[Federal Register Volume 78, Number 93 (Tuesday, May 14, 2013)]
[Notices]
[Pages 28194-28198]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-11314]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-886]


Polyethylene Retail Carrier Bags From the People's Republic of 
China: Initiation of Anticircumvention Inquiry on Antidumping Duty 
Order

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

DATES: Effective Date: May 14, 2013.
SUMMARY: In response to a request from The Polyethylene Retail Carrier 
Bag Committee and its individual members: PCL Packaging, Inc., Hilex 
Poly Co., LLC, Superbag Corp., and Inteplast Group, Ltd., 
(collectively, the petitioners), the Department of Commerce (the 
Department) is initiating an anticircumvention inquiry pursuant to 
section 781(a) of the Tariff Act of 1930, as amended (the Act), to 
determine whether imports of unfinished polyethylene retail carrier 
bags (PRCBs) from the People's Republic of China (PRC) are 
circumventing the antidumping duty order on PRCBs from the PRC.\1\
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    \1\ See Antidumping Duty Order: Polyethylene Retail Carrier Bags 
From the People's Republic of China, 69 FR 48201 (August 9, 2004) 
(PRCB Order).

FOR FURTHER INFORMATION CONTACT: Dustin Ross, AD/CVD Operations, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and

[[Page 28195]]

Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-
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0747.

SUPPLEMENTARY INFORMATION: 

Background

    The Department received from U.S. Customs and Border Protection 
(CBP) a sample of merchandise that was part of a larger shipment 
imported into the United States and that resembles an unfinished PRCB. 
The sample resembles an in-scope, finished PRCB in all respects except 
that it is sealed on all four sides and appears ready to undergo the 
final processing step of die-cutting the unfinished PRCB, which will 
create the opening and the handles of the finished PRCB.\2\ On August 
29, 2012, the Department placed a memorandum onto the record stating 
that it received this sample unfinished PRCB along with proprietary 
documentation associated with the shipment and invited parties to view 
the sample and submit comments.
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    \2\ This particular CBP sample measures roughly 19 inches by 
11.5 inches; the front surface includes red print that reads ``THANK 
YOU'' six times; it contains the number ``2'' within the recycling 
symbol in the bottom left area; the product displays the caution, 
``WARNING: TO AVOID DANGER OF SUFFOCATION. KEEP THIS PLASTIC BAG 
AWAY FROM BABIES AND CHILDREN. DO NOT USE THIS BAG IN CRIBS, BEDS. 
CARRIAGES OR PLAYPENS.'' The merchandise also includes the text, 
``PLEASE RETURN TO A PARTICIPATING STORE FOR RECYCLING.'' There are 
two holes near the top border of the CBP sample.
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    On March 15, 2013, the petitioners requested that the Department 
issue an affirmative anticircumvention determination (the petitioners' 
Request), pursuant to section 781(a) of the Act and 19 CFR 351.225(g). 
Specifically, the petitioners stated that CBP officials advised them 
that some importers have been entering merchandise described by the CBP 
officials as unfinished ``t-shirt'' style PRCBs. The petitioners 
explain that CBP officials conveyed that the unfinished PRCBs are 
sealed on all four sides and lack handles when entered into the United 
States, but that they are clearly intended for use as finished PRCBs. 
Furthermore, they explained that the CBP officials advised the 
petitioners that the practice of importing unfinished PRCBs is 
increasing and expanding to multiple ports. The petitioners further 
assert that there is no commercial justification for not completing the 
PRCB production process at the place of manufacture and instead 
locating the final minor finishing operation in the United States 
except to evade imposition of antidumping duties.

Scope of the Order

    The merchandise subject to the antidumping duty order is PRCBs 
which may be referred to as t-shirt sacks, merchandise bags, grocery 
bags, or checkout bags. The subject merchandise is defined as non-
sealable sacks and bags with handles (including drawstrings), without 
zippers or integral extruded closures, with or without gussets, with or 
without printing, of polyethylene film having a thickness no greater 
than 0.035 inch (0.889 mm) and no less than 0.00035 inch (0.00889 mm), 
and with no length or width shorter than 6 inches (15.24 cm) or longer 
than 40 inches (101.6 cm). The depth of the bag may be shorter than 6 
inches but not longer than 40 inches (101.6 cm). PRCBs are typically 
provided without any consumer packaging and free of charge by retail 
establishments, e.g., grocery, drug, convenience, department, specialty 
retail, discount stores, and restaurants, to their customers to package 
and carry their purchased products. The scope of the order excludes (1) 
polyethylene bags that are not printed with logos or store names and 
that are closeable with drawstrings made of polyethylene film and (2) 
polyethylene bags that are packed in consumer packaging with printing 
that refers to specific end-uses other than packaging and carrying 
merchandise from retail establishments, e.g., garbage bags, lawn bags, 
trash-can liners. Imports of the subject merchandise are currently 
classifiable under statistical category 3923.21.0085 of the Harmonized 
Tariff Schedule of the United States (HTSUS). This subheading also 
covers products that are outside the scope of the order. Furthermore, 
although the HTSUS subheading is provided for convenience and customs 
purposes, our written description of the scope of the order is 
dispositive.

Scope of the Anticircumvention Inquiry

    This anticircumvention inquiry covers merchandise from the PRC that 
appears to be an unfinished PRCB which is sealed on all four sides, cut 
to length, and which appears ready to undergo the final step in the 
production process, i.e., to use a die press to stamp out the opening 
and create the handles of a finished PRCB. The unfinished PRCBs subject 
to this inquiry may or may not have printing and may be of different 
dimensions as long as they meet the description of the scope of the 
order.

The Petitioners' Request for Initiation of Anticircumvention Proceeding

    As stated above, the petitioners filed a request for a 
circumvention determination, in which they commented on the 
relationship of this merchandise to merchandise covered by the scope of 
the PRCB Order. The petitioners allege that the product is intended to 
be a finished PRCB and is dedicated to PRCB use, as it has gone through 
every stage of the production process except for the final die cut 
operation.\3\ According to the petitioners, the number ``2'' in the 
recycling symbol indicates that the product is made out of 
polyethylene.\4\ The petitioners also allege that the two holes near 
the top of the unfinished PRCBs are alignment holes that allow the 
merchandise to be slipped over pins to ensure that the stack of 
unfinished PRCBs is properly positioned for the die-cutting operation 
that opens the top and creates the handles of the finished PRCB. The 
petitioners explain that, once aligned, a simple press is used to cut 
the stack of unfinished PRCBs to create finished PRCBs that are ready 
for use.\5\
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    \3\ See The petitioners' Request at 7.
    \4\ See The petitioners' Request at 7, referencing ``The 
American Chemistry Council Plastic Packaging Resin Codes,'' provided 
at Exhibit 9 of the petitioners' Request.
    \5\ See The petitioners' Request at 7.
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    Citing the International Trade Commission (ITC)'s recent sunset 
review determination of PRCBs from the PRC, the petitioners explain 
that the PRCB production process can be described as a four-step 
process consisting of (1) blending polyethylene resin pellets, color 
concentrates, and other additives; (2) extrusion and film forming; (3) 
printing; and (4) PRCB conversion.\6\ The final step in the conversion 
process for die-cut PRCBs, such as t-shirt bags, involves the use of an 
automated die and press at the end of an integrated PRCB conversion 
line to cut the film, which serves the dual purpose of opening the top 
of the PRCB and creating the PRCB handles, at which point the 
merchandise is ready for inspection, packing, and shipment.\7\ For the 
unfinished PRCBs subject to this circumvention inquiry, the product is 
taken off-line prior to completion of this final step, which the 
petitioners allege is subsequently performed after importation into the 
United States.\8\ Additionally, the petitioners continue, no material 
is added to complete the finished PRCBs, but rather the scrap film is 
typically removed for recycling.\9\
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    \6\ See The petitioners' Request at 4, citing Polyethylene 
Retail Carrier Bags from China, Malaysia, and Thailand, Inv. Nos. 
731-TA-1043-1045 (Review), USITC Pub. 4160 (June 2010) at I-17.
    \7\ See The petitioners' Request at 6.
    \8\ Id.
    \9\ Id.

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[[Page 28196]]

Initiation of Anticircumvention Proceeding

Applicable Statute

    Section 781(a) of the Act and 19 CFR 351.225(g) provide that the 
Department may find circumvention of an antidumping duty order when 
merchandise of the same class or kind subject to the order is completed 
or assembled in the United States. In conducting anticircumvention 
inquiries under section 781(a)(1) of the Act, the Department relies 
upon the following criteria: (A) Merchandise sold in the United States 
is of the same class or kind as any other merchandise that is produced 
in a foreign country that is subject to an antidumping duty order; (B) 
such merchandise sold in the United States is completed or assembled in 
the United States from parts or components produced in the foreign 
country with respect to which the antidumping duty order applies; (C) 
the process of assembly or completion in the United States is minor or 
insignificant; and (D) the value of the parts or components referred to 
in (B) is a significant portion of the total value of the merchandise. 
As discussed below, the petitioners presented evidence with respect to 
these criteria.
A. Merchandise of the Same Class or Kind
    The petitioners state that the unfinished PRCB sold in the United 
States is of the same class or kind as subject merchandise, as it is 
dedicated as a generic ``Thank You'' t-shirt bag and only requires a 
simple die-cutting to become proto-typical subject merchandise.\10\ The 
petitioners assert that the script on the merchandise identifies the 
product twice as a ``bag'' and states that it should be returned to the 
participating store for recycling, indicating it is used by retail 
establishments.\11\ Petitioners also assert that the merchandise is 
made of polyethylene film, as indicated by the ``2'' in the recycle 
triangle, and that it falls within the dimensions of in-scope 
merchandise.\12\ For these reasons, the petitioners argue, it is 
completely and exclusively intended for use as a finished PRCB once it 
undergoes the final ``bag conversion'' step of the production process 
and, therefore, is of the same class or kind as subject merchandise.
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    \10\ See The petitioners' Request at 10.
    \11\ Id.
    \12\ Id.
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B. Completion of Merchandise in the United States
    The petitioners assert that the unfinished PRCBs are imported from 
the PRC and CBP officials described the product as only needing to 
undergo the final die-cutting operation to open the top and create the 
handles of finished PRCBs, which means that no materials are added in 
the United States.\13\ Rather, the merchandise as entered has all the 
necessary raw materials for a finished PRCB. Performing the final die-
cutting operation in the United States simply removes the material to 
finish the PRCB.\14\
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    \13\ See The petitioners' Request at 11.
    \14\ Id.
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C. Minor or Insignificant Process
    According to the petitioners, the process of converting this 
product into a finished PRCB is minor or insignificant.\15\ Based on 
publicly-available information, and their own industry experience, the 
petitioners argue that an analysis of the relevant statutory factors of 
section 781(a)(2) of the Act supports their conclusion that the final 
processing in the United States is ``minor or insignificant'' as the 
only operation remaining to transform this unfinished PRCB into subject 
merchandise is to perform the final die-cutting operation.\16\ The 
petitioners assert that the Statement of Administrative Action (SAA) 
for the Uruguay Round Agreements Act provides that no single factor 
will be controlling in determining whether the process of assembly or 
completion is minor or insignificant, and that the Department will 
evaluate each of the factors as they exist in the United States 
depending on the particular factual pattern of each case.\17\ These 
factors include: (1) The level of investment in the United States; (2) 
the level of research and development in the United States; (3) the 
nature of the production process in the United States; (4) the extent 
of production facilities in the United States; and (5) whether the 
value of the processing performed in the United States represents a 
small proportion of the value of the merchandise sold in the United 
States.\18\
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    \15\ Id.
    \16\ Id.
    \17\ See The petitioners' Request at 9, citing SAA, Uruguay 
Round Agreements Act, H. Doc. 103-316, Vol. 1 (1994) at 893.
    \18\ See The petitioners' Request at 9.
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    The petitioners argue that the level of investment in the United 
States is extremely limited. The only equipment needed is a small press 
and a die for the cut-out. The petitioners assert that dies cost from 
$45 to $65 each and a new press, according to the advertisement 
provided by the petitioners, can be purchased for around $7,000.\19\ In 
contrast, the operations performed in the PRC, the petitioners contend, 
are highly capital-intensive and sophisticated.\20\
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    \19\ See The petitioners' Request at 12.
    \20\ Id.
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    The petitioners argue that no research and development expenditures 
are required to perform the simple die-cutting operation, as the 
technically complex research and development activities are performed 
prior to this stage in the PRC.\21\
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    \21\ Id.
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    Next, the petitioners explain that all production steps, with the 
exception of the final die-cutting operation, are performed in the PRC 
and, therefore, the nature of the production process in the United 
States is minor in scope and elementary in technique, relative to the 
production process as a whole.\22\
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    \22\ Id.
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    The petitioners also state that minor production facilities are 
required to perform the final die-cutting operation in the United 
States. Specifically, the operation could be performed in a small 
single-story room.\23\
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    \23\ See The petitioners' Request at 13.
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    Finally, the petitioners assert that the value of processing 
performed in the United States represents a negligible proportion of 
the value of the merchandise sold in the United States.\24\ Completion 
of the PRCB can be performed by a single employee, and the capital and 
marginal costs of the die-cutting operations in the United States are 
relatively insignificant in comparison to the manufacturing of the 
unfinished PRCB performed in the PRC.\25\ The petitioners further 
explain that the Department need not collect precise information on the 
amount of value added in the United States to conclude that the process 
is minor or insignificant but may rather rely on a qualitative 
assessment to draw this conclusion, citing Anti-Circumvention Inquiry 
of the Antidumping and Countervailing Duty Orders on Certain Pasta From 
Italy: Affirmative Preliminary Determinations of Circumvention of 
Antidumping and Countervailing Duty Orders, 68 FR 46571 (August 6, 
2003), unchanged in Anti-Circumvention Inquiry of the Antidumping and 
Countervailing Duty Orders on Certain Pasta from Italy: Affirmative 
Final Determinations of Circumvention of Antidumping and

[[Page 28197]]

Countervailing Duty Orders, 68 FR 54888 (September 19, 2003).\26\
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    \24\ Id.
    \25\ Id.
    \26\ See The petitioners' Request at Footnote 40.
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D. Value of Merchandise Produced in the Foreign Country Is a 
Significant Portion of the Value of the Merchandise Sold in the United 
States
    As stated above, the petitioners contend that the value of the 
processing performed in the United States represents a minor portion of 
the value of the completed merchandise, as little value is added by 
processing in the United States.\27\ Therefore, because virtually all 
of the value of the finished PRCB is created in the PRC, the value of 
the parts or components entered are certainly a significant portion of 
the total value of merchandise.
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    \27\ See The petitioners' Request at 13.
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E. Factors To Consider in Determining Whether Action Is Necessary
    Section 781(a)(3) of the Act identifies additional factors that the 
Department shall consider in determining whether to include parts or 
components in an antidumping duty order as part of an anticircumvention 
inquiry. Of these, the petitioners argue that importation of the 
circumventing merchandise represents a change in the pattern of 
trade.\28\ The petitioners assert that prior to imposition of the PRCB 
Order, no party imported unfinished PRCBs. The petitioners argue that 
interrupting the production process prior to completion is neither 
economical nor rational, and the only reason not to complete the PRCB 
in the country of origin is to evade application of antidumping duties 
upon importation.\29\
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    \28\ See The petitioners' Request at 14.
    \29\ Id.
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Analysis

    Based on our analysis of the petitioners' Request, the Department 
determines that the criteria under section 781(a) of the Act have been 
satisfied to warrant an initiation of an anticircumvention inquiry. In 
accordance with 19 CFR 351.225(f)(1), a notice of the initiation of an 
anticircumvention inquiry issued under 19 CFR 351.225(e) will include a 
description of the product that is the subject of the anticircumvention 
inquiry--in this case, unfinished PRCBs from the PRC--and an 
explanation of the reasons for the Department's decision to initiate an 
anticircumvention inquiry, as provided below.
    With regard to whether the merchandise sold in the United States is 
of the same class or kind as the merchandise covered by the antidumping 
duty order, the petitioners presented information indicating that the 
merchandise sold in the United States is of the same class or kind as 
finished PRCBs from the PRC, which are subject to the antidumping duty 
order.\30\ We note, however, that there only exists a presumption at 
this time that the imported merchandise ultimately is sold in the 
United States after undergoing further processing.
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    \30\ See The petitioners' Request at 10-11.
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    With regard to completion of merchandise in the United States, the 
petitioners have also presented information to support their contention 
that the unfinished PRCBs which are presumably further processed and 
sold in the United States as in-scope merchandise are produced from 
merchandise imported into the United States from the PRC.\31\
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    \31\ See The petitioners' Request at 11.
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    With regard to whether the process of converting this product into 
a finished PRCB is a ``minor or insignificant process,'' the 
petitioners addressed the relevant statutory factors with the best 
information available to them at the time of their anticircumvention 
inquiry request.\32\ The petitioners relied on publicly-available 
information for this purpose, in addition to their own expertise in the 
production process. Given that the petitioners do not have access to 
cost or price data of either the PRC producer or the U.S. importer, the 
petitioners therefore relied on their own knowledge of the production 
process to draw their conclusions and demonstrate that, qualitatively, 
the value of the conversion from an unfinished PRCB to subject 
merchandise is minor or insignificant.\33\
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    \32\ See The petitioners' Request at 11-13.
    \33\ Id.
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    With respect to the value of the merchandise produced in the PRC, 
the petitioners relied on the information and arguments in the ``minor 
or insignificant process'' portion of their anticircumvention request 
to indicate that the value of the PRC production for unfinished PRCBs 
is significant relative to the total value of finished PRCBs sold in 
the United States.\34\ We find that this information adequately meets 
the requirements of this factor, as discussed above.
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    \34\ See The petitioners' Request at 13.
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    Finally, the petitioners argued that the Department should also 
consider the pattern of trade as a factor in determining whether to 
initiate the anticircumvention inquiry. In particular, the petitioners 
asserted that no party imported unfinished PRCBs that must undergo the 
final step of the production process to be converted into finished 
PRCBs prior to the imposition of the PRCB Order, as doing so is 
irrational and uneconomical.\35\
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    \35\ See The petitioners' Request at 14.
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    Based on our analysis of the information in the petitioners' 
submission, we find that the petitioners provided sufficient evidence 
for each of the criteria enumerated in the statute to initiate an 
anticircumvention inquiry.
    Accordingly, we are initiating an anticircumvention inquiry 
concerning the antidumping duty order on PRCBs from the PRC, pursuant 
to section 781(a) of the Act and 19 CFR 351.225(g). The Department is 
initiating this circumvention proceeding with respect to all such 
unfinished PRCBs received by CBP from the PRC as described above, 
regardless of producer or exporter. In accordance with 19 CFR 
351.225(l)(2), if the Department issues a preliminary affirmative 
determination, we will then instruct CBP to suspend liquidation and 
require a cash deposit of estimated duties, at the applicable rate, for 
each unliquidated entry of the merchandise at issue, entered or 
withdrawn from warehouse for consumption on or after the date of 
initiation of the inquiry. In accordance with section 781(e)(1) of the 
Act and 19 CFR 351.225(f)(7)(i)(C), we intend to notify the ITC in the 
event of an affirmative preliminary determination of circumvention 
under section 781(d) of the Act.
    This notice serves as an invitation to interested parties to 
participate in this anticircumvention inquiry. The Department invites 
all potential respondents to identify themselves as producers of such 
merchandise, and provide their own evidence and information that may 
inform the Department's determination. Please contact the official 
listed under the above heading, FOR FURTHER INFORMATION CONTACT for 
instructions for participating in this segment of the proceeding. The 
Department will, following consultation with interested parties, 
establish a schedule for questionnaires and comments on the issues. The 
Department intends to issue its final determination within 300 days of 
the date of publication of this initiation consistent with section 
781(f) of the Act.
    This notice is published in accordance with 781(a) of the Act and 
19 CFR 351.225(f).


[[Page 28198]]


    Dated: May 7, 2013.
Christian Marsh,
Deputy Assistant Secretary for Antidumping and Countervailing Duty 
Operations.
[FR Doc. 2013-11314 Filed 5-13-13; 8:45 am]
BILLING CODE 3510-DS-P