[Federal Register Volume 74, Number 201 (Tuesday, October 20, 2009)]
[Notices]
[Pages 53703-53707]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-25210]


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DEPARTMENT OF COMMERCE

International Trade Administration

(C-570-959)


Certain Coated Paper Suitable for High-Quality Print Graphics 
Using Sheet-Fed Presses from the People's Republic of China: Initiation 
of Countervailing Duty Investigation

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

EFFECTIVE DATE: October 20, 2009.

FOR FURTHER INFORMATION CONTACT: Yasmin Nair and Joseph Shuler, AD/CVD 
Operations, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230; telephone: (202) 482-3813 and (202) 482-1293, 
respectively.

SUPPLEMENTARY INFORMATION:

The Petition

    On September 23, 2009, the Department of Commerce (``Department'') 
received a petition filed in proper form by Appleton Coated LLC, 
NewPage Corporation, S.D. Warren Company d/b/a Sappi Fine Paper North 
America, and the United Steel, Paper and Forestry, Rubber, 
Manufacturing, Energy, Allied Industrial and Service Workers 
International Union (collectively, ``Petitioners''), domestic producers 
of certain coated paper suitable for high-quality print graphics using 
sheet-fed presses (``coated paper'').\1\ In response to the 
Department's requests, Petitioners provided timely information 
supplementing the Petition on October 2, 2009, and October 6, 2009.
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    \1\ See Petition for the Imposition of Antidumping and 
Countervailing Duties Pursuant to Sections 701 and 731 of the Tariff 
Act of 1930, as Amended: Certain Coated Paper Suitable for High-
Quality Print Graphics Using Sheet-Fred Presses from the People's 
Republic of China, dated September 23, 2009 (``Petition'').
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    In accordance with section 702(b)(1) of the Tariff Act of 1930, as 
amended (``the Act''), Petitioners allege that manufacturers, 
producers, or exporters of coated paper in the People's Republic of 
China (``PRC'') receive countervailable subsidies within the meaning of 
section 701 of the Act, and that such imports are materially injuring, 
or threatening material injury to, an industry in the United States.
    The Department finds that Petitioners filed the Petition on behalf 
of the domestic industry because they are interested parties as defined 
in section 771(9)(C) and (D) of the Act, and Petitioners have 
demonstrated sufficient industry support with respect to the 
countervailing duty (``CVD'') investigation (see ``Determination of 
Industry Support for the Petition'' section below).

Period of Investigation

    The period of investigation is January 1, 2008, through December 
31, 2008.

Scope of Investigation

    The products covered by the investigation are coated paper products 
from the PRC. For a full description of the scope of the investigation, 
please see ``Scope of Investigation,'' in Appendix I of this notice.

Comments on Scope of Investigation

    During our review of the Petition, we discussed the scope with 
Petitioners to ensure that it is an accurate reflection of the products 
for which the domestic industry is seeking relief. Moreover, as 
discussed in the preamble to the Department's regulations (Antidumping 
Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 
1997)), we are setting aside a period for interested parties to raise 
issues regarding product coverage. The Department encourages all 
interested parties to submit such comments by November 2, 2009, twenty 
calendar days from the signature date of this notice. Comments should 
be addressed to Import Administration's APO/Dockets Unit, Room 1870, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230. The period of the scope consultations is intended 
to provide the Department with ample opportunity to consider all 
comments and to consult with parties prior to the issuance of the 
preliminary determination.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, on September 23, 
2009, the Department invited representatives of the Government of the 
PRC (``GOC'') for consultations with respect to the CVD petition. The 
GOC did not request such consultations, however, on October 13, 2009, 
the GOC's Ministry of Commerce submitted to the United States Embassy 
in Beijing, China comments pertaining to the Petition.

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the

[[Page 53704]]

petition account for: (i) at least 25 percent of the total production 
of the domestic like product; and (ii) more than 50 percent of the 
production of the domestic like product produced by that portion of the 
industry expressing support for, or opposition to, the petition. 
Moreover, section 702(c)(4)(D) of the Act provides that, if the 
petition does not establish support of domestic producers or workers 
accounting for more than 50 percent of the total production of the 
domestic like product, the Department shall: (i) poll the industry or 
rely on other information in order to determine if there is support for 
the petition, as required by subparagraph (A); or (ii) determine 
industry support using a statistically valid sampling method.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers as a whole of a domestic like product. Thus, to determine 
whether a petition has the requisite industry support, the statute 
directs the Department to look to producers and workers who produce the 
domestic like product. The International Trade Commission (``ITC''), 
which is responsible for determining whether ``the domestic industry'' 
has been injured, must also determine what constitutes a domestic like 
product in order to define the industry. While both the Department and 
the ITC must apply the same statutory definition regarding the domestic 
like product (see section 771(10) of the Act), they do so for different 
purposes and pursuant to a separate and distinct authority. In 
addition, the Department's determination is subject to limitations of 
time and information. Although this may result in different definitions 
of the like product, such differences do not render the decision of 
either agency contrary to law. See USEC, Inc. v. United States, 132 F. 
Supp. 2d 1, 8 (Ct. Int'l Trade 2001), citing Algoma Steel Corp., Ltd. 
v. United States, 688 F. Supp. 639, 644 (Ct. Int'l Trade 1988), aff'd 
865 F.2d 240 (Fed. Cir. 1989), cert. denied 492 U.S. 919 (1989).
    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation'' (i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition).
    With regard to the domestic like product, Petitioners offer a 
definition of domestic like product that includes sheeter rolls (rolls 
of certain coated paper intended to be slit and used in sheet-fed 
presses) and, therefore, is broader than the scope of the 
investigation, which does not include sheeter rolls. Based on our 
analysis of the information submitted on the record, we have determined 
that coated paper described in the scope of the investigation and 
sheeter rolls constitute a single domestic like product and we have 
analyzed industry support in terms of that domestic like product. For a 
discussion of the domestic like product analysis in this case, see 
Countervailing Duty Investigation Initiation Checklist: Certain Coated 
Paper from the PRC (``PRC Initiation Checklist'') at Attachment II, 
Analysis of Industry Support for the Petitions Covering Certain Coated 
Paper from the People's Republic of China and Indonesia, dated 
concurrently with this notice and on file in the Central Records Unit, 
Room 1117 of the main Department of Commerce building.
    In determining whether Petitioners have standing under section 
702(c)(4)(A) of the Act, we considered the industry support data 
contained in the Petition with reference to the domestic like product 
as defined in the Petition. To establish industry support, Petitioners 
provided their own 2008 shipments of the domestic like product, as well 
as one supporting company's (SMART Papers) 2008 shipments, and compared 
the total to the 2008 shipments of the entire domestic industry. See 
Volume I of the Petition, at 2-3, Exhibits I-3, I-4, and I-19, and 
Supplement to the AD/CVD Petitions, dated October 2, 2009, at 19-22 and 
Exhibit 4. Petitioners estimated total 2008 shipments of the domestic 
like product based on the American Forest & Paper Association annual 
Coated Printing Papers Survey. See Volume I of the Petition, at 3 and 
Exhibits I-3 and I-4, and Supplement to the AD/CVD Petitions, dated 
October 2, 2009, at 22 and Exhibit 4; see also PRC Initiation Checklist 
at Attachment II.
    Our review of the data provided in the Petition, supplemental 
submissions, and other information readily available to the Department 
indicates that Petitioners have established industry support. First, 
the Petition established support from domestic producers (or workers) 
accounting for more than 50 percent of the total production of the 
domestic like product and, as such, the Department is not required to 
take further action in order to evaluate industry support (e.g., 
polling). See section 702(c)(4)(D) of the Act; see also PRC Initiation 
Checklist at Attachment II. Second, the domestic producers (or workers) 
have met the statutory criteria for industry support under section 
702(c)(4)(A)(i) of the Act because the domestic producers (or workers) 
who support the Petition account for at least 25 percent of the total 
production of the domestic like product. See PRC Initiation Checklist 
at Attachment II. Finally, the domestic producers (or workers) have met 
the statutory criteria for industry support under section 
702(c)(4)(A)(ii) of the Act because the domestic producers (or workers) 
who support the Petition account for more than 50 percent of the 
production of the domestic like product produced by that portion of the 
industry expressing support for, or opposition to, the Petition. 
Accordingly, the Department determines that the Petition was filed on 
behalf of the domestic industry within the meaning of section 702(b)(1) 
of the Act. See id.
    The Department finds that Petitioners filed the Petition on behalf 
of the domestic industry because they are interested parties as defined 
in sections 771(9)(C) and 771(9)(D) of the Act and they have 
demonstrated sufficient industry support with respect to the CVD 
investigation that they are requesting the Department initiate. See id.

Injury Test

    Because the PRC is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, section 701(a)(2) of the Act 
applies to this investigation. Accordingly, the ITC must determine 
whether imports of the subject merchandise from the PRC materially 
injure, or threaten material injury to, a U.S. industry.

Allegations and Evidence of Material Injury and Causation

    Petitioners allege that imports of coated paper from the PRC are 
benefitting from countervailable subsidies and that such imports are 
causing, or threaten to cause, material injury to the domestic industry 
producing certain coated paper. In addition, Petitioners allege that 
subsidized imports exceed the negligibility threshold provided for 
under section 771(24)(A) of the Act.
    Petitioners contend that the industry's injured condition is 
illustrated by reduced market share, underselling and price depressing 
and suppressing effects, increased import penetration, lost sales and 
revenue, reduced production, capacity, and capacity utilization, 
reduced shipments and inventories, reduced employment, and reduced 
financial performance. We have assessed the allegations and supporting 
evidence regarding material injury,

[[Page 53705]]

threat of material injury, and causation, and we have determined that 
these allegations are properly supported by adequate evidence and meet 
the statutory requirements for initiation. See PRC Initiation Checklist 
at Attachment III, Analysis of Allegations and Evidence of Material 
Injury and Causation for the Petitions Covering Certain Coated Paper 
from the People's Republic of China and Indonesia.

Initiation of Countervailing Duty Investigation

    Section 702(b) of the Act requires the Department to initiate a CVD 
proceeding whenever an interested party files a petition on behalf of 
an industry that: (1) alleges the elements necessary for an imposition 
of a duty under section 701(a) of the Act; and (2) is accompanied by 
information reasonably available to Petitioner(s) supporting the 
allegations.
    The Department has examined the CVD petition on coated paper from 
the PRC and finds that it complies with the requirements of section 
702(b) of the Act. Therefore, in accordance with section 702(b) of the 
Act, we are initiating a CVD investigation to determine whether 
manufacturers, producers, or exporters of coated paper in the PRC 
receive countervailable subsidies. For a discussion of evidence 
supporting our initiation determination, see Initiation Checklist.
    We are including in our investigation the following programs 
alleged in the Petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in the PRC:
A. Preferential Lending to the Coated Paper Industry
    1. Policy Loans from State-Owned Commercial Banks and Government 
Policy Banks
    2. Fast-Growth High-Yield Forestry Program Loans
B. Income Tax Programs
    1. Income Tax Exemption/Reduction under ``Two-Free/Three Half'' 
Program
    2. Local Income Tax Exemption and Reductions for ``Productive'' 
Foreign-Invested Enterprises (``FIEs'')
    3. Income Tax Reduction for FIEs Purchasing Domestically-Produced 
Equipment
    4. Tax Subsidies to FIEs Based on Geographic Location
    5. Preferential Tax Policies for Technology or Knowledge-Intensive 
FIEs
    6. Tax Programs for FIEs that are High or New Technology 
Enterprises
    7. Income Tax Reductions for High-Technology Industries in 
Guangdong Province
    8. Preferential Tax Policies for Research and Development at FIEs
    9. Income Tax Credits for Domestically-Owned Companies Purchasing 
Domestically-Produced Equipment
    10. Income Tax Exemption Program for Export-Oriented FIEs
    11. Corporate Income Tax Refund Program for Reinvestment of FIE 
profits in Export-Oriented Enterprises
    12. Exemption from City Maintenance and Construction Taxes and 
Education Surcharges for FIEs
C. Indirect Tax and Import Tariff Programs
    1. Value Added Tax (``VAT'') and Tariff Exemptions on Imported 
Equipment
    2. VAT Rebates on Domestically Produced Equipment
    3. Domestic VAT Refunds for Companies Located in the Hainan 
Economic Development Zone
D. Grant Programs
    1. Funds for Forestry Plantation Construction and Management
    2. The State Key Technologies Renovation Project Fund
    3. Loan Interest Subsidies for Major Industrial Technology Reform 
Projects in Wuhan
    4. Funds for Water Treatment Improvement Projects in the 
Songhuajiang Basin
    5. Special Fund for Energy Saving Technology Reform in Wuhan and 
Shouguang Municipality
    6. Clean Production Technology Fund
    7. Famous Brands Awards
E. Provision of Goods or Services for Less Than Adequate Remuneration 
(``LTAR'')
    1. Papermaking Chemicals
    2. Electricity
    3. Land-Use Rights to State Owned Enterprises
F. Economic Development Zone Programs
    1. Subsidies in the Nanchang EDZ
    2. Subsidies in the Wuhan EDZ
    3. Subsidies in the Yangpu EDZ
    4. Subsidies in the Zhenjiang EDZ
For further information explaining why the Department is investigating 
these programs, see Initiation Checklist.
We are not including in our investigation the following programs 
alleged to benefit producers and exporters of the subject merchandise 
in the PRC:
    1. State Science and Technology Support Scheme
    Petitioners allege that the GOC provides grants to support research 
and development under the National Mid-term and Long-term Science and 
Technology Plan (2006 - 2020). While the Department has relied on 
policy directives such as the 2007 Paper Plan and Decision No. 40 to 
support specificity findings with respect to policy lending, 
Petitioners have not pointed to any language in these policy directives 
regarding grants to promote research and development. Instead, the 
grants are given pursuant to the Science and Technology Plan and 
Petitioners' specificity allegations in this respect are based on 
Section 771(5A)(D)(ii) and (D)(iii)(I) of the Act. Regarding the 
former, Petitioners appear to argue that because eligibility is not 
automatic ((D)(ii)(I)) and/or because the eligibility criteria are not 
clearly set out ((D)(ii)(III)), the program is specific as a matter of 
law. However, Petitioners have misconstrued the structure of (D)(ii) 
and a finding of de jure specificity set forth under section 
771(5A)(D)(i) of the Act. Section 771(5A)(D)(ii) does not mean that if 
one or more of the criterion listed under this section of the Act is 
not meet then the program is specific as a matter of law. To be 
specific as a matter of law the program must meet the standard set 
forth under section 771(5A)(D)(i) of the Act: the legislation under 
which the program operates expressly limits access to the subsidy to an 
enterprise or industry. Petitioners have failed to sufficiently allege 
or support a claim that this program is de jure specific under Section 
771(5A)(D)(i) of the Act. Finally, Petitioners have provided no support 
for their claim that the number of recipients is limited. Consequently, 
we do not plan on investigating this program.
    2. Special Funds for Environmental Protection
    Petitioners allege that central, provincial, and local government 
funds, in the form of grants or loan interest subsidies, are available 
to support certain qualified environmental protection projects. 
Although Petitioners point to specific language in the Papermaking Plan 
regarding policy support, that Plan was in place from 2001 - 2005, 
while the measures authorizing these grants were put in place after 
that timeframe. Further, Petitioners have not provided evidence showing 
that grants provided pursuant

[[Page 53706]]

to these authorizations are specific in law under Section 771(5A)(D)(i) 
or in fact under Section 771(5A)(D)(iii). We do not agree with 
Petitioners' claim of specificity under Section 771(5A)(D)(ii) for the 
reasons explained above under, ``State Science and Technology Support 
Scheme.'' Consequently, we do not plan on investigating this program.
    3. Provision of Coal for LTAR
    Petitioners allege that the GOC provides coal to Chinese producers 
of coated paper for LTAR. Petitioners have not supported their 
allegation that this program is specific to paper producers. The 
program as it relates to electricity generation targets the electricity 
industry, not the papermaking industry. Further, Petitioners have not 
supported their claim that the paper industry is an ``export 
industry.'' Consequently, we do not plan on investigating this program.
    4. Provision of Water for LTAR
    Petitioners allege that the GOC provides favored sectors with 
differential water rates and unlimited water use. Petitioners have not 
provided sufficient support of a national policy to provide water for 
LTAR to coated paper producers. Consequently, we do not plan on 
investigating this program.
    5. Currency Undervaluation
    Petitioners allege that the GOC-maintained exchange rate 
effectively prevents the appreciation of the Chinese currency (RMB) 
against the U.S. dollar. Therefore, when producers/exporters in the PRC 
sell their dollars at official foreign exchange banks, as required by 
law, the producers receive more RMB than they otherwise would if the 
value of the RMB were set by market mechanisms. In the alternative, 
Petitioners allege that GOC foreign exchange market interventions 
constitute a price support (of the U.S. dollar vis a vis the RMB), 
within the meaning of section 771(5)(B)(ii). In both cases, Petitioners 
describe the benefit conferred as the excess of RMB received, over what 
would have been received at a market rate (``excess RMB'') and alleges 
specificity within the meaning of Section 771(5A)(B) of the Act by 
virtue of the fact that `` there is a direct and positive correlation 
between the export activity/export earnings and the amount of subsidy 
received.'' Section 771(5A)(B) of the Act describes an export subsidy 
as `` a subsidy that is, in law or fact, contingent upon export 
performance, alone or as 1 of 2 or more conditions.'' Petitioners have 
failed to sufficiently allege that the receipt of the excess RMB is 
contingent on export or export performance because receipt of the 
excess RMB is independent of the type of transaction or commercial 
activity for which the dollars are converted or of the particular 
company or individuals converting the dollars. Consequently, we do not 
plan on investigating this program because Petitioners have failed to 
properly allege the specificity element.

Respondent Selection

    For this investigation, the Department expects to select 
respondents based on U.S. Customs and Border Protection (``CBP'') data 
for U.S. imports during the period of investigation. We intend to 
release the CBP data under Administrative Protective Order (``APO'') to 
all parties with access to information protected by APO within five 
days of the announcement of the initiation of this investigation. 
Interested parties may submit comments regarding the CBP data and 
respondent selection within seven calendar days of publication of this 
notice. We intend to make our decision regarding respondent selection 
within 20 days of publication of this Federal Register notice.
    Interested parties must submit applications for disclosure under 
APO in accordance with 19 CFR 351.305(b). Instructions for filing such 
applications may be found on the Department's website at http://ia.ita.doc.gov/apo.

Distribution of Copies of the Petition

    In accordance with section 702(b)(4)(A)(i) of the Act, a copy of 
the public version of the Petition has been provided to the Government 
of the PRC. As soon as and to the extent practicable, we will attempt 
to provide a copy of the public version of the Petition to each 
exporter named in the Petition, consistent with section 351.203(c)(2) 
of the Department's regulations

ITC Notification

    We have notified the ITC of our initiation, as required by section 
702(d) of the Act.

Preliminary Determination by the ITC

    The ITC will preliminarily determine, within 25 days after the date 
on which it receives notice of the initiation, whether there is a 
reasonable indication that imports of subsidized coated paper from the 
PRC are causing material injury, or threatening to cause material 
injury, to a U.S. industry. See section 703(a)(2) of the Act. A 
negative ITC determination will result in the investigation being 
terminated; otherwise, the investigation will proceed according to 
statutory and regulatory time limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: October 13, 2009.
Ronald K. Lorentzen,
Acting Assistant Secretary for Import Administration.

Appendix I

Scope of the Investigation

The merchandise covered by this investigation includes certain coated 
paper and paperboard\2\ in sheets suitable for high quality print 
graphics using sheet-fed presses; coated on one or both sides with 
kaolin (China or other clay), calcium carbonate, titanium dioxide, and/
or other inorganic substances; with or without a binder; having a GE 
brightness level of 80 or higher\3\; weighing not more than 340 grams 
per square meter; whether gloss grade, satin grade, matte grade, dull 
grade, or any other grade of finish; whether or not surface-colored, 
surface-decorated, printed (except as described below), embossed, or 
perforated; and irrespective of dimensions (``Certain Coated Paper'').
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    \2\ `` `Paperboard' refers to Certain Coated Paper that is 
heavier, thicker and more rigid than coated paper which otherwise 
meets the product description. In the context of Certain Coated 
Paper, paperboard typically is referred to as `cover,' to 
distinguish it from `text.'''
    \3\ One of the key measurements of any grade of paper is 
brightness. Generally speaking, the brighter the paper the better 
the contrast between the paper and the ink. Brightness is measured 
using a GE Reflectance Scale, which measures the reflection of light 
off of a grade of paper. One is the lowest reflection, or what would 
be given to a totally black grade, and 100 is the brightest measured 
grade.
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Certain Coated Paper includes (a) coated free sheet paper and 
paperboard that meets this scope definition; (b) coated groundwood 
paper and paperboard produced from bleached chemi-thermo-mechanical 
pulp (``BCTMP'') that meets this scope definition; and (c) any other 
coated paper that meets this scope definition.
Certain Coated Paper is typically (but not exclusively) used for 
printing multi-colored graphics for catalogues, books, magazines, 
envelopes, labels and wraps, greeting cards, and other commercial 
printing applications requiring high quality print graphics. 
Specifically excluded from the scope are imports of paper and 
paperboard printed with final content printed text or graphics.
    As of 2009, imports of the subject merchandise are provided for 
under the following categories of the Harmonized Tariff Schedule of the 
United States (``HTSUS''): 4810.14.11, 4810.14.1900, 4810.14.2010, 
4810.14.2090, 4810.14.5000, 4810.14.6000, 4810.14.70, 4810.19.1100, 
4810.19.1900, 4810.19.2010, 4810.19.2090, 4810.22.1000, 4810.22.50, 
4810.22.6000,

[[Page 53707]]

4810.22.70, 4810.29.1000, 4810.29.5000, 4810.29.6000, 4810.29.70. While 
HTSUS subheadings are provided for convenience and customs purposes, 
the written description of the scope of the investigation is 
dispositive.
[FR Doc. E9-25210 Filed 10-19-09; 8:45 am]
BILLING CODE 3510-DS-S