[Federal Register Volume 72, Number 106 (Monday, June 4, 2007)]
[Notices]
[Pages 30758-30766]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-10705]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-906]


Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Coated Free Sheet Paper from the 
People's Republic of China

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

EFFECTIVE DATE: June 4, 2007.
SUMMARY: The Department of Commerce (the ``Department'') preliminarily 
determines that coated free sheet paper (``CFS'') from the People's 
Republic of China (``PRC'') is being, or is likely to be, sold in the 
United States at less than fair value (``LTFV''), as provided in 
section 733 of the Tariff Act of 1930, as amended (``Act''). The 
estimated dumping margins are shown in the ``Preliminary 
Determination'' section of this notice.

FOR FURTHER INFORMATION CONTACT: Magd Zalok or Drew Jackson, AD/CVD 
Operations, Office 4, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC, 20230; telephone: (202) 482-
4162 or 482-4406, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On October 31, 2006, the Department received petitions concerning 
imports of CFS from the PRC, Indonesia, and the Republic of Korea 
(``Korea'') filed in proper form by NewPage Corporation 
(``petitioner'') on behalf of the domestic industry. The Department 
initiated antidumping duty investigations of CFS from the above-
mentioned countries on November 20, 2006. See Initiation of Antidumping 
Duty Investigations: Coated Free Sheet Paper from Indonesia, the 
People's Republic of China, and the Republic of Korea, 71 FR 68537 
(November 27, 2006) (``Initiation Notice''). On December 22, 2006, the 
International Trade Commission (``ITC'') preliminarily determined that 
there is a reasonable indication that imports of CFS from the PRC, 
Indonesia, and Korea are materially injuring the U.S. industry. See 
Coated Free Sheet Paper From China, Indonesia, and Korea, Investigation 
Nos. 701-TA-444-446 and 731-TA-1107-1109 (Preliminary), 71 FR 78464 
(December 29, 2006).
    On November 29, 2006, the Department requested quantity and value 
(``Q&V'') information from 14

[[Page 30759]]

companies identified in the petition as potential producers or 
exporters of CFS from the PRC. See Exhibit 5, Volume I, of the October 
31, 2006 Petition for the Imposition of Antidumping and Countervailing 
Duties.
    On December 27, 2006, the Department received Q&V responses from 
four interested parties. Additionally, on January 3, 2007, the 
Department received an untimely Q&V response from UPM-Kymmene 
(Changshu) Paper Industry Co., Ltd. (``UPM''), which we rejected. See 
letter to UPM concerning ``Return of Untimely Submission of Quantity 
and Value Information'' dated January 11, 2007.
    On December 27, 2006, the Department received a separate-rate 
application from Yanzhou Tianzhang Paper Industry Co. Ltd. (``Yanzhou 
Tianzhang''), a producer and exporter not named in the petition. 
Additionally, on January 26, 2007, the Department received a separate-
rate application from UPM, which we rejected. See letter to UPM 
concerning ``Submissions by UPM-Kymmene (Changshu) Paper Industry Co., 
Ltd.'' dated February 8, 2007.\1\
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    \1\ See also the submissions to the Department from UPM dated 
January 29, 2007, February 1, 2007, and February 5, 2007, and from 
the petitioner dated February 2, 2007.
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    On January 10, 2007, the Department selected Gold East Paper 
(Jiangsu) Co. Ltd, (``GE''), and Shandong Chenming Paper Holdings 
Limited (``Chenming'') as mandatory respondents. See memorandum 
regarding ``Selection of Respondents for the Antidumping Investigation 
of Coated Free Sheet Paper from the People's Republic of China,'' dated 
January 10, 2007 (``Respondent Selection Memorandum'').
    On January 11, 2007, we issued the Department's antidumping 
questionnaire to the mandatory respondents. GE and Chenming submitted 
timely responses to the Department's questionnaire during February and 
March 2007. The Department issued supplemental questionnaires to, and 
received responses from, GE and Chenming from February to May 2007. The 
petitioner submitted comments to the Department regarding GE's and 
Chenming's questionnaire and supplemental questionnaire responses from 
February to April 2007.
    On January 24, 2007, the Department released a memorandum in which 
it listed potential surrogate countries and invited interested parties 
to comment on surrogate country and factor value selection. No party 
responded to the Department's invitation to comment on surrogate 
country selection. However, from March to May, 2007, both the 
petitioner and the respondents submitted surrogate values, including 
surrogate financial statements, for use in this investigation. All of 
the submitted surrogate data are from India.
    On February 15, 2007, the respondent in the antidumping duty 
investigation of CFS from Korea submitted comments to the Department 
regarding the appropriate model matching criteria. The Department 
received no rebuttal comments on model matching.
    On March 1, 2007, the petitioner made a timely request, pursuant to 
19 CFR 351.205(e), for a fifty-day postponement of the preliminary 
determination in this investigation. On March 19, 2007, pursuant to 
section 733(c)(1)(A) of the Act, the Department postponed the 
preliminary determination until no later than May 29, 2007. See 
Postponement of Preliminary Determinations in the Antidumping Duty 
Investigations of Coated Free Sheet Paper from the People's Republic of 
China, Indonesia, and the Republic of Korea, 72 FR 12757 (March 19, 
2007). On May 11, 2007, the petitioner, the respondents, and the Bureau 
of Fair Trade, Ministry of Commerce, People's Republic of China 
(``BOFT''), submitted comments to the Department regarding issues they 
would like addressed in the preliminary determination. In addition, on 
May 11, 2007, UPM filed a submission with the Department in which it 
requested that the Department reconsider its decision not to accept the 
company's untimely Q&V response. For the reasons given in the 
Department's January 11, and February 8, 2007 letters to UPM, the 
Department has not reversed its earlier decision to reject UPM's 
separate-rate application and untimely Q&V response.
    Also, on May 11, 2007, GE requested that, in the event of an 
affirmative preliminary determination in this investigation, the 
Department: (1) postpone its final determination by 60 days in 
accordance with 19 CFR 351.210(2)(ii) and 735(a)(2)(A) of the Act; and 
(2) extend the application of the provisional measures prescribed under 
19 CFR 351.210(e)(2) from a 4-month period to a 6-month period. 
Finally, on May 18, 2007, the petitioner responded to the BOFT's May 
11, 2007 comments.

Period of Investigation

    The period of investigation (``POI'') is April 1, 2006, through 
September 30, 2006. This period comprises the two fiscal quarters 
immediately prior to the month in which the petition was filed (October 
31, 2006). See 19 CFR 351.204(b)(1).

Scope of the Investigation

    The merchandise covered by this investigation includes coated free 
sheet paper and paperboard of a kind used for writing, printing or 
other graphic purposes. Coated free sheet paper is produced from not-
more-than 10 percent by weight mechanical or combined chemical/
mechanical fibers. Coated free sheet paper is coated with kaolin (China 
clay) or other inorganic substances, with or without a binder, and with 
no other coating. Coated free sheet paper may be surface-colored, 
surface-decorated, printed (except as described below), embossed, or 
perforated. The subject merchandise includes single- and double-side-
coated free sheet paper; coated free sheet paper in both sheet or roll 
form; and is inclusive of all weights, brightness levels, and finishes. 
The terms ``wood free'' or ``art'' paper may also be used to describe 
the imported product.
    Excluded from the scope are: (1) Coated free sheet paper that is 
imported printed with final content printed text or graphics; (2) base 
paper to be sensitized for use in photography; and (3) paper containing 
by weight 25 percent or more cotton fiber. Coated free sheet paper is 
classifiable under subheadings 4810.13.1900, 4810.13.2010, 
4810.13.2090, 4810.13.5000, 4810.13.7040, 4810.14.1900, 4810.14.2010, 
4810.14.2090, 4810.14.5000, 4810.14.7040, 4810.19.1900, 4810.19.2010, 
and 4810.19.2090 of the Harmonized Tariff Schedule of the United States 
(``HTSUS''). While HTSUS subheadings are provided for convenience and 
customs purposes, our written description of the scope of this 
investigation is dispositive.

Scope Comments

    The Department set aside a period of time for parties to raise 
issues regarding product coverage, and encouraged all parties to submit 
comments within 20 calendar days of publication of the Initiation 
Notice. See Initiation Notice, 71 FR at 68538; see also Antidumping 
Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 
1997).
    On January 12, 2007, the respondents in the antidumping duty 
investigation of CFS from Indonesia submitted timely comments on the 
record of this proceeding, in which they requested that the Department 
exclude cast-coated CFS from the scope of the investigation. On January 
19, 2007, the petitioner responded to these comments. The

[[Page 30760]]

Department has analyzed these comments and rebuttal comments and 
determined that it is not appropriate to exclude cast-coated CFS from 
the scope of the CFS investigations. See memorandum regarding ``Request 
to Exclude Cast-Coated Free Sheet Paper from the Antidumping Duty and 
Countervailing Duty Investigations on Coated Free Sheet Paper,'' dated 
March 22, 2007, on file in the Central Records Unit (``CRU'') of the 
main Department building.

Non-Market-Economy (``NME'') Treatment

    The Department considers the PRC to be an NME country. In 
accordance with section 771(18)(C)(i) of the Act, any determination 
that a country is an NME country shall remain in effect until revoked 
by the administering authority. See Tapered Roller Bearings and Parts 
Thereof, Finished and Unfinished, (``TRBs'') From the People's Republic 
of China: Preliminary Results of 2001-2002 Administrative Review and 
Partial Rescission of Review, 68 FR 7500 (February 14, 2003), unchanged 
in TRBs from the People's Republic of China: Final Results of 2001-2002 
Administrative Review, 68 FR 70488 (December 18, 2003).
    In its May 11, 2007 comments, the BOFT argues that recent findings 
by the Department in the countervailing duty (``CVD'') investigation of 
CFS from the PRC require the Department to treat the PRC as a market-
economy country. Absent revocation of the PRC's NME status, the BOFT 
argues that those recent findings require the Department to immediately 
modify its NME methodology by instituting: (1) a presumption that all 
PRC exporters are independent from government control and entitled to 
separate rates; and (2) a provision for granting market economy 
treatment to certain respondents. Additionally, the BOFT requests that, 
in the instant investigation, the Department: (1) exercise its 
discretion, under the statute, and base normal value (``NV'') on home 
market or third country prices (given that home market values were used 
in the companion CVD investigation); and (2) adopt measures to avoid 
imposing both antidumping and countervailing duties to compensate for 
the same unfair trade practice (``double-remedy'').
    In its May 11, 2007, comments Chenming also argues that the 
Department must adjust its antidumping duty calculation to avoid a 
``double remedy.''
    The petitioner urges the Department to reject the BOFT's and 
Chenming's arguments. According to the petitioner, the Department 
should reject the BOFT's proposal for treating the PRC as a market 
economy country because the proposal was submitted too late to be 
considered in this investigation and does not address the statutory and 
regulatory criteria for granting market economy or market-oriented 
industry status. With respect to the double-remedy, the petitioner 
makes the following points: (1) adjusting the dumping margin for 
domestic subsidies is contrary to the statute; (2) the BOFT has not 
supported its assertion that domestic subsidies reduce export prices; 
(3) the NME methodology was designed to calculate NV in antidumping 
cases, not provide a remedy for subsidization; (4) the BOFT's 
presumption that surrogate values result in a subsidy-free restatement 
of the NME producer's costs misconstrues the operation and purpose of 
surrogate values (surrogate values do not exactly replicate the NME 
producer's costs); (5) during its accession to the World Trade 
Organization (``WTO''), the PRC agreed to be bound by the disciplines 
in the WTO Agreement on Subsidies and Countervailing Measures and the 
WTO Agreement on the Implementation of Article VI (the ``Antidumping 
Agreement''), neither of which include provisions about adjustments to 
be made for domestic subsidies; and (6) there is no basis for adjusting 
PRC companies' dumping margins for domestic subsidies when no other 
U.S. trading partner is granted such an adjustment (in fact, the 
Government Accountability Office stated that granting special 
concessions to the PRC to correct an alleged double remedy would be 
``wholly inappropriate.'').
    The Department has not revoked its determination that the PRC is a 
NME country, nor has it altered in this determination its NME 
methodology as requested by the BOFT. With respect to market-economy 
treatment of certain entities, we note that on May 25, 2007, the 
Department published a notice in the Federal Register requesting 
comments on whether it should consider granting market-economy 
treatment to individual respondents in antidumping proceedings 
involving China, the conditions under which individual firms should be 
granted market-economy treatment, and how such treatment might affect 
our antidumping calculation for such qualifying respondents. See 
Antidumping Methodologies in Proceedings Involving Certain Non-Market 
Economies: Market-Oriented Enterprise, 72 FR 29302 (May 25, 2007). The 
Department will address market-economy treatment of individual 
respondents after considering the comments submitted within that 
process. We further note that the question of whether a double remedy 
has been or could be applied, or whether the Department has the 
authority to adjust for such a situation, involves complex factual, 
methodological and legal issues that will require additional time to 
analyze. In this regard, we note that the comments we have received to 
date do not address with sufficient specificity the analytical and 
computational methods by which one might attempt to determine the 
existence and extent of any alleged double remedy. Therefore, the 
Department cannot at this time determine whether an adjustment is 
necessary nor, if so, calculate an appropriate adjustment. However, the 
Department will analyze comments regarding the double remedy that are 
submitted by interested parties during the course of this 
investigation, and may seek additional information on the topic. 
Therefore, in this preliminary determination, we have treated the PRC 
as an NME country and applied our current NME methodology.

Selection of a Surrogate Country

    In antidumping proceedings involving NME countries, the Department, 
pursuant to section 773(c)(1) of the Act, will generally base NV on the 
value of the NME producer's factors of production. In accordance with 
section 773(c)(4) of the Act, in valuing the factors of production, the 
Department shall utilize, to the extent possible, the prices or costs 
of factors of production in one or more market-economy countries that 
are at a level of economic development comparable to that of the NME 
country and are significant producers of merchandise comparable to the 
subject merchandise.
    The Department has determined that India, Indonesia, Sri Lanka, the 
Philippines, and Egypt are countries that are at a level of economic 
development comparable to that of the PRC. See memorandum regarding 
``Antidumping Duty Investigation of Coated Free Sheet Paper from the 
People's Republic of China (PRC): Request for a List of Surrogate 
Countries,'' dated January 22, 2007 (``Policy Memorandum''). From among 
these economically comparable countries, the Department has 
preliminarily selected India as the surrogate country for this 
investigation because it determined that: (1) India is a significant 
producer of merchandise comparable to the subject merchandise and (2) 
reliable Indian data for valuing

[[Page 30761]]

the factors of production are readily available. See memorandum 
regarding ``Coated Free Sheet Paper from the People's Republic of 
China: Selection of Surrogate Country'' dated May 2, 2007.

Treating GE and Certain Other Companies as a Single Entity

    Based on record evidence, the Department has preliminarily 
determined that GE, Gold Huasheng Paper Co., Ltd. (``GHS''), a paper 
producer capable of producing subject merchandise, and China Union 
(Macao Commercial Offshore) Company Limited (``CU''), a company that 
plays a role in GE's operations involving subject merchandise, are 
affiliated pursuant to section 771(33)(F) and (G) of the Act 
(affiliation by virtue of control). Moreover, the Department has 
preliminarily determined that it is appropriate to treat GE, GHS, and 
CU as a single entity for antidumping duty purposes. GE and GHS produce 
similar merchandise and would not require substantial retooling to 
restructure manufacturing priorities.\2\ Additionally, after 
considering the following criteria, the Department determined that 
there exists a significant potential for the manipulation of price or 
production: (1) the level of common ownership; (2) the extent to which 
managerial employees or board members of one firm sit on the Board of 
Directors of an affiliated firm; and (3) whether the companies' 
operations are intertwined. See 19 CFR 351.401(f). Thus, the Department 
has preliminarily collapsed GE, GHS, and CU (collectively ``GE''). For 
details regarding this decision, see memorandum regarding ``Whether to 
Collapse Gold East Paper (Jiangsu) Co., Ltd. with Gold Huasheng Paper 
Co., Ltd. and China Union (Macao Commercial Offshore) Company 
Limited,'' dated concurrently with this notice.
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    \2\ While CU is not a producer of CFS, we note that where 
companies are affiliated, and there exists a significant potential 
for manipulation of prices and/or export decisions, the Department 
has found it appropriate to treat those companies as a single 
entity. The CIT upheld the Department's decision to include export 
decisions in its analysis of whether there was a significant 
potential for manipulation. See Hontex Enterprises v. United States, 
248 F. Supp. 2d 1323, 1343 (CIT 2003).
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Separate Rates

    In proceedings involving NME countries, the Department has a 
rebuttable presumption that all companies within the country are 
subject to government control and thus should be assessed a single 
antidumping duty rate. It is the Department's policy to assign all 
exporters of merchandise subject to investigation involving an NME 
country this single rate unless an exporter can demonstrate that it is 
sufficiently independent so as to be entitled to a separate rate. GE, 
Chenming, and Yanzhou Tianzhang provided company-specific information 
to demonstrate that they operate independently of de jure and de facto 
government control, and therefore are entitled to a separate rate.
    The Department's separate-rate test is not concerned, in general, 
with macroeconomic/border-type controls, e.g., export licenses, quotas, 
and minimum export prices, particularly if these controls are imposed 
to prevent dumping. See Notice of Final Determination of Sales at Less 
Than Fair Value: Certain Preserved Mushrooms from the People's Republic 
of China, 63 FR 72255, 72256 (December 31, 1998). The test focuses, 
rather, on controls over the investment, pricing, and output decision-
making process at the individual firm level. See Notice of Final 
Determination of Sales at Less than Fair Value: Certain Cut-to-Length 
Carbon Steel Plate From Ukraine, 62 FR 61754, 61758 (November 19, 
1997), and Tapered Roller Bearings and Parts Thereof, Finished and 
Unfinished, from the People's Republic of China: Final Results of 
Antidumping Duty Administrative Review, 62 FR 61276, 61279 (November 
17, 1997).
    To establish whether a firm is sufficiently independent from 
government control of its export activities to be entitled to a 
separate rate, the Department analyzes each entity exporting the 
subject merchandise under a test arising from the Notice of Final 
Determination of Sales at Less Than Fair Value: Sparklers from the 
People's Republic of China, 56 FR 20588 (May 6, 1991) (``Sparklers''), 
as further developed in Notice of Final Determination of Sales at Less 
Than Fair Value: Silicon Carbide from the People's Republic of China, 
59 FR 22585 (May 2, 1994) (``Silicon Carbide''). In accordance with the 
separate-rates criteria, the Department assigns separate rates in NME 
cases only if respondents can demonstrate the absence of both de jure 
and de facto governmental control over export activities.

Absence of De Jure Control

    The Department considers the following de jure criteria in 
determining whether an individual company may be granted a separate 
rate: (1) an absence of restrictive stipulations associated with an 
individual exporter's business and export licenses; (2) any legislative 
enactments decentralizing control of companies; and (3) other formal 
measures by the government decentralizing control of companies. See 
Sparklers, 56 FR at 20589.
    Information submitted by GE, Chenming, and Yanzhou Tianzhang 
indicates that there are no restrictive stipulations associated with 
their exporter and/or business licenses; and there are legislative 
enactments decentralizing control of the companies. Therefore, the 
Department has preliminarily found a de jure absence of government 
control over these companies' export activities. See memorandum 
regarding ``Separate Rates'' dated concurrently with this notice 
(``Separate Rates Memorandum'').

Absence of De Facto Control

    Typically the Department considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (1) whether the export prices are set by, or are 
subject to the approval of, a governmental agency; (2) whether the 
respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses. See Silicon Carbide, 59 FR at 22586-87; see also 
Notice of Final Determination of Sales at Less Than Fair Value: 
Furfuryl Alcohol From the People's Republic of China, 60 FR 22544, 
22545 (May 8, 1995). The Department considers an analysis of de facto 
control to be critical in determining whether a respondent is, in fact, 
subject to a degree of governmental control that would preclude the 
Department from assigning the respondent a separate rate.
    GE, Chenming, and Yanzhou Tianzhang have each provided information 
indicating that they: (1) set export prices independent of the 
government and without the approval of a government authority; (2) have 
the authority to negotiate and sign contracts and other agreements; (3) 
have autonomy from the government regarding the selection of 
management; and (4) retain proceeds from sales and make independent 
decisions regarding the disposition of profits or financing of losses. 
Therefore, the Department has preliminarily found a de facto absence of 
government control over these companies' export activities.

[[Page 30762]]

    Based on the foregoing,\3\ the Department has preliminarily granted 
the two mandatory respondents, and Yanzhou Tianzhang, separate, 
company-specific dumping margins. See Separate Rates Memorandum. The 
Department calculated company-specific dumping margins for GE, and 
Chenming and assigned Yanzhou Tianzhang a dumping margin equal to the 
weighted-average of the dumping margins calculated for GE and Chenming.
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    \3\ Record information submitted regarding GHS and CU, companies 
which the Department collapsed with GE, also supports granting the 
collapsed entity a separate rate. See Separate Rates Memorandum.
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The PRC-Wide Entity

    Although all PRC exporters of subject merchandise to the United 
States were given an opportunity to provide Q&V information to the 
Department, not all exporters responded to the Department's request for 
Q&V information.\4\ Based upon our knowledge of the volume of imports 
of subject merchandise from the PRC, we have concluded that the 
companies that responded to the Q&V questionnaire do not account for 
all U.S. imports during the POI of subject merchandise from the PRC. We 
have treated the non-responsive PRC producers/exporters as part of the 
PRC-wide entity because they did not qualify for a separate rate.
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    \4\ The Department received only four timely responses to the 
requests for Q&V information that it sent to the 14 potential 
exporters identified in the petition.
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    Section 776(a)(2) of the Act provides that, if an interested party 
(A) withholds information that has been requested by the Department, 
(B) fails to provide such information in a timely manner or in the form 
or manner requested, subject to subsections 782(c)(1) and (e) of the 
Act, (C) significantly impedes a proceeding under the antidumping 
statute, or (D) provides such information but the information cannot be 
verified, the Department shall, subject to subsection 782(d) of the 
Act, use facts otherwise available in reaching the applicable 
determination.
    As noted above, the PRC-wide entity withheld information requested 
by the Department. As a result, pursuant to section 776(a)(2)(A) of the 
Act, we find it appropriate to base the PRC-wide dumping margin on 
facts available. See Notice of Preliminary Determination of Sales at 
Less Than Fair Value, Affirmative Preliminary Determination of Critical 
Circumstances and Postponement of Final Determination: Certain Frozen 
Fish Fillets From the Socialist Republic of Vietnam, 68 FR 4986 
(January 31, 2003), unchanged in Notice of Final Antidumping Duty 
Determination of Sales at Less Than Fair Value and Affirmative Critical 
Circumstances: Certain Frozen Fish Fillets from the Socialist Republic 
of Vietnam, 68 FR 37116 (June 23, 2003).
    Section 776(b) of the Act provides that, in selecting from among 
the facts otherwise available, the Department may employ an adverse 
inference if an interested party fails to cooperate by not acting to 
the best of its ability to comply with requests for information. See 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Cold-Rolled Flat-Rolled Carbon-Quality Steel Products From the Russian 
Federation, 65 FR 5510, 5518 (February 4, 2000); see also ``Statement 
of Administrative Action,'' accompanying the URAA, H.R. Rep. No. 103-
316, 870 (1994) (``SAA''). Because the PRC-wide entity did not respond 
to the Department's request for information, the Department has 
concluded that it has failed to cooperate to the best of its ability. 
Therefore, the Department preliminarily finds that, in selecting from 
among the facts available, an adverse inference is appropriate.
    Section 776(b) of the Act authorizes the Department to use, as 
adverse facts available (``AFA''), information derived from the 
petition, the final determination from the LTFV investigation, a 
previous administrative review, or any other information placed on the 
record. In selecting a rate for AFA, the Department selects one that is 
sufficiently adverse ``as to effectuate the purpose of the facts 
available rule to induce respondents to provide the Department with 
complete and accurate information in a timely manner.'' See Notice of 
Final Determination of Sales at Less Than Fair Value: Static Random 
Access Memory Semiconductors From Taiwan, 63 FR 8909, 8932 (February 
23, 1998). It is the Department's practice to select, as AFA, the 
higher of the (a) highest margin alleged in the petition, or (b) the 
highest calculated rate for any respondent in the investigation. See 
Final Determination of Sales at Less Than Fair Value: Certain Cold-
Rolled Flat-Rolled Carbon Quality Steel Products From the People's 
Republic of China, 65 FR 34660 (May 21, 2000) and accompanying Issues 
and Decision Memorandum, at ``Facts Available'' section. Because the 
dumping margin derived from the petition is higher than the calculated 
weighted-average margins for the mandatory respondents, we examined 
whether it was appropriate to base the PRC-wide dumping margin on the 
secondary information in the petition.
    When the Department relies on secondary information, rather than 
information obtained in the course of an investigation, section 776(c) 
of the Act requires it to, to the extent practicable, corroborate that 
information from independent sources reasonably at its disposal.\5\ The 
SAA also states that the independent sources may include published 
price lists, official import statistics and customs data, and 
information obtained from interested parties during the particular 
investigation. See SAA at 870.
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    \5\ Secondary information is described in the SAA as 
``information derived from the petition that gave rise to the 
investigation or review, the final determination concerning subject 
merchandise, or any previous review under section 751 concerning the 
subject merchandise.'' See SAA at 870.
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    The SAA also clarifies that ``corroborate'' means that the 
Department will satisfy itself that the secondary information to be 
used has probative value. See SAA at 870. To corroborate secondary 
information, the Department will, to the extent practicable, examine 
the reliability and relevance of the information used. See Tapered 
Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan, 
and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, 
and Components Thereof, From Japan; Preliminary Results of Antidumping 
Duty Administrative Reviews and Partial Termination of Administrative 
Reviews, 61 FR 57391, 57392 (November 6, 1996), unchanged in Tapered 
Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan, 
and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, 
and Components Thereof, From Japan: Final Results of Antidumping Duty 
Administrative Reviews and Termination in Part, 62 FR 11825 (March 13, 
1997).
    To corroborate the petition margin, we compared the range of 
control number-specific dumping margins calculated for the preliminary 
determination to the dumping margin alleged in the petition. Based on 
this comparison, we have preliminarily corroborated the 99.65 percent 
dumping from the petition. See memorandum regarding ``Corroboration of 
the PRC-Wide Facts Available Rate for the Preliminary Determination in 
the Antidumping Duty Investigation of Coated Free Sheet Paper from the 
People's Republic of China,'' dated concurrently with this notice. This 
PRC-wide dumping margin applies to all entries of the merchandise under 
investigation except for entries of subject merchandise from GE, 
Chenming, and Yanzhou Tianzhang.

[[Page 30763]]

Fair Value Comparisons

    To determine whether GE or Chenming sold CFS to the United States 
at LTFV, we compared the weighted-average export price (``EP'') or 
constructed export price (``CEP''), as appropriate, of the CFS to the 
NV of the CFS, as described in the ``U.S. Price,'' and ``NV'' sections 
of this notice.

U.S. Price

EP

    In accordance with section 772(a) of the Act, we based the U.S. 
price for certain sales on EP because the first sale to an unaffiliated 
purchaser was made prior to importation, and the use of CEP was not 
otherwise warranted. In accordance with section 772(c) of the Act, we 
calculated EP by deducting, where applicable, the following expenses 
from the starting price (gross unit price) charged to the first 
unaffiliated customer in the United States: rebates, foreign movement 
expenses, marine insurance, international freight, and foreign and U.S. 
brokerage and handling expenses.
    We based these movement expenses on surrogate values where a PRC 
company provided the service and was paid in Renminbi (``RMB''). If 
market-economy service providers, who were paid in a market economy 
currency, provided movement services for over 33 percent of subject 
merchandise shipments, by volume, we based the movement expenses on the 
actual price charged by the service provider. If market-economy service 
providers, who were paid in a market economy currency, provided 
movement services for less than 33 percent of subject merchandise 
shipments, by volume, we calculated the movement expenses by weight-
averaging surrogate values with the actual price charged by the service 
provider. See Antidumping Methodologies: Market Economy Inputs, 
Expected Non-Market Economy Wages, Duty Drawback; and Request for 
Comments, 71 FR 61716 (October 19, 2006) (``Notice for Antidumping 
Methodologies''). For details regarding our EP calculation, see 
analysis memoranda for GE and Chenming dated concurrently with this 
notice.

CEP

    In accordance with section 772(b) of the Act, we based the U.S. 
price for certain sales on CEP because these sales were made by GE's 
and Chenming's U.S. affiliates. In accordance with section 772(c)(2)(A) 
of the Act, we calculated CEP by deducting, where applicable, the 
following expenses from the starting price (gross unit price) charged 
to the first unaffiliated customer in the United States: early payment 
discounts, billing adjustments, rebates, foreign movement expenses, 
international freight, marine insurance, and U.S. movement expenses, 
including brokerage and handling. Further, in accordance with section 
772(d)(1) of the Act and 19 CFR 351.402(b), where appropriate, we 
deducted from the starting price the following selling expenses 
associated with economic activities occurring in the United States: 
credit expenses, warranty expenses, other direct selling expenses, and 
indirect selling expenses. In addition, pursuant to section 772(3) of 
the Act, we made an adjustment to the starting price for CEP profit. We 
based movement expenses on either surrogate values, actual expenses, or 
an average of the two as explained above in the ``EP'' section of this 
notice.

NV

    In accordance with section 773(c) of the Act, we constructed NV 
from the factors of production employed by the respondents to 
manufacture subject merchandise during the POI. Specifically, we 
calculated NV by adding together the value of the factors of 
production, general expenses, profit, and packing costs. We valued the 
factors of production using prices and financial statements from the 
surrogate country, India, or, where appropriate, the market economy 
prices paid for the factor (see further discussion below). In selecting 
surrogate values, we followed, to the extent practicable, the 
Department's practice of choosing values which are non-export average 
values, contemporaneous with, or closest in time to, the POI, product-
specific, and tax-exclusive. See e.g., Notice of Preliminary 
Determination of Sales at Less Than Fair Value, Negative Preliminary 
Determination of Critical Circumstances and Postponement of Final 
Determination: Certain Frozen and Canned Warmwater Shrimp From the 
Socialist Republic of Vietnam, 69 FR 42672, 42682 (July 16, 2004), 
unchanged in Final Determination of Sales at Less Than Fair Value: 
Certain Frozen and Canned Warmwater Shrimp from the Socialist Republic 
of Vietnam, 69 FR 71005 (December 8, 2004) (``Shrimp from Vietnam''). 
We also considered the quality of the source of surrogate information 
in selecting surrogate values.
    We valued material inputs and packing by multiplying the amount of 
the factor consumed in producing subject merchandise by the average 
unit value of the factor. We derived the average unit value of the 
factor from Indian import statistics. In addition, we added freight 
costs to the surrogate costs that we calculated for material inputs. We 
calculated freight costs by multiplying surrogate freight rates by the 
shorter of the reported distance from the domestic supplier to the 
factory that produced the subject merchandise or the distance from the 
nearest seaport to the factory that produced the subject merchandise, 
as appropriate. This adjustment is in accordance with the Court of 
Appeals for the Federal Circuit's decision in Sigma Corp. v. United 
States, 117 F. 3d 1401, 1407-1408 (Fed. Cir. 1997). Where we could only 
obtain surrogate values that were not contemporaneous with the POI, we 
inflated (or deflated) the surrogate values using, where appropriate, 
the Indian Wholesale Price Index (``WPI'') as published in the 
International Financial Statistics of the International Monetary Fund.
    Further, in calculating surrogate values from Indian imports, we 
disregarded imports from Indonesia, South Korea, and Thailand because, 
in other proceedings, the Department found that these countries 
maintain broadly available, non-industry-specific export subsidies. 
Therefore, it is reasonable to infer that all exports to all markets 
from these countries may be subsidized. See Notice of Amended Final 
Determination of Sales at Less Than Fair Value: Certain Automotive 
Replacement Glass Windshields from the People's Republic of China, 67 
FR 11670 (March 15, 2002); see also Notice of Final Determination of 
Sales at Less Than Fair Value and Negative Final Determination of 
Critical Circumstances: Certain Color Television Receivers From the 
People's Republic of China, 69 FR 20594 (April 16, 2004).\6\ Therefore, 
we have not used prices from these countries either in calculating the 
Indian import-based surrogate values or in calculating market-economy 
input values. In instances where a market-economy input was obtained 
solely from suppliers located in these countries, we used Indian 
import-based surrogate values to value the input. See Final 
Determination of Sales at Less Than Fair Value: Certain Automotive 
Replacement Glass Windshields From The People's Republic of China, 67 
FR 6482 (February 12, 2002), and accompanying Issues and Decision 
Memorandum at Comment 1.
---------------------------------------------------------------------------

    \6\ We note that legislative history directs the Department not 
to conduct a formal investigation to ensure that such prices are not 
subsidized. See H.R. Rep. 100-576 at 590 (1988). Rather, Congress 
directed the Department to base its decision on information that is 
available to it at the time it makes its determination.

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[[Page 30764]]

    During the POI, GE and Chenming purchased all or a portion of 
certain inputs from a market economy supplier and paid for the inputs 
in a market economy currency. The Department has instituted a 
rebuttable presumption that market economy input prices are the best 
available information for valuing an input when the total volume of the 
input purchased from all market economy sources during the period of 
investigation or review exceeds 33 percent of the total volume of the 
input purchased from all sources during the period.\7\ In these cases, 
unless case-specific facts provide adequate grounds to rebut the 
Department's presumption, the Department will use the weighted-average 
market economy purchase price to value the input. Alternatively, when 
the volume of an NME firm's purchases of an input from market economy 
suppliers during the period is below 33 percent of its total volume of 
purchases of the input during the period, but where these purchases are 
otherwise valid and there is no reason to disregard the prices, the 
Department will weight-average the weighted-average market economy 
purchase price with an appropriate surrogate value according to their 
respective shares of the total volume of purchases, unless case-
specific facts provide adequate grounds to rebut the presumption. When 
a firm has made market economy input purchases that may have been 
dumped or subsidized, are not bona fide, or are otherwise not 
acceptable for use in a dumping calculation, the Department will 
exclude them from the numerator of the ratio to ensure a fair 
determination of whether valid market economy purchases meet the 33 
percent threshold. See Notice for Antidumping Methodologies. 
Accordingly, we valued GE's and Chenming's inputs using the market 
economy prices paid for the inputs where the total volume of the input 
purchased from all market economy sources during the POI exceeded 33 
percent of the total volume of the input purchased from all sources 
during that period. Alternatively, when the volume of GE's or 
Chenming's purchases of an input from market economy suppliers during 
the POI was below 33 percent of the company's total volume of purchases 
of the input during the POI, we weight-averaged the weighted-average 
market economy purchase price with an appropriate surrogate value 
according to their respective shares of the total volume of purchases, 
as appropriate. Where appropriate, we increased the market economy 
prices of inputs by freight and brokerage and handling expenses. See 
GE's Factor Value Memorandum and Chenming's Factor Value Memorandum.
---------------------------------------------------------------------------

    \7\ Notwithstanding the determination the Department reached in 
Shrimp from Vietnam, at Comment 8, the Department will examine if 
and when the inputs were used in the production process when case-
specific conditions demand it. Unless there are case-specific 
reasons to examine other criteria, the Department will base its 
decision on whether to accept market economy input purchases to 
value the input on the relative share of market economy purchases 
during the period of investigation or review to total purchases 
during that period.
---------------------------------------------------------------------------

    We valued raw materials and packing materials using Indian Import 
Statistics, except as noted below.
    We valued diesel fuel and purchased electricity using rates from 
Key World Energy Statistics 2005, and Key World Energy Statistics 2003, 
respectively, published by the International Energy Agency. Because 
these data were not contemporaneous with the POI, we inflated the 
values using the WPI. See Factor Value Memoranda.
    We valued natural gas using a value obtained from the Gas Authority 
of India Ltd.'s website, a supplier of natural gas in India. See http://www.gailonline.com/gailnewsite/index.html. The value relates to the 
period January through June 2002. Therefore, we inflated the value 
using the appropriate WPI inflator. In addition, we added 
transportation charges to the value. See Surrogate Value Memorandum and 
Polyvinyl Alcohol From the People's Republic of China: Final Results of 
Antidumping Duty Administrative Review, 71 FR 27991 (May 15, 2006), and 
accompanying Issues and Decision Memorandum at Comment 2.
    Consistent with 19 CFR 351.408(c)(3), we valued direct, indirect, 
and packing labor, using the most recently calculated regression-based 
wage rate, which relies on 2004 data. This wage rate can currently be 
found on the Department's website on Import Administration's home page, 
Import Library, Expected Wages of Selected NME Countries, revised in 
January 2007, http://ia.ita.doc.gov/wages/index.html. The source of 
these wage-rate data on the Import Administration's web site is the 
Yearbook of Labour Statistics 2002, ILO (Geneva: 2002), Chapter 5B: 
Wages in Manufacturing. Because this regression-based wage rate does 
not separate the labor rates into different skill levels or types of 
labor, we have applied the same wage rate to all skill levels and types 
of labor reported by GE and Chenming. See Factor Value Memoranda.
    We valued water using data from the Maharashtra Industrial 
Development Corporation (www.midcindia.org) since it includes a wide 
range of industrial water tariffs. This source provides 386 industrial 
water rates within the Maharashtra province from June 2003: 193 for the 
``inside industrial areas'' usage category and 193 for the ``outside 
industrial areas'' usage category. Because the value was not 
contemporaneous with the POI, we inflated the rate using the WPI. See 
Factor Value Memoranda.
    We valued truck freight expenses using a per kilometer per kilogram 
average rate from data obtained from the web site of an Indian 
transportation company, InFreight Technologies India Limited. See 
http://www.infreight.com/. This average rate was used by the Department 
in the antidumping duty administrative review of Saccharin from the 
People's Republic of China; Preliminary Results of the 2005-2006 
Antidumping Duty Administrative Review, 72 FR 25247 (May 4, 2007). 
Because this value is not contemporaneous with the POI, we inflated the 
rate using the WPI. See Factor Value Memoranda.
    We used two sources to calculate the surrogate value for domestic 
brokerage and handling expenses. We averaged publicly available 
brokerage and handling data reported by Essar Steel in the antidumping 
duty administrative review of hot-rolled carbon steel flat products 
from India with publicly available brokerage and handling data reported 
by Agro Dutch Industries Limited (``Agro Dutch'') in the antidumping 
duty administrative review of certain preserved mushrooms from India. 
See Certain Hot-Rolled Carbon Steel Flat Products From India: 
Preliminary Results of Antidumping Duty Administrative Review, 71 FR 
2018, 2022 (January 12, 2006) (Essar Steel's February 28, 2005, 
submission); see also Certain Preserved Mushrooms From India: Final 
Results of Antidumping Duty Administrative Review, 70 FR 37757 (June 
30, 2005) (Agro Dutch's May 24, 2005, submission). See Factor Value 
Memoranda.
    We valued marine insurance using a price quote from http://www.rjgconsultants.com/insurance.html, a market-economy provider of 
marine insurance. See GE's Factor Value Memorandum.
    We valued factory overhead, selling, general, and administrative 
(SG&A) expenses, and profit, using the audited financial statements 
from the following Indian companies: Seshasayee Paper and Boards Ltd., 
JK Paper, Ltd., and Ballarpur Industries Ltd.. See Factor Value 
Memoranda. We selected the above-referenced financial statements from 
among the financial statements placed on the record by interested

[[Page 30765]]

parties because these companies produce subject merchandise and, like 
the respondents, do so by producing wood free paper and coating it.
    Because the financial statements that we are using as surrogates do 
not separately report manufacturing and non-manufacturing labor costs, 
the petitioner proposes allocating the line item for labor costs on 
these financial statements between manufacturing labor costs and SG&A 
labor costs. Specifically, the petitioner suggests allocating the line 
item for labor costs using data from an annual survey of the Indian 
paper and paper products industry which identifies wages paid to all 
employees and wages paid to workers (defined as persons employed in any 
manufacturing process).
    Generally, the Department does not adjust the data used to 
calculate financial ratios because it is concerned that such 
adjustments may introduce unintended distortions into the data. See 
Final Determination of Sales at Less Than Fair Value: Wooden Bedroom 
Furniture From the People's Republic of China, 69 FR 67313 (November 
17, 2004) and accompanying Issues and Decision Memorandum at Comment 
12. Thus, for the preliminary determination, we have not adjusted labor 
costs in the surrogate financial statements. Nevertheless, the 
Department intends to revisit this issue for the final determination.
    In accordance with 19 CFR 351.301(c)(3)(i), interested parties may 
submit publicly available information with which to value factors of 
production in the final determination within 40 days after the date of 
publication of the preliminary determination.

Currency Conversion

    We made currency conversions into U.S. dollars, in accordance with 
section 773A(a) of the Act, based on the exchange rates in effect on 
the dates of the U.S. sales as certified by the Federal Reserve Bank.

Verification

    As provided in section 782(i)(1) of the Act, we intend to verify 
the information upon which we will rely in making our final 
determination.

Combination Rates

    In the Initiation Notice, the Department stated that it would 
calculate combination rates for certain respondents that are eligible 
for a separate rate in this investigation. See Initiation Notice. This 
change in practice is described in Policy Bulletin 05.1, available at 
http://ia.ita.doc.gov/. Policy Bulletin 05.1, states:
    {w{time} hile continuing the practice of assigning separate rates 
only to exporters, all separate rates that the Department will now 
assign in its NME investigations will be specific to those producers 
that supplied the exporter during the period of investigation. Note, 
however, that one rate is calculated for the exporter and all of the 
producers which supplied subject merchandise to it during the period of 
investigation. This practice applies both to mandatory respondents 
receiving an individually calculated separate rate as well as the pool 
of non-investigated firms receiving the weighted-average of the 
individually calculated rates. This practice is referred to as the 
application of ``combination rates'' because such rates apply to 
specific combinations of exporters and one or more producers. The cash-
deposit rate assigned to an exporter will apply only to merchandise 
both exported by the firm in question and produced by a firm that 
supplied the exporter during the period of investigation.
See Policy Bulletin 05.1, ``Separate Rates Practice and Application of 
Combination Rates in Antidumping Investigations Involving Non-Market 
Economy Countries.''

Preliminary Determination

    The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                            Weighted-
                  Exporter & Producer                     Average Margin
------------------------------------------------------------------------
GE's Collapsed Entity:.................................  ...............
(Gold East Paper (Jiangsu) Co. Ltd.-Gold Hua Sheng       23.19 [percnt]
 Paper (Suzhou Industry Park) Co. Ltd.-China Union
 (Macao Commercial Offshore) Company Ltd.).............
Shandong Chenming Paper Holdings Ltd...................  48.07 [percnt]
Yanzhou Tianzhang Paper Industry Co. Ltd...............  30.22 [percnt]
PRC-Wide Rate..........................................  99.65 [percnt]
------------------------------------------------------------------------

Disclosure

    We will disclose the calculations performed within five days of the 
date of publication of this notice to parties in this proceeding in 
accordance with 19 CFR 351.224(b).

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we will instruct U.S. 
Customs and Border Protection (``CBP'') to suspend liquidation of all 
entries of CFS from the PRC as described in the ``Scope of the 
Investigation'' section, entered, or withdrawn from warehouse, for 
consumption from GE's collapsed entity (i.e., GE, GHS, and CU), 
Chenming, Yanzhou Tianzhang, and the PRC-wide entity on or after the 
date of publication of this notice in the Federal Register. We will 
instruct CBP to require a cash deposit or the posting of a bond equal 
to the weighted-average amount by which the NV exceeds U.S. price, as 
indicated above. The suspension of liquidation will remain in effect 
until further notice.

International Trade Commission Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our preliminary affirmative determination of sales at LTFV. 
Section 735(b)(2) of the Act requires the ITC to make its final 
determination as to whether the domestic industry in the United States 
is materially injured, or threatened with material injury, by reason of 
imports of CFS, or sales (or the likelihood of sales) for importation, 
of the subject merchandise within 45 days of our final determination.

Public Comment

    Case briefs or other written comments may be submitted to the 
Assistant Secretary for Import Administration no later than seven days 
after the date the final verification report is issued in this 
proceeding and rebuttal briefs, limited to issues raised in case 
briefs, no later than five days after the deadline for submitting case 
briefs. A list of authorities used and an executive summary of issues 
should accompany any briefs submitted to the Department. This summary 
should be limited to five pages total, including footnotes.
    In accordance with section 774 of the Act, we will hold a public 
hearing, if requested, to afford interested parties an opportunity to 
comment on arguments raised in case or rebuttal briefs. If a request 
for a hearing is made, we intend to hold the hearing three days after 
the deadline of submission of rebuttal briefs at the U.S. Department of 
Commerce, 14th Street and Constitution Ave, NW, Washington, DC 20230, 
at a time and location to be determined. Parties should confirm by 
telephone the date, time, and location of the hearing two days before 
the scheduled date.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department

[[Page 30766]]

of Commerce, Room 1870, within 30 days after the date of publication of 
this notice. See 19 CFR 351.310(c). Requests should contain the party's 
name, address, and telephone number, the number of participants, and a 
list of the issues to be discussed. At the hearing, each party may make 
an affirmative presentation only on issues raised in that party's case 
brief and may make rebuttal presentations only on arguments included in 
that party's rebuttal brief.

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2) of the Act, on May 11, 2007, GE 
requested that in the event of an affirmative preliminary determination 
in this investigation, the Department postpone its final determination 
by 60 days. At the same time, GE requested that the Department extend 
the application of the provisional measures prescribed under 19 CFR 
351.210(e)(2) from a 4-month period to a 6-month period. In accordance 
with section 733(d) of the Act and 19 CFR 351.210(b), because (1) our 
preliminary determination is affirmative, (2) the requesting exporter 
accounts for a significant proportion of exports of the subject 
merchandise, and (3) no compelling reasons for denial exist, we are 
granting the request and are postponing the final determination until 
no later than 135 days after the publication of this notice in the 
Federal Register. Suspension of liquidation will be extended 
accordingly.
    This determination is issued and published in accordance with 
sections 733(f) and 777(i)(1) of the Act.

    Dated: May 29, 2007.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E7-10705 Filed 6-1-07; 8:45 am]
BILLING CODE 3510-DS-S