[Federal Register Volume 72, Number 206 (Thursday, October 25, 2007)]
[Notices]
[Pages 60645-60648]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-21046]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

[C-570-907]


Coated Free Sheet Paper from the People's Republic of China: 
Final Affirmative Countervailing Duty Determination

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (Department) has made a final 
determination that countervailable subsidies are being provided to 
producers and exporters of coated free sheet (CFS) paper from the 
People's Republic of China. For information on the estimated 
countervailing duty rates, please see the ``Suspension of Liquidation'' 
section, below.

EFFECTIVE DATE: October 25, 2007.

FOR FURTHER INFORMATION CONTACT: David Layton or David Neubacher, AD/
CVD Operations, Office 1, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0371 or (202) 482-5823, respectively.

SUPPLEMENTARY INFORMATION:

Petitioner

    The petitioner in this investigation is the NewPage Corporation 
(petitioner).

Period of Investigation

    The period for which we are measuring subsidies, or period of 
investigation, is January 1, 2005, through December 31, 2005.

Case History

    The following events have occurred since the announcement of the 
preliminary determination on March 30, 2007, and subsequent publication 
in the Federal Register on April 9, 2007. See Coated Free Sheet Paper 
from the People's Republic of China: Amended Affirmative Preliminary 
Countervailing Duty Determination, 72 FR 17484 (April 9, 2007) 
(Preliminary Determination).
    On April 9, 2007, Gold East Paper (Jiangsu) Co., Ltd. (GE) and the 
petitioner submitted ministerial error allegations relating to the 
Preliminary Determination. We addressed these ministerial error 
allegations in a May 11, 2007, memorandum to Stephen J. Claeys, Deputy 
Assistant Secretary for Import Administration, entitled Ministerial 
Error Allegations, which is on file in the Central Records Unit (CRU), 
Room B-099 of the main Department building.
    On April 12, 2007, the Department requested that GE amend the 
bracketing and resubmit its March 9, 2007, supplemental questionnaire 
response, which GE did on April 17, 2007.
    We issued a supplemental questionnaire to the Government of the 
People's Republic of China (GOC) on April 23, 2007, and to GE and 
Shandong Chenming Paper Holdings Ltd. (Shandong Chenming) on April 20, 
2007. We received the GOC's supplemental questionnaire response on May 
13, 2007, Shandong Chenming's supplemental questionnaire response on 
May 18, 2007, and GE's supplemental response on May 25, 2007. On May 
25, 2007, we issued a supplemental questionnaire to Shandong Chenming, 
but did not receive a response. The GOC, GE, the petitioner, and 
interested parties also submitted factual information, comments, and 
arguments at numerous instances prior to the final determination based 
on various deadlines for submissions of factual information and/or 
arguments established by the Department subsequent to the Preliminary 
Determination.
    On May 2, 2007, the Department published notification of alignment 
of the final determinations in the antidumping and countervailing duty 
investigations of CFS paper from the People's Republic of China (PRC). 
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). The Department subsequently postponed the final 
determinations for the antidumping and countervailing investigations of 
CFS paper from the PRC. See 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, 72 FR 30758 (June 4, 
2007).
    On June 13, 2007, we received a letter from Shandong Chenming 
withdrawing its participation in the investigation and requesting that 
all of its business proprietary information be removed from the record 
and destroyed. On June 27, 2007, the Department notified Shandong 
Chenming that it had

[[Page 60646]]

removed and destroyed the company's submitted proprietary information 
from the record of this investigation and would direct all interested 
parties under the Administrative Protective Order (APO) to certify its 
destruction. All interested parties certified destruction of Shandong 
Chenming's proprietary information.
    From July 11 to July 28, 2007, we conducted verification of the 
questionnaire responses submitted by the GOC and GE.
    On August 30, 2007, we issued our preliminary determination 
regarding the creditworthiness of GE and its cross-owned companies. We 
addressed our preliminary findings in a August 30, 2007, memorandum to 
David M. Spooner, Assistant Secretary for Import Administration, 
entitled Preliminary Creditworthiness Determination for Gold East Paper 
(Jiangsu) Co., Ltd. and its Cross-Owned Companies, which is on file in 
the CRU.
    We received case briefs from the GOC; GE; the petitioner; and the 
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied 
Industrial and Service Workers International Union, AFL-CIO-CLC on 
September 7, 2007. The same parties submitted rebuttal briefs on 
September 12, 2007. We held a hearing for this investigation on 
September 18, 2007.

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 these investigations is dispositive.

Scope Comments

    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. 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 the ``Issues and Decision Memorandum 
for Final Determination'' from Stephen J. Claeys, Deputy Assistant 
Secretary for Import Administration, to David M. Spooner, Assistant 
Secretary for Import Administration, dated October 17, 2007 (Decision 
Memorandum).

Analysis of Comments Received

    All issues raised in the case and rebuttal briefs by parties to 
this investigation are addressed in the Decision Memorandum, which is 
hereby adopted by this notice. Attached to this notice as an Appendix 
is a list of the issues that parties have raised and to which we have 
responded in the Decision Memorandum. Parties can find a complete 
discussion of all issues raised in this investigation and the 
corresponding recommendations in this public memorandum, which is on 
file in the CRU. In addition, a complete version of the Decision 
Memorandum can be accessed directly on the Internet at http://ia.ita.doc.gov/frn/. The paper copy and electronic version of the 
Decision Memorandum are identical in content.

Use of Adverse Facts Available

    Sections 776(a)(1) and (2) of the Act provide that the Department 
shall apply ``facts otherwise available'' if, inter alia, necessary 
information is not on the record or an interested party or any other 
person: (A) withholds information that has been requested; (B) fails to 
provide information within the deadlines established, or in the form 
and manner requested by the Department, subject to subsections (c)(1) 
and (e) of section 782 of the Act; (C) significantly impedes a 
proceeding; or (D) provides information that cannot be verified as 
provided by section 782(i) of the Act.
    Where the Department determines that a response to a request for 
information does not comply with the request, section 782(d) of the Act 
provides that the Department will so inform the party submitting the 
response and will, to the extent practicable, provide that party the 
opportunity to remedy or explain the deficiency. If the party fails to 
remedy the deficiency within the applicable time limits and subject to 
section 782(e) of the Act, the Department may disregard all or part of 
the original and subsequent responses, as appropriate. Section 782(e) 
of the Act provides that the Department ``shall not decline to consider 
information that is submitted by an interested party and is necessary 
to the determination but does not meet all applicable requirements 
established by the administering authority'' if the information is 
timely, can be verified, is not so incomplete that it cannot be used, 
and if the interested party acted to the best of its ability in 
providing the information. Where all of these conditions are met, the 
statute requires the Department to use the information if it can do so 
without undue difficulties.
    Section 776(b) of the Act further provides that the Department may 
use an adverse inference in applying the facts otherwise available when 
a party has failed to cooperate by not acting to the best of its 
ability to comply with a request for information. Section 776(b) of the 
Act also authorizes the Department to use as adverse facts available 
(AFA) information derived from the petition, the final determination, a 
previous administrative review, or other information placed on the 
record.

[[Page 60647]]

    Section 776(c) of the Act provides that, when the Department relies 
on secondary information rather than on information obtained in the 
course of an investigation or review, it shall, to the extent 
practicable, corroborate that information from independent sources that 
are reasonably at its disposal. Secondary information is defined as 
``[i]nformation 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) 
accompanying the Uruguay Round Agreements Act, H. Doc. No. 316, 103d 
Cong., 2d Session at 870 (1994). 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 to be used. 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 Department has concluded that it is appropriate to base the 
final determination for Shandong Chenming on facts otherwise available. 
Shandong Chenming failed to respond fully to the Department's 
questionnaires and did not respond at all to one questionnaire. Also, 
on June 13, 2007, Shandong Chenming withdrew its proprietary 
information from the record. Thus, Shandong Chenming withheld 
information requested by the Department. Consequently, the use of facts 
otherwise available is warranted under section 776(a)(2)(A) of the Act.
    In selecting from among the facts available, the Department has 
determined that an adverse inference is warranted, pursuant to section 
776(b) of the Act because, in addition to not fully responding to all 
of our requests for information, as of June 13, 2007, Shandong Chenming 
withdrew from all participation in the investigation and did not 
provide the Department with the opportunity to verify the information 
it did submit. Thus, Shandong Chenming failed to cooperate by not 
acting to the best of its ability, and our final determination is based 
on total AFA.

Selection of the Adverse Facts Available Rate

    In deciding which facts to use as AFA, section 776(b) of the Act 
and 19 CFR 351.308(c)(1) authorize the Department to rely on 
information derived from (1) the petition, (2) a final determination in 
the investigation, (3) any previous review or determination, or (4) any 
information placed on the record. It is the Department's practice to 
select, as AFA, the highest calculated rate in any segment of the 
proceeding. See, e.g., Certain In-shell Roasted Pistachios from the 
Islamic Republic of Iran: Final Results of Countervailing Duty 
Administrative Review, 71 FR 66165 (November 13, 2006), and 
accompanying Issues and Decision Memorandum at ``Analysis of 
Programs.''
    The Department's practice when selecting an adverse rate from among 
the possible sources of information is to ensure that the margin is 
sufficiently adverse ``as to effectuate the purpose of the facts 
available role 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). The Department's practice also ensures ``that the party does 
not obtain a more favorable result by failing to cooperate than if it 
had cooperated fully.'' See SAA at 870. In choosing the appropriate 
balance between providing a respondent with an incentive to respond 
accurately and imposing a rate that is reasonably related to the 
respondent's prior commercial activity, selecting the highest prior 
margin ``reflects a common sense inference that the highest prior 
margin is the most probative evidence of current margins, because, if 
it were not so, the importer, knowing of the rule, would have produced 
current information showing the margin to be less.'' See Rhone Poulenc, 
Inc. v. United States, 899 F. 2d 1185, 1190 (Fed. Cir. 1990).
    For these reasons the Department is relying on the highest 
calculated final subsidy rates for income tax, VAT, and policy lending 
programs of the other producer/exporter of the subject merchandise in 
this investigation, GE, to calculate the AFA rate for Shandong 
Chenming. We do not need to corroborate these rates because they are 
not considered secondary information as they are based on information 
obtained in the course of this investigation, pursuant to section 
776(c) of the Act.

Suspension of Liquidation

    In accordance with section 705(c)(1)(B)(i)(I) of the Act, we have 
calculated an individual rate for the companies under investigation, GE 
and Shandong Chenming. According to section 705(c)(5)(A)(i) of the Act, 
the Department excludes any rates determined entirely under section 776 
of the Act. As Shandong Chenming's rate was calculated under section 
776 of the Act, we have used the rate for GE as the ``all others'' 
rate.

------------------------------------------------------------------------
                                                                   Net
                     Exporter/Manufacturer                       Subsidy
                                                                  Rate
------------------------------------------------------------------------
Gold East Paper (Jiangsu) Co., Ltd............................      7.40
                                                                [percnt]
Shandong Chenming Paper Holdings Ltd..........................     44.25
                                                                [percnt]
All Others....................................................      7.40
                                                                [percnt]
------------------------------------------------------------------------

    As a result of our Preliminary Determination and pursuant to 
section 703(d) of the Act, we instructed the U.S. Customs and Border 
Protection (CBP) to suspend liquidation of all entries of coated free 
sheet paper from the PRC which were entered or withdrawn from 
warehouse, for consumption on or after April 9, 2007, the date of the 
publication of the 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 countervailing duty 
purposes for subject merchandise entered on or after August 7, 2007, 
but to continue the suspension of liquidation of entries made from 
April 9, 2007, through August 7, 2007.
    We will issue a countervailing duty order and reinstate the 
suspension of liquidation under section 706(a) of the Act if the 
International Trade Commission (ITC) issues a final affirmative injury 
determination, and will require a cash deposit of estimated 
countervailing duties for such entries of merchandise in the amounts 
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 that it will not disclose such information, either publicly or 
under an APO, without the written consent of the Assistant Secretary 
for Import Administration.

[[Page 60648]]

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 an administrative protective order (APO) of their 
responsibility concerning the destruction of proprietary information 
disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely 
written notification of the return/destruction of APO materials or 
conversion to judicial protective order is hereby requested. Failure to 
comply with the regulations and terms of an APO is a violation which is 
subject to sanction.
    This determination is 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

List of Comments and Issues in the Decision Memorandum
    Comment 1: Applicability of the CVD Law to China
    Comment 2: The Administrative Procedures Act (APA) Claim
    Comment 3: The Department's Justification for its Change in 
Practice from Sulfanilic Acid from Hungary
    Comment 4: China's WTO Accession Protocol
    Comment 5: Retroactive Application of the CVD Law to China
    Comment 6: Comparison of the Department's Findings in the 
Georgetown Memo and the August 30 Market Economy Status Memo
    Comment 7: Application of Adverse Facts Available to the GOC
    Comment 8: Policy Lending
    Comment 9: Countervailability of Foreign-denominated Loans
    Comment 10: Benchmark for Policy Lending
    Comment 11: Adjustment for Long-term Interest Rate Benchmark
    Comment 12: Creditworthiness of GE and its Cross-owned Companies
    Comment 13: Application of a Risk Premium to the Short-term Loan 
Benchmark
    Comment 14: Specificity of Programs for FIEs
    Comment 15: Over-calculation of the Two Free/Three Half Benefit
    Comment 16: Specificity of VAT Programs
    Comment 17: Attribution of GHS' Subsidies to GE
    Comment 18: Attribution of Subsidies Bestowed on Input Suppliers
    Comment 19: Whether the Department's Cross-ownership Regulations 
Provide for the Attribution of Upstream Subsidies to Cross-owned 
Companies
    Comment 20: Attribution of Subsidies Bestowed on the Forestry 
Companies to CFS
    Comment 21: Rate Adjustment for GE's Ad Valorem Subsidy Rate
    Comment 22: Subsidies to Forestry Companies Discovered After the 
Preliminary Determination
    Comment 23: Correction to GE's Domestic Sales Value
    Comment 24: Application of Adverse Facts Available to Chenming
    Comment 25: Certification of Non-Reimbursement of Duties
[FR Doc. E7-21046 Filed 10-24-07; 8:45 am]
BILLING CODE 3510-DS-S