68 FR 65879, November 24, 2003
DEPARTMENT OF COMMERCE
International Trade Administration
[C-122-839]
Preliminary Results and Partial Rescission of Countervailing Duty
Expedited Reviews: Certain Softwood Lumber Products From Canada
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of countervailing duty expedited
reviews.
-----------------------------------------------------------------------
SUMMARY: The Department of Commerce (the Department) is conducting
expedited reviews of the countervailing duty order on certain softwood
lumber products from Canada for the period April 1, 2000 through March
31, 2001. This notice includes the preliminary results for 16
companies. For all 16 companies we applied the Group 2 methodology. See
the ``Methodology'' section below for details. For information on
estimated net subsidies, see the ``Preliminary Results of Reviews''
section of this notice. If the final results remain the same as these
preliminary results of reviews, we will instruct the U.S. Customs and
Border Protection (CBP) to amend the cash deposit rate for each
reviewed company as detailed in the ``Preliminary Results of Reviews''
section of this notice. Interested parties are invited to comment on
these preliminary results.
The Department is also rescinding expedited reviews of five
companies. See the ``Partial Rescission'' section below for details.
EFFECTIVE DATE: November 24, 2003.
FOR FURTHER INFORMATION CONTACT: Stephanie Moore or Cindy Lai Robinson,
Office of AD/CVD Enforcement VI, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
3692 or (202) 482-3797.
SUPPLEMENTARY INFORMATION:
Background
On May 22, 2002, the Department published in the Federal Register
its amended final affirmative countervailing duty determination and
countervailing duty order on certain softwood lumber products (subject
merchandise) from Canada (67 FR 36070), as corrected, 67 FR 37775 (May
30, 2002) (Amended Final Determination). On July 17, 2002, the
Department published the Notice of Initiation of Expedited Reviews of
the Countervailing Duty Order: Certain Softwood Lumber Products From
Canada, 67 FR 46955 (July 17, 2002) (Notice of Initiation/Round 1),
which covered 73 companies that filed complete and timely review
applications. On September 20, 2002, the Department published the
Notice of Initiation of Expedited Reviews of the Countervailing Duty
Order: Certain Softwood Lumber Products from Canada, 67 FR 59252
(September 20, 2002) (Notice of Initiation/Round 2), which covered 31
additional companies. This notice included 23 companies that had
corrected their applications as well as eight companies whose requests
were received after the initial application deadline for reasons
outside the requesters' control.
As explained in the Notice of Initiation/Round 1, we segregated the
73 Round 1 applicants into two groups. Group 1 consists of 45 companies
which obtain the majority of their wood (over 50 percent of their
inputs) from the United States, the Maritime Provinces, Canadian
private lands, and Canadian companies excluded from the order, and
companies that source less than a majority of their wood from these
sources and do not have tenure. Group 2 includes 28 companies that have
tenure contracts and source less than a majority of their wood from
these sources. Of the 31 companies in Round 2, we similarly segregated
23 companies into Group 1 and eight companies into Group 2.
With respect to the Group 1 companies, on August 14, 2002, the
Department issued a notice of preliminary results covering 18
companies. See Preliminary Results of Countervailing Duty Expedited
Reviews: Certain Softwood Lumber Products from Canada, 67 FR 52945
(August 14, 2002) (August Preliminary Results). On November 5, 2002,
the Department issued a notice of final results for 13 of the 18
companies covered in the August Preliminary results. Of the five
remaining companies, two companies requested an analysis of whether
they benefitted from subsidies bestowed on their inputs and we deferred
a notice of final results for the other three companies to allow
interested parties to comment on the verification reports. See
[[Page 65880]]
Final Results and Partial Rescission of Countervailing duty Expedited
Reviews: Certain Softwood Lumber Products from Canada, 67 FR 67388
(November 5, 2002) (November Final Results). A notice of final results
for these three companies was issued on May 7, 2003. See Final Results
of Countervailing duty Expedited Reviews: Certain Softwood Lumber
Products from Canada, 68 FR 24436 (May 7, 2003) (May Final Results).
In addition, on May 8, 2003, the Department published another
notice of preliminary results for 28 Group 1 companies (14 in Round 1
and 14 in Round 2). See Preliminary Results and Partial Rescission of
Countervailing Duty Expedited Reviews: Certain Softwood Lumber Products
from Canada, 68 FR 24717 (May 8, 2003) (May Preliminary Results).
Companies that requested an analysis of whether they benefitted from
subsidies bestowed on their inputs, acquired in arm's length
transactions, were not included in the preliminary results notice. The
Department also addressed outstanding methodological issues related to
Group 1 companies. See May Preliminary results.
This notice includes the preliminary results for 16 Group 2
companies (13 in Round 1 and three in Round 2). We are not including in
this notice any of the following 15 Group 2 companies that requested an
analysis of whether they benefitted from subsidies bestowed on their
inputs. They are: Apollo Forest Products Ltd., Aspen Planers Ltd.,
Downie Timber Ltd., Dunkley Lumber Ltd., Gorman Bros. Lumber Ltd.,
Liskeard Lumber Ltd., Mill & Timber Products Ltd., North Enderby Timber
Ltd., Riverside Forest Products Ltd., Selkirk Specialty Wood Ltd.,
Slocan Forest Products Ltd., Tembec Inc., Tolko Industries Ltd., and
Uphill Wood Supply Inc. (the above companies are in Round 1), and
Bridgeside Hilga Forest Industries Ltd. (which is in Round 2).
Furthermore, this preliminary results do not include the following
three Group 2 companies: Jackpine Engineered Wood Products Inc. and
Jackpine Forest Products Ltd. (in Round 1), and 9027-7971 Quebec Inc.
(in Round 2), because the reviews of these three companies have been
rescinded in an earlier notice (See May Preliminary results).
We received various comments from interested parties subsequent to
the Department's Initiation/Round 1, August Preliminary Results,
Initiation/Round 2, and the November Final Result. All general
methodological issues related to both Group 1 and Group 2, and company-
specific issues pertaining to Group 1 companies have been addressed in
the notices of Group 1's preliminary results and final results. See
August Preliminary Results, November Final Result, ``Issues and
Decision Memorandum'' dated concurrently with the November Final
Results notice, May Preliminary Results, May Final Results, and the
``Issues and Decision Memorandum'' dated concurrently with the May
Final Results notice. In this preliminary results notice, we are
addressing only petitioners' and respondents' comments concerning the
Group 2 companies covered in these results.
Partial Rescission
We did not receive any responses from South East Forest Products
Ltd. (South East Forest), a respondent in Round 2. We contacted a South
East Forest company official who confirmed that the company will no
longer participate in these expedited reviews. See Department's March
31, 2003, memorandum to the file regarding Expedited Reviews in the
Countervailing Duty Order on Softwood Lumber from Canada (C-122-839),
which is on file in room B-099 of the Central Records Unit of the Main
Commerce Building (CRU). Because South East Forest did not provide the
necessary information, we are not able to proceed with an expedited
review of this company. Therefore, we are rescinding the expedited
review for South East Forest.
On April 14, 2003, Teal Cedar Products Ltd., another respondent in
Round 2, withdrew its request for review. West Fraser Mills Ltd., a
respondent in Round 1, also withdrew its request for an expedited
review on June 12, 2003. Therefore, we are rescinding the expedited
review for Teal Cedar Products Ltd. and West Fraser Mills Ltd.
In addition, Lukwa Mills Ltd. (Lukwa), another Round 2 company, did
not respond to our supplemental questionnaire. We contacted the general
manager of the company who told us that Lukwa is shutting down and
there is no staff to work on the response. Because Lukwa did not
provide the necessary information, we are also unable to proceed with
an expedited review of this company. Therefore, we are rescinding the
expedited review for Lukwa. See Department's May 6, 2003, memorandum to
the file regarding Expedited Reviews in the Countervailing Duty Order
on Softwood Lumber from Canada (C-122-839), which is on file in CRU.
Finally, the Department is also rescinding a Group 1 company,
Kootenay Innovate Wood Inc. (Kootenay), which initially indicated a
possible cross-ownership with a Group 2 company, Kalesnikoff Lumber Co.
Ltd. (Kalesnikoff). The Department did not include Kootenay in the May
Preliminary Results. Rather, it postponed the analysis of Kootenay
until these preliminary results for Group 2 companies so a consolidated
subsidy rate for Kootenay and Kalesnikoff could be calculated. See May
Preliminary Results.
However, during the Group 2 expedited review, Kalesnikoff stated
that it is not cross-owned with Kootenay. After further analysis we
have determined that cross-ownership between Kootenay and Kalesnikoff
does not exist. Additionally, Kootenay stated in its application and
later confirmed in a supplemental questionnaire response that it did
not have any sales of subject merchandise to the United States during
the POR. In accordance with the Department's practice, companies that
did not ship subject merchandise during the period covered by the
investigation or administrative review are not eligible to participate
in that segment of the proceeding. See, e.g., Final Results and Partial
Rescission of Countervailing Duty Administrative Review: Stainless
Steel Sheet and Strip from the Republic of Korea (68 FR 13267; March
19, 2002). Moreover, the application to request an expedited review
specifically listed exports of subject merchandise to the United States
during the POR as one of the eligibility requirements. Because there is
no information on the record indicating that Kootenay exported subject
merchandise to the United States during the POR, we are rescinding the
expedited review with respect to Kootenay.
Companies Reporting Cross-Ownership
The following companies reported that they are cross-owned with
other companies that produce and/or manufacture subject merchandise:
Canadian Forest Products Ltd. (Canfor) reported that it is cross-owned
with Lakeland Mills Ltd. (Lakeland), and the Pas Lumber Company Ltd.
(The Pas); Greenwood Forest Products Ltd. (Greenwood) reported that it
is cross-owned with GFP Enterprise Ltd. (GFP); Commonwealth Plywood Co.
Ltd. (Commonwealth) reported that it is cross-owned with three
companies that produce and/or manufacture subject merchandise: Les
Entreprises Atlas (1985) Inc., Bois Clo-Val Inc., and the W.C. Edwards
Company Ltd.; Shawood Lumber Inc. (Shawood) and Lukwa reported that the
two companies jointly cross-own a logging company; R. Fryer Forest
Products Ltd. (Fryer) reported
[[Page 65881]]
that it is cross-owned with a holding company; C. Cambie Cedar Products
(Cambie) reported that it is cross-owned with an inactive shell
company; Kootenay reported that it was cross-owned with Kalesnikoff;
and Selkirk Specialty Wood Ltd. (Selkirk) reported that it is cross-
owned with one of its suppliers.
Regarding Canfor's reporting of cross-ownership with Lakeland and
The Pas. Canfor \1\ states that in the preliminary and final
determinations for the antidumping investigation of softwood lumber,
the Department collapsed Lakeland, and The Pas with Canfor. Further, in
two subsequent supplemental responses \2\ Canfor reported that its
investment level, board of directors representation, and management
involvement with respect to Lakeland and The Pas is absolutely equal to
that of the two additional investors who are also equal shareholders,
with Canfor, of Lakeland and The Pas. Thus, Canfor owns and controls
one-third of the voting shares in Lakeland and The Pas.
---------------------------------------------------------------------------
\1\ See Canfor's March 31, 2003 expedited review questionnaire
response at page 4.
\2\ See Canfor's May 27, 2003 expedited review supplemental
response (May supplemental) at page 1 and Canfor's June 16, 2003
expedited review supplemental response (June supplemental) at pages
1 through 4.
---------------------------------------------------------------------------
Specifically, under 19 CFR 351.525(b)(6)(vi), cross-ownership
exists between two or more corporations where one corporation can use
or direct the individual assets of the other corporation(s) in
essentially the same ways it can use its own assets. Normally, this
standard will be met where there is a majority voting ownership
interest between two corporations or through common ownership of two
(or more) corporations (see 19 CFR 351.525(b)(6)(vi)). In the instant
case, Canfor is not able to use Lakeland and The Pas as it would its
own assets, nor does Canfor control a majority voting ownership
interest in either company. Broad corporate business decisions
regarding Lakeland and The Pas are made by three equal ``corporate''
investment entities of which Canfor is one. Finally, as Canfor has
reported in its May and June supplementals, neither Canfor nor any of
the one-third investment partners are involved in the day-to-day
operations of Lakeland and The Pas. Therefore, we preliminarily
determine that the level of Canfor's investment and management control
of Lakeland and The Pas is not sufficient to consider the three
companies cross-owned under 19 CFR 351.525(b)(6)(vi). Thus, with
respect to Canfor, Lakeland and The Pas, because we determine that
cross-ownership does not exist, we have applied the Group 2 methodology
to these companies separately. See company-specific analysis memorandum
for further details.
Greenwood reported that it was affiliated and cross-owned with GFP
in its March 28, 2003 questionnaire response. It stated that the two
companies shared a senior management position, but that each company
had its own asset base, which is not shared. In its April 29, 2003 and
May 16, 2003 supplemental questionnaire responses, Greenwood confirmed
that there was no controlling interest between the two companies.
Therefore, we preliminarily determine that Greenwood and GFP are not
crossed-owned under 19 CFR 351.525(b)(6)(vi).
Kootenay reported that it was affiliated and shared cross-ownership
with Kalesnikoff in its February 18, 2003 questionnaire response.
Kalesnikoff, however, reported that it was not crossed-owned with any
other company during the POR in its March 20, 2003 questionnaire
response. We sent supplemental questionnaires to both companies with
regard to the cross-ownership between the two companies. Both Kootenay
and Kalesnikoff responded that, while the owners of the two companies
are affiliated, neither company held any shares of the other company,
nor did they share members of a board of directors or management
staff.\3\ Accordingly, we preliminarily determine that Kalesnikoff and
Kootenay are not crossed-owned under 19 CFR 351.525(b)(6)(vi).
Therefore, in these preliminary results we are rescinding the expedited
review with respect to Kootenay (see ``Partial Rescission'' section
above for further discussion). Further, we have applied the Group 2
calculation methodology to Kalesnikoff for determining its level of
subsidy benefit.
---------------------------------------------------------------------------
\3\ See Kalesnikoff's May 12, 2003 supplemental questionnaire
response at pages 1 through 2, Kootenay's May 16, 2003 supplemental
questionnaire response at pages 1 through 2, and Kootenay's May 22,
2003 supplemental questionnaire response at page 2.
---------------------------------------------------------------------------
Selkirk reported that it is cross-owned with another lumber
producer. That producer requested the Department to calculate a
separate CVD rate for its company using the arm's length methodology.
On this basis, we determine that it is necessary to postpone the
calculation of an individual, separate rate for Selkirk until the
analysis has been completed for Selkirk's cross-owned company.
Accordingly, we will combine the results of Selkirk and its cross-owned
company in the results calculated subsequent to these preliminary
results.
Finally, for these preliminary results, in those instances in which
we determined that cross-ownership existed between companies during the
POR, such as in the case of Commonwealth, we calculated the
consolidated benefit for cross-owned companies in accordance with 19
CFR 351.525(b)(6). Specifically, for cross-owned companies that are all
in Group 2 and had harvesting operations during the POR, we calculated
the consolidated benefit using the Group 2 methodology as described
below in the ``Methodology'' section. We then divided the total
consolidated benefit by the entity's consolidated sales (scope and non-
scope softwood lumber products, net of resales, and softwood lumber by-
products) to obtain the consolidated net subsidy rate.
Shawood indicated that it did not harvest timber during the POR.
Instead, it purchased its log inputs from a joint-owned logging company
it created with Lukwa. Shawood and Lukwa each own fifty percent of the
logging company. As stated above, under 19 CFR 351.525(b)(6)(iv), the
cross-ownership standard is normally met where there is a majority
voting ownership interest between two corporations or through common
ownership of two (or more) corporations. Because Shawood does not have
a majority interest in the logging company, we preliminary find that
the two companies are not cross-owned within the meaning of 19 CFR
351.525(b)(6)(iv). Accordingly, to calculate the countervailable
benefit, we multiplied the volume of the logs and lumber that Shawood
purchased by the amount of the provincial unit benefit calculated in
the underlying investigation.
With respect to Fryer, which is cross-owned with a holding company,
and Cambie, whose cross-owned company is an inactive shell company, we
applied the Group 2 methodology to the companies themselves, but not to
their cross-owned companies. See company-specific analysis memorandum
for further details.
Companies Addressed in These Preliminary Results
This notice includes the preliminary results of review for the
following 13 Group 2, Round 1 companies:
Cambie Cedar Products Ltd
Canadian Forest Products Ltd
Commonwealth Plywood Co. Ltd.
E. Tremblay et fils ltee
Federated Co-operatives Ltd
Greenwood Forest Products Ltd.
Kalesnikoff Lumber Co. Ltd.
[[Page 65882]]
Kenora Forest Products Ltd.
Lakeland Mills Ltd.
Lulumco Inc.
R. Fryer Forest Products Ltd.
Terminal Forest Products Ltd.
The Pas Lumber Company Ltd.
These preliminary results also include the preliminary results of
review for the following three Group 2, Round 2 companies:
Shawood Lumber Inc.
St. Jean Lumber (1984) Ltd.
Wynndel Box & Lumber Co. Ltd.
In addition, these preliminary results include the recision for one
company in Group 2, Round 1, three companies in Group 2, Round 2, and
one company in Group 1, Round 1.
Kootenay Innovate Wood Inc.
Lukwa Mills Ltd.
South East Forest Products Ltd.
Teal Cedar Products Ltd.
West Fraser Mills Ltd.
Scope of the Reviews
The products covered by this order are softwood lumber, flooring
and siding (softwood lumber products). Softwood lumber products include
all products classified under headings 4407.1000, 4409.1010, 4409.1090,
and 4409.1020, respectively, of the Harmonized Tariff Schedule of the
United States (HTSUS), and any softwood lumber, flooring and siding
described below. These softwood lumber products include:
(1) Coniferous wood, sawn or chipped lengthwise, sliced or peeled,
whether or not planed, sanded or finger-jointed, of a thickness
exceeding six millimeters;
(2) Coniferous wood siding (including strips and friezes for
parquet flooring, not assembled) continuously shaped (tongued, grooved,
rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like)
along any of its edges or faces, whether or not planed, sanded or
finger-jointed;
(3) Other coniferous wood (including strips and friezes for parquet
flooring, not assembled) continuously shaped (tongued, grooved,
rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like)
along any of its edges or faces (other than wood moldings and wood
dowel rods) whether or not planed, sanded or finger-jointed; and
(4) Coniferous wood flooring (including strips and friezes for
parquet flooring, not assembled) continuously shaped (tongued, grooved,
rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like)
along any of its edges or faces, whether or not planed, sanded or
finger-jointed.
Although the HTSUS subheadings are provided for convenience and
customs purposes, the written description of the merchandise subject to
this order is dispositive.
As specifically stated in the Issues and Decision Memorandum
accompanying the Notice of Final Determination of Sales at Less Than
Fair Value: Certain Softwood Lumber Products from Canada (67 FR 15539;
April 2, 2002) (see comment 53, item D, page 116, and comment 57, item
B-7, page 126), available at http://www.enforcement.trade.gov, drilled and
notched lumber and angle cut lumber are covered by the scope of this
order.
The following softwood lumber products are excluded from the scope
of this order provided they meet the specified requirements detailed
below:
(1) Stringers (pallet components used for runners): If they have at
least two notches on the side, positioned at equal distance from the
center, to properly accommodate forklift blades, properly classified
under HTSUS 4421.90.98.40.
(2) Box-spring frame kits: If they contain the following wooden
pieces--two side rails, two end (or top) rails and varying numbers of
slats. The side rails and the end rails should be radius-cut at both
ends. The kits should be individually packaged, they should contain the
exact number of wooden components needed to make a particular box
spring frame, with no further processing required. None of the
components exceeds 1'' in actual thickness or 83'' in length.
(3) Radius-cut box-spring-frame components, not exceeding 1'' in
actual thickness or 83'' in length, ready for assembly without further
processing. The radius cuts must be present on both ends of the boards
and must be substantial cuts so as to completely round one corner.
(4) Fence pickets requiring no further processing and properly
classified under HTSUS heading 4421.90.70, 1'' or less in actual
thickness, up to 8'' wide, 6' or less in length, and have finials or
decorative cuttings that clearly identify them as fence pickets. In the
case of dog-eared fence pickets, the corners of the boards should be
cut off so as to remove pieces of wood in the shape of isosceles right
angle triangles with sides measuring \3/4\ inch or more.
(5) U.S. origin lumber shipped to Canada for minor processing and
imported into the United States, is excluded from the scope of this
order if the following conditions are met: (1) the processing occurring
in Canada is limited to kiln-drying, planing to create smooth-to-size
board, and sanding, and (2) if the importer establishes to CBP's
satisfaction that the lumber is of U.S. origin.
(6) Softwood lumber products contained in single family home
packages or kits,\4\ regardless of tariff classification, are excluded
from the scope of this order if the importer certifies to items 6 A, B,
C, D, and requirement 6 E is met:
---------------------------------------------------------------------------
\4\ To ensure administrability, we clarified the language of
exclusion number 6 to require an importer certification and to
permit single or multiple entries on multiple days as well as
instructing importers to retain and make available for inspection
specific documentation in support of each entry.
---------------------------------------------------------------------------
A. The imported home package or kit constitutes a full package of
the number of wooden pieces specified in the plan, design or blueprint
necessary to produce a home of at least 700 square feet produced to a
specified plan, design or blueprint;
B. The package or kit must contain all necessary internal and
external doors and windows, nails, screws, glue, sub floor, sheathing,
beams, posts, connectors, and if included in the purchase contract,
decking, trim, drywall and roof shingles specified in the plan, design
or blueprint.
C. Prior to importation, the package or kit must be sold to a
retailer of complete home packages or kits pursuant to a valid purchase
contract referencing the particular home design plan or blueprint, and
signed by a customer not affiliated with the importer;
D. Softwood lumber products entered as part of a single family home
package or kit, whether in a single entry or multiple entries on
multiple days, will be used solely for the construction of the single
family home specified by the home design matching the entry.
E. For each entry, the following documentation must be retained by
the importer and made available to the CBP upon request:
i. A copy of the appropriate home design, plan, or blueprint
matching the entry;
ii. A purchase contract from a retailer of home kits or packages
signed by a customer not affiliated with the importer;
iii. A listing of inventory of all parts of the package or kit
being entered that conforms to the home design package being entered;
iv. In the case of multiple shipments on the same contract, all
items listed in E(iii) which are included in the present shipment shall
be identified as well.
Lumber products that the CBP may classify as stringers, radius cut
box-spring-frame components, and fence pickets, not conforming to the
above requirements, as well as truss components, pallet components, and
door and window frame parts, are
[[Page 65883]]
covered under the scope of this order and may be classified under HTSUS
subheadings 4418.90.45.90 , 4421.90.70.40, and 4421.90.97.40.
Finally, as clarified throughout the course of the investigation,
the following products, previously identified as Group A, remain
outside the scope of this order. They are:
1. Trusses and truss kits, properly classified under HTSUS 4418.90;
2. I-joist beams;
3. Assembled box spring frames;
4. Pallets and pallet kits, properly classified under HTSUS
4415.20;
5. Garage doors;
6. Edge-glued wood, properly classified under HTSUS item
4421.90.98.40;
7. Properly classified complete door frames;
8. Properly classified complete window frames;
9. Properly classified furniture.
In addition, this scope language has been further clarified to now
specify that all softwood lumber products entered from Canada claiming
non-subject status based on U.S. country of origin will be treated as
non-subject U.S.-origin merchandise under the countervailing duty
order, provided that these softwood lumber products meet the following
condition: Upon entry, the importer, exporter, Canadian processor and/
or original U.S. producer establish to CBP's satisfaction that the
softwood lumber entered and documented as U.S.-origin softwood lumber
was first produced in the United States as a lumber product satisfying
the physical parameters of the softwood lumber scope.\5\ The
presumption of non-subject status can, however, be rebutted by evidence
demonstrating that the merchandise was substantially transformed in
Canada.
---------------------------------------------------------------------------
\5\ See the scope clarification message ( 3034202),
dated February 3, 2003, to the CBP, regarding treatment of U.S.
origin lumber on file in the Central Records Unit, Room B-099 of the
main Commerce Building.
---------------------------------------------------------------------------
Methodology
A. Stumpage Programs
These preliminary results include companies that source less than a
majority of their wood (less than 50 percent of their inputs) from the
United States, the Maritime Provinces, Canadian private lands, and/or
Canadian companies excluded from the order, and have acquired Crown
timber through their own tenure contracts. We have included in our
subsidy calculations only harvested softwood sawlogs processed by the
firm's sawmills. We calculated company-specific rates as follows: To
obtain the company-specific stumpage benefit for logs harvested under a
company's own tenure, we first calculated, on a species-specific basis,
an average unit benefit from ``Crown land harvesting'' by dividing the
stumpage fees each company paid by the total quantity harvested from
Crown land to obtain the stumpage price. The resulting unit stumpage
price was adjusted by the company-specific unit tenure costs to derive
an adjusted stumpage price for each species.\6\ The adjusted species-
specific stumpage price then was compared to the appropriate benchmark
for that province to determine the species-specific benefit per-unit,
which was multiplied by the harvest volume \7\ for each species to
obtain the total species-specific benefit. Species-specific benefits
were summed up to derive the total benefit from Crown land harvesting.
For all wood inputs (logs and lumber) from other subsidized sources, we
applied the same methodology used in Group 1: We calculated the benefit
by multiplying the quantity purchased by the province-specific stumpage
benefit amount calculated in the underlying investigation (i.e., the
average per-unit differential between the calculated adjusted stumpage
fee for the relevant province and the appropriate benchmark for that
province). Also see Notice of Final Affirmative Countervailing Duty
Determination and Final Negative Critical Circumstances Determination:
Certain Softwood Lumber Products From Canada (Final Determination), 67
FR 15545 (April 2, 2002), and Issues and Decision Memorandum: Final
Results of the Countervailing Duty Investigation of Certain Softwood
Lumber Products from Canada (Investigation Decision Memo).
---------------------------------------------------------------------------
\6\ These cost adjustments were limited to those granted in the
underlying investigation.
\7\ Certain companies reported that certain harvested softwood
sawlogs were not used in lumber production. These were excluded from
our calculations.
---------------------------------------------------------------------------
We then divided the combined stumpage benefit resulting from
harvesting under a company's own tenure and from purchases of logs and
lumber through other subsidized sources by the appropriate value of the
company's sales (scope and non-scope softwood lumber products, net of
resales, and softwood lumber by-products) to determine the company's
estimated subsidy rate from stumpage and then added any benefit from
other programs to obtain the net subsidy rate for the company.
As indicated in the Notice of Initiation/Round 1, we have not
attributed a benefit to (1) logs or lumber acquired from the Maritime
Provinces, (2) logs or lumber of U.S. origin, (3) lumber produced by
companies excluded in the investigation, and (4) logs from Canadian
private land. See 67 FR 46955, 46957. Furthermore, we are not including
logs which the companies claim to have acquired and resold without any
processing in our subsidy rate calculations. In addition, we are also
not including in our subsidy calculations lumber purchased and resold
without any further manufacturing.
Other Programs
In the underlying investigation, the Department determined that the
province of British Columbia provided countervailable benefits under
the Forest Renewal program and the Job Protection program, while the
province of Quebec provided countervailable benefits under the Private
Forest Development Program (PFDP), loans issued by Investment Quebec,
lending under Article 28 of the Society for the Industrial Development
of Quebec (SDI), and loans issues by the Society for the Recuperation
and Development of Quebec Forests (Rexfor). Based upon our decision in
the underlying investigation, the Department requested information from
companies regarding the use of these programs.
Kalesnikoff was the only one that reported using one of such
program, the Forest Renewal program. However, Kalesnikoff reported that
it did not receive any grants or loans under this program during the
POR; rather it acted as a delivery agent for silviculture and resource
inventory activities. Kalesnikoff was reimbursed for non-profit
activities on behalf of the Forest Renewal Program for the
administration and overhead costs incurred in delivering this program
to the Province. On this basis, we preliminarily find that Kalesnikoff
did not receive countervailable benefits under this program. No other
company reported using any of the British Columbia or Quebec programs
during the POR.
Analysis of Comments Received
Comment 1: Whether Timber Sale Licenses Should Be Considered as Tenure
Agreements and Cambie Cedar Products Ltd. Should Be in Group 2
Cambie Cedar Products Ltd. (Cambie) asserts that there are several
kinds of tenure arrangements in British Columbia which are considered
both short-term agreements and long-term agreements. Cambie argues that
Timber Sale Licenses cannot be described as
[[Page 65884]]
tenure agreements because they are awarded to the sealed tender bidder
with the highest bonus bid through a Market Pricing System. Moreover,
Cambie argues that the small companies that hold only Section 20 Timber
Sale Licenses conduct their business in a way that closely approximates
a free market system in the acquisition of timber. Therefore, they are
the least likely to benefit from the set stumpage rates which are
favorably applied to large tenure holders under Tree Farm Licenses and
Forest Licenses. As a result of these differences between Timber Sale
Licenses and tenure agreements, Cambie argues that Timber Sale Licenses
should not be considered ``tenure'' for purposes of categorizing
applicants into Group 1 or Group 2 for purposes of these expedited
reviews.
Cambie also argues that a distinction should be made between
companies that had harvesting contracts during the POR, and those that
actually harvested crown timber pursuant to harvesting rights that
existed during the POR. In the instant case, Cambie reported that it
obtained a one year Timber Sale License with respect to certain crown
timber in British Columbia during the POR. However, Cambie also
reported that it did not harvest any Crown timber during the POR and
provided certifications from the province of British Columbia to
support this claim. Therefore, Cambie concludes that its company should
be classified under Group 1(b), ``companies that source less than a
majority of their wood from the United States, Maritime Provinces,
Canadian private lands, and/or Canadian companies excluded from the
order and have not acquired Crown timber through their own tenure
contracts during the POR.'' Thus, Cambie argues that the actual
harvesting of Crown timber, rather than the existence of harvesting
rights should govern whether a company is categorized within Group 1 or
Group 2. Based on these arguments, Cambie contends that it should be
considered a Group 1(b) company or alternatively, classified within
Group 2. Cambie argues that if the Department determines that Cambie
should be classified as a Group 2 company, it should be considered and
analyzed first among that group because its data is not very complex.
Petitioners contest Cambie's request that companies with Section 20
Timber Sale Licenses should be reviewed using the Group 1 methodology
for several reasons. According to petitioners, Section 20 sales are far
below market value as recognized by the Department in the Final
Determination. Petitioners assert that to the extent that these
licenses exceed British Columbia administered stumpage rates generally
paid, they would be reflected within the Department's subsidy
calculations. Moreover, petitioners argue that as a tenure holder,
Cambie should be subject to the calculation methodology of Group 2,
irrespective as to whether or not it harvested crown timber during the
POR.
Department's Position
Record evidence indicates that Cambie did not harvest Crown timber
during the POR. Therefore, questions surrounding how the Department
should calculate benefits stemming from Crown harvest operations are
moot. Accordingly, since Cambie has indicated that it has no
countervailable log harvests, we derived the benefit attributable to
Cambie's purchases of countervailable log and lumber inputs using the
approach, effectively the Group I methodology, described in the
``Methodology'' section of this notice.
Comment 2: Whether Harvested Crown Logs Not Entering the Respondent's
Mill Should Be Excluded
Canfor argues that harvested Crown logs that do not enter Canfor's
mill should not be included in the calculation. Additionally, Canfor
states that the cash deposit rate should reflect the actual subsidy
benefit it received on the logs it harvested for its lumber production.
According to petitioners, Canfor has suggested changes to the
investigation methodology and the exclusion methodology. Petitioners
assert that Canfor's contention that a stumpage benefit should be
calculated only on the volume of crown logs that were manufactured into
lumber is not consistent with the statute. Petitioners argue that a
benefit has been conferred when a company pays less for goods than it
would have paid absent the government subsidy program. Thus,
petitioners assert that Canfor receives a countervailable subsidy
benefit when it harvests timber at below-market prices.
Department's Position
With respect to harvested Crown logs that do not enter a lumber
producer's mill, we agree with Canfor. We note that to do otherwise
would be inconsistent with our approach in the underlying
investigation. See, the ``Numerator Issues'' section of the
Investigation Decision Memo in which we stated that we were not
deviating from the approach used in Lumber III, ``* * * because the
stumpage benefit that we are calculating is that which is received by
lumber producers which purchase the subsidized stumpage * * * the
subsidy is properly attributed to the value of the lumber products
produced from that input * * *'' See also the ``Denominator Issues''
section of the Investigation Decision Memo in which the Department
stated that it was only including in the denominators those sales which
were the result of the lumber manufacturing process.
Comment 3: Whether a Single, Provincial Unit-Benefit Should Be Applied
to Purchased Logs and Lumber
Canfor argues that the Department should calculate a benefit for
countervailable log and lumber purchases using a species/regional
specific benefit rate (as opposed to the single province specific unit
benefit rate used in our prior expedited review notices--e.g., Notice
of Initiation/Round 1. Canfor argues that, while the calculation
methodology for purchases of logs and lumber was used in the exclusion
process in the investigation as well as prior expedited review
determinations, the methodology is distortive in provinces, such as
British Columbia, where there are a variety of species groups and a
wide disparity in stumpage fees among the species. For example, Canfor
points out that the majority of logs and lumber harvested and acquired
in Manitoba, Ontario, and Quebec fell into the spruce, pine, fir (SPF)
category and, thus, the single, unit-benefit rate applied to purchased
logs and lumber during the exclusion and expedited review process was
almost identical to the SPF-specific stumpage rate for those provinces.
However, they contend that in the case of British Columbia, the
application of a single, unit-benefit to the purchases of logs and
lumber overstates the benefit for certain, less expensive, species of
logs and lumber acquired by the company. They further argue that the
application of a single, unit-benefit to the purchases of logs and
lumber fails to account for the real price differences that exist
between logs and lumber acquired in the coastal and interior regions of
the Province.
According to Canfor, companies can easily identify and quantify the
volumes of logs and lumber purchased by source, province, geographic
area in British Columbia, and species purchased, because they maintain
the records for this information. Thus, Canfor argues that the
Department should apply its suggested methodology for purchased logs
and lumber and calculate the subsidy based on species-specific and
region-specific benefit rate.
With respect to Canfor's argument that the Department's approach to
[[Page 65885]]
purchases of countervailable logs and lumber is distortive in the case
of companies with operations in British Columbia, petitioners object to
Canfor's suggestion, that the company provide data on the volume of
lumber and logs purchased by province and species. Petitioners are
opposed to this argument, because the information has not been
verified. Moreover, Canfor's proposed methodology would result in
special treatment that would not be applicable to other companies in
the expedited review. Petitioners assert that the Department's
methodology should be consistent for all companies. Therefore,
petitioners contend if the Department accepts Canfor's proposed
methodology, it must require the same information from all companies
and apply the methodology consistently.
Department's Position
We disagree with Canfor on these points. As explained above, these
expedited reviews are predicated on the consistent application to all
companies of a streamlined methodology which adheres, as closely as
possible, to the methodology utilized in the underlying investigation.
Comment 4: Whether Benefit From Resold Lumber Should Be Included in
Reseller's Company-Specific Calculation
Canfor contends that resold lumber transactions should be excluded
from the numerator and the denominator in the Department's company-
specific rate calculations. According to Canfor, a company may purchase
lumber and resell it without ever taking possession of it. They contend
that, for CBP purposes, the cash deposit rate applied to these entries
would be that applicable to the manufacturer (i.e., either the
manufacturer's company-specific rate or the country-wide rate found in
the investigation). Canfor argues that including a benefit from such
resales in the reseller's company-specific calculation is inappropriate
as the reseller's rate will not be applied to such lumber. Likewise,
the sales value of such lumber resales should not be included in the
denominator for the reseller. Canfor concludes that only in cases where
a company purchases and remanufacturers it, is it appropriate to
calculate a stumpage benefit on the remanufactured lumber sold by that
company and to include the sales value of the remanufactured lumber in
the denominator of its subsidy rate calculation.
Department's Position
With respect to resold lumber, we agree with Canfor that these
transactions should not be included in the numerator or the denominator
of the company's calculations. As explained in the ``Preliminary
Results of Review'' section of the May Preliminary Results, in
instances involving resales activity, we required information from all
of the reseller's suppliers in order to calculate an individual net
subsidy rate for those resales activities. In the case of Canfor, it
did not provide any information regarding the suppliers of the
merchandise that it resold. Therefore, consistent with the May
Preliminary Results, we will calculate net subsidy rates for only
lumber that Canfor has produced and exported to the United States. See
id. at the ``Preliminary Results of Review'' section. Further, with
respect to lumber that Canfor resold without any further processing or
manufacturing, we will instruct the CBP to apply the company-specific
rate applicable to the manufacturer of the resold lumber. If no
company-specific rate was calculated for the manufacturer of the resold
lumber, then we will instruct the CBP to apply the country-wide rate.
Comment 5: Whether Shawood Lumber Inc.'s Reporting on Affiliation Is
Consistent
Petitioners contend that Shawood Lumber Inc. (Shawood) has
inconsistent reporting between its exclusion request and the expedited
review. Specifically, petitioners state that Shawood reported an
affiliated company in its exclusion request. However, in the expedited
review, it did not report any affiliated companies. Moreover, in the
company exclusion process, Shawood reported that it had received
government assistance during the POI, but did not report government
assistance in the expedited review process.
Department's Position
We disagree with petitioners. With respect to whether Shawood
reported affiliates in its expedited review application, the reporting
methodologies used by participating companies differed between the
exclusion process and the expedited review process. In the exclusion
process, companies signed certifications regarding their affiliation
and cross-ownership status that were based on questionnaires and
guidelines compiled and issued by the Government of Canada (GOC). See
the GOC's October 29, 2001 submission. In contrast, in the expedited
reviews, the Department has sent questionnaires directly to the
participating companies that contain specific definitions and
instructions regarding the issue of affiliation, and cross-ownership,
as well as on other Federal and Provincial programs. Therefore, it is
entirely possible, since different authorities issued separate and
different questionnaires, that some discrepancies would exist. In
addition, Shawood has provided detailed information on its affiliated
logging company in its original and supplemental questionnaire
responses in the current proceeding.
Verification
In accordance with 782(i)(3) of the Tariff Act of 1930, as amended
(the Act), we may verify information submitted by respondents who
receive a de minimis subsidy rate, prior to making our final
determination.
Preliminary Results of Reviews
In accordance with 19 CFR 351.221(b)(4)(i), we calculated an
individual subsidy rate for each producer/exporter subject to these
expedited reviews. For the period April 1, 2000 to March 31, 2001, we
preliminarily determine the net subsidy to be as follows:
----------------------------------------------------------------------------------------------------------------
Net subsidy
rate % for Net subsidy Total net
Net subsidies--Producer/exporter stumpage rate % for subsidy rate
programs other programs
----------------------------------------------------------------------------------------------------------------
Group 2, Round 1 Companies:
Cambie Cedar Products Ltd................................... 14.59 .............. ..............
Canadian Forest Products Ltd................................ 12.24 .............. ..............
Commonwealth Plywood Co. Ltd................................ 2.89 .............. ..............
E. Tremblay et fils ltee.................................... 6.36 .............. ..............
Federated Co-operatives Ltd................................. 28.55 .............. ..............
Greenwood Forest Products Ltd............................... 7.95 .............. ..............
Kalesnikoff Lumber Co. Ltd.................................. 12.10 .............. ..............
[[Page 65886]]
Kenora Forest Products Ltd.................................. 20.29 .............. ..............
Lakeland Mills Ltd.......................................... 8.85 .............. ..............
Lulumco Inc................................................. 13.74 .............. ..............
R. Fryer Forest Products Ltd................................ 20.53 .............. ..............
Terminal Forest Products Ltd................................ 10.00 .............. ..............
The Pas Lumber Company Ltd.................................. 7.45 .............. ..............
Group 2, Round 2 Companies:
Shawood Lumber Inc.......................................... 5.46 .............. ..............
St. Jean Lumber (1984) Ltd.................................. 33.27 .............. ..............
Wynndel Box & Lumber Co. Ltd................................ 12.89 .............. ..............
----------------------------------------------------------------------------------------------------------------
To the extent practicable, the Department will issue the final
results of these reviews 30 days after the closing of the public
comments. If the final results of these reviews remain the same as
these preliminary results, the Department intends to instruct the CBP
to collect cash deposits of estimated countervailing duties in the
amounts indicated above of the f.o.b. invoice price on all shipments of
the subject merchandise produced and exported by the reviewed
companies, entered, or withdrawn from warehouse, for consumption on or
after the date of publication of the final results of these reviews.
These rates will not apply to merchandise purchased by the reviewed
companies and exported without further processing.
If, in the final results, there are producers/exporters whose final
estimated net subsidy rates are zero or de minimis, they will be
excluded from the order. Because, in the Department's view, there is no
relevant difference for purposes of the de minimis rule between
expedited reviews of orders resulting from investigations conducted on
an aggregate basis and expedited reviews of orders resulting from
investigations conducted on a company-specific basis, we believe it is
appropriate in these reviews to treat de minimis rates, one percent ad
valorem in this case, in accordance with section 19 CFR
351.214(k)(3)(iv). Therefore, after the issuance of its final results,
the Department intends to instruct CBP to liquidate, without regard to
countervailing duties, all outstanding shipments of the subject
merchandise produced and exported by excluded companies.
These expedited reviews cover only those companies that we have
specifically identified as qualifying for expedited reviews. We will
instruct the CBP to continue to collect cash deposits for all non-
reviewed companies at the country-wide0 cash deposit rate established
in the investigation.
Public Comment
Pursuant to 19 CFR 351.224(b), the Department will disclose to
parties to the proceeding any calculations performed in connection with
these preliminary results within five days after the date of
publication of this notice. Pursuant to 19 CFR 351.309, interested
parties may submit written comments in response to these preliminary
results. Parties who submit argument in this proceeding are requested
to submit with the argument: (1) A statement of the issue, and (2) a
brief summary of the argument. Case and rebuttal briefs must be served
on interested parties in accordance with 19 CFR 351.303(f). The due
dates for the case briefs will be announced at a later date.
Individuals who wish to request a hearing must submit a written
request within 14 days of the publication of this notice in the Federal
Register to the Assistant Secretary for Import Administration, U.S.
Department of Commerce, Room 1870, 14th Street and Constitution Avenue,
NW, Washington, DC 20230. The time, date, and place of the hearing will
be announced after the Department has released the dates of the
briefing schedule. However, any party that wants to participate in a
hearing must submit a written request within the time period specified
above.
Requests for a public hearing should contain: (1) The party's name,
address, and telephone number; (2) the number of participants; and, (3)
to the extent practicable, an identification of the arguments to be
raised at the hearing. In addition, ten copies of the business
proprietary version and six copies of the non-proprietary version of
the case briefs must be submitted to the Assistant Secretary.
Representatives of parties to the proceeding may request disclosure
of proprietary information under administrative protective order no
later than 10 days after the representative's client or employer
becomes a party to the proceeding, but in no event later than the date
the case briefs, under 19 CFR 351.309(c)(ii), are due. The Department
will include the results of its analysis of issues raised in any case
or rebuttal briefs in the final results of these expedited reviews. The
Department will ensure that interested parties are informed of the
briefing schedule.
In the interests of giving each respondent an informed opportunity
to request rescission of their expedited review, we have amended the
timeline announced in the application form to request rescission of an
expedited review. Requests for rescission must be received by the
Department no later than 30 days after the date of publication of the
preliminary results of the relevant expedited review.
These expedited reviews and notice are issued and published in
accordance with section 751(a)(1) and 777(i)(1) of the Act (19 U.S.C.
1675(a)(1) and 19 U.S.C. 1677(f)(1).
Dated: November 17, 2003.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 03-29308 Filed 11-21-03; 8:45 am]