[Federal Register Volume 78, Number 147 (Wednesday, July 31, 2013)]
[Notices]
[Pages 46319-46322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-18430]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-843]


Polyethylene Retail Carrier Bags From Taiwan: Initiation of Anti-
Circumvention Inquiry on Antidumping Duty Order

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

DATES: Effective Date: July 31, 2013.

[[Page 46320]]

SUMMARY: In response to a request from The Polyethylene Retail Carrier 
Bag Committee and its individual members PCL Packaging, Inc., Hilex 
Poly Co., LLC, and Superbag Corp. (collectively, the petitioners), the 
Department of Commerce (the Department) is initiating an anti-
circumvention 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) on a roll from Taiwan are 
circumventing the antidumping duty order on PRCBs from Taiwan.\1\
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    \1\ See Antidumping Duty Order: Polyethylene Retail Carrier Bags 
from Indonesia, Taiwan, and the Socialist Republic of Vietnam, 75 FR 
23667 (May 4, 2010) (PRCB Orders).

FOR FURTHER INFORMATION CONTACT: Hermes Pinilla, AD/CVD Operations, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue NW., 
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Washington, DC 20230; telephone: (202) 482-3477.

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 a series or roll of 
unfinished PRCBs. The particular sample measures roughly 42.5 inches by 
9 inches and the front surface is printed with multi-color graphics and 
the words ``Brush,'' ``Floss,'' and ``Smile.'' The sample also shows 
the location of oval handles that have not yet been die cut out of the 
bags and the color printing registration marks used to print the bag in 
Taiwan are contained in the location of the oval handles. The sample 
resembles in-scope, finished PRCBs on a roll in all respects except 
that the bottoms are open and they lack handles. The merchandise 
appears ready to undergo the final processing of cutting the unfinished 
PRCBs to length, sealing the bottoms, and die-cutting the unfinished 
PRCBs to create the handles of the finished PRCBs. In addition, the 
Department received from CBP documentation associated with the shipment 
of this product.
    In April 2013, the Department placed two memoranda on to the record 
stating that it received this sample unfinished PRCB along with 
proprietary documentation associated with the shipment, and inviting 
parties to view the sample and submit comments.\2\
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    \2\ See Memoranda to the File dated April 18, 2013, and April 
24, 2013.
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    On May 3, 2013, SmileMakers Inc. (SmileMakers) submitted a scope 
ruling request to the Department regarding certain rolls of unfinished 
PRCBs that are to be used to ``produce customized bags for dentists' 
and doctors' offices.'' \3\
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    \3\ See SmileMakers' letter to the Department, ``Polyethylene 
Retail Carrier Bags from Taiwan (A-583-843): SmileMakers, Inc., 
Scope Ruling Request: Rolls of Polyethylene Film Tube'' dated May 3, 
2013 (SmileMakers' scope ruling request).
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    On May 20, 2013, the petitioners requested that the Department 
issue an affirmative anti-circumvention determination, pursuant to 
section 781(a) of the Act and 19 CFR 351.225(g).\4\ The petitioners 
further state that CBP officials had advised them that the practice of 
importing unfinished PRCBs is increasing and expanding to multiple 
ports.\5\ The petitioners claim 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.\6\
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    \4\ See the petitioners' letter to the Department, 
``Polyethylene Retail Carrier Bags From Taiwan/Request For An 
Affirmative Anti-Circumvention Determination'' dated May 20, 2013 
(the petitioners' request).
    \5\ Id. at 3.
    \6\ Id.
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    After considering the information placed on the record, the 
Department has determined to conduct one proceeding in the context of 
an anti-circumvention inquiry. The parties' submissions demonstrate 
that both requests cover identically described merchandise. For this 
reason, we find that it is reasonable and practical to address whether 
the merchandise at issue is subject to the order on PRCBs from Taiwan 
in the context of an anti-circumvention inquiry, which will provide for 
the most comprehensive analysis, under section 781(a) of the Act and 19 
CFR 351.225(g). As a result of our determination to initiate this 
inquiry, we are placing SmileMakers' scope ruling request and the 
information we received from CBP on the record of this anti-
circumvention inquiry.

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 Anti-Circumvention Inquiry

    This anti-circumvention inquiry covers merchandise from Taiwan that 
appears to be a series or roll of unfinished PRCBs that is ready to 
undergo the final steps in the production process, i.e., cutting-to-
size the merchandise, sealing the bag on one end to form a closure, and 
creating the handles of a finished PRCB (using a die press to stamp out 
the opening).\7\
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    \7\ The unfinished PRCBs, as described by SmileMakers in its 
scope request, ``are made from polyethylene formed into the shape of 
a tube that is open (unsealed) on both ends; they do not contain any 
handles, perforations, seams, or seals; they are imprinted with a 
variety of pictures and designs, depending on SmileMakers 
requirements; and they all serve the same purpose (i.e., after 
importation, they are imprinted with medical practitioners' contact 
information, cut, punched, and sealed to form small bags that are 
given out at dentists' and doctors' offices, etc.).''
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The Petitioners' Request for Initiation of Anti-Circumvention 
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 from Taiwan. The petitioners allege that

[[Page 46321]]

while the imported unfinished PRCBs are sealed on the sides, the bottom 
and top are open, and the oval handle has not been die cut. The 
petitioners contend that completion of these steps would make the bags 
subject merchandise if they were imported in this condition.\8\
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    \8\ See the petitioners' request at 6.
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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.\9\
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    \9\ Id. 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.
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    The final, normal ``conversion'' step is described in information 
submitted by the petitioners as follows: ``After the printing process 
is complete, the large roll of film is then cut to size with hot knives 
that seam the sides of the bags together when cut. Then, the film is 
fed into bag manufacturing machines where the top and bottom seals are 
formed and handles are cut out.'' \10\ The petitioners contend that the 
unfinished PRCBs that are the subject of their request represent an 
interruption in this continuous production process because, while they 
have been sealed on their sides, the bottom and top are open and the 
oval handle has not been die cut.\11\ Completion of these steps would 
make the bags subject of the antidumping duty order if they were 
imported in this finished condition.\12\
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    \10\ See the petitioners' request at Exhibit 5.
    \11\ Id. at 6.
    \12\ Id.
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Initiation of Anti-Circumvention Proceeding

Applicable Law

    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 as merchandise that is subject to 
the order is completed or assembled in the United States. In conducting 
anti-circumvention 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 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 merchandise sold in the United 
States is of the same class or kind as the subject merchandise. The 
petitioners agree with the Department's statement that the samples 
``closely resemble'' a PRCB.\13\ Moreover, the merchandise is made of 
polyethylene film and the dimensions of the finished PRCBs are within 
those of the scope definition. Finally, the petitioners state, because 
the bag is completely and exclusively dedicated to use as a Dentist 
PRCB and has been finished to the point where there can be no doubt of 
its intended use, the merchandise will be subject merchandise within 
the order on PRCBs Taiwan scope definition when completed.\14\
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    \13\ See Memorandum to the File, dated April 18, 2013.
    \14\ Id. at 10.
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B. Completion of Merchandise in the United States

    The petitioners cite to the CBP referral and SmileMakers' scope 
ruling request to support their claim that the imported rolls are 
completed in the United States from parts and components produced in 
Taiwan. All the necessary raw materials for a finished PRCB are 
entered. Performing the final die-cutting operation in the United 
States simply finishes the PRCB.\15\
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    \15\ Id. at 11.
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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, particularly 
relative to the production process as a whole. The petitioners assert 
that the sealing and cutting operation is a simple step that occurs 
only at the very end of the multi-step production process. 
Specifically, the bottom of the bag is sealed with a hot knife and the 
handles cut by clamping a die to a press and then pressing on the 
pillow pack.\16\ Consequently, the only equipment that is needed seals 
the bag and cuts out an oval handle.\17\ According to the advertisement 
provided by the petitioners, the equipment needed to accomplish these 
tasks can be purchased new for $11,000 to $13,000.\18\ In contrast, the 
operations performed in Taiwan, the petitioners contend, are highly 
capital-intensive and technologically sophisticated.
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    \16\ Id. at 12.
    \17\ Id. at 11.
    \18\ Id. and Exhibit 10.
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    The petitioners further argue that no research and development 
expenditures are required to perform the simple sealing, and die-
cutting operations, as the technically complex research and development 
activities are performed prior to this stage in Taiwan.\19\ Similarly, 
the petitioners state that minor production facilities are required and 
that the operations could be performed in a small single-story 
room.\20\
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    \19\ Id. at 12.
    \20\ Id.
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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. 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 
imported merchandise performed in Taiwan.\21\ The petitioners further 
explain that the Department need not collect precise information on the 
amount of the 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.\22\
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    \21\ Id.
    \22\ Id. at 10 n. 37 (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 
Countervailing Duty Orders, 68 FR 54888 (September 19, 2003)).
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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

[[Page 46322]]

of the completed merchandise.\23\ Therefore, because most of the value 
of the finished PRCB is created in Taiwan, the value of the merchandise 
as entered is certainly a significant portion of the total value of the 
finished PRCB.
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    \23\ Id. 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 anti-
circumvention inquiry. Of these, the petitioners argue that importation 
of the circumventing merchandise represents a change in the pattern of 
trade.\24\ The petitioners assert that prior to imposition of the PRCB 
Orders, no party imported such merchandise for completion into finished 
PRCBs. The petitioners argue that interrupting the production process 
prior to completion is neither economical nor rational, and that the 
only reason not to complete the PRCB in the country of origin is to 
evade application of antidumping duties upon importation.\25\
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    \24\ Id.
    \25\ Id.
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Analysis

    Section 351.225(f)(1) of our regulations directs that a notice of 
the initiation of an anti-circumvention inquiry issued under 19 CFR 
351.225(e) will include a description of the product that is the 
subject of the anti-circumvention inquiry and an explanation of the 
reasons for the Department's decision to initiate an anti-circumvention 
inquiry.
    The product that is subject of this anti-circumvention inquiry 
covers merchandise from Taiwan that appears to be series or roll of 
unfinished PRCBs that is ready to undergo the final steps in the 
production process, i.e., cutting-to-size the merchandise, sealing the 
bag on one end to form a closure, and creating the handles of a 
finished PRCB (using a die press to stamp out the opening).
    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 the initiation of an anti-circumvention inquiry.
    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 completed and sold in the United States is of the same 
class or kind as PRCBs from Taiwan which are subject to the order on 
PRCBs from Taiwan.\26\ With regard to whether the process of converting 
this product into finished PRCBs 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 anti-
circumvention inquiry request.\27\ 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 Taiwanese producer or 
the U.S. importer, the petitioners relied on their own knowledge of the 
production process to draw their conclusions and demonstrate that, 
qualitatively, the value of the conversion of the imported merchandise 
into subject merchandise is minor or insignificant.\28\
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    \26\ Id. at 10-11.
    \27\ Id. at 11-13.
    \28\ Id.
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    With respect to the value of the merchandise produced in Taiwan, 
the petitioners relied on the information and arguments in the ``minor 
or insignificant process'' portion of their anti-circumvention request 
to indicate that the value of Taiwan production for unfinished PRCBs is 
significant relative to the total value of finished PRCBs sold in the 
United States.\29\
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    \29\ Id. 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 anti-circumvention inquiry. In particular, the petitioners 
asserted that no party imported merchandise that must undergo the final 
step of the production process to be converted into finished PRCBs 
prior to the imposition of the order on PRCBs from Taiwan, as doing so 
is irrational and uneconomical.\30\
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    \30\ Id.
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    Based on these allegations, we are initiating an anti-circumvention 
inquiry concerning the antidumping duty order on PRCBs from Taiwan, 
pursuant to section 781(a) of the Act and 19 CFR 351.225(g). The 
Department is initiating this anti-circumvention inquiry with respect 
to all such merchandise from Taiwan 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)(A), 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 anti-circumvention inquiry. The Department invites 
all potential respondents to identify themselves as producers, 
importers, or further processors of such merchandise and to 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 inquiry. 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).

    Dated: July 25, 2013.
Paul Piquado,
Assistant Secretary for Import Administration.
[FR Doc. 2013-18430 Filed 7-30-13; 8:45 am]
BILLING CODE 3510-DS-P