[Federal Register Volume 72, Number 206 (Thursday, October 25, 2007)]
[Notices]
[Pages 60642-60645]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-21040]


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DEPARTMENT OF COMMERCE

International Trade Administration

C-560-821


Coated Free Sheet Paper from Indonesia: Final Affirmative 
Countervailing Duty Determination

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) has reached a 
final determination that countervailable subsidies are being provided 
to producers and exporters of coated free sheet paper (CFS) from 
Indonesia. For information on the countervailable subsidy rates, please 
see the ``Final Determination'' section of this notice.

EFFECTIVE DATE: October 25, 2007.

FOR FURTHER INFORMATION CONTACT: Sean Carey, Nicholas Czajkowski, or 
Gene Calvert, AD/CVD Operations, Office 6, Import Administration, 
International Trade Administration, U.S. Department of Commerce, Room 
7866, 14th Street and Constitution Avenue, NW, Washington, DC 20230; 
telephone: (202) 482-3964, (202) 482-1395, or (202) 482-3586, 
respectively.

SUPPLEMENTARY INFORMATION:

Case History

    On April 9, 2007, the Department published Coated Free Sheet Paper 
from Indonesia: Notice of Preliminary Affirmative Countervailing Duty 
Determination, 72 FR 17498 (April 9, 2007) (Preliminary Determination). 
Since the issuance of the Preliminary Determination, the following 
events have occurred. On April 10 and May 18, 2007, the Department 
issued supplemental questionnaires to the Government of Indonesia (GOI) 
and to PT. Pabrik Kertas Tjiwi Kimia Tbk. (TK) and Pindo Deli Pulp and 
Paper Mills (PD) (the respondent companies). On April 20 and May 24, 
2007, the Department issued initial and supplemental questionnaires to 
the GOI and to the respondent companies regarding the petitioner's 
December 15, 2007 additional allegations concerning debt forgiveness. 
Both parties submitted timely responses to all of the Department's 
questionnaires and supplemental questionnaires.
    On May 2, 2007, the Department aligned the final determination in 
this countervailing duty investigation with the final determination in 
the companion antidumping duty investigation. See Coated Free Sheet 
Paper from Indonesia, the People's Republic of China, and the Republic 
of Korea: Alignment of Final Countervailing Duty Determinations with 
Final Antidumping Duty Determinations, 72 FR 24277 (May 2, 2007). On 
May 10, 2007, NewPage Corporation (the petitioner) requested a hearing 
pursuant to 19 CFR 351.310(c) and the Department's Preliminary 
Determination.
    On June 18 and June 19, 2007, the petitioner and the respondent 
companies submitted new factual information concerning the Department's 
investigation of the ``GOI Provision of Standing Timber for Less than 
Adequate Remuneration,'' or ``stumpage.'' On June 28, 2007, the 
petitioner submitted rebuttal comments regarding the respondent 
companies' new factual information submission.
    From June 25 through July 13, 2007, the Department conducted 
verification of the questionnaire responses provided by the GOI and the 
respondent companies. On July 13, 2007, the petitioner filed an 
upstream subsidy allegation, claiming, in accordance with section 
771A(a) of the Tariff Act of 1930, as amended, (the Act), that (1) a 
subsidy, other than an export subsidy, has been paid or bestowed on an 
input product that is used in the manufacture or production of 
merchandise subject to a countervailing duty proceeding; (2) the 
subsidy bestows a competitive benefit on the merchandise; and (3) the 
subsidy has a significant effect on the cost of manufacturing or 
producing the merchandise. On July 23, 2007, the respondent companies 
filed rebuttal comments, and on August 10, 2007, the petitioner filed 
surrebuttal comments on this allegation.
    The Department issued verification reports on August 24, 2007: see 
Memoranda to the File, Countervailing Duty Investigation of Coated Free 
Sheet (CFS) Paper from Indonesia: Verification of the Questionnaire 
Responses Submitted by Ministry of Forestry and the Ministry of 
Finance; Countervailing Duty Investigation of Coated Free Sheet Paper 
from Indonesia: Verification of Cross-Ownership and Debt Restructuring 
for the Asia Pulp and Paper/Sinar Mas Group; Countervailing Duty 
Investigation of Coated Free Sheet Paper from Indonesia: Verification 
of PT Pindo Deli Pulp & Paper Mills and PT. Pabrik Kertas Tjiwi Kimia 
(Paper Producers/Exports) and PT Cakrawala Mega Indah (trading 
company); Countervailing Duty Investigation of Coated Free Sheet (CFS) 
Paper from Indonesia: Verification of the Questionnaire Responses 
Submitted by Pulp Producers PT. Lontar Papyrus Pulp and Paper and Indah 
Kiat Pulp and Paper Tbk.; and, Countervailing Duty Investigation of 
Coated Free Sheet (CFS) Paper from Indonesia: Verification of the 
Questionnaire Responses Submitted by Forestry Companies PT. Arara 
Abadi, PT. Wirakarya Sakti, PT. Finnantara Intiga, and PT. Riau Abadi 
Lestari.
    On September 5 and September 6, 2007, the petitioner, the GOI, the 
respondent companies, and the United Steel, Paper and Forestry, Rubber, 
Manufacturing, Energy, Allied Industrial and Service Workers 
International Union, AFL-CIO, CLC

[[Page 60643]]

(USW), a domestic interested party to this proceeding, timely filed 
case briefs regarding our Preliminary Determination. On September 11, 
2007, the petitioner, the GOI, the respondent companies, and the USW 
each filed rebuttal comments regarding our Preliminary Determination. 
At the Department's request, the petitioner, the GOI, and the 
respondent companies removed what the Department determined to be new 
factual information from their comments and rebuttal comments regarding 
the Department's Preliminary Determination, and resubmitted those 
comments to the Department on September 18 and September 19, 2007.
    On September 7, 2007, the Department issued the interim analysis of 
two additional subsidy allegations. We explained in the Preliminary 
Determination that because we had only recently initiated 
investigations of these two programs, there was not sufficient time to 
gather information and analyze the countervailability of the programs 
for the purposes of the Preliminary Determination. See the Memorandum 
to David M. Spooner, Assistant Secretary for Import Administration from 
Barbara E. Tillman, Director, Office 6, AD/CVD Operations, 
Countervailing Duty Investigation: Coated Free Sheet Paper from 
Indonesia; Post-Preliminary Analysis of Two New Subsidy Allegations 
(Post-Preliminary Analysis). The Department set a separate briefing 
schedule for parties to file comments and rebuttal comments on our 
Post-Preliminary Analysis. On September 18, 2007, such comments were 
filed by the GOI and the respondent companies. The petitioner filed 
rebuttal comments regarding the Department's Post-Preliminary Analysis 
on September 25, 2007. The petitioner withdrew its request for a 
hearing on September 10, 2007.

Period of Investigation

    The period of investigation (POI) for which we are measuring 
subsidies is
    January 1, 2005 through December 31, 2005, which corresponds to the 
most recently completed fiscal year for the respondent companies. See 
19 CFR 351.204(b)(2).

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

    On January 12, 2007, the respondent companies filed a request to 
exclude cast-coated free sheet paper from the scope of the 
investigations of CFS from Indonesia, Korea, and the People's Republic 
of China. The petitioner submitted comments on the respondent 
companies' request on January 19, 2007. The Department analyzed both 
parties' comments and denied the respondent companies' request to 
exclude cast-coated free sheet paper from the scope of these 
investigations. See the Memorandum to Stephen J. Claeys, Deputy 
Assistant Secretary for Import Administration, 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, 
which is on file in the Central Records Unit (CRU), Room B099 of the 
main Commerce building.
    On August 20, August 28, and September 10, 2007, the petitioner 
requested that the Department clarify the scope of the antidumping and 
countervailing duty investigations of CFS paper from Indonesia, Korea 
and the People's Republic of China (PRC). Specifically, the petitioner 
asked the Department to ``clarify that the scope of the investigation 
includes coated free sheet paper containing hardwood BCTMP.''
    Because this was a general issue pertaining to all six 
investigations, the Department set up a general issues file to handle 
this scope request. A hearing on the scope request was held on 
September 26, 2007. The hearing comprised a public session, a closed 
session for the antidumping investigation from Korea, and a closed 
session for the countervailing duty investigation from the PRC. After 
considering the comments submitted by the parties to these 
investigations, we have determined not to adopt the scope clarification 
sought by the petitioner. See Memorandum to Stephen J. Claeys, Deputy 
Assistant Secretary for Import Administration, entitled ``Scope 
Clarification Request: NewPage Corporation'' dated concurrently with 
this notice, which is appended to ``Issues and Decision Memorandum for 
the Final Determination in the Countervailing Duty Investigation of 
Coated Free Sheet Paper from the People's Republic of China.''

Initiation and Deferral of Upstream Subsidy Investigation

    On July 13, 2007, the petitioner filed an upstream subsidy 
allegation, claiming, in accordance with section 771A(a) of the Act, 
that (1) a subsidy, other than an export subsidy, has been paid or 
bestowed on an input product, i.e., pulpwood, that is used in the 
manufacture or production of merchandise subject to a countervailing 
duty proceeding, i.e., CFS paper; (2) the subsidy bestows a competitive 
benefit on the merchandise; and (3) the subsidy has a significant 
effect on the cost of manufacturing or producing the merchandise. See 
19 CFR 351.523. The respondent companies filed rebuttal arguments on 
July 23, 2007, and the petitioner filed additional comments and 
clarifications of its allegation on August 13, 2007.
    After fully considering all of these submissions, we have 
determined that the threshold requirements set forth in the Act and the 
Department's regulations for initiation of an upstream subsidy 
investigation have been met. However, we have simultaneously decided to 
defer the conduct of the upstream subsidy investigation until the first 
administrative review, if a countervailing duty order is issued and 
such a review is requested. See section 703(g)(2)(B)(i) of the Act. A 
complete discussion of our decisions to both initiate an upstream 
investigation and defer the conduct of such investigation can be found 
in the ``Issues and

[[Page 60644]]

Decision Memorandum'' from Stephen J. Claeys, Deputy Assistant 
Secretary for Import Administration, to David M. Spooner, Assistant 
Secretary for Import Administration, dated concurrently with this 
notice (Decision Memorandum) and hereby adopted by this notice.

Analysis of Subsidy Programs and Comments Received

    The subsidy programs under investigation and the issues raised by 
interested parties in their case briefs and rebuttal briefs on the 
Preliminary Determination and the Post-Preliminary Analysis, are 
discussed in the Decision Memorandum. A list of the subsidy programs 
and of the issues which parties have raised is attached to this notice 
as Appendix I. Parties can find a complete discussion of all of the 
subsidy programs, and issues raised in this investigation and the 
corresponding recommendations in this public memorandum, which is on 
file in the CRU. A complete version of the Decision Memorandum is 
available at http://www.trade.gov/ia under the heading ``Federal 
Register Notices.'' The paper copy and the electronic version of the 
Decision Memorandum are identical in content.

Final Determination

    In accordance with section 705(c)(1)(B)(i) of the Act, we have 
determined a single subsidy rate for the two cross-owned producers/
exporters of the subject merchandise. We determine the total 
countervailable subsidy rate to be:

------------------------------------------------------------------------
                  Producer/Exporter                          Rate
------------------------------------------------------------------------
PT. Pabrik Kertas Tjiwi Kimia Tbk./PT. Pindo Deli                 22.48%
 Pulp and Paper Mills...............................
All Others..........................................              22.48%
------------------------------------------------------------------------

    In accordance with sections 703(d) and 705(c)(5)(A) of the Act, we 
have set the all- others rate as the rate for TK/PD because it was the 
only producer/exporter under investigation.

Suspension of Liquidation

    In accordance with our affirmative Preliminary Determination, we 
instructed U.S. Customs and Border Protection (CBP) to suspend 
liquidation of all entries of CFS from Indonesia, which were entered or 
withdrawn from warehouse, for consumption on or after
    April 9, 2007, the date of the publication of our Preliminary 
Determination in the Federal Register. In accordance with section 
703(d) of the Act, we instructed CBP to discontinue the suspension of 
liquidation for merchandise entered on or after August 7, 2007, but to 
continue the suspension of liquidation of entries made on or after 
April 9, 2007 and before August 7, 2007.
    If the International Trade Commission (ITC) issues a final 
affirmative injury determination, we will issue a countervailing duty 
order, reinstate suspension of liquidation under section 706(a) of the 
Act for all entries, and require a cash deposit of estimated 
countervailing duties for such entries of merchandise at the rates 
indicated above. If the ITC determines that material injury, or threat 
of material injury, does not exist, this proceeding will be terminated 
and all estimated duties deposited or securities posted as a result of 
the suspension of liquidation will be refunded or canceled.

ITC Notification

    In accordance with section 705(d) of the Act, we will notify the 
ITC of our determination. In addition, we are making available to the 
ITC all non-privileged and non-proprietary information related to this 
investigation. We will allow the ITC access to all privileged and 
business proprietary information in our files, provided the ITC 
confirms it will not disclose such information, either publicly or 
under an administrative protective order (APO), without the written 
consent of the Assistant Secretary for Import Administration.

Return or Destruction of Proprietary Information

    In the event that the ITC issues a final negative injury 
determination, this notice will serve as the only reminder to parties 
subject to APO of their responsibility concerning the destruction of 
proprietary information disclosed under APO in accordance with section 
351.305(a)(3) of the Department's regulations. Failure to comply is a 
violation of the APO.
    This determination is issued and published pursuant to sections 
705(d) and 777(i) of the Act.

    Dated: October 17, 2007.
David M. Spooner,
Assistant Secretary for Import Administration.

Appendix I: Issues and Decision Memorandum

I. Summary

II. Background

III. Initiation and Deferral of Upstream Subsidy Investigation

IV. Subsidies Valuation Information

A. Cross-Ownership
B. Attribution of Subsidies Provided to Cross-Owned Input Suppliers
C. Allocation Period
D. Loan Benchmark and Discount Rate
E. Creditworthiness

V. Application of Facts Available and Use of an Adverse Inference

VI. Analysis of Programs

A. Programs Determined to Be Countervailable
    1. GOI Provision of Standing Timber for Less Than Adequate 
Remuneration
    2. GOI's Log Export Ban
    3. Subsidized Funding for Reforestation (Hutan Tanaman Industria or 
HTI Program): ``Zero Interest'' Rate Loans
    4. Debt Forgiveness Through the GOI's Acceptance of Instruments 
that Had No Market Value
    5. Debt Forgiveness through SMG/APP's the Buyback of Its Own Debt 
from the GOI
B. Program Determined to Be Not Countervailable
    Subsidized Funding for Reforestation (Hutan Tanaman Industria or 
HTI Program): Government Capital Infusions into Joint Venture Forest 
Plantation
C. Program Determined To Be Not Used
    Subsidized Funding for Reforestation (Hutan Tanaman Industria or 
HTI Program): Commercial Rate Loans

VII. Analysis of Comments

Comment 1: Whether the Department Should Find that SMG/APP Received 
Upstream Subsidies on Purchases of Timber from Non-Cross Owned Entities 
and Consider the Legality Under which This Timber was Harvested
Comment 2: Whether the Department's Cross-Ownership Regulations Provide 
for the Attribution of Upstream Subsidies to Cross-Owned Companies
Comment 3: Cross-Ownership of AA and WKS with IK, Lontar, TK and PD
Comment 4: Widjaja Family Interest In Purinusa and Cross-Ownership
Comment 5: Cross-Ownership Between AA and WKS
Comment 6: Cross-Ownership Between WKS and Purinusa
Comment 7: Cross-Ownership Between AA and Purinusa
Comment 8: Cross-Ownership of Certain Additional Companies That Were 
Preliminarily Found to be Cross-Owned with Companies in the APP/SMG CFS 
Group
Comment 9: Whether the Provision of Standing Acacia is the Provision of 
a Good by the GOI to the SMG/APP Forestry Companies
Comment 10: Specificity of the GOI's Provision of Standing Timber for 
Less Than Adequate Remuneration

[[Page 60645]]

Comment 11: Use of Malaysian Export Statistics as the Starting Point 
for Deriving Stumpage Benchmarks
Comment 12: The Stumpage Rate Calculation Provided by Respondents in 
their Expert's Report
Comment 13: Calculation of Species-Specific Benchmarks
Comment 14: Whether to Adjust the Benchmark for Movement Expenses
Comment 15: Whether to Use Monthly Exchange Rates
Comment 16: Whether to Adjust the Benchmark for Export Royalty Fees and 
G&A Expenses
Comment 17: Profit Adjustment to the Benchmark
Comment 18: Use of Actual Versus Accrued Stumpage Payments
Comment 19: Use of the FAO's Conversion Factors
Comment 20: Whether to Adjust WKS' Log Harvest
Comment 21: Adjustments to the Sales Denominator
Comment 22: Treatment of Alleged Illegal Logging in Indonesia
Comment 23: Indications of Illegal Logging Practices in Subsidizing 
Indonesia's CFS Paper Industry
Comment 24: Examination of Log Purchases from Non-Cross Owned Entities 
Under the Log Export Ban
Comment 25: The Legality of the WTO's Findings on Export Restraints
Comment 26: Whether Respondent Companies Cured Any Deficiency with 
Respect to Settling Debt with COEs
Comment 27: Specificity of IBRA's Acceptance of BII Shares and COEs for 
the Repayment of SMG/APP Debt
Comment 28: The Effect of IBRA's Outright Debt Forgiveness on the 
Specificity of the Acceptance of COEs for SMG/APP Debt
Comment 29: Benefit from IBRA's Acceptance of COEs as Settlement of 
Debt
Comment 30: Whether an Adverse Inference Can be Applied in Determining 
that Orleans was Affiliated with SMG/APP
Comment 31: Specificity of IBRA's Sale of SMG/APP Debt to an Affiliate 
of the Original Debtor
Comment 32: Whether the Information the Department Relied Upon Was 
Speculative and Circumstantial
Comment 33: Procedural Abnormalities in IBRA's Sale of the SMG/APP Debt 
and Specificity
Comment 34: Effect of the Lack of Reduction in Debt on the 
Countervailability of the Sale of SMG/APP's Debt to Orleans
Comment 35: The Appropriateness of the Department's Reliance on Facts 
Available with an Adverse Inference
Comment 36: Whether A Government Can Provide a Financial Contribution 
When the Act is Illegal

VIII. Recommendation

[FR Doc. E7-21040 Filed 10-24-07; 8:45 am]
BILLING CODE 3510-DS-S