72 FR 60645, October 25, 2007
DEPARTMENT OF COMMERCE
International Trade Administration
[C-570-907]
Coated Free Sheet Paper from the People's Republic of China:
Final Affirmative Countervailing Duty Determination
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce (Department) has made a final
determination that countervailable subsidies are being provided to
producers and exporters of coated free sheet (CFS) paper from the
People's Republic of China. For information on the estimated
countervailing duty rates, please see the ``Suspension of Liquidation''
section, below.
EFFECTIVE DATE: October 25, 2007.
FOR FURTHER INFORMATION CONTACT: David Layton or David Neubacher, AD/
CVD Operations, Office 1, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0371 or (202) 482-5823, respectively.
SUPPLEMENTARY INFORMATION:
Petitioner
The petitioner in this investigation is the NewPage Corporation
(petitioner).
Period of Investigation
The period for which we are measuring subsidies, or period of
investigation, is January 1, 2005, through December 31, 2005.
Case History
The following events have occurred since the announcement of the
preliminary determination on March 30, 2007, and subsequent publication
in the Federal Register on April 9, 2007. See Coated Free Sheet Paper
from the People's Republic of China: Amended Affirmative Preliminary
Countervailing Duty Determination, 72 FR 17484 (April 9, 2007)
(Preliminary Determination).
On April 9, 2007, Gold East Paper (Jiangsu) Co., Ltd. (GE) and the
petitioner submitted ministerial error allegations relating to the
Preliminary Determination. We addressed these ministerial error
allegations in a May 11, 2007, memorandum to Stephen J. Claeys, Deputy
Assistant Secretary for Import Administration, entitled Ministerial
Error Allegations, which is on file in the Central Records Unit (CRU),
Room B-099 of the main Department building.
On April 12, 2007, the Department requested that GE amend the
bracketing and resubmit its March 9, 2007, supplemental questionnaire
response, which GE did on April 17, 2007.
We issued a supplemental questionnaire to the Government of the
People's Republic of China (GOC) on April 23, 2007, and to GE and
Shandong Chenming Paper Holdings Ltd. (Shandong Chenming) on April 20,
2007. We received the GOC's supplemental questionnaire response on May
13, 2007, Shandong Chenming's supplemental questionnaire response on
May 18, 2007, and GE's supplemental response on May 25, 2007. On May
25, 2007, we issued a supplemental questionnaire to Shandong Chenming,
but did not receive a response. The GOC, GE, the petitioner, and
interested parties also submitted factual information, comments, and
arguments at numerous instances prior to the final determination based
on various deadlines for submissions of factual information and/or
arguments established by the Department subsequent to the Preliminary
Determination.
On May 2, 2007, the Department published notification of alignment
of the final determinations in the antidumping and countervailing duty
investigations of CFS paper from the People's Republic of China (PRC).
See Coated Free Sheet Paper from Indonesia, the People's Republic of
China, and the Republic of Korea: Alignment of Final Countervailing
Duty Determinations with Final Antidumping Duty Determinations, 72 FR
24277 (May 2, 2007). The Department subsequently postponed the final
determinations for the antidumping and countervailing investigations of
CFS paper from the PRC. See Preliminary Determination of Sales at Less
Than Fair Value and Postponement of Final Determination: Coated Free
Sheet Paper from the People's Republic of China, 72 FR 30758 (June 4,
2007).
On June 13, 2007, we received a letter from Shandong Chenming
withdrawing its participation in the investigation and requesting that
all of its business proprietary information be removed from the record
and destroyed. On June 27, 2007, the Department notified Shandong
Chenming that it had
[[Page 60646]]
removed and destroyed the company's submitted proprietary information
from the record of this investigation and would direct all interested
parties under the Administrative Protective Order (APO) to certify its
destruction. All interested parties certified destruction of Shandong
Chenming's proprietary information.
From July 11 to July 28, 2007, we conducted verification of the
questionnaire responses submitted by the GOC and GE.
On August 30, 2007, we issued our preliminary determination
regarding the creditworthiness of GE and its cross-owned companies. We
addressed our preliminary findings in a August 30, 2007, memorandum to
David M. Spooner, Assistant Secretary for Import Administration,
entitled Preliminary Creditworthiness Determination for Gold East Paper
(Jiangsu) Co., Ltd. and its Cross-Owned Companies, which is on file in
the CRU.
We received case briefs from the GOC; GE; the petitioner; and the
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied
Industrial and Service Workers International Union, AFL-CIO-CLC on
September 7, 2007. The same parties submitted rebuttal briefs on
September 12, 2007. We held a hearing for this investigation on
September 18, 2007.
Scope of the Investigation
The merchandise covered by this investigation includes coated free
sheet paper and paperboard of a kind used for writing, printing or
other graphic purposes. Coated free sheet paper is produced from not-
more-than 10 percent by weight mechanical or combined chemical/
mechanical fibers. Coated free sheet paper is coated with kaolin (China
clay) or other inorganic substances, with or without a binder, and with
no other coating. Coated free sheet paper may be surface-colored,
surface-decorated, printed (except as described below), embossed, or
perforated. The subject merchandise includes single- and double-side-
coated free sheet paper; coated free sheet paper in both sheet or roll
form; and is inclusive of all weights, brightness levels, and finishes.
The terms ``wood free'' or ``art'' paper may also be used to describe
the imported product.
Excluded from the scope are: (1) coated free sheet paper that is
imported printed with final content printed text or graphics; (2) base
paper to be sensitized for use in photography; and (3) paper containing
by weight 25 percent or more cotton fiber.
Coated free sheet paper is classifiable under subheadings
4810.13.1900, 4810.13.2010, 4810.13.2090, 4810.13.5000, 4810.13.7040,
4810.14.1900, 4810.14.2010, 4810.14.2090, 4810.14.5000, 4810.14.7040,
4810.19.1900, 4810.19.2010, and 4810.19.2090 of the Harmonized Tariff
Schedule of the United States (HTSUS). While HTSUS subheadings are
provided for convenience and customs purposes, our written description
of the scope of these investigations is dispositive.
Scope Comments
On August 20, August 28, and September 10, 2007, the petitioner
requested that the Department clarify the scope of the antidumping and
countervailing duty investigations of CFS paper from Indonesia, Korea
and the People's Republic of China. Specifically, the petitioner asked
the Department to ``clarify that the scope of the investigation
includes coated free sheet paper containing hardwood BCTMP.''
Because this was a general issue pertaining to all six
investigations, the Department set up a general issues file to handle
this scope request. A hearing on the scope request was held on
September 26, 2007. The hearing comprised a public session, a closed
session for the antidumping investigation from Korea, and a closed
session for the countervailing duty investigation from the PRC. After
considering the comments submitted by the parties to these
investigations, we have determined not to adopt the scope clarification
sought by the petitioner. See Memorandum to Stephen J. Claeys, Deputy
Assistant Secretary for Import Administration, entitled ``Scope
Clarification Request: NewPage Corporation,'' dated concurrently with
this notice, which is appended to the ``Issues and Decision Memorandum
for Final Determination'' from Stephen J. Claeys, Deputy Assistant
Secretary for Import Administration, to David M. Spooner, Assistant
Secretary for Import Administration, dated October 17, 2007 (Decision
Memorandum).
Analysis of Comments Received
All issues raised in the case and rebuttal briefs by parties to this
investigation are addressed in the Decision Memorandum, which is hereby
adopted by this notice. Attached to this notice as an Appendix is a list
of the issues that parties have raised and to which we have responded in
the Decision Memorandum. Parties can find a complete discussion of all
issues raised in this investigation and the corresponding recommendations
in this public memorandum, which is on file in the CRU. In addition, a
complete version of the Decision Memorandum can be accessed directly on
the Internet at https://enforcement.trade.gov/frn/. The paper copy and electronic
version of the Decision Memorandum are identical in content.
Use of Adverse Facts Available
Sections 776(a)(1) and (2) of the Act provide that the Department
shall apply ``facts otherwise available'' if, inter alia, necessary
information is not on the record or an interested party or any other
person: (A) withholds information that has been requested; (B) fails to
provide information within the deadlines established, or in the form
and manner requested by the Department, subject to subsections (c)(1)
and (e) of section 782 of the Act; (C) significantly impedes a
proceeding; or (D) provides information that cannot be verified as
provided by section 782(i) of the Act.
Where the Department determines that a response to a request for
information does not comply with the request, section 782(d) of the Act
provides that the Department will so inform the party submitting the
response and will, to the extent practicable, provide that party the
opportunity to remedy or explain the deficiency. If the party fails to
remedy the deficiency within the applicable time limits and subject to
section 782(e) of the Act, the Department may disregard all or part of
the original and subsequent responses, as appropriate. Section 782(e)
of the Act provides that the Department ``shall not decline to consider
information that is submitted by an interested party and is necessary
to the determination but does not meet all applicable requirements
established by the administering authority'' if the information is
timely, can be verified, is not so incomplete that it cannot be used,
and if the interested party acted to the best of its ability in
providing the information. Where all of these conditions are met, the
statute requires the Department to use the information if it can do so
without undue difficulties.
Section 776(b) of the Act further provides that the Department may
use an adverse inference in applying the facts otherwise available when
a party has failed to cooperate by not acting to the best of its
ability to comply with a request for information. Section 776(b) of the
Act also authorizes the Department to use as adverse facts available
(AFA) information derived from the petition, the final determination, a
previous administrative review, or other information placed on the
record.
[[Page 60647]]
Section 776(c) of the Act provides that, when the Department relies
on secondary information rather than on information obtained in the
course of an investigation or review, it shall, to the extent
practicable, corroborate that information from independent sources that
are reasonably at its disposal. Secondary information is defined as
``[i]nformation derived from the petition that gave rise to the
investigation or review, the final determination concerning the subject
merchandise, or any previous review under section 751 concerning the
subject merchandise.'' See Statement of Administrative Action (SAA)
accompanying the Uruguay Round Agreements Act, H. Doc. No. 316, 103d
Cong., 2d Session at 870 (1994). Corroborate means that the Department
will satisfy itself that the secondary information to be used has
probative value. See SAA at 870. To corroborate secondary information,
the Department will, to the extent practicable, examine the reliability
and relevance of the information to be used. The SAA emphasizes,
however, that the Department need not prove that the selected facts
available are the best alternative information. See SAA at 869.
The Department has concluded that it is appropriate to base the
final determination for Shandong Chenming on facts otherwise available.
Shandong Chenming failed to respond fully to the Department's
questionnaires and did not respond at all to one questionnaire. Also,
on June 13, 2007, Shandong Chenming withdrew its proprietary
information from the record. Thus, Shandong Chenming withheld
information requested by the Department. Consequently, the use of facts
otherwise available is warranted under section 776(a)(2)(A) of the Act.
In selecting from among the facts available, the Department has
determined that an adverse inference is warranted, pursuant to section
776(b) of the Act because, in addition to not fully responding to all
of our requests for information, as of June 13, 2007, Shandong Chenming
withdrew from all participation in the investigation and did not
provide the Department with the opportunity to verify the information
it did submit. Thus, Shandong Chenming failed to cooperate by not
acting to the best of its ability, and our final determination is based
on total AFA.
Selection of the Adverse Facts Available Rate
In deciding which facts to use as AFA, section 776(b) of the Act
and 19 CFR 351.308(c)(1) authorize the Department to rely on
information derived from (1) the petition, (2) a final determination in
the investigation, (3) any previous review or determination, or (4) any
information placed on the record. It is the Department's practice to
select, as AFA, the highest calculated rate in any segment of the
proceeding. See, e.g., Certain In-shell Roasted Pistachios from the
Islamic Republic of Iran: Final Results of Countervailing Duty
Administrative Review, 71 FR 66165 (November 13, 2006), and
accompanying Issues and Decision Memorandum at ``Analysis of
Programs.''
The Department's practice when selecting an adverse rate from among
the possible sources of information is to ensure that the margin is
sufficiently adverse ``as to effectuate the purpose of the facts
available role to induce respondents to provide the Department with
complete and accurate information in a timely manner.'' See Notice of
Final Determination of Sales at Less than Fair Value: Static Random
Access Memory Semiconductors From Taiwan; 63 FR 8909, 8932 (February
23, 1998). The Department's practice also ensures ``that the party does
not obtain a more favorable result by failing to cooperate than if it
had cooperated fully.'' See SAA at 870. In choosing the appropriate
balance between providing a respondent with an incentive to respond
accurately and imposing a rate that is reasonably related to the
respondent's prior commercial activity, selecting the highest prior
margin ``reflects a common sense inference that the highest prior
margin is the most probative evidence of current margins, because, if
it were not so, the importer, knowing of the rule, would have produced
current information showing the margin to be less.'' See Rhone Poulenc,
Inc. v. United States, 899 F. 2d 1185, 1190 (Fed. Cir. 1990).
For these reasons the Department is relying on the highest
calculated final subsidy rates for income tax, VAT, and policy lending
programs of the other producer/exporter of the subject merchandise in
this investigation, GE, to calculate the AFA rate for Shandong
Chenming. We do not need to corroborate these rates because they are
not considered secondary information as they are based on information
obtained in the course of this investigation, pursuant to section
776(c) of the Act.
Suspension of Liquidation
In accordance with section 705(c)(1)(B)(i)(I) of the Act, we have
calculated an individual rate for the companies under investigation, GE
and Shandong Chenming. According to section 705(c)(5)(A)(i) of the Act,
the Department excludes any rates determined entirely under section 776
of the Act. As Shandong Chenming's rate was calculated under section
776 of the Act, we have used the rate for GE as the ``all others''
rate.
------------------------------------------------------------------------
Net
Exporter/Manufacturer Subsidy
Rate
------------------------------------------------------------------------
Gold East Paper (Jiangsu) Co., Ltd............................ 7.40
[percnt]
Shandong Chenming Paper Holdings Ltd.......................... 44.25
[percnt]
All Others.................................................... 7.40
[percnt]
------------------------------------------------------------------------
As a result of our Preliminary Determination and pursuant to
section 703(d) of the Act, we instructed the U.S. Customs and Border
Protection (CBP) to suspend liquidation of all entries of coated free
sheet paper from the PRC which were entered or withdrawn from
warehouse, for consumption on or after April 9, 2007, the date of the
publication of the Preliminary Determination in the Federal Register.
In accordance with section 703(d) of the Act, we instructed CBP to
discontinue the suspension of liquidation for countervailing duty
purposes for subject merchandise entered on or after August 7, 2007,
but to continue the suspension of liquidation of entries made from
April 9, 2007, through August 7, 2007.
We will issue a countervailing duty order and reinstate the
suspension of liquidation under section 706(a) of the Act if the
International Trade Commission (ITC) issues a final affirmative injury
determination, and will require a cash deposit of estimated
countervailing duties for such entries of merchandise in the amounts
indicated above. If the ITC determines that material injury, or threat
of material injury, does not exist, this proceeding will be terminated
and all estimated duties deposited or securities posted as a result of
the suspension of liquidation will be refunded or canceled.
ITC Notification
In accordance with section 705(d) of the Act, we will notify the
ITC of our determination. In addition, we are making available to the
ITC all non-privileged and non-proprietary information related to this
investigation. We will allow the ITC access to all privileged and
business proprietary information in our files, provided the ITC
confirms that it will not disclose such information, either publicly or
under an APO, without the written consent of the Assistant Secretary
for Import Administration.
[[Page 60648]]
Return or Destruction of Proprietary Information
In the event that the ITC issues a final negative injury
determination, this notice will serve as the only reminder to parties
subject to an administrative protective order (APO) of their
responsibility concerning the destruction of proprietary information
disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely
written notification of the return/destruction of APO materials or
conversion to judicial protective order is hereby requested. Failure to
comply with the regulations and terms of an APO is a violation which is
subject to sanction.
This determination is published pursuant to sections 705(d) and
777(i) of the Act.
Dated: October 17, 2007.
David M. Spooner,
Assistant Secretary for Import Administration.
Appendix
List of Comments and Issues in the Decision Memorandum
Comment 1: Applicability of the CVD Law to China
Comment 2: The Administrative Procedures Act (APA) Claim
Comment 3: The Department's Justification for its Change in Practice from
Sulfanilic Acid from Hungary
Comment 4: China's WTO Accession Protocol
Comment 5: Retroactive Application of the CVD Law to China
Comment 6: Comparison of the Department's Findings in the Georgetown Memo
and the August 30 Market Economy Status Memo
Comment 7: Application of Adverse Facts Available to the GOC
Comment 8: Policy Lending
Comment 9: Countervailability of Foreign-denominated Loans
Comment 10: Benchmark for Policy Lending
Comment 11: Adjustment for Long-term Interest Rate Benchmark
Comment 12: Creditworthiness of GE and its Cross-owned Companies
Comment 13: Application of a Risk Premium to the Short-term Loan Benchmark
Comment 14: Specificity of Programs for FIEs
Comment 15: Over-calculation of the Two Free/Three Half Benefit
Comment 16: Specificity of VAT Programs
Comment 17: Attribution of GHS' Subsidies to GE
Comment 18: Attribution of Subsidies Bestowed on Input Suppliers
Comment 19: Whether the Department's Cross-ownership Regulations Provide
for the Attribution of Upstream Subsidies to Cross-owned Companies
Comment 20: Attribution of Subsidies Bestowed on the Forestry
Companies to CFS
Comment 21: Rate Adjustment for GE's Ad Valorem Subsidy Rate
Comment 22: Subsidies to Forestry Companies Discovered After the
Preliminary Determination
Comment 23: Correction to GE's Domestic Sales Value
Comment 24: Application of Adverse Facts Available to Chenming
Comment 25: Certification of Non-Reimbursement of Duties
[FR Doc. E7-21046 Filed 10-24-07; 8:45 am]
BILLING CODE 3510-DS-S