70 FR 22848, May 3, 2005
DEPARTMENT OF COMMERCE
International Trade Administration
[C-122-839]
Certain Softwood Lumber Products From Canada: Preliminary Results
of Countervailing Duty New Shipper Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) is conducting a
new shipper review of Seed Timber Co. Ltd. (Seed Timber) under the
countervailing duty order on certain softwood lumber products from
Canada for the period January 1, 2003, through December 31, 2003. If
the final results remain the same as the preliminary results of this
new shipper review, we will instruct U.S. Customs and Border Protection
(CBP) to assess countervailing duties as detailed in the ``Preliminary
Results of New Shipper Review'' section of this notice. Interested
parties are invited to comment on the preliminary results of this new
shipper review. (See the ``Public Comment'' section of this notice.)
EFFECTIVE DATE: May 3, 2005.
FOR FURTHER INFORMATION CONTACT: Kristen Johnson, AD/CVD Operations,
Office 3, Import Administration, U.S. Department of Commerce, Room
4014, 14th Street and Constitution Avenue, NW., Washington, DC 20230;
telephone (202) 482-4793.
SUPPLEMENTARY INFORMATION:
Background
On May 22, 2002, the Department published in the Federal Register
the countervailing duty order on certain softwood lumber products from
Canada. See Notice of Amended Final Affirmative Countervailing Duty
Determination and Countervailing Duty Order: Certain Softwood Products
From Canada, 67 FR 36070 (May 22, 2002). On May 28, 2004, we received a
request from Seed Timber, a respondent company, for a new shipper
review covering Seed Timber's shipments of subject merchandise. On June
30, 2004, we initiated a new shipper review for Seed Timber covering
the review period January 1, 2003, through December 31, 2003 (POR). See
Certain Softwood Lumber Products From Canada: Notice of Initiation of
Antidumping Duty New Shipper Review for the Period May 1, 2003, Through
April 30, 2004, and Notice of Initiation of Countervailing Duty New
Shipper Review for the Period January 1, 2003, Through December 31,
2003, 69 FR 41229 (July 8, 2004).\1\
---------------------------------------------------------------------------
\1\ Seed Timber's antidumping new shipper review was
subsequently rescinded as a result of the company's withdrawal of
its request for a review (69 FR 54766, September 10, 2004).
---------------------------------------------------------------------------
On August 10, 2004, we issued a questionnaire to Seed Timber. On
September 30, 2004, Seed Timber submitted its questionnaire response.
On October 26, 2004, we extended the period for the completion of the
preliminary results pursuant to section 751(a)(2)(B)(iv) of the Tariff
Act of 1930, as amended (the Act). See Certain Softwood Lumber Products
From Canada: Extension of Time Limit for the Preliminary Results of
Countervailing Duty New Shipper Review, 69 FR 63366 (November 1, 2004).
On March 18, 2005, and March 24, 2005, we issued supplemental
questionnaires and received Seed Timber's questionnaire responses on
April 7, 2005.
In accordance with 19 CFR 351.214(a), this new shipper review
covers only the exporter or producer for which a review was
specifically
[[Page 22849]]
requested. Accordingly, this new shipper review only covers subject
merchandise exported and produced by Seed Timber.
Scope of Order
The products covered by this order are softwood lumber, flooring
and siding (softwood lumber products). Softwood lumber products include
all products classified under subheadings 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/frn, 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 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 the
satisfaction of U.S. Customs and Border Protection (CBP) that the
lumber is of U.S. origin.
(6) Softwood lumber products contained in single family home
packages or kits,\2\ 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:
---------------------------------------------------------------------------
\2\ 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 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 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 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 4421.90.98.40;
[[Page 22850]]
7. Properly classified complete door frames;
8. Properly classified complete window frames;
9. Properly classified furniture.
In addition, this scope language was further clarified to 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.\3\ The
presumption of non-subject status can, however, be rebutted by evidence
demonstrating that the merchandise was substantially transformed in
Canada.
---------------------------------------------------------------------------
\3\ See scope clarification message 3034202, dated February 3,
2003, to CBP, concerning treatment of U.S.-origin lumber on file in
the Department's Central Records Unit (CFU), room B-099.
---------------------------------------------------------------------------
Company History
Seed Timber, located in the province of British Columbia, was
incorporated in July 2001, and commenced active operations in September
2001. Seed Timber purchases logs from various suppliers and then rents
either a sawmill or remanufacturing facility to custom cut the logs
into softwood lumber products, which the company sells directly to
customers in Canada and the United States. During the review period
(i.e., calendar year 2003) Seed Timber purchased Western Red Cedar
(WRC) Crown-origin logs from a number of suppliers. Until December 1,
2003, Seed Timber was affiliated with and cross-owned by Storey Creek
Trading Ltd. (Storey Creek), a log broker, also located in British
Columbia. Storey Creek reported that it does not and has never produced
or exported the subject merchandise.
Analysis of Programs
I. Program Preliminarily Determined To Be Countervailable
In the Final Results of Countervailing Duty Administrative Review
and Rescission of Certain Company-Specific Reviews: Certain Softwood
Lumber Products From Canada, 69 FR 75917 (December 20, 2004)) (Lumber
IV First Review Final), we found the Government of British Columbia's
(GOBC) stumpage program to be countervailable. Specifically, we found
that the GOBC's stumpage program constitutes a financial contribution
in the form of a provision of a good within the meaning of section
771(5)(D)(iii) of the Act; is specific under section 771(5A)(D)(iii)(I)
of the Act because the provincial stumpage subsidy program is used by a
limited number of enterprises; and conferred benefits through the
provision of a good for less than adequate remuneration under section
771(5)(E)(iv) of the Act. In addition, we determined that the stumpage
and log markets are closely intertwined and therefore Crown stumpage
prices affect both stumpage and log prices. See Issues and Decision
Memorandum: Final Results of Administrative Review of Certain Softwood
Lumber Products from Canada (Lumber IV First Review Final Memorandum)
(December 13, 2004) at 14. No new information has been provided in this
review to warrant reconsideration of our earlier findings.
During the review period, Seed Timber purchased Crown-origin WRC
logs. Because of the Department's prior findings that Crown logs are
subsidized, we have reason to believe that those purchases may have
provided Seed Timber with a ``competitive benefit'' within the meaning
of section 771A(b) of the Act. Therefore, we undertook to evaluate
whether a competitive benefit was, in fact, bestowed on Seed Timber.
To determine whether a competitive benefit exists, section
351.523(c)(1) of the CVD Regulations states that the Department will
compare the price for the subsidized input product (i.e., logs) to a
benchmark input price and outlines five benchmark input price
alternatives in order of preference. Based on information available to
the Department for these preliminary results, we are using, under tier
(v) of the benchmark hierarchy,\4\ U.S. log prices for WRC as the
appropriate benchmark input price. See the April 25, 2005, Memorandum
to Barbara E. Tillman, Acting Deputy Assistant Secretary, Import
Administration, from Melissa G. Skinner, Director, AD/CVD Operations,
Office 3, concerning Benchmark Input Price Hierarchy, which is on file
in the CRU. The U.S. log prices are from private transactions between
log sellers and sawmills for logs harvested from private lands and are
thus market-determined prices. Use of a U.S. log price benchmark is
also consistent with our approach in the Lumber IV First Review Final
Memorandum (see pages 16-18).
---------------------------------------------------------------------------
\4\ Tier (v) permits the use of a surrogate price deemed
appropriate by the Secretary. See section 351.523(c)(1)(v) of the
Department's Regulations.
---------------------------------------------------------------------------
Specifically, we have selected U.S. Pacific Northwest log prices
for WRC as an appropriate benchmark to evaluate whether a competitive
benefit was bestowed on Seed Timber through the purchase of Crown-
origin WRC from various B.C. log suppliers. We obtained U.S. log prices
for WRC for calendar year 2003, from publicly available materials,
which are on the record of this new shipper review. See the April 20,
2005, Memorandum to the File concerning U.S. Log Price Data.\5\
---------------------------------------------------------------------------
\5\ This public document is available in the public file in the
CRU.
---------------------------------------------------------------------------
Based on our analysis, we preliminarily find that Seed Timber
received a competitive benefit through its purchase of Crown-origin
logs because the price paid for those logs was lower than the benchmark
U.S. log price and that the subsidized logs (the only input product for
the production of softwood lumber) had a significant effect on Seed
Timber's cost of producing subject merchandise. Therefore, in
accordance with section 771A of the Act, we preliminarily determine
that Seed Timber received countervailable subsidies in 2003.
To calculate the countervailable benefit conferred on Seed Timber,
we multiplied the calculated price differential between benchmark log
price and the price Seed Timber paid for the Crown-origin logs by the
volume of the Crown-origin logs purchased. We then expensed the total
benefit bestowed on Seed Timber in the year of receipt, i.e., the year
in which the logs were purchased and entered a sawmill for processing.
As in Lumber IV First Review Final, we did not include in our
calculation logs which Seed Timber acquired and resold without any
processing (i.e., logs that did not enter a sawmill). Also, consistent
with our approach in the expedited reviews, we calculated a subsidy
rate which applies only to the softwood lumber produced by Seed Timber
by dividing the benefit by the appropriate value of Seed Timber's sales
(i.e., scope and non-scope softwood lumber products and softwood lumber
by-products, net of resales). See, e.g., Issues and Decision
Memorandum: Final Results of Expedited Review of Companies Covered by
the May 8, 2003, Notice of Preliminary Results and Partial Rescission
of Countervailing Duty Expedited Review (March 9, 2004) at 3. On this
basis, we preliminarily determine a net countervailable subsidy of 2.22
percent ad valorem for Seed Timber.
[[Page 22851]]
II. Programs Preliminarily Determined To Be Not Used
Seed Timber and its previously affiliated company, Storey Creek,
reported that they did not apply for, use, or benefit from the programs
listed below; therefore, we preliminarily determine that neither
company used these programs.
A. Non-Stumpage Programs of the GOBC
1. Grants, Loans, and Loan Guarantees Provided from Forest Renewal
BC
2. Payments Associated with Tenure Reclamation
3. Land-Base Investment Program
4. Forestry Innovation Investment Program
5. Allowances for Harvesting Beetle-Infested Timber
6. Tax Breaks for Timber Harvesters on Private Timber Land
B. Non-Stumpage Programs of the Federal Government of Canada
1. Non-Repayable Grants and Conditionally Repayable Contributions
from the Department of Western Economic Diversification
2. Workers Assistance Packages
3. Softwood Marketing Subsidies
4. Litigation Related Payments to Lumber Trade Associations
Preliminary Results of New Shipper Review
In accordance with section 751(a)(2)(B)(i) of the Act, we have
determined an individual rate for the exporter or producer of the
subject merchandise participating in this new shipper review. We
preliminarily determine the total net countervailable subsidy rate to
be:
------------------------------------------------------------------------
Producer/exporter Net subsidy rate
------------------------------------------------------------------------
Seed Timber Co. Ltd....................... 2.22 percent ad valorem
------------------------------------------------------------------------
If the final results of this new shipper review remain the same as
these preliminary results, the Department will instruct CBP within 41
days of publication of the final results of this review, to liquidate
shipments of the subject merchandise produced or exported by Seed
Timber entered, or withdrawn from warehouse, for consumption from
January 1, 2003, through December 31, 2003, at 2.22 percent ad valorem
of the f.o.b. invoice price. The Department also intends to instruct
CBP to collect cash deposits of estimated countervailing duties at 2.22
percent ad valorem of the f.o.b. invoice price on all shipments of the
subject merchandise from Seed Timber entered, or withdrawn from
warehouse, for consumption on or after the date of publication of the
final results of this new shipper review.
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. Case briefs must be submitted within 30 days after the date of
publication of this notice, and rebuttal briefs, limited to arguments
raised in case briefs, must be submitted no later than five days after
the time limit for filing case briefs. 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).
Also, pursuant to 19 CFR 351.310(c), within 30 days of the date of
publication of this notice, interested parties may request a public
hearing on arguments to be raised in the case and rebuttal briefs.
Unless the Secretary specifies otherwise, the hearing, if requested,
will be held two days after the date of submission of rebuttal briefs,
that is, thirty-seven days after the date of publication of these
preliminary results. 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 issue and publish the final results of this
review, which will include the results of its analysis of issues raised
in any case or rebuttal brief, or at a hearing, if requested within 90
days of publication of these preliminary results.
This review and notice is issued and published in accordance with
sections 751(a) and 777(i)(1) of the Act.
Dated: April 26, 2005.
Barbara E. Tillman,
Acting Assistant Secretary for Import Administration.
[FR Doc. E5-2147 Filed 5-2-05; 8:45 am]