[Federal Register Volume 75, Number 87 (Thursday, May 6, 2010)]
[Notices]
[Pages 24892-24906]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-10701]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-958]


Certain Coated Paper Suitable for High-Quality Print Graphics 
Using Sheet-Fed Presses From the People's Republic of China: Notice of 
Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination

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

[[Page 24893]]


DATES: Effective Date: May 6, 2010.

SUMMARY: The Department of Commerce (``Department'') preliminarily 
determines that certain coated paper suitable for high-quality print 
graphics using sheet-fed presses (``coated paper'') 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 (``the Act''). The 
estimated margins of sales at LTFV are shown in the ``Preliminary 
Determination'' section of this notice. Pursuant to requests from 
interested parties, we are postponing the final determination and 
extending the provisional measures from a four-month period to not more 
than six months. Accordingly, we will make our final determination not 
later than 135 days after publication of the preliminary determination.

FOR FURTHER INFORMATION CONTACT: Lindsey Novom or Demitrios 
Kalogeropoulos, AD/CVD Operations, Office 8, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230; telephone: 
(202) 482-5256 or (202) 482-2623, respectively.

SUPPLEMENTARY INFORMATION:

Initiation

    On September 23, 2009, the Department received an antidumping duty 
(``AD'') petition concerning imports of coated paper from the PRC filed 
in proper form by Appleton Coated LLC, NewPage Corporation, S.D. Warren 
Company d/b/a Sappi Fine Paper North America, and United Steel, Paper 
and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and 
Service Workers International Union (collectively, ``Petitioners''). 
See the Petition for the Imposition of Antidumping and Countervailing 
Duties Pursuant to Sections 701 and 731 of the Tariff Act of 1930, as 
amended (``Petition''), filed on September 23, 2009. Based on the 
Department's request, Petitioners filed supplements to the Petitions on 
October 2, 8, and 9, 2009.
    The Department initiated this investigation on October 13, 2009.\1\ 
In the Initiation Notice, the Department notified parties of the 
application process by which exporters and producers may obtain 
separate-rate status in non-market economy (``NME'') investigations. 
The process requires exporters and producers to submit a separate-rate 
status application (``SRA'') \2\ and to demonstrate an absence of both 
de jure and de facto government control over its export activities. The 
SRA for this investigation was posted on the Department's Web site 
http://ia.ita.doc.gov/ia-news-2009.html on October 14, 2009. The due 
date for filing an SRA was December 22, 2009.
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    \1\ See Coated Paper From the People's Republic of China: 
Initiation of Antidumping Duty Investigation, 74 FR 53710 (October 
20, 2009) (``Initiation Notice'').
    \2\ See Policy Bulletin 05.1: Separate-Rates Practice and 
Application of Combination Rates in Antidumping Investigations 
Involving Non-Market Economy Countries (April 5, 2005) (``Policy 
Bulletin 05.1''), available at http://ia.ita.doc.gov/policy/bull05-1.pdf.
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    On November 23, 2009, the International Trade Commission (``ITC'') 
determined that there is a reasonable indication that an industry in 
the United States is materially injured or threatened with material 
injury by reason of imports of coated paper from the PRC.\3\
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    \3\ See Investigation Nos. 701-TA-470-471 and 731-TA-1169-1170 
(Preliminary): Coated Paper From China, 74 FR 61174 (November 23, 
2009).
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Period of Investigation

    The period of investigation (``POI'') is January 1, 2009, through 
June 30, 2009. This period corresponds to the two most recent fiscal 
quarters prior to the month of the filing of the petition, which was 
September 2009. See 19 CFR 351.204(b)(1).

Postponement of Preliminary Determination

    On January 22, 2010, petitioners made a timely request pursuant to 
section 733(c)(1)(A) of the Act and 19 CFR 351.205(b)(2) and (e) for a 
50-day postponement of the preliminary determination. On February 19, 
2010, the Department published a postponement of the preliminary AD 
determination on coated paper from the PRC.\4\
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    \4\ See Coated Paper From the People's Republic of China: 
Postponement of Preliminary Determinations of Antidumping Duty 
Investigations, 75 FR 7447 (February 19, 2010).
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Tolling of Administrative Deadlines

    As explained in the memorandum from the Deputy Assistant Secretary 
for Import Administration, the Department has exercised its discretion 
to toll deadlines for the duration of the closure of the Federal 
Government from February 5, through February 12, 2010. Thus, all 
deadlines in this segment of the proceeding have been extended by seven 
days. The revised deadline for this preliminary determination is now 
April 28, 2010. See Memorandum to the Record from Ronald Lorentzen, DAS 
for Import Administration, regarding ``Tolling of Administrative 
Deadlines As a Result of the Government Closure During the Recent 
Snowstorm,'' dated February 12, 2010.

Scope of the Investigation

    The merchandise covered by this investigation includes certain 
coated paper and paperboard \5\ 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; \6\ 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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    \5\ `` `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.' ''
    \6\ 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 and paperboard 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,

[[Page 24894]]

4810.22.1000, 4810.22.50, 4810.22.6000, 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 investigations is dispositive.

Scope Comments

    As discussed in the preamble to the regulations, we set aside a 
period for interested parties to raise issues regarding product 
coverage. See Antidumping Duties; Countervailing Duties; Final Rule, 62 
FR 27296, 27323 (May 19, 1997). The Department encouraged all 
interested parties to submit such comments within 20 calendar days of 
signature of the Initiation Notice. See Initiation Notice, 74 FR at 
31692. As we stated in Certain Coated Paper Suitable For High-Quality 
Print Graphics Using Sheet-Fed Presses From the People's Republic of 
China: Preliminary Affirmative Countervailing Duty Determination and 
Alignment of Final Countervailing Duty Determination With Final 
Antidumping Duty Determination, 75 FR 10774 (March 9, 2010) (``PRC 
Coated Paper CVD Prelim'') and Certain Coated Paper From Indonesia: 
Preliminary Affirmative Countervailing Duty Determination and Alignment 
of Final Countervailing Duty Determination With Final Antidumping Duty 
Determination, 75 FR 10761 (March 9, 2010) (``Indonesia Coated Paper 
CVD Prelim''), the Department received scope comments from interested 
parties on November 6, 2009,\7\ November 16, 2009,\8\ December 16, 
2009,\9\ December 28, 2009,\10\ and March 12, 2010,\11\ with respect to 
whether multi-ply coated paper products are covered by the scope of the 
AD/CVD investigations of coated paper from the PRC and Indonesia. As 
the Department stated in the PRC Coated Paper CVD Prelim and Indonesia 
Coated Paper CVD Prelim, based on our review of the scope, we find that 
the number of plies is not among the specific physical characteristics 
(e.g., brightness, coating, weight, etc.) defining the subject 
merchandise. Accordingly, we preliminarily find that multi-ply coated 
paper is covered by the scope of these investigations, to the extent 
that it meets the description of the merchandise in the scope.
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    \7\ See ``Scope Comments: Coated Paper Suitable For High-Quality 
Print Graphics Using Sheet-Fed Presses from China and Indonesia,'' 
dated November 6, 2009.
    \8\ See ``Certain Coated Paper Suitable For High-Quality Print 
Graphics Using Sheet-Fed Presses (``Certain Coated Paper'') from 
Indonesia and the People's Republic of China: Petitioners' Rebuttal 
Comments on Scope,'' dated November 16, 2009.
    \9\ See ``Request to Re-Examine the Department's Industry 
Support Calculation Coated Paper Suitable For High-Quality Print 
Graphics Using Sheet-Fed Presses from China,'' dated December 16, 
2009.
    \10\ See ``Certain Coated Paper Suitable For High-Quality Print 
Graphics Using Sheet-Fed Presses from Indonesia and the People's 
Republic of China: Petitioners' Response to Chinese and Indonesian 
Respondents' Request to Re-examine the Department's Industry Support 
Calculation,'' dated December 28, 2009.
    \11\ See ``Ex Parte Meeting Regarding Scope: Records Documents, 
Certain Coated Paper Suitable For High-Quality Print Graphics Using 
Sheet-Fed Presses from Indonesia and the People's Republic of 
China,'' originally dated February 23, 2010, resubmitted on March 
12, 2010.
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    On February 25, 2010, Petitioners filed additional comments 
rebutting certain documents filed by the PRC and Indonesian respondents 
which contained scope comments and restating their prior claims. In 
response to a question the Department posed during an ex parte meeting, 
Petitioners stated that the phrase ``suitable for high quality print 
graphics'' could be stricken from the description of the subject 
merchandise without altering the scope of these investigations. In the 
PRC Coated Paper CVD Prelim and Indonesia Coated Paper CVD Prelim, the 
Department invited interested parties to comment within 20 calendar 
days of publication of the PRC Coated Paper CVD Prelim and Indonesia 
Coated Paper CVD Prelim with respect to whether striking the language 
``suitable for high quality print graphics'' from the description of 
the subject merchandise would alter the scope of these investigations. 
We received comments from interested parties on March 29, 2010,\12\ and 
April 8, 2010.\13\ Based on the information contained in these 
submissions, on April 23, 2010, the Department requested additional 
information from Petitioners with respect to this scope issue. 
Petitioners' submission is due May 3, 2010. Therefore, we intend to 
address this issue for the final determinations in these coated paper 
AD/CVD investigations.
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    \12\ See ``Additional Scope Comments: Certain Coated Paper 
Suitable For High-Quality Print Graphics Using Sheet-Fed Presses 
from China and Indonesia,'' dated March 29, 2010.
    \13\ See ``Certain Coated Paper Suitable For High-Quality Print 
Graphics Using Sheet-Fed Presses (``Certain Coated Paper'') from 
Indonesia and the People's Republic of China: Petitioners' Rebuttal 
Comments on Scope,'' dated April 8, 2010.
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    In their February 25, 2010 submission, Petitioners also stated that 
the phrase in the scope, ``(c) any other coated paper that meets the 
scope definition'' should also include the word ``paperboard.'' As the 
Department stated in the PRC Coated Paper CVD Prelim and Indonesia 
Coated Paper CVD Prelim, we agree that the word ``paperboard'' was 
inadvertently omitted (e.g., it is already explicitly included in the 
first sentence of the scope language and in ``(b)'' of the second 
paragraph) and have corrected the scope language to read ``(c) any 
other coated paper and paperboard that meets this scope definition.''

Non-Market Economy Country

    For purposes of initiation, Petitioners submitted an LTFV analysis 
for the PRC as an NME.\14\ The Department's most recent examination of 
the PRC's market status determined that NME status should continue for 
the PRC.\15\ Additionally, in two recent investigations, the Department 
also determined that the PRC is an NME country.\16\ In accordance with 
section 771(18)(C)(i) of the Act, the NME status remains in effect 
until revoked by the Department. The Department has not revoked the 
PRC's status as an NME country, and we have therefore treated the PRC 
as an NME in this preliminary determination and applied our NME 
methodology.
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    \14\ See Initiation Notice, 74 FR at 53713.
    \15\ See the Department's memorandum entitled, ``Antidumping 
Duty Investigation of Certain Lined Paper Products from the People's 
Republic of China (``China'')--China's status as a non-market 
economy (``NME''),'' dated August 30, 2006. This document is 
available online at: http://ia.ita.doc.gov/download/prc-nmestatus/prc-lined-paper-memo-08302006.pdf.
    \16\ See, e.g., Certain Kitchen Appliance Shelving and Racks 
From the People's Republic of China: Preliminary Determination of 
Sales at Less Than Fair Value and Postponement of Final 
Determination, 74 FR 9591 (March 5, 2009) (``Kitchen Racks Prelim'') 
unchanged in Certain Kitchen Appliance Shelving and Racks From the 
People's Republic of China: Final Determination of Sales at Less 
Than Fair Value, 74 FR 36656 (July 24, 2009) (``Kitchen Racks 
Final'') and Certain Tow Behind Lawn Groomers and Certain Parts 
Thereof from the People's Republic of China: Preliminary 
Determination of Sales at Less Than Fair Value and Postponement of 
Final Determination, 74 FR 4929 (January 28, 2009) unchanged in 
Certain Tow Behind Lawn Groomers and Certain Parts Thereof from the 
People's Republic of China: Final Determination of Sales at Less 
Than Fair Value, 74 FR 29167 (June 19, 2009).
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Market Oriented Industry Treatment

    In the Amendment to Final Determination of Sales at Less Than Fair 
Value and Amendment to Antidumping Duty Order: Chrome-Plated Lug Nuts 
From the People's Republic of China, 57 FR 15052 (April 24, 1992) 
(``Lug Nuts From the PRC''), the Department set forth the factors to be 
considered in determining whether an MOI exists in an economy which is 
considered an NME for the purposes of the antidumping duty law. These 
factors include, but are not limited to:

-- For the merchandise under investigation, there must be virtually

[[Page 24895]]

no government involvement in setting prices or amounts to be produced. 
For example, state-required production of the merchandise, whether for 
export or domestic consumption in the non-market economy country would 
be an almost insuperable barrier to finding a market-oriented industry 
(first prong).
--The industry producing the merchandise under investigation should be 
characterized by private or collective ownership. There may be state-
owned enterprises in the industry but substantial state ownership would 
weigh heavily against finding a market-oriented industry (second 
prong).
--Market-determined prices must be paid for all significant inputs, 
whether material or non-material (e.g., labor and overhead), and for 
all but an insignificant proportion of all the inputs accounting for 
the total value of the merchandise under investigation. For example, an 
input price will not be considered market-determined if the producers 
of the merchandise under investigation pay a state-set price for the 
input or if the input is supplied to the producers at government 
direction. Moreover, if there is any state-required production in the 
industry producing the input, the share of state-required production 
must be insignificant (third prong).

    If any one of these conditions is not met, then, pursuant to 
sections 773(c)(1), (3) and (4) of the Act and 19 CFR 351.408, the 
producers of the merchandise under investigation will be treated as 
NME-producers, and the normal value will be calculated on the basis of 
the value of the factors of production, which to the extent possible 
will be based on prices and costs of the factors of production in one 
or more market economy countries that are (A) at a level of economic 
development comparable to that of the nonmarket economy country, and 
(B) are significant producers of comparable merchandise.
    In Lug Nuts From the PRC, the Department stated that the test for 
finding such a market-oriented industry must begin with a strong 
presumption that such situations do not occur. See Lug Nuts From the 
PRC. The presumption against finding a market-oriented industry must 
prevail unless thorough and convincing evidence is presented on the 
record which demonstrates that the producers operate in an environment 
of market-based costs and prices. See Lug Nuts From the PRC.
    All of the mandatory respondents and the separate rate respondent, 
Chenming (collectively, ``MOI Respondents''), in this investigation 
have claimed that the coated paper industry is a market-oriented 
industry (``MOI''). In their February 5, 24, March 9, and April 14, 
2010, submissions, the MOI Respondents claim that the market determines 
the prices for major inputs (pulp, China clay, and caustic soda) as 
evidenced by the existence of imports and an absence of government 
price controls. In addition, MOI Respondents claim that privately held 
companies and foreign-invested enterprises (``FIEs'') account for a 
significant majority of production of these three inputs during the 
POI. MOI Respondents claim that the government did not regulate the 
quantity or pricing of subject merchandise during the POI and that the 
coated paper industry in the PRC consists predominantly of privately 
held companies and FIEs that act according to market considerations. 
Accordingly, these MOI Respondents state that these submissions 
demonstrate that the coated paper industry is an MOI and, as such, is 
fully entitled to market treatment in this investigation.
    On February 5, 2010, MOI Respondents provided an initial MOI 
submission addressing the second prong (as articulated in Lug Nuts From 
the PRC) and indicated they intended to submit additional data and 
other factual evidence in support of their request for MOI treatment. 
After receiving this initial submission, the Department prompted MOI 
Respondents to complete their submission and address the first and 
third prong (as articulated in Lug Nuts From the PRC), as well as 
address the specific inputs of land, capital, and labor.\17\ MOI 
Respondents provided the Department information for three material 
inputs: pulp, caustic soda, and China clay, as well as information 
regarding land, capital, and labor.\18\ On March 9 and 19, 2010, 
Petitioners submitted information citing deficiencies in MOI 
Respondents' MOI submissions. MOI Respondents on April 14, 2010 
provided additional information in support of their MOI claim and 
provided responses to some of the Petitioners' arguments.
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    \17\ See Department's February 24, 2010, Request for Additional 
Information Concerning Market-Oriented Industry Treatment.
    \18\ See MOI Respondents' March 9 and April 14 submissions.
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    The Department requires that any MOI claim be submitted such that 
it provides sufficient time to consider the claim. See, e.g., Final 
Determination of Sales at Less Than Fair Value: Wooden Bedroom 
Furniture From the People's Republic of China, 69 FR 67314 (November 
17, 2004). While the Department has given MOI Respondents' claim full 
consideration in this case, for future cases, the Department wishes to 
clarify that MOI Respondents should submit their complete MOI claim no 
later than two months after the initiation of a segment of a proceeding 
such that in the event of granting MOI treatment to a certain industry, 
this could allow sufficient time to request and analyze market economy 
data for use in the Department's determinations.
    For the reasons explained below, the Department concludes that the 
MOI Respondents' claim is insufficient with respect to prongs two and 
three. The Department requires that an MOI claim cover virtually all of 
the producers of the industry and virtually all inputs. See, e.g., 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Preserved Mushrooms From the People's Republic of China, 63 FR 72255 
(December 31, 1998) (``Preserved Mushrooms From the PRC''). The 
Department finds that the MOI Respondents' claim does not sufficiently 
address the ownership of coated paper producers and does not address 
virtually all inputs for the coated paper industry.
    With respect to the second prong, regarding private or collective 
ownership, the evidence on the record is inconclusive with respect to 
the ownership status of enterprises in the coated paper industry. MOI 
Respondents themselves identified one of the largest producers of 
coated paper as a state-owned enterprise (``SOE'').\19\ Petitioners 
have provided evidence on the record that another one of the largest 
producers is also an SOE.\20\ In addition, Petitioners provided 
information that several other enterprises, classified as non-SOE by 
MOI Respondents, are in fact state-owned.\21\ The Department further 
notes that MOI Respondents' April 14, 2010, submission failed to 
address, respond, or otherwise rebut Petitioners' evidence on the 
record that several enterprises are misclassified as private, FIE, and 
collective, and should be reclassified as SOEs. For example, under 
Article 4 of China's Law on Chinese-Foreign Equity Joint Ventures, an 
enterprise with at least 25 percent foreign capital contribution is 
classified as an FIE. For some enterprises, it appears that MOI 
Respondents classified enterprises as FIEs in the case where an SOE, or 
company owned by an ultimate SOE parent, contributed the

[[Page 24896]]

majority of the capital.\22\ The Department also notes that MOI 
respondents provided no information on the ultimate ownership structure 
of the companies that own the coated paper producers. Moreover, because 
the information provided by MOI Respondents regarding the percentage of 
ownership structure in the coated paper industry in China is presented 
in aggregate form on a production basis, as opposed to providing 
enterprise-level production data, the Department is precluded from 
performing its own calculation of the portion of the coated paper 
industry that is state-owned. For all of the above reasons, the 
Department finds that the MOI Respondents' claim is not sufficient with 
respect to the second prong of the MOI test.
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    \19\ See Exhibit 1 of Respondents' February 5, 2010 submission.
    \20\ See Petitioners' March 9, 2010 submission.
    \21\ See Petitioners' March 9, 2010 submission.
    \22\ See Exhibit 1 of Respondents' April 14, 2010 submission.
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    Under the third MOI prong, the Department requires that the MOI 
claim provide a sufficient basis to demonstrate that ``market 
determined prices'' are paid for virtually all inputs (emphasis added, 
see Preserved Mushrooms From the PRC). With regard to the third prong, 
the MOI claim must provide evidence that market determined prices are 
paid for (1) all significant inputs, whether material or non-material 
(e.g., labor and overhead), and (2) all but an insignificant proportion 
of the inputs accounting for the total value of the merchandise under 
investigation. See Lug Nuts From the PRC. The Department does not 
expect MOI Respondents' MOI claim to provide ownership documentation 
for every input supplier, and for each and every input; the Department, 
however, does require that, at a minimum, a claim at least include 
aggregate information on the state-ownership of a material input as 
well as summary information that provides sufficient evidence that 
market determined prices are paid (See factors cited in the preceding 
paragraph).
    Aside from the lack of de jure price controls, MOI Respondents' 
claim with respect to whether market prices are paid for inputs 
consists of providing ownership information for three input producers 
in addition to the existence of imports.\23\ The mere existence of 
imports, however, without a basis for comparison, does not provide a 
sufficient basis for the claim that market prices were paid. Import 
volumes alone do not provide a meaningful indicator unless they are, 
inter alia, compared to domestic consumption, i.e. the import 
penetration ratio. The Department notes that MOI Respondents did not 
provide this metric for any of the inputs. Absent or in addition to 
such information, it may also be appropriate to consider: (1) Whether 
the input is subject to any state guidance pricing, decrees, circulars, 
or other administratively determined reference pricing that is not 
explicitly referred to in the law and, (2) the absence of border 
measures (export taxes and quotas) on raw material inputs that can 
depress domestic prices. While no one factor, alone, is dispositive, 
the Department finds that MOI Respondents did not provide a sufficient 
basis to support the claim for market determined prices.
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    \23\ See MOI Respondents' March 9, 2010 and April 14, 2010 
submissions.
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    Additionally, the Department requires that the MOI claim provide 
information that addresses virtually all inputs. See, e.g., Preserved 
Mushrooms From the PRC. Coated paper production requires anywhere from 
several dozen up to hundreds of different material inputs.\24\ MOI 
Respondents, however, have only provided information on three material 
inputs. For certain coated paper products, these three inputs do not 
account for a large portion of the direct material cost.\25\ Further, 
the Department notes that at least one of the inputs has substantial 
state production.\26\ With regard to the remaining material inputs, MOI 
Respondents' only assertion is to reference the mandatory respondents' 
questionnaire responses.\27\ As the Department has previously stated, 
the MOI claim must encompass the entire industry and provide 
information that addresses virtually all inputs. See, e.g., Notice of 
Final Determination of Sales at Less Than Fair Value: Freshwater 
Crawfish Tail Meat From the People's Republic of China, 62 FR 41347, 
41353 (August 1, 1997); see also Preserved Mushrooms From the PRC.
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    \24\ See GE Group's and Sun Paper and Board's Section D 
questionnaire responses.
    \25\ Due to the proprietary nature of this data, please see the 
analysis memos for the GE Group and Sun Paper and Board.
    \26\ See Exhibit INPUT-3 of MOI Respondent's March 9, 2010 
submission.
    \27\ See MOI Respondents' April 14, 2010 submission.
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    For the reasons noted above, the Department determines that MOI 
Respondents' MOI claim did not provide sufficient evidence as to the 
second and third prongs to warrant the Department's further 
consideration in this investigation of whether producers in the coated 
paper industry operate in an environment of market-based costs and 
prices sufficient to overcome the strong presumption that an MOI does 
not exist in a nonmarket economy. In light of this finding, we do not 
need to reach the issues with respect to the first prong or with 
respect to the claims concerning land, capital, and labor.

Market-Oriented Enterprise Treatment

    On January 21, 2010, Gold East Paper (Jiangsu) Co., Ltd. (``GE'') 
and Gold Huasheng Paper Co., Ltd. (``GHS'') requested that the 
Department apply its market economy (``ME'') methodology when 
calculating its AD margins for the GE Group. In its request, GE and GHS 
presented the following claims as to why the Department should afford 
the GE Group market-oriented enterprise (``MOE'') treatment: (1) GE and 
GHS are 100 percent foreign owned which ``signifies that market 
principles are being applied;'' (2) a significant portion of GE and 
GHS's material inputs are sourced from ME countries and ``reliance on 
market economy inputs makes it less likely that there will be residual 
influence from the non-market economy on the respondents' operations;'' 
and (3) GE and GHS are subject to a companion countervailing duty case. 
On April 19, 2010, the GE Group submitted a ME questionnaire response, 
notwithstanding that the Department had not issued the GE Group a ME 
questionnaire.
    As an initial matter, we note that the antidumping statute and the 
Departments' regulations are silent with respect to the term ``MOE.'' 
Neither the statute nor the regulations compel the agency to treat some 
constituents of the NME industry as MOEs while treating others as NME 
entities. To date, the Department has not adopted any MOE exception to 
the application of the NME methodology in any proceeding involving an 
NME country. As we stated in Final Determination of Sales at Less Than 
Fair Value: Coated Free Sheet Paper From the People's Republic of 
China, 72 FR 60632 (Oct. 25, 2007), and accompanying Issues and 
Decision Memorandum at Comment 1, no determination has been made 
``whether it would be appropriate to introduce a market oriented 
enterprise process'' in NME antidumping investigations. Speaking to the 
complexity of the issue, the Department has twice asked for public 
comment on whether it should consider granting market-economy treatment 
to individual respondents operating in non-market economies, the 
conditions under which individual firms should be granted market-
economy treatment, and how such treatment might affect antidumping 
calculations for such qualifying respondents. See First MOE Comment 
Request, 72 FR at 29302-03; Antidumping Methodologies in Proceedings 
Involving Certain Non-Market Economies: Market-Oriented

[[Page 24897]]

Enterprise: Request for Comment, 72 FR 60649 (Oct. 25, 2007) (``Second 
MOE Comment Request''). The Department received numerous comments in 
response to the two Federal Register notices. The Department is still 
considering those comments while evaluating whether to adopt an 
official policy concerning MOEs.
    Pursuant to section 771(18)(A) of the Act, when a country is 
determined to be an NME, it means that the designated country, in this 
case the PRC, ``{d{time} oes not operate on market principles of cost 
or pricing structures, so that sales of merchandise in such country do 
not reflect the fair value of the merchandise.'' In accordance with 
section 771(18)(C)(i) of the Act, the presumption of NME status remains 
in effect until revoked by the Department. The presumption of NME 
status for the PRC has not been revoked by the Department and remains 
in effect for the purpose of this investigation. Accordingly, the 
normal value (``NV'') of the product is appropriately based on factors 
of production (``FOP'') valued in a surrogate ME country in accordance 
with section 773(c) of the Act, a methodology that has been repeatedly 
upheld by the Courts. See, e.g., Sigma Corp. v. United States, 117 F.3d 
1401, 1405 (Fed. Cir. 1997); Nation Ford Chem. Co. vs. United States, 
166 F.3d 1373 (Fed. Cir. 1999).\28\
---------------------------------------------------------------------------

    \28\ Under the NME presumption established by the statutory 
scheme, the only mechanism for market economy treatment currently 
available to respondents in NME proceedings is market-oriented 
industry (``MOI'') classification. Commerce currently employs an 
industry-wide test to determine whether, under section 773(c)(1)(B), 
available information in the NME country permits the use of the ME 
methodology for the NME industry producing the subject merchandise. 
The MOI test affords NME-country respondents the possibility of 
market economy treatment, but only upon a case-by-case, industry-
specific basis. This test is performed only upon the request of a 
respondent. See, e.g., Antidumping Methodologies in Proceedings 
Involving Certain Non-Market Economies: Market-Oriented Enterprise, 
72 FR 29302, 29302 (May 25, 2007) (``First MOE Comment Request'').
---------------------------------------------------------------------------

Selection of Respondents

    In accordance with section 777A(c)(2) of the Act, the Department 
selected the four largest exporters of coated paper (i.e., GE, GHS, 
Yanzhou Tianzhang Paper Industry Co., Ltd. (``Tianzhang''), and 
Shandong International Paper and Sun Coated Paperboard Co., Ltd./
International Paper and Sun Cartonboard Co., Ltd. (``IP Paperboard'' 
and ``IP Cartonboard'') by volume as the mandatory respondents in this 
investigation based on the quantity and value (``Q&V'') information 
from exporters/producers that were identified in the Petition, of which 
five firms filed timely Q&V questionnaire responses.\29\ Of the five 
Q&V questionnaire responses, four companies (GE, GHS, Tiangzhang and IP 
Paperboard/IP Cartonboard) filed two consolidated Q&V questionnaire 
responses.
---------------------------------------------------------------------------

    \29\  See the Department's memorandum entitled, ``Antidumping 
Duty Investigation of Coated Paper from the People's Republic of 
China: Respondent Selection,'' dated November 25, 2009 (``Respondent 
Selection Memo'').
---------------------------------------------------------------------------

    The Department issued its antidumping questionnaire to Tianzhang 
and IP Paperboard/IP Cartonboard (collectively, ``Sun Paper and 
Board'') and GE and GHS on November 27, 2009. The Department requested 
that the respondents provide a response to section A of the 
Department's questionnaire on December 18, 2009, and a response to 
sections C and D of the questionnaire on January 4, 2010. From December 
15, 2009, until the present, the Department has granted both 
respondents several extensions for their submissions.
    Sun Paper and Board submitted its responses to the section A and 
sections C and D questionnaires on December 29, 2009 and January 20, 
2010, respectively. Sun Paper and Board submitted responses to the 
section A and section C supplemental questionnaires on March 18 and 
March 25, 2010, respectively. The Department received Sun Paper and 
Board's section D supplemental questionnaire response and section A and 
C 2nd supplemental questionnaire response on April 9, 2010. After the 
Department requested reconciliation of sales in a memorandum to the 
file, Sun Paper and Board submitted its reconciliation of sales on 
March 26, 2010. In two memorandums to the file requesting affiliation 
information, Sun Paper and Board submitted affiliation information on 
April 6, 2010, and April 14, 2010.
    GE, GHS, and its affiliated producers Ningbo Zhonghua Paper Co., 
Ltd., (``NBZH'') and Ningbo Asia Pulp and Paper Co., Ltd., (``NAPP'') 
(collectively, ``GE Group'') submitted their section A responses on 
December 23, 2009. GE and GHS submitted responses to section C and D on 
January 20, 2010, and January 22, 2010, respectively. NAPP and NBZH 
submitted its section C and D responses on March 5, 2010. The 
Department received the GE Group's section A supplemental response on 
March 16, 2010. The Department received GE, GHS, NBZH's and NAPP's 
section C and D supplemental questionnaire responses on April 6, 2010.

Targeted Dumping

    On March 15, 2010, the Department received Petitioners' allegations 
of targeted dumping by the GE group \30\ using a variation of the 
Department's methodology as established in Certain Steel Nails From the 
United Arab Emirates: Notice of Final Determination of Sales at Not 
Less Than Fair Value, 73 FR 33985 (June 16, 2008) (``Steel Nails''), in 
addition to proposing an alternative targeted dumping methodology. 
Based on our examination of the targeted dumping allegations filed by 
Petitioners on March 15, 2010, pursuant to 777A(d)(1)(B)(i) of the Act, 
the Department has determined that the Petitioners' allegations 
sufficiently indicate that there is a pattern of export prices (or 
constructed export prices) for comparable merchandise that differ 
significantly among purchasers and regions. Therefore, for purposes of 
this preliminary determination, we have applied the targeted dumping 
methodology established in Steel Nails.
---------------------------------------------------------------------------

    \30\ Specifically filed against Gold East (Jiangsu) Co., Ltd.; 
Gold Huasheng Paper Co., Ltd., Ningbo Zhonghua Paper Co., Ltd.; and 
Ningbo Asia Pulp and Paper Co., Ltd.
---------------------------------------------------------------------------

    We have rejected Petitioners' proposed targeted dumping test for 
purposes of the preliminary determination, for the same reasons we have 
explained in recent past investigations involving targeted dumping 
allegations (see Steel Nails and Certain Oil Country Tubular Goods From 
the People's Republic of China: Final Determination of Sales at Less 
Than Fair Value, Affirmative Final Determination of Critical 
Circumstances and Final Determination of Targeted Dumping, 75 FR 20335 
(April 19, 2010) (``OCTG''), where the Department rejected use of the 
``P/2'' test). The Department will, therefore, continue to apply the 
targeted dumping methodology established in Steel Nails, and most 
recently applied in OCTG.
    As a result, the Department has applied the targeted dumping 
analysis established in Steel Nails to the GE Group's U.S. sales to 
targeted customers and regions. The methodology we employed involves a 
two-stage test; the first stage addresses the pattern requirement and 
the second stage addresses the significant-difference requirement. See 
section 777A(d)(1)(B)(i) of the Act and Steel Nails. In this test we 
made all price comparisons on the basis of comparable merchandise 
(i.e., by control number or CONNUM). The test procedures are the same 
for the customer and region targeted-dumping allegations. We based all 
of our targeted-dumping calculations

[[Page 24898]]

on the U.S. net price which we determined for U.S. sales by the GE 
Group in our standard margin calculations. For further discussion of 
the test and the results, see Memorandum from Bobby Wong to Wendy 
Frankel, regarding the ``Targeted Dumping Analysis of the GE Group'' 
(``Targeted Dumping Memo''), dated concurrently with this notice. As a 
result of our analysis, we preliminarily determine that there is a 
pattern of sales for comparable merchandise that differ significantly 
among certain customers for the GE Group in accordance with section 
777A(d)(1)(B)(i) of the Act, and our practice as discussed in Steel 
Nails. We determine that the standard average-to-average comparison 
methodology does not account for the identified pattern of price 
differences. Therefore, consistent with OCTG, we have applied the 
average-to-transaction methodology to all sales.

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2) of the Act, on April 13, and April 
20, 2010, respectively, GE Group and Sun Paper and Board requested that 
in the event of an affirmative preliminary determination in this 
investigation, the Department postpone the final determination by 60 
days. On April 16, 2010, Petitioners requested that in the event of a 
negative preliminary determination in this investigation, the 
Department postpone the final determination by 60 days, as well as the 
deadline to allege critical circumstances. Sun Paper and Board, and the 
GE Group, also requested that the Department extend the application of 
the provisional measures prescribed under 19 CFR 351.210(e)(2) from a 
four-month period to a six-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 exporters account for 
a significant proportion of exports of the subject merchandise, and (3) 
no compelling reasons for denial exist, we are granting the requests 
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.

Surrogate Country

    When the Department is investigating imports from an NME, section 
773(c)(1) of the Act directs it to base NV, in most circumstances, on 
the NME producer's FOPs valued in a surrogate ME country or countries 
considered to be appropriate by the Department. In accordance with 
section 773(c)(4) of the Act, in valuing the FOPs, the Department shall 
utilize, to the extent possible, the prices or costs of FOPs in one or 
more ME countries that are at a level of economic development 
comparable to that of the NME country and are significant producers of 
comparable merchandise. The sources of the surrogate values we have 
used in this investigation are discussed under the ``Normal Value'' 
section below.
    The Department's practice with respect to determining economic 
comparability is explained in Policy Bulletin 04.1,\31\ which states 
that ``OP {Office of Policy{time}  determines per capita economic 
comparability on the basis of per capita gross national income, as 
reported in the most current annual issue of the World Development 
Report (The World Bank).'' The Department considers the six countries 
identified in its Surrogate Country List as ``equally comparable in 
terms of economic development.'' See Policy Bulletin 04.1 at 2. Thus, 
we find that India, Indonesia, the Philippines, Ukraine, Thailand, and 
Peru are all at an economic level of development equally comparable to 
that of the PRC.
---------------------------------------------------------------------------

    \31\ See Policy Bulletin 04.1: Non-Market Economy Surrogate 
Country Selection Process, (March 1, 2004), (``Policy Bulletin 
04.1'') at Attachment II of the Department's Surrogate Country 
Letter, also available at http://ia.ita.doc.gov/policy/bull04-1.html.
---------------------------------------------------------------------------

    Second, Policy Bulletin 04.1 provides some guidance on identifying 
comparable merchandise and selecting a producer of comparable 
merchandise. Based on the financial statements of various Indian 
producers provided by Petitioners in the petition, we find that India 
is a producer of identical merchandise. See Petition at Volume II-a, 
Exhibit 4. Because the Department was unable to find production data, 
we are relying on export data to proxy for overall production data in 
this case. Of the six countries listed in the Surrogate Country List, 
only India, Indonesia, and Thailand are significant exporters of coated 
paper. See Memorandum to the File regarding, ``Certain Coated Paper 
Suitable for High-Quality Print Graphics Using Sheet-Fed Presses 
(``Certain Coated Paper'') from the People's Republic of China: 
Surrogate Values for the Preliminary Determination,'' dated 
concurrently with this notice (``Surrogate Value Memorandum''), at 
Exhibit 1. Consequently, at this time, Ukraine, Peru, and the 
Philippines, are not being considered to be appropriate surrogate 
countries for the PRC as they are not significant exporters of subject 
coated paper. During the POI, India exported over 12,925 MT of 
comparable merchandise, Indonesia exported over 325,965 MT of 
comparable merchandise, and Thailand exported over 9,003 MT of 
comparable merchandise. Thus, India, Indonesia, and Thailand are 
considered as appropriate surrogate countries because each exported 
significant quantities of comparable merchandise. Finally, we have 
reliable data from India on the record that we can use to value the 
FOPs. Petitioners, GE Group, and Sun Paper and Board submitted 
surrogate values using Indian sources, suggesting greater availability 
of appropriate surrogate value data in India.
    Therefore, the Department is preliminarily selecting India as the 
surrogate country on the basis that: (1) It is at a similar level of 
economic development pursuant to 773(c)(4) of the Act; (2) it is a 
significant producer of comparable merchandise; and (3) we have 
reliable data from India that we can use to value the factors of 
production. Thus, we have calculated normal value using Indian prices 
when available and appropriate to value respondents' factors of 
production. See Surrogate Value Memorandum.
    In accordance with 19 CFR 351.301(c)(3)(i), for the final 
determination in an antidumping investigation, interested parties may 
submit publicly available information to value the FOPs within 40 days 
after the date of publication of the preliminary determination.\32\
---------------------------------------------------------------------------

    \32\ In accordance with 19 CFR 351.301(c)(1), for the final 
determination of this investigation, interested parties may submit 
factual information to rebut, clarify, or correct factual 
information submitted by an interested party less than ten days 
before, on, or after, the applicable deadline for submission of such 
factual information. However, the Department notes that 19 CFR 
351.301(c)(1) permits new information only insofar as it rebuts, 
clarifies, or corrects information recently placed on the record. 
The Department generally cannot accept the submission of additional, 
previously absent-from-the-record alternative surrogate value 
information pursuant to 19 CFR 351.301(c)(1). See Glycine from the 
People's Republic of China: Final Results of Antidumping Duty 
Administrative Review and Final Rescission, in Part, 72 FR 58809 
(October 17, 2007) and accompanying Issues and Decision Memorandum 
at Comment 2.
---------------------------------------------------------------------------

Surrogate Value Comments

    Surrogate factor valuation comments and surrogate value information 
with which to value the FOPs in this proceeding were originally due 
January 29, 1010. GE Group and Sun Paper and Board requested an 
extension to submit surrogate values on January 25, 2010, and January 
27, 2010, respectively; on January 27, 2010, the Department granted 
this request to extend the deadline for submission of surrogate value 
information for all interested

[[Page 24899]]

parties until February 12, 2010. Surrogate value submissions were filed 
February 12, 2010, February 17, 2010, February 19, 2010 by Sun Paper 
and Board, GE Group, and Petitioners, respectively. GE Group filed 
rebuttal surrogate values comments on February 22, 2010. Petitioners 
filed rebuttal surrogate values comments on February 24, 2010, and 
April 12, 2010. GE filed rebuttal surrogate values comments on April 
12, 2010. For a detailed discussion of the surrogate values used in 
this LTFV proceeding, see the ``Factor Valuation'' section below and 
the Surrogate Value Memorandum.

Affiliation

    Based on the evidence presented in Sun Paper and Board's 
questionnaire responses, we preliminarily find affiliation between 
Tianzhang, IP Sun Cartonboard, and IP Sun Paperboard (``Sun Paper and 
Board'') pursuant to sections 771(33)(E) and (F) of the Act. In 
addition, we find that Shandong Sun Paper Industry Joint Stock Co., 
Ltd. and Yanzhou City Jintaiyang Investment Co., Ltd. are affiliated 
pursuant to sections 771(33)(E) of the Act. Further, we find Yanzhou 
City Jintaiyang Investment Co., Ltd. and Jin Rui Group, Inc. to be 
under the common control of the Li family and thus constitute a single 
group (``Li Family Group'') pursuant to section 771(33)(F) of the Act 
and section 351.102(b)(3) of the Department's regulations. Next, we 
find that International Paper Company (``IP Company'') (which includes 
the division, xpedx), International Paper International Holdings, 
International Paper Singapore, and International Paper Asia (``IP 
Companies'') are affiliated to each other pursuant to section 
771(33)(E) of the Act. In addition, based on their ownership interests, 
we consider the IP Companies to be a single entity.
    We also find that the IP Companies and Sun Paper and Board are 
affiliated pursuant to section 771(33)(E) of the Act. Moreover, we 
preliminarily find that the Li Family Group and the IP Companies are 
affiliated under section 771(33)(F) of the Act through their direct and 
indirect control over the joint venture partnership in IP Sun 
Cartonboard and IP Sun Paperboard, producers of subject merchandise.
    In addition, based on the evidence presented in Sun Paper and 
Board's questionnaire responses, we preliminarily find that Tianzhang, 
IP Sun Cartonboard, and IP Sun Paperboard should be collapsed for the 
purposes of this investigation. This finding is based on the 
determination that Tianzhang, IP Sun Cartonboard, and IP Sun Paperboard 
are affiliated, that all three companies are producers of similar or 
identical products and no retooling would be necessary in order to 
restructure manufacturing priorities, and that there is significant 
potential for manipulation of price or production between the parties. 
See 19 CFR 351.401(f)(1) and (2).
    For further discussion of the Department's affiliation and 
collapsing decisions, see the Department's Memorandum regarding, 
``Antidumping Duty Investigation of Coated Paper from the People's 
Republic of China: Affiliation of Tianzhang, IP Sun Cartonboard, IP Sun 
Paperboard, the Li Family Group, and the IP Companies, and Collapsing 
of Tianzhang, IP Sun Cartonboard, IP Sun Paperboard,'' dated 
concurrently with this notice.
    Based on the evidence presented in the GE Group's questionnaire 
responses, we preliminarily find that GHS, NBZH, NAPP, and Gold East 
(Hong Kong) Trading Co., Ltd., (``GEHK''), a company that plays a role 
in GE, GHS, NBZH, and NAPP's operations involving subject merchandise, 
are affiliated with GE, pursuant to sections 771(33)(E) and (F) of the 
Act. In addition, based on the evidence presented in their respective 
questionnaire responses, we preliminarily find that GE, GHS, NBZH, 
NAPP, and GEHK should be treated as a single entity for the purposes of 
this investigation. This finding is based on the determination that GE, 
GHS, NBZH, and NAPP are producers of similar or identical products and 
no retooling would be necessary in order to restructure manufacturing 
priorities, and that GEHK is involved in the export of subject 
merchandise. Further, we find that there is significant potential for 
manipulation of price or production between the parties.\33\ See 19 CFR 
Sec. 351.401(f)(1) and (2). For further discussion of the Department's 
affiliation and collapsing decision, see the Department's Memorandum 
titled, ``Antidumping Duty Investigation of Certain Coated Paper from 
the People's Republic of China: Affiliation and Collapsing of Gold East 
Paper (Jiangsu) Co., Ltd., Gold Huasheng Paper Co., Ltd., Ningbo Asia 
Pulp and Paper Co., Ltd., Ningbo Zhoughua Paper Co., Ltd., and Gold 
East (Hong Kong) Trading Co., Ltd.,'' dated concurrently with this 
notice.
---------------------------------------------------------------------------

    \33\ While GEHK is not a producer of coated paper, 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 Court of International Trade (``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). In this case, not only is GEHK an exporter of subject 
merchandise, but it is an exporter of the subject merchandise 
produced by its four affiliated producers of subject merchandise 
(i.e., GE, GHS, NAPP, and NBZH).
---------------------------------------------------------------------------

Separate Rates

    In the Initiation Notice, the Department notified parties of the 
application process by which exporters and producers may obtain 
separate-rate status in NME investigations. See Initiation Notice, 74 
FR at 31695. The process requires exporters and producers to submit an 
SRA. See also Policy Bulletin 05.1.\34\ The standard for eligibility 
for a separate rate is whether a firm can demonstrate an absence of 
both de jure and de facto government control over its export 
activities. In this instant investigation, the Department received a 
timely-filed SRA from one company.\35\ The four mandatory respondents 
(i.e., GE, GHS, Tianzhang, and IP Paperboard/IP Cartonboard), the 
separate-rate respondent Chenming, and NAPP and NBZH, GE's affiliated 
exporters of subject merchandise, provided company-specific information 
and each stated that it meets the criteria for the assignment of a 
separate rate.
---------------------------------------------------------------------------

    \34\ Policy Bulletin 05.1 states: ``while 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 applied 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 at 6.
    \35\ The one separate-rate applicant is: (1) Shandong Chenming 
Paper Holdings Ltd. (``Chenming'').
---------------------------------------------------------------------------

    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 in 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. 
Exporters can demonstrate this independence through the absence of both 
de jure and de facto governmental control over export activities. The 
Department analyzes

[[Page 24900]]

each entity exporting the subject merchandise under a test arising from 
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 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. GE, GHS, 
NBZH, and NAPP all indicated that they sold subject merchandise through 
Gold East (Hong Kong) Trading Co., Ltd. (``GEHK''). As information on 
the record demonstrates that GEHK is located in Hong Kong,\36\ 
consistent with our practice, we have not conducted a separate rate 
analysis of GEHK.
---------------------------------------------------------------------------

    \36\ See page 8 of GEHK's financial statements, at GE's December 
23, 2009, section A questionnaire response at Volume 3.
---------------------------------------------------------------------------

a. 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.
    The evidence provided by all separate rate applicants supports a 
preliminary finding of de jure absence of government control based on 
the following: (1) An absence of restrictive stipulations associated 
with the individual exporter's business and export licenses; (2) 
applicable legislative enactments that decentralize control of the 
companies; and (3) formal measures by the government decentralizing 
control of companies. See Chenming's SRA submissions, dated December 
22, 2009, and March 25, 2010; GE Group's section A questionnaire 
submissions dated December 23, 2009; and Sun Paper and Board's separate 
rate information in the section A questionnaire submissions dated 
December 30, 2009, where the separate-rate applicants certified that 
they had no relationship with any level of the PRC government with 
respect to ownership, internal management, and business operations.
b. Absence of De Facto Control
    Typically, the Department considers four factors in evaluating 
whether each respondent is subject to de facto government control of 
its export functions: (1) Whether the export prices are set by or are 
subject to the approval of a government 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 has determined that an analysis of 
de facto control is critical in determining whether respondents are, in 
fact, subject to a degree of government control which would preclude 
the Department from assigning separate rates.
    In this investigation, all separate rate applicants each asserted 
the following: (1) That the export prices are not set by, and are not 
subject to, the approval of a governmental agency; (2) they have 
authority to negotiate and sign contracts and other agreements; (3) 
they have autonomy from the government in making decisions regarding 
the selection of management; and (4) they retain the proceeds of their 
export sales and make independent decisions regarding disposition of 
profits or financing of losses. Additionally, each of these companies' 
SRA responses indicate that its pricing during the POI does not involve 
coordination among exporters. See Chenming's SRA submission dated 
December 22, 2009, and March 25, 2010; GE Group's separate rate 
information in the section A questionnaire submissions dated December 
23, 2009; and Sun Paper and Board's separate rate information in the 
section A questionnaire submissions dated December 30, 2009.
    Evidence placed on the record of this investigation by Sun Paper 
and Board, GE Group, and Chenming demonstrate an absence of de jure and 
de facto government control with respect to their respective exports of 
the merchandise under investigation, in accordance with the criteria 
identified in Sparklers and Silicon Carbide. Therefore, we are 
preliminarily granting a separate rate to these entities.

Application of Facts Otherwise Available and Adverse Facts Available

The PRC-Wide Entity and PRC-Wide Rate

    We issued our request for Q&V information to 56 potential Chinese 
exporters of the subject merchandise, in addition to posting the Q&V 
questionnaire on the Department's Web site. See Respondent Selection 
Memo. While information on the record of this investigation indicates 
that there are numerous producers/exporters of coated paper in the PRC, 
we received only five timely filed Q&V responses. Although all 
exporters were given an opportunity to provide Q&V information, not all 
exporters provided a response to the Department's Q&V letter. 
Therefore, the Department has preliminarily determined that there were 
exporters/producers of the subject merchandise during the POI from the 
PRC that did not respond to the Department's request for information. 
We have treated these PRC producers/exporters as part of the PRC-wide 
entity because they did not apply for a separate rate. See, e.g., 
Kitchen Racks Prelim, unchanged in Kitchen Racks Final.
    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.
    Information on the record of this investigation indicates that the 
PRC-wide entity was non-responsive. Certain companies did not respond 
to our questionnaire requesting Q&V information. As a result, pursuant 
to section 776(a)(2)(A) of the Act, we find that the use of facts 
available (``FA'') is appropriate to determine the PRC-wide rate. See 
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 Final 
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).

[[Page 24901]]

    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 
Statement of Administrative Action, accompanying the Uruguay Round 
Agreements Act (``URAA''), H.R. Rep. No. 103-316, 870 (1994) (``SAA''); 
see also 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). We 
find that, because the PRC-wide entity did not respond to our requests 
for information, it has failed to cooperate to the best of its ability. 
Furthermore, the PRC-wide entity's refusal to provide the requested 
information constitutes circumstances under which it is reasonable to 
conclude that less than full cooperation has been shown. See Nippon 
Steel Corporation v. United States, 337 F.3d 1373, 1383 (Fed. Cir. 
2003) (``Nippon Steel'') where the Court of Appeals for the Federal 
Circuit provided an explanation of the ``failure to act to the best of 
its ability'' standard noting that the Department need not show 
intentional conduct existed on the part of the respondent, but merely 
that a ``failure to cooperate to the best of a respondent's ability'' 
existed (i.e., information was not provided ``under circumstances in 
which it is reasonable to conclude that less than full cooperation has 
been shown''). Therefore, the Department preliminarily finds that, in 
selecting from among the facts available, an adverse inference is 
appropriate.
    When employing an adverse inference, section 776 of the Act 
indicates that the Department may rely upon 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 adverse facts available (``AFA''), the 
Department selects a rate that is sufficiently adverse to ensure that 
the uncooperative party does not obtain a more favorable result by 
failing to cooperate than if it had fully cooperated. 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 of 
any respondent in the investigation. See Final Determination of Sales 
at Less Than Fair Value: Certain Cold-Rolled Carbon Quality Steel 
Products From the People's Republic of China, 65 FR 34660 (May 31, 
2000), and accompanying Issues and Decision Memorandum, at ``Facts 
Available.'' As AFA, we have preliminarily assigned to the PRC-wide 
entity a rate of 135.8 percent, the highest calculated rate from the 
petition. The Department preliminarily determines that this information 
is the most appropriate from the available sources to effectuate the 
purposes of AFA. The Department's reliance on the petition rate to 
determine an AFA rate is subject to the requirement to corroborate 
secondary information, discussed in the Corroboration section below.

Partial AFA to Sun Paper and Board

    In its questionnaire responses, Tianzhang, IP Sun Paperboard, and 
IP Sun Cartonboard stated that they made constructed export (``CEP'') 
sales through their U.S. affiliate, Jin Rui. Jin Rui resold some of the 
three producers/exporters' subject merchandise to xpedx, an operating 
division of IP Company. As stated above in the ``Affiliation Section,'' 
we preliminarily find that IP Company, as part of the IP Companies, and 
Sun Paper and Board are affiliated pursuant to section 771(33)(F) of 
the Act. In addition, as explained above, we preliminarily find that 
the IP Companies, of which xpedx is a part, and the Li Family Group, of 
which Jin Rui is a part, are affiliated.
    In finding that the Li Family Group and the IP Companies are 
affiliated, we find that sales from Jin Rui to xpedx are affiliated 
party transactions, and we requested that xpedx report its downstream 
sales of subject merchandise during the POI. We originally requested 
this data from Sun Paper and Board on March 26, 2010, with a due date 
of April 2, 2010. On March 31, 2010, we spoke with company officials 
from xpedx and IP Company who claimed that it would be difficult to 
provide xpedx's downstream sales. We detailed the conversation in a 
memo to the file and responded by continuing to request xpedx's 
sales.\37\ On April 1, 2010, we granted an extension for xpedx to 
submit its downstream sales until April 9, 2010. On April 8, 2010, we 
granted a second (partial) extension until April 16, 2010. On April 14, 
2010,\38\ Sun Paper and Board stated that there were substantial 
operational difficulties in meeting the Department's request, 
reiterating that on April 8, 2010, they had requested an extension of 
time to submit the downstream sales. We did not receive xpedx's 
downstream sales on April 16, 2010. On April 20, 2010, we received 
communication from counsel to Sun Paper and Board that xpedx was not 
going to submit the information requested by the Department.\39\ 
Nevertheless, subsequently on April 20, 2010, after the deadline for 
xpedx to submit the required downstream sales had passed, we received 
from Sun Paper and Board a request for a further extension to submit 
xpedx's downstream sales until April 27, 2010, one day prior to the 
preliminary determination.
---------------------------------------------------------------------------

    \37\ See Memo to the File regarding ``IP-Xpedx affiliation and 
Xpedx's downstream sales,'' dated April 1, 2010.
    \38\ See Sun Paper and Board's ``Submission of Section D, C, and 
A Supplemental response,'' dated April 14, 2010.
    \39\ See Memo to the File, regarding, ``Communicating with the 
Counsel to Sun Paper and Board regarding the Department's request 
for Xpedx's Downstream Sales dated April 20, 2010.
---------------------------------------------------------------------------

    Sun Paper and Board, in its March 31, 2010, and April 8, 2010, 
requests for extensions to provide the downstream sales database, 
outlined certain difficulties in providing the requested data. In 
response, the Department granted the first extension request in full, 
and the second extension request in part. However, Sun Paper and 
Board's April 20, 2010, request for extension, submitted to the 
Department four days subsequent to the date the downstream sales were 
due, while referencing certain circumstances surrounding its business 
relationship with xpedex, did not indicate a particular reason for not 
responding timely to the Department's request for information, nor did 
it indicate a reason why it was requesting additional time. Based on 
the above, i.e., Sun Paper and Board's failure to submit xpedx's 
downstream sales in a timely manner, and its untimely submitted request 
for a third extension to do so, the Department finds that Sun Paper and 
Board did not cooperate to the best of its ability to provide the 
Department with timely information regarding xpedx's downstream sales 
of the subject merchandise, consistent with Nippon Steel.
    Thus, Sun Paper and Board failed to report information that had 
been requested and significantly impeded this proceeding, pursuant to 
sections 776(a)(1) and (2)(A), (B) and (C) of the of Act, by not 
reporting certain downstream sales of its affiliate, as requested by 
the Department. As a result, the Department has determined to apply the 
facts otherwise available for the unreported downstream sales. Further, 
because the Department finds that Sun Paper and Board failed to 
cooperate to the best of its ability, pursuant to section 776(b) of the 
Act,

[[Page 24902]]

the Department has determined to use an adverse inference when applying 
facts available for the preliminary determination. As partial AFA, the 
Department is applying to the unreported sales the highest margin from 
the Petition.\40\
---------------------------------------------------------------------------

    \40\ See Sun Paper and Board's Analysis Memo.
---------------------------------------------------------------------------

Corroboration

    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 as facts available, it must, to the extent 
practicable, corroborate that information from independent sources 
reasonably at its disposal. Secondary information is described as 
``information derived from the petition that gave rise to the 
investigation or review, the final determination concerning merchandise 
subject to this investigation, or any previous review under section 751 
concerning the merchandise subject to this investigation.'' \41\ To 
``corroborate'' means that the Department will satisfy itself that the 
secondary information to be used has probative value. Independent 
sources used to corroborate may include, for example, published price 
lists, official import statistics and customs data, and information 
obtained from interested parties during the particular investigation. 
To corroborate secondary information, the Department will, to the 
extent practicable, examine the reliability and relevance of the 
information used.\42\
---------------------------------------------------------------------------

    \41\ See Final Determination of Sales at Less Than Fair Value: 
Sodium Hexametaphosphate From the People's Republic of China, 73 FR 
6479, 6481 (February 4, 2008), quoting SAA at 870.
    \42\ 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).
---------------------------------------------------------------------------

    The AFA rate that the Department used is from the Petition. 
Petitioners' methodology for calculating the United States price and NV 
in the Petition is discussed in the Initiation Notice. To corroborate 
the AFA margin that we have selected, we compared this margin to the 
margin we found for the mandatory respondents. We found that the margin 
of 135.8 percent has probative value because it is in the range of the 
control number (CONNUM)-specific margins that we found for the GE Group 
during the period of investigation. See GE Group's Analysis Memo. Given 
that numerous PRC-wide entities did not respond to the Department's 
requests for information and that Sun Paper and Board failed to report 
a significant portion of U.S. sales, the Department concludes that the 
petition rate of 135.8 percent, as total AFA for the PRC-wide entity 
and as partial AFA for Sun Paper and Board, is sufficiently adverse to 
prevent these respondents from benefitting from their lack of 
cooperation. See SAA at 870. Accordingly, we find that the rate of 
135.8 percent is corroborated to the extent practicable within the 
meaning of section 776(c) of the Act.

Margin for the Separate Rate Company

    As discussed above, the Department received a timely and complete 
separate rate application from Chenming, who is an exporter of coated 
paper from the PRC during the POI and who was not selected as a 
mandatory respondent in this investigation. Through the evidence in its 
SRA, this company has demonstrated its eligibility for a separate rate, 
as discussed above. Consistent with the Department's practice, as the 
separate rate, we have established a margin for Chenming based on the 
average of the rates we calculated for the mandatory respondents, Sun 
Paper and Board and the GE Group, excluding any rates that were zero, 
de minimis, or based entirely on AFA.\43\
---------------------------------------------------------------------------

    \43\ See, e.g., Preliminary Determination of Sales at Less Than 
Fair Value and Partial Affirmative Determination of Critical 
Circumstances: Certain Polyester Staple Fiber From the People's 
Republic of China, 71 FR 77373, 77377 (December 26, 2006), unchanged 
in Final Determination of Sales at Less Than Fair Value and Partial 
Affirmative Determination of Critical Circumstances: Certain 
Polyester Staple Fiber From the People's Republic of China, 72 FR 
19690 (April 19, 2007).
---------------------------------------------------------------------------

Date of Sale

    19 CFR 351.401(i) states that, ``in identifying the date of sale of 
the merchandise under consideration or foreign like product, the 
Secretary normally will use the date of invoice, as recorded in the 
exporter or producer's records kept in the normal course of business.'' 
In Allied Tube, the CIT noted that a ``party seeking to establish a 
date of sale other than invoice date bears the burden of producing 
sufficient evidence to `satisf{y{time} ' the Department that `a 
different date better reflects the date on which the exporter or 
producer establishes the material terms of sale.' '' Allied Tube & 
Conduit Corp. v. United States 132 F. Supp. 2d at 1090 (CIT 2001) 
(quoting 19 CFR 351.401(i)) (``Allied Tube''). Additionally, the 
Secretary may use a date other than the date of invoice if the 
Secretary is satisfied that a different date better reflects the date 
on which the exporter or producer establishes the material terms of 
sale. See 19 CFR 351.401(i); see also Allied Tube, 132 F. Supp. 2d 
1087, 1090-1092. The date of sale is generally the date on which the 
parties agree upon all substantive terms of the sale. This normally 
includes the price, quantity, delivery terms and payment terms. See 
Carbon and Alloy Steel Wire Rod From Trinidad and Tobago: Final Results 
of Antidumping Duty Administrative Review, 72 FR 62824 (November 7, 
2007), and accompanying Issue and Decision Memorandum at Comment 1; 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Cold-Rolled Flat-Rolled Carbon Quality Steel Products From Turkey, 65 
FR 15123 (March 21, 2000), and accompanying Issues and Decision 
Memorandum at Comment 1.
    For sales by the GE Group, consistent with 19 CFR 351.401(i), we 
used the commercial invoice date as the sale date because record 
evidence indicates that the terms of were not set until the issuance of 
the commercial invoice. See, e.g., GE's section A response at Exhibit 
A-2 and Volume 5, page 26. See also GHS' section A response at page 21.
    For Sun Paper and Board, we will use the pro forma/internal invoice 
date of Jin Rui Group, Sun Paper and Board's U.S. affiliate, as the 
date of sale because based on the record evidence to date, we 
preliminarily find that pro forma/internal invoice date best reflects 
the date on which the essential terms of sale are fixed and final. In 
our analysis of Sun Paper and Board's information, we determined that 
the sale date reported in Tianzhang's January 19, 2010, U.S. sales 
database represents the commercial invoice date (which is issued to the 
customer 30-60 days later when the product arrives to the customer) 
that Jin Rui chose to record the sale of merchandise under 
consideration in its books and records, not the date the material terms 
of the sale were established with its U.S. customer. On March 19, 2010, 
we asked Jin Rui to provide a new U.S. sales database based on the pro 
forma/internal invoice date, which it did on March 26, 2010. We 
preliminarily determine Jin Rui's pro forma/internal invoice date best 
reflects the date on which the essential terms are fixed and final.

[[Page 24903]]

Fair Value Comparisons

    To determine whether sales of coated paper to the United States by 
the respondents were made at LTFV, we compared Export Price (``EP'') 
and CEP to NV, as described in the ``Constructed Export Price,'' 
``Export Price,'' and ``Normal Value'' sections of this notice.

U.S. Price

Constructed Export Price

    In accordance with section 772(a) of the Act, CEP is the price at 
which the subject merchandise is first sold (or agreed to be sold) in 
the United States before or after the date of importation by or for the 
account of the producer or exporter of such merchandise or by a seller 
affiliated with the producer or exporter, to a purchaser not affiliated 
with the producer or exporter, as adjusted under subsections (c) and 
(d). In accordance with section 772(a) of the Act, we used CEP for Sun 
Paper and Board's U.S. sales because the merchandise subject to this 
investigation was sold directly to an affiliated purchaser located in 
the United States. In addition, in accordance with section 772(a) of 
the Act, we used CEP for certain U.S. sales of the GE Group because the 
merchandise, in these cases, was sold directly to an affiliated 
purchaser located in the United States.
    We calculated CEP for Sun Paper and Board and the GE Group based on 
delivered prices to unaffiliated purchasers in the United States. We 
made deductions from the U.S. sales price, where applicable, for 
movement expenses in accordance with section 772(c)(2)(A) of the Act. 
These included such expenses as foreign inland freight from the plant 
to the port of exportation, international freight, marine insurance, 
other U.S. transportation, U.S. customs duty, U.S. inland freight from 
port to the warehouse, and U.S. inland freight from the warehouse to 
the customer. In accordance with section 772(d)(1) of the Act, the 
Department deducted credit expenses, inventory carrying costs and 
indirect selling expenses from the U.S. price, all of which relate to 
commercial activity in the United States. Finally, we deducted CEP 
profit, in accordance with sections 772(d)(3) and 772(f) of the 
Act.\44\
---------------------------------------------------------------------------

    \44\ See Surrogate Value Memorandum.
---------------------------------------------------------------------------

Export Price

    In accordance with section 772(a) of the Act, we used EP for 
certain U.S. sales of the GE Group. We calculated EP based on the 
packed prices to unaffiliated purchasers in, or for exportation to, the 
United States. We made deductions, as appropriate, for any movement 
expenses (e.g., foreign inland freight from the plant to the port of 
exportation, domestic brokerage, international freight to the port of 
importation, etc.) in accordance with section 772(c)(2)(A) of the Act. 
Where foreign inland freight or foreign brokerage and handling fees 
were provided by PRC service providers or paid for in renminbi, we 
based those charges on surrogate value rates from India. See ``Factor 
Valuation'' section below for further discussion of surrogate value 
rates.
    In determining the most appropriate surrogate values to use in a 
given case, the Department's stated practice is to use period-wide 
price averages, prices specific to the input in question, prices that 
are net of taxes and import duties, prices that are contemporaneous 
with the POI, and publicly available data.\45\ We valued brokerage and 
handling using a simple average of the brokerage and handling costs 
that were reported in public submissions that were filed in three 
antidumping duty cases. Specifically, we averaged the public brokerage 
and handling expenses reported by Navneet Publications (India) Ltd. in 
the 2007-2008 administrative review of certain lined paper products 
from India, Essar Steel Limited in the 2006-2007 antidumping duty 
administrative review of hot-rolled carbon steel flat products from 
India, and Himalya International Ltd. in the 2005-2006 administrative 
review of certain preserved mushrooms from India. Because these values 
were not concurrent with the POI, we adjusted these rates for inflation 
using the Wholesale Price Indices (``WPI'') for India as published in 
the International Monetary Fund's (``IMF's'') International Financial 
Statistics, available at http://ifs.apdi.net/imf, and then calculated a 
simple average of the three companies' brokerage expense data.\46\ See 
Surrogate Value Memorandum.
---------------------------------------------------------------------------

    \45\ See, e.g., Certain Cased Pencils from the People's Republic 
of China; Final Results and Partial Rescission of Antidumping Duty 
Administrative Review, 71 FR 38366 (July 6, 2006), and accompanying 
Issues and Decision Memorandum at Comment 1.
    \46\ See, e.g., Tapered Roller Bearings and Parts Thereof, 
Finished or Unfinished, From the People's Republic of China: 
Preliminary Results of the 2007 2008 Administrative Review of the 
Antidumping Duty Order, 74 FR 32539 (July 8, 2009), (unchanged in 
final results) (``07-08 TRBs'').
---------------------------------------------------------------------------

    To value domestic insurance, the Department used the publicly 
summarized version of the average insurance expenses reported by Agro 
Dutch Industries Limited in a submission dated May 24, 2005, in the 
antidumping administrative review of Certain Preserved Mushrooms From 
India.
    To value marine insurance, the Department used data from RGJ 
Consultants (http://www.rjgconsultants.com/). This source provides 
information regarding the per-value rates of marine insurance of 
imports and exports to/from various countries.

Normal Value

    Section 773(c)(1) of the Act provides that the Department shall 
determine the NV using an FOP methodology if the merchandise is 
exported from an NME and the information does not permit the 
calculation of NV using home-market prices, third-country prices, or 
constructed value under section 773(a) of the Act. The Department bases 
NV on the FOPs because the presence of government controls on various 
aspects of NMEs renders price comparisons and the calculation of 
production costs invalid under the Department's normal methodologies. 
See, e.g., Kitchen Racks Prelim, 71 FR at 19703 (unchanged in Kitchen 
Racks Final).
    In accordance with 19 CFR 351.408(c)(1), the Department will 
normally use publicly available information to find an appropriate 
surrogate value to value FOPs, but when a producer sources an input 
from a ME and pays for it in a ME currency, the Department may value 
the factor using the actual price paid for the input. See 19 CFR 
351.408(c)(1); see also Shakeproof Assembly Components Div of Ill v. 
United States, 268 F.3d 1376, 1382-1383 (Fed. Cir. 2001) (affirming the 
Department's use of market-based prices to value certain FOPs).

Factor Valuations

    In accordance with section 773(c) of the Act, we calculated NV 
based on FOP data reported by respondents during the POI. To calculate 
NV, we multiplied the reported per-unit factor-consumption rates by 
publicly available surrogate values (except as discussed below). In 
selecting the surrogate values, we considered the quality, specificity, 
and contemporaneity of the data. See, e.g., Fresh Garlic From the 
People's Republic of China: Final Results of Antidumping Duty New 
Shipper Review, 67 FR 72139 (December 4, 2002), and accompanying Issues 
and Decision Memorandum at Comment 6; and Final Results of First New 
Shipper Review and First Antidumping Duty Administrative Review: 
Certain Preserved Mushrooms From the People's Republic of China, 66 FR 
31204 (June 11, 2001), and accompanying Issues and Decision

[[Page 24904]]

Memorandum at Comment 5. As appropriate, we adjusted input prices by 
including freight costs to make them delivered prices. Specifically, we 
added to Indian import surrogate values a surrogate freight cost using 
the shorter of the reported distance from the domestic supplier to the 
factory or the distance from the nearest seaport to the factory where 
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, 1407-08 (Fed. Cir. 1997). A detailed description of all 
surrogate values used for Sun Paper and Board and the GE Group can be 
found in the Surrogate Value Memorandum.
    For the preliminary determination, in accordance with the 
Department's practice, we used data from the Indian Import Statistics 
and other publicly available Indian sources in order to calculate 
surrogate values for Sun Paper and Board's and GE Group's FOPs (direct 
materials, energy, and packing materials) and certain movement 
expenses. In selecting the best available information for valuing FOPs 
in accordance with section 773(c)(1) of the Act, the Department's 
practice is to select, to the extent practicable, surrogate values 
which are non-export average values, most contemporaneous with 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). The record shows that data 
in the Indian Import Statistics, as well as those from the other Indian 
sources, are contemporaneous with the POI, product-specific, and tax-
exclusive. See Surrogate Value Memorandum. In those instances where we 
could not obtain publicly available information contemporaneous to the 
POI with which to value factors, we adjusted the surrogate values 
using, where appropriate, the Indian WPI as published in the IMF's 
International Financial Statistics. See, e.g., Kitchen Racks, 74 FR at 
9600.
    Furthermore, with regard to the Indian import-based surrogate 
values, we have disregarded import prices that we have reason to 
believe or suspect may be subsidized. We have reason to believe or 
suspect that prices of inputs from Indonesia, South Korea, and Thailand 
may have been subsidized. We have found in other proceedings that these 
countries maintain broadly available, non-industry-specific export 
subsidies and, therefore, it is reasonable to infer that all exports to 
all markets from these countries may be subsidized. See 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), and accompanying Issues and Decision Memorandum at Comment 7.
    Further, guided by the legislative history, it is the Department's 
practice not to conduct a formal investigation to ensure that such 
prices are not subsidized. See Omnibus Trade and Competitiveness Act of 
1988, Conference Report to accompany H.R. Rep. 100-576 at 590 (1988) 
reprinted in 1988 U.S.C.C.A.N. 1547, 1623-24; see also Preliminary 
Determination of Sales at Less Than Fair Value: Coated Free Sheet Paper 
From the People's Republic of China, 72 FR 30758 (June 4, 2007) 
unchanged in Final Determination of Sales at Less Than Fair Value: 
Coated Free Sheet Paper From the People's Republic of China, 72 FR 
60632 (October 25, 2007). Rather, the Department bases its decision on 
information that is available to it at the time it makes its 
determination. See Polyethylene Terephthalate Film, Sheet, and Strip 
from the People's Republic of China: Preliminary Determination of Sales 
at Less Than Fair Value, 73 FR 24552, 24559 (May 5, 2008), unchanged in 
Polyethylene Terephthalate Film, Sheet, and Strip from the People's 
Republic of China: Final Determination of Sales at Less Than Fair 
Value, 73 FR 55039 (September 24, 2008). Therefore, we have not used 
prices from these countries in calculating the Indian import-based 
surrogate values. Additionally, we disregarded prices from NME 
countries. Finally, imports that were labeled as originating from an 
``unspecified'' country were excluded from the average value, because 
the Department could not be certain that they were not from either an 
NME country or a country with general export subsidies. See id.
    Both the GE Group and Sun Paper and Board claimed that certain of 
their reported raw material inputs were sourced from an ME country and 
paid for in ME currencies. Pursuant to 19 CFR 351.408(c)(1), when a 
respondent sources inputs from an ME supplier in meaningful quantities 
(i.e., not insignificant quantities), we use the actual price paid by 
respondent for those inputs, except when prices may have been distorted 
by findings of dumping by the PRC and/or subsidies.\47\ Where we found 
ME purchases to be of significant quantities (i.e., 33 percent or 
more), in accordance with our statement of policy as outlined in 
Antidumping Methodologies: Market Economy Inputs,\48\ we used the 
actual purchases of these inputs to value the inputs.
---------------------------------------------------------------------------

    \47\ See Antidumping Duties; Countervailing Duties; Final Rule, 
62 FR 27296, 27366 (May 19, 1997).
    \48\ See Antidumping Methodologies: Market Economy Inputs, 
Expected Non-Market Economy Wages, Duty Drawback; and Request for 
Comments, 71 FR 61716, 61717 (October 19, 2006) (``Antidumping 
Methodologies: Market Economy Inputs'').
---------------------------------------------------------------------------

    Accordingly, we valued certain of respondents' inputs using the ME 
prices paid for in ME currencies for the inputs where the total volume 
of the input purchased from all ME sources during the POI exceeds or is 
equal to 33 percent of the total volume of the input purchased from all 
sources during the period. Where the quantity of the reported input 
purchased from ME suppliers was below 33 percent of the total volume of 
the input purchased from all sources during the POI, and were otherwise 
valid, we weight-averaged the ME input's purchase price with the 
appropriate surrogate value for the input according to their respective 
shares of the reported total volume of purchases.\49\ Where 
appropriate, we added freight to the ME prices of inputs. Additionally, 
consistent with the Department's practice,\50\ we excluded certain of 
the GE Group's claimed ME purchases which involved a PRC intermediary 
because we find that these sales did not occur directly between the 
respondent and an ME supplier. For a detailed description of the actual 
values used for the ME inputs reported, see the Department's analysis 
memoranda dated concurrently with this notice.
---------------------------------------------------------------------------

    \49\ See Antidumping Methodologies: Market Economy Inputs, 71 FR 
at 61718.
    \50\ See, e.g., Certain New Pneumatic Off-The-Road Tires From 
the People's Republic of China: Final Affirmative Determination of 
Sales at Less Than Fair Value and Partial Affirmative Determination 
of Critical Circumstances, 73 FR 40485 (July 15, 2008), and 
accompanying Issues and Decision Memorandum at comment 70.
---------------------------------------------------------------------------

    For direct, indirect, and packing labor, consistent with 19 CFR 
351.408(c)(3), we used the PRC regression-based wage rate as reported 
on Import Administration's home page, Import Library, Expected Wages of 
Selected NME Countries, revised in December 2009. See 2009 Calculation 
of Expected Non-Market Economy Wages, 74 FR 65092 (December 9, 2009), 
and

[[Page 24905]]

http://ia.ita.doc.gov/wages/index.html. The source of these wage-rate 
data on the Import Administration's Web site is the 2006 and 2007 data 
in Chapter 5B of the International Labour Organization's Yearbook of 
Labour Statistics. 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 the respondents.
    We valued truck freight expenses using a per-unit average rate 
calculated from data on the infobanc Web site: http://www.infobanc.com/logistics/logtruck.htm. The logistics section of this Web site contains 
inland freight truck rates between many large Indian cities.
    Consistent with past practice and these submissions, the Department 
has applied a surrogate value for hydrochloric acid using the values 
submitted by the parties from Chemical Weekly. See Surrogate Value 
Memorandum.
    We valued electricity using price data for small, medium, and large 
industries, as published by the Central Electricity Authority of the 
Government of India in its publication titled Electricity Tariff & Duty 
and Average Rates of Electricity Supply in India, dated March 2008. 
These electricity rates represent actual country-wide, publicly 
available information on tax-exclusive electricity rates charged to 
industries in India.
    We valued diesel oil using published prices from the International 
Energy Agency: Key World Statistics 2007. We used the first quarter 
2007 value for automotive diesel oil. See Surrogate Value Memorandum.
    To value water, we used the revised Maharashtra Industrial 
Development Corporation water rates available at http://www.midcindia.com/water-supply. See Surrogate Value Memorandum.
    We calculated the surrogate value for steam based upon the April 
2007- March 2008 financial statement of Hindalco Industries Limited. 
See 1-Hydroxyethylidene-1, 1-Diphosphonic Acid From the People's 
Republic of China: Final Determination of Sales at Less than Fair 
Value, 74 FR 10545 (March 11, 2009), and accompanying Issues and 
Decision Memorandum at Comment 4. We inflated the steam value using the 
appropriate WPI inflator. See Surrogate Value Memorandum.
    We valued natural gas using April through June 2002 data from the 
Gas Authority of India Ltd. Consistent with the Department's recent 
determination in Polyvinyl Alcohol, we averaged the base and ceiling 
gas prices of 2,850 rupees per 1000 cubic meters (``m3'') and 2,150 
rupees per 1000 m3, and added a transmission charge of 1,150 rupees per 
1000 m3 to calculate a value of Rs 3.650/cubic meter. See Surrogate 
Value Memorandum.
    We used the Indian Bureau of Mines' publication: 2007 edition of 
the Indian Minerals Yearbook (``IBM Yearbook'') to value coal. For this 
preliminary determination, we find that the IBM Yearbook's reported 
Grade C coal most closely matches the coal consumed by respondents 
during the POI. See Surrogate Value Memorandum.
    To value factory overhead, selling, general, and administrative 
expenses, and profit, we used audited financial statements of JK Paper 
Ltd., and Seshasayee Paper and Boards, Ltd., each covering the fiscal 
period April 1, 2008, through March 31, 2009. The Department may 
consider other publicly available financial statements for the final 
determination, as appropriate.

Currency Conversion

    Where necessary, 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 from Sun Paper and Board and the GE Group 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.\51\ This practice is 
described in Policy Bulletin 05.1.
---------------------------------------------------------------------------

    \51\ See Initiation Notice, 74 FR at 31695.
---------------------------------------------------------------------------

Preliminary Determination

    The weighted-average dumping margin percentages are as follows:

------------------------------------------------------------------------
                                                               Percent
             Exporter                      Producer             margin
------------------------------------------------------------------------
Yanzhou Tianzhang Paper Industry   Yanzhou Tianzhang Paper         89.71
 Co., Ltd.                          Industry Co., Ltd.
Shandong International Paper and   Shandong International
 Sun Coated Paperboard Co., Ltd.    Paper and Sun Coated
                                    Paperboard Co., Ltd.
International Paper and Sun        International Paper and
 Cartonboard Co., Ltd.              Sun Cartonboard Co.,
                                    Ltd.
Gold East Paper (Jiangsu) Co.,     Gold East Paper                 30.82
 Ltd.                               (Jiangsu) Co., Ltd.
Gold Huasheng Paper Co., Ltd.....  Gold Huasheng Paper Co.,
                                    Ltd.
Ningbo Zhonghua Paper Co., Ltd...  Ningbo Zhonghua Paper
                                    Co., Ltd.
Ningbo Asia Pulp and Paper Co.,    Ningbo Asia Pulp and
 Ltd.                               Paper Co., Ltd.
Gold East (Hong Kong) Trading
 Co., Ltd.
Shandong Chenming Paper Holdings   Shandong Chenming Paper         60.27
 Ltd.                               Holdings Ltd.
PRC-Wide Entity..................  ........................        135.8
------------------------------------------------------------------------

Disclosure

    We will disclose the calculations performed to parties in this 
proceeding within five days of the date of publication of this notice 
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 coated paper from the PRC as described in the ``Scope of 
Investigation'' section, entered, or withdrawn from warehouse, for 
consumption 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 
normal value exceeds U.S. price, as follows: (1) The rate for the 
exporter/producer combinations listed in the chart above will be the 
rate we have determined in this preliminary determination; (2) for

[[Page 24906]]

all PRC exporters of subject merchandise which have not received their 
own rate, the cash-deposit rate will be the PRC-wide rate; and (3) for 
all non-PRC exporters of subject merchandise which have not received 
their own rate, the cash-deposit rate will be the rate applicable to 
the PRC exporter/producer combination that supplied that non-PRC 
exporter. These suspension-of-liquidation instructions 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 coated paper, or sales (or the likelihood of sales) for 
importation, of the merchandise under consideration 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 on which the final verification report is issued in this 
proceeding and rebuttal briefs, limited to issues raised in case 
briefs, may be submitted no later than five days after the deadline 
date for case briefs. See 19 CFR 351.309. A table of contents, 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. The Department also requests 
that parties provide an electronic copy of its case and rebuttal brief 
submissions in either a ``Microsoft Word'' or a ``pdf'' format.
    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. 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 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. 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. See 19 CFR 351.310. Parties should confirm by telephone the 
date, time, and location of the hearing two days before the scheduled 
date.
    We will make our final determination no later than 135 days after 
the date of publication of this preliminary determination, pursuant to 
section 735(a)(2) of the Act.
    This determination is issued and published in accordance with 
sections 733(f) and 777(i)(1) of the Act.

    Dated: April 28, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-10701 Filed 5-5-10; 8:45 am]
BILLING CODE 3510-DS-P