Polyethylene Retail Carrier Bags from the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review and Partial Rescission of Review, 51588-51595 [E7-17751]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 72, Number 174 (Monday, September 10, 2007)]
[Notices]
[Pages 51588-51595]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-17751]


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DEPARTMENT OF COMMERCE

International Trade Administration

A-570-886


Polyethylene Retail Carrier Bags from the People's Republic of 
China: Preliminary Results of Antidumping Duty Administrative Review 
and Partial Rescission of Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to a request from the Polyethylene Retail Carrier 
Bag Committee,\1\ which represents domestic producers of polyethylene 
retail carrier bags, and individual requests from certain 
manufacturers/exporters of subject merchandise located in the People's 
Republic of China (``PRC''), the Department of Commerce (``the 
Department'') is conducting an administrative review of the antidumping 
duty order on polyethylene retail carrier bags (``PRCBs'') from the 
PRC. The

[[Page 51589]]

Department has reviewed shipments of subject merchandise made by 
Dongguan Nozawa Plastics Products Co., Ltd. and United Power Packaging, 
Ltd. (collectively, ``Nozawa''), and Rally Plastics Co., Ltd. 
(``Rally''), during the period August 1, 2005, through July 31, 2006.
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    \1\ Consisting of Hilex Poly Company, LLC and the Superbag 
Corporation (collectively, ``the petitioners'').
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    We preliminarily find that Nozawa and Rally made U.S. sales below 
normal value (``NV'') during the period of review (``POR''). The 
preliminary results are listed below in the section entitled 
``Preliminary Results of Review.'' If these preliminary results are 
adopted in our final results, we will instruct U.S. Customs and Border 
Protection (``CBP'') to assess the ad valorem margins against the 
entered value of each entry of the subject merchandise during the POR.

EFFECTIVE DATE: September 10, 2007.

FOR FURTHER INFORMATION CONTACT: Maisha Cryor, Zev Primor or Karine 
Gziryan, AD/CVD Operations, Office 4, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230; telephone: 
(202) 482-5831, (202) 482-4114, and (202) 482-4081, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On August 9, 2004, the Department published the antidumping duty 
order on PRCBs from the PRC. See Antidumping Duty Order: Polyethylene 
Retail Carrier Bags From the People's Republic of China, 69 FR 48201 
(August 9, 2004). On August 1, 2006, the Department notified interested 
parties of the opportunity to request an administrative review of this 
antidumping duty order. See Antidumping or Countervailing Duty Order, 
Finding, or Suspended Investigation; Opportunity to Request an 
Administrative Review; 71 FR 43441 (August 1, 2006). In accordance with 
19 CFR 351.213(b), from August 11, 2006, through August 29, 2006, the 
Department received letters from the following companies in which each 
company requested that the Department conduct an administrative review 
of its sales to the United States made during the POR: Chun Hing 
Plastic Packaging Mfy. Ltd. and Chun Yip Plastic Bag Factory 
(collectively, ``Chun Hing''); Crown Polyethylene Products (Int'l) Ltd. 
(``Crown''); Heng Rong Plastic Products Co., Ltd. (``Heng Rong''); 
Nozawa; Rally; and Samson Plastic Manufactory Co., Ltd. (``Samson''). 
On August 31, 2006, in accordance with 19 CFR 351.213(b), the 
petitioners requested that the Department conduct an administrative 
review of Rally's sales of subject merchandise to the United States 
made during the POR. On September 29, 2006, the Department initiated an 
antidumping duty administrative review covering Chun Hing, Crown, Heng 
Rong, Nozawa, Rally, and Samson. See Initiation of Antidumping and 
Countervailing Duty Administrative Reviews, 71 FR 57465 (September 29, 
2006) (``Initiation Notice'').
    The petitioners, on October 30, 2006, requested that the Department 
determine whether antidumping duties have been absorbed by the 
companies subject to the review. On November 20, 2006, Heng Rong 
notified the Department that it was withdrawing its request for 
administrative review. On November 20, 2006, the Department issued a 
quantity and value (``Q&V'') questionnaire, and a separate rate 
application/certification, to all of the manufacturers/exporters noted 
above. Crown withdrew its request for review on November 28, 2006. The 
Department received responses to the Q&V questionnaire from Chun Hing, 
Samson, and Rally on December 4, 2007, and from Nozawa on December 8, 
2007. Based upon these responses, the Department selected Nozawa and 
Rally as mandatory respondents in this administrative review on 
December 19, 2006. On that same day, the Department issued the standard 
non-market economy (``NME'') antidumping duty questionnaire to Nozawa 
and Rally. On January 19, 2007, the Department received separate rate 
applications from Chun Hing and Samson. The Department issued a 
supplemental questionnaire to Chun Hing and Samson concerning their 
separate rate applications on February 15, 2007. Between January and 
July 2007, Nozawa and Rally submitted responses to the Department's 
original and supplemental questionnaires covering sections A, C, D, and 
E of the standard NME antidumping duty questionnaire.\2\ The 
petitioners submitted comments on Rally's methodology for allocating 
its consumption of inputs on August 13, 2007, and Rally submitted 
rebuttal comments on August 20, 2007.
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    \2\ Section A of the NME questionnaire requests general 
information concerning a company's corporate structure and business 
practices, the merchandise under investigation that it sells, and 
the manner in which it sells that merchandise in all of its markets. 
Section C requests a complete listing of U.S. sales. Section D 
requests information on the factors of production of the merchandise 
sold in or to the United States. Section E requests information on 
further manufacturing.
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Period of Review

    The POR for this administrative review is August 1, 2005, through 
July 31, 2006.

Scope of the Order

    The merchandise subject to this antidumping duty order is PRCBs, 
which may be referred to as t-shirt sacks, merchandise bags, grocery 
bags, or checkout bags. The subject merchandise is defined as non-
sealable sacks and bags with handles (including drawstrings), without 
zippers or integral extruded closures, with or without gussets, with or 
without printing, of polyethylene film having a thickness no greater 
than 0.035 inch (0.889 mm) and no less than 0.00035 inch (0.00889 mm), 
and with no length or width shorter than 6 inches (15.24 cm) or longer 
than 40 inches (101.6 cm). The depth of the bag may be shorter than 6 
inches but not longer than 40 inches (101.6 cm).
    PRCBs are typically provided without any consumer packaging and 
free of charge by retail establishments, e.g., grocery, drug, 
convenience, department, specialty retail, discount stores, and 
restaurants, to their customers to package and carry their purchased 
products. The scope of the investigation excludes (1) polyethylene bags 
that are not printed with logos or store names and that are closeable 
with drawstrings made of polyethylene film and (2) polyethylene bags 
that are packed in consumer packaging with printing that refers to 
specific end-uses other than packaging and carrying merchandise from 
retail establishments, e.g., garbage bags, lawn bags, trash-can liners.
    Imports of the subject merchandise are currently classifiable under 
statistical category 3923.21.0085 of the Harmonized Tariff Schedule of 
the United States (``HTSUS'').\3\ This subheading may also cover 
products that are outside the scope of this investigation. Furthermore, 
although the HTSUS subheading is provided for convenience and customs 
purposes, our written description of the scope of this order is 
dispositive.
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    \3\ Until July 1, 2005, these products were classifiable under 
HTSUS 3923.21.0090 (Sacks and bags of polymers of ethylene, other). 
See Harmonized Tariff Schedule of the United States (2005)--
Supplement 1 Annotated for Statistical Reporting Purposes Change 
Record--17th Edition--Supplement 1, available at https://
hotdocs.usitc.gov/docs/tata/hts/bychapter/0510/0510chgs.pdf.
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Partial Rescission of Review

    In accordance with 19 CFR 351.213(d)(1), we are rescinding this 
administrative review with respect to Heng Rong and Crown. As noted 
above, on November 20 and 28, 2006, Heng

[[Page 51590]]

Rong and Crown, respectively, withdrew their requests for an 
administrative review. Since these requests to withdraw from the review 
were filed within 90 days of the Initiation Notice, and no other party 
requested an administrative review of U.S. sales made by either 
company, the Department is rescinding the review with respect to Heng 
Rong and Crown.

Partial Preliminary Rescission of Review

    Samson reported that it had three sales during the POR. However, 
according to the entry summary information provided by Samson, all of 
these sales entered the United States after the POR. See Samson's 
January 19, 2007, separate rate application response at page 4 and 
Exhibit 1. The Department confirmed with Samson that it had no sales of 
subject merchandise that entered the United States during the POR. See 
Memorandum from Mark Manning, Program Manager, to the File, ``Entries 
Of Subject Merchandise Made by Samson,'' dated August 30, 2007.
    The Department's practice, supported by substantial precedent, 
requires that there be entries during the POR upon which to assess 
antidumping duties, to conduct an administrative review. See, e.g., 
Certain Cut-To-Length Carbon-Quality Steel Plate Products From Italy: 
Preliminary Results and Partial Rescission of Antidumping Duty 
Administrative Review, 71 FR 11178 (March 6, 2006) and Certain Cut-to-
Length Carbon-Quality Steel Plate Products From Italy: Final Results 
and Partial Rescission of Antidumping Duty Administrative Review, 71 FR 
39299 (July 12, 2006) (unchanged in final results). Pursuant to 19 CFR 
351.213(d)(3), the Department will rescind an administrative review in 
whole or only with respect to a particular exporter or producer if we 
conclude that during the period of review there were ``no entries, 
exports, or sales of the subject merchandise.'' Since Samson confirmed 
that it did not enter subject merchandise into the United States during 
the POR, there are no entries to assess. Therefore, in accordance with 
19 CFR 351.213(d)(3), we are preliminarily rescinding the 
administrative review with respect to Samson.

Duty Absorption

    On October 30, 2006, the petitioners requested that the Department 
determine whether antidumping duties had been absorbed for U.S. sales 
of PRCBs made during the POR by Chun Hing, Crown, Nozawa, Heng Rong, 
Rally, and Samson. Section 751(a)(4) of the Tariff Act of 1930, as 
amended (``the Act''), provides for the Department, if requested, to 
determine during an administrative review initiated two or four years 
after publication of the order, whether antidumping duties have been 
absorbed by a foreign producer or exporter, if the subject merchandise 
is sold in the United States through an affiliated importer. As noted 
above, we have rescinded the review for Crown and Heng Rong, and 
preliminarily rescinded for Samson, thus making the petitioner's 
request with respect to these companies moot. In addition, Rally and 
Chun Hing did not sell subject merchandise in the United States through 
an affiliated importer. Thus, according to section 751(a)(4) of the 
Act, we did not investigate whether Rally and Chun Hing absorbed 
duties. In this case, only Nozawa sold subject merchandise in the 
United States through an affiliated importer. Because the antidumping 
duty order underlying this review was issued in 2004, and this review 
was initiated in 2006, we are conducting a duty absorption 
investigation in this segment of the proceeding.
    In determining whether the antidumping duties have been absorbed by 
the respondent, we presume the duties will be absorbed for those sales 
that have been made at less than NV. This presumption can be rebutted 
with evidence (e.g., an agreement between the affiliated importer and 
unaffiliated purchaser) that the unaffiliated purchaser will pay the 
full duty ultimately assessed on the subject merchandise. See, e.g., 
Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan: 
Preliminary Results of Antidumping Duty Administrative Review and 
Notice of Intent to Rescind in Part, 70 FR 39735, 39737 (July 11, 
2005), Notice of Final Results and Final Rescission in Part of 
Antidumping Duty Administrative Review: Certain Stainless Steel Butt-
Weld Pipe Fittings From Taiwan, 70 FR 73727 (December 13, 2005) 
(unchanged in final results). Prior to these preliminary results, the 
Department asked Nozawa to provide evidence to demonstrate that its 
unaffiliated U.S. purchasers will pay any antidumping duties ultimately 
assessed on entries of subject merchandise. Nozawa did not respond to 
the Department's request. See Memorandum from Mark Manning, Program 
Manager, Ad/CVD Operations, Office 4, to the File, regarding ``Nozawa's 
Response to Request for Duty Absorption Information,'' dated August 16, 
2007. Accordingly, based on the information on the record, we cannot 
conclude that the unaffiliated purchasers in the United States will pay 
the ultimately assessed duties. Because Nozawa did not rebut the duty-
absorption presumption with evidence that its unaffiliated U.S. 
purchasers will pay the full duty ultimately assessed on the subject 
merchandise, we preliminarily find that antidumping duties have been 
absorbed by Nozawa on all U.S. sales made through its affiliated 
importers.

NME Country Status

    In every case conducted by the Department involving the PRC, the 
PRC has been treated as an NME country. In accordance with section 
771(18)(C)(i) of the Act, any determination that a foreign country is 
an NME country shall remain in effect until revoked by the 
administering authority. See Brake Rotors From the People's Republic of 
China: Final Results and Partial Rescission of the 2004/2005 
Administrative Review and Notice of Rescission of 2004/2005 New Shipper 
Review, 71 FR 66304 (November 14, 2006). None of the parties to this 
proceeding have contested such treatment. Accordingly, we calculated NV 
in accordance with section 773(c) of the Act, which applies to NME 
countries.

Separate Rates

    A designation of a country as an NME remains in effect until it is 
revoked by the Department. See section 771(18)(C) of the Act. 
Accordingly, there is a rebuttable presumption that all companies 
within the PRC are subject to government control and, thus, should be 
assessed a single antidumping duty rate. It is the Department's 
standard policy to assign all exporters of the merchandise subject to 
review in NME countries a single rate unless an exporter can 
affirmatively demonstrate an absence of government control, both in law 
(de jure) and in fact (de facto), with respect to exports. To establish 
whether a company is sufficiently independent to be entitled to a 
separate, company-specific rate, the Department analyzes each exporting 
entity in an NME country under the test established in the Final 
Determination of Sales at Less than Fair Value: Sparklers from the 
People's Republic of China, 56 FR 20588 (May 6, 1991), as amplified by 
the Notice of Final Determination of Sales at Less Than Fair Value: 
Silicon Carbide from the People's Republic of China, 59 FR 22585 (May 
2, 1994).
    The Department's separate-rate test determines whether the 
exporters are independent from government control and does not 
consider, in general,

[[Page 51591]]

macroeconomic/border-type controls, e.g., export licenses, quotas, and 
minimum export prices, particularly if these controls are imposed to 
prevent dumping. The test focuses, rather, on controls over the 
investment, pricing, and output decision-making process at the 
individual firm level. See, e.g., Notice of Final Determination of 
Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate 
From Ukraine, 62 FR 61754, 61757 (November 19, 1997); and Tapered 
Roller Bearings and Parts Thereof, Finished and Unfinished, From the 
People's Republic of China; Final Results of Antidumping Administrative 
Review, 62 FR 61276, 61279 (November 17, 1997).
    Chun Hing, Nozawa, and Rally provided company-specific separate-
rate information and stated that the standards for the assignment of 
separate rates have been met because they are privately-owned trading 
companies incorporated and based in Hong Kong. See Chun Hing's January 
19, 2007, separate-rate application response at 17; Nozawa's March 16, 
2007, response at A2; Rally's March 12, 2007, response at A2-A3. 
Because each of these companies is foreign owned, it is not necessary 
to undertake additional separate-rates analysis for the Department to 
determine that the export activities of Chun Hing, Nozawa, and Rally 
are independent from the PRC government's control. Accordingly, Chun 
Hing, Nozawa, and Rally are eligible for a separate rate. See, e.g., 
Brake Rotors From the People's Republic of China: Preliminary Results 
of the Tenth New Shipper Review, 69 FR 30875, 30876 (June 1, 2004), 
Brake Rotors From the People's Republic of China: Final Results of the 
Tenth New Shipper Review, 69 FR 52228 (August 25, 2004) (unchanged in 
the final results) (``Brake Rotors 10\th\ NSR''); Notice of Final 
Determination of Sales at Less Than Fair Value: Creatine Monohydrate 
From the People's Republic of China, 64 FR 71104 (December 20, 1999); 
and Notice of Final Determination of Sales at Less Than Fair Value: 
Bicycles From the People's Republic of China, 61 FR 19026, 19027 (April 
30, 1996). The Department calculated company-specific dumping margins 
for Nozawa and Rally, and assigned Chun Hing a dumping margin equal to 
the weighted-average of the dumping margins calculated for Nozawa and 
Rally.

Surrogate Country and Factors

    On March 6, 2007, we issued to interested parties a list of 
possible surrogate market economy countries and invited parties to (1) 
comment on the suitability of the countries for use in this 
administrative review and the level of PRCBs production in those 
countries, and (2) submit publicly available information from those 
countries to use in valuing the factors of production (``FOPs'') used 
by the respondents to produce PRCBs. On April 3, 2007, the petitioners 
submitted information for the Department to consider in valuing the 
FOPs. Also on April 3, 2007, and June 18, 2007, Rally submitted 
information for the Department to consider in valuing the FOPs. All 
surrogate value data submitted by interested parties were from Indian 
sources. On May 31, 2007, the Department selected India as the 
surrogate market economy country for this administrative review.

Surrogate Country

    When the Department analyzes imports from an NME country, section 
773(c)(1) of the Act directs it to base NV, in most circumstances, on 
the NME producer's FOPs, valued in a surrogate market economy country 
or countries considered to be appropriate by the Department. In 
accordance with section 773(c)(4) of the Act, in valuing the FOPs, the 
Department shall utilize, to the extent possible, the prices or costs 
of FOPs in one or more market economy countries that are: (1) at a 
level of economic development comparable to that of the NME country; 
and (2) significant producers of comparable merchandise. On December 
21, 2006, the Office of Policy issued a memorandum identifying India as 
being at a level of economic development comparable to the PRC for the 
POR. See Memorandum from Ron Lorentzen, Director, Office of Policy to 
Mark Manning, Program Manager, AD/CVD Operations, Office 4, 
``Administrative Review of Polyethylene Retail Carrier Bags from the 
People's Republic of China: Request for a List of Surrogate 
Countries,'' dated December 21, 2006.
    In the Department's March 6, 2007, letter to interested parties 
requesting surrogate country and surrogate value comments, the 
Department noted that India is among the countries comparable to the 
PRC in terms of overall economic development. In addition, based on 
publicly available information placed on the record (i.e., export 
data), India is a significant producer of the subject merchandise. See 
Memorandum from Zev Primor, Senior International Trade Compliance 
Analyst, through Mark Manning, Program Manager, to Abdelali Elouaradia, 
Office Director, ``Antidumping Administrative Review of Polyethylene 
Retail Carrier Bags from the People's Republic of China: Selection of a 
Surrogate Country,'' dated May 31, 2007. Furthermore, we note that 
India has been the primary surrogate country in past segments of this 
case, and both Rally and the petitioners submitted surrogate values 
based on Indian data that are contemporaneous to the POR, which gives 
further credence to the use of India as a surrogate country. The 
sources of the surrogate factor values are discussed under the ``Normal 
Value'' section below and in the Memorandum from Zev Primor, Senior 
International Trade Compliance Analyst, through Mark Manning, Program 
Manager, to the File, ``Surrogate Values for the Preliminary Results,'' 
dated August 31, 2007 (``Surrogate Values Memorandum'').

Normal Value Comparisons

    To determine whether Nozawa's and Rally's sales of the subject 
merchandise to the United States were made at a price below NV, we 
compared their U.S. price to NV, as described in the ``U.S. Price'' and 
``Normal Value'' sections of this notice.

U.S. Price

A. Export Price

    In accordance with section 772(a) of the Act, we calculated the 
export price (``EP'') for sales to the United States by Rally and 
certain sales by Nozawa because the first sale to an unaffiliated party 
was made before the date of importation and the use of constructed EP 
(``CEP'') was not otherwise warranted. We calculated EP for Nozawa and 
Rally based on the prices to unaffiliated purchasers in the United 
States. For Nozawa, in accordance with section 772(c) of the Act, we 
first added gross unit price adjustments and then deducted from the 
price to unaffiliated purchasers, where appropriate, foreign inland 
freight, brokerage and handling, international freight, and marine 
insurance. See Memorandum from Zev Primor, Senior International Trade 
Compliance Analyst, to the File, ``Analysis for the Preliminary Results 
of the 2005-2006 Administrative Review of Polyethylene Retail Carrier 
Bags from the People's Republic of China: Dongguan Nozawa Plastic 
Products Co., Ltd., and United Power Packaging Ltd.,'' dated August 31, 
2007 (``Nozawa Preliminary Analysis Memorandum''). For Rally, also in 
accordance with section 772(c) of the Act, we first added gross unit 
price adjustments and then deducted from the price to unaffiliated 
purchasers, where appropriate, foreign inland freight, brokerage and 
handling, international freight, and marine

[[Page 51592]]

insurance. See Memorandum from Maisha Cryor, Senior International Trade 
Compliance Analyst, to the File, regarding ``Analysis Memorandum for 
the Preliminary Results of Rally Plastics Co., Ltd.,'' dated August 31, 
2007 (``Rally Preliminary Analysis Memorandum'').

B. Constructed Export Price

    In accordance with section 772(b) of the Act, CEP is the price at 
which the subject merchandise is first sold (or agreed to be sold) in 
the United States before or after the date of importation by or for the 
account of the producer or exporter of such merchandise or by a seller 
affiliated with the producer or exporter, to a purchaser not affiliated 
with the producer or exporter, as adjusted under sections 772(c) and 
(d) of the Act. In accordance with section 772(b) of the Act, we used 
CEP for certain of Nozawa's sales because Nozawa sold its subject 
merchandise to its affiliated companies in the United States Kal Pac 
Corporation (``Kal Pac'') and Packaging Solutions, Inc. (``PSI''), 
which, in turn, made the first sales of subject merchandise to 
unaffiliated U.S. customers. In addition, Nozawa reported that PSI made 
sales of subject merchandise which it further manufactured in the 
United States.
    We added twelve types of miscellaneous revenue to the gross unit 
price. See Nozawa Preliminary Analysis Memorandum at 2. In accordance 
with section 772(c)(2) of the Act, we made deductions from Nozawa's 
starting price for early payment discounts, rebates, foreign inland 
freight from the plant to the port of exportation, international 
freight, marine insurance, brokerage and handling, U.S. devanning 
expense, U.S. duty, inland freight from the warehouse to the 
unaffiliated U.S. customer, and commissions. Where foreign movement 
expenses or international movement expenses were provided by NME 
service providers or paid for in an NME currency, we valued these 
services using surrogate values. See Surrogate Values Memorandum at 
Attachment VII.. For those expenses that were provided by a market 
economy provider and paid for in market economy currency, we deducted 
the actual expenses incurred. See Nozawa Preliminary Analysis 
Memorandum at 2. In accordance with section 772(d)(1) of the Act, the 
Department additionally deducted credit expenses, inventory carrying 
costs, and U.S. indirect selling expenses from the U.S. price, all of 
which relate to commercial activity in the United States. We calculated 
Nozawa's credit expenses and inventory carrying costs based on the 
Federal Reserve short-term rate because Nozawa reported that neither 
Kal Pac nor PSI had short-term borrowings during the POR.
    We also deducted an amount for further-manufacturing costs, where 
applicable, in accordance with section 772(d)(2) of the Act. To 
calculate the cost of further manufacturing in the United States, we 
relied on PSI's reported cost of materials, labor, overhead, general 
and administrative expenses, and financial expenses of the further 
manufactured materials. In addition, we deducted CEP profit in 
accordance with sections 772(d)(3) and 772(f) of the Act.

C. Surrogate Values for Expenses Incurred in the PRC for U.S. Sales

    Nozawa and Rally reported that for certain U.S. sales, foreign 
inland freight was provided by an NME vendor or paid for using an NME 
currency. In such instances, we based the deduction of these charges on 
surrogate values. We valued foreign inland freight with the surrogate 
value for truck freight. For foreign brokerage and handling as well as 
international freight, Nozawa and Rally reported using market economy 
vendors and stated that these expenses were paid for in a market 
economy currency. Where movement services were provided by a market 
economy vendor and paid for in a market economy currency, we deducted 
the actual cost per kilogram of the freight. See Surrogate Values 
Memorandum at Attachment IX.

Normal Value

1. Methodology

    Section 773(c)(1)(B) of the Act provides that the Department shall 
determine the NV using an FOP methodology if the merchandise is 
exported from an NME and the information does not permit the 
calculation of NV using home-market prices, third-country prices, or 
constructed value under section 773(a) of the Act. The Department bases 
NV on the FOPs because the presence of government controls on various 
aspects of NMEs renders price comparisons and the calculation of 
production costs invalid under the Department's normal methodologies.
    The FOPs for PRCBs include: (1) quantities of raw materials 
employed; (2) hours of labor required; (3) amounts of energy and other 
utilities consumed; (4) representative capital and selling costs; and 
(5) packing materials. We used the FOPs reported by respondents for 
materials, energy, labor, by-products, and packing.
    In accordance with 19 CFR 351.408(c)(1), when a producer sources an 
input from a market-economy country and pays for it in a market-economy 
currency, the Department will normally value the factor using the 
actual price paid for the input. See 19 CFR 351.408(c)(1); see also 
Lasko Metal Products v. United States, 43 F.3d 1442, 1445-1446 (Fed. 
Cir. 1994) (affirming the Department's use of market-based prices to 
value certain FOPs). Where a portion of the input is purchased from a 
market-economy supplier and the remainder from an NME supplier, the 
Department will normally use the price paid for the inputs sourced from 
market-economy suppliers to value all of the input, provided the volume 
of the market-economy inputs as a share of total purchases from all 
sources is ``meaningful.'' See Antidumping Duties; Countervailing 
Duties; Final rule, 62 FR 27296, 27366 (May 19, 1997); Shakeproof v. 
United States, 268 F.3d 1376, 1382 (Fed. Cir. 2001). See also 19 CFR 
351.408(c)(1).

2. Factor Methodology

    During the POR, Nozawa did not produce certain types of merchandise 
that were sold during the POR. Consequently, the original FOP database 
filed by Nozawa did not contain factors of production for those control 
numbers (``CONNUMs'') sold but not produced by Nozawa during this POR. 
Because the vast majority of the CONNUMs sold by Nozawa were produced 
during this POR or the prior POR, Nozawa also submitted on the record 
of this review the FOP database from the prior review (i.e., the first 
administrative review). In addition, Nozawa submitted an FOP database 
incorporating the FOPs for all CONNUMs sold during the POR, using both 
production data from this and the prior POR. Therefore, for purposes of 
factor valuation, the Department is using the FOP database 
incorporating all CONNUMs sold during the POR. We note that certain FOP 
data were based on similar CONNUMs where the product was not produced 
in either this or the prior POR. The Department reviewed Nozawa's 
identification of the most similar matches for the CONNUMs sold but not 
produced during the first or second POR. In doing so, we determined the 
product characteristics which have the most significant impact on the 
cost of materials and then compared all product characteristics of the 
actual CONNUMS to the product characteristics of the proposed matching 
CONNUMs. We found that Nozawa's proposed matches were identical in the 
most significant product characteristics and had some insignificant 
differences

[[Page 51593]]

in other characteristics. Therefore, we accepted Nozawa's assignment of 
the most similar CONNUMs for those products sold but not produced 
during the POR. See Nozawa Preliminary Analysis Memorandum, at 3.
    With respect to Rally, we note that certain bag types produced by 
Rally contain certain attachments (e.g., plastic handles, plastic 
drawstring). Rally asserts that it reported its FOPs using an 
allocation methodology that assigns the consumption of the materials 
used to produce the attachments equally across all products. In a 
supplemental questionnaire, the Department asked Rally to allocate its 
consumption of materials used to produce these attachments to those 
CONNUMs that actually incorporate these items. See the Department's May 
27, 2007, section D supplemental questionnaire, at question 54.d. Rally 
replied that its accounting system does not track costs at this level 
and they could not report the FOPs in the manner requested by the 
Department. However, Rally claims that its material FOPs are based on a 
reasonable allocation methodology. See Rally's June 6, 2007, 
supplemental section D response at 23.
    The Department has analyzed Rally's reported sales and consumption 
data and has made the following determinations. We find that, on an 
aggregate basis, as would be expected, Rally's total quantity of inputs 
consumed to produce all subject merchandise sold in the U.S. market 
during the POR is greater than the total weight of all finished subject 
merchandise sold in the U.S. market during the POR. See Rally 
Preliminary Analysis Memorandum. However, on a CONNUM-specific level, 
we find that the total quantity of inputs consumed is less than the 
total finished weight for many CONNUMs, the vast majority of which have 
attachments. Id. Thus, Rally's inability to allocate the materials 
consumed for the attachments to the CONNUMs that actually have 
attachments has distorted the reported FOPs. In order to correct this 
distortion for the relevant CONNUMs, the Department increased the total 
reported materials weight by the appropriate percentage so that the 
revised input material weight is equal to the finished weight of the 
CONNUM, plus Rally's average yield loss percentage. Id. The Department 
will continue to examine this issue for the final results and will 
allow Rally one last opportunity to provide alternative methods of 
allocating its FOPs.

2. Factors of Production Valuation

    In accordance with section 773(c) of the Act, we calculated NV 
based on the FOPs reported by respondents for the POR. To calculate NV, 
we multiplied the reported per-unit factor-consumption rates by 
publicly available surrogate values. In selecting the surrogate values, 
we considered the quality, specificity, and contemporaneity of the 
data.
    Except as noted below, we valued raw material inputs using the 
weighted-average unit import values derived from the 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 in the World Trade Atlas, available 
at https://www.gtis.com/wta.htm (``WTA''). For those surrogate values 
based upon Indian import statistics, we disregarded prices which we 
have reason to believe or suspect may be subsidized. We have reason to 
believe or suspect that prices of inputs from Indonesia, South Korea, 
and Thailand may have been subsidized. We have found in other 
proceedings that these countries maintain broadly available, non-
industry-specific export subsidies and, therefore, it is reasonable to 
infer that all exports to all markets from these countries may be 
subsidized. See Notice of Final Determination of Sales at Less Than 
Fair Value and Negative Final Determination of Critical Circumstances: 
Certain Color Television Receivers From the People's Republic of China, 
69 FR 20594 (April 16, 2004) and accompanying Issues and Decision 
Memorandum at Comment 7; see also Certain Cut-to-Length Carbon Steel 
Plate from Romania: Notice of Final Results and Final Partial 
Rescission of Antidumping Duty Administrative Review, 70 FR 12651 
(March 15, 2005) and accompanying Issues and Decision Memorandum at 
Comment 4. The legislative history provides that in making its 
determination as to whether input values may be subsidized, the 
Department is not required to conduct a formal investigation; rather, 
Congress directed the Department to base its decision on information 
that is available to it at the time it makes its determination. See 
H.R. Rep. 100-576, at 590 (1988), reprinted in 1988 U.S.C.C.A.N. 1547, 
1623-24. Therefore, based on the information currently available, we 
have not used prices from these countries in calculating the surrogate 
values based on Indian import data. We have also disregarded Indian 
import data from countries that the Department has previously 
determined to be NME countries, as well as imports originating from 
``unspecified'' countries because the Department could not be certain 
that they were not from either an NME or a country with generally 
available export subsidies. See Notice of Preliminary Determination of 
Sales at Less Than Fair Value and Postponement of Final Determination: 
Chlorinated Isocyanurates From the People's Republic of China, 69 FR 
75294, 75300 (December 16, 2004), 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) (unchanged in 
the final results). For a comprehensive list of the sources and data 
used to determine the surrogate vales for the FOPs, by-products, and 
the surrogate financial ratios for factory overhead, selling, general 
and administrative expenses (``SG&A''), and profit, see Surrogate 
Values Memorandum at Attachments I and IX.
    Where appropriate, we adjusted the Indian import prices by 
including freight costs to make them delivered prices. Specifically, we 
added to the Indian import prices a surrogate freight cost using the 
shorter of the reported distance from the domestic supplier to the 
factory of production or the distance from the nearest seaport to the 
factory of production where appropriate. This adjustment is in 
accordance with the Court of Appeals for the Federal Circuit's decision 
in Sigma Corp. v. United States, 117 F.3d 1401, 1407-1408 (Fed. Cir. 
1997). Where we did not use Indian import data as the basis of the 
surrogate value, we calculated inland freight based on the reported 
distance from the supplier to the factory. We used the freight rates 
obtained from www.infreight.com to value truck freight. See Surrogate 
Values Memorandum at Attachment VIII.
    It is the Department's practice to calculate price index adjustors 
to inflate or deflate, as appropriate, surrogate values that are not 
contemporaneous with the POR using the wholesale price index for the 
subject country. See Certain Preserved Mushrooms from the People's 
Republic of China: Final Results of the Antidumping Duty New Shipper 
Review, 71 FR 66910 (November 17, 2006). Therefore, where publicly 
available information contemporaneous with the POR could not be 
obtained, surrogate values were adjusted using the Wholesale Price 
Index for India, as published in the International Financial Statistics 
of the International Monetary Fund.
    To value electricity, we used the 2000 electricity price data from 
International

[[Page 51594]]

Energy Agency, Energy Prices and Taxes--Quarterly Statistics (First 
Quarter 2003), adjusted for inflation. See Surrogate Values Memorandum 
at Attachment V.
    For direct labor, indirect labor, and packing labor, consistent 
with 19 CFR 351.408(c)(3), we used the PRC regression-based wage rate 
as reported on Import Administration's web site. See Expected Wages of 
Selected NME Countries (revised November 2005) (available at https://
ia.ita.doc.gov/wages). The source of these wage rate data on the Import 
Administration's website is the Yearbook of Labour Statistics 2003, 
ILO, (Geneva: 2003), Chapter 5B: Wages in Manufacturing. The years of 
the reported wage rates range from 2003 through 2004. Because this 
regression-based wage rate does not separate the labor rates into 
different skill levels or types of labor, we have applied the same wage 
rate to all skill levels and types of labor reported by each 
respondent. See Surrogate Value Memorandum at Attachment VI.
    To value factory overhead, SG&A, and profit values, we used 
information from Smitabh Intercon Limited; M/S Carry Print (India) 
Private Limited; Kuloday Plastomers Private Limited; Sangeeta Poly Pack 
Private Limited; and A.P. Polyplast Private Limited for the fiscal year 
ending March 31, 2006. From this information, we were able to determine 
factory overhead as a percentage of the total raw materials, labor and 
energy (``ML&E'') costs; SG&A as a percentage of ML&E plus overhead 
(i.e., cost of manufacture); and profit as a percentage of the cost of 
manufacture plus SG&A. See Surrogate Values Memorandum at Attachment 
VII.
    For packing materials, we used the per-kilogram values obtained 
from the WTA and made adjustments to account for freight costs incurred 
between the PRC supplier and Rally's plant. See Surrogate Values 
Memorandum at Attachment II.

Currency Conversion

    We made currency conversions into U.S. dollars, in accordance with 
section 773A(a) of the Act, based on the exchange rates in effect on 
the dates of the U.S. sales, as certified by the Federal Reserve Bank.

Preliminary Results of the Review

    The Department has determined that the following preliminary 
dumping margins exist for the period August 1, 2005, through July 31, 
2006:

              Polyethylene Retail Carrier Bags from the PRC
------------------------------------------------------------------------
                                                            Weighted-
                 Manufacturer/Exporter                    Average Margin
                                                            (Percent)
------------------------------------------------------------------------
Chun Hing Plastic Packaging Mfy. Ltd. and Chun Yip               13.35
 Plastic Bag Factory...................................
Dongguan Nozawa Plastics Products Co., Ltd. and United            2.54
 Power Packaging, Ltd..................................
Rally Plastics Co., Ltd................................          31.71
------------------------------------------------------------------------

Disclosure

    The Department will disclose calculations performed for these 
preliminary results to the parties within five days of the date of 
publication of this notice in accordance with 19 CFR 351.224(b). 
Interested parties may submit case briefs and/or written comments no 
later than 30 days after the date of publication of these preliminary 
results of review. See 19 CFR 351.309(c)(1)(ii). Interested parties may 
submit publicly available information to value factors no later than 20 
days after the date of publication of these preliminary results of 
review. See 19 CFR 351.301(c)(3)(ii). Rebuttal briefs and rebuttals to 
written comments, limited to issues raised in such briefs or comments, 
may be filed no later than five days after the time limit for filing 
the case briefs. See 19 CFR 351.309(d). The Department requests that 
parties submitting written comments also provide the Department with an 
additional copy of those comments on diskette.
    Any interested party may request a hearing within 30 days of 
publication of these preliminary results. See 19 CFR 351.310(c). 
Requests should contain the following information: (1) the party's 
name, address, and telephone number; (2) the number of participants; 
and (3) a list of the issues to be discussed. Oral presentations will 
be limited to issues raised in the briefs. If we receive a request for 
a hearing, we intend to hold the hearing seven days after the deadline 
for submission of the rebuttal briefs at the U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 
20230. The Department intends to issue the final results of this 
administrative review, which will include the results of its analysis 
of issues raised in any such comments, within 120 days of publication 
of these preliminary results, pursuant to section 751(a)(3)(A) of the 
Act.

Assessment Rates

    Upon issuance of the final results, the Department will determine, 
and U.S. Customs and Border Protection (``CBP'') shall assess, 
antidumping duties on all appropriate entries. The Department intends 
to issue assessment instructions to CBP 15 days after the date of 
publication of the final results of review. If these preliminary 
results are adopted in our final results of review, the Department 
shall determine, and CBP shall assess, antidumping duties on all 
appropriate entries. Pursuant to 19 CFR 351.212(b)(1), we will 
calculate importer-specific (or customer-specific) ad valorem or, where 
the entered value was not known by the respondent, per-unit duty 
assessment rates based on the ratio of the total amount of the dumping 
margins calculated for the examined sales to the total entered value, 
or total quantity, of those same sales. We will instruct CBP to assess 
antidumping duties on all appropriate entries covered by this review if 
any importer-specific or customer-specific assessment rate calculated 
in the final results of this review is above de minimis.

Cash Deposit Requirements

    The following cash deposit requirements will be effective upon 
publication of the final results of the administrative review for 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results, as provided by section 751(a)(2)(C) of the Act: (1) for 
subject merchandise exported by Chun Hing, Nozawa, and Rally, the cash-
deposit rate will be that established in the final results of review 
(except, if the rate is zero or de minimis, no cash deposit will be 
required); (2) for previously reviewed or investigated companies not 
listed above that have separate rates, the cash-deposit rate will 
continue to be the company-specific rate published for the most recent 
period; (3) for all other PRC exporters of subject merchandise, which 
have not been found to be entitled to a separate rate, the cash-deposit 
rate will be PRC-wide rate of 77.57 percent; (4) for all non-PRC 
exporters of subject merchandise, the cash-deposit rate will be the 
rate applicable to the PRC exporter that supplied that exporter. These 
deposit requirements, when imposed, shall remain in effect until 
further notice.

Notification to Importers

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR

[[Page 51595]]

351.402(f)(2) to file a certificate regarding the reimbursement of 
antidumping duties prior to liquidation of the relevant entries during 
this review period. Failure to comply with this requirement could 
result in the Secretary's presumption that reimbursement of antidumping 
duties occurred and the subsequent assessment of double antidumping 
duties.
    This administrative review and this notice are in accordance with 
sections 751(a)(1) and 777(i) of the Act, 19 CFR 351.213, and 19 CFR 
351.221(b)(4).

    Dated: August 31, 2007.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E7-17751 Filed 9-7-07; 8:45 am]
BILLING CODE 3510-DS-S