[Federal Register Volume 67, Number 63 (Tuesday, April 2, 2002)]
[Notices]
[Pages 15539-15542]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-7848]



[[Page 15539]]

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DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-838]


Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Softwood Lumber Products from Canada

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

DATES: EFFECTIVE DATE: April 2, 2002.

FOR FURTHER INFORMATION CONTACT: Charles Riggle or Constance Handley, 
at (202) 482-0650 or (202) 482-0631, respectively; Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue NW, Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to Department of Commerce (Department) 
regulations refer to the regulations codified at 19 CFR part 351 
(2001).

Final Determination

    We determine that certain softwood lumber products from Canada are 
being sold, or are likely to be sold, in the United States at less than 
fair value (LTFV), as provided in section 735 of the Act. The estimated 
margins of sales at LTFV are shown in the ``Suspension of Liquidation'' 
section of this notice.

Case History

    The preliminary determination in this investigation was issued on 
October 31, 2001. See Notice of Preliminary Determination of Sales at 
Less Than Fair Value and Postponement of Final Determination: Certain 
Softwood Lumber Products From Canada, 66 FR 56062 (November 6, 2001). 
Since the publication of the preliminary determination, the following 
events have occurred:
    In December 2001 and January - February 2002, the Department 
verified the responses submitted by the six respondents in the 
investigation: Abitibi-Consolidated Inc. (Abitibi); Canfor Corporation 
(Canfor); Slocan Forest Products Ltd. (Slocan); Tembec Inc. (Tembec); 
West Fraser Timber Co. Ltd. (West Fraser); and Weyerhaeuser Company 
(Weyerhaeuser). Verification reports were issued in January and 
February 2002.
    On February 12, 2002, we received case briefs from the 
petitioners\1\, the six respondents, and the Ontario Lumber 
Manufacturers Association (OLMA), Ontario Forest Industries Association 
(OFIA), Association of Consumers for Affordable Homes (ACAH), Bowater 
International, the Canadian Maritimes Provinces, the British Columbia 
Lumber Trade Council (BCLTC), Louisiana Pacific Corporation and Idaho 
Timber Corporation. On February 19, 2002, we received rebuttal briefs 
from the petitioners, respondents, OLMA, OFIA, BCLTC, the Government of 
Canada and the Government of Quebec. We held a public hearing on 
February 25, 2002.
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    \1\ The petitioners are the coalition for Fair Lumber Imports 
Executive Committee; the United Brotherhood of Carpenters and 
Joiners; and the Paper, Allied-Industrial, Chemical and Energy 
Workers International Union.
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    A separate briefing schedule dealing with class or kind of 
merchandise and other scope issues was established. On March 15, 2002, 
we received case briefs from the petitioners, respondents Abitibi, 
Tembec and Weyerhaeuser, as well as from the Government of Canada, the 
Government of Quebec, OFIA and OLMA, the Quebec Lumber Manufacturers 
Association, the International Sleep Products Association, Sinclar 
Enterprises Inc., the U.S. Red Cedar Manufacturers Association, Lindal 
Cedar Homes, Fred Tebb & Sons, and the Natural Resources Defense 
Council pertaining to these issues.\2\ Rebuttal briefs on these topics 
were submitted by the petitioners, Tembec, OFIA and OLMA and the QLMA 
on March 18, 2002. A public hearing limited to issues of scope and 
class or kind of merchandise was held on March 19, 2002.
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    \2\ On March 6, 2002, Anderson Wholesale Inc. and North Pacific 
Trading filed a joint case brief on scope issues.
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Scope of Investigation

    The products covered by this investigation are softwood lumber, 
flooring and siding (softwood lumber products). Softwood lumber 
products include all products classified under headings 4407.1000, 
4409.1010, 4409.1090, and 4409.1020, respectively, of the Harmonized
    Tariff Schedule of the United States (HTSUS), and any softwood 
lumber, flooring and siding described below. These softwood lumber 
products include:
    (1) coniferous wood, sawn or chipped lengthwise, sliced or peeled,
    whether or not planed, sanded or finger-jointed, of a thickness 
exceeding six millimeters;
    (2) coniferous wood siding (including strips and friezes for 
parquet flooring, not assembled) continuously shaped (tongued, grooved, 
rabbeted, chamfered, V-jointed, beaded, molded, rounded or the like) 
along any of its edges or faces, whether or not planed, sanded or 
finger-jointed;
    (3) other coniferous wood (including strips and friezes for parquet 
flooring, not assembled) continuously shaped (tongued, grooved, 
rabbeted, chamfered, V-jointed, beaded, molded, rounded or the like) 
along any of its edges or faces (other than wood mouldings and wood 
dowel rods) whether or not planed, sanded or finger-jointed; and
    (4) coniferous wood flooring (including strips and friezes for 
parquet flooring, not assembled) continuously shaped (tongued, grooved, 
rabbeted, chamfered, V-jointed, beaded, molded, rounded or the like) 
along any of its edges or faces, whether or not planed, sanded or 
finger-jointed.
    Although the HTSUS subheadings are provided for convenience and 
U.S. Customs purposes, the written description of the merchandise under 
investigation is dispositive.
    A complete description of the scope of this investigation, 
including an itemized list of all product exclusions, is contained in 
the Issues and Decision Memorandum accompanying this notice.

Period of Investigation

    The period of investigation is April 1, 2000, through March 31, 
2001. This period corresponds to the four most recent fiscal quarters 
prior to the month of the filing of the petition (i.e., April 2001).

Verification

    As provided in section 782(i) of the Act, we conducted verification 
of the cost and sales information submitted by the six respondents. We 
used standard verification procedures including examination of relevant 
accounting and production records, and original source documents 
provided by the respondent.

Analysis of Comments Received

    All issues raised in the case and rebuttal briefs by parties to 
this investigation, as well as certain other findings by the Department 
which are summarized in this notice, are addressed in the ``Issues and 
Decision Memorandum for the Final Determination in the Antidumping Duty 
Investigation of Certain Softwood Lumber Products from Canada''

[[Page 15540]]

(Decision Memorandum), from Bernard Carreau, Deputy Assistant 
Secretary, Import Administration, to Faryar Shirzad, Assistant 
Secretary for Import Administration, dated March 21, 2002, which is 
hereby adopted by this notice. A list of issues which parties have 
raised and to which we have responded, all of which are in the Decision 
Memorandum, is attached to this notice as an Appendix. Parties can find 
a complete discussion of all issues raised in this investigation and 
the corresponding recommendations in this public memorandum which is on 
file in the Central Records Unit, Room B-099 of the main Department 
building and on the Web at: http://ia.ita.doc.gov/. The paper copy and 
electronic version of the Decision Memorandum are identical in content.

Changes Since the Preliminary Determination

    From the outset of this investigation, a central issue has been the 
determination of the appropriate method by which to allocate joint 
production costs for the various lumber products produced. All of the 
respondents submitted data sets that allocated production costs on a 
per-unit volume (i.e., per thousand board feet (MBF)) basis, which is 
consistent with their normal books and records. Four of the six 
respondents submitted an additional data set which allocated production 
costs using a value-based methodology. The petitioners have argued 
throughout the investigation that the joint lumber production costs 
should be allocated using a volume-based methodology. For the 
preliminary determination, the Department calculated cost of production 
(COP) and constructed value (CV) based on the volume-based cost 
allocation data sets submitted by each of the respondents.
    The cost allocation issues raised in the context of this case are 
among the most complex that the Department has ever considered. Based 
on our analysis of comments received, we have reconsidered the 
appropriateness of the preliminary determination whereby we allocated 
costs on the basis of volume. After careful consideration, we believe 
it is appropriate to allocate wood and sawmill costs to particular 
grades of lumber using a value-based measure, because a volume-based 
allocation does not recognize the fact that there are separately 
identifiable grades of wood within a given log and that the producer 
factors their presence into the cost it is willing to incur to obtain 
those various grades.
    In reaching this conclusion, we considered several factors, among 
them, that grade differences pre-exist in the raw material, that these 
grade differences do not result from the production process, and that 
they can be so significant that they often alter a product's intended 
end use. We concluded that it is reasonable to assume that a lumber 
producer considers these factors when deciding on how much cost to 
incur to acquire the raw material (i.e., logs).
    We recognize that a value-based cost allocation method can be 
problematic in an antidumping context, and that it is appropriate in 
only very limited instances. After a great deal of deliberation in 
consideration of the comments made with regard to our preliminary 
determination, we believe that the facts of this case support the use 
of a value-based allocation method for wood and sawmill costs. This 
issue is discussed further in the Decision Memorandum.
    Based on our analysis of comments received, we have made other 
changes in the margin calculations, as well. Furthermore, prior to the 
start of their respective verifications, all six respondents presented 
corrections to their questionnaire responses which resulted from their 
preparation for verification. In addition, based on the Department's 
verification findings, various other corrections have been made to the 
margin calculations of all six respondents. These changes are discussed 
in the relevant sections of the Decision Memorandum or in each 
company's analysis memorandum.

Critical Circumstances

    Section 735(a)(3) of the Act provides that the Department will 
determine that critical circumstances exist if there is a reasonable 
basis to believe or suspect that: (A)(i) there is a history of dumping 
and material injury by reason of dumped imports in the United States or 
elsewhere of the subject merchandise, or (ii) the person by whom, or 
for whose account, the merchandise was imported knew or should have 
known that the exporter was selling the subject merchandise at less 
than its fair value and that there was likely to be material injury by 
reason of such sales, and (B) there have been massive imports of the 
subject merchandise over a relatively short period.
    In the preliminary determination, the Department found for all 
mandatory respondents and the companies within the ``all 
others''category that critical circumstances did not exist because the 
second prong of the statute regarding critical circumstances, i.e., 
massive imports, had not been met. Since the preliminary critical 
circumstances determination, we have received and verified the shipment 
data for the subject merchandise for all mandatory respondents.
    In determining whether imports of the subject merchandise have been 
``massive,'' the Department normally will examine (i) the volume and 
value of the imports, (ii) seasonal trends, and (iii) the share of 
domestic consumption accounted for by the imports. Section 
351.206(h)(2) of the Department's regulations provides that an increase 
in imports of 15 percent or more during a ``relatively short period'' 
may be considered ``massive.'' In addition, section 351.206(i) of the 
Department's regulations defines ``relatively short period'' as 
generally the period beginning on the date the proceeding begins (i.e., 
the date the petition is filed) and ending at least three months later. 
As a consequence, the Department compares import levels during at least 
the three-month period immediately after initiation with at least the 
three-month period immediately preceding initiation to determine 
whether there has been at least a 15-percent increase in imports of 
subject merchandise. Where information is available for longer periods, 
the Department will compare such data. See, e.g., Preliminary 
Determinations of Critical Circumstances: Steel Concrete Reinforcing 
Bars From Ukraine and Moldova, 65 FR 70696, 70697 (November 27, 2000).
    In this case, because data were available for additional months, 
for purposes of the final determination, the Department compared import 
and shipment data during the six-month period immediately after 
initiation with the six-month period immediately preceding initiation 
to determine whether there has been at least a 15-percent increase in 
imports of subject merchandise. Based on this comparison, the 
Department found that there were no massive imports with respect to the 
mandatory respondents nor the companies in the ``All Others'' category. 
For further details, see the Department's Final Determination of 
Critical Circumstances memorandum from Gary Taverman to Bernard T. 
Carreau, (March 21, 2002). As discussed in the above-referenced 
memorandum, the Department's finding that massive imports did not exist 
for these companies is based on seasonal adjustments of the relevant 
shipment and import data. Because this prong of the statute regarding 
critical circumstances has not been met for any company, the Department 
determined that critical circumstances do not exist for any company.

[[Page 15541]]

Suspension of Liquidation

    Pursuant to section 735(c)(1)(B) of the Act, we are instructing 
Customs to continue to suspend liquidation of all entries of certain 
softwood lumber products from Canada that are entered, or withdrawn 
from warehouse, for consumption on or after November 6, 2001, the date 
of publication of the Preliminary Determination in the Federal 
Register. The Customs Service shall continue to require a cash deposit 
or the posting of a bond based on the estimated weighted-average 
dumping margins shown below. The suspension of liquidation instructions 
will remain in effect until further notice.

------------------------------------------------------------------------
           Manufacturer/Exporter               Weighted-Average Margin
------------------------------------------------------------------------
Abitibi...................................                         14.60
   (and its affiliates Produits Forestiers
   Petit Paris Inc.,......................
     Produits Forestiers La Tuque Inc.,...
     Scieries Saguenay Ltee.,.............
     Societe En Commandite Scierie
     Opticwan)............................
Canfor....................................                          5.96
   (and its affiliates Lakeland Mills
   Ltd.,..................................
     The Pas Lumber Company Ltd.,.........
     Howe Sound Pulp and Paper Limited
     Partnership).........................
Slocan....................................                          7.55
Tembec....................................                         12.04
   (and its affiliates Marks Lumber Ltd.,.
     Excel Forest Products)...............
West Fraser...............................                          2.26
   (and its affiliates West Fraser Forest
   Products Inc.,.........................
     Seehta Forest Products Ltd.).........
Weyerhaeuser..............................                         15.83
   (and its affiliates Monterra Lumber
   Mills Ltd.,............................
     Weyerhaeuser Saskatchewan Ltd.)......
All Others................................                          9.67
------------------------------------------------------------------------

ITC Notification
    In accordance with section 735(d) of the Act, we have notified the 
International Trade Commission (ITC) of our determination. As our final 
determination is affirmative, the ITC will determine, within 45 days, 
whether these imports are causing material injury, or are a threat of 
material injury, to an industry in the United States. If the ITC 
determines that material injury or threat of injury does not exist, the 
proceeding will be terminated and all securities posted will be 
refunded or canceled. If the ITC determines that such injury does 
exist, the Department will issue an antidumping order directing Customs 
officials to assess antidumping duties on all imports of the subject 
merchandise entered, or withdrawn from warehouse, for consumption on or 
after the effective date of the suspension of liquidation.
    This notice also serves as a reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 351.305. Timely notification of return/
destruction of APO materials or conversion to judicial protective order 
is hereby requested. Failure to comply with the regulations and the 
terms of an APO is a sanctionable violation.
    This determination is issued and published in accordance with 
sections 735(d) and 777(i)(1) of the Act.

    Dated: March 21, 2002
Faryar Shirzad,
Assistant Secretaryfor Import Administration.

APPENDIX

I. General Issues

Comment 1:Whether the Department should rescind the initiation and 
terminate the investigation
Comment 2: Whether dumping exists
Comment 3: Critical circumstances
Comment 4: Value-based cost allocation methodology
Comment 5: Fair comparisons in the application of the sales below cost 
test
Comment 6: Constructed value profit
Comment 7: Product matching
Comment 8: Value-based difference in merchandise (difmer) adjustments
Comment 9: Whether Softwood Lumber Agreement (SLA) export taxes should 
be deducted from U.S. price
Comment 10: Treatment of trim ends/trim blocks
Comment 11: By-product revenue offset
Comment 12: Treatment of negative margins
Comment 13: Exclusion of Maritime Provinces

II. Company-Specific Issues

Issues Specific to Abitibi
Comment 14: Whether Scierie Saguenay Ltee. should be collapsed into the 
Abitibi Group
Comment 15: Financial expense ratio
Comment 16: General and administrative (G&A) expense ratio
Issues Specific to Canfor
Comment 17: Canfor, Lakeland, and The Pas' product reporting
Comment 18: Treatment of three U.S. sales
Comment 19: G&A expenses for Canfor, Lakeland, and The Pas
Comment 20: Canfor's packing cost

Issues Specific to Slocan

Comment 21: Futures contracts
Comment 22: Unreported freight expenses
Comment 23: Unreported comparison market freight rebates
Comment 24: Overstated freight rebates
Comment 25: Donations
Comment 26: Cost differences for precision end trimmed products
Comment 27: Mackenzie Ospika Division Lathe and Precut
Comment 28: Profits on log sales
Comment 29: Depreciation expenses at the Plateau Sawmill
Comment 30: Unreported foreign exchange losses
Comment 31: Timber tenure amortization
Comment 32: Startup adjustments
Issues Specific to Tembec
Comment 33: G&A expense
Issues Specific to West Fraser
Comment 34: Downstream sales
Comment 35: Inventory carrying costs
Comment 36: Log sales
Comment 37: Prior period stumpage and silviculture

[[Page 15542]]

Issues Specific to Weyerhaeuser

Comment 38: Sales verification
Comment 39: The petitioners received inadequate time to examine the 
Weyerhaeuser sales verification report
Comment 40: Warehousing expenses for WBM inventory sales
Comment 41: British Columbia Coastal's (BCC) warehousing expenses
Comment 42: Early payment discounts
Comment 43: CLB's SLA tax amounts
Comment 44: CLB's quota-transfer sales
Comment 45: Critical circumstances data for Monterra Lumber
Comment 46: Log/wood costs
Comment 47: Depletion expenses
Comment 48: G&A expenses
Comment 49: Interest expense

III. Scope Issues

Comment 50: Due process
Comment 51: Authority to define the scope
Comment 52: Class or kind of products
Comment 53: Other scope issues
Comment 54: Industry support
Comment 55: Whether including certain products is harmful to U.S. 
industry
Comment 56: Remanufactured products
Comment 57: Scope exclusion requests
[FR Doc. 02-7848 Filed 4-1-02; 8:45 am]
BILLING CODE 3510-DS-S