[Federal Register Volume 71, Number 175 (Monday, September 11, 2006)]
[Notices]
[Pages 53405-53412]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-14914]


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DEPARTMENT OF COMMERCE

International Trade Administration

A-549-821


Polyethylene Retail Carrier Bags from Thailand: Preliminary 
Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to requests from interested parties, the 
Department of Commerce (the Department) is conducting an administrative 
review of the antidumping duty order on polyethylene retail carrier 
bags (PRCBs) from Thailand. The review covers seven manufacturers/
exporters. The period of review is January 26, 2004, through July 31, 
2005.
    We have preliminarily determined that sales have been made below 
normal value by each of the companies subject to this review. If these 
preliminary results are adopted in our final results of administrative 
review, we will instruct U.S. Customs and Border Protection (CBP) to 
assess antidumping duties on all appropriate entries.

[[Page 53406]]

    We invite interested parties to comment on these preliminary 
results. Parties who submit comments in this review are requested to 
submit with each argument (1) a statement of each issue and (2) a brief 
summary of the argument.

EFFECTIVE DATE: September 11, 2005

FOR FURTHER INFORMATION CONTACT: Thomas Schauer at (202) 482-0410 or 
Richard Rimlinger at (202) 482-4477, AD/CVD Operations, Office 5, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14\th\ Street and Constitution Avenue, NW, 
Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

    On August 9, 2004, the Department published in the Federal Register 
the antidumping duty order on polyethylene retail carrier bags from 
Thailand. See Antidumping Duty Order: Polyethylene Retail Carrier Bags 
from Thailand, 69 FR 48204 (August 9, 2004). On September 28, 2005, in 
accordance with 19 CFR 351.213(b), we published a notice of initiation 
of administrative review of this order. See Initiation of Antidumping 
and Countervailing Duty Administrative Reviews and Request for 
Revocation in Part, 70 FR 56631 (September 28, 2005). Since initiation 
of the review we extended the due date for the completion of these 
preliminary results of review from May 3, 2006, to August 31, 2006. See 
Notice of Extension of Deadline for the Preliminary Results of 
Antidumping Duty Administrative Review: Polyethylene Retail Carrier 
Bags from Thailand, 71 FR 24641 (April 26, 2006), and Notice of 
Extension of Deadline for the Preliminary Results of Antidumping Duty 
Administrative Review: Polyethylene Retail Carrier Bags from Thailand, 
71 FR 42630 (July 27, 2006). The companies for which we have conducted 
an administrative review of the order on PRCBs from Thailand are as 
follows: Universal Polybag Co., Ltd., Alpine Plastics, Inc., Advance 
Polybag Inc., and API Enterprises, Inc. (collectively, UPC/API); Thai 
Plastic Bags Industries Company Ltd. and APEC Film Ltd. (collectively, 
TPBG); Apple Film Co., Ltd. (Apple); CP Packaging Industry Co. Ltd. (CP 
Packaging); King Pac Industrial Co., Ltd. (KPI), Dpac Industrial Co., 
Ltd. (DPAC), Zippac Co., Ltd. (Zippac), and King Bag Co., Ltd. (King 
Bag) (collectively, KP); Naraipak Co., Ltd., and Narai Packaging 
(Thailand) Ltd. (collectively, Naraipak); Sahachit Watana Plastic Ind. 
Co., Ltd. (Sahachit Watana). Although our initiation notice listed KPI 
separately, KPI informed us in its response that it was affiliated with 
DPAC, Zippac, and King Bag and KP submitted a response on behalf of all 
those firms. Based on information in this consolidated response, we 
have collapsed these firms into one entity, herein after referred to as 
KP. See Collapsing Decision Memorandum, dated August 31, 2006. With 
respect to TPBG, although we initiated an administrative review of 
Winner's Pack Co., Ltd. (Winner's), this company informed us in its 
response that it merged with TPBG prior to the period of review. See 
Winner's/TPBG's November 23, 2005, submission at Exhibit A-11.

Scope of Order

    The merchandise subject to this antidumping duty order is 
polyethylene retail carrier bags (PRCBs) which may be referred to as t-
shirt sacks, merchandise bags, grocery bags, or checkout bags. The 
subject merchandise is defined as non-sealable sacks and bags with 
handles (including drawstrings), without zippers or integral extruded 
closures, with or without gussets, with or without printing, of 
polyethylene film having a thickness no greater than 0.035 inch (0.889 
mm) and no less than 0.00035 inch (0.00889 mm), and with no length or 
width shorter than 6 inches (15.24 cm) or longer than 40 inches (101.6 
cm). The depth of the bag may be shorter than 6 inches but not longer 
than 40 inches (101.6 cm).
    PRCBs are typically provided without any consumer packaging and 
free of charge by retail establishments, e.g., grocery, drug, 
convenience, department, specialty retail, discount stores, and 
restaurants, to their customers to package and carry their purchased 
products. The scope of the order excludes (1) polyethylene bags that 
are not printed with logos or store names and that are closeable with 
drawstrings made of polyethylene film and (2) polyethylene bags that 
are packed in consumer packaging with printing that refers to specific 
end-uses other than packaging and carrying merchandise from retail 
establishments, e.g., garbage bags, lawn bags, trash-can liners.
    Imports of the subject merchandise are currently classifiable under 
statistical category 3923.21.0085 of the Harmonized Tariff Schedule of 
the United States (HTSUS). This subheading also covers products that 
are outside the scope of the order. Furthermore, although the HTSUS 
subheading is provided for convenience and customs purposes, the 
written description of the scope of this order is dispositive.

Verification

    As provided in section 782(i) of the Tariff Act of 1930, as amended 
(the Act), we have verified information provided by certain respondents 
using standard verification procedures, including on-site inspection of 
the manufacturers' facilities, the examination of relevant sales and 
financial records, and the selection of original documentation 
containing relevant information. Specifically, we conducted sales and 
cost verifications of CP Packaging and KP. Our verification results are 
outlined in the public versions of the verification reports, which are 
on file in the Central Records Unit (CRU), room B-099 of the main 
Commerce building. See CP Packaging Sales Verification Report (July 17, 
2006) (CP Sales Verification Report), CP Packaging Cost Verification 
Report (July 17, 2006) (CP Cost Verification Report), KP Sales 
Verification Report (August 31, 2006), and KP Cost Verification Report 
(August 31, 2006).

Use of Facts Available

    Section 776(a)(2) of the Act provides that, if an interested party 
withholds information that has been requested by the Department, fails 
to provide such information in a timely manner or in the form or manner 
requested, significantly impedes a proceeding under the antidumping 
statute, or provides such information but the information cannot be 
verified, the Department shall use, subject to sections 782(d) and (e) 
of the Act, facts otherwise available in reaching the applicable 
determination. Pursuant to section 782(e) of the Act, the Department 
shall not decline to consider submitted information if that information 
is necessary to the determination but does not meet all of the 
requirements established by the Department provided that all of the 
following requirements are met: (1) The information is submitted by the 
established deadline; (2) the information can be verified; (3) the 
information is not so incomplete that it cannot serve as a reliable 
basis for reaching the applicable determination; (4) the interested 
party has demonstrated that it acted to the best of its ability; (5) 
the information can be used without undue difficulties.
    In addition, section 776(b) of the Act provides that, if the 
Department finds that an interested party ``has failed to cooperate by 
not acting to the best of its ability to comply with a request for 
information,'' the Department may use information that is adverse to 
the interests of that party as facts otherwise available.

[[Page 53407]]

    With respect to KP, it withheld information, failed to provide 
information in a timely manner or in the form or manner requested, and 
significantly impeded the proceeding. As a consequence, we were unable 
to verify KP's response. See the August 31, 2006, Decision Memorandum 
to Laurie Parkhill entitled ``Decision to Apply Adverse Facts Available 
and the Appropriate Rate'' (AFA Memo) for a full discussion on an 
adverse facts-available treatment with respect to KP. As described in 
the AFA Memo, based on the difficulties we encountered at verification 
(see KP Sales and Cost Verification Reports (August 31, 2006)), the use 
of facts available is necessary. See section 776(a) of the Act. 
Furthermore, because KP could have provided correct and verifiable data 
but did not, we determine that KP did not act to the best of its 
ability. Therefore, the use of an adverse inference is warranted. See 
section 776(b) of the Act and Nippon Steel Corp. v. United States, 337 
F.3d 1373, 1382-83 (Fed. Cir. 2003) (Nippon Steel).
    As total adverse facts available, we have used the highest rate we 
found in the less-than-fair-value investigation, which was 122.88 
percent. See Notice of Final Determination of Sales at Less Than Fair 
Value: Polyethylene Retail Carrier Bags from Thailand, 69 FR 34122-
34125 (June 18, 2004) (Final LTFV). We applied this rate to Zippac, one 
of the companies comprising the KP group of companies, as well as to 
two other non-cooperative companies in the less-than-fair-value 
investigation. Id. See also the AFA Memo for a full discussion on an 
adverse facts-available treatment with respect to KP.
    When a respondent is not cooperative, like KP here, the Department 
has the discretion to presume that the highest prior margin reflects 
the current margins. See Ta Chen Stainless Steel Pipe, Inc. v. United 
States, 298 F.3d 1330, 1339 (Fed. Cir. 2002) (citing Rhone Poulenc, 
Inc. v. United States, 899 F.2d 1185, 1190 (Fed. Cir. 1990)). As stated 
in Rhone Poulenc, ``if this were not so, the importer, knowing the 
rule, would have produced current information showing the margin to be 
less.'' Rhone Poulenc, 899 F.2d at 1190. Further, as stated in Shanghai 
Taoen, ``{t{time} he purposes of using the highest prior antidumping 
duty rate are to offer assurance that the exporter will not benefit 
from refusing to provide information, and to produce an antidumping 
duty rate that bears some relationship to past practices in the 
industry in question.'' Shanghai Taoen Int'l Trading Co. v. United 
States, 360 F. Supp. 2d 1339, 1348 (CIT 2005) (citing D&L Supply Co. v. 
United States, 113 F.3d 1220,1223 (Fed. Cir. 1997)).
    Section 776(c) of the Act requires that the Department corroborate, 
to the extent practicable, secondary information from independent 
sources that are reasonably at its disposal. Secondary information is 
defined as ``information derived from the petition that gave rise to 
the investigation or review, the final determination concerning the 
subject merchandise, or any previous review under section 751 
concerning the subject merchandise.'' See Statement of Administrative 
Action (SAA) at 870. The SAA clarifies that ``corroborate'' means that 
the Department will satisfy itself that the secondary information to be 
used has probative value. See SAA at 870. Information from a prior 
segment of this proceeding, such as that used here, constitutes 
secondary information. See, e.g., Anhydrous Sodium Metasilicate from 
France: Preliminary Results of Antidumping Duty Administrative Review, 
68 FR 44283 (July 28, 2003).
    As stated in F.Lii de Cecco di Filippo Fara S. Martino, S.p.A. v. 
United States, 216 F.3d 1027, 1030 (2000), to corroborate secondary 
information, the Department will examine, to the extent practicable, 
the reliability and relevance of the information. The SAA emphasizes, 
however, that the Department need not prove that the selected facts 
available are the best alternative information. See SAA at 869. The SAA 
also states that independent sources used to corroborate such evidence 
may include, for example, published price lists, official import 
statistics and customs data, and information obtained from interested 
parties during the particular investigation. See 19 CFR 351.308(d) and 
SAA at 870.
    With respect to the reliability aspect of corroboration, the 
Department found the rate of 122.88 percent to be reliable in the 
investigation. See Final LTFV, 69 FR at 34123- 34124. There, the 
Department stated that the rate was calculated from source documents 
included with the petition, namely, a price quotation for various sizes 
of PRCBs commonly produced in Thailand, import statistics, and 
affidavits from company officials, all from a different Thai producer 
of subject merchandise. See AFA Memo. Because the information is 
supported by source documents, we preliminarily determine that the 
information is still reliable.
    In making a determination as to the relevance aspect of 
corroboration, the Department will consider information reasonably at 
its disposal as to whether there are circumstances that would render a 
margin not relevant. Where circumstances indicate that the selected 
margin is not appropriate as adverse facts available, the Department 
will disregard the margin and determine an appropriate margin. For 
example, in Fresh Cut Flowers from Mexico: Final Results of Antidumping 
Duty Administrative Review, 61 FR 6812 (February 22, 1996), the 
Department disregarded the highest margin as ``best information 
available'' (the predecessor to ``facts available'') since the margin 
was based on another company's uncharacteristic business expense that 
resulted in an unusually high dumping margin. Similarly, the Department 
does not apply a margin that has been discredited. See D&L Supply Co. 
v. United States, 113 F. 3d 1220, 1224 (Fed. Cir. 1997) (the Department 
will not use a margin that has been judicially invalidated). None of 
these unusual circumstances are present here, and there is no evidence 
indicating that the margin used as facts available in this review is 
not appropriate.
    In the investigation, the Department determined that, because the 
offer used in the calculation of 122.88 percent reflected commercial 
practices of the particular industry during the period of 
investigation, the information was relevant to mandatory respondents 
that failed to participate in the investigation. See Final LTFV, 69 FR 
at 34123-24. No information has been presented in the current review 
that calls into question the relevance of this information. 
Accordingly, we preliminarily determine that the adverse facts-
available rate we corroborated in the investigation is relevant to KP 
in this first administrative review of the order.
    KP's failure to cooperate to the best of its abilities in this 
review has left the Department with an ``egregious lack of evidence.'' 
See Shanghai Taoen, 360 F. Supp. 2d at 1348. Further, because this is 
the first review of KP (and because Zippac failed to participate in the 
investigation), there are no probative alternatives. Id. Accordingly, 
by using information that was corroborated in the investigation and 
preliminarily determined to be relevant to KP in this review, we have 
corroborated the adverse facts-available rate ``to the extent 
practicable.'' See section 776(c) of the Act; 19 CFR 351.308(d); NSK 
Ltd. v. United States, 347 F. Supp. 2d 1312, 1336 (CIT 2004) (stating, 
``pursuant to the 'to the extent practicable' language . . . the 
corroboration requirement itself is not mandatory when not feasible'').
    With respect to CP Packaging, we found at verification that CP 
Packaging reported incorrect amounts for inland-freight expenses it 
incurred for all U.S.

[[Page 53408]]

sales we examined. See CP Sales Verification Report at 15. Because we 
were unable to verify this expense, the use of facts available is 
necessary. See section 776(a)(2)(D) of the Act. In addition, CP 
Packaging had the documents necessary to report the correct freight 
expenses for its U.S. sales. See CP Sales Verification Report at 
Exhibit 6, which includes the bills from the freight and brokerage 
suppliers which we used to ascertain the actual freight expense for a 
particular U.S. sale. Because it did not do so, we find that CP 
Packaging did not act to the best of its ability in reporting this 
expense and, accordingly, the use of an adverse inference is necessary. 
See section 776(b) of the Act; Nippon Steel, 337 F.3d at 1382-83. As 
partial adverse facts available, we used the highest per-kilogram 
inland-freight expense that CP reported for any U.S. sale.
    With respect to CP Packaging, we also found at verification that CP 
Packaging reported incorrect amounts for the direct-materials expenses 
it incurred for the three subject models we examined. See CP Cost 
Verification Report at 14-15. Because we were unable to verify this 
expense, the use of facts available is necessary. See section 
776(a)(2)(D) of the Act. In addition, CP Packaging had the documents 
necessary to report the correct direct-materials costs for its subject 
models. See, e.g., CP Cost Verification Report at Exhibit 13, which 
includes the print product-costing reports which CP could have used to 
report the correct costs. Because it did not do so, we find that CP 
Packaging did not act to the best of its ability in reporting this 
expense and, accordingly, the use of an adverse inference is necessary. 
See section 776(b) of the Act; Nippon Steel, 337 F.3d at 1382-83. With 
the exception of the merchandise extruded at CP Packaging's Bangplee 
facility, however, the reported direct materials costs for the other 
two models for the months we examined was understated by approximately 
the same proportion. See CP Cost Verification Report at 14-15. We 
consider the merchandise that CP Packaging extruded at the Bangplee 
facility to be an unusual situation such that it is unrepresentative of 
other models CP Packaging produced because it was the only model CP 
Packaging sold during the period of review that it did not wholly 
produce at its Rayong facility. See CP Cost Verification Report at 3. 
Because costs for the other models were off by a similar proportion, as 
partial adverse facts available, we have restated the direct-materials 
costs for all models, except the model produced at the Bangplee 
facility, by increasing the materials costs by the same proportion as 
the two non-Bangplee models we examined at verification. We restated 
the materials costs for the model CP Packaging extruded at the Bangplee 
facility using the amounts we verified for this model.

Export Price and Constructed Export Price

    For the price to the United States, we used export price (EP) or 
constructed export price (CEP) as defined in sections 772(a) and (b) of 
the Act, as appropriate. We calculated EP and CEP based on the packed 
F.O.B., C.I.F., or delivered price to unaffiliated purchasers in, or 
for exportation to, the United States. See section 772(c) of the Act. 
We made deductions, as appropriate, for discounts and rebates. See 
section 772(d) of the Act. We also made deductions for any movement 
expenses in accordance with section 772(c)(2)(A) of the Act.
    In accordance with section 772(d)(1) of the Act and the SAA 
accompanying the Uruguay Round Agreements Act (URAA), H.R. Rep. No. 
103-316, at 823-824, reprinted in 1994 U.S.C.C.A.N. 4040, 4163-64, we 
calculated the CEP by deducting selling expenses associated with 
economic activities occurring in the United States, which include 
commissions and direct selling expenses. In accordance with section 
772(d)(1) of the Act, we also deducted those indirect selling expenses 
associated with economic activities occurring in the United States and 
the profit allocated to expenses deducted under section 772(d)(1) in 
accordance with sections 772(d)(3) and 772(f) of the Act. In accordance 
with section 772(f) of the Act, we computed profit based on the total 
revenues realized on sales in both the U.S. and comparison markets, 
less all expenses associated with those sales. We then allocated profit 
to expenses incurred with respect to U.S. economic activity based on 
the ratio of total U.S. expenses to total expenses for both the U.S. 
and comparison markets.

Comparison-Market Sales

    Based on a comparison of the aggregate quantity of comparison-
market and U.S. sales and absent any information that a particular 
market situation in the exporting country did not permit a proper 
comparison, with the exception of UPC/API, we determined that the 
quantity of foreign like product sold by all respondents in the 
exporting country was sufficient to permit a proper comparison with the 
sales of the subject merchandise to the United States, pursuant to 
section 773(a)(1) of the Act. Aside from UPC/API, each company's 
quantity of sales in its comparison market was greater than five 
percent of its sales to the U.S. market. See section 773(a)(1)(c) of 
the Act. Therefore, in accordance with section 773(a)(1)(B)(i) of the 
Act, we based normal value for all respondents except for UPC/API on 
the prices at which the foreign like product was first sold for 
consumption in the exporting country in the usual commercial quantities 
and in the ordinary course of trade and, to the extent practicable, at 
the same level of trade as the EP or CEP sales.
    Although UPC/API did not have a viable home market within the 
meaning of section 773(a)(1)(B)(ii)(II) of the Act, Canada was a viable 
third-country market for UPC/API under section 773(a)(1)(C) of the Act. 
Therefore, we based normal value for UPC/API's U.S. sales on the prices 
at which the foreign like product was first sold for consumption in 
Canada in the usual commercial quantities and in the ordinary course of 
trade and, to the extent practicable, at the same level of trade as the 
CEP sales. See section 773(a)(1)(c) of the Act.

Cost of Production

    We disregarded below-cost sales in accordance with section 773(b) 
of the Act in the antidumping duty investigation with respect to PRCBs 
sold by TPBG. See Final LTFV, 69 FR at 34124. Therefore, we have 
reasonable grounds to believe or suspect that sales of the foreign like 
product under consideration for the determination of normal value in 
this review may have been made at prices below the cost of production 
(COP) as provided by section 773(b)(2)(A)(ii) of the Act. Therefore, 
pursuant to section 773(b)(1) of the Act, we conducted a COP 
investigation of sales by TPBG in the comparison market.
    The petitioners in this proceeding\1\ filed allegations that all of 
the respondents (other than TPBG) made sales below COP in the 
comparison market. Based on the information in the responses, we found 
that we had reasonable grounds to believe or suspect that sales of the 
foreign like product were made at prices that are less than the cost of 
production of the product by UPC/API, Apple, CP Packaging, KP, and 
Naraipak. Therefore, pursuant to section 773(b)(1) of the Act, we 
conducted COP investigations of sales by these firms in the respective

[[Page 53409]]

comparison market. We did not find reasonable grounds to believe or 
suspect that sales of the foreign like product were made at prices that 
are less than the COP of the product by Sahachit Watana. Therefore, we 
did not conduct a COP investigation of sales by this firm. See the 
February 21, 2006, Decision Memorandum to Laurie Parkhill entitled 
``Polyethylene Retail Carrier Bags from Thailand - Request to Initiate 
Cost Investigation for Sahachit Watana Plastic Industry Co., Ltd.'' for 
a full discussion of our analysis.
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    \1\ The petitioners are the Polyethylene Retail Carrier Bag 
Committee and its individual members, Hilex Poly Co., LLC, and 
Superbag Corporation.
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    In accordance with section 773(b)(3) of the Act, we calculated the 
COP based on the sum of the costs of materials and fabrication employed 
in producing the foreign like product, the selling, general, and 
administrative (SG&A) expenses, and all costs and expenses incidental 
to packing the merchandise. In our COP analysis, we used the 
comparison-market sales and COP information provided by each respondent 
in its questionnaire responses.
    After calculating the COP, in accordance with section 773(b)(1) of 
the Act we tested whether comparison-market sales of the foreign like 
product were made at prices below the COP within an extended period of 
time in substantial quantities and whether such prices permitted the 
recovery of all costs within a reasonable period of time. See section 
773(b)(2) of the Act. We compared model-specific COPs to the reported 
comparison-market prices less any applicable movement charges, 
discounts, and rebates.
    Pursuant to section 773(b)(2)(C) of the Act, when less than 20 
percent of a respondent's sales of a given product were at prices less 
than the COP, we did not disregard any below-cost sales of that product 
because the below-cost sales were not made in substantial quantities 
within an extended period of time. When 20 percent or more of a 
respondent's sales of a given product during the period of review were 
at prices less than the COP, we disregarded the below-cost sales 
because they were made in substantial quantities within an extended 
period of time pursuant to sections 773(b)(2)(B) and (C) of the Act and 
based on comparisons of prices to weighted-average COPs for the period 
of review, we determined that these sales were at prices which would 
not permit recovery of all costs within a reasonable period of time in 
accordance with section 773(b)(2)(D) of the Act. See the Department's 
preliminary analysis memoranda for UPC/API, Apple, CP Packaging, KP, 
Naraipak, and TPBG, dated August 31, 2006. Based on this test, we 
disregarded below-cost sales with respect to all of these companies.
    We made several changes to the costs reported by CP Packaging. As 
discussed under the Use of Facts Available section above, we increased 
the raw-materials costs by the percentage by which the raw-materials 
costs for models we examined at verification was understated.
    In addition, we found at verification that, for some comparison-
market products, CP Packaging made a small number of sales to a single 
domestic customer for which the customer provided replacement raw 
materials following production. We made an appropriate adjustment to 
the cost for those sales by the value of the raw materials. See CP 
Packaging Preliminary Results Analysis Memorandum, dated August 31, 
2006.
    Finally, we made an adjustment to CP Packaging's reported costs for 
recycled resin supplied by an affiliated party pursuant to section 
773(f)(2) of the Act. Our calculation of the adjustment to CP 
Packaging's costs for this affiliated-party input is attached to the CP 
Packaging Preliminary Results Analysis Memorandum, dated August 31, 
2006.
    UPC/API reported the cost of raw materials purchased from 
affiliated resellers at transfer price. In accordance with section 
773(f)(2) of the Act, the Department is directed to determine whether 
inputs obtained from affiliated parties reflect arm's-length values. 
Because the affiliated reseller provided both the raw materials as well 
as the administrative services related to acquiring the raw materials, 
there is an administrative cost associated with the purchase of raw 
materials and with coordinating their delivery. Therefore, to ensure 
that we have captured the market value of the inputs plus an amount to 
cover the additional procurement services provided to UPC/API by its 
affiliates, we have compared transfer prices to adjusted market prices 
(i.e., the market price of the raw materials plus an amount for the 
affiliates' SG&A expenses). Where the adjusted market prices were 
higher than the reported transfer prices, we increased the reported 
total cost of manufacturing to reflect the adjusted market prices. See 
the UPC/API Preliminary Results Analysis Memorandum, dated August 31, 
2006, for additional information.
    Further, UPC/API reported cost data on both a quarterly and period-
of-review basis, requesting that the Department use quarterly data due 
to the significant fluctuation in the cost of resin. It is the 
Department's normal practice to use annual-average costs to address 
fluctuations in the production cost over the entire period of review in 
non-high-inflation cases. See Certain Steel Concrete Reinforcing Bars 
from Turkey; Final Results, Recession of Antidumping Duty 
Administrative Review in Part, and Determination to Revoke in Part, 70 
FR 67665 (November 8, 2005), and accompanying Issues and Decision 
Memorandum at Comment 1. While our normal practice for a respondent in 
a country that is not experiencing high inflation is to calculate a 
single weighted-average cost for the entire period of review, we have 
used short cost- averaging periods in unusual cases where a company 
experienced a drastic and consistent change in cost and prices. Id. 
Therefore, we conducted an analysis of UPC/API's reported cost data to 
determine whether the fluctuation in the cost of resin had an impact on 
the cost of manufacturing. We found that there was an insignificant 
difference in the cost of manufacturing when comparing quarterly cost 
data to cost data for the period of review. For this reason, we have 
not departed from our normal practice and, accordingly, used UPC/API's 
reported period-of-review cost data for these preliminary results. See 
UPC/API Preliminary Results Analysis Memorandum for a more 
comprehensive description of our analysis.
    Finally, UPC/API reported and subtracted from the total cost of 
manufacturing what it describes as shut-down/start-up costs. Section 
773(f)(1)(C)(ii) of the Act allows for an adjustment for start-up 
operations only where a producer is using new production facilities or 
producing a new product that requires substantial additional investment 
and production levels are limited by technical factors associated with 
the initial phase of commercial production. After evaluating the 
information provided in UPC/API's questionnaire responses, we found 
that the expenses identified by UPC/API did not result from start-up 
operations as described under section 773(f)(1)(C)(ii) of the Act. See 
UPC/API Preliminary Results Analysis Memorandum for more details. 
Therefore, we did not allow an adjustment to the cost of manufacturing 
for the reason of start-up operations.
    We determined further that the expenses do not meet the 
Department's definition of extraordinary expenses (i.e., infrequent in 
occurrence and unusual in nature). It is the Department's practice to 
exclude items that are infrequent and unusual from the calculation of 
reported costs. See Certain Steel Concrete Reinforcing Bars from 
Turkey; Final Results, Rescission

[[Page 53410]]

of Antidumping Duty Administrative Review in Part, and Determination 
Not To Revoke in Part, 69 FR 64731 (November 8, 2004), and accompanying 
Issues and Decision Memorandum at Comment 13. Because the generally 
accepted accounting principles (GAAP) of many countries have varying 
tests of classifying extraordinary items, we test these classifications 
to ensure that they are the result of events that are unusual and 
infrequent. See, e.g., Notice of Final Determination of Sales at Less 
Than Fair Value: Static Random Access Memory Semiconductors From 
Taiwan, 63 FR 8909 (February 23, 1998); see also Notice of Final 
Determination of Sales at Less Than Fair Value: Stainless Steel Sheet 
and Strip in Coils From Japan,64 FR 30574, 30590-91 (June 8, 1999) 
(stating that the Department's policy is to exclude ``extraordinary'' 
expenses provided they are both unusual and infrequent). Based on the 
information on the record of this review, we do not find that temporary 
shut-downs in the manufacturing industry are unusual in nature and 
infrequent in occurrence. See Notice of Final Determination of Sales at 
Less Than Fair Value: Fresh Atlantic Salmon From Chile, 63 FR 31411, 
31436 (June 9, 1998), where the Department concluded that costs 
associated with the temporary shut-down of a facility should be 
included in the COP. Accordingly, for these preliminary results, we 
have added back to the total cost of manufacturing the expenses that 
UPC/API identified and reported as shut-down/start-up expenses.
    We made no other adjustments to the cost information the 
respondents reported.

Model-Match Methodology

    We compared U.S. sales with sales of the foreign like product in 
the comparison market. Specifically, in making our comparisons, we used 
the following methodology. If an identical comparison-market model was 
reported, we made comparisons to weighted-average comparison-market 
prices that were based on all sales which passed the COP test of the 
identical product during the relevant or contemporary month. We 
calculated the weighted-average comparison-market prices on a level of 
trade-specific basis. If there were no contemporaneous sales of an 
identical model, we identified the most similar comparison-market 
model. To determine the most similar model, we matched the foreign like 
product based on the physical characteristics reported by the 
respondents in the following order of importance: (1) Quality, (2) bag 
type, (3) length, (4) width, (5) gusset, (6) thickness, (7) percentage 
of high-density polyethylene resin, (8) percentage of low-density 
polyethylene resin, (9) percentage of low linear-density polyethylene 
resin, (10) percentage of color concentrate, (11) percentage of ink 
coverage, (12) number of ink colors, (13) number of sides printed.

Normal Value

    Comparison-market prices were based on the packed, ex-factory, or 
delivered prices to affiliated or unaffiliated purchasers. When 
applicable, we made adjustments for differences in packing and for 
movement expenses in accordance with sections 773(a)(6)(A) and (B) of 
the Act. We also made adjustments for differences in cost attributable 
to differences in physical characteristics of the merchandise pursuant 
to section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411 and for 
differences in circumstances of sale in accordance with section 
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. For comparisons to EP, 
we made circumstance-of-sale adjustments by deducting comparison-market 
direct selling expenses from and adding U.S. direct selling expenses to 
normal value. For comparisons to CEP, we made circumstance-of-sale 
adjustments by deducting comparison-market direct selling expenses from 
normal value. We also made adjustments, when applicable, for 
comparison-market indirect selling expenses to offset U.S. commissions 
in EP and CEP calculations and for U.S. indirect selling expenses to 
offset comparison-market commissions.
    In accordance with section 773(a)(1)(B)(i) of the Act, we based 
normal value, to the extent practicable, on sales at the same level of 
trade as the EP or CEP. If normal value was calculated at a different 
level of trade, we made an adjustment, if appropriate and if possible, 
in accordance with section 773(a)(7)(A) of the Act. See Level of Trade 
section below.
    The Department may calculate normal value based on a sale to an 
affiliated party only if it is satisfied that the price to the 
affiliated party is comparable to the price at which sales are made to 
parties not affiliated with the exporter or producer, i.e., sales at 
arm's-length prices. See 19 CFR 351.403(c). We excluded sales to 
affiliated customers for consumption in the comparison market that we 
determined not to be at arm's-length prices from our analysis. To test 
whether these sales were made at arm's-length prices, the Department 
compared the prices of sales of comparable merchandise to affiliated 
and unaffiliated customers, net of all rebates, movement charges, 
direct selling expenses, and packing. Pursuant to 19 CFR 351.403(c) and 
in accordance with our practice, when the prices charged to an 
affiliated party were, on average, between 98 and 102 percent of the 
prices charged to unaffiliated parties for merchandise comparable to 
that sold to the affiliated party, we determined that the sales to the 
affiliated party were at arm's-length prices. See Antidumping 
Proceedings: Affiliated Party Sales in the Ordinary Course of Trade, 67 
FR 69186 (November 15, 2002). We included in our calculation of normal 
value those sales to affiliated parties that were made at arm's-length 
prices.
    As discussed in the Cost of Production section above, we found at 
verification that, for some comparison-market products, CP Packaging 
made a small number of sales to a single domestic customer for which 
the customer provided replacement raw materials following production. 
We made an appropriate adjustment to the price for those sales by the 
value of the raw materials. See CP Packaging Preliminary Results 
Analysis Memorandum, dated August 31, 2006.

Constructed Value

    In accordance with section 773(a)(4) of the Act, we used 
constructed value as the basis for normal value when we could not 
determine normal value due to lack of usable sales of the foreign like 
product in the comparison market. We calculated constructed value in 
accordance with section 773(e) of the Act. We included the cost of 
materials and fabrication, SG&A expenses, U.S. packing expenses, and 
profit in the calculation of constructed value. In accordance with 
section 773(e)(2)(A) of the Act, we based SG&A expenses and profit on 
the actual amounts incurred and realized by each respondent in 
connection with the production and sale of the foreign like product in 
the ordinary course of trade for consumption in the comparison market.
    When appropriate, we made adjustments to constructed value in 
accordance with section 773(a)(8) of the Act, 19 CFR 351.410, and 19 
CFR 351.412, for circumstance-of-sale differences and level-of-trade 
differences. For comparisons to EP, we made circumstance-of-sale 
adjustments by deducting comparison-market direct selling expenses from 
and adding U.S. direct selling expenses to constructed value. For 
comparisons to CEP, we made circumstance-of-sale adjustments by 
deducting comparison-market direct selling expenses from constructed 
value.

[[Page 53411]]

We also made adjustments, when applicable, for comparison-market 
indirect selling expenses to offset U.S. commissions in EP and CEP 
comparisons.
    When possible, we calculated constructed value at the same level of 
trade as the EP or CEP. If constructed value was calculated at a 
different level of trade, we made an adjustment, if appropriate and if 
possible, in accordance with sections 773(a)(7) and (8) of the Act.

Level of Trade

    To the extent practicable, we determined normal value for sales at 
the same level of trade as the U.S. sales (either EP or CEP). See 
sections 773(a)(1)(B)(i) and 773(a)(7) of the Act. When there were no 
sales at the same level of trade, we compared U.S. sales to comparison-
market sales at a different level of trade. The normal-value level of 
trade is that of the starting-price sales in the comparison market. 
When normal value is based on constructed value, the level of trade is 
that of the sales from which we derived SG&A and profit. To determine 
whether comparison-market sales are at a different level of trade than 
U.S. sales, we examined stages in the marketing process and selling 
functions along the chain of distribution between the producer and the 
unaffiliated customer.
    No company reported any significant differences in selling 
functions between different channels of distribution or customer type 
in either the comparison or U.S. markets. Therefore, for each 
respondent, we determined that all comparison-market sales were made at 
one level of trade and that all U.S. sales were made at one level of 
trade. Moreover, for each respondent that had EP sales, we determined 
that all comparison-market sales were made at the same level of trade 
as the EP customer.
    For each of the two respondents that had CEP sales (UPC/API and 
Apple), we found that the comparison-market level of trade was not 
equivalent to the CEP level of trade and that the CEP level of trade 
was at a less advanced stage than the comparison-market level of trade. 
Therefore, we were unable to determine a level-of-trade adjustment 
based on the respondents' comparison-market sales of the foreign like 
product. Furthermore, we have no other information that provides an 
appropriate basis for determining a level-of-trade adjustment. For 
these respondents' CEP sales, we made a CEP-offset adjustment in 
accordance with section 773(a)(7)(B) of the Act. The CEP-offset 
adjustment to normal value was subject to the offset cap, calculated as 
the sum of comparison-market indirect selling expenses up to the amount 
of U.S. indirect selling expenses deducted from CEP (or, if there were 
no comparison-market commissions, the sum of U.S. indirect selling 
expenses and U.S. commissions).

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following percentage weighted-average dumping margins exist on 
polyethylene retail carrier bags from Thailand for the period January 
26, 2004, through July 31, 2005:

------------------------------------------------------------------------
                        Company                         Margin (percent)
------------------------------------------------------------------------
UPC/API...............................................             14.17
TPBG..................................................              1.41
Apple.................................................             16.43
CP Packaging..........................................              7.75
KP....................................................            122.88
Naraipac..............................................              1.69
Sahachit Watana.......................................              6.34
------------------------------------------------------------------------

Comments

    We will disclose the calculations used in our analysis to parties 
to this review within five days of the date of publication of this 
notice. Any interested party may request a hearing within 30 days of 
the date of publication of this notice. See 19 CFR 351.310. 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 within 30 days of the date of publication of this 
notice. Requests should contain the following: (1) the party's name, 
address, and telephone number; (2) the number of participants; (3) a 
list of issues to be discussed. See 19 CFR 351.310(c).
    Issues raised in the hearing will be limited to those raised in the 
case and rebuttal briefs. See 19 CFR 351.310(c). Case briefs from 
interested parties may be submitted not later than 30 days after the 
date of publication of this notice of preliminary results of review. 
See 19 CFR 351.309(c)(1)(ii). Rebuttal briefs from interested parties, 
limited to the issues raised in the case briefs, may be submitted not 
later than five days after the time limit for filing the case briefs or 
comments. See 19 CFR 351.309(d)(1). See 19 CFR 351.310(c). Any hearing, 
if requested, will be held two days after the scheduled date for 
submission of rebuttal briefs. See 19 CFR 351.310(d). Parties who 
submit case briefs or rebuttal briefs in this proceeding are requested 
to submit with each argument a statement of the issue, a summary of the 
arguments not exceeding five pages, and a table of statutes, 
regulations, and cases cited. See 19 CFR 351.309(c)(2).
    The Department will issue the final results of this administrative 
review, including the results of its analysis of issues raised in any 
such written briefs or at the hearing, if held, not later than 120 days 
after the date of publication of this notice. See section 751(a)(3)(A) 
of the Act.

Assessment Rates

    The Department shall determine, and CBP shall assess, antidumping 
duties on all appropriate entries. In accordance with 19 CFR 
351.212(b)(1), we have calculated, whenever possible, an exporter/
importer (or customer)-specific assessment rate or value for 
merchandise subject to this review. Pursuant to 19 CFR 351.212.(b)(1), 
the Department has calculated importer (or customer)-specific ad 
valorem duty-assessment rates based on the ratio of the total amount of 
the dumping margins calculated for the examined sales to the total 
entered value of those same sales. Where entered value is unavailable 
the Department has calculated importer (or customer)-specific per-unit 
assessment amounts by dividing the total dumping margin for each 
importer or customer by the number of units that importer or customer 
purchased during the period of review.
    With respect to KP, because we are relying on total adverse facts 
available to establish its dumping margin, we preliminarily determine 
to instruct CBP to apply 122.88 percent to all entries during the 
period of review which were produced or exported by any of the KP 
entities (KPI, DPAC, Zippac, and King Bag).
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003 (68 FR 23954). This clarification will apply to entries of 
subject merchandise during the period of review produced by companies 
included in these preliminary results of review for which the reviewed 
companies did not know their merchandise was destined for the United 
States. In such instances, we will instruct CBP to liquidate unreviewed 
entries at the all-others rate if there is no rate for the intermediate 
company(ies) involved in the transaction. For a full discussion of this 
clarification, see Antidumping and Countervailing Duty Proceedings: 
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).
    The Department will issue appropriate assessment instructions 
directly to CBP within 15 days of

[[Page 53412]]

publication of the final results of review.

Cash-Deposit Requirements

    The following deposit requirements will be effective upon 
publication of the notice of final results of administrative review for 
all shipments of polyethylene retail carrier bags from Thailand 
entered, or withdrawn from warehouse, for consumption on or after the 
date of publication, as provided by section 751(a)(1) of the Act: (1) 
The cash-deposit rates for the reviewed companies will be the rates 
established in the final results of review; (2) for previously 
investigated companies not listed above, the cash-deposit rate will 
continue to be the company-specific rate published in the Notice of 
Amended Final Determination of Sales at Less Than Fair Value: 
Polyethylene Retail Carrier Bags from Thailand, 69 FR 42419 (July 15, 
2004); (3) if the exporter is not a firm covered in this review or the 
less-than-fair-value investigation but the manufacturer is, the cash-
deposit rate will be the rate established for the most recent period 
for the manufacturer of the merchandise; (4) if neither the exporter 
nor the manufacturer has its own rate the cash-deposit rate will be 
2.80 percent, the ``all others'' rate for this proceeding. These 
deposit requirements, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.

Notification to Importer

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Department's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of doubled antidumping duties.
    These preliminary results of administrative review are issued and 
published in accordance with sections 751(a)(1) and 777(i)(1) of the 
Act.

    Dated: August 31, 2006.
David M. Spooner,
Assistant Secretaryfor Import Administration.
[FR Doc. E6-14914 Filed 9-11-06; 8:45 am]
BILLING CODE 3510-DS-S