Initiation of Antidumping Duty Investigations: Certain Lined Paper Products From India, Indonesia, and the People's Republic of China, 58374-58381 [E5-5515]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 70, Number 193 (Thursday, October 6, 2005)]
[Notices]
[Pages 58374-58381]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-5515]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-533-843, A-560-818 and A-570-901]


Initiation of Antidumping Duty Investigations: Certain Lined 
Paper Products From India, Indonesia, and the People's Republic of 
China

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

DATES: Effective October 6, 2005.

FOR FURTHER INFORMATION CONTACT: Christopher Hargett (India), Brandon 
Farlander (Indonesia), or Charles Riggle (People's Republic of China), 
AD/CVD Operations, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
4161, (202) 482-0182 and (202) 482-0650, respectively.

Initiation of Investigations

The Petitions

    On September 9, 2005, the Department of Commerce (``the 
Department'') received Petitions (``the Petitions'') concerning imports 
of certain lined paper products (``CLPP'') from India, Indonesia, and 
the People's Republic of China (``PRC'') filed in proper form by the 
Association of American School Paper Suppliers and its individual 
members (MeadWestvaco Corporation; Norcom, Inc.; and Top Flight, Inc.) 
(``Petitioner'') on behalf of the domestic industry and workers

[[Page 58375]]

producing CLPP. On September 21, 2005, the Department issued a memo 
clarifying that the official filing date of the Petitions was September 
9, 2005. See Memorandum from the Team to Acting Deputy Assistant 
Secretary Barbara Tillman: Decision Memorandum Concerning Filing Date 
of Petitions, September 21, 2005. The period of investigation (``POI'') 
for India and Indonesia is July 1, 2004, through June 30, 2005. The POI 
for the PRC is January 1, 2005, through June 30, 2005.
    In accordance with section 732(b) of the Tariff Act of 1930, as 
amended (``the Act''), Petitioner alleged that imports of CLPP from 
India, Indonesia and the PRC are being, or are likely to be, sold in 
the United States at less than fair value within the meaning of section 
731 of the Act, and that such imports are materially injuring and 
threaten to injure an industry in the United States.

Scope of Investigations

    See Scope Appendix.

Comments on Scope of Investigations

    During our review of the Petitions, we discussed the scope with 
Petitioner to ensure that it accurately reflects the product for which 
the domestic industry is seeking relief. Moreover, as discussed in the 
preamble to the Department's regulations, we are setting aside a period 
for interested parties to raise issues regarding product coverage. See 
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27323 (May 19, 1997). The Department encourages all interested parties 
to submit such comments within 20 calendar days of publication of this 
initiation notice. Comments should be addressed to Import 
Administration's Central Records Unit in Room 1870, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230--Attention: James Terpstra. The period of scope consultations is 
intended to provide the Department with ample opportunity to consider 
all comments and consult with interested parties prior to the issuance 
of the preliminary determinations.

Determination of Industry Support for the Petitions

    Section 732(b)(1) of the Act requires that a petition be filed by 
or on behalf of the domestic industry. In order to determine whether a 
petition has been filed by or on behalf of the industry, the 
Department, pursuant to section 732(c)(4)(A) of the Act, determines 
whether a minimum percentage of the relevant industry supports the 
petition. A petition meets this requirement if the domestic producers 
or workers who support the petition account for: (i) At least 25 
percent of the total production of the domestic like product; and (ii) 
more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition. Moreover, section 732(c)(4)(D) of the Act 
provides that, if the petition does not establish support of domestic 
producers or workers accounting for more than 50 percent of the total 
production of the domestic like product, the Department shall: (i) Poll 
the industry or rely on other information in order to determine if 
there is support for the petition, as required by subparagraph (A), or 
(ii) determine industry support using a statistically valid sampling 
method.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether a 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who produce the domestic 
like product. The International Trade Commission (``ITC''), which is 
responsible for determining whether ``the domestic industry'' has been 
injured, must also determine what constitutes a domestic like product 
in order to define the industry. While both the Department and the ITC 
must apply the same statutory definition regarding the domestic like 
product (section 771(10) of the Act), they do so for different purposes 
and pursuant to a separate and distinct authority. In addition, the 
Department's determination is subject to limitations of time and 
information. Although this may result in different definitions of the 
like product, such differences do not render the decision of either 
agency contrary to law. See USEC, Inc. v. United States, 132 F. Supp. 
2d 1, 8 (CIT 2001), citing Algoma Steel Corp. Ltd. v. United States, 
688 F. Supp. 639, 644 (1988), aff'd 865 F.2d 240 (Fed. Cir. 1989), 
cert. denied 492 U.S. 919 (1989).
    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation,'' (i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition).
    With regard to the domestic like product, Petitioner does not offer 
a definition of domestic like product distinct from the scope of the 
investigation. See Indonesia Initiation Checklist, India Initiation 
Checklist, and PRC Initiation Checklist at Attachment II (Industry 
Support). Based on our analysis of the information submitted in the 
Petitions we have determined there is a single domestic like product, 
certain lined paper products, which is defined further in the Scope 
Appendix below, and we have analyzed industry support in terms of that 
domestic like product.
    Our review of the data provided in the Petitions and other 
information readily available to the Department indicates that 
Petitioner has established industry support representing at least 25 
percent of the total production of the domestic like product; and more 
than 50 percent of the production of the domestic like product produced 
by that portion of the industry expressing support for or opposition to 
the Petitions, requiring no further action by the Department pursuant 
to section 732(c)(4)(D) of the Act. In addition, the Department 
received no opposition to the Petitions from domestic producers of the 
like product.\1\ Therefore, the domestic producers (or workers) who 
support the Petitions account for at least 25 percent of the total 
production of the domestic like product, and the requirements of 
section 732(c)(4)(A)(i) of the Act are met. Furthermore, the domestic 
producers who support the Petitions account for more than 50 percent of 
the production of the domestic like product produced by that portion of 
the industry expressing support for, or opposition to, the Petitions. 
Thus, the requirements of section 732(c)(4)(A)(ii) of the Act also are 
met. Accordingly, the Department determines that the Petitions were 
filed on behalf of the domestic industry within the meaning of section 
732(b)(1) of the Act. See Indonesia Initiation Checklist, India 
Initiation Checklist, and PRC Initiation Checklist at Attachment II 
(Industry Support).
    The Department finds that Petitioner filed the Petitions on behalf 
of the domestic industry because it is an interested party as defined 
in section 771(9)(E) and (F) of the Act and it has demonstrated 
sufficient industry support with respect to the antidumping 
investigations that it is requesting the Department initiate. See 
Indonesia Initiation Checklist, India Initiation Checklist, and PRC 
Initiation Checklist at Attachment II (Industry Support).

U.S. Price and Normal Value
---------------------------------------------------------------------------

    \1\ The Department did receive a challenge to industry support 
in the PRC case. See Indonesia Initiation Checklist, India 
Initiation Checklist, and PRC Initiation Checklist at Attachment II 
(Industry Support).
---------------------------------------------------------------------------

    The following is a description of the allegation of sales at less 
than fair value

[[Page 58376]]

upon which the Department based its decision to initiate these 
investigations on India, Indonesia, and the PRC. The sources of data 
for the deductions and adjustments relating to the U.S. price, home-
market price (India and Indonesia), constructed value (India and 
Indonesia), and the factors of production (PRC only) are also discussed 
in the country-specific Initiation Checklist. See Indonesia Initiation 
Checklist, India Initiation Checklist, and PRC Initiation Checklist. 
Should the need arise to use any of this information as facts available 
under section 776 of the Act in our preliminary or final 
determinations, we will reexamine the information and may revise the 
margin calculations, if appropriate.

India

Export Price (``EP'')

    Petitioner based U.S. price on transaction information from the 
Port Import-Export Reporting Service (``PIERS'') data intelligence 
service for two Indian producers/exporters of CLPP. Petitioner based 
U.S. price on export price because it stated that Indian producers/
exporters typically sell either directly to a distributor or retailer 
in the United States or through an unaffiliated trading company to 
unrelated distributors or retailers in the United States. In addition, 
the quoted sales offers are made to the unrelated customers for 
purchase prior to importation. See Petition Volume II at pages 2-4. 
Petitioner calculated EP based on the sale of notebooks manufactured in 
India by Kejriwal Paper Ltd. (``Kejriwal'') and the sale of filler 
paper manufactured in India by Navneet Publications (India) Ltd. 
(``Navneet''), both free on board (``FOB'') foreign port. In terms of 
movement charges, Petitioner deducted from U.S. price the domestic 
freight from the producers' factories to the ports of exportation, 
insurance fees, port charges, brokerage and handling fees associated 
with the transfer of goods to an ocean-going vessel, and document 
preparation fees. Id. at page 5 and Exhibit II-11. To be conservative, 
Petitioner stated that it made no downward adjustment for trading 
company commissions. Id. at page 3.

Normal Value (``NV'')

    To calculate NV, Petitioner provided a price quote for one size of 
packaged and lined filler paper, obtained through foreign market 
research regarding products manufactured by Navneet and offered for 
sale in the Indian market. See Petition Volume II at pages 10-11. This 
sale price was offered by Navneet without the involvement of a 
distributor or agent. Petitioner has not based normal value upon the 
ex-factory normal value for Kejriwal because the foreign market 
researcher found that Kejriwal is not involved in the sale of 
merchandise domestically. Petitioner stated that Kejriwal has dedicated 
its current production to producing and selling only to the United 
States market. See id.

Price-to-Constructed Value (``CV'') Comparisons

    Petitioner has provided information demonstrating reasonable 
grounds to believe or suspect that sales of CLPP in the home market 
were made at prices below the fully absorbed cost of production 
(``COP''), within the meaning of section 773(b) of the Act, and 
requested that the Department conduct a country-wide sales-below-cost 
investigation. Pursuant to section 773(b)(3) of the Act, COP consists 
of the cost of manufacturing (``COM''); selling, general, and 
administrative expenses (``SG&A''); financial expenses; and packing 
expenses. Petitioner calculated COM based on their own production 
experience, adjusted for known differences between costs incurred to 
produce CLPP in the United States and in India. Petitioner calculated 
the COM as the sum of raw materials, direct labor, and manufacturing 
overhead inclusive of energy and depreciation expenses. However, 
Petitioner calculated the manufacturing overhead ratio by dividing the 
manufacturing overhead amount inclusive of depreciation expense by the 
sum of raw materials, direct labor, and energy. Petitioner then applied 
this ratio to the sum of raw materials and direct labor to calculate 
the COM. Thus, Petitioner included energy in the denominator of the 
calculated overhead rate, which is not arithmetically consistent with 
the raw materials and direct labor to which it was applied. To correct 
this error, we recalculated the manufacturing overhead ratio by 
dividing the manufacturing overhead amount inclusive of energy and 
depreciation expenses by the sum of raw materials and direct labor, and 
applied this ratio to the sum of direct materials and direct labor to 
calculate the COM. As a result of changes to overhead and SG&A, the 
profit ratio also changed.
    To calculate SG&A and financial expenses, Petitioner relied upon 
amounts reported in Navneet's 2004 fiscal year financial statements, an 
Indian CLPP producer. In calculating the COP, Petitioner erroneously 
included certain items (e.g., rebates, discounts, transportation 
expenses etc.) in the SG&A expenses. Therefore, to avoid double 
counting, we revised the SG&A, inclusive of interest expense ratios, 
and recalculated the COP. See India Initiation Checklist. Based upon a 
comparison of the prices of the foreign like product in the home market 
to the recalculated COP of the product, we find reasonable grounds to 
believe or suspect that sales of the foreign like product were made 
below the COP, within the meaning of section 773(b)(2)(A)(i) of the 
Act. Accordingly, the Department is initiating a country-wide cost 
investigation.
    Pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, 
Petitioner also based NV for sales in India on CV. Petitioner 
calculated CV using the same COM, SG&A, and financial expense figures 
used to compute the Indian home market costs. Consistent with 773(e)(2) 
of the Act, Petitioner included in CV an amount for profit. See India 
Initiation Checklist.

Indonesia

Export Price

    Petitioner based U.S. price on EP, which was based on a sales 
quote. Petitioner also claims that Indonesian producers typically sell 
subject merchandise directly to a distributor or retailer in the United 
States or through an unaffiliated trading company to unrelated 
distributors or retailers in the United States. Petitioner also asserts 
that the sales quote it obtained is to unrelated customers for purchase 
prior to importation. See Petition Volume III at page 2. Petitioner 
claims that it was informed of this price through a common process of 
auction-style bidding between U.S. producers and Indonesian producers 
and/or exporters, as well as through monitoring of import manifests as 
collected through the PIERS service. See Petition Volume III at page 3. 
To be conservative, Petitioner stated that it made no downward 
adjustment for trading company commissions.
    Petitioner calculated an export price based upon transaction 
information concerning sales of CLPP produced in Indonesia. Because 
Petitioner believes that PT. Pabrik Kertas Tjiwi Kimia Tbk. (``Tjiwi 
Kimia'') was the primary manufacturer/exporter of CLPP to the United 
States during the POI, Petitioner calculated EP based upon sales of a 
specific type of filler paper sold by Tjiwi Kimia. See Petition Volume 
III at pages 3-4.
    Petitioner states that it was unable to obtain sales terms, but 
based upon its own experience, knows that CLPP is

[[Page 58377]]

quoted by Indonesian producers and exporters on a FOB export port 
basis. Petitioner notes that CLPP is also sold on a per unit basis. 
From the quoted transaction price, Petitioner deducted domestic freight 
from the producer's factory to the port of exportation, port charges, 
and brokerage and handling fees associated with the transfer of goods 
to an ocean-going vessel along with documentation fees. See Petition 
Volume III at pages 4-5. Although Petitioner also stated that it was 
deducting inland freight insurance, we see no evidence of this 
deduction in the Petition. In its September 22, 2005, submission, 
Petitioner provided a revised price quote, resulting in an adjusted EP. 
See the September 22, 2005, Supplemental Response at III-Suppl-1 and 
III-Suppl-9. See Indonesia Initiation Checklist.

Normal Value

    Petitioner calculated NV based upon information on sales or offers 
of sales in Indonesia of CLPP that are identical or similar to the 
imported product. See Petition at Exhibit III-3. Petitioner used quoted 
transaction prices of CLPP produced by Tjiwi Kimia and sold or offered 
for sale to customers in Indonesia. Petitioner notes that there are 
differences in the physical characteristics between the product sold in 
the United States and the product sold by Tjiwi Kimia in Indonesia. 
Petitioner states that these differences relate to paper size. 
Petitioner has accounted for these differences in sizes through a 
difference in merchandise adjustment. See Petition Volume III at page 
10 and at Exhibit III-21. All of the quoted prices for Indonesian home 
market sales are on a per unit basis. We have revised Petitioner's 
calculation of the exchange rate to be a simple average of daily 
exchange rates during the POI in accordance with our standard practice.
    Petitioner states that it does not have the information concerning 
delivery terms in the home market, but has assumed delivery to 
customers in Jakarta. Petitioner states that it deducted from this 
price inland freight charges from the Indonesian mill to their home 
market customers, and a distributor mark-up. In its submission, 
Petitioner notes that it was not able to obtain actual inland freight 
expenses incurred by Tjiwi Kimia in shipping to its home market 
customers, or by what method the subject merchandise was shipped. 
Therefore, Petitioner has used the average of the truck and rail 
freight rates as reported by the Department in its investigation of 
Carbon and Certain Alloy Steel Wire Rod From Ukraine. See Petition 
Volume III at page 10-11, and at Exhibit III-5, and 21. Petitioner 
states that, because neither Tjiwi Kimia, the Asia Pulp and Paper 
Group, nor their wholesalers, provided a price quote for sales in the 
home market when contacted, Petitioner instead contacted a distributor. 
Therefore, Petitioner has deducted a ten percent mark-up to reflect the 
``likely mark-up that a customer would likely incur in prices from a 
distributor.'' See Petition Volume III at page 12, and at Exhibit III-
13. Petitioner notes that NV was calculated in the manner above to be 
conservative. See Indonesia Initiation Checklist.

Cost of Production

    Petitioner has provided information demonstrating reasonable 
grounds to believe or suspect that sales of CLPP in the home market 
were made at prices below the fully absorbed COP, within the meaning of 
section 773(b) of the Act, and requested that the Department conduct a 
country-wide sales-below-cost investigation. Pursuant to section 
773(b)(3) of the Act, COP consists of COM; SG&A; financial expenses; 
and packing expenses. Petitioner calculated COM based on the production 
experience of a large U.S. CLPP producer, adjusted for known 
differences between costs incurred to produce CLPP in the United States 
and in Indonesia.
    Petitioner computed factory overhead costs (which are composed 
primarily of depreciation expenses) based on Tjiwi Kimia's parent 
company's 1999 consolidated financial statements. However, the parent 
company appears to be an integrated paper producer (i.e., manufactures 
the blank paper in rolls as well as the final CLPP product) and, as a 
result, appears to maintain a substantial amount of fixed assets for 
the production of blank paper in rolls. In Petitioner's calculation of 
COP, the factory overhead ratio (i.e., overhead expenses over the cost 
of goods sold) was applied to Tjiwi Kimia's total cost of 
manufacturing, which included the cost of blank paper in rolls, to 
obtain factory overhead costs. In order to avoid double-counting any 
factory overhead costs incurred by the paper producer in the paper 
production process that are included in the price of blank paper, we 
revised Petitioner's calculation of factory overhead costs by excluding 
factory overhead from the blank paper costs before applying the factory 
overhead ratio to COM.
    To calculate SG&A and financial expenses, Petitioner relied upon 
amounts reported in the 1999 consolidated financial statements of Tjiwi 
Kimia's parent company, Asia Pulp & Paper Co. Ltd.
    Based upon a comparison of the prices of the foreign like product 
in the home market to the calculated COP of the product, we find 
reasonable grounds to believe or suspect that sales of the foreign like 
product were made below the COP, within the meaning of section 
773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a 
country-wide cost investigation. See Indonesia Initiation Checklist.

Normal Value based on Constructed Value

    Pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, 
Petitioner also based NV on CV. We calculated CV using the same COM, 
SG&A, and financial expense figures used to compute the COP. Petitioner 
did not include an amount for profit in the calculation of CV, as 
permitted by 773(e)(2) of the Act, because the most recent data 
available (i.e., the parent company's 1999 consolidated financial 
statements) reflected a net loss. Therefore, Petitioner did not adjust 
CV to account for profit. Should the need arise to use the profit rate 
provided by Petitioner as facts available under section 776 of the Act 
in our preliminary or final determination, we will re-examine the 
information and may, if appropriate, revise the CV calculations. See 
Indonesia Initiation Checklist.

PRC

Export Price

    Petitioner based its U.S. prices on information regarding Chinese 
quoted offer prices as relayed by a U.S. customer. Petitioner based 
U.S. price on export price because it stated that Indian producers/
exporters typically sell either directly to a distributor or retailer 
in the United States or through an unaffiliated trading company to 
unrelated purchasers in the United States. The Department deducted from 
these prices the costs associated with exporting the product, including 
foreign port expense, inland insurance, and brokerage and handling. See 
PRC Initiation Checklist.

Normal Value

    Petitioner stated that the PRC is a non-market economy (``NME'') 
and no determination to the contrary has yet been made by the 
Department. In previous investigations, the Department has determined 
that the PRC is an NME. See Notice of Final Determination of Sales at 
Less Than Fair Value: Magnesium Metal from the People's

[[Page 58378]]

Republic of China, 70 FR 9037 (February 24, 2005), Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Tissue Paper 
Products from the People's Republic of China, 70 FR 7475 (February 14, 
2005), and Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Frozen and Canned Warmwater Shrimp from the People's 
Republic of China, 69 FR 70997 (December 8, 2004). In accordance with 
section 771(18)(C)(i) of the Act, the presumption of NME status remains 
in effect until revoked by the Department. The presumption of NME 
status for the PRC has not been revoked by the Department and remains 
in effect for purposes of the initiation of this investigation. 
Accordingly, the NV of the product is appropriately based on factors of 
production valued in a surrogate market-economy country in accordance 
with section 773(c) of the Act. In the course of this investigation, 
all parties will have the opportunity to provide relevant information 
related to the issues of the PRC's NME status and the granting of 
separate rates to individual exporters. Petitioner selected India as 
the surrogate country arguing that, pursuant to section 773(c)(4) of 
the Act, India is an appropriate surrogate because it is a market-
economy country that is at a comparable level of economic development 
to the PRC and is a significant producer and exporter of CLPP. See 
Petition Volume IV at pages 10-12. Based on the information provided by 
Petitioner, we believe that its use of India as a surrogate country is 
appropriate for purposes of initiating this investigation. After the 
initiation of the investigation, we will solicit comments regarding 
surrogate country selection. Also, pursuant to 19 CFR 351.301(c)(3)(i) 
of the Department's regulations, interested parties will be provided an 
opportunity to submit publicly available information to value factors 
of production within 40 days after the date of publication of the 
preliminary determination.
    Petitioner explained that the production process for CLPP involves 
drawing out large rolls of paper (i.e., ``web paper''), printing lines 
with a press machine, cutting it to desired size, and perforating the 
paper as necessary. See Petition Volume IV at 13. Petitioner stated 
that manufacturing of CLPP is extremely similar regardless of location 
and therefore its use of the U.S. producer's product-specific 
production costs and/or consumption rates represents the best 
information reasonably available to Petitioner at this time. See 
Petition Volume IV at 13-14. In building up the factors of production, 
Petitioner started with blank paper in rolls as the primary input in 
finished CLPP.
    Petitioner provided a dumping margin calculation using the 
Department's NME methodology as required by 19 CFR 351.202(b)(7)(i)(C). 
See Petition Volume IV at Exhibit IV-20; and September 22, 2005, First 
Supplement Exhibit IV-Supp-9; September 23, 2005, at Exhibit IV-Supp-2-
6; and September 27, 2005, at Exhibit IV-Supp-3-10. To determine the 
quantities of inputs used by the PRC producers to produce 150-count 
filler paper and 70-count spiral-bound notebooks, Petitioner relied on 
the production experience and actual consumption rates of a U.S. CLPP 
producer for the period January 2005 through June 2005. For composition 
books, Petitioner relied on its understanding of the ``step and 
repeat'' manufacturing process to estimate usage rates for the period 
July 1, 2004, through June 30, 2005.
    In accordance with section 773(c)(4) of the Act, Petitioner valued 
factors of production, where possible, on reasonably available, public 
surrogate country data. To value certain factors of production, 
Petitioner used Monthly Statistics of the Foreign Trade of India, as 
published by the Directorate General of Commercial Intelligence and 
Statistics of the Ministry of Commerce and Industry, Government of 
India. For more information see the PRC Initiation Checklist.
    For inputs valued in Indian rupees and not contemporaneous with the 
POI, Petitioner used information from the wholesale price indices in 
India as published by the International Monetary Fund in the 
International Financial Statistics to determine the appropriate 
adjustments for inflation. In addition, Petitioner made currency 
conversions, where necessary, based on the average rupee/U.S. dollar 
exchange rate for the POI as reported on the Department's Web site. The 
Department recalculated Petitioner's exchange rate for the POI to be a 
simple daily average. See PRC Initiation Checklist.
    The Department calculates and publishes the surrogate values for 
labor to be used in NME cases on its Web site. Therefore, to value 
labor, Petitioner used a labor rate of $0.85 per hour, in accordance 
with the Department's regulations. See 19 CFR 351.408(c)(3) and the 
September 27, 2005, submission at page 8. Petitioner stated that 
electricity was recorded in overhead and did not include packing costs. 
See Petition at Exhibit IV-13.
    Petitioner calculated surrogate financial ratios (overhead, SG&A, 
and profit) using information obtained from the Navneet 2003-2004 
Annual Report. See Petition Volume IV at page 19-21 and Exhibit IV-19. 
Navneet is an Indian producer of CLPP. In this case, the Department has 
accepted the financial information from the Navneet financial 
statements for the purposes of initiation, because these data appear to 
be the best information on such expenses currently available to 
Petitioner. However, the Department identified certain errors in 
Petitioner's calculations and has corrected these surrogate financial 
ratios as discussed below. Petitioner calculated the COM as the sum of 
raw materials, direct labor, and manufacturing overhead expenses 
inclusive of energy and depreciation expenses. However, Petitioner 
calculated the manufacturing overhead ratio by dividing the 
manufacturing overhead amount, as discussed above, by the sum of raw 
materials, direct labor, and energy. Petitioner then applied this ratio 
to the sum of raw materials and direct labor to calculate the COM. 
Thus, Petitioner erred in calculating the overhead amount included in 
the COM, by including energy in the denominator of the calculated 
overhead rate and then applying this rate to the sum of materials and 
direct labor. To correct this error, we recalculated the manufacturing 
overhead ratio by dividing the manufacturing overhead amount (inclusive 
of energy and depreciation expenses) by the sum of raw materials and 
direct labor, and applied this ratio to the sum of raw materials and 
direct labor to calculate the COM.
    To calculate the SG&A ratio and financial expenses, Petitioner 
relied upon amounts reported in Navneet's 2004 fiscal year financial 
statements. In calculating the SG&A ratio (which includes the interest 
expense ratio), Petitioner erroneously included certain items such as 
rebates, discounts, transportation expenses, etc. These items are 
generally accounted for elsewhere in our calculations. Therefore, to 
avoid double counting, we revised the SG&A ratio to exclude these 
items. As a result of these changes in the overhead and SG&A ratios, 
the profit ratio also changed. See PRC Initiation Checklist.
    The Department's practice in NME proceedings is to add to surrogate 
values based on import statistics a surrogate freight cost calculated 
using the shorter of the reported distance from the domestic supplier 
to the factory or the distance from the nearest seaport to the factory. 
This adjustment is in accordance with the Court of Appeals for the 
Federal Circuit's decision in

[[Page 58379]]

Sigma Corp. v. United States, 117 F. 3d 1401, 1408 (Fed. Cir. 1997). 
Here, Petitioner was unable to obtain the actual supplier distances to 
the Chinese producer, and did not adjust its NV calculation to include 
a freight expense for the raw material inputs. See Petition Volume IV 
at pages 15-16 and Exhibit IV-15. Therefore, we did not include the 
freight-in expense from Navneet's financial statement in the buildup of 
materials costs for purposes of calculating the surrogate financial 
ratios.

Fair Value Comparisons

    Based on the data provided by Petitioner, there is reason to 
believe that imports of CLPP from India, Indonesia and the PRC are 
being, or are likely to be, sold in the United States at less than fair 
value. Based on comparisons of EP (method derived from one price quote) 
to NV, calculated in accordance with section 773(a) of the Act, and of 
EP to CV, the range of the revised estimated dumping margins for CLPP 
from Indonesia is 77.06 percent to 118.63 percent. Based on comparisons 
of EP to NV, calculated in accordance with section 773(c) of the Act, 
the estimated revised weighted-average dumping margin for CLPP from the 
PRC is 258.21 percent. The estimated revised dumping margins for India 
based on a comparison of EP to recalculated CV ranged from 181.68 
percent to 215.93 percent.

Allegations and Evidence of Material Injury and Causation

    With regard to India, Indonesia and the PRC, Petitioner alleges 
that the U.S. industry producing the domestic like product is being 
materially injured, or is threatened with material injury, by reason of 
the individual and cumulated imports of the subject merchandise sold at 
less than NV. Petitioner contends that the industry's injured condition 
is illustrated by the decline in customer base, market share, domestic 
shipments, prices and profit. We have assessed the allegations and 
supporting evidence regarding material injury and causation, and we 
have determined that these allegations are properly supported by 
adequate evidence and meet the statutory requirements for initiation. 
See Indonesia Initiation Checklist, India Initiation Checklist, and PRC 
Initiation Checklist at Attachment III (Injury).

Separate Rates and Quantity and Value Questionnaire

    The Department recently modified the process by which exporters and 
producers may obtain separate-rate status in NME investigations. See 
Policy Bulletin 05.1: Separate-Rates Practice and Application of 
Combination Rates in Antidumping Investigations Involving Non-Market 
Economy Countries, (April 5, 2005), available on the Department's Web 
site at https://ia.ita.doc.gov/policy/bull05-1.pdf. The process now 
requires the submission of a separate-rate status application. Based on 
our experience in processing the separate rates applications in the 
antidumping duty investigations of Artists Canvas and Diamond Sawblades 
(see Initiation of Antidumping Duty Investigation: Certain Artist 
Canvas From the People's Republic of China, 70 FR 21996, 21999 (April 
28, 2005), and Initiation of Antidumping Duty Investigations: Diamond 
Sawblades and Parts Thereof from the People's Republic of China and the 
Republic of Korea, 70 FR 35623, 35629 (June 21, 2005)), we have 
modified the application for this investigation to make it more 
administrable and easier for applicants to complete. The specific 
requirements for submitting the separate-rates application in this 
investigation are outlined in detail in the application itself, which 
will be available on the Department's Web site at https://
ia.ita.doc.gov/ on the date of publication of this initiation notice in 
the Federal Register. Please refer to this application for all 
instructions.

Use of Combination Rates in an NME Investigation

    The Department will calculate combination rates for certain 
respondents that are eligible for a separate rate in this 
investigation. The Separate Rates and Combination Rates Bulletin, 
states:

    {w{time} hile continuing the practice of assigning separate 
rates only to exporters, all separate rates that the Department will 
now assign in its NME investigations will be specific to those 
producers that supplied the exporter during the period of 
investigation. Note, however, that one rate is calculated for the 
exporter and all of the producers which supplied subject merchandise 
to it during the period of investigation. This practice applies both 
to mandatory respondents receiving an individually calculated 
separate rate as well as the pool of non-investigated firms 
receiving the weighted-average of the individually calculated rates. 
This practice is referred to as the application of ``combination 
rates'' because such rates apply to specific combinations of 
exporters and one or more producers. The cash-deposit rate assigned 
to an exporter will apply only to merchandise both exported by the 
firm in question and produced by a firm that supplied the exporter 
during the period of investigation.

Separate Rates and Combination Rates Bulletin, at page 6.

Initiation of Antidumping Investigations

    Based upon our examination of the Petitions on CLPP, we find that 
these Petitions meet the requirements of section 732 of the Act. 
Therefore, we are initiating antidumping duty investigations to 
determine whether imports of CLPP are being, or are likely to be, sold 
in the United States at less than fair value. Unless postponed, we will 
make our preliminary determinations no later than 140 days after the 
date of these initiations.

Distribution of Copies of the Petitions

    In accordance with section 732(b)(3)(A) of the Act, copies of the 
public versions of the respective Petition has been provided to the 
Government of India, Government of Indonesia, and the Government of the 
PRC.

International Trade Commission Notification

    We have notified the ITC of our initiations, as required by section 
732(d) of the Act.

Preliminary Determination by the ITC

    The ITC will preliminarily determine, within 25 days after the date 
on which it receives notice of these initiations, whether there is a 
reasonable indication that imports of CLPP from India, Indonesia and 
the PRC are causing material injury, or threatening to cause material 
injury, to a U.S. industry. See section 733(a)(2) of the Act. A 
negative ITC determination will result in the investigations being 
terminated; otherwise, these investigations will proceed according to 
statutory and regulatory time limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: September 29, 2005.
Barbara E. Tillman,
Acting Assistant Secretary for Import Administration.

Scope Appendix

Scope of the Investigation

    The scope of this investigation includes certain lined paper 
products, typically school supplies,\2\ composed of or including paper 
that incorporates straight horizontal and/or vertical lines on ten or 
more paper sheets,\3\ including but not limited to such products as 
single- and multi-subject notebooks,

[[Page 58380]]

composition books, wireless notebooks, looseleaf or glued filler paper, 
graph paper, and laboratory notebooks, and with the smaller dimension 
of the paper measuring 6 inches to 15 inches (inclusive) and the larger 
dimension of the paper measuring 8\3/4\ inches to 15 inches 
(inclusive). Page dimensions are measured size (not advertised, stated, 
or ``tear-out'' size), and are measured as they appear in the product 
(i.e., stitched and folded pages in a notebook are measured by the size 
of the page as it appears in the notebook page, not the size of the 
unfolded paper). However, for measurement purposes, pages with tapered 
or rounded edges shall be measured at their longest and widest points. 
Subject lined paper products may be loose, packaged or bound using any 
binding method (other than case bound through the inclusion of binders 
board, a spine strip, and cover wrap). Subject merchandise may or may 
not contain any combination of a front cover, a rear cover, and/or 
backing of any composition, regardless of the inclusion of images or 
graphics on the cover, backing, or paper. Subject merchandise is within 
the scope of this petition whether or not the lined paper and/or cover 
are hole punched, drilled, perforated, and/or reinforced. Subject 
merchandise may contain accessory or informational items including but 
not limited to pockets, tabs, dividers, closure devices, index cards, 
stencils, protractors, writing implements, reference materials such as 
mathematical tables, or printed items such as sticker sheets or 
miniature calendars, if such items are physically incorporated, 
included with, or attached to the product, cover and/or backing 
thereto.
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    \2\ For purposes of this scope definition, the actual use of or 
labeling these products as school supplies or non-school supplies is 
not a defining characteristic.
    \3\ There shall be no minimum page requirement for looseleaf 
filler paper.
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    Specifically excluded from the scope of this petition are: unlined 
copy machine paper; writing pads with a backing (including but not 
limited to products commonly known as ``tablets,'' ``note pads,'' 
``legal pads,'' and ``quadrille pads''), provided that they do not have 
a front cover (whether permanent or removable). This exclusion does not 
apply to such writing pads if they consist of hole-punched or drilled 
filler paper; three-ring or multiple-ring binders, or notebook 
organizers incorporating such a ring binder provided that they do not 
include subject paper; index cards; printed books and other books that 
are case bound through the inclusion of binders board, a spine strip, 
and cover wrap; newspapers; pictures and photographs; desk and wall 
calendars and organizers (including but not limited to such products 
generally known as ``office planners,'' ``time books,'' and 
``appointment books''); telephone logs; address books; columnar pads & 
tablets, with or without covers, primarily suited for the recording of 
written numerical business data; lined business or office forms, 
including but not limited to: preprinted business forms, lined invoice 
pads and paper, mailing and address labels, manifests, and shipping log 
books; lined continuous computer paper; boxed or packaged writing 
stationery (including but not limited to products commonly known as 
``fine business paper,'' ``parchment paper,'' and ``letterhead''), 
whether or not containing a lined header or decorative lines; 
Stenographic pads (``steno pads''), Gregg ruled,\4\ measuring 6 inches 
by 9 inches;
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    \4\ ``Gregg ruling'' consists of a single- or double-margin 
vertical ruling line down the center of the page. For a six-inch by 
nine-inch stenographic pad, the ruling would be located 
approximately three inches from the left of the book.
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    Also excluded from the scope of these investigations are the 
following trademarked products: Fly* lined paper products: A notebook, 
notebook organizer, loose or glued note paper, with papers that are 
printed with infrared reflective inks and readable only by a Fly* pen-
top computer. The product must bear the valid trademark Fly*.\5\ 
Zwipes*: A notebook or notebook organizer made with a blended 
polyolefin writing surface as the cover and pocket surfaces of the 
notebook, suitable for writing using a specially-developed permanent 
marker and erase system (known as a Zwipes* pen). This system allows 
the marker portion to mark the writing surface with a permanent ink. 
The eraser portion of the marker dispenses a solvent capable of 
solubilizing the permanent ink, allowing the ink to be removed. The 
product must bear the valid trademark Zwipes*.\6\ FiveStar*Advance*: A 
notebook or notebook organizer bound by a continuous spiral, or 
helical, wire and with plastic front and rear covers made of a blended 
polyolefin plastic material joined by 300 denier polyester, coated on 
the backside with PVC (poly vinyl chloride) coating, and extending the 
entire length of the spiral or helical wire. The polyolefin plastic 
covers are of specific thickness; front cover is .019 inches (within 
normal manufacturing tolerances) and rear cover is .028 inches (within 
normal manufacturing tolerances). Integral with the stitching that 
attaches the polyester spine covering, is captured both ends of 
a1 wide elastic fabric band. This band is located 2\3/
8\ from the top of the front plastic cover and provides pen 
or pencil storage. Both ends of the spiral wire are cut and then bent 
backwards to overlap with the previous coil but specifically outside 
the coil diameter but inside the polyester covering. During 
construction, the polyester covering is sewn to the front and rear 
covers face to face (outside to outside) so that when the book is 
closed, the stitching is concealed from the outside. Both free ends 
(the ends not sewn to the cover and back) are stitched with a turned 
edge construction. The flexible polyester material forms a covering 
over the spiral wire to protect it and provide a comfortable grip on 
the product. The product must bear the valid trademarks 
FiveStar*Advance*.\7\
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    \5\ Products found to be bearing an invalidly licensed or used 
trademark are not excluded from the scope.
    \6\ Products found to be bearing an invalidly licensed or used 
trademark are not excluded from the scope.
    \7\ Products found to be bearing an invalidly licensed or used 
trademark are not excluded from the scope.
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    FiveStar Flex*: A notebook, a notebook organizer, or binder with 
plastic polyolefin front and rear covers joined by 300 denier polyester 
spine cover extending the entire length of the spine and bound by a 3-
ring plastic fixture. The polyolefin plastic covers are of a specific 
thickness; front cover is .019 inches (within normal manufacturing 
tolerances) and rear cover is .028 inches (within normal manufacturing 
tolerances). During construction, the polyester covering is sewn to the 
front cover face to face (outside to outside) so that when the book is 
closed, the stitching is concealed from the outside. During 
construction, the polyester cover is sewn to the back cover with the 
outside of the polyester spine cover to the inside back cover. Both 
free ends (the ends not sewn to the cover and back) are stitched with a 
turned edge construction. Each ring within the fixture is comprised of 
a flexible strap portion that snaps into a stationary post which forms 
a closed binding ring. The ring fixture is riveted with six metal 
rivets and sewn to the back plastic cover and is specifically 
positioned on the outside back cover. The product must bear the valid 
trademark FiveStar Flex*.\8\
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    \8\ Products found to be bearing an invalidly licensed or used 
trademark are not excluded from the scope.
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    Merchandise subject to this investigation is typically imported 
under headings 4820.10.2050, 4810.22.5044, 4811.90.9090 of the 
Harmonized Tariff Schedule of the United States (HTSUS).\9\ The tariff 
classifications are provided for

[[Page 58381]]

convenience and U.S. Customs and Border Protection purposes; however, 
the written description of the scope of the investigation is 
dispositive.
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    \9\ During the investigation additional HTS codes may be 
identified.

[FR Doc. E5-5515 Filed 10-5-05; 8:45 am]
BILLING CODE 3510-DS-P