Certain Tissue Paper Products from the People's Republic of China: Notice of Initiation of Anti-circumvention Inquiry, 53662-53666 [E6-15094]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 71, Number 176 (Tuesday, September 12, 2006)]
[Notices]
[Pages 53662-53666]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-15094]


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DEPARTMENT OF COMMERCE

International Trade Administration

A-570-894


Certain Tissue Paper Products from the People's Republic of 
China: Notice of Initiation of Anti-circumvention Inquiry

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to a request from the Seaman Paper Company of 
Massachusetts, Inc. (petitioner), the Department of Commerce (the 
Department) is initiating an anti-circumvention inquiry to determine 
whether certain imports of tissue paper from Vietnam are circumventing 
the antidumping duty order on certain tissue paper products (tissue 
paper) from the People's Republic of China (PRC). See Notice of Amended 
Final Determination of Sales at Less than Fair Value and Antidumping 
Duty Order: Certain Tissue Paper Products from the People's Republic of 
China, 70 FR 16223 (March 30, 2005) (Tissue Paper Order).

EFFECTIVE DATE: September 12, 2006.

FOR FURTHER INFORMATION CONTACT: Kristina Boughton or Bobby Wong, AD/
CVD Operations, Office 9, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
8173 or (202) 482-0409, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On July 19, 2006, petitioner submitted a letter requesting that the 
Department initiate and conduct an anti-circumvention inquiry, pursuant 
to section 781(b) of the Tariff Act of 1930, as amended (the Act), and 
19 CFR 351.225(h), to determine whether imports of tissue paper from 
Vietnam made from jumbo rolls of tissue paper which are a product of 
the PRC are circumventing the antidumping duty order on tissue paper 
from the PRC. Specifically, petitioner alleges that sending PRC jumbo 
rolls of tissue paper to Vietnam for completion or assembly into 
merchandise of the same class or kind as that covered by the 
antidumping duty order on tissue paper from the PRC constitutes 
circumvention of the antidumping duty order on tissue paper from the 
PRC.
    On July 21, 2006, petitioner re-filed the anti-circumvention 
request to include business proprietary information, which had been 
redacted in the first initiation request. On August 11, 2006, Vietnam 
Quijiang Paper Co., Ltd (Quijiang) submitted comments on petitioner's 
July 21, 2006, request for an anti-circumvention inquiry. On August 14, 
2006, the Department requested that petitioner submit documentation 
referenced, but not included, in its July 21, 2006, request. On August 
18, 2006, petitioner submitted a response to the Department's August 
14, 2006, request. On August 21, 2006, petitioner submitted comments on 
Quijiang's August 11, 2006, submission.

Scope of the Order

    The tissue paper products subject to order are cut-to-length sheets 
of tissue paper having a basis weight not exceeding 29 grams per square 
meter. Tissue paper products subject to this order may or may not be 
bleached, dye-colored, surface-colored, glazed, surface decorated or 
printed, sequined, crinkled, embossed, and/or die cut. The tissue paper 
subject to this order is in the form of cut-to-length sheets of tissue 
paper with a width equal to or greater than one-half (0.5) inch. 
Subject tissue paper may be flat or folded, and may be packaged by 
banding or wrapping with paper or film, by placing in plastic or film 
bags, and/or by placing in boxes for distribution and use by the 
ultimate consumer. Packages of tissue paper subject to this order may 
consist solely

[[Page 53663]]

of tissue paper of one color and/or style, or may contain multiple 
colors and/or styles.
    Tissue paper products subject to this order do not have specific 
classification numbers assigned to them under the Harmonized Tariff 
Schedule of the United States (HTSUS) and appear to be imported under 
one or more of the several different ``basket'' categories, including 
but not necessarily limited to the following subheadings: HTSUS 
4802.30, HTSUS 4802.54, HTSUS 4802.61, HTSUS 4802.62, HTSUS 4802.69, 
HTSUS 4804.39, HTSUS 4806.40, HTSUS 4808.30, HTSUS 4808.90, HTSUS 
4811.90, HTSUS 4823.90, HTSUS 9505.90.40.
    Although the HTSUS subheadings are provided for convenience and 
customs purposes, the written description of the scope of the 
investigation is dispositive.
    Excluded from the scope of the order are the following tissue paper 
products: (1) tissue paper products that are coated in wax, paraffin, 
or polymers, of a kind used in floral and food service applications; 
(2) tissue paper products that have been perforated, embossed, or die-
cut to the shape of a toilet seat, i.e., disposable sanitary covers for 
toilet seats; (3) toilet or facial tissue stock, towel or napkin stock, 
paper of a kind used for household or sanitary purposes, cellulose 
wadding, and webs of cellulose fibers (HTSUS 4803.00.20.00 and 
4803.00.40.00).

Initiation of Anti-circumvention Proceeding

Applicable Statute

    Section 781(b) of the Act provides that the Department may find 
circumvention of an antidumping duty order when merchandise of the same 
class or kind subject to the order is completed or assembled in a 
foreign country other than the country to which the order applies. In 
conducting anti-circumvention inquiries under section 781(b) of the 
Act, the Department relies upon the following criteria: (A) merchandise 
imported into the United States is of the same class or kind as any 
merchandise produced in a foreign country that is subject to an 
antidumping duty order; (B) before importation into the United States, 
such imported merchandise is completed or assembled in another foreign 
country from merchandise which is subject to the order or produced in 
the foreign country that is subject to the order; (C) the process of 
assembly or completion in the foreign country referred to in (B) is 
minor or insignificant; (D) the value of the merchandise produced in 
the foreign country to which the antidumping duty order applies is a 
significant portion of the total value of the merchandise exported to 
the United States; and (E) the administering authority determines that 
action is appropriate to prevent evasion of such order or finding. As 
discussed below, petitioner presented evidence with respect to these 
criteria.

A. Merchandise of the Same Class or Kind

    Petitioner states that the Tissue Paper Order covers cut-to-length 
sheets of tissue paper equal to or greater than 0.5 inches in width, 
with a basis weight not exceeding 29 grams per square meter and other 
specified characteristics of the scope. Petitioner argues that the 
tissue paper from Vietnam, which Quijiang has stated on the record of 
the first administrative review of tissue paper from the PRC that it 
produces from Chinese jumbo rolls and which is being imported into the 
United States from Vietnam, is physically identical to the subject 
merchandise cut-to-length tissue paper from the PRC. Because of this, 
pursuant to section 781(b)(1)(A)(i) of the Act, petitioner claims this 
tissue paper is of the same class or kind as the tissue paper produced 
in the PRC, which is subject to the antidumping duty order.

B. Completion of Merchandise in a Foreign Country

    Petitioner states that the tissue paper that is the subject of the 
anti-circumvention inquiry request is made from jumbo rolls of tissue 
paper produced in the PRC and processed in Vietnam for export to the 
United States. Petitioner argues that this tissue paper is the final 
result of a production process that involves a highly capital 
intensive, skilled operation to produce the tissue paper in the PRC 
with end stage processing, including converting the tissue paper 
(cutting-to-length, possibly folding, and packaging) and possibly 
printing or dying, to produce cut-to-length tissue paper in Vietnam. 
Petitioner also notes that Quijiang and Guilin Qifeng Paper Co., Ltd. 
(Guilin Qifeng) have both stated on the record of the first 
administrative review of tissue paper from the PRC that Guilin Qifeng 
supplied its affiliate Quijiang with jumbo rolls of tissue paper 
produced in the PRC, which were then further processed in Vietnam. 
Petitioner therefore concludes that, pursuant to section 
781(b)(1)(B)(ii) of the Act, Quijiang's cut-to-length tissue paper is 
merchandise completed in another foreign country (Vietnam) from 
merchandise that is produced in a country (the PRC) already subject to 
a dumping order which includes cut-to-length tissue paper in its scope.

C. Minor or Insignificant Process

    Petitioner argues that for the purposes of section 781(b)(1)(C) of 
the Act, conversion of jumbo rolls of tissue paper produced in the PRC 
into cut-to-length tissue paper in Vietnam is a ``minor or 
insignificant process'' as defined by the Act. According to petitioner, 
printing and dying are decorative operations that complete the 
decorative aspects of merchandise. Petitioner argues that most 
fundamental aspects of the merchandise-tissue paper possessing a 
particular basis weight, texture, quality, and other specific 
characteristics that may be required if the paper is intended for 
printing-are previously and irrevocably established when the tissue 
paper is produced. Citing the February 17, 2004, petition in tissue 
paper from the PRC, petitioner states that the production process for 
making lightweight tissue paper is complex and requires high-quality 
material inputs, complex and capital-intensive physical equipment, and 
high levels of technical expertise by the operators. See ``Antidumping 
Duty Petition on Certain Tissue Paper Products and Crepe Paper Products 
from the People's Republic of China,'' filed by Seaman Paper Company of 
Massachusetts, Inc.; American Crepe Corporation; Eagle Tissue LLC; 
Flower City Tissue Mills Co.; Garlock Printing & Converting, Inc.; 
Paper Service Ltd.; Putney Paper Co., Ltd.; and the Paper, Allied-
Industrial, Chemical and Energy Workers International Union AFL-CIO, 
CLC, dated February 17, 2004. Furthermore, petitioner claims that this 
type of tissue paper production is consistent with the production that 
Guilin Qifeng employs in the PRC. According to its Internet site, 
petitioner states, Guilin Qifeng possesses a large, modern papermaking 
operation, with 18 different paper machines. See July 21, 2006, anti-
circumvention request at Exhibit 4.
    Petitioner states that the papermaking process is different in 
significance and complexity compared to the dying, decorating, printing 
or converting of jumbo rolls. While petitioner states that it does not 
have access to the detailed information concerning Quijiang's 
facilities, it contends that the best information available on Vietnam 
processing is the record of the underlying investigation concerning 
production in the PRC. Regarding printing in the PRC, petitioner states 
that, despite the nature of the design, i.e., whether complicated or 
simple, the nature of the printing process is not

[[Page 53664]]

complex. Petitioner further states that converting the tissue involves 
two to three minor processes typically performed by hand in the PRC: 
cutting the tissue to a specific size, folding it (by hand) and 
packaging for export (also by hand). Petitioner cites to an affidavit 
from the Petition (at Exhibit 5), where members of the domestic 
industry reported first-hand knowledge of the production facilities in 
China based on site visits where they observed papermaking and 
converting operations; the public version of Section D and Exhibit D-5 
of the Section D response of China National Aero-Technology Import and 
Export Xiamen Corp. (China National) during the investigation, which 
reflects the production process petitioner described in its July 21, 
2006, anti-circumvention request; and the January 6, 2005, verification 
report for China National at page 39 from the investigation, where 
Department verifiers confirm that China National used manual labor for 
folding paper and packaging. See August 18, 2006, petitioner submission 
at pages 2-4 and Exhibits 3-4. All of these sources, petitioner argues, 
support its statements that Chinese converting operations involve hand 
folding and packaging, rather than automated activities, and are 
therefore ``minor or insignificant'' processes.
    Petitioner argues that an analysis of the relevant statutory 
factors of section 781(b)(2) of the Act further supports its conclusion 
that the Vietnam processing is ``minor or insignificant.'' These 
factors include: (1) level of investment in the foreign country; (2) 
level of research and development in the foreign country; (3) nature of 
the production process in the foreign country; (4) extent of production 
facilities in the foreign country; and (5) whether the value of the 
processing in the foreign country represents a small proportion of the 
value of the merchandise imported into the United States.
    Petitioner argues that the Vietnam process is ``minor and 
insignificant'' as the term is defined in section 781(b)(2) of the Act 
when compared to the complex, highly capital intensive, skilled 
operations required to produce lightweight tissue paper from pulp, 
chemicals, and dyes in the PRC. Petitioner's analysis of the statutory 
factors follows:
(1) Level of Investment
    Petitioner claims that available information from Quijiang and 
Guilin Qifeng indicates that little investment has been or is being 
made in Vietnam. Petitioner argues that the business model described by 
the two companies indicates that Quijiang only serves as a converting 
operation and an export platform for Guilin Qifeng and is not an 
integrated production operation. Petitioner further argues that Guilin 
Qifeng would have no desire to set up an operation in Vietnam that 
would compete with its own production capacity. Petitioner cites to 
Quijiang's business license, which provides a description of Quijiang's 
business activities, as proof of its statements. Because the business 
license is business proprietary information, its specific content 
cannot be discussed here. See July 21, 2006, anti-circumvention request 
at Exhibit 5. Petitioner concludes that the level of investment in the 
Vietnam processing facility is low.
(2) Level of Research and Development
    Petitioner states that because Quijiang is affiliated with Guilin 
Qifeng, it is reasonable to presume that any research and development 
efforts would originate at Guilin Qifeng in the PRC. Furthermore, the 
tissue paper production industry is a mature industry and any 
innovations are refinements rather than new technologies, petitioner 
states, as determined by the U.S. International Trade Commission 
(USITC) in its injury findings. See Certain Tissue Paper Products From 
China, Inv. No. 731-TA-1070B (Final), Pub. 3758 at III-3 (March 2005) 
(USITC Final Report). Converting operations are also mature, according 
to petitioner, and likely involve hand-folding and packaging, rather 
than automated and research and development intensive activities, as 
would be found in the United States.
(3) Nature of the Production Process
    Petitioner argues that both Quijiang and Guilin Qifeng describe the 
nature of the Vietnamese production process as follows: jumbo rolls 
further processed by cutting, slitting, dying, printing, decorating, 
folding, and packaging prior to transport. See July 21, 2006, anti-
circumvention request at Exhibits 2-3. Although petitioner states that 
it does not have specific information regarding these production 
processes, it contends that taking the description at face value 
indicates that the operations are decorative in nature or involve 
completing the merchandise. Petitioner argues that none of the 
processes listed above, particularly dying and decorating, alter the 
fundamental nature or critical characteristics such as basis weight, 
quality, and texture- of the papermaking stage of production. 
Petitioner states that dip-dying, printing, and converting use few 
inputs, and, while cutting jumbo rolls to length involves some skill 
and may involve machinery, the essence of the activity is not complex 
although it can be performed in a variety of more or less complex ways. 
Folding and packing, petitioner adds, are done by hand in the PRC. 
Petitioner presumes, based on its knowledge of the PRC industry, that 
folding and packing are done by hand in Vietnam as well.
(4) Extent of Production in Vietnam
    Petitioner states that it does not have access to detailed 
information concerning the extent of production facilities in Vietnam. 
However, petitioner claims that Quijiang's operations are housed in 
rented facilities, which suggests a lower level of investment than that 
which would be required by the capital-intensive nature of papermaking 
operations. Specifically, papermaking operations require that the 
necessary machinery be permanently placed and operated, while printing 
and converting operations are more easily temporarily housed and 
movable, petitioner states. Petitioner claims that the rented nature of 
the business operations supports a determination that Quijiang was 
established as a means for Guilin Qifeng to continue to use its 
production capacity while evading the dumping order.
(5) Value of Vietnam Processing Compared to Tissue Paper Imported Into 
the United States
    Petitioner states that it does not have access to information 
concerning the cost of tissue paper rolls sent to Quijiang or the costs 
associated with operations in Vietnam; however, it contends that data 
from the period of investigation supports a determination that the 
value of processing performed in Vietnam represents a small proportion 
of value of the merchandise imported into the United States. In late 
2003 and early 2004, petitioner states, it gathered prices on jumbo 
rolls and converted tissue paper products. Based on a comparison of two 
data points, petitioner argues that the value added by converting jumbo 
rolls is insignificant. Because the price points are business 
proprietary information, they cannot be discussed here. See July 21, 
2006, anti-circumvention request at pages 21-22 and Exhibit 7.

D. Value of Merchandise Produced in PRC

    Petitioner argues that the evidence as noted supra in their anti-
circumvention request clearly supports its position that the value of 
the Guilin Qifeng jumbo rolls produced in the PRC and sent to

[[Page 53665]]

Quijiang represents a significant portion of the total value of the 
merchandise exported to the United States, as measured by the prices at 
which jumbo rolls and converted tissue paper were offered for sale.

E. Factors To Consider in Determining Whether Action Is Necessary

    Petitioner argues that additional factors must be considered in the 
Department's decision whether to issue a finding of circumvention 
regarding importation of Vietnamese tissue paper. These factors are 
discussed below.

Pattern of Trade

    Petitioner states that section 781(b)(3) of the Act directs the 
Department to take into account patterns of trade when making a 
decision on anti-circumvention rulings. Petitioner argues that in 
February 2004, when petitioner and other members of the domestic 
industry filed a Petition in this proceeding, Vietnam was not a source 
of any exports of tissue paper to the United States. Petitioner bases 
these claims on an analysis of publicly available information from the 
Port Import Export Reporting Service (PIERS). See July 21, 2006, anti-
circumvention request at Exhibit 1 and August 18, 2006, petitioner 
submission at Exhibits 1-2. Petitioner claims that four months after 
the petition was filed, in June 2004, Guilin Qifeng established 
Quijiang with the sole purpose of importing Chinese jumbo rolls for 
converting and completion into tissue paper for export into the United 
States. Two months later, petitioner contends, in August 2004 large and 
increasing volumes of tissue paper shipments from Vietnam emerged and 
have continued. See July 21, 2006, anti-circumvention request at 
Exhibit 1 and August 18, 2006, petitioner submission at Exhibits 1-2.

Affiliation

    Petitioner states that section 781(b)(3) of the Act directs the 
Department to take into account whether the manufacturer or export of 
the merchandise is affiliated with the person who uses the merchandise 
to assemble or complete in the foreign country the merchandise that is 
subsequently imported into the United States when making a decision on 
anti-circumvention rulings. Petitioner contends that both Quijiang and 
Guilin Qifeng have admitted that they are affiliated companies. See 
July 21, 2006, anti-circumvention request at Exhibits 2 and 3. The 
timing of the establishment of Quijiang and the terms of the company's 
operation, i.e., importing rolls to be converted and then exported, 
petitioner argues, suggests a clear intention to shift completion of 
merchandise under order from the PRC to Vietnam.

Subsequent Import Volume

    Petitioner states that section 781(b)(3) of the Act directs the 
Department to take into account whether imports into the foreign 
country of the merchandise have increased after the initiation of the 
investigation which resulted in the issuance of such an order or 
finding when making a decision on anti-circumvention rulings. 
Petitioner claims it does not have access to data concerning trade 
flows of jumbo rolls between the PRC and Vietnam; however, it noted 
that it is impossible that Quijiang would have received jumbo rolls 
before June 2004 because the company did not exist before then. 
Petitioner also claims that the evidence concerning Vietnam's lack of 
exports to the United States, along with the emergence of large exports 
of tissue paper starting in August 2004, is a reasonable basis for 
inferring that jumbo roll imports into Vietnam from the PRC increased 
after the initiation of the original investigation in this proceeding. 
See July 21, 2006, anti-circumvention request at Exhibit 1 and August 
18, 2006, petitioner submission at Exhibits 1-2.

Comments from Quijiang

    On August 11, 2006, Quijiang submitted comments on petitioner's 
July 21, 2006, anti-circumvention request. Quijiang states that the 
Department should not initiate an anti-circumvention inquiry. It claims 
that its production of tissue paper from Vietnamese-sourced paper, in 
addition to PRC-sourced paper, shows that Guilin Qifeng's investment in 
Vietnam is substantial and that research and development does take 
place at Quijiang. Quijiang argues that the effect of paper converting 
is significant and cites the record from the USITC injury determination 
where the USITC examined the converting process in detail and 
determined that the domestic industry consists of vertically integrated 
firms and firms that convert tissue paper from jumbo rolls. See USITC 
Final Report at I-10-11 and III-4; see also Id. at 3-4. Quijiang also 
claims that information from the March 12, 2004, USITC post-conference 
brief indicates the percentage of value added to a jumbo roll by the 
conversion process is significant and that this information is readily 
available to petitioner.
    Quijiang states that the original scope request on jumbo rolls, in 
which the Department determined that jumbo rolls were excluded from the 
scope of this order, indicated that the value-added by converting 
operations was estimated to be about one third of the total value. See 
``Memorandum for Acting Deputy Assistant Secretary: Final Scope Ruling: 
Antidumping Duty Order on Certain Tissue Paper from the People's 
Republic of China (A-570-894); CSS Industries, Inc.,'' dated December 
1, 2004.
    If the Department believes that Quijang's cutting of jumbo rolls 
may constitute circumvention, Quijiang argues, then it should 
investigate petitioner's operations as well because Quijiang is aware 
that its affiliate Guilin Qifeng sells petitioner jumbo rolls from the 
PRC which petitioner then converts using essentially the same 
production processes as Quijiang.\1\ In addition, Quijiang states that 
it objects to petitioner having placed proprietary documents submitted 
by Quijiang and Guilin Qifeng in the first administrative review of 
tissue paper from the PRC on the record of this proceeding. 
Petitioner's decision, Quijiang claims, to submit the July 21, 2006, 
anti-circumvention request as business proprietary, including 
bracketing some of petitioner's own information, makes it impossible 
for Quijiang to meaningfully comment of the information contained 
within the submission as no administrative protective order (APO) has 
been established for the anti-circumvention inquiry yet.\2\
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    \1\ At this time, the Department is not considering Quijiang's 
request here in the absence of a formal anti-circumvention request 
that provides information regarding all of the factors enumerated in 
section 781(b) of the Act.
    \2\ In accordance with our practice, the Department notes that 
an APO will be established upon the initiation of this inquiry and 
at that time Quijiang's counsel may apply for an APO and receive 
copies of the business proprietary anti-circumvention request and 
other relevant submissions, upon which it may then make more 
comments. We note that that lack of an APO at this time has no 
bearing on whether an anti-circumvention inquiry should be 
initiated.
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    For all the reasons stated above, Quijiang argues, the Department 
should reject petitioner's request to initiate an anti-circumvention 
inquiry.

Analysis

    Based on our analysis of the application and the August 18, 2006, 
petitioner submission, the Department determines that a formal anti-
circumvention inquiry is warranted. In accordance with 19 CFR 
351.225(e), if the Department finds that the issue of whether a product 
is included within the scope of an order cannot be determined based 
solely upon the application and the descriptions of the merchandise, 
the Department will notify by mail all parties on the Department's

[[Page 53666]]

scope service list of the initiation of a scope inquiry, including an 
anti-circumvention inquiry. In addition, in accordance with 19 CFR 
351.225(f)(1)(ii), a notice of the initiation of an anti-circumvention 
inquiry issued under paragraph (e) of this section will include a 
description of the product that is the subject of the anti-
circumvention inquiry in this case, cut-to-length tissue paper that 
contains the characteristics as provided in the scope of the order, and 
an explanation of the reasons for the Department's decision to initiate 
an anti-circumvention inquiry, as provided below.
    With regard to whether the merchandise from Vietnam is of the same 
class or kind as the merchandise produced in the PRC, petitioner has 
presented information indicating that the merchandise being imported 
from Vietnam is of the same class or kind as the tissue paper produced 
in the PRC, which is subject to the antidumping duty order. The 
merchandise from Vietnam shares physical characteristics with the 
merchandise covered by the antidumping duty order.
    With regard to completion of merchandise in a foreign country, 
petitioner has also presented information that the tissue paper from 
Vietnam is being processed in Vietnam using PRC jumbo rolls of tissue 
paper as the input. Guilin Qifeng and Quijiang have admitted the same 
on the record of the first administrative review of tissue paper from 
the PRC. See ``Letter to the Secretary from Guilin Qifeng: Q&V response 
of Guilin Qifeng Paper Co., Ltd.,'' dated June 21, 2006; see also 
``Letter to the Secretary from Quijiang: Q&V response of Vietnam 
Quijiang Paper Company, Limited,'' dated May 25, 2006.
    With regard to whether the conversion of PRC jumbo rolls of tissue 
paper into cut-to-length tissue paper from Vietnam is a ``minor or 
insignificant process,'' petitioner addressed the relevant statutory 
factors used to determine whether the processing jumbo rolls of tissue 
paper is minor or insignificant with the best information available to 
petitioner at the time of the request. Petitioner relied on information 
from the underlying investigation and information placed on the record 
of the first administrative review by Quijiang and Guilin Qifeng. 
Although Quijiang has challenged petitioner's claim that the conversion 
process in Vietnam is ``minor or insignificant,'' we find that the 
information presented by petitioner supports petitioner's request to 
initiate an anti-circumvention inquiry. In particular, petitioner 
provides evidence for each of the criteria provided in the statute, 
including arguing 1) that Quijiang's business license suggests little 
investment has been made in Quijiang; 2) that because Guilin Qifeng has 
a fully integrated production facility and is affiliated with Quijiang 
it is reasonable to presume that research and development takes place 
in the PRC; 3) that printing, folding, and cutting, i.e., the 
converting process, do not alter the fundamental characteristics of the 
tissue paper; 4) that Quijiang's rented facilities suggest a lower 
investment level than that required by the capital-intensive nature of 
the paper-making process; and 5) that business proprietary price points 
obtained by petitioner suggest that converting tissue paper adds little 
value to the merchandise imported to the United States. Furthermore, we 
note that the converting operations described in the scope request and 
in the USITC report, to which Quijiang refers, discuss converting 
operations in the United States. Our analysis will focus on converting 
operations in Vietnam and, in the context of this proceeding, we will 
closely examine the value-added and extent of processing in Vietnam.
    With respect to the value of the merchandise produced in the PRC, 
petitioner relied on the information and arguments in the ``minor or 
insignificant process'' portion of its anti-circumvention request to 
indicate that the value of jumbo rolls of tissue paper is significant 
relative to the total value of finished merchandise exported to the 
United States. We find that the information adequately meets the 
requirements of this factor, as discussed above.
    Finally, petitioner argued that the Department should also consider 
the pattern of trade, affiliation, and subsequent import volumes as 
factors in determining whether to initiate the anti-circumvention 
inquiry. The import information submitted by petitioner indicates that 
imports of tissue paper from Vietnam are rising significantly. 
Moreover, Guilin Qifeng's and Quijiang's own statements establish that 
Quijiang is an affiliate of Guilin Qifeng.
    Accordingly, we are initiating a formal anti-circumvention inquiry 
concerning the antidumping duty order on certain tissue paper products 
from the PRC, pursuant to section 781(b) of the Act. In accordance with 
19 CFR 351.225(l)(2), if the Department issues a preliminary 
affirmative determination, we will then instruct U.S. Customs and 
Border Protection to suspend liquidation and require a cash deposit of 
estimated duties on the merchandise.
    The Department is focusing its analysis of the significance of the 
production process in Vietnam on the single processor identified by the 
petitioner, namely Quijiang, in its July 21, 2006, anti-circumvention 
request and about which sufficient information to initiate an inquiry 
has been provided. If the Department receives a formal request from an 
interested party regarding potential circumvention by other Vietnamese 
companies involved in processing PRC jumbo rolls for export to the 
United States within sufficient time, we will consider conducting the 
inquiries concurrently.
    The Department will, following consultation with interested 
parties, establish a schedule for questionnaires and comments on the 
issues. The Department intends to issue its final determination within 
300 days of the date of publication of this initiation.
    This notice is published in accordance with section 777(i)(1) of 
the Act.

    Dated: September 5, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E6-15094 Filed 9-11-06; 8:45 am]
BILLING CODE 3510-DS-S