[Federal Register Volume 69, Number 177 (Tuesday, September 14, 2004)]
[Notices]
[Pages 55406-55409]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2187]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-838]


Notice of Preliminary Results of Antidumping Duty Changed 
Circumstances Review: Softwood Lumber From Canada

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

ACTION: Notice of preliminary results of antidumping duty changed 
circumstances review.

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EFFECTIVE DATE: September 14, 2004.

FOR FURTHER INFORMATION CONTACT: Constance Handley or Saliha Loucif, 
Office 1, AD/CVD Enforcement, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
0631 or (202) 482-1779, respectively.
SUMMARY: On May 11, 2004, the Department of Commerce (the Department) 
published a notice of initiation of changed circumstances review of the 
antidumping duty order on certain softwood lumber products from Canada. 
See Initiation of Antidumping Duty Changed Circumstances Review: 
Certain Softwood Products From Canada, 69 FR 26072, May 11, 2004 
(Initiation Notice), to determine the appropriate cash deposit rate for 
the Canfor Corporation (Canfor), which merged with Slocan Forest 
Products Ltd. (Slocan) as of April 1, 2004. We have preliminarily 
determined that the post-merger Canfor is the successor-in-interest to 
both the pre-merger Canfor and Slocan. Therefore, we have preliminarily 
concluded that post-merger Canfor should be assigned a cash deposit 
rate reflecting a weighted-average of Canfor's and Slocan's respective 
cash deposit rates prior to the merger. Because Canfor and Slocan are 
both respondents in the ongoing first administrative review covering 
the period May 22, 2002, through April 30, 2003, we plan to align the 
final results of this changed circumstances review with the final 
results of the first administrative review for the purposes of 
establishing the final cash deposit rate for the post-merger Canfor. 
The final results of the first administrative review are due December 
13, 2004.\1\ Interested parties are invited to comment on these 
preliminary results.
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    \1\ See, Notice of Preliminary Results of Antidumping Duty 
Administrative Review and Postponement of Final Results: Certain 
Softwood Lumber Products From Canada 69 FR 33235, 33236 (June 14, 
2004).

SUPPLEMENTARY INFORMATION:

Background

    On April 22, 2004, the Coalition for Fair Lumber Imports Executive 
Committee, the petitioner in this case, submitted a request that the 
Department initiate a changed circumstances review of the antidumping 
duty order on certain softwood lumber products from Canada pursuant to 
Section 751(b)(1) of the Trade Act of 1930, as amended (``the Act''), 
and 19 CFR 351.22 (c)(3)(ii) (2003). On May 11, 2004, the

[[Page 55407]]

Department published the Initiation Notice in the Federal Register. On 
June 23, 2004, the Department issued Canfor a questionnaire requesting 
further details on the merger of Canfor and Slocan. Canfor's response 
was received by the Department on July 7, 2004.

Scope of the Review

    The products covered by this order 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 moldings 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 
customs purposes, the written description of the merchandise under 
review is dispositive.
    Softwood lumber products excluded from the scope: Trusses and truss 
kits, properly classified under HTSUS 4418.90; I-joist beams; assembled 
box spring frames; pallets and pallet kits, properly classified under 
HTSUS 4415.20; garage doors; edge-glued wood, properly classified under 
HTSUS 4421.90.97.40 (formerly HTSUS 4421.90.98.40); properly classified 
complete door frames; properly classified complete window frames; and 
properly classified furniture.
    Softwood lumber products excluded from the scope only if they meet 
certain requirements:
    Stringers (pallet components used for runners): if they have at 
least two notches on the side, positioned at equal distance from the 
center, to properly accommodate forklift blades, properly classified 
under HTSUS 4421.90.97.40 (formerly HTSUS 4421.90.98.40).
    Box-spring frame kits: if they contain the following wooden 
pieces--two side rails, two end (or top) rails and varying numbers of 
slats. The side rails and the end rails should be radius-cut at both 
ends. The kits should be individually packaged, they should contain the 
exact number of wooden components needed to make a particular box 
spring frame, with no further processing required. None of the 
components exceeds 1'' in actual thickness or 83'' in length.
    Radius-cut box-spring-frame components, not exceeding 1'' in actual 
thickness or 83'' in length, ready for assembly without further 
processing. The radius cuts must be present on both ends of the boards 
and must be substantial cuts so as to completely round one corner.
    Fence pickets requiring no further processing and properly 
classified under HTSUS 4421.90.70, 1'' or less in actual thickness, up 
to 8'' wide, 6' or less in length, and have finials or decorative 
cuttings that clearly identify them as fence pickets. In the case of 
dog-eared fence pickets, the corners of the boards should be cut off so 
as to remove pieces of wood in the shape of isosceles right angle 
triangles with sides measuring \3/4\ inch or more.
    U.S. origin lumber shipped to Canada for minor processing and 
imported into the United States, is excluded from the scope of this 
order if the following conditions are met: (1) The processing occurring 
in Canada is limited to kiln-drying, planing to create smooth-to-size 
board, and sanding, and (2) if the importer establishes to U.S. Customs 
and Border Protections (CBPs) satisfaction that the lumber is of U.S. 
origin.
    Softwood lumber products contained in single family home packages 
or kits,\2\ regardless of tariff classification, are excluded from the 
scope of the orders if the following criteria are met:
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    \2\ To ensure administrability, we clarified the language of 
this exclusion to require an importer certification and to permit 
single or multiple entries on multiple days as well as instructing 
importers to retain and make available for inspection specific 
documentation in support of each entry.
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    (A) The imported home package or kit constitutes a full package of 
the number of wooden pieces specified in the plan, design or blueprint 
necessary to produce a home of at least 700 square feet produced to a 
specified plan, design or blueprint;
    (B) The package or kit must contain all necessary internal and 
external doors and windows, nails, screws, glue, subfloor, sheathing, 
beams, posts, connectors and if included in purchase contract decking, 
trim, drywall and roof shingles specified in the plan, design or 
blueprint;
    (C) Prior to importation, the package or kit must be sold to a 
retailer of complete home packages or kits pursuant to a valid purchase 
contract referencing the particular home design plan or blueprint, and 
signed by a customer not affiliated with the importer;
    (D) The whole package must be imported under a single consolidated 
entry when permitted by CBP, whether or not on a single or multiple 
trucks, rail cars or other vehicles, which shall be on the same day 
except when the home is over 2,000 square feet;
    (E) The following documentation must be included with the entry 
documents:
    A copy of the appropriate home design, plan, or blueprint matching 
the entry;
    A purchase contract from a retailer of home kits or packages signed 
by a customer not affiliated with the importer;
    A listing of inventory of all parts of the package or kit being 
entered that conforms to the home design package being entered; and,
    In the case of multiple shipments on the same contract, all items 
listed immediately above which are included in the present shipment 
shall be identified as well.
    We have determined that the excluded products listed above are 
outside the scope of this order provided the specified conditions are 
met. Lumber products that CBP may classify as stringers, radius cut 
box-spring-frame components, and fence pickets, not conforming to the 
above requirements, as well as truss components, pallet components, and 
door and window frame parts, are covered under the scope of this order 
and may be classified under HTSUS subheadings 4418.90.40.90, 
4421.90.70.40, and 4421.90.98.40. Due to changes in the 2002 HTSUS 
whereby subheading 4418.90.40.90 and 4421.90.98.40 were changed to 
4418.90.45.90 and 4421.90.97.40, respectively, we are adding these 
subheadings as well.
    In addition, this scope language has been further clarified to now 
specify that all softwood lumber products entered from Canada claiming 
non-

[[Page 55408]]

subject status based on U.S. country of origin will be treated as non-
subject U.S.-origin merchandise under the antidumping and 
countervailing duty orders, provided that these softwood lumber 
products meet the following condition: upon entry, the importer, 
exporter, Canadian processor and/or original U.S. producer establish to 
CBP's satisfaction that the softwood lumber entered and documented as 
U.S.-origin softwood lumber was first produced in the United States as 
a lumber product satisfying the physical parameters of the softwood 
lumber scope.\3\ The presumption of non-subject status can, however, be 
rebutted by evidence demonstrating that the merchandise was 
substantially transformed in Canada.
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    \3\ See the scope clarification message (3034202), dated 
February 3, 2003, to CBP, regarding treatment of U.S.-origin lumber 
on file in the Central Records Unit, Room B-099 of the main Commerce 
Building.
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Preliminary Results of the Review

    In submissions to the Department dated April 29, 2004, and July 7, 
2004,\4\ Canfor advised the Department that Canfor and Slocan merged on 
April 1, 2004, through a share purchase arrangement in which Canfor 
purchased all issued and outstanding Slocan shares. See the Combination 
Agreement.\5\ In submissions to the Department dated April 29, 2004, 
and July 7, 2004,\6\ Canfor advised the Department that Canfor and 
Slocan merged on April 1, 2004, through a share purchase arrangement in 
which Canfor purchased all issued and outstanding Slocan shares. See 
the Combination Agreement.\7\ The Amalgamation Application and 
Certificate of Amalgamation \8\ demonstrate that Slocan and its 
subsidiaries have been amalgamated with Canfor's principal subsidiary, 
Canadian Forest Products Ltd., and consequently, that Slocan has ceased 
to exist as a separate corporate entity. The post-merger Canfor assumed 
all softwood lumber, flooring and siding industry operations formerly 
held by Slocan, in addition to continuing its own operations.
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    \4\ See letter from Canfor to the Department, dated April 29, 
2004; see also, response of post-merger Canfor and Slocan's 
questionnaire response (Questionnaire Response) dated July 7, 2004.
    \5\ Questionnaire Response at Exhibit 1.
    \6\ See letter from Canfor to the Department, dated April 29, 
2004; see also, response of post-merger Canfor and Slocan's 
questionnaire response (Questionnaire Response) dated July 7, 2004.
    \7\ Questionnaire Response at Exhibit 1.
    \8\ Id. at Exhibits 1 and 3.
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    In antidumping duty changed circumstances reviews involving a 
successor-in-interest determination, the Department typically examines 
several factors including, but not limited to, changes in: (1) 
Management; (2) production facilities; (3) supplier relationships; and 
(4) customer base. See Brass Sheet and Strip from Canada: Notice of 
Final Results of Antidumping Administrative Review, 57 FR 20460, 20462 
(May 13, 1992) (Canada Brass). While no single factor or combination of 
factors will necessarily be dispositive, the Department generally will 
consider the new company to be the successor to the predecessor company 
if the resulting operations are essentially the same as those of the 
predecessor company. See, e.g., Industrial Phosphoric Acid From Israel: 
Final Results of Changed Circumstances Review, 59 FR 6944, 6945 
(February 14, 1994), and Canada Brass, 57 FR 20462. Thus, if the record 
evidence demonstrates that, with respect to the production and sale of 
the subject merchandise, the new company operates as the same business 
entity as the predecessor company, the Department may assign the new 
company the cash deposit rate of its predecessor. See, e.g., Fresh and 
Chilled Atlantic Salmon From Norway: Final Results of Changes 
Circumstances Antidumping Duty Administrative Review, 64 FR 9979, 9980 
(March 1, 1999).
    Based on our review of the Questionnaire Response, we preliminarily 
determine that post-merger Canfor is the successor-in-interest to both 
the pre-merger Canfor and Slocan. As a result of the merger, 
significant components of both pre-merger Canfor's and Slocan's 
management, production facilities, supplier relationships, and customer 
base have been incorporated into both the post-merger Canfor and 
Slocan.
    As a result of the amalgamation, Canfor's management structure has 
been revised to incorporate former Slocan managers. The new Board of 
Directors of the post-merger Canfor was elected at a shareholders' 
meeting on April 30, 2004.\9\ In accordance with the Combination 
Agreement,\10\ Canfor's post-merger management team is composed of 
fifteen Directors, four of whom are Slocan nominees. Slocan's former 
Chief Executive Officer (CEO) is the President and CEO of the post-
merger Canfor. In addition, Canfor's new executive team includes former 
Slocan managers as Vice-President of Human Resources, Vice-President of 
Wood Products (managing manufacturing facilities that were formerly 
with Slocan) and Vice-President of Finance. A number of senior managers 
with the pre-merger Canfor continue to hold managerial posts in the 
post-merger Canfor.\11\ Thus, managers of both companies play important 
roles in senior management of the post-merger Canfor.
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    \9\ Id. at Exhibit 7.
    \10\ Id. at page 3.
    \11\ Id. at Exhibit 7.
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    The transfer of Slocan's fixed assets to Canfor provides evidence 
of a dramatic increase in Canfor's production capacity.\12\ As 
evidenced by their participation in both the investigation and 
administrative review in this case, both the pre-merger Canfor and 
Slocan were among the largest softwood lumber producers in Canada.\13\ 
Prior to the merger, Canfor had eleven primary sawmills and one 
remanufacturing plant; Slocan had eight sawmills and one 
remanufacturing plant. Following the merger, the post-merger Canfor 
operates the combined nineteen sawmills and two remanufacturing 
plants.\14\ While production from all the mills and remanufacturing 
plants is currently sold under the Canfor name, this includes a large 
quantity of lumber from mills which were formerly part of Slocan. 
Canfor reported that its post-merger products are the same as those 
produced by Canfor and Slocan prior to the merger.\15\ Clearly, the 
post-merger Canfor currently produces a much larger quantity of and a 
wider range of products than could be produced by either Canfor or 
Slocan before the amalgamation.\16\
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    \12\ Id. at Exhibits 1 and 2.
    \13\ See Memo from Valerie Ellis and Christopher Smith to 
Bernard Carrea, Deputy Assistant Secretary, dated May 5, 2001, and 
Memo from Keith Nickerson and Amber Musser to Holly Kuga, dated 
Augist 1, 2003.
    \14\ Id. at page 4.
    \15\ Id. at page 4.
    \16\ Id. at page 4 and Exhibits 1, 2, and 6.
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    Further, the amalgamation of Slocan allowed Canfor to significantly 
increase its customer base. In addition to Canfor's own customers, 
former Slocan customers now purchase from the post-merger Canfor.\17\ 
Likewise, suppliers that previously serviced Slocan continue to supply 
the post-merger Canfor.\18\ Thus, the post-merger Canfor has noticeably 
increased the number of customers to whom it sells, and its list of 
suppliers is now more diversified.
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    \17\ Id. at page 5 and Exhibit 1.
    \18\ Id. at page 6 and Exhibit 1.
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    Additionally, Canfor's sales process has undergone apparent 
adjustments. Slocan's sales employees have relocated into the post-
merger Canfor's sales office site, which has led to a departmental 
restructuring. The majority of Slocan's former sales managers have kept 
their titles upon joining the post-merger Canfor; others have 
experienced minor

[[Page 55409]]

changes in responsibilities, but kept their employment. Ultimately, the 
post-merger Canfor's sales organization plans to maintain nearly all of 
Canfor and Slocan's combined number of sales employees. In sum, 
Canfor's amalgamation with Slocan has precipitated important changes to 
the corporate structures of both the pre-merger Canfor and Slocan, as 
it applies to the sales of the subject merchandise.
    However, when as the result of a merger, the post-merger entity 
contains significant elements of both companies involved in the merger, 
we consider the post-merger entity to be a successor-in-interest to 
both of the pre-merger companies.\19\ The post-merger Canfor's 
management, production facilities, supplier relationships, customer 
base and sales facilities combine important elements of both the pre-
merger Canfor and Slocan.\20\ Consequently, we preliminarily determine 
that the post-merger Canfor is the successor in interest to both the 
pre-merger Canfor and Slocan. Therefore, we have preliminarily 
concluded that the post-merger Canfor should be assigned a cash deposit 
rate reflecting a weighted-average of Canfor's and Slocan's respective 
cash deposit rates prior to the merger.
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    \19\ See Marine Harvest (Chile) S.A. v. United States, Slip Op. 
03-22 (Mar. 4, 2003), affirming Final Results of Redetermination 
Pursuant to Court Remand, 2003-22, January 7, 2003, (upon remand 
from Marine Harvest (Chile) S.A. v. United States, 244 F. Supp. 2d 
1364 (CIT 2002)).
    \20\ Id. pages 1-7 and Exhibits 1, 2, and 3.
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    If the above preliminary results are affirmed in the Department's 
final results, the cash deposit rate from this changed circumstances 
review will apply to all entries of the subject merchandise entered, or 
withdrawn from warehouse, for consumption on or after the date of 
publication of the final results of this changed circumstances review. 
See Granular Polytetrafluoroethylene Resin from Italy; Final Results of 
Antidumping Duty Changed Circumstances Review, 68 FR 25327 (May 12, 
2003). This deposit rate shall remain in effect until publication of 
the final results of the next administrative review in which Canfor 
participates.

Public Comment

    Any interested party may request a hearing within 30 days of 
publication of this notice. 19 CFR 351.310(c). Any hearing, if 
requested, will be held 44 days after the date of publication of this 
notice, or the first working day thereafter. Interested parties may 
submit case briefs not later than 30 days after the date of publication 
of this notice. 19 CFR 351.309(c)(ii). Rebuttal briefs, which must be 
limited to issues raised in such briefs, be filed not later than 37 
days after the date of publication of this notice. See 19 CFR 
351.309(d). Parties who submit arguments are requested to submit with 
the argument (1) a statement of the issue, (2) a brief summary of the 
argument, and (3) a table of authorities. Consistent with our alignment 
with the final results of the first administrative review, we will 
issue the final results of this changed circumstances review no later 
than December 13, 2004.
    This notice is in accordance with sections 751(b) and 777(i)(1) of 
the Act, and Sec.  351.221(c)(3)(i) of the Department's regulations.

    Dated: August 26, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. E4-2187 Filed 9-13-04; 8:45 am]
BILLING CODE 3510-DS-P