[Federal Register Volume 76, Number 225 (Tuesday, November 22, 2011)]
[Notices]
[Pages 72161-72164]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-30164]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-916;C-570-917]


Laminated Woven Sacks From the People's Republic of China: 
Negative Preliminary Determination of Circumvention of the Antidumping 
and Countervailing Duty Orders

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

Preliminary Determination

    The Department of Commerce (``the Department'') preliminarily 
determines that the laminated woven sacks subject to this inquiry are 
not circumventing the antidumping and countervailing duty orders on 
laminated woven sacks from the People's Republic of China (``PRC''), as 
provided in section 781(d) of the Tariff Act of 1930, as amended (``the 
Act'').\1\
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    \1\ See Notice of Antidumping Duty Order: Laminated Woven Sacks 
From the People's Republic of China, 73 FR 45941 (August 7, 2008); 
see also Laminated Woven Sacks From the People's Republic of China: 
Countervailing Duty Order, 73 FR 45955 (August 7, 2008), 
(collectively, ``Orders'').

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DATES: Effective Date: November 22, 2011.

FOR FURTHER INFORMATION CONTACT: Jamie Blair-Walker, Office 9, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue NW., Washington, DC, 
20230; telephone (202) 482-2615.


SUPPLEMENTARY INFORMATION:

Background

    On January 26, 2011, pursuant to sections 781(c) and (d) of the 
Act, and 19 CFR 351.225(i) and (j), Petitioners \2\ submitted requests 
for the Department to initiate and conduct both a minor alterations 
inquiry and a later-developed merchandise anti-circumvention inquiry to 
determine whether laminated woven sacks printed with two colors in 
register and with the use of a screening process are circumventing the 
Orders.\3\ On March 25, 2011, Petitioners withdrew their request for 
the Department to initiate a minor alterations anti-circumvention 
inquiry pursuant to 781(c) of the Act and 19 CFR 351.225(i).\4\ On 
April 28, 2011, the Department initiated a later-developed merchandise 
anti-circumvention inquiry.\5\
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    \2\ The Laminated Woven Sacks Committee and its individual 
members, Coating Excellence International, LLC and Polytex Fibers 
Corporation, (collectively, ``Petitioners'').
    \3\ See Petitioners' Requests for Circumvention Inquiries dated 
January 21, 2011 and February 4, 2011.
    \4\ See Petitioners' Partial Withdrawal of Request For 
Determination of Circumvention (Printed Ink Colors) dated March 25, 
2011.
    \5\ See Laminated Woven Sacks From the People's Republic of 
China: Initiation of Anti-Circumvention Inquiry, 76 FR 23791 (April 
28, 2011) (``Initiation Notice'').
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    On May 3, July 18, and September 2, 2011, the Department issued 
various questionnaires to interested parties. On July 15, 2011, the 
Department held a meeting with Petitioners to discuss the anti-
circumvention inquiry.

Scope of the Orders

    The merchandise covered by the orders is laminated woven sacks. 
Laminated woven sacks are bags or sacks consisting of one or more plies 
of fabric consisting of woven polypropylene strip and/or woven 
polyethylene strip, regardless of the width of the strip; with or 
without an extrusion coating of polypropylene and/or polyethylene on 
one or both sides of the fabric; laminated by any method either to an 
exterior ply of plastic film such as biaxially-oriented polypropylene 
(``BOPP'') or to an exterior ply of paper that is suitable for high 
quality print graphics; \6\ printed with three colors or more in 
register; with or without lining; whether or not closed on one end; 
whether or not in roll form (including sheets, lay-flat tubing, and 
sleeves); with or without handles; with or without special closing 
features; not exceeding one kilogram in weight. Laminated woven sacks 
are typically used for retail packaging of consumer goods such as pet 
foods and bird seed.
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    \6\ ``Paper suitable for high quality print graphics,'' as used 
herein, means paper having an ISO brightness of 82 or higher and a 
Sheffield Smoothness of 250 or less. Coated free sheet is an example 
of a paper suitable for high quality print graphics.
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    Effective July 1, 2007, laminated woven sacks are classifiable 
under Harmonized Tariff Schedule of the United States (``HTSUS'') 
subheadings 6305.33.0050 and 6305.33.0080. Laminated woven sacks were 
previously classifiable under HTSUS subheading 6305.33.0020. If entered 
with plastic coating on both sides of the fabric consisting of woven 
polypropylene strip and/or woven polyethylene strip, laminated woven 
sacks may be classifiable under HTSUS subheadings 3923.21.0080, 
3923.21.0095, and 3923.29.0000. If entered not closed on one end or in 
roll form (including sheets, lay-flat tubing, and sleeves), laminated 
woven sacks may be classifiable under other HTSUS subheadings including 
3917.39.0050, 3921.90.1100, 3921.90.1500, and 5903.90.2500. If the 
polypropylene strips and/or polyethylene strips making up the fabric 
measure more than 5 millimeters in width, laminated woven sacks may be 
classifiable under other HTSUS subheadings including 4601.99.0500, 
4601.99.9000, and 4602.90.0000. Although HTSUS subheadings are provided 
for convenience and customs purposes, the written description of the 
scope of this order is dispositive.

Scope of the Anti-Circumvention Inquiry

    The merchandise subject to the anti-circumvention inquiry is 
laminated

[[Page 72162]]

woven sacks produced with two ink colors printed in register and a 
screening process (``screening-process sacks''). Petitioners allege 
that Chinese producers of screening-process sacks have adapted the 
screening process to create graphics that appear to have three or more 
distinct colors visible, although they are produced using only two inks 
and a screen. Petitioners contend that such graphics would normally be 
printed using three inks printed in register at three different print 
stations, which would then make them subject merchandise. However, by 
adapting the screening process, Petitioners state that Chinese 
producers of screening-process sacks are able to produce similar 
graphics while only using two inks, thus making merchandise that is out 
of scope and not subject to antidumping and countervailing duties.
    The screening process at issue, as described by interested parties, 
only uses two ink colors printed in register at two different print 
stations. However, the artwork, by use of a screen, allows for 
different shades of a single color to appear on the bag. Thus, when 
printed, the screening-process sacks appear to have been printed with 
more than two colored inks because more than two distinct colors are 
visible on the finished product. As an example of the screening-process 
sacks, the Department placed on the record of both proceedings five 
laminated woven sacks imported by Shapiro: Two individual Manna Pro 
Horse Feed sacks, two individual Red Head Deer Corn sacks, and one 
Manna Pro Calf-Manna sack.\7\
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    \7\ See Memo to the File from Jamie Blair-Walker regarding Anti-
circumvention Inquiry of Laminated Woven Sacks from the People's 
Republic of China on the subject of Meeting with Counsel for the 
Laminated Woven Sacks Committee and its individual members, Coating 
Excellence International, LLC and Polytex Fibers Corporation, dated 
July 15, 2011.
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Negative Preliminary Determination of Circumvention

    For the reasons described below, we preliminarily determine that 
the screening-process sacks are not later-developed merchandise because 
they were commercially available at the time of the initiation of the 
less-than-fair-value (``LTFV'') investigation on laminated woven sacks 
from the PRC. Therefore, we also preliminarily determine that the 
screening-process sacks are not circumventing the Orders within the 
meaning of section 781(d) of the Act.

Applicable Statute

    Section 781(d)(1) of the Act provides that the Department may find 
circumvention of an antidumping or countervailing duty order when 
merchandise is developed after an investigation is initiated (``later-
developed merchandise''). In conducting later-developed merchandise 
anti-circumvention inquiries, under section 781(d)(1) of the Act, the 
Department first determines whether the merchandise under consideration 
is ``later-developed.'' \8\ To do so, the Department examines whether 
the merchandise at issue was commercially available at the time of the 
initiation of the LTFV investigation.\9\ We define commercial 
availability as ``present in the commercial market or fully developed, 
i.e., tested and ready for commercial production, but not yet in the 
commercial market.'' \10\ In other words, the Department normally 
considers: (1) Whether it was possible, at all, to manufacture the 
product in question; and (2) if the technology existed, whether the 
product was available in the market.\11\
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    \8\ See Later-Developed Merchandise Anticircumvention Inquiry of 
the Antidumping Duty Order on Petroleum Wax Candles from the 
People's Republic of China: Affirmative Final Determination of 
Circumvention of the Antidumping Duty Order, 71 FR 59075 (October 6, 
2006) (``Candles Anticircumvention Final'') and accompanying Issues 
and Decision Memorandum at Comment 4; see also Erasable Programmable 
Read Only Memories from Japan; Final Scope Ruling, 57 FR 11599 
(April 6, 1992) (``EPROMs from Japan''); Electrolytic Manganese 
Dioxide from Japan; Final Scope Ruling, 57 FR 395 (January 6, 
1992)(``EMD from Japan''); Portable Electronic Typewriters from 
Japan, 55 FR 47358 (November 13, 1990).
    \9\ See Candles Anticircumvention Final, 71 FR at 59077 and 
Comment 4, affirmed by Target Corp. v. United States, 626 F. Supp. 
2d 1285 (CIT 2009), and Target Corp. v. United States, 609 F.3d 
1352, 1358-1360 (Fed. Cir. 2010) (``Target Corp. III'') (holding 
that Commerce's interpretation of later-developed as turning on 
whether the merchandise was commercially available at the time of 
the investigation is reasonable).
    \10\ See Target Corp. III, 609 F.3d at 1358; see also Candles 
Anti-circumvention Final at Comment 4.
    \11\ See Anticircumvention Inquiry of the Antidumping Duty Order 
on Petroleum Wax Candles from the People's Republic of China: 
Affirmative Preliminary Determination of Circumvention of the 
Antidumping Duty Order, 71 FR 32033, 32038 (June 2, 2006), unchanged 
in Candles Anticircumvention Final; see also EPROMs from Japan, 57 
FR at 11602-3 (examining whether the technology to develop the new 
product existed at the time of the original investigation); 
Television Receiving Sets, Monochrome and Color, from Japan: Final 
Scope Ruling, 56 FR 66841 (December 26, 1991) (noting that LCD TV 
technology did not exist at the time the original product 
descriptions were developed).
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    If the Department determines that such merchandise was not 
commercially available at the time of the initiation of the LTFV 
investigation, and is thus later-developed, the Department will 
consider whether the later-developed merchandise is covered by the 
order by evaluating whether the general physical characteristics of the 
merchandise under consideration are the same as subject merchandise 
covered by the order,\12\ whether the expectations of the ultimate 
purchasers of the merchandise under consideration are no different than 
the expectations of the ultimate purchasers of subject merchandise,\13\ 
whether the ultimate use of the subject merchandise and the merchandise 
under consideration are the same,\14\ whether the channels of trade of 
both products are the same,\15\ and whether there are any differences 
in the advertisement and display of both products.\16\ The Department, 
after taking into account any advice provided by the United States 
International Trade Commission (``ITC''), under section 781(e) of the 
Act, may include such imported merchandise within the scope of an order 
at any time an order is in effect.
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    \12\ See section 781(d)(1)(A) of the Act.
    \13\ See section 781(d)(1)(B) of the Act.
    \14\ See section 781(d)(1)(C) of the Act.
    \15\ See section 781(d)(1)(D) of the Act.
    \16\ See section 781(d)(1)(E) of the Act.
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Commercial Availability Analysis

    In determining the commercial availability of the screening-process 
sacks at issue in this inquiry, the Department first examined whether 
it was possible to produce the merchandise. The Department then 
examined if there was evidence of the screening-process sacks being 
commercially available in the market prior to the initiation of the 
LTFV investigation.
    As noted by the ITC, the developing nature of the industry at the 
time of the LTFV investigation could have had tempered the demand for 
screening-process sacks.\17\ Therefore, the Department examined whether 
the technology needed to produce screening-process sacks existed prior 
to the LTFV investigation as part of these preliminary results. Based 
on the record evidence, the Department finds that the technology for 
producing screening-process sacks was available prior to the LTFV 
investigation. From 2005-2007, all interested parties providing 
information and comments for this record purchased the technology to 
use a screening process in production of laminated woven sacks, 
although the number of inks that were printed on the laminated woven 
sacks varied for different products (i.e., included the use of only two 
inks as well as the use of

[[Page 72163]]

three or more).\18\ Furthermore, all parties agree that the screening 
technology used on laminated woven sacks was not new at the time of the 
initiation of the LTFV investigation.\19\
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    \17\ See Laminated Woven Sacks from China, Investigation Nos. 
701-TA-450 and 731-TA-1122 (Preliminary), ITC Publication 3942 
(August 2007) (``ITC Preliminary Determination'') at 31.
    \18\ See Commercial Packaging's Supplemental Questionnaire 
Response dated September 16, 2011 at 2; see also Response of the 
Laminated Woven Sacks Committee to the Department's Questionnaire of 
September 2, 2011 dated September 16, 2011 at 4; see also Shapiro's 
Supplemental Questionnaire Response dated September 16, 2011 at 2.
    \19\ See Commercial Packaging's Supplemental Questionnaire 
Response dated September 16, 2011 at 3; see also Petitioners' 
Questionnaire Response dated May 18, 2011 at 12; see also Shapiro's 
Supplemental Questionnaire Response dated September 16, 2011 at 2.
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    With regard to whether the screening-process sacks were available 
in the market at the time of the LTFV investigation, in response to the 
initiation of this anti-circumvention inquiry, Shapiro submitted 
evidence of at least one sale destined for the United States of the 
screening-process sacks. Specifically, Shapiro provided an invoice, 
packing list, bill-of-lading, purchase order, and approved screen 
artwork associated with the 2005 sale of the Manna Pro Horse Feed 
Sack.\20\ The purchase order references the use of reverse printing 
with two inks: Red PMS 186 and Blue PMS 072.\21\ The corresponding 
artwork, signed and approved for production on February 15, 2005, in 
conjunction with the related paperwork discussed above demonstrates the 
use of a screen in production.\22\ Shapiro's supplier's use of the 
screening process in combination with two inks in production of 
laminated woven sacks beginning in 2005 was also confirmed in an 
affidavit from the Assistant Vice-President of Purchasing at Manna Pro, 
the customer that coordinates the design of, and buys, the Manna Pro 
Horse Feed Sack from Shapiro.\23\ Shapiro also stated that it sold 
147,842.50 lbs. of the Manna Pro Horse Feed Sack prior to the date of 
initiation of the LTFV investigation.\24\ Although Shapiro states that 
it permanently changed the design of the art work to accommodate the 
use of only two inks and a screening process with respect to the 
specific sacks on this record after the publication of the preliminary 
determination in the LTFV investigation, Shapiro demonstrated that it 
used two inks and a screening process for some of the designs at least 
occasionally prior to the initiation of the LTFV investigation.\25\ 
Finally, as demonstrated by an affidavit supplied by Commercial 
Packaging, the screening process has been used to produce graphics on 
laminated woven sacks prior to the LTFV investigation.\26\ Therefore, 
the above information on the record demonstrates that sacks produced 
with a screening process and two inks were commercially available prior 
to the LTFV investigation.
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    \20\ See Shapiro's Comments on Initiation dated May 19, 2011 at 
Exhibit 1.
    \21\ See Id.
    \22\ See Id. and at Exhibit 2.
    \23\ See Id. at Exhibit 3.
    \24\ See Id. at 2.
    \25\ See Shapiro's Supplemental Questionnaire Response dated 
July 28, 2011 at 1.
    \26\ See Commercial Packaging's Comments on Petitioners' 
Submission Dated May 17, 2011 dated June 2, 2011 at 9 and Exhibit 2.
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    Finally, parties provided affidavits on the record stating that 
using only two inks and a screening process reduces the cost of 
production.\27\ Although Petitioners contend that, despite the use of 
only two print stands and fewer inks, the development of the artwork 
and the time needed to readjust the machinery could possibly increase 
the production costs of screening-process sacks versus subject 
merchandise, the Department finds that if the customer seeks a simpler 
graphic, the use of only two inks and a screening process is a viable 
option to produce a less complex and possibly more affordable 
image.\28\
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    \27\ See Shapiro's Comments on Initiation dated May 19, 2011 at 
Exhibit 3.
    \28\ See Commercial Packaging's Comments on Petitioners' 
Submission Dated May 17, 2011 dated June 2, 2011 at Exhibit 2.
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    As demonstrated above, the screening technology existed prior to 
the LTFV investigation and had been applied to laminated woven sacks 
since 2005 (including with the use of only two inks). Thus, the 
Department finds that it was possible to produce screening-process 
sacks prior to the LTFV investigation and concludes that the screening-
process sacks were commercially available, i.e., tested and ready for 
commercial production prior to the LTFV investigation.

Summary of Analysis

    After analyzing the above factors, the Department has made a 
preliminary determination that the screening-process sacks are not 
later-developed merchandise.\29\ The agreement of all parties that the 
technology was available prior to the initiation of the LTFV 
investigation coupled with the fact that Shapiro demonstrated the sale 
of screening-process sacks to the United States has led to the 
Department's preliminary determination that the screening-process sacks 
were commercially available prior to the initiation of the LTFV 
investigation and are therefore not later-developed merchandise. 
Furthermore, because the Department has preliminarily determined that 
the screening-process sacks are not later-developed merchandise, the 
Department does not need to consider the criteria in section 781(d) of 
the Act to determine if the screening-process sacks are subject 
merchandise.\30\ Therefore, we preliminarily determine that, because 
the sacks are not later-developed merchandise, they do not circumvent 
the Orders.
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    \29\ See Candles Anticircumvention Final, 71 FR at 59075 at 
Comment 4; see also EPROMs from Japan; EMD from Japan; Portable 
Electronic Typewriters from Japan, 55 FR 47358 (November 13, 1990).
    \30\ See Electroytic Manganese Dioxide from Japan; Preliminary 
Scope Ruling, 56 FR 56977 (Nov 7, 1991) (``if a product is developed 
before an antidumping case is initiated, the later-developed product 
provision is clearly inapplicable'') unchanged in final EMD from 
Japan.
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Public Comment

    Interested parties may submit case briefs and/or written comments 
no later than 30 days after the date of publication of these 
preliminary results of review.\31\ Rebuttal briefs and rebuttals to 
written comments, limited to issues raised in such briefs or comments 
may be filed no later than five days after the deadline for filing case 
briefs.\32\ Parties who submit case briefs or rebuttal briefs in this 
proceeding are requested to submit with each argument: (1) A statement 
of the issue; (2) a brief summary of the argument; and (3) a table of 
authorities.\33\ Case briefs and rebuttal briefs must be submitted on 
both proceedings.
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    \31\ See 19 CFR 351.309(c)(1)(ii).
    \32\ See 19 CFR 351.309(d).
    \33\ See 19 CFR 351.309(c) and (d).
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    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 within 30 days after the 
date of publication of this notice, pursuant to 19 CFR 351.310. 
Requests should contain the party's name, address, and telephone 
number, the number of participants, and a list of the issues to be 
discussed. At the hearing, each party may make an affirmative 
presentation only on issues raised in that party's case brief and may 
make rebuttal presentations only on arguments included in that party's 
rebuttal brief. If a hearing is requested, we will notify those parties 
that requested a hearing of a hearing date and time.

Final Determination

    The final determination with respect to this anti-circumvention 
inquiry will be issued no later than February 16, 2012, including the 
results of the

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Department's analysis of any written comments. This preliminary 
negative circumvention determination is published in accordance with 
section 781(d) of the Act and 19 CFR 351.225.

    Dated: November 15, 2011.
Paul Piquado,
Assistant Secretary for Import Administration.
[FR Doc. 2011-30164 Filed 11-21-11; 8:45 am]
BILLING CODE 3510-DS-P