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\
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    \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subsequently rescinded as a result of the company's withdrawal of 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).
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    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:
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    \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.
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    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.
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    \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.
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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).
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    \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.
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    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\
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    \5\ This public document is available in the public file in the 
CRU.
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    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
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    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]