Laminated Woven Sacks from the People's Republic of China: Initiation of Countervailing Duty Investigation, 40839-40841 [E7-14375]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 72, Number 142 (Wednesday, July 25, 2007)]
[Notices]
[Pages 40839-40841]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-14375]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

[C-570-917]


Laminated Woven Sacks from the People's Republic of China: 
Initiation of Countervailing Duty Investigation

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

EFFECTIVE DATE: July 25, 2007.

FOR FURTHER INFORMATION CONTACT: Mark Hoadley or Joshua Reitze, AD/CVD 
Operations, Office 6, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
3128 and (202) 482-0666, respectively.

Initiation of Investigation

SUPPLEMENTARY INFORMATION:

The Petition

    On June 28, 2007, the Department of Commerce (Department) received 
a Petition filed in proper form by the Laminated Woven Sacks Committee 
and its individual members, Bancroft Bag, Inc., Coating Excellence 
International, LLC, Hood Packaging Corporation, Mid-America Packaging, 
LLC, and Polytex Fibers Corporation (collectively, the Petitioners). 
See Petition for the Imposition of Antidumping and Countervailing 
Duties Against Laminated Woven Sacks from the People's Republic of 
China (June 28, 2007) (Petition). On July 2, July 6, July 11, and July 
12, 2007, the Department issued requests for additional information and 
clarification of certain areas of the Petition involving general issues 
concerning the countervailing duty (CVD) allegations. Based on the 
Department's requests, the Petitioners filed additional information 
concerning the Petition on July 11 and July 13, 2007.
    In accordance with section 702(b)(1) of the Tariff Act of 1930, as 
amended (the Act), the Petitioners allege that manufacturers, 
producers, or exporters of laminated woven sacks (LWS) in the People's 
Republic of China (the PRC) receive countervailable subsidies within 
the meaning of section 701 of the Act and that such imports are 
materially retarding the establishment of an industry in the United 
States, or that such an industry is materially injured or threatened 
with material injury by reason of such imports.
    The Department finds that the Petitioners filed the Petition on 
behalf of the domestic industry because they are interested parties as 
defined in sections 771(9)(E) and (F) of the Act and the Petitioners 
have demonstrated sufficient industry support with respect to the 
countervailing duty investigation (see ``Determination of Industry 
Support for the Petition'' section below).

Scope of Investigation

    The merchandise covered by this investigation is laminated woven 
sacks. See Attachment to this notice for a complete description of the 
merchandise covered by this investigation.

Comments on Scope of Investigation

    During our review of the Petition, we discussed the scope with the 
Petitioners to ensure that it is an accurate reflection of the products 
for which the domestic industry is See king 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 by August 7, 2007. Comments should be 
addressed to Import Administration's Central Records Unit, Room 1870, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230, attention Mark Hoadley, room 7866. 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 determination.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, on June 29, 2007, 
the Department invited representatives of the Government of the 
People's Republic of China (herein after the GOC) for consultations 
with respect to the countervailing duty Petition. The Department held 
these consultations in Beijing, China, with representatives of the GOC 
on July 16, 2007. See Memorandum to the File, ``Consultations with 
Officials from the Government of the People's Republic of China'' (July 
16, 2007) (on file in the Central Records Unit (CRU) of the Department 
of Commerce building, Room B-099).

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(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: (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 702(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 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

[[Page 40840]]

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, covered by the scope as defined in the Petition).
    With regard to the domestic like product, the Petitioners do not 
offer a definition of domestic like product distinct from the scope of 
the investigation. Based on our analysis of the information submitted 
on the record, we have determined that LWS constitute a single domestic 
like product and we have analyzed industry support in terms of that 
domestic like product. For a discussion of the domestic like product 
analysis in this case, see the Countervailing Duty Investigation 
Initiation Checklist: Laminated Woven Sacks from the People's Republic 
of China (PRC), Industry Support at Attachment II (CVD 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 the Petitioners have established industry support. 
First, the Petition established support from domestic producers (or 
workers) accounting for more than 50 percent of the total production of 
the domestic like product and, as such, the Department is not required 
to take further action in order to evaluate industry support (e.g., 
polling). See Section 702(c)(4)(D) of the Act. Second, the domestic 
producers have met the statutory criteria for industry support under 
702(c)(4)(A)(i) because the domestic producers (or workers) who support 
the Petition account for at least 25 percent of the total production of 
the domestic like product. Finally, the domestic producers have met the 
statutory criteria for industry support under 702(c)(4)(A)(ii) because 
the domestic producers (or workers) 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. Accordingly, the Department determines 
that the Petition was filed on behalf of the domestic industry within 
the meaning of section 702(b)(1) of the Act. See CVD Initiation 
Checklist at Attachment II (Industry Support).
    The Department finds that the Petitioners filed the Petition on 
behalf of the domestic industry because they are interested parties as 
defined in sections 771(9)(C), (E), and (F) of the Act and they have 
demonstrated sufficient industry support with respect to the 
countervailing duty investigation that they are requesting the 
Department initiate. See CVD Initiation Checklist at Attachment II 
(Industry Support).

Allegations and Evidence of Material Retardation and of Material Injury 
and Causation

    Because the PRC is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, section 701(a)(2) of the Act 
applies to these investigations. Accordingly, the ITC must determine 
whether imports of the subject merchandise from the PRC materially 
injure, or threaten material injury to, a U.S. industry, or whether the 
establishment of an industry in the United States is materially 
retarded.
    Section 703(a)(1)(B) of the Act states that the ITC ``shall 
determine . . . .whether there is a reasonable indication that the 
establishment of an industry in the United States is materially 
retarded by reason of imports of the subject merchandise.'' The 
Petitioners allege that imports of subject merchandise from the PRC 
have materially retarded the establishment of the domestic industry 
producing LWS. The Petitioners argue that U.S. producers of LWS have 
not stabilized their operations and, therefore, a U.S. industry 
producing LWS has not been established. To support their argument, the 
Petitioners examine the five factors considered by the ITC to determine 
if an industry is established, as set forth in the ITC's Antidumping 
and Countervailing Duty Handbook. See Antidumping and Countervailing 
Duty Handbook (12th Ed.), USITC Pub. 3916 (April 2007). Furthermore, 
the Petitioners contend that their efforts to establish a domestic LWS 
industry have been thwarted by dumped and subsidized imports of LWS 
from the PRC.
    The Petitioners also allege that the U.S. industry producing the 
domestic like product is being materially injured, or is threatened 
with material injury, by reason of the subsidized imports of the 
subject merchandise. The Petitioners contend that the industry's 
injured condition is illustrated by lost sales, lost revenue, 
underselling and price depression or suppression, poor financial 
performance, capacity and depressed capacity utilization rate, and 
increased import penetration.
    We have assessed the allegations and supporting evidence regarding 
material retardation and 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 CVD 
Initiation Checklist at Attachment III (Injury).

Subsidy Allegations

    Section 702(b) of the Act requires the Department to initiate a 
countervailing duty proceeding whenever an interested party files a 
petition on behalf of an industry that (1) alleges the elements 
necessary for an imposition of a duty under section 701(a) of the Act 
and (2) is accompanied by information reasonably available to the 
Petitioners supporting the allegations.
    The Department has examined the countervailing duty Petition on LWS 
from the PRC and found that it complies with the requirements of 
section 702(b) of the Act. Therefore, in accordance with section 702(b) 
of the Act, we are initiating a countervailing duty investigation to 
determine whether manufacturers, producers, or exporters of LWS in the 
PRC receive countervailable subsidies.
    We are including in our investigation the following programs 
alleged in the Petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in the PRC:
     GOC Loan Programs
     1. Policy Loans to LWS Producers from Government-Owned Banks
     2. Loan Forgiveness for LWS Producers by the GOC
     GOC Provision of Goods or Services for Less Than Adequate 
Remuneration
     3. Provision of Electricity for Less than Adequate Remuneration
     4. Provision of Land for Less than Adequate Remuneration
     GOC Grant Programs
     5. The State Key Technologies Renovation Project Fund
     6. Grants and Other Funding for High Technology Equipment for the 
Textile Industry
     7. Grants to Loss-Making State-Owned Enterprises
     GOC Income Tax Programs
     8. Preferential Tax Policies for Enterprises with Foreign 
Investment (Two Free, Three Half Program)
     9. Preferential Tax Policies for Export-Oriented Foreign Invested 
Enterprises (FIEs)
     10. Corporate Income Tax Refund Program for Reinvestment of FIE 
Profits in Export-Oriented Enterprises
     11. Tax Benefits for FIEs in Encouraged Industries that

[[Page 40841]]

Purchase Domestic Origin Machinery
     12. Tax Program for FIEs Recognized as High or New Technology 
Enterprises
     13. Preferential Tax Policies for Research and Development
     14. Tax Subsidies to FIEs in Specially Designated Geographic Areas
     15. Preferential Tax Policies for Township Enterprises by FIEs
     GOC Indirect Tax Programs and Import Tariff Programs
     16. Value Added Tax (VAT) Rebate for FIE Purchases of Domestically 
Produced Equipment
     17. VAT and Tariff Exemptions for FIEs Using Imported Technology 
and Equipment in Encouraged Industries
     18. VAT and Tariff Exemptions on Imported Equipment (Domestic 
Enterprises)
     19. Exemption from Payment of Staff and Worker Benefit Taxes for 
Export-Oriented Enterprises
     Provincial Grant Programs
     20. Export Interest Subsidy Funds for Enterprises Located in 
Zhejiang and Guangdong Provinces
     21. Technological Innovation Funds Provided by Zhejiang Province
     22. Programs to Rebate Antidumping Legal Fees
     Provincial and Local Tax Programs for FIEs
     23. Local Income Tax Exemption and Reduction Programs for 
``Productive'' FIEs
    For further information explaining the basis for the Department's 
determination to investigate these programs, see CVD Initiation 
Checklist.

Application of the Countervailing Duty Law to the PRC

    The Department has treated the PRC as an NME country in all past 
antidumping duty investigations and administrative reviews. In 
accordance with section 771(18)(C)(i) of the Act, any determination 
that a country is an NME country shall remain in effect until revoked 
by the administering authority. See Tapered Roller Bearings and Parts 
Thereof, Finished and Unfinished, (TRBs) From the People's Republic of 
China: Preliminary Results of 2001-2002 Administrative Review and 
Partial Rescission of Review, 68 FR 7500, 7500-1 (February 14, 2003), 
unchanged in TRBs from the People's Republic of China: Final Results of 
2001-2002 Administrative Review, 68 FR 70488, 70488-89 (December 18, 
2003).
    In the amended preliminary determination in the investigation of 
coated free sheet paper from the PRC, the Department preliminarily 
determined that the current nature of the PRC economy does not create 
obstacles to applying the necessary criteria in the CVD law. See Coated 
Free Sheet Paper from the People's Republic of China; Amended 
Preliminary Affirmative Countervailing Duty Determination, 72 FR 17484, 
17486 (April 9, 2007) (CFS Preliminary Determination), and Memorandum 
for David M. Spooner, Assistant Secretary for Import Administration, 
``Countervailing Duty Investigation of Coated Free Sheet Paper from The 
People's Republic of China Whether the Analytic Elements of the 
Georgetown Steel Opinion are Applicable to China's Present-day 
Economy,'' (March 29, 2007), on file in the CRU. Therefore, because the 
Petitioners have provided sufficient allegations and support of their 
allegations to meet the statutory criteria for initiating a 
countervailing duty investigation of LWS from the PRC, initiation of a 
CVD investigation is warranted in this case.

Distribution of Copies of the Petition

    In accordance with section 702(b)(4)(A)(i) of the Act, a copy of 
the public version of the Petition has been provided to the GOC. To the 
extent practicable, we will attempt to provide a copy of the public 
version of the Petition to each exporter named in the Petition, 
consistent with 19 CFR 351.203(c)(2).

ITC Notification

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

Preliminary Determination by the ITC

    The ITC will preliminarily determine, no later than August 13, 
2007, whether there is a reasonable indication that imports of LWS from 
the PRC are materially retarding the establishment of a U.S. industry, 
or whether such an industry is materially injured or threatened with 
material injury by reason of such imports. See section 703(a)(2) of the 
Act. A negative ITC determination will result in the investigation 
being terminated; otherwise, the investigation will proceed according 
to statutory and regulatory time limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: July 18, 2007.
Joseph A. Spetrini,
Deputy Assistant Secretaryfor Import Administration.

Attachment

Scope of the Countervailing Duty Investigation

Laminated Woven Sacks from the People's Republic of China

    The merchandise covered by this investigation is laminated woven 
sacks. Laminated woven sacks are bags or sacks consisting of one or 
more plies of fabric consisting of woven polypropylene strip and/or 
woven polyethylene strip; with or without an extrusion coating of 
polypropylene and/or polyethylene on one or both sides of the 
fabric;\1\ laminated by any method either to an exterior ply of plastic 
film such as biaxially-oriented polypropylene (``BOPP'') or to an 
exterior ply of paper that is suitable for high quality print graphics; 
printed with three colors or more in register; with or without lining; 
whether or not closed on one end; whether or not in roll form; with or 
without handles; with or without special closing features; not 
exceeding one kilogram in weight. Laminated woven bags are typically 
used for retail packaging of consumer goods such as pet foods and bird 
seed.
---------------------------------------------------------------------------

    \1\ ``Paper suitable for high quality print graphics,'' as used 
herein, means paper having an ISO brightness of 82 or higher and a 
Sheffield Smoothness of 250 or less. Coated free sheet is an example 
of a paper suitable for high quality print graphics.
---------------------------------------------------------------------------

    Effective July 1, 2007, laminated woven sacks are classifiable 
under Harmonized Tariff Schedule of the United States (``HTSUS'') 
subheadings 6305.33.0050 and 6305.33.0080. Laminated woven sacks were 
previously classifiable under HTSUS subheading 6305.33.0020. If entered 
with plastic coating on both sides of the fabric consisting of woven 
polypropylene strip and/or woven polypropylene strip, laminated woven 
sacks may be classifiable under HTSUS subheadings 3923.21.0080, 
3923.21.0095, and 3923.29.0000. If entered not closed on one end or in 
roll form, laminated woven sacks may be classifiable under HTSUS 
subheading 5903.90.2500 and 3921.19.0000. Although HTSUS subheadings 
are provided for convenience and customs purposes, the written 
description of the scope of this investigation is dispositive.
[FR Doc. E7-14375 Filed 7-24-07; 8:45 am]
BILLING CODE 3510-DS-S