Initiation of Antidumping Duty Investigations: Coated Free Sheet Paper from Indonesia, the People's Republic of China, and the Republic of Korea, 68537-68543 [E6-20020]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 71, Number 227 (Monday, November 27, 2006)]
[Notices]
[Pages 68537-68543]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-20020]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-560-820, A-570-906, A-580-856]


Initiation of Antidumping Duty Investigations: Coated Free Sheet 
Paper from Indonesia, the People's Republic of China, and the Republic 
of Korea

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

EFFECTIVE DATE: November 27, 2006.

FOR FURTHER INFORMATION CONTACT: Irina Itkin (Indonesia), Magd Zalok 
(People's Republic of China) or Joy Zhang (Republic of Korea), AD/CVD 
Operations, Office 2, Office 4, and Office 3, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230; telephone: 
(202) 482-0656, (202) 482-4162, or (202) 482-1168, respectively.

SUPPLEMENTARY INFORMATION:

The Petitions

    On October 31, 2006, the Department of Commerce (the Department) 
received petitions concerning imports of coated free sheet paper (CFS) 
from Indonesia (Indonesian petition), the Republic of Korea (Korea) 
(Korean petition), and the People's Republic of China (PRC) (PRC 
petition) filed in proper form by NewPage Corporation (the petitioner). 
See the Petitions for the Imposition of Antidumping and Countervailing 
Duties Against Coated Free Sheet Paper From China, Indonesia, and Korea 
filed on October 31, 2006. On November 3, 13, and 16, 2006, the 
Department issued requests for additional information and clarification 
of certain areas of the petitions. Based on the Department's requests, 
the petitioner filed supplements to the petitions on November 9, 15, 
and 17, 2006. The period of investigation (POI) for Indonesia and Korea 
is October 1, 2005, through September 30, 2006. The POI for the PRC is 
April 1, 2006, through September 30, 2006.
    In accordance with section 732(b) of the Tariff Act of 1930, as 
amended (the Act), the petitioner alleges that imports of CFS from 
Indonesia, Korea, 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, 
or threatening material injury to, an industry in the United States.
    The Department finds that the petitioner filed these petitions on 
behalf

[[Page 68538]]

of the domestic industry because the petitioner is an interested party 
as defined in section 771(9)(C) of the Act, and has demonstrated 
sufficient industry support with respect to the antidumping 
investigations that the petitioner is requesting that the Department 
initiate (see ``Determination of Industry Support for the Petition'' 
below).

Scope of Investigations

    The merchandise covered by each of these investigations 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.

Comments on Scope of Investigations

    During our review of the petitions, we discussed the scope with the 
petitioner to ensure that it is an accurate reflection of the products 
for which the domestic industry is seeking relief. Moreover, as 
discussed in the preamble to the regulations (Antidumping Duties; 
Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997)), 
we are setting aside a period for interested parties to raise issues 
regarding product coverage. The Department encourages all interested 
parties to submit such comments within 20 calendar days of the 
publication of this notice. Comments should be addressed to Import 
Administration's Central Records Unit (CRU), Room 1870, U.S. Department 
of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 
20230. The period of scope consultations is intended to provide the 
Department with ample opportunity to consider all comments and to 
consult with 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 on 
behalf of the domestic industry. Section 732(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for (1) at least 
25 percent of the total production of the domestic like product and (2) 
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 as a whole of a domestic like product. Thus, to determine 
whether the petitions have 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) is 
responsible for determining whether ``the domestic industry'' has been 
injured and must also determine what constitutes a domestic like 
product in order to define the industry. While the Department and the 
ITC must apply the same statutory definition regarding the domestic 
like product, they do so for different purposes and pursuant to 
separate and distinct authority. See section 771(10) of the Act. In 
addition, the Department's determination is subject to limitations of 
time and information. Although this may result in different definitions 
of the domestic like product, such differences do not render the 
decision of either agency contrary to law.\1\
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    \1\ 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).
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    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 subtitle.'' 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 domestic like product, the petitioner does not offer 
a definition of domestic like product distinct from the scope of the 
investigations. Based on our analysis of the information presented by 
the petitioner, we have determined that there is a single domestic like 
product, coated free sheet paper, which is defined in the ``Scope of 
Investigations'' section above, and we have analyzed industry support 
in terms of the domestic like product.
    On November 15 and 16, 2006, we received submissions on behalf of 
Chinese and Indonesian producers of CFS questioning the industry 
support calculation. See ``Office of AD/CVD Operations Initiation 
Checklist for the Antidumping Duty Petition on Coated Free Sheet Paper 
from Indonesia,'' at Attachment II (Nov. 20, 2006) (Indonesia 
Initiation Checklist), ``Office of AD/CVD Operations Initiation 
Checklist for the Antidumping Duty Petition on Coated Free Sheet Paper 
from the Republic of Korea,'' at Attachment II (Nov. 20, 2006) (Korea 
Initiation Checklist), and ``Office of AD/CVD Operations Initiation 
Checklist for the Antidumping Duty Petition on Coated Free Sheet Paper 
from the People's Republic of China,'' at Attachment II (Nov. 20, 2006) 
(PRC Initiation Checklist), on file in the CRU. Our review of the data 
provided in the petition, supplemental submissions, and other 
information readily available to the Department indicates that 
Petitioners have 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 petition, requiring no further action by the Department pursuant to 
section 732(c)(4)(D) of the Act. Therefore, the domestic producers (or 
workers) who support the petition

[[Page 68539]]

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 
petition 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 petition. Thus, the 
requirements of section 732(c)(4)(A)(ii) of the Act also are met. 
Accordingly, the Department determines that the petition was filed on 
behalf of the domestic industry within the meaning of section 732(b)(1) 
of the Act. See Indonesia Initiation Checklist at Attachment II, Korea 
Initiation Checklist at Attachment II, and PRC Initiation Checklist at 
Attachment II.

Allegations and Evidence of Material Injury and Causation

    With regard to Indonesia, Korea, and the PRC, the petitioner 
alleges that the U.S. industry producing the domestic like product is 
being materially injured and is threatened with material injury by 
reason of the individual and cumulated imports of the subject 
merchandise sold at less than fair value. The petitioner contends that 
the industry's injury is evidenced by reduced market share, increased 
inventories, reduced shipments, lost sales, reduced production, lower 
capacity and capacity utilization rates, decline in prices, lost 
revenue, reduced employment, and a decline in financial performance.
    These allegations are supported by relevant evidence including 
import data, evidence of lost sales, and pricing information. We 
assessed the allegations and supporting evidence regarding material 
injury, threat of material injury, and causation, and have determined 
that these allegations are supported by accurate and adequate evidence 
and meet the statutory requirements for initiation. See Indonesia 
Initiation Checklist at Attachment III, Korea Initiation Checklist at 
Attachment III, and PRC Initiation Checklist Attachment III.

Allegations of Sales at Less Than Fair Value

    The following is a description of the allegations of sales at less 
than fair value upon which the Department based its decision to 
initiate these investigations on imports of CFS from Indonesia, Korea, 
and the PRC. The sources of data for the deductions and adjustments 
relating to the U.S. price, constructed value (CV) (for Indonesia and 
Korea), and the factors of production (for the PRC only) are also 
discussed in the country-specific initiation checklists. See Indonesia 
Initiation Checklist, Korea 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 revise the 
margin calculations, if appropriate.

Indonesia and Korea

Export Price (EP)
    The petitioner calculated a single EP using the average unit values 
(AUVs) for import data collected by the U.S. Census Bureau for both 
Indonesia and Korea. The petitioner used a weighted average of two 
HTSUS numbers under which CFS is imported into the United States and 
that fall within the scope of the investigations. These HTSUS numbers 
contain imports of products which were most similar to the product on 
which the petitioner based normal value (NV) in the Indonesian and 
Korean petitions: 4810.14.19.00 and 4810.19.19.00.\2\ In addition, 
these HTSUS numbers account for 48 percent of the volume of imports 
from Indonesia and 45 percent of the volume of imports from Korea. To 
be conservative, the petitioner did not make any adjustments to U.S. 
price.
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    \2\ The petitioner based the AUV on customs data for the period 
October 1, 2005, through August 30, 2006, the most recently 
available data for the POI at the time of the petition filing.
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Use of a Third Country Market and Sales Below Cost Allegation
    With respect to NV, the petitioner stated that home market prices 
in Indonesia and Korea were not reasonably available. According to the 
petitioner, market intelligence in these countries is very difficult to 
obtain and sources of this information were either unable or unwilling 
to provide such data. The petitioner stated that it queried all 
available sources to identify Indonesian and Korean home market pricing 
data but was unsuccessful in its attempts. See e.g., page 2 of the 
October 31, 2006, Indonesian petition and pages 1 and 2 of the November 
9, 2006, supplement to the Indonesian petition; and page 2 of the 
October 31, 2006, Korean petition and page 1 of the November 9, 2006, 
supplement to the Korean petition.
    Consequently, for Indonesia and Korea, the petitioner used 
statistics on Indonesia's and Korea's third-country exports based on 
official Indonesian and Korean export data for determining NV. In 
selecting the third-country market, the petitioner chose Malaysia for 
Indonesia, and Australia and Bangladesh for Korea because: (1) These 
countries represent the largest third-country markets (for Indonesia 
and Korea, respectively) for scope merchandise during the POI; (2) the 
aggregate quantity of scope merchandise sold by Indonesian exporters to 
Malaysia, and Korean exporters to Australia and Bangladesh, accounted 
for more than five percent of the aggregate quantity of the scope 
merchandise sold in the United States; and (3) the product sold to the 
Malaysian market (for Indonesia) and to the Australian and Bangladeshi 
markets (for Korea) is comparable to the product that served as the 
basis for EP. After examining this evidence, we found the selection of 
Malaysia for Indonesia, and Australia and Bangladesh for Korea, as the 
comparison market to be reasonable.
    The petitioner calculated third-country price for Indonesia and 
Korea using quantities and FOB values from official Indonesian and 
Korean export statistics.
    The petitioner has provided information demonstrating reasonable 
grounds to believe or suspect that sales of CFS in the comparison 
markets (i.e., Malaysia for Indonesia, and Australia and Bangladesh for 
Korea) 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 country-wide sales-below-cost 
investigations. The Statement of Administrative Action (SAA), submitted 
to the Congress in connection with the interpretation and application 
of the URAA, states that an allegation of sales below COP need not be 
specific to individual exporters or producers. See SAA, H.R. Doc. No. 
103-316 at 833 (1994). The SAA, at 833, states that ``Commerce will 
consider allegations of below-cost sales in the aggregate for a foreign 
country, just as Commerce currently considers allegations of sales at 
less than fair value on a country-wide basis for purposes of initiating 
an antidumping investigation.''
    Further, the SAA provides that section 773(b)(2)(A) of the Act 
retains the requirement that the Department have ``reasonable grounds 
to believe or suspect'' that below-cost sales have occurred before 
initiating such an investigation. Reasonable grounds exist when an 
interested party provides specific factual information on costs and 
prices, observed or constructed, indicating that sales in the foreign 
market in question are at below-cost prices. Id.

[[Page 68540]]

Cost of Production
Indonesia
    Pursuant to section 773(b)(3) of the Act, COP consists of the cost 
of manufacturing (COM); selling, general and administrative (SG&A) 
expenses; financial expenses; and packing expenses. The petitioner 
calculated the quantity of each of the inputs into COM (except factory 
overhead) and packing based on the input quantities of a U.S. CFS 
producer during the POI, multiplied by the value of inputs used to 
manufacture CFS in Indonesia using publicly available data adjusted for 
inflation. To calculate average factory overhead, SG&A and the 
financial expense rate, the petitioner relied on the most current 
financial statements of two Indonesian producers of CFS.
Korea
    Pursuant to section 773(b)(3) of the Act, COP consists of the COM; 
SG&A expenses; financial expenses; and packing expenses. The petitioner 
calculated COM (except for pulp and factory overhead) and packing 
expenses using input quantities based on the production experience of a 
U.S. CFS producer during the POI, multiplied by the value of inputs 
used to manufacture CFS in Korea using publicly available data. For 
pulp, the petitioner used input quantities from an independent study, 
multiplied by the costs incurred to manufacture CFS in Korea using 
publicly available data. To calculate average factory overhead, SG&A 
and the financial expense rates, the petitioner relied on the most 
current financial statements of six Korean producers of CFS.
Indonesia and Korea
    Based on a comparison of the Malaysian market prices of CFS for 
Indonesia, and the Australian and Bangladeshi market prices of CFS for 
Korea, to the COP calculated for Indonesia and Korea, respectively, in 
the petitions, we find reasonable grounds to believe or suspect that 
sales of the foreign like products in Malaysia (for Indonesia) and 
Australia and Bangladesh (for Korea) were made at prices below COP 
within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, 
the Department is initiating country-wide cost investigations relating 
to third-country sales to Malaysia (for Indonesia) and to Australia and 
Bangladesh (for Korea). We note, however, that if we determine that the 
home markets (i.e., Indonesia and Korea) are viable, our initiation of 
country-wide cost investigations with respect to sales to the third 
country markets will be rendered moot. See Indonesia Initiation 
Checklist and Korea Initiation Checklist.
Normal Value Based on CV
    Because it alleged sales below cost, pursuant to sections 
773(a)(4), 773(b) and 773(e) of the Act, the petitioner calculated NV 
based on CV for Indonesia and Korea. The petitioner calculated CV using 
the same average COM, SG&A, financial and packing figures used to 
compute the COP. The petitioner then added the average profit rate 
based on the most recent financial statements of two Indonesian 
producers of CFS for Indonesia and three Korean producers of CFS for 
Korea. See Indonesia Initiation Checklist and Korea Initiation 
Checklist.

PRC

EP

    The petitioner calculated a single EP using the AUVs for import 
data collected by the U.S. Census Bureau. The petitioner used a 
weighted average of two HTSUS numbers under which CFS is imported into 
the United States and that fall within the scope of the investigation. 
These HTSUS numbers containing imports of products which were most 
similar to the product on which the petitioner based NV in the PRC 
petition: 4810.14.19.00 and 4810.19.19.00.\3\ In addition, the HTSUS 
numbers account for over 87 percent of the imports of CFS from China, 
by volume. To calculate EP, the petitioner deducted foreign brokerage 
charges from the AUV (the petitioner did not deduct foreign inland 
freight charges from the AUV because it was unable to establish the 
distances between the Chinese mills and the ports closest to them). See 
PRC Initiation Checklist.
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    \3\ The petitioner based the AUV on customs data for the period 
April 1, 2006, through August 30, 2006, the most recently available 
data for the POI at the time of the petition filing.
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Normal Value
    The petitioner stated that the PRC was a non-market economy (NME) 
and no determination to the contrary has 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: Chlorinated Isocyanurates From the People's Republic of China, 
70 FR 24502 (May 10, 2005), Notice of Final Determination of Sales at 
Less Than Fair Value and Affirmative Critical Circumstances: Magnesium 
Metal from the People's Republic of China, 70 FR 9037 (Feb. 24, 2005) 
and 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 (Feb.14, 2005). 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, because available 
information does not permit the NV of the merchandise to be determined 
under section 773(a) of the Act, 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.
    The petitioner identified India as the surrogate country, arguing 
that India is an appropriate surrogate, pursuant to section 773(c)(4) 
of the Act, because it is a market economy country that is at a level 
of economic development comparable to that of the PRC and is a 
significant producer and exporter of CFS. See Volume II of the PRC 
petition at pages 2-3. Based on the information provided by the 
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, the Department will solicit comments 
regarding surrogate country selection. Also, pursuant to 19 CFR 
351.301(c)(3)(i), 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.
    The petitioner explained that the production process for CFS begins 
with the manufacture of groundwood free pulp, which involves the use of 
wood fiber as the primary raw material. The wood is then placed into 
digester cooking vessels and mixed with various chemicals to produce 
pulp which is then washed and bleached. The chemical pulp is then 
placed in a paper machine which spreads the pulp into a uniform flat 
surface and removes water from the pulp through both mechanical and 
thermal means. The last section of the paper machine consists of 
several calendaring rolls with a reel device for winding the paper into 
a roll, which is then sent through a coating process. See Volume II of 
the PRC petition at pages 3 through 6, and Exhibit I-5. The

[[Page 68541]]

petitioner stated that, to the best of its knowledge, Chinese producers 
manufacturing CFS use the same processes and machinery as U.S. 
producers, and many Chinese mills use Western technology and mills 
built by Western companies. According to the petitioner, many of the 
CFS mills in the PRC are fully integrated. See Volume II of the PRC 
petition at page 5.
    The petitioner provided a dumping margin calculation using the 
Department's NME methodology as required by 19 CFR 351.202(b)(7)(i)(C). 
See Volume II of the PRC petition at Exhibits II-5 and 14, as revised 
in Exhibits 3 and 4, respectively, of the November 9, 2006, supplement 
to the petition. According to the petitioner, the cost model provided 
in Exhibit II-5 of the PRC petition, as revised in Exhibit 2 of the 
November 17, 2006 supplement to the petition, reflects the cost of 
producing the type of paper (i.e., 70 lb. (104g/m3) basis 
weight, grade 2, double-sided CFS) that can be imported under either of 
the tariff categories used to derive U.S. price, categories which 
comprise the majority of subject merchandise imports from the PRC 
during the POI. See PRC Initiation Checklist.
    To determine the quantities of inputs for each raw material used by 
the PRC producers to produce CFS, the petitioner relied on its own 
production experience because it claimed that it is not aware of any 
publicly available information regarding the factor inputs and factor 
consumption rates pertaining to Chinese producers of CFS. In accordance 
with section 773(c)(4) of the Act, the petitioner valued factors of 
production, where possible, using reasonably available, public 
surrogate country data. To value certain factors of production, the 
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, and compiled by World Trade Data Atlas (WTA). Since there were 
no Indian imports of one minor input, the petitioner used import data 
for Indonesia from the WTA to value this input. See PRC Initiation 
Checklist.
    Since Indian and Indonesian import values are expressed in a 
foreign currency, the petitioner converted these values into U.S. 
dollars using the exchange rates on Import Administration's Web site, 
ia.ita.doc.gov/exchange/india.txt, for the period during which the 
imports were made. The petitioner then inflated the resulting amounts 
to a POI value using the Indian and, where applicable, Indonesian, 
Wholesale Price Index (WPI) for ``All Commodities.'' \4\
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    \4\ Source: International Financial Statistics, IMF, October 
2006.
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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, the petitioner used a labor rate of $0.97 per hour, published on 
the Department Web site, in accordance with the Department's 
regulations. See 19 CFR 351.408(c)(3) and the PRC Initiation Checklist.
    The petitioner valued the various forms of energy used in the 
production of CFS based on the following sources: (1) the Indian 
electricity rate as reported by the U.S. Department of Energy for the 
year 2000, inflated to a POI value using the WPI for power, fuel, and 
lubrications published by the Reserve Bank of India (see Volume II of 
the PRC petition at page 9 and Exhibit II-9); (2) Indian natural gas 
prices charged to industrial users during a period overlapping the POI, 
as reported by CRISIL Research India (see Volume II of the PRC petition 
at page 9 and Exhibit II-10); (3) prices for hydrocarbon products (to 
value fuel oil) quoted by Bharat Petroleum Corporation, Ltd., which is, 
according to the petitioner, a major supplier of oil and other fuel 
products throughout India (see Volume II of the PRC petition at pages 
9-10 and Exhibit II-11); and (4) the price of coal from the TERI Energy 
Data Directory & Yearbook 2003/04, inflated using the Indian WPI for 
power, fuel and lubricants, and converted from Rupees per metric ton to 
U.S. dollars per million British thermal units (see Volume II of the 
PRC petition at page 10 and Exhibit II-12). The Department revised the 
petitioner's value for natural gas to reflect the price in effect 
during the POI only. See PRC Initiation Checklist for further details.
    The petitioner calculated surrogate financial ratios (overhead, 
SG&A, and profit) from the annual reports of two Indian producers of 
CFS: The 2004-2005 Annual Reports of Ballapur Industries, Ltd. 
(Ballapur) and the 2005-2006 Annual Report of Seshasayee Paper and 
Boards, Ltd. (Seshasayee). See Volume II of the PRC petition at page 10 
and Exhibit I-13. The Department revised the petitioner's financial 
ratio calculations by including in the calculations certain financial 
statement line items that were omitted from the calculations and by 
reclassifying certain expenses used in the calculations. See PRC 
Initiation Checklist.

Fair Value Comparisons

    Based on the data provided by the petitioner, there is reason to 
believe that imports of CFS from Indonesia, Korea, 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 to CV, calculated in accordance with 
section 773(a)(4) of the Act, the weighted-average dumping margin for 
CFS is 99.14 percent for Indonesia, and 71.81 percent for Korea. Based 
on comparisons of EP to NV, calculated in accordance with section 
773(c) of the Act and adjusted as noted above, the weighted-average 
dumping margin for CFS from the PRC is 99.65 percent.

Initiation of Antidumping Investigations

    Based upon the examination of the petitions on CFS from Indonesia, 
Korea, and the PRC, the Department finds that the petitions meet the 
requirements of section 732 of the Act. Therefore, we are initiating 
antidumping duty investigations to determine whether imports of CFS 
from Indonesia, Korea, and the PRC are being, or are likely to be, sold 
in the United States at less than fair value. In accordance with 
section 733(b)(1)(A) of the Act, unless postponed, we will make our 
preliminary determinations no later than 140 days after the date of 
this initiation.

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 (Separate Rates and Combination Rates Bulletin), 
(Apr. 5, 2005), available on the Department's Web site at https://
ia.ita.doc.gov/policy/bull05-1.pdf. The process requires the submission 
of a separate-rate status application. Based on our experience in 
processing the separate-rate applications in the following antidumping 
duty investigations, we have modified the application for this 
investigation to make it more administrable and easier for applicants 
to complete: Initiation of Antidumping Duty Investigations: Certain 
Lined Paper Products from India, Indonesia, and the People's Republic 
of China, 70 FR 58374, 58379 (Oct. 6, 2005), Initiation of Antidumping 
Duty Investigation: Certain Artist Canvas From the People's Republic of 
China,70 FR 21996, 21999 (Apr. 28,

[[Page 68542]]

2005) (Artist Canvas from the PRC) 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 35625, 35629 (June 
21, 2005) (Sawblades from the PRC and Korea). The specific requirements 
for submitting the separate-rate 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/ia-highlights-
and-news.html on the date of publication of this initiation notice in 
the Federal Register. The separate-rate application is due no later 
than January 26, 2007.

NME Respondent Selection and Quantity and Value Questionnaire

    For NME investigations, it is the Department's practice to request 
quantity and value information from all known exporters identified in 
the petition. In addition, the Department typically requests the 
assistance of the NME government in transmitting the Department's 
quantity and value questionnaire to all companies that manufacture and 
export subject merchandise to the United States, as well as to 
manufacturers that produce the subject merchandise for companies that 
were engaged in exporting subject merchandise to the United States 
during the POI. The quantity and value data received from NME exporters 
is used as the basis to select the mandatory respondents. Although many 
NME exporters respond to the quantity and value information request, at 
times some exporters may not have received the quantity and value 
questionnaire or may not have received it in time to respond by the 
specified deadline.
    The Department requires that the respondents submit a response to 
both the quantity and value questionnaire and the separate-rate 
application by the respective deadlines in order to receive 
consideration for separate-rate status. This procedure will be applied 
to this and all future NME investigations. See Artist Canvas from the 
PRC, 70 FR at 21999, Sawblades from the PRC and Korea, 70 FR at 35629, 
and Initiation of Antidumping Duty Investigation: Certain Activated 
Carbon from the People's Republic of China, 71 FR 16757, 16760 (Apr. 4, 
2006). Appendix I of this notice contains the quantity and value 
questionnaire that must be submitted by all NME exporters no later than 
December 27, 2006. In addition, the Department will post the quantity 
and value questionnaire along with the filing instructions on the IA 
Web site: https://ia.ita.doc.gov/ia-highlights-and-
news.html. The Department will send the quantity and value 
questionnaire to those companies identified in Exhibit I-5 of Volume I 
of the PRC petition and the NME government.

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]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.

Distribution of Copies of the Petitions

    In accordance with section 732(b)(3)(A) of the Act, copies of the 
public versions of the petitions have been provided to the 
representatives of the Governments of Indonesia, Korea, and the PRC. We 
will attempt to provide a copy of the public version of the petitions 
to the foreign producers/exporters named in the petitions.

International Trade Commission Notification

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

Preliminary Determinations by the International Trade Commission

    The ITC will preliminarily determine, no later than December 15, 
2006, whether there is a reasonable indication that imports of CFS from 
Indonesia, Korea, and the PRC are materially injuring, or threatening 
material injury to, a U.S. industry. A negative ITC determination with 
respect to any of the investigations will result in those 
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: November 20, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.

APPENDIX I

    Where it is not practicable to examine all known producers/
exporters of subject merchandise, section 777A(c)(2) of the Tariff 
Act of 1930 (as amended) permits us to investigate 1) a sample of 
exporters, producers, or types of products that is statistically 
valid based on the information available at the time of selection, 
or 2) exporters and producers accounting for the largest volume and 
value of the subject merchandise that can reasonably be examined. In 
the chart below, please provide the total quantity and total value 
of all your sales of merchandise covered by the scope of this 
investigation (see scope section of this notice), produced in the 
PRC, and exported/shipped to the United States during the period 
April 1, 2006, through September 30, 2006.

----------------------------------------------------------------------------------------------------------------
                             Market
----------------------------------------------------------------- Total Quantity   Terms of Sale    Total Value
                          United States
----------------------------------------------------------------------------------------------------------------
1. Export Price Sales...........................................  ..............  ..............  ..............
2...............................................................  ..............  ..............  ..............
    a. Exporter name............................................  ..............  ..............  ..............
    b. Address..................................................  ..............  ..............  ..............
    c. Contact..................................................  ..............  ..............  ..............
    d. Phone No.................................................  ..............  ..............  ..............
    e. Fax No...................................................  ..............  ..............  ..............
3. Constructed Export Price Sales...............................  ..............  ..............  ..............
4. Further Manufactured.........................................  ..............  ..............  ..............

[[Page 68543]]

 
Total Sales.....................................................  ..............  ..............  ..............
----------------------------------------------------------------------------------------------------------------

Total Quantity:

     Please report quantity on a metric ton basis. If any 
conversions were used, please provide the conversion formula and 
source.

Terms of Sales:

     Please report all sales on the same terms (e.g., free 
on board).

Total Value:

     All sales values should be reported in U.S. dollars. 
Please indicate any exchange rates used and their respective dates 
and sources.

Export Price Sales:

     Generally, a U.S. sale is classified as an export price 
sale when the first sale to an unaffiliated person occurs before 
importation into the United States.
     Please include any sales exported by your company 
directly to the United States;
     Please include any sales exported by your company to a 
third-country market economy reseller where you had knowledge that 
the merchandise was destined to be resold to the United States.
     If you are a producer of subject merchandise, please 
include any sales manufactured by your company that were 
subsequently exported by an affiliated exporter to the United 
States.
     Please do not include any sales of merchandise 
manufactured in Hong Kong in your figures.

Constructed Export Price Sales:

     Generally, a U.S. sale is classified as a constructed 
export price sale when the first sale to an unaffiliated person 
occurs after importation. However, if the first sale to the 
unaffiliated person is made by a person in the United States 
affiliated with the foreign exporter, constructed export price 
applies even if the sale occurs prior to importation.
     Please include any sales exported by your company 
directly to the United States;
     Please include any sales exported by your company to a 
third-country market economy reseller where you had knowledge that 
the merchandise was destined to be resold to the United States.
     If you are a producer of subject merchandise, please 
include any sales manufactured by your company that were 
subsequently exported by an affiliated exporter to the United 
States.
     Please do not include any sales of merchandise 
manufactured in Hong Kong in your figures.

Further Manufactured:

     Further manufacture or assembly costs include amounts 
incurred for direct materials, labor and overhead, plus amounts for 
general and administrative expense, interest expense, and additional 
packing expense incurred in the country of further manufacture, as 
well as all costs involved in moving the product from the U.S. port 
of entry to the further manufacturer.
 [FR Doc. E6-20020 Filed 11-24-06; 8:45 am]
BILLING CODE 3510-P