[Federal Register Volume 75, Number 87 (Thursday, May 6, 2010)]
[Notices]
[Pages 24892-24906]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-10701]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-958]
Certain Coated Paper Suitable for High-Quality Print Graphics
Using Sheet-Fed Presses From the People's Republic of China: Notice of
Preliminary Determination of Sales at Less Than Fair Value and
Postponement of Final Determination
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
[[Page 24893]]
DATES: Effective Date: May 6, 2010.
SUMMARY: The Department of Commerce (``Department'') preliminarily
determines that certain coated paper suitable for high-quality print
graphics using sheet-fed presses (``coated paper'') from the People's
Republic of China (``PRC'') is being, or is likely to be, sold in the
United States at less than fair value (``LTFV''), as provided in
section 733 of the Tariff Act of 1930, as amended (``the Act''). The
estimated margins of sales at LTFV are shown in the ``Preliminary
Determination'' section of this notice. Pursuant to requests from
interested parties, we are postponing the final determination and
extending the provisional measures from a four-month period to not more
than six months. Accordingly, we will make our final determination not
later than 135 days after publication of the preliminary determination.
FOR FURTHER INFORMATION CONTACT: Lindsey Novom or Demitrios
Kalogeropoulos, AD/CVD Operations, Office 8, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, NW., Washington, DC 20230; telephone:
(202) 482-5256 or (202) 482-2623, respectively.
SUPPLEMENTARY INFORMATION:
Initiation
On September 23, 2009, the Department received an antidumping duty
(``AD'') petition concerning imports of coated paper from the PRC filed
in proper form by Appleton Coated LLC, NewPage Corporation, S.D. Warren
Company d/b/a Sappi Fine Paper North America, and United Steel, Paper
and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and
Service Workers International Union (collectively, ``Petitioners'').
See the Petition for the Imposition of Antidumping and Countervailing
Duties Pursuant to Sections 701 and 731 of the Tariff Act of 1930, as
amended (``Petition''), filed on September 23, 2009. Based on the
Department's request, Petitioners filed supplements to the Petitions on
October 2, 8, and 9, 2009.
The Department initiated this investigation on October 13, 2009.\1\
In the Initiation Notice, the Department notified parties of the
application process by which exporters and producers may obtain
separate-rate status in non-market economy (``NME'') investigations.
The process requires exporters and producers to submit a separate-rate
status application (``SRA'') \2\ and to demonstrate an absence of both
de jure and de facto government control over its export activities. The
SRA for this investigation was posted on the Department's Web site
http://ia.ita.doc.gov/ia-news-2009.html on October 14, 2009. The due
date for filing an SRA was December 22, 2009.
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\1\ See Coated Paper From the People's Republic of China:
Initiation of Antidumping Duty Investigation, 74 FR 53710 (October
20, 2009) (``Initiation Notice'').
\2\ See Policy Bulletin 05.1: Separate-Rates Practice and
Application of Combination Rates in Antidumping Investigations
Involving Non-Market Economy Countries (April 5, 2005) (``Policy
Bulletin 05.1''), available at http://ia.ita.doc.gov/policy/bull05-1.pdf.
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On November 23, 2009, the International Trade Commission (``ITC'')
determined that there is a reasonable indication that an industry in
the United States is materially injured or threatened with material
injury by reason of imports of coated paper from the PRC.\3\
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\3\ See Investigation Nos. 701-TA-470-471 and 731-TA-1169-1170
(Preliminary): Coated Paper From China, 74 FR 61174 (November 23,
2009).
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Period of Investigation
The period of investigation (``POI'') is January 1, 2009, through
June 30, 2009. This period corresponds to the two most recent fiscal
quarters prior to the month of the filing of the petition, which was
September 2009. See 19 CFR 351.204(b)(1).
Postponement of Preliminary Determination
On January 22, 2010, petitioners made a timely request pursuant to
section 733(c)(1)(A) of the Act and 19 CFR 351.205(b)(2) and (e) for a
50-day postponement of the preliminary determination. On February 19,
2010, the Department published a postponement of the preliminary AD
determination on coated paper from the PRC.\4\
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\4\ See Coated Paper From the People's Republic of China:
Postponement of Preliminary Determinations of Antidumping Duty
Investigations, 75 FR 7447 (February 19, 2010).
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Tolling of Administrative Deadlines
As explained in the memorandum from the Deputy Assistant Secretary
for Import Administration, the Department has exercised its discretion
to toll deadlines for the duration of the closure of the Federal
Government from February 5, through February 12, 2010. Thus, all
deadlines in this segment of the proceeding have been extended by seven
days. The revised deadline for this preliminary determination is now
April 28, 2010. See Memorandum to the Record from Ronald Lorentzen, DAS
for Import Administration, regarding ``Tolling of Administrative
Deadlines As a Result of the Government Closure During the Recent
Snowstorm,'' dated February 12, 2010.
Scope of the Investigation
The merchandise covered by this investigation includes certain
coated paper and paperboard \5\ in sheets suitable for high quality
print graphics using sheet-fed presses; coated on one or both sides
with kaolin (China or other clay), calcium carbonate, titanium dioxide,
and/or other inorganic substances; with or without a binder; having a
GE brightness level of 80 or higher; \6\ weighing not more than 340
grams per square meter; whether gloss grade, satin grade, matte grade,
dull grade, or any other grade of finish; whether or not surface-
colored, surface-decorated, printed (except as described below),
embossed, or perforated; and irrespective of dimensions (``Certain
Coated Paper'').
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\5\ `` `Paperboard' refers to Certain Coated Paper that is
heavier, thicker and more rigid than coated paper which otherwise
meets the product description. In the context of Certain Coated
Paper, paperboard typically is referred to as `cover,' to
distinguish it from `text.' ''
\6\ One of the key measurements of any grade of paper is
brightness. Generally speaking, the brighter the paper the better
the contrast between the paper and the ink. Brightness is measured
using a GE Reflectance Scale, which measures the reflection of light
off of a grade of paper. One is the lowest reflection, or what would
be given to a totally black grade, and 100 is the brightest measured
grade.
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Certain Coated Paper includes (a) coated free sheet paper and
paperboard that meets this scope definition; (b) coated groundwood
paper and paperboard produced from bleached chemi-thermo-mechanical
pulp (``BCTMP'') that meets this scope definition; and (c) any other
coated paper and paperboard that meets this scope definition.
Certain Coated Paper is typically (but not exclusively) used for
printing multi-colored graphics for catalogues, books, magazines,
envelopes, labels and wraps, greeting cards, and other commercial
printing applications requiring high quality print graphics.
Specifically excluded from the scope are imports of paper and
paperboard printed with final content printed text or graphics.
As of 2009, imports of the subject merchandise are provided for
under the following categories of the Harmonized Tariff Schedule of the
United States (``HTSUS''): 4810.14.11, 4810.14.1900, 4810.14.2010,
4810.14.2090, 4810.14.5000, 4810.14.6000, 4810.14.70, 4810.19.1100,
4810.19.1900, 4810.19.2010, 4810.19.2090,
[[Page 24894]]
4810.22.1000, 4810.22.50, 4810.22.6000, 4810.22.70, 4810.29.1000,
4810.29.5000, 4810.29.6000, 4810.29.70. While HTSUS subheadings are
provided for convenience and customs purposes, the written description
of the scope of the investigations is dispositive.
Scope Comments
As discussed in the preamble to the regulations, we set aside a
period for interested parties to raise issues regarding product
coverage. See Antidumping Duties; Countervailing Duties; Final Rule, 62
FR 27296, 27323 (May 19, 1997). The Department encouraged all
interested parties to submit such comments within 20 calendar days of
signature of the Initiation Notice. See Initiation Notice, 74 FR at
31692. As we stated in Certain Coated Paper Suitable For High-Quality
Print Graphics Using Sheet-Fed Presses From the People's Republic of
China: Preliminary Affirmative Countervailing Duty Determination and
Alignment of Final Countervailing Duty Determination With Final
Antidumping Duty Determination, 75 FR 10774 (March 9, 2010) (``PRC
Coated Paper CVD Prelim'') and Certain Coated Paper From Indonesia:
Preliminary Affirmative Countervailing Duty Determination and Alignment
of Final Countervailing Duty Determination With Final Antidumping Duty
Determination, 75 FR 10761 (March 9, 2010) (``Indonesia Coated Paper
CVD Prelim''), the Department received scope comments from interested
parties on November 6, 2009,\7\ November 16, 2009,\8\ December 16,
2009,\9\ December 28, 2009,\10\ and March 12, 2010,\11\ with respect to
whether multi-ply coated paper products are covered by the scope of the
AD/CVD investigations of coated paper from the PRC and Indonesia. As
the Department stated in the PRC Coated Paper CVD Prelim and Indonesia
Coated Paper CVD Prelim, based on our review of the scope, we find that
the number of plies is not among the specific physical characteristics
(e.g., brightness, coating, weight, etc.) defining the subject
merchandise. Accordingly, we preliminarily find that multi-ply coated
paper is covered by the scope of these investigations, to the extent
that it meets the description of the merchandise in the scope.
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\7\ See ``Scope Comments: Coated Paper Suitable For High-Quality
Print Graphics Using Sheet-Fed Presses from China and Indonesia,''
dated November 6, 2009.
\8\ See ``Certain Coated Paper Suitable For High-Quality Print
Graphics Using Sheet-Fed Presses (``Certain Coated Paper'') from
Indonesia and the People's Republic of China: Petitioners' Rebuttal
Comments on Scope,'' dated November 16, 2009.
\9\ See ``Request to Re-Examine the Department's Industry
Support Calculation Coated Paper Suitable For High-Quality Print
Graphics Using Sheet-Fed Presses from China,'' dated December 16,
2009.
\10\ See ``Certain Coated Paper Suitable For High-Quality Print
Graphics Using Sheet-Fed Presses from Indonesia and the People's
Republic of China: Petitioners' Response to Chinese and Indonesian
Respondents' Request to Re-examine the Department's Industry Support
Calculation,'' dated December 28, 2009.
\11\ See ``Ex Parte Meeting Regarding Scope: Records Documents,
Certain Coated Paper Suitable For High-Quality Print Graphics Using
Sheet-Fed Presses from Indonesia and the People's Republic of
China,'' originally dated February 23, 2010, resubmitted on March
12, 2010.
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On February 25, 2010, Petitioners filed additional comments
rebutting certain documents filed by the PRC and Indonesian respondents
which contained scope comments and restating their prior claims. In
response to a question the Department posed during an ex parte meeting,
Petitioners stated that the phrase ``suitable for high quality print
graphics'' could be stricken from the description of the subject
merchandise without altering the scope of these investigations. In the
PRC Coated Paper CVD Prelim and Indonesia Coated Paper CVD Prelim, the
Department invited interested parties to comment within 20 calendar
days of publication of the PRC Coated Paper CVD Prelim and Indonesia
Coated Paper CVD Prelim with respect to whether striking the language
``suitable for high quality print graphics'' from the description of
the subject merchandise would alter the scope of these investigations.
We received comments from interested parties on March 29, 2010,\12\ and
April 8, 2010.\13\ Based on the information contained in these
submissions, on April 23, 2010, the Department requested additional
information from Petitioners with respect to this scope issue.
Petitioners' submission is due May 3, 2010. Therefore, we intend to
address this issue for the final determinations in these coated paper
AD/CVD investigations.
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\12\ See ``Additional Scope Comments: Certain Coated Paper
Suitable For High-Quality Print Graphics Using Sheet-Fed Presses
from China and Indonesia,'' dated March 29, 2010.
\13\ See ``Certain Coated Paper Suitable For High-Quality Print
Graphics Using Sheet-Fed Presses (``Certain Coated Paper'') from
Indonesia and the People's Republic of China: Petitioners' Rebuttal
Comments on Scope,'' dated April 8, 2010.
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In their February 25, 2010 submission, Petitioners also stated that
the phrase in the scope, ``(c) any other coated paper that meets the
scope definition'' should also include the word ``paperboard.'' As the
Department stated in the PRC Coated Paper CVD Prelim and Indonesia
Coated Paper CVD Prelim, we agree that the word ``paperboard'' was
inadvertently omitted (e.g., it is already explicitly included in the
first sentence of the scope language and in ``(b)'' of the second
paragraph) and have corrected the scope language to read ``(c) any
other coated paper and paperboard that meets this scope definition.''
Non-Market Economy Country
For purposes of initiation, Petitioners submitted an LTFV analysis
for the PRC as an NME.\14\ The Department's most recent examination of
the PRC's market status determined that NME status should continue for
the PRC.\15\ Additionally, in two recent investigations, the Department
also determined that the PRC is an NME country.\16\ In accordance with
section 771(18)(C)(i) of the Act, the NME status remains in effect
until revoked by the Department. The Department has not revoked the
PRC's status as an NME country, and we have therefore treated the PRC
as an NME in this preliminary determination and applied our NME
methodology.
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\14\ See Initiation Notice, 74 FR at 53713.
\15\ See the Department's memorandum entitled, ``Antidumping
Duty Investigation of Certain Lined Paper Products from the People's
Republic of China (``China'')--China's status as a non-market
economy (``NME''),'' dated August 30, 2006. This document is
available online at: http://ia.ita.doc.gov/download/prc-nmestatus/prc-lined-paper-memo-08302006.pdf.
\16\ See, e.g., Certain Kitchen Appliance Shelving and Racks
From the People's Republic of China: Preliminary Determination of
Sales at Less Than Fair Value and Postponement of Final
Determination, 74 FR 9591 (March 5, 2009) (``Kitchen Racks Prelim'')
unchanged in Certain Kitchen Appliance Shelving and Racks From the
People's Republic of China: Final Determination of Sales at Less
Than Fair Value, 74 FR 36656 (July 24, 2009) (``Kitchen Racks
Final'') and Certain Tow Behind Lawn Groomers and Certain Parts
Thereof from the People's Republic of China: Preliminary
Determination of Sales at Less Than Fair Value and Postponement of
Final Determination, 74 FR 4929 (January 28, 2009) unchanged in
Certain Tow Behind Lawn Groomers and Certain Parts Thereof from the
People's Republic of China: Final Determination of Sales at Less
Than Fair Value, 74 FR 29167 (June 19, 2009).
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Market Oriented Industry Treatment
In the Amendment to Final Determination of Sales at Less Than Fair
Value and Amendment to Antidumping Duty Order: Chrome-Plated Lug Nuts
From the People's Republic of China, 57 FR 15052 (April 24, 1992)
(``Lug Nuts From the PRC''), the Department set forth the factors to be
considered in determining whether an MOI exists in an economy which is
considered an NME for the purposes of the antidumping duty law. These
factors include, but are not limited to:
-- For the merchandise under investigation, there must be virtually
[[Page 24895]]
no government involvement in setting prices or amounts to be produced.
For example, state-required production of the merchandise, whether for
export or domestic consumption in the non-market economy country would
be an almost insuperable barrier to finding a market-oriented industry
(first prong).
--The industry producing the merchandise under investigation should be
characterized by private or collective ownership. There may be state-
owned enterprises in the industry but substantial state ownership would
weigh heavily against finding a market-oriented industry (second
prong).
--Market-determined prices must be paid for all significant inputs,
whether material or non-material (e.g., labor and overhead), and for
all but an insignificant proportion of all the inputs accounting for
the total value of the merchandise under investigation. For example, an
input price will not be considered market-determined if the producers
of the merchandise under investigation pay a state-set price for the
input or if the input is supplied to the producers at government
direction. Moreover, if there is any state-required production in the
industry producing the input, the share of state-required production
must be insignificant (third prong).
If any one of these conditions is not met, then, pursuant to
sections 773(c)(1), (3) and (4) of the Act and 19 CFR 351.408, the
producers of the merchandise under investigation will be treated as
NME-producers, and the normal value will be calculated on the basis of
the value of the factors of production, which to the extent possible
will be based on prices and costs of the factors of production in one
or more market economy countries that are (A) at a level of economic
development comparable to that of the nonmarket economy country, and
(B) are significant producers of comparable merchandise.
In Lug Nuts From the PRC, the Department stated that the test for
finding such a market-oriented industry must begin with a strong
presumption that such situations do not occur. See Lug Nuts From the
PRC. The presumption against finding a market-oriented industry must
prevail unless thorough and convincing evidence is presented on the
record which demonstrates that the producers operate in an environment
of market-based costs and prices. See Lug Nuts From the PRC.
All of the mandatory respondents and the separate rate respondent,
Chenming (collectively, ``MOI Respondents''), in this investigation
have claimed that the coated paper industry is a market-oriented
industry (``MOI''). In their February 5, 24, March 9, and April 14,
2010, submissions, the MOI Respondents claim that the market determines
the prices for major inputs (pulp, China clay, and caustic soda) as
evidenced by the existence of imports and an absence of government
price controls. In addition, MOI Respondents claim that privately held
companies and foreign-invested enterprises (``FIEs'') account for a
significant majority of production of these three inputs during the
POI. MOI Respondents claim that the government did not regulate the
quantity or pricing of subject merchandise during the POI and that the
coated paper industry in the PRC consists predominantly of privately
held companies and FIEs that act according to market considerations.
Accordingly, these MOI Respondents state that these submissions
demonstrate that the coated paper industry is an MOI and, as such, is
fully entitled to market treatment in this investigation.
On February 5, 2010, MOI Respondents provided an initial MOI
submission addressing the second prong (as articulated in Lug Nuts From
the PRC) and indicated they intended to submit additional data and
other factual evidence in support of their request for MOI treatment.
After receiving this initial submission, the Department prompted MOI
Respondents to complete their submission and address the first and
third prong (as articulated in Lug Nuts From the PRC), as well as
address the specific inputs of land, capital, and labor.\17\ MOI
Respondents provided the Department information for three material
inputs: pulp, caustic soda, and China clay, as well as information
regarding land, capital, and labor.\18\ On March 9 and 19, 2010,
Petitioners submitted information citing deficiencies in MOI
Respondents' MOI submissions. MOI Respondents on April 14, 2010
provided additional information in support of their MOI claim and
provided responses to some of the Petitioners' arguments.
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\17\ See Department's February 24, 2010, Request for Additional
Information Concerning Market-Oriented Industry Treatment.
\18\ See MOI Respondents' March 9 and April 14 submissions.
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The Department requires that any MOI claim be submitted such that
it provides sufficient time to consider the claim. See, e.g., Final
Determination of Sales at Less Than Fair Value: Wooden Bedroom
Furniture From the People's Republic of China, 69 FR 67314 (November
17, 2004). While the Department has given MOI Respondents' claim full
consideration in this case, for future cases, the Department wishes to
clarify that MOI Respondents should submit their complete MOI claim no
later than two months after the initiation of a segment of a proceeding
such that in the event of granting MOI treatment to a certain industry,
this could allow sufficient time to request and analyze market economy
data for use in the Department's determinations.
For the reasons explained below, the Department concludes that the
MOI Respondents' claim is insufficient with respect to prongs two and
three. The Department requires that an MOI claim cover virtually all of
the producers of the industry and virtually all inputs. See, e.g.,
Notice of Final Determination of Sales at Less Than Fair Value: Certain
Preserved Mushrooms From the People's Republic of China, 63 FR 72255
(December 31, 1998) (``Preserved Mushrooms From the PRC''). The
Department finds that the MOI Respondents' claim does not sufficiently
address the ownership of coated paper producers and does not address
virtually all inputs for the coated paper industry.
With respect to the second prong, regarding private or collective
ownership, the evidence on the record is inconclusive with respect to
the ownership status of enterprises in the coated paper industry. MOI
Respondents themselves identified one of the largest producers of
coated paper as a state-owned enterprise (``SOE'').\19\ Petitioners
have provided evidence on the record that another one of the largest
producers is also an SOE.\20\ In addition, Petitioners provided
information that several other enterprises, classified as non-SOE by
MOI Respondents, are in fact state-owned.\21\ The Department further
notes that MOI Respondents' April 14, 2010, submission failed to
address, respond, or otherwise rebut Petitioners' evidence on the
record that several enterprises are misclassified as private, FIE, and
collective, and should be reclassified as SOEs. For example, under
Article 4 of China's Law on Chinese-Foreign Equity Joint Ventures, an
enterprise with at least 25 percent foreign capital contribution is
classified as an FIE. For some enterprises, it appears that MOI
Respondents classified enterprises as FIEs in the case where an SOE, or
company owned by an ultimate SOE parent, contributed the
[[Page 24896]]
majority of the capital.\22\ The Department also notes that MOI
respondents provided no information on the ultimate ownership structure
of the companies that own the coated paper producers. Moreover, because
the information provided by MOI Respondents regarding the percentage of
ownership structure in the coated paper industry in China is presented
in aggregate form on a production basis, as opposed to providing
enterprise-level production data, the Department is precluded from
performing its own calculation of the portion of the coated paper
industry that is state-owned. For all of the above reasons, the
Department finds that the MOI Respondents' claim is not sufficient with
respect to the second prong of the MOI test.
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\19\ See Exhibit 1 of Respondents' February 5, 2010 submission.
\20\ See Petitioners' March 9, 2010 submission.
\21\ See Petitioners' March 9, 2010 submission.
\22\ See Exhibit 1 of Respondents' April 14, 2010 submission.
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Under the third MOI prong, the Department requires that the MOI
claim provide a sufficient basis to demonstrate that ``market
determined prices'' are paid for virtually all inputs (emphasis added,
see Preserved Mushrooms From the PRC). With regard to the third prong,
the MOI claim must provide evidence that market determined prices are
paid for (1) all significant inputs, whether material or non-material
(e.g., labor and overhead), and (2) all but an insignificant proportion
of the inputs accounting for the total value of the merchandise under
investigation. See Lug Nuts From the PRC. The Department does not
expect MOI Respondents' MOI claim to provide ownership documentation
for every input supplier, and for each and every input; the Department,
however, does require that, at a minimum, a claim at least include
aggregate information on the state-ownership of a material input as
well as summary information that provides sufficient evidence that
market determined prices are paid (See factors cited in the preceding
paragraph).
Aside from the lack of de jure price controls, MOI Respondents'
claim with respect to whether market prices are paid for inputs
consists of providing ownership information for three input producers
in addition to the existence of imports.\23\ The mere existence of
imports, however, without a basis for comparison, does not provide a
sufficient basis for the claim that market prices were paid. Import
volumes alone do not provide a meaningful indicator unless they are,
inter alia, compared to domestic consumption, i.e. the import
penetration ratio. The Department notes that MOI Respondents did not
provide this metric for any of the inputs. Absent or in addition to
such information, it may also be appropriate to consider: (1) Whether
the input is subject to any state guidance pricing, decrees, circulars,
or other administratively determined reference pricing that is not
explicitly referred to in the law and, (2) the absence of border
measures (export taxes and quotas) on raw material inputs that can
depress domestic prices. While no one factor, alone, is dispositive,
the Department finds that MOI Respondents did not provide a sufficient
basis to support the claim for market determined prices.
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\23\ See MOI Respondents' March 9, 2010 and April 14, 2010
submissions.
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Additionally, the Department requires that the MOI claim provide
information that addresses virtually all inputs. See, e.g., Preserved
Mushrooms From the PRC. Coated paper production requires anywhere from
several dozen up to hundreds of different material inputs.\24\ MOI
Respondents, however, have only provided information on three material
inputs. For certain coated paper products, these three inputs do not
account for a large portion of the direct material cost.\25\ Further,
the Department notes that at least one of the inputs has substantial
state production.\26\ With regard to the remaining material inputs, MOI
Respondents' only assertion is to reference the mandatory respondents'
questionnaire responses.\27\ As the Department has previously stated,
the MOI claim must encompass the entire industry and provide
information that addresses virtually all inputs. See, e.g., Notice of
Final Determination of Sales at Less Than Fair Value: Freshwater
Crawfish Tail Meat From the People's Republic of China, 62 FR 41347,
41353 (August 1, 1997); see also Preserved Mushrooms From the PRC.
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\24\ See GE Group's and Sun Paper and Board's Section D
questionnaire responses.
\25\ Due to the proprietary nature of this data, please see the
analysis memos for the GE Group and Sun Paper and Board.
\26\ See Exhibit INPUT-3 of MOI Respondent's March 9, 2010
submission.
\27\ See MOI Respondents' April 14, 2010 submission.
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For the reasons noted above, the Department determines that MOI
Respondents' MOI claim did not provide sufficient evidence as to the
second and third prongs to warrant the Department's further
consideration in this investigation of whether producers in the coated
paper industry operate in an environment of market-based costs and
prices sufficient to overcome the strong presumption that an MOI does
not exist in a nonmarket economy. In light of this finding, we do not
need to reach the issues with respect to the first prong or with
respect to the claims concerning land, capital, and labor.
Market-Oriented Enterprise Treatment
On January 21, 2010, Gold East Paper (Jiangsu) Co., Ltd. (``GE'')
and Gold Huasheng Paper Co., Ltd. (``GHS'') requested that the
Department apply its market economy (``ME'') methodology when
calculating its AD margins for the GE Group. In its request, GE and GHS
presented the following claims as to why the Department should afford
the GE Group market-oriented enterprise (``MOE'') treatment: (1) GE and
GHS are 100 percent foreign owned which ``signifies that market
principles are being applied;'' (2) a significant portion of GE and
GHS's material inputs are sourced from ME countries and ``reliance on
market economy inputs makes it less likely that there will be residual
influence from the non-market economy on the respondents' operations;''
and (3) GE and GHS are subject to a companion countervailing duty case.
On April 19, 2010, the GE Group submitted a ME questionnaire response,
notwithstanding that the Department had not issued the GE Group a ME
questionnaire.
As an initial matter, we note that the antidumping statute and the
Departments' regulations are silent with respect to the term ``MOE.''
Neither the statute nor the regulations compel the agency to treat some
constituents of the NME industry as MOEs while treating others as NME
entities. To date, the Department has not adopted any MOE exception to
the application of the NME methodology in any proceeding involving an
NME country. As we stated in Final Determination of Sales at Less Than
Fair Value: Coated Free Sheet Paper From the People's Republic of
China, 72 FR 60632 (Oct. 25, 2007), and accompanying Issues and
Decision Memorandum at Comment 1, no determination has been made
``whether it would be appropriate to introduce a market oriented
enterprise process'' in NME antidumping investigations. Speaking to the
complexity of the issue, the Department has twice asked for public
comment on whether it should consider granting market-economy treatment
to individual respondents operating in non-market economies, the
conditions under which individual firms should be granted market-
economy treatment, and how such treatment might affect antidumping
calculations for such qualifying respondents. See First MOE Comment
Request, 72 FR at 29302-03; Antidumping Methodologies in Proceedings
Involving Certain Non-Market Economies: Market-Oriented
[[Page 24897]]
Enterprise: Request for Comment, 72 FR 60649 (Oct. 25, 2007) (``Second
MOE Comment Request''). The Department received numerous comments in
response to the two Federal Register notices. The Department is still
considering those comments while evaluating whether to adopt an
official policy concerning MOEs.
Pursuant to section 771(18)(A) of the Act, when a country is
determined to be an NME, it means that the designated country, in this
case the PRC, ``{d{time} oes not operate on market principles of cost
or pricing structures, so that sales of merchandise in such country do
not reflect the fair value of the merchandise.'' In accordance with
section 771(18)(C)(i) of the Act, the presumption of NME status remains
in effect until revoked by the Department. The presumption of NME
status for the PRC has not been revoked by the Department and remains
in effect for the purpose of this investigation. Accordingly, the
normal value (``NV'') of the product is appropriately based on factors
of production (``FOP'') valued in a surrogate ME country in accordance
with section 773(c) of the Act, a methodology that has been repeatedly
upheld by the Courts. See, e.g., Sigma Corp. v. United States, 117 F.3d
1401, 1405 (Fed. Cir. 1997); Nation Ford Chem. Co. vs. United States,
166 F.3d 1373 (Fed. Cir. 1999).\28\
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\28\ Under the NME presumption established by the statutory
scheme, the only mechanism for market economy treatment currently
available to respondents in NME proceedings is market-oriented
industry (``MOI'') classification. Commerce currently employs an
industry-wide test to determine whether, under section 773(c)(1)(B),
available information in the NME country permits the use of the ME
methodology for the NME industry producing the subject merchandise.
The MOI test affords NME-country respondents the possibility of
market economy treatment, but only upon a case-by-case, industry-
specific basis. This test is performed only upon the request of a
respondent. See, e.g., Antidumping Methodologies in Proceedings
Involving Certain Non-Market Economies: Market-Oriented Enterprise,
72 FR 29302, 29302 (May 25, 2007) (``First MOE Comment Request'').
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Selection of Respondents
In accordance with section 777A(c)(2) of the Act, the Department
selected the four largest exporters of coated paper (i.e., GE, GHS,
Yanzhou Tianzhang Paper Industry Co., Ltd. (``Tianzhang''), and
Shandong International Paper and Sun Coated Paperboard Co., Ltd./
International Paper and Sun Cartonboard Co., Ltd. (``IP Paperboard''
and ``IP Cartonboard'') by volume as the mandatory respondents in this
investigation based on the quantity and value (``Q&V'') information
from exporters/producers that were identified in the Petition, of which
five firms filed timely Q&V questionnaire responses.\29\ Of the five
Q&V questionnaire responses, four companies (GE, GHS, Tiangzhang and IP
Paperboard/IP Cartonboard) filed two consolidated Q&V questionnaire
responses.
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\29\ See the Department's memorandum entitled, ``Antidumping
Duty Investigation of Coated Paper from the People's Republic of
China: Respondent Selection,'' dated November 25, 2009 (``Respondent
Selection Memo'').
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The Department issued its antidumping questionnaire to Tianzhang
and IP Paperboard/IP Cartonboard (collectively, ``Sun Paper and
Board'') and GE and GHS on November 27, 2009. The Department requested
that the respondents provide a response to section A of the
Department's questionnaire on December 18, 2009, and a response to
sections C and D of the questionnaire on January 4, 2010. From December
15, 2009, until the present, the Department has granted both
respondents several extensions for their submissions.
Sun Paper and Board submitted its responses to the section A and
sections C and D questionnaires on December 29, 2009 and January 20,
2010, respectively. Sun Paper and Board submitted responses to the
section A and section C supplemental questionnaires on March 18 and
March 25, 2010, respectively. The Department received Sun Paper and
Board's section D supplemental questionnaire response and section A and
C 2nd supplemental questionnaire response on April 9, 2010. After the
Department requested reconciliation of sales in a memorandum to the
file, Sun Paper and Board submitted its reconciliation of sales on
March 26, 2010. In two memorandums to the file requesting affiliation
information, Sun Paper and Board submitted affiliation information on
April 6, 2010, and April 14, 2010.
GE, GHS, and its affiliated producers Ningbo Zhonghua Paper Co.,
Ltd., (``NBZH'') and Ningbo Asia Pulp and Paper Co., Ltd., (``NAPP'')
(collectively, ``GE Group'') submitted their section A responses on
December 23, 2009. GE and GHS submitted responses to section C and D on
January 20, 2010, and January 22, 2010, respectively. NAPP and NBZH
submitted its section C and D responses on March 5, 2010. The
Department received the GE Group's section A supplemental response on
March 16, 2010. The Department received GE, GHS, NBZH's and NAPP's
section C and D supplemental questionnaire responses on April 6, 2010.
Targeted Dumping
On March 15, 2010, the Department received Petitioners' allegations
of targeted dumping by the GE group \30\ using a variation of the
Department's methodology as established in Certain Steel Nails From the
United Arab Emirates: Notice of Final Determination of Sales at Not
Less Than Fair Value, 73 FR 33985 (June 16, 2008) (``Steel Nails''), in
addition to proposing an alternative targeted dumping methodology.
Based on our examination of the targeted dumping allegations filed by
Petitioners on March 15, 2010, pursuant to 777A(d)(1)(B)(i) of the Act,
the Department has determined that the Petitioners' allegations
sufficiently indicate that there is a pattern of export prices (or
constructed export prices) for comparable merchandise that differ
significantly among purchasers and regions. Therefore, for purposes of
this preliminary determination, we have applied the targeted dumping
methodology established in Steel Nails.
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\30\ Specifically filed against Gold East (Jiangsu) Co., Ltd.;
Gold Huasheng Paper Co., Ltd., Ningbo Zhonghua Paper Co., Ltd.; and
Ningbo Asia Pulp and Paper Co., Ltd.
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We have rejected Petitioners' proposed targeted dumping test for
purposes of the preliminary determination, for the same reasons we have
explained in recent past investigations involving targeted dumping
allegations (see Steel Nails and Certain Oil Country Tubular Goods From
the People's Republic of China: Final Determination of Sales at Less
Than Fair Value, Affirmative Final Determination of Critical
Circumstances and Final Determination of Targeted Dumping, 75 FR 20335
(April 19, 2010) (``OCTG''), where the Department rejected use of the
``P/2'' test). The Department will, therefore, continue to apply the
targeted dumping methodology established in Steel Nails, and most
recently applied in OCTG.
As a result, the Department has applied the targeted dumping
analysis established in Steel Nails to the GE Group's U.S. sales to
targeted customers and regions. The methodology we employed involves a
two-stage test; the first stage addresses the pattern requirement and
the second stage addresses the significant-difference requirement. See
section 777A(d)(1)(B)(i) of the Act and Steel Nails. In this test we
made all price comparisons on the basis of comparable merchandise
(i.e., by control number or CONNUM). The test procedures are the same
for the customer and region targeted-dumping allegations. We based all
of our targeted-dumping calculations
[[Page 24898]]
on the U.S. net price which we determined for U.S. sales by the GE
Group in our standard margin calculations. For further discussion of
the test and the results, see Memorandum from Bobby Wong to Wendy
Frankel, regarding the ``Targeted Dumping Analysis of the GE Group''
(``Targeted Dumping Memo''), dated concurrently with this notice. As a
result of our analysis, we preliminarily determine that there is a
pattern of sales for comparable merchandise that differ significantly
among certain customers for the GE Group in accordance with section
777A(d)(1)(B)(i) of the Act, and our practice as discussed in Steel
Nails. We determine that the standard average-to-average comparison
methodology does not account for the identified pattern of price
differences. Therefore, consistent with OCTG, we have applied the
average-to-transaction methodology to all sales.
Postponement of Final Determination and Extension of Provisional
Measures
Pursuant to section 735(a)(2) of the Act, on April 13, and April
20, 2010, respectively, GE Group and Sun Paper and Board requested that
in the event of an affirmative preliminary determination in this
investigation, the Department postpone the final determination by 60
days. On April 16, 2010, Petitioners requested that in the event of a
negative preliminary determination in this investigation, the
Department postpone the final determination by 60 days, as well as the
deadline to allege critical circumstances. Sun Paper and Board, and the
GE Group, also requested that the Department extend the application of
the provisional measures prescribed under 19 CFR 351.210(e)(2) from a
four-month period to a six-month period. In accordance with section
733(d) of the Act and 19 CFR 351.210(b), because (1) our preliminary
determination is affirmative, (2) the requesting exporters account for
a significant proportion of exports of the subject merchandise, and (3)
no compelling reasons for denial exist, we are granting the requests
and are postponing the final determination until no later than 135 days
after the publication of this notice in the Federal Register.
Suspension of liquidation will be extended accordingly.
Surrogate Country
When the Department is investigating imports from an NME, section
773(c)(1) of the Act directs it to base NV, in most circumstances, on
the NME producer's FOPs valued in a surrogate ME country or countries
considered to be appropriate by the Department. In accordance with
section 773(c)(4) of the Act, in valuing the FOPs, the Department shall
utilize, to the extent possible, the prices or costs of FOPs in one or
more ME countries that are at a level of economic development
comparable to that of the NME country and are significant producers of
comparable merchandise. The sources of the surrogate values we have
used in this investigation are discussed under the ``Normal Value''
section below.
The Department's practice with respect to determining economic
comparability is explained in Policy Bulletin 04.1,\31\ which states
that ``OP {Office of Policy{time} determines per capita economic
comparability on the basis of per capita gross national income, as
reported in the most current annual issue of the World Development
Report (The World Bank).'' The Department considers the six countries
identified in its Surrogate Country List as ``equally comparable in
terms of economic development.'' See Policy Bulletin 04.1 at 2. Thus,
we find that India, Indonesia, the Philippines, Ukraine, Thailand, and
Peru are all at an economic level of development equally comparable to
that of the PRC.
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\31\ See Policy Bulletin 04.1: Non-Market Economy Surrogate
Country Selection Process, (March 1, 2004), (``Policy Bulletin
04.1'') at Attachment II of the Department's Surrogate Country
Letter, also available at http://ia.ita.doc.gov/policy/bull04-1.html.
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Second, Policy Bulletin 04.1 provides some guidance on identifying
comparable merchandise and selecting a producer of comparable
merchandise. Based on the financial statements of various Indian
producers provided by Petitioners in the petition, we find that India
is a producer of identical merchandise. See Petition at Volume II-a,
Exhibit 4. Because the Department was unable to find production data,
we are relying on export data to proxy for overall production data in
this case. Of the six countries listed in the Surrogate Country List,
only India, Indonesia, and Thailand are significant exporters of coated
paper. See Memorandum to the File regarding, ``Certain Coated Paper
Suitable for High-Quality Print Graphics Using Sheet-Fed Presses
(``Certain Coated Paper'') from the People's Republic of China:
Surrogate Values for the Preliminary Determination,'' dated
concurrently with this notice (``Surrogate Value Memorandum''), at
Exhibit 1. Consequently, at this time, Ukraine, Peru, and the
Philippines, are not being considered to be appropriate surrogate
countries for the PRC as they are not significant exporters of subject
coated paper. During the POI, India exported over 12,925 MT of
comparable merchandise, Indonesia exported over 325,965 MT of
comparable merchandise, and Thailand exported over 9,003 MT of
comparable merchandise. Thus, India, Indonesia, and Thailand are
considered as appropriate surrogate countries because each exported
significant quantities of comparable merchandise. Finally, we have
reliable data from India on the record that we can use to value the
FOPs. Petitioners, GE Group, and Sun Paper and Board submitted
surrogate values using Indian sources, suggesting greater availability
of appropriate surrogate value data in India.
Therefore, the Department is preliminarily selecting India as the
surrogate country on the basis that: (1) It is at a similar level of
economic development pursuant to 773(c)(4) of the Act; (2) it is a
significant producer of comparable merchandise; and (3) we have
reliable data from India that we can use to value the factors of
production. Thus, we have calculated normal value using Indian prices
when available and appropriate to value respondents' factors of
production. See Surrogate Value Memorandum.
In accordance with 19 CFR 351.301(c)(3)(i), for the final
determination in an antidumping investigation, interested parties may
submit publicly available information to value the FOPs within 40 days
after the date of publication of the preliminary determination.\32\
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\32\ In accordance with 19 CFR 351.301(c)(1), for the final
determination of this investigation, interested parties may submit
factual information to rebut, clarify, or correct factual
information submitted by an interested party less than ten days
before, on, or after, the applicable deadline for submission of such
factual information. However, the Department notes that 19 CFR
351.301(c)(1) permits new information only insofar as it rebuts,
clarifies, or corrects information recently placed on the record.
The Department generally cannot accept the submission of additional,
previously absent-from-the-record alternative surrogate value
information pursuant to 19 CFR 351.301(c)(1). See Glycine from the
People's Republic of China: Final Results of Antidumping Duty
Administrative Review and Final Rescission, in Part, 72 FR 58809
(October 17, 2007) and accompanying Issues and Decision Memorandum
at Comment 2.
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Surrogate Value Comments
Surrogate factor valuation comments and surrogate value information
with which to value the FOPs in this proceeding were originally due
January 29, 1010. GE Group and Sun Paper and Board requested an
extension to submit surrogate values on January 25, 2010, and January
27, 2010, respectively; on January 27, 2010, the Department granted
this request to extend the deadline for submission of surrogate value
information for all interested
[[Page 24899]]
parties until February 12, 2010. Surrogate value submissions were filed
February 12, 2010, February 17, 2010, February 19, 2010 by Sun Paper
and Board, GE Group, and Petitioners, respectively. GE Group filed
rebuttal surrogate values comments on February 22, 2010. Petitioners
filed rebuttal surrogate values comments on February 24, 2010, and
April 12, 2010. GE filed rebuttal surrogate values comments on April
12, 2010. For a detailed discussion of the surrogate values used in
this LTFV proceeding, see the ``Factor Valuation'' section below and
the Surrogate Value Memorandum.
Affiliation
Based on the evidence presented in Sun Paper and Board's
questionnaire responses, we preliminarily find affiliation between
Tianzhang, IP Sun Cartonboard, and IP Sun Paperboard (``Sun Paper and
Board'') pursuant to sections 771(33)(E) and (F) of the Act. In
addition, we find that Shandong Sun Paper Industry Joint Stock Co.,
Ltd. and Yanzhou City Jintaiyang Investment Co., Ltd. are affiliated
pursuant to sections 771(33)(E) of the Act. Further, we find Yanzhou
City Jintaiyang Investment Co., Ltd. and Jin Rui Group, Inc. to be
under the common control of the Li family and thus constitute a single
group (``Li Family Group'') pursuant to section 771(33)(F) of the Act
and section 351.102(b)(3) of the Department's regulations. Next, we
find that International Paper Company (``IP Company'') (which includes
the division, xpedx), International Paper International Holdings,
International Paper Singapore, and International Paper Asia (``IP
Companies'') are affiliated to each other pursuant to section
771(33)(E) of the Act. In addition, based on their ownership interests,
we consider the IP Companies to be a single entity.
We also find that the IP Companies and Sun Paper and Board are
affiliated pursuant to section 771(33)(E) of the Act. Moreover, we
preliminarily find that the Li Family Group and the IP Companies are
affiliated under section 771(33)(F) of the Act through their direct and
indirect control over the joint venture partnership in IP Sun
Cartonboard and IP Sun Paperboard, producers of subject merchandise.
In addition, based on the evidence presented in Sun Paper and
Board's questionnaire responses, we preliminarily find that Tianzhang,
IP Sun Cartonboard, and IP Sun Paperboard should be collapsed for the
purposes of this investigation. This finding is based on the
determination that Tianzhang, IP Sun Cartonboard, and IP Sun Paperboard
are affiliated, that all three companies are producers of similar or
identical products and no retooling would be necessary in order to
restructure manufacturing priorities, and that there is significant
potential for manipulation of price or production between the parties.
See 19 CFR 351.401(f)(1) and (2).
For further discussion of the Department's affiliation and
collapsing decisions, see the Department's Memorandum regarding,
``Antidumping Duty Investigation of Coated Paper from the People's
Republic of China: Affiliation of Tianzhang, IP Sun Cartonboard, IP Sun
Paperboard, the Li Family Group, and the IP Companies, and Collapsing
of Tianzhang, IP Sun Cartonboard, IP Sun Paperboard,'' dated
concurrently with this notice.
Based on the evidence presented in the GE Group's questionnaire
responses, we preliminarily find that GHS, NBZH, NAPP, and Gold East
(Hong Kong) Trading Co., Ltd., (``GEHK''), a company that plays a role
in GE, GHS, NBZH, and NAPP's operations involving subject merchandise,
are affiliated with GE, pursuant to sections 771(33)(E) and (F) of the
Act. In addition, based on the evidence presented in their respective
questionnaire responses, we preliminarily find that GE, GHS, NBZH,
NAPP, and GEHK should be treated as a single entity for the purposes of
this investigation. This finding is based on the determination that GE,
GHS, NBZH, and NAPP are producers of similar or identical products and
no retooling would be necessary in order to restructure manufacturing
priorities, and that GEHK is involved in the export of subject
merchandise. Further, we find that there is significant potential for
manipulation of price or production between the parties.\33\ See 19 CFR
Sec. 351.401(f)(1) and (2). For further discussion of the Department's
affiliation and collapsing decision, see the Department's Memorandum
titled, ``Antidumping Duty Investigation of Certain Coated Paper from
the People's Republic of China: Affiliation and Collapsing of Gold East
Paper (Jiangsu) Co., Ltd., Gold Huasheng Paper Co., Ltd., Ningbo Asia
Pulp and Paper Co., Ltd., Ningbo Zhoughua Paper Co., Ltd., and Gold
East (Hong Kong) Trading Co., Ltd.,'' dated concurrently with this
notice.
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\33\ While GEHK is not a producer of coated paper, we note that
where companies are affiliated, and there exists a significant
potential for manipulation of prices and/or export decisions, the
Department has found it appropriate to treat those companies as a
single entity. The Court of International Trade (``CIT'') upheld the
Department's decision to include export decisions in its analysis of
whether there was a significant potential for manipulation. See
Hontex Enterprises v. United States, 248 F. Supp. 2d 1323, 1343 (CIT
2003). In this case, not only is GEHK an exporter of subject
merchandise, but it is an exporter of the subject merchandise
produced by its four affiliated producers of subject merchandise
(i.e., GE, GHS, NAPP, and NBZH).
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Separate Rates
In the Initiation Notice, the Department notified parties of the
application process by which exporters and producers may obtain
separate-rate status in NME investigations. See Initiation Notice, 74
FR at 31695. The process requires exporters and producers to submit an
SRA. See also Policy Bulletin 05.1.\34\ The standard for eligibility
for a separate rate is whether a firm can demonstrate an absence of
both de jure and de facto government control over its export
activities. In this instant investigation, the Department received a
timely-filed SRA from one company.\35\ The four mandatory respondents
(i.e., GE, GHS, Tianzhang, and IP Paperboard/IP Cartonboard), the
separate-rate respondent Chenming, and NAPP and NBZH, GE's affiliated
exporters of subject merchandise, provided company-specific information
and each stated that it meets the criteria for the assignment of a
separate rate.
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\34\ Policy Bulletin 05.1 states: ``while continuing the
practice of assigning separate rates only to exporters, all separate
rates that the Department will now assign in its NME investigations
will be specific to those producers that supplied the exporter
during the period of investigation. Note, however, that one rate is
calculated for the exporter and all of the producers which supplied
subject merchandise to it during the period of investigation. This
practice applied both to mandatory respondents receiving an
individually calculated separate rate as well as the pool of non-
investigated firms receiving the weighted-average of the
individually calculated rates. This practice is referred to as the
application of ``combination rates'' because such rates apply to
specific combinations of exporters and one or more producers. The
cash-deposit rate assigned to an exporter will apply only to
merchandise both exported by the firm in question and produced by a
firm that supplied the exporter during the period of
investigation.'' See Policy Bulletin 05.1 at 6.
\35\ The one separate-rate applicant is: (1) Shandong Chenming
Paper Holdings Ltd. (``Chenming'').
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In proceedings involving NME countries, the Department has a
rebuttable presumption that all companies within the country are
subject to government control and thus should be assessed a single
antidumping duty rate. It is the Department's policy to assign all
exporters of merchandise subject to investigation in an NME country
this single rate unless an exporter can demonstrate that it is
sufficiently independent so as to be entitled to a separate rate.
Exporters can demonstrate this independence through the absence of both
de jure and de facto governmental control over export activities. The
Department analyzes
[[Page 24900]]
each entity exporting the subject merchandise under a test arising from
Final Determination of Sales at Less Than Fair Value: Sparklers From
the People's Republic of China, 56 FR 20588 (May 6, 1991)
(``Sparklers''), as further developed in Final Determination of Sales
at Less Than Fair Value: Silicon Carbide From the People's Republic of
China, 59 FR 22585 (May 2, 1994) (``Silicon Carbide ''). In accordance
with the separate-rates criteria, the Department assigns separate rates
in NME cases only if respondents can demonstrate the absence of both de
jure and de facto governmental control over export activities. GE, GHS,
NBZH, and NAPP all indicated that they sold subject merchandise through
Gold East (Hong Kong) Trading Co., Ltd. (``GEHK''). As information on
the record demonstrates that GEHK is located in Hong Kong,\36\
consistent with our practice, we have not conducted a separate rate
analysis of GEHK.
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\36\ See page 8 of GEHK's financial statements, at GE's December
23, 2009, section A questionnaire response at Volume 3.
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a. Absence of De Jure Control
The Department considers the following de jure criteria in
determining whether an individual company may be granted a separate
rate: (1) An absence of restrictive stipulations associated with an
individual exporter's business and export licenses; (2) any legislative
enactments decentralizing control of companies; and (3) other formal
measures by the government decentralizing control of companies. See
Sparklers, 56 FR at 20589.
The evidence provided by all separate rate applicants supports a
preliminary finding of de jure absence of government control based on
the following: (1) An absence of restrictive stipulations associated
with the individual exporter's business and export licenses; (2)
applicable legislative enactments that decentralize control of the
companies; and (3) formal measures by the government decentralizing
control of companies. See Chenming's SRA submissions, dated December
22, 2009, and March 25, 2010; GE Group's section A questionnaire
submissions dated December 23, 2009; and Sun Paper and Board's separate
rate information in the section A questionnaire submissions dated
December 30, 2009, where the separate-rate applicants certified that
they had no relationship with any level of the PRC government with
respect to ownership, internal management, and business operations.
b. Absence of De Facto Control
Typically, the Department considers four factors in evaluating
whether each respondent is subject to de facto government control of
its export functions: (1) Whether the export prices are set by or are
subject to the approval of a government agency; (2) whether the
respondent has authority to negotiate and sign contracts and other
agreements; (3) whether the respondent has autonomy from the government
in making decisions regarding the selection of management; and (4)
whether the respondent retains the proceeds of its export sales and
makes independent decisions regarding disposition of profits or
financing of losses. See Silicon Carbide, 59 FR at 22586-87; see also
Notice of Final Determination of Sales at Less Than Fair Value:
Furfuryl Alcohol From the People's Republic of China, 60 FR 22544,
22545 (May 8, 1995). The Department has determined that an analysis of
de facto control is critical in determining whether respondents are, in
fact, subject to a degree of government control which would preclude
the Department from assigning separate rates.
In this investigation, all separate rate applicants each asserted
the following: (1) That the export prices are not set by, and are not
subject to, the approval of a governmental agency; (2) they have
authority to negotiate and sign contracts and other agreements; (3)
they have autonomy from the government in making decisions regarding
the selection of management; and (4) they retain the proceeds of their
export sales and make independent decisions regarding disposition of
profits or financing of losses. Additionally, each of these companies'
SRA responses indicate that its pricing during the POI does not involve
coordination among exporters. See Chenming's SRA submission dated
December 22, 2009, and March 25, 2010; GE Group's separate rate
information in the section A questionnaire submissions dated December
23, 2009; and Sun Paper and Board's separate rate information in the
section A questionnaire submissions dated December 30, 2009.
Evidence placed on the record of this investigation by Sun Paper
and Board, GE Group, and Chenming demonstrate an absence of de jure and
de facto government control with respect to their respective exports of
the merchandise under investigation, in accordance with the criteria
identified in Sparklers and Silicon Carbide. Therefore, we are
preliminarily granting a separate rate to these entities.
Application of Facts Otherwise Available and Adverse Facts Available
The PRC-Wide Entity and PRC-Wide Rate
We issued our request for Q&V information to 56 potential Chinese
exporters of the subject merchandise, in addition to posting the Q&V
questionnaire on the Department's Web site. See Respondent Selection
Memo. While information on the record of this investigation indicates
that there are numerous producers/exporters of coated paper in the PRC,
we received only five timely filed Q&V responses. Although all
exporters were given an opportunity to provide Q&V information, not all
exporters provided a response to the Department's Q&V letter.
Therefore, the Department has preliminarily determined that there were
exporters/producers of the subject merchandise during the POI from the
PRC that did not respond to the Department's request for information.
We have treated these PRC producers/exporters as part of the PRC-wide
entity because they did not apply for a separate rate. See, e.g.,
Kitchen Racks Prelim, unchanged in Kitchen Racks Final.
Section 776(a)(2) of the Act provides that, if an interested party
(A) withholds information that has been requested by the Department,
(B) fails to provide such information in a timely manner or in the form
or manner requested, subject to subsections 782(c)(1) and (e) of the
Act, (C) significantly impedes a proceeding under the antidumping
statute, or (D) provides such information but the information cannot be
verified, the Department shall, subject to subsection 782(d) of the
Act, use facts otherwise available in reaching the applicable
determination.
Information on the record of this investigation indicates that the
PRC-wide entity was non-responsive. Certain companies did not respond
to our questionnaire requesting Q&V information. As a result, pursuant
to section 776(a)(2)(A) of the Act, we find that the use of facts
available (``FA'') is appropriate to determine the PRC-wide rate. See
Preliminary Determination of Sales at Less Than Fair Value, Affirmative
Preliminary Determination of Critical Circumstances and Postponement of
Final Determination: Certain Frozen Fish Fillets From the Socialist
Republic of Vietnam, 68 FR 4986 (January 31, 2003), unchanged in Final
Determination of Sales at Less Than Fair Value and Affirmative Critical
Circumstances: Certain Frozen Fish Fillets From the Socialist Republic
of Vietnam, 68 FR 37116 (June 23, 2003).
[[Page 24901]]
Section 776(b) of the Act provides that, in selecting from among
the facts otherwise available, the Department may employ an adverse
inference if an interested party fails to cooperate by not acting to
the best of its ability to comply with requests for information. See
Statement of Administrative Action, accompanying the Uruguay Round
Agreements Act (``URAA''), H.R. Rep. No. 103-316, 870 (1994) (``SAA'');
see also Notice of Final Determination of Sales at Less Than Fair
Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products
From the Russian Federation, 65 FR 5510, 5518 (February 4, 2000). We
find that, because the PRC-wide entity did not respond to our requests
for information, it has failed to cooperate to the best of its ability.
Furthermore, the PRC-wide entity's refusal to provide the requested
information constitutes circumstances under which it is reasonable to
conclude that less than full cooperation has been shown. See Nippon
Steel Corporation v. United States, 337 F.3d 1373, 1383 (Fed. Cir.
2003) (``Nippon Steel'') where the Court of Appeals for the Federal
Circuit provided an explanation of the ``failure to act to the best of
its ability'' standard noting that the Department need not show
intentional conduct existed on the part of the respondent, but merely
that a ``failure to cooperate to the best of a respondent's ability''
existed (i.e., information was not provided ``under circumstances in
which it is reasonable to conclude that less than full cooperation has
been shown''). Therefore, the Department preliminarily finds that, in
selecting from among the facts available, an adverse inference is
appropriate.
When employing an adverse inference, section 776 of the Act
indicates that the Department may rely upon information derived from
the petition, the final determination from the LTFV investigation, a
previous administrative review, or any other information placed on the
record. In selecting a rate for adverse facts available (``AFA''), the
Department selects a rate that is sufficiently adverse to ensure that
the uncooperative party does not obtain a more favorable result by
failing to cooperate than if it had fully cooperated. It is the
Department's practice to select, as AFA, the higher of the (a) highest
margin alleged in the petition, or (b) the highest calculated rate of
any respondent in the investigation. See Final Determination of Sales
at Less Than Fair Value: Certain Cold-Rolled Carbon Quality Steel
Products From the People's Republic of China, 65 FR 34660 (May 31,
2000), and accompanying Issues and Decision Memorandum, at ``Facts
Available.'' As AFA, we have preliminarily assigned to the PRC-wide
entity a rate of 135.8 percent, the highest calculated rate from the
petition. The Department preliminarily determines that this information
is the most appropriate from the available sources to effectuate the
purposes of AFA. The Department's reliance on the petition rate to
determine an AFA rate is subject to the requirement to corroborate
secondary information, discussed in the Corroboration section below.
Partial AFA to Sun Paper and Board
In its questionnaire responses, Tianzhang, IP Sun Paperboard, and
IP Sun Cartonboard stated that they made constructed export (``CEP'')
sales through their U.S. affiliate, Jin Rui. Jin Rui resold some of the
three producers/exporters' subject merchandise to xpedx, an operating
division of IP Company. As stated above in the ``Affiliation Section,''
we preliminarily find that IP Company, as part of the IP Companies, and
Sun Paper and Board are affiliated pursuant to section 771(33)(F) of
the Act. In addition, as explained above, we preliminarily find that
the IP Companies, of which xpedx is a part, and the Li Family Group, of
which Jin Rui is a part, are affiliated.
In finding that the Li Family Group and the IP Companies are
affiliated, we find that sales from Jin Rui to xpedx are affiliated
party transactions, and we requested that xpedx report its downstream
sales of subject merchandise during the POI. We originally requested
this data from Sun Paper and Board on March 26, 2010, with a due date
of April 2, 2010. On March 31, 2010, we spoke with company officials
from xpedx and IP Company who claimed that it would be difficult to
provide xpedx's downstream sales. We detailed the conversation in a
memo to the file and responded by continuing to request xpedx's
sales.\37\ On April 1, 2010, we granted an extension for xpedx to
submit its downstream sales until April 9, 2010. On April 8, 2010, we
granted a second (partial) extension until April 16, 2010. On April 14,
2010,\38\ Sun Paper and Board stated that there were substantial
operational difficulties in meeting the Department's request,
reiterating that on April 8, 2010, they had requested an extension of
time to submit the downstream sales. We did not receive xpedx's
downstream sales on April 16, 2010. On April 20, 2010, we received
communication from counsel to Sun Paper and Board that xpedx was not
going to submit the information requested by the Department.\39\
Nevertheless, subsequently on April 20, 2010, after the deadline for
xpedx to submit the required downstream sales had passed, we received
from Sun Paper and Board a request for a further extension to submit
xpedx's downstream sales until April 27, 2010, one day prior to the
preliminary determination.
---------------------------------------------------------------------------
\37\ See Memo to the File regarding ``IP-Xpedx affiliation and
Xpedx's downstream sales,'' dated April 1, 2010.
\38\ See Sun Paper and Board's ``Submission of Section D, C, and
A Supplemental response,'' dated April 14, 2010.
\39\ See Memo to the File, regarding, ``Communicating with the
Counsel to Sun Paper and Board regarding the Department's request
for Xpedx's Downstream Sales dated April 20, 2010.
---------------------------------------------------------------------------
Sun Paper and Board, in its March 31, 2010, and April 8, 2010,
requests for extensions to provide the downstream sales database,
outlined certain difficulties in providing the requested data. In
response, the Department granted the first extension request in full,
and the second extension request in part. However, Sun Paper and
Board's April 20, 2010, request for extension, submitted to the
Department four days subsequent to the date the downstream sales were
due, while referencing certain circumstances surrounding its business
relationship with xpedex, did not indicate a particular reason for not
responding timely to the Department's request for information, nor did
it indicate a reason why it was requesting additional time. Based on
the above, i.e., Sun Paper and Board's failure to submit xpedx's
downstream sales in a timely manner, and its untimely submitted request
for a third extension to do so, the Department finds that Sun Paper and
Board did not cooperate to the best of its ability to provide the
Department with timely information regarding xpedx's downstream sales
of the subject merchandise, consistent with Nippon Steel.
Thus, Sun Paper and Board failed to report information that had
been requested and significantly impeded this proceeding, pursuant to
sections 776(a)(1) and (2)(A), (B) and (C) of the of Act, by not
reporting certain downstream sales of its affiliate, as requested by
the Department. As a result, the Department has determined to apply the
facts otherwise available for the unreported downstream sales. Further,
because the Department finds that Sun Paper and Board failed to
cooperate to the best of its ability, pursuant to section 776(b) of the
Act,
[[Page 24902]]
the Department has determined to use an adverse inference when applying
facts available for the preliminary determination. As partial AFA, the
Department is applying to the unreported sales the highest margin from
the Petition.\40\
---------------------------------------------------------------------------
\40\ See Sun Paper and Board's Analysis Memo.
---------------------------------------------------------------------------
Corroboration
Section 776(c) of the Act provides that, when the Department relies
on secondary information rather than on information obtained in the
course of an investigation as facts available, it must, to the extent
practicable, corroborate that information from independent sources
reasonably at its disposal. Secondary information is described as
``information derived from the petition that gave rise to the
investigation or review, the final determination concerning merchandise
subject to this investigation, or any previous review under section 751
concerning the merchandise subject to this investigation.'' \41\ To
``corroborate'' means that the Department will satisfy itself that the
secondary information to be used has probative value. Independent
sources used to corroborate may include, for example, published price
lists, official import statistics and customs data, and information
obtained from interested parties during the particular investigation.
To corroborate secondary information, the Department will, to the
extent practicable, examine the reliability and relevance of the
information used.\42\
---------------------------------------------------------------------------
\41\ See Final Determination of Sales at Less Than Fair Value:
Sodium Hexametaphosphate From the People's Republic of China, 73 FR
6479, 6481 (February 4, 2008), quoting SAA at 870.
\42\ See Tapered Roller Bearings and Parts Thereof, Finished and
Unfinished, From Japan, and Tapered Roller Bearings, Four Inches or
Less in Outside Diameter, and Components Thereof, From Japan;
Preliminary Results of Antidumping Duty Administrative Reviews and
Partial Termination of Administrative Reviews, 61 FR 57391, 57392
(November 6, 1996), unchanged in Tapered Roller Bearings and Parts
Thereof, Finished and Unfinished, From Japan, and Tapered Roller
Bearings, Four Inches or Less in Outside Diameter, and Components
Thereof, From Japan; Final Results of Antidumping Duty
Administrative Reviews and Termination in Part, 62 FR 11825 (March
13, 1997).
---------------------------------------------------------------------------
The AFA rate that the Department used is from the Petition.
Petitioners' methodology for calculating the United States price and NV
in the Petition is discussed in the Initiation Notice. To corroborate
the AFA margin that we have selected, we compared this margin to the
margin we found for the mandatory respondents. We found that the margin
of 135.8 percent has probative value because it is in the range of the
control number (CONNUM)-specific margins that we found for the GE Group
during the period of investigation. See GE Group's Analysis Memo. Given
that numerous PRC-wide entities did not respond to the Department's
requests for information and that Sun Paper and Board failed to report
a significant portion of U.S. sales, the Department concludes that the
petition rate of 135.8 percent, as total AFA for the PRC-wide entity
and as partial AFA for Sun Paper and Board, is sufficiently adverse to
prevent these respondents from benefitting from their lack of
cooperation. See SAA at 870. Accordingly, we find that the rate of
135.8 percent is corroborated to the extent practicable within the
meaning of section 776(c) of the Act.
Margin for the Separate Rate Company
As discussed above, the Department received a timely and complete
separate rate application from Chenming, who is an exporter of coated
paper from the PRC during the POI and who was not selected as a
mandatory respondent in this investigation. Through the evidence in its
SRA, this company has demonstrated its eligibility for a separate rate,
as discussed above. Consistent with the Department's practice, as the
separate rate, we have established a margin for Chenming based on the
average of the rates we calculated for the mandatory respondents, Sun
Paper and Board and the GE Group, excluding any rates that were zero,
de minimis, or based entirely on AFA.\43\
---------------------------------------------------------------------------
\43\ See, e.g., Preliminary Determination of Sales at Less Than
Fair Value and Partial Affirmative Determination of Critical
Circumstances: Certain Polyester Staple Fiber From the People's
Republic of China, 71 FR 77373, 77377 (December 26, 2006), unchanged
in Final Determination of Sales at Less Than Fair Value and Partial
Affirmative Determination of Critical Circumstances: Certain
Polyester Staple Fiber From the People's Republic of China, 72 FR
19690 (April 19, 2007).
---------------------------------------------------------------------------
Date of Sale
19 CFR 351.401(i) states that, ``in identifying the date of sale of
the merchandise under consideration or foreign like product, the
Secretary normally will use the date of invoice, as recorded in the
exporter or producer's records kept in the normal course of business.''
In Allied Tube, the CIT noted that a ``party seeking to establish a
date of sale other than invoice date bears the burden of producing
sufficient evidence to `satisf{y{time} ' the Department that `a
different date better reflects the date on which the exporter or
producer establishes the material terms of sale.' '' Allied Tube &
Conduit Corp. v. United States 132 F. Supp. 2d at 1090 (CIT 2001)
(quoting 19 CFR 351.401(i)) (``Allied Tube''). Additionally, the
Secretary may use a date other than the date of invoice if the
Secretary is satisfied that a different date better reflects the date
on which the exporter or producer establishes the material terms of
sale. See 19 CFR 351.401(i); see also Allied Tube, 132 F. Supp. 2d
1087, 1090-1092. The date of sale is generally the date on which the
parties agree upon all substantive terms of the sale. This normally
includes the price, quantity, delivery terms and payment terms. See
Carbon and Alloy Steel Wire Rod From Trinidad and Tobago: Final Results
of Antidumping Duty Administrative Review, 72 FR 62824 (November 7,
2007), and accompanying Issue and Decision Memorandum at Comment 1;
Notice of Final Determination of Sales at Less Than Fair Value: Certain
Cold-Rolled Flat-Rolled Carbon Quality Steel Products From Turkey, 65
FR 15123 (March 21, 2000), and accompanying Issues and Decision
Memorandum at Comment 1.
For sales by the GE Group, consistent with 19 CFR 351.401(i), we
used the commercial invoice date as the sale date because record
evidence indicates that the terms of were not set until the issuance of
the commercial invoice. See, e.g., GE's section A response at Exhibit
A-2 and Volume 5, page 26. See also GHS' section A response at page 21.
For Sun Paper and Board, we will use the pro forma/internal invoice
date of Jin Rui Group, Sun Paper and Board's U.S. affiliate, as the
date of sale because based on the record evidence to date, we
preliminarily find that pro forma/internal invoice date best reflects
the date on which the essential terms of sale are fixed and final. In
our analysis of Sun Paper and Board's information, we determined that
the sale date reported in Tianzhang's January 19, 2010, U.S. sales
database represents the commercial invoice date (which is issued to the
customer 30-60 days later when the product arrives to the customer)
that Jin Rui chose to record the sale of merchandise under
consideration in its books and records, not the date the material terms
of the sale were established with its U.S. customer. On March 19, 2010,
we asked Jin Rui to provide a new U.S. sales database based on the pro
forma/internal invoice date, which it did on March 26, 2010. We
preliminarily determine Jin Rui's pro forma/internal invoice date best
reflects the date on which the essential terms are fixed and final.
[[Page 24903]]
Fair Value Comparisons
To determine whether sales of coated paper to the United States by
the respondents were made at LTFV, we compared Export Price (``EP'')
and CEP to NV, as described in the ``Constructed Export Price,''
``Export Price,'' and ``Normal Value'' sections of this notice.
U.S. Price
Constructed Export Price
In accordance with section 772(a) of the Act, CEP is the price at
which the subject merchandise is first sold (or agreed to be sold) in
the United States before or after the date of importation by or for the
account of the producer or exporter of such merchandise or by a seller
affiliated with the producer or exporter, to a purchaser not affiliated
with the producer or exporter, as adjusted under subsections (c) and
(d). In accordance with section 772(a) of the Act, we used CEP for Sun
Paper and Board's U.S. sales because the merchandise subject to this
investigation was sold directly to an affiliated purchaser located in
the United States. In addition, in accordance with section 772(a) of
the Act, we used CEP for certain U.S. sales of the GE Group because the
merchandise, in these cases, was sold directly to an affiliated
purchaser located in the United States.
We calculated CEP for Sun Paper and Board and the GE Group based on
delivered prices to unaffiliated purchasers in the United States. We
made deductions from the U.S. sales price, where applicable, for
movement expenses in accordance with section 772(c)(2)(A) of the Act.
These included such expenses as foreign inland freight from the plant
to the port of exportation, international freight, marine insurance,
other U.S. transportation, U.S. customs duty, U.S. inland freight from
port to the warehouse, and U.S. inland freight from the warehouse to
the customer. In accordance with section 772(d)(1) of the Act, the
Department deducted credit expenses, inventory carrying costs and
indirect selling expenses from the U.S. price, all of which relate to
commercial activity in the United States. Finally, we deducted CEP
profit, in accordance with sections 772(d)(3) and 772(f) of the
Act.\44\
---------------------------------------------------------------------------
\44\ See Surrogate Value Memorandum.
---------------------------------------------------------------------------
Export Price
In accordance with section 772(a) of the Act, we used EP for
certain U.S. sales of the GE Group. We calculated EP based on the
packed prices to unaffiliated purchasers in, or for exportation to, the
United States. We made deductions, as appropriate, for any movement
expenses (e.g., foreign inland freight from the plant to the port of
exportation, domestic brokerage, international freight to the port of
importation, etc.) in accordance with section 772(c)(2)(A) of the Act.
Where foreign inland freight or foreign brokerage and handling fees
were provided by PRC service providers or paid for in renminbi, we
based those charges on surrogate value rates from India. See ``Factor
Valuation'' section below for further discussion of surrogate value
rates.
In determining the most appropriate surrogate values to use in a
given case, the Department's stated practice is to use period-wide
price averages, prices specific to the input in question, prices that
are net of taxes and import duties, prices that are contemporaneous
with the POI, and publicly available data.\45\ We valued brokerage and
handling using a simple average of the brokerage and handling costs
that were reported in public submissions that were filed in three
antidumping duty cases. Specifically, we averaged the public brokerage
and handling expenses reported by Navneet Publications (India) Ltd. in
the 2007-2008 administrative review of certain lined paper products
from India, Essar Steel Limited in the 2006-2007 antidumping duty
administrative review of hot-rolled carbon steel flat products from
India, and Himalya International Ltd. in the 2005-2006 administrative
review of certain preserved mushrooms from India. Because these values
were not concurrent with the POI, we adjusted these rates for inflation
using the Wholesale Price Indices (``WPI'') for India as published in
the International Monetary Fund's (``IMF's'') International Financial
Statistics, available at http://ifs.apdi.net/imf, and then calculated a
simple average of the three companies' brokerage expense data.\46\ See
Surrogate Value Memorandum.
---------------------------------------------------------------------------
\45\ See, e.g., Certain Cased Pencils from the People's Republic
of China; Final Results and Partial Rescission of Antidumping Duty
Administrative Review, 71 FR 38366 (July 6, 2006), and accompanying
Issues and Decision Memorandum at Comment 1.
\46\ See, e.g., Tapered Roller Bearings and Parts Thereof,
Finished or Unfinished, From the People's Republic of China:
Preliminary Results of the 2007 2008 Administrative Review of the
Antidumping Duty Order, 74 FR 32539 (July 8, 2009), (unchanged in
final results) (``07-08 TRBs'').
---------------------------------------------------------------------------
To value domestic insurance, the Department used the publicly
summarized version of the average insurance expenses reported by Agro
Dutch Industries Limited in a submission dated May 24, 2005, in the
antidumping administrative review of Certain Preserved Mushrooms From
India.
To value marine insurance, the Department used data from RGJ
Consultants (http://www.rjgconsultants.com/). This source provides
information regarding the per-value rates of marine insurance of
imports and exports to/from various countries.
Normal Value
Section 773(c)(1) of the Act provides that the Department shall
determine the NV using an FOP methodology if the merchandise is
exported from an NME and the information does not permit the
calculation of NV using home-market prices, third-country prices, or
constructed value under section 773(a) of the Act. The Department bases
NV on the FOPs because the presence of government controls on various
aspects of NMEs renders price comparisons and the calculation of
production costs invalid under the Department's normal methodologies.
See, e.g., Kitchen Racks Prelim, 71 FR at 19703 (unchanged in Kitchen
Racks Final).
In accordance with 19 CFR 351.408(c)(1), the Department will
normally use publicly available information to find an appropriate
surrogate value to value FOPs, but when a producer sources an input
from a ME and pays for it in a ME currency, the Department may value
the factor using the actual price paid for the input. See 19 CFR
351.408(c)(1); see also Shakeproof Assembly Components Div of Ill v.
United States, 268 F.3d 1376, 1382-1383 (Fed. Cir. 2001) (affirming the
Department's use of market-based prices to value certain FOPs).
Factor Valuations
In accordance with section 773(c) of the Act, we calculated NV
based on FOP data reported by respondents during the POI. To calculate
NV, we multiplied the reported per-unit factor-consumption rates by
publicly available surrogate values (except as discussed below). In
selecting the surrogate values, we considered the quality, specificity,
and contemporaneity of the data. See, e.g., Fresh Garlic From the
People's Republic of China: Final Results of Antidumping Duty New
Shipper Review, 67 FR 72139 (December 4, 2002), and accompanying Issues
and Decision Memorandum at Comment 6; and Final Results of First New
Shipper Review and First Antidumping Duty Administrative Review:
Certain Preserved Mushrooms From the People's Republic of China, 66 FR
31204 (June 11, 2001), and accompanying Issues and Decision
[[Page 24904]]
Memorandum at Comment 5. As appropriate, we adjusted input prices by
including freight costs to make them delivered prices. Specifically, we
added to Indian import surrogate values a surrogate freight cost using
the shorter of the reported distance from the domestic supplier to the
factory or the distance from the nearest seaport to the factory where
appropriate. This adjustment is in accordance with the Court of Appeals
for the Federal Circuit's decision in Sigma Corp. v. United States, 117
F.3d 1401, 1407-08 (Fed. Cir. 1997). A detailed description of all
surrogate values used for Sun Paper and Board and the GE Group can be
found in the Surrogate Value Memorandum.
For the preliminary determination, in accordance with the
Department's practice, we used data from the Indian Import Statistics
and other publicly available Indian sources in order to calculate
surrogate values for Sun Paper and Board's and GE Group's FOPs (direct
materials, energy, and packing materials) and certain movement
expenses. In selecting the best available information for valuing FOPs
in accordance with section 773(c)(1) of the Act, the Department's
practice is to select, to the extent practicable, surrogate values
which are non-export average values, most contemporaneous with the POI,
product-specific, and tax-exclusive. See, e.g., Notice of Preliminary
Determination of Sales at Less Than Fair Value, Negative Preliminary
Determination of Critical Circumstances and Postponement of Final
Determination: Certain Frozen and Canned Warmwater Shrimp From the
Socialist Republic of Vietnam, 69 FR 42672, 42682 (July 16, 2004),
unchanged in Final Determination of Sales at Less Than Fair Value:
Certain Frozen and Canned Warmwater Shrimp From the Socialist Republic
of Vietnam, 69 FR 71005 (December 8, 2004). The record shows that data
in the Indian Import Statistics, as well as those from the other Indian
sources, are contemporaneous with the POI, product-specific, and tax-
exclusive. See Surrogate Value Memorandum. In those instances where we
could not obtain publicly available information contemporaneous to the
POI with which to value factors, we adjusted the surrogate values
using, where appropriate, the Indian WPI as published in the IMF's
International Financial Statistics. See, e.g., Kitchen Racks, 74 FR at
9600.
Furthermore, with regard to the Indian import-based surrogate
values, we have disregarded import prices that we have reason to
believe or suspect may be subsidized. We have reason to believe or
suspect that prices of inputs from Indonesia, South Korea, and Thailand
may have been subsidized. We have found in other proceedings that these
countries maintain broadly available, non-industry-specific export
subsidies and, therefore, it is reasonable to infer that all exports to
all markets from these countries may be subsidized. See Notice of Final
Determination of Sales at Less Than Fair Value and Negative Final
Determination of Critical Circumstances: Certain Color Television
Receivers From the People's Republic of China, 69 FR 20594 (April 16,
2004), and accompanying Issues and Decision Memorandum at Comment 7.
Further, guided by the legislative history, it is the Department's
practice not to conduct a formal investigation to ensure that such
prices are not subsidized. See Omnibus Trade and Competitiveness Act of
1988, Conference Report to accompany H.R. Rep. 100-576 at 590 (1988)
reprinted in 1988 U.S.C.C.A.N. 1547, 1623-24; see also Preliminary
Determination of Sales at Less Than Fair Value: Coated Free Sheet Paper
From the People's Republic of China, 72 FR 30758 (June 4, 2007)
unchanged in Final Determination of Sales at Less Than Fair Value:
Coated Free Sheet Paper From the People's Republic of China, 72 FR
60632 (October 25, 2007). Rather, the Department bases its decision on
information that is available to it at the time it makes its
determination. See Polyethylene Terephthalate Film, Sheet, and Strip
from the People's Republic of China: Preliminary Determination of Sales
at Less Than Fair Value, 73 FR 24552, 24559 (May 5, 2008), unchanged in
Polyethylene Terephthalate Film, Sheet, and Strip from the People's
Republic of China: Final Determination of Sales at Less Than Fair
Value, 73 FR 55039 (September 24, 2008). Therefore, we have not used
prices from these countries in calculating the Indian import-based
surrogate values. Additionally, we disregarded prices from NME
countries. Finally, imports that were labeled as originating from an
``unspecified'' country were excluded from the average value, because
the Department could not be certain that they were not from either an
NME country or a country with general export subsidies. See id.
Both the GE Group and Sun Paper and Board claimed that certain of
their reported raw material inputs were sourced from an ME country and
paid for in ME currencies. Pursuant to 19 CFR 351.408(c)(1), when a
respondent sources inputs from an ME supplier in meaningful quantities
(i.e., not insignificant quantities), we use the actual price paid by
respondent for those inputs, except when prices may have been distorted
by findings of dumping by the PRC and/or subsidies.\47\ Where we found
ME purchases to be of significant quantities (i.e., 33 percent or
more), in accordance with our statement of policy as outlined in
Antidumping Methodologies: Market Economy Inputs,\48\ we used the
actual purchases of these inputs to value the inputs.
---------------------------------------------------------------------------
\47\ See Antidumping Duties; Countervailing Duties; Final Rule,
62 FR 27296, 27366 (May 19, 1997).
\48\ See Antidumping Methodologies: Market Economy Inputs,
Expected Non-Market Economy Wages, Duty Drawback; and Request for
Comments, 71 FR 61716, 61717 (October 19, 2006) (``Antidumping
Methodologies: Market Economy Inputs'').
---------------------------------------------------------------------------
Accordingly, we valued certain of respondents' inputs using the ME
prices paid for in ME currencies for the inputs where the total volume
of the input purchased from all ME sources during the POI exceeds or is
equal to 33 percent of the total volume of the input purchased from all
sources during the period. Where the quantity of the reported input
purchased from ME suppliers was below 33 percent of the total volume of
the input purchased from all sources during the POI, and were otherwise
valid, we weight-averaged the ME input's purchase price with the
appropriate surrogate value for the input according to their respective
shares of the reported total volume of purchases.\49\ Where
appropriate, we added freight to the ME prices of inputs. Additionally,
consistent with the Department's practice,\50\ we excluded certain of
the GE Group's claimed ME purchases which involved a PRC intermediary
because we find that these sales did not occur directly between the
respondent and an ME supplier. For a detailed description of the actual
values used for the ME inputs reported, see the Department's analysis
memoranda dated concurrently with this notice.
---------------------------------------------------------------------------
\49\ See Antidumping Methodologies: Market Economy Inputs, 71 FR
at 61718.
\50\ See, e.g., Certain New Pneumatic Off-The-Road Tires From
the People's Republic of China: Final Affirmative Determination of
Sales at Less Than Fair Value and Partial Affirmative Determination
of Critical Circumstances, 73 FR 40485 (July 15, 2008), and
accompanying Issues and Decision Memorandum at comment 70.
---------------------------------------------------------------------------
For direct, indirect, and packing labor, consistent with 19 CFR
351.408(c)(3), we used the PRC regression-based wage rate as reported
on Import Administration's home page, Import Library, Expected Wages of
Selected NME Countries, revised in December 2009. See 2009 Calculation
of Expected Non-Market Economy Wages, 74 FR 65092 (December 9, 2009),
and
[[Page 24905]]
http://ia.ita.doc.gov/wages/index.html. The source of these wage-rate
data on the Import Administration's Web site is the 2006 and 2007 data
in Chapter 5B of the International Labour Organization's Yearbook of
Labour Statistics. Because this regression-based wage rate does not
separate the labor rates into different skill levels or types of labor,
we have applied the same wage rate to all skill levels and types of
labor reported by the respondents.
We valued truck freight expenses using a per-unit average rate
calculated from data on the infobanc Web site: http://www.infobanc.com/logistics/logtruck.htm. The logistics section of this Web site contains
inland freight truck rates between many large Indian cities.
Consistent with past practice and these submissions, the Department
has applied a surrogate value for hydrochloric acid using the values
submitted by the parties from Chemical Weekly. See Surrogate Value
Memorandum.
We valued electricity using price data for small, medium, and large
industries, as published by the Central Electricity Authority of the
Government of India in its publication titled Electricity Tariff & Duty
and Average Rates of Electricity Supply in India, dated March 2008.
These electricity rates represent actual country-wide, publicly
available information on tax-exclusive electricity rates charged to
industries in India.
We valued diesel oil using published prices from the International
Energy Agency: Key World Statistics 2007. We used the first quarter
2007 value for automotive diesel oil. See Surrogate Value Memorandum.
To value water, we used the revised Maharashtra Industrial
Development Corporation water rates available at http://www.midcindia.com/water-supply. See Surrogate Value Memorandum.
We calculated the surrogate value for steam based upon the April
2007- March 2008 financial statement of Hindalco Industries Limited.
See 1-Hydroxyethylidene-1, 1-Diphosphonic Acid From the People's
Republic of China: Final Determination of Sales at Less than Fair
Value, 74 FR 10545 (March 11, 2009), and accompanying Issues and
Decision Memorandum at Comment 4. We inflated the steam value using the
appropriate WPI inflator. See Surrogate Value Memorandum.
We valued natural gas using April through June 2002 data from the
Gas Authority of India Ltd. Consistent with the Department's recent
determination in Polyvinyl Alcohol, we averaged the base and ceiling
gas prices of 2,850 rupees per 1000 cubic meters (``m3'') and 2,150
rupees per 1000 m3, and added a transmission charge of 1,150 rupees per
1000 m3 to calculate a value of Rs 3.650/cubic meter. See Surrogate
Value Memorandum.
We used the Indian Bureau of Mines' publication: 2007 edition of
the Indian Minerals Yearbook (``IBM Yearbook'') to value coal. For this
preliminary determination, we find that the IBM Yearbook's reported
Grade C coal most closely matches the coal consumed by respondents
during the POI. See Surrogate Value Memorandum.
To value factory overhead, selling, general, and administrative
expenses, and profit, we used audited financial statements of JK Paper
Ltd., and Seshasayee Paper and Boards, Ltd., each covering the fiscal
period April 1, 2008, through March 31, 2009. The Department may
consider other publicly available financial statements for the final
determination, as appropriate.
Currency Conversion
Where necessary, we made currency conversions into U.S. dollars, in
accordance with section 773A(a) of the Act, based on the exchange rates
in effect on the dates of the U.S. sales as certified by the Federal
Reserve Bank.
Verification
As provided in section 782(i)(1) of the Act, we intend to verify
the information from Sun Paper and Board and the GE Group upon which we
will rely in making our final determination.
Combination Rates
In the Initiation Notice, the Department stated that it would
calculate combination rates for certain respondents that are eligible
for a separate rate in this investigation.\51\ This practice is
described in Policy Bulletin 05.1.
---------------------------------------------------------------------------
\51\ See Initiation Notice, 74 FR at 31695.
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Preliminary Determination
The weighted-average dumping margin percentages are as follows:
------------------------------------------------------------------------
Percent
Exporter Producer margin
------------------------------------------------------------------------
Yanzhou Tianzhang Paper Industry Yanzhou Tianzhang Paper 89.71
Co., Ltd. Industry Co., Ltd.
Shandong International Paper and Shandong International
Sun Coated Paperboard Co., Ltd. Paper and Sun Coated
Paperboard Co., Ltd.
International Paper and Sun International Paper and
Cartonboard Co., Ltd. Sun Cartonboard Co.,
Ltd.
Gold East Paper (Jiangsu) Co., Gold East Paper 30.82
Ltd. (Jiangsu) Co., Ltd.
Gold Huasheng Paper Co., Ltd..... Gold Huasheng Paper Co.,
Ltd.
Ningbo Zhonghua Paper Co., Ltd... Ningbo Zhonghua Paper
Co., Ltd.
Ningbo Asia Pulp and Paper Co., Ningbo Asia Pulp and
Ltd. Paper Co., Ltd.
Gold East (Hong Kong) Trading
Co., Ltd.
Shandong Chenming Paper Holdings Shandong Chenming Paper 60.27
Ltd. Holdings Ltd.
PRC-Wide Entity.................. ........................ 135.8
------------------------------------------------------------------------
Disclosure
We will disclose the calculations performed to parties in this
proceeding within five days of the date of publication of this notice
in accordance with 19 CFR 351.224(b).
Suspension of Liquidation
In accordance with section 733(d) of the Act, we will instruct U.S.
Customs and Border Protection (``CBP'') to suspend liquidation of all
entries of coated paper from the PRC as described in the ``Scope of
Investigation'' section, entered, or withdrawn from warehouse, for
consumption on or after the date of publication of this notice in the
Federal Register. We will instruct CBP to require a cash deposit or the
posting of a bond equal to the weighted-average amount by which the
normal value exceeds U.S. price, as follows: (1) The rate for the
exporter/producer combinations listed in the chart above will be the
rate we have determined in this preliminary determination; (2) for
[[Page 24906]]
all PRC exporters of subject merchandise which have not received their
own rate, the cash-deposit rate will be the PRC-wide rate; and (3) for
all non-PRC exporters of subject merchandise which have not received
their own rate, the cash-deposit rate will be the rate applicable to
the PRC exporter/producer combination that supplied that non-PRC
exporter. These suspension-of-liquidation instructions will remain in
effect until further notice.
International Trade Commission Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our preliminary affirmative determination of sales at LTFV.
Section 735(b)(2) of the Act requires the ITC to make its final
determination as to whether the domestic industry in the United States
is materially injured, or threatened with material injury, by reason of
imports of coated paper, or sales (or the likelihood of sales) for
importation, of the merchandise under consideration within 45 days of
our final determination.
Public Comment
Case briefs or other written comments may be submitted to the
Assistant Secretary for Import Administration no later than seven days
after the date on which the final verification report is issued in this
proceeding and rebuttal briefs, limited to issues raised in case
briefs, may be submitted no later than five days after the deadline
date for case briefs. See 19 CFR 351.309. A table of contents, list of
authorities used and an executive summary of issues should accompany
any briefs submitted to the Department. This summary should be limited
to five pages total, including footnotes. The Department also requests
that parties provide an electronic copy of its case and rebuttal brief
submissions in either a ``Microsoft Word'' or a ``pdf'' format.
In accordance with section 774 of the Act, we will hold a public
hearing, if requested, to afford interested parties an opportunity to
comment on arguments raised in case or rebuttal briefs. Interested
parties, who wish to request a hearing, or to participate if one is
requested, must submit a written request to the Assistant Secretary for
Import Administration, U.S. Department of Commerce, Room 1870, within
30 days after the date of publication of this notice. See 19 CFR
351.310(c). Requests should contain the party's name, address, and
telephone number, the number of participants, and a list of the issues
to be discussed. If a request for a hearing is made, we intend to hold
the hearing three days after the deadline of submission of rebuttal
briefs at the U.S. Department of Commerce, 14th Street and Constitution
Ave., NW., Washington, DC 20230, at a time and location to be
determined. See 19 CFR 351.310. Parties should confirm by telephone the
date, time, and location of the hearing two days before the scheduled
date.
We will make our final determination no later than 135 days after
the date of publication of this preliminary determination, pursuant to
section 735(a)(2) of the Act.
This determination is issued and published in accordance with
sections 733(f) and 777(i)(1) of the Act.
Dated: April 28, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-10701 Filed 5-5-10; 8:45 am]
BILLING CODE 3510-DS-P