Certain Tissue Paper Products from the People's Republic of China: Notice of Initiation of Anti-circumvention Inquiry, 17127-17131 [2010-7662]
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Federal Register / Vol. 75, No. 64 / Monday, April 5, 2010 / Notices
record and to report findings and
recommendations to the Board.
Public comment is invited from
interested parties. Submissions (original
and 3 copies) shall be addressed to the
Board’s Executive Secretary at the
address listed below. The closing period
for their receipt is June 4, 2010. Rebuttal
comments in response to material
submitted during the foregoing period
may be submitted during the subsequent
15-day period (to June 21, 2010).
A copy of the application will be
available for public inspection at the
Office of the Executive Secretary,
Foreign–Trade Zones Board, Room
2111, U.S. Department of Commerce,
1401 Constitution Avenue, NW,
Washington, DC 20230–0002, and in the
‘‘Reading Room’’ section of the Board’s
website, which is accessible via
www.trade.gov/ftz. For further
information, contact Kathleen Boyce at
Kathleen.Boyce@trade.gov or (202) 482–
1346.
Dated: March 25, 2010.
Andrew McGilvray,
Executive Secretary.
[FR Doc. 2010–7669 Filed 4–2–10; 8:45 am]
BILLING CODE 3510–DS–S
DEPARTMENT OF COMMERCE
International Trade Administration
[A–570–894]
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Certain Tissue Paper Products from
the People’s Republic of China: Notice
of Initiation of Anti–circumvention
Inquiry
AGENCY: Import Administration,
International Trade Administration,
Department of Commerce.
SUMMARY: In response to a request from
Seaman Paper Company of
Massachusetts, Inc. (the petitioner), the
Department of Commerce (the
Department) is initiating an anti–
circumvention inquiry to determine
whether certain imports of tissue paper
from Vietnam are circumventing the
antidumping duty order on certain
tissue paper products (tissue paper)
from the People’s Republic of China
(PRC). See Notice of Amended Final
Determination of Sales at Less than Fair
Value and Antidumping Duty Order:
Certain Tissue Paper Products from the
People’s Republic of China, 70 FR 16223
(March 30, 2005) (Tissue Paper Order).
EFFECTIVE DATE: April 5, 2010.
FOR FURTHER INFORMATION CONTACT:
Brian Smith or Gemal Brangman, AD/
CVD Operations, Office 2, Import
Administration, International Trade
Administration, U.S. Department of
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Commerce, 14th Street and Constitution
Avenue, NW, Washington, DC 20230;
telephone: (202) 482–1766 or (202) 482–
3773, respectively.
SUPPLEMENTARY INFORMATION:
Background
On February 18, 2010, the petitioner
submitted a letter requesting that the
Department initiate and conduct an
anti–circumvention inquiry, pursuant to
section 781(b) of the Tariff Act of 1930,
as amended (the Act), and 19 CFR
351.225(h), to determine whether
imports of tissue paper from Vietnam
which the petitioner alleges Max
Fortune (Vietnam) Paper Products
Company Limited (Max Fortune
Vietnam) made from jumbo rolls and cut
sheets of tissue paper produced in the
PRC are circumventing the antidumping
duty order on tissue paper from the
PRC. Specifically, the petitioner alleges
that Max Fortune Vietnam is importing
into Vietnam PRC–produced jumbo rolls
and cut sheets of tissue paper for
completion or assembly into
merchandise of the same class or kind
as that covered by the antidumping duty
order on tissue paper from the PRC prior
to exporting that merchandise to the
United States; and that such activity on
the part of Max Fortune Vietnam
constitutes circumvention of the PRC
tissue paper order.
On February 24, 2010, the Department
requested that the petitioner provide
additional information pertinent to its
anti–circumvention inquiry request. See
Letter to Seaman Paper Company of
Massachusetts, Inc., dated February 24,
2010. The petitioner provided the
requested information on March 1,
2010.
On March 10, 2010, Department
officials spoke with the foreign market
researcher who provided certain
information contained in the anti–
circumvention inquiry request. See
memorandum to the file entitled,
‘‘Telephone Conversation with Foreign
Market Researcher,’’ dated March 17,
2010.
On March 16, 2010, Max Fortune
Vietnam responded to the petitioner’s
circumvention allegation. In its
submission, Max Fortune Vietnam
asserts, among other things, that it has
never imported raw tissue paper from
the PRC, and that its tissue paper
production and processing operations in
Vietnam are significant. Therefore, Max
Fortune Vietnam requests that the
Department reject the petitioner’s
request to initiate an anti–
circumvention inquiry with respect to
its operations.
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17127
Scope of the Order
The tissue paper products subject to
order are cut–to-length sheets of tissue
paper having a basis weight not
exceeding 29 grams per square meter.
Tissue paper products subject to this
order may or may not be bleached, dye–
colored, surface–colored, glazed, surface
decorated or printed, sequined,
crinkled, embossed, and/or die cut. The
tissue paper subject to this order is in
the form of cut–to-length sheets of tissue
paper with a width equal to or greater
than one–half (0.5) inch. Subject tissue
paper may be flat or folded, and may be
packaged by banding or wrapping with
paper or film, by placing in plastic or
film bags, and/or by placing in boxes for
distribution and use by the ultimate
consumer. Packages of tissue paper
subject to this order may consist solely
of tissue paper of one color and/or style,
or may contain multiple colors and/or
styles.
Tissue paper products subject to this
order do not have specific classification
numbers assigned to them under the
Harmonized Tariff Schedule of the
United States (HTSUS) and appear to be
imported under one or more of the
several different ‘‘basket’’ categories,
including but not necessarily limited to
the following subheadings: HTSUS
4802.30, HTSUS 4802.54, HTSUS
4802.61, HTSUS 4802.62, HTSUS
4802.69, HTSUS 4804.39, HTSUS
4806.40, HTSUS 4808.30, HTSUS
4808.90, HTSUS 4811.90, HTSUS
4823.90, HTSUS 9505.90.40.
Although the HTSUS subheadings are
provided for convenience and customs
purposes, the written description of the
scope of the investigation is dispositive.
Excluded from the scope of the order
are the following tissue paper products:
(1) tissue paper products that are coated
in wax, paraffin, or polymers, of a kind
used in floral and food service
applications; (2) tissue paper products
that have been perforated, embossed, or
die–cut to the shape of a toilet seat, i.e.,
disposable sanitary covers for toilet
seats; and (3) toilet or facial tissue stock,
towel or napkin stock, paper of a kind
used for household or sanitary
purposes, cellulose wadding, and webs
of cellulose fibers (HTSUS
4803.00.20.00 and 4803.00.40.00).
Initiation of Anti–circumvention
Proceeding
Applicable Statute
Section 781(b) of the Act provides
that the Department may find
circumvention of an antidumping duty
order when merchandise of the same
class or kind subject to the order is
completed or assembled in a foreign
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country other than the country to which
the order applies. In conducting anti–
circumvention inquiries under section
781(b) of the Act, the Department relies
upon the following criteria: (A)
merchandise imported into the United
States is of the same class or kind as any
merchandise produced in a foreign
country that is subject to an
antidumping duty order; (B) before
importation into the United States, such
imported merchandise is completed or
assembled in another foreign country
from merchandise which is subject to
the order or produced in the foreign
country that is subject to the order; (C)
the process of assembly or completion
in the foreign country referred to in (B)
is minor or insignificant; (D) the value
of the merchandise produced in the
foreign country to which the
antidumping duty order applies is a
significant portion of the total value of
the merchandise exported to the United
States; and (E) the administering
authority determines that action is
appropriate to prevent evasion of such
order or finding. As discussed below,
the petitioner presented evidence with
respect to these criteria.
A. Merchandise of the Same Class or
Kind
The petitioner claims that the tissue
paper from Vietnam, which it alleges
Max Fortune Vietnam completes or
assembles (i.e., by cutting to length if
necessary, folding, and packaging) in
Vietnam before exporting it to the
United States, is produced from jumbo
rolls and sheets of PRC–origin tissue
paper obtained from Max Fortune
Vietnam’s affiliate in the PRC, Fuzhou
Tian Jun Trading Co. Ltd., (Tian Jun),
and other Chinese sources, and is
physically identical to the subject
merchandise cut–to-length tissue paper
from the PRC. The petitioner states that
its claim is supported by the fact that
Max Fortune Industrial Limited (Max
Fortune), which wholly owns Max
Fortune Vietnam and exports the subject
merchandise to the United States, has
consistently stated in its questionnaire
responses submitted to the Department
in past and ongoing administrative
reviews of the antidumping duty order
on tissue paper from the PRC, that the
tissue paper Max Fortune Vietnam
exports to the United States is of the
same class or kind of merchandise as
that covered by the antidumping duty
order. See February 18, 2010, anti–
circumvention inquiry request at pages
11–12. Accordingly, pursuant to section
781(b)(1)(A)(i) of the Act, the petitioner
claims that the tissue paper from Max
Fortune Vietnam is of the same class or
kind as the tissue paper produced in the
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PRC, which is subject to the
antidumping duty order.
B. Completion of Merchandise in a
Foreign Country
The petitioner alleges that the tissue
paper that is the subject of the anti–
circumvention inquiry request is made
from jumbo rolls and sheets of tissue
paper produced in the PRC which are
completed or assembled (i.e., cut–tolength (if starting from jumbo rolls),
folded, and packaged) into finished
tissue paper products in Vietnam for
export to the United States. Based
largely on information obtained from a
foreign market researcher, the petitioner
asserts that: 1) Max Fortune Vietnam
has been importing significant amounts
of tissue paper jumbo rolls and sheets
since the company was established in
2004 (shortly after the original less–
than-fair–value (LTFV) investigation
segment of this proceeding was
initiated) from Tian Jun and other
Chinese sources; 2) Max Fortune
Vietnam has been exporting significant
quantities of tissue paper products to
the United States since 2005; and 3)
Max Fortune’s facility in Vietnam
performs labor–intensive converting
operations (i.e., cutting, folding and
packing activities), rather than capital–
intensive papermaking operations. See
February 18, 2010, anti–circumvention
inquiry request at pages 12–21, and
Exhibits 1, 13 and 14; and the March 1,
2010, supplemental submission. Based
on this information, the petitioner
concludes that, pursuant to section
781(b)(1)(B)(ii) of the Act, Max Fortune
Vietnam’s tissue paper products are
completed or assembled in another
foreign country (Vietnam) from
merchandise (tissue paper sheets or
jumbo rolls) which is produced in the
foreign country (the PRC) that is subject
to the antidumping duty order.
C. Minor or Insignificant Process
The petitioner maintains that for the
purpose of section 781(b)(1)(C) of the
Act, conversion of jumbo rolls and/or
sheets of tissue paper produced in the
PRC into cut–to-length tissue paper in
Vietnam is a ‘‘minor or insignificant
process’’ as defined by the Act.
According to the petitioner, the record
evidence in the PRC tissue paper
proceeding demonstrates that
converting jumbo rolls and sheets of
tissue paper is a minor or insignificant
process. The petitioner states that
cutting, folding and packaging tissue
paper are operations that merely impart
the final sheet size and form in which
the product is delivered to the ultimate
customer. The petitioner also states that
the most fundamental aspects of the
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merchandise, such as the basis weight,
texture, quality, and other special
characteristics that may be required if
the paper is intended for printing, are
established when the paper is produced.
Furthermore, the petitioner claims that
the types of minor assembly operations
described above (and below) with
respect to converting jumbo rolls and
sheets of tissue paper is consistent with
the information its foreign market
researcher obtained with respect to the
operations of Max Fortune Vietnam’s
facility in Vietnam. See February 18,
2010, anti–circumvention inquiry
request at pages 22–26, and Exhibits 1
and 2.
The petitioner states that converting
jumbo rolls and pre–cut sheets of tissue
paper involves two to three minor
processes typically performed by hand
in Vietnam: cutting the tissue to a
specific size (if starting from jumbo
rolls), folding it (by hand typically) and
packaging it for export (by hand). The
petitioner contends that, based on the
information obtained from its foreign
market researcher, Max Fortune
Vietnam only performs labor–intensive
converting operations in Vietnam (i.e.,
cutting, folding and packing activities),
which are minor or insignificant
processes in the overall production of
tissue paper products, not capital–
intensive papermaking operations. See
February 18, 2010, anti–circumvention
inquiry request at Exhibit 1.
The petitioner argues that an analysis
of the relevant statutory factors of
section 781(b)(2) of the Act further
supports its conclusion that the
processing in Vietnam is ‘‘minor or
insignificant.’’ These factors include: (1)
the level of investment in the foreign
country; (2) the level of research and
development in the foreign country; (3)
the nature of the production process in
the foreign country; (4) the extent of
production facilities in the foreign
country; and (5) whether the value of
the processing performed in the foreign
country represents a small proportion of
the value of the merchandise imported
into the United States.
The petitioner argues that the
processing in Vietnam is ‘‘minor and
insignificant’’ as the term is defined in
section 781(b)(2) of the Act when
compared to the complex and capital–
intensive processes involved in
producing lightweight tissue paper from
pulp, chemicals, and dyes. The
petitioner’s analysis of the statutory
factors follows below.
(1) Level of Investment
The petitioner claims that available
information concerning Max Fortune
Vietnam’s operations indicates that the
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level of investment is minor or
insignificant. According to the
petitioner, Max Fortune Vietnam’s
production model (i.e., importing jumbo
rolls and cut–to-length sheets from Tian
Jun and other companies in China,
cutting to length if necessary and using
manual labor to hand–fold and package
the tissue paper before export to the
United States) requires at most paper
cutting machines, table chairs and
lights, and the investment associated
with this equipment is not significant.
The petitioner states that its claim is
supported by data obtained from its
foreign market researcher. See February
18, 2010, anti–circumvention inquiry
request at pages 27–28, and Exhibit 1.
Accordingly, the petitioner concludes
that the level of investment in Max
Fortune Vietnam’s processing facility is
low.
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(2) Level of Research and Development
The petitioner maintains that the
evidence reasonably available indicates
that no research and development (R&D)
is taking place in Vietnam. The
petitioner states that because Max
Fortune Vietnam is wholly–owned by
Max Fortune, it is reasonable to
presume that any R&D efforts would
originate with Max Fortune’s affiliated
tissue paper supplier in the PRC.
Furthermore, the petitioner states that
tissue paper production involves mature
technologies and processes, and any
technical developments are refinements
rather than new technologies.
Converting operations also reflect
mature technologies, according to the
petitioner, and the Vietnamese
converting operations involve hand–
folding and packaging, which are
inherently mature processes. See
February 18, 2010, anti–circumvention
inquiry request at pages 29 and 30, and
Exhibit 1.
(3) Nature of the Production Process in
Vietnam
The petitioner states that its research
indicates that Max Fortune Vietnam’s
operations in Vietnam are limited to
PRC–origin jumbo rolls and sheets being
cut to size (if necessary), and folded and
packed by hand prior to export. As
such, they involve unskilled manual
labor in contrast to skilled labor
required for papermaking. While cutting
jumbo rolls into sheets of tissue paper
may involve some skill and machinery,
according to the petitioner, the nature of
this activity is not complex. Therefore,
the petitioner contends that Max
Fortune Vietnam’s ‘‘production process’’
is minor or insignificant. See February
18, 2010, anti–circumvention inquiry
request at page 30–32.
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(4) Extent of Production Facilities in
Vietnam
The petitioner asserts, based on
information obtained from its foreign
market researcher, that Max Fortune
Vietnam’s facility is relying on
significant amounts of PRC tissue paper
in its operations. According to the
petitioner, Max Fortune Vietnam has
imported converting equipment from
Tian Jun and employs unskilled labor to
convert the tissue paper it imports from
the PRC. Therefore, the petitioner
concludes that Max Fortune Vietnam’s
production facility in Vietnam is
minimal. See February 18, 2010, anti–
circumvention inquiry request at pages
32–33, and Exhibit 1A; and the March
1, 2010 supplemental submission at
pages 10–11, and Exhibit Supp–6.
(5) Value of Processing in Vietnam
Compared to Value of Tissue Paper
Imported Into United States
The petitioner states that it does not
have access to information concerning
the value of the jumbo rolls and sheets
of tissue paper exported from the PRC
to Max Fortune Vietnam, or the value
associated with Max Fortune Vietnam’s
converting operations performed in
Vietnam; however, it contends that data
(i.e., Max Fortune Vietnam’s parent
company’s factors of production and
usage rates) from the record of the 2007–
2008 administrative review of the
antidumping duty order on tissue paper
from the PRC support a determination
that the value of processing performed
in Vietnam represents a small portion of
the value of the merchandise imported
into the United States. See February 18,
2010, anti–circumvention inquiry
request at pages 34–35, and Exhibit 16.
In addition, the petitioner contends
that data from the record of a prior anti–
circumvention inquiry regarding tissue
paper exports from Vietnam support a
determination that the value of
processing performed in Vietnam
represents a small portion of the value
of the merchandise imported into the
United States. Specifically, in the prior
anti–circumvention inquiry, the
Department determined that the same
type of conversion processes were
minor or insignificant for purposes of
the statute, and that inclusion of the
resulting tissue paper in the order was
appropriate to avoid circumvention of
the order. See Certain Tissue Paper
Products From the People’s Republic of
China: Affirmative Preliminary
Determination of Circumvention of the
Antidumping Duty Order and Extension
of Final Determination, 73 FR 21580
(April 22, 2008) (which was upheld in
Certain Tissue Paper Products From the
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17129
People’s Republic of China: Affirmative
Final Determination of Circumvention
of the Antidumping Duty Order, 73 FR
57591 (October 3, 2008)). In fact, the
petitioner notes that in the prior anti–
circumvention inquiry, the activities
performed by the Vietnamese entity at
issue included more involved forms of
processing (such as dip–dying), which
would add greater amounts of value
than merely converting jumbo rolls and
sheets. In contrast, the petitioner
contends that Max Fortune Vietnam is
only converting the imported jumbo
rolls and sheets without performing
additional processing (such as dip–
dying). See February 18, 2010, anti–
circumvention inquiry request at page
35.
D. Value of Merchandise Produced in
PRC
For the reasons stated in section C.5.
above and for the purpose of section
781(b)(1)(D) of the Act, the petitioner
contends that the value of the
processing performed by Max Fortune
Vietnam is a minor portion of the value
of the completed merchandise.
According to the petitioner, in this case,
that analysis necessarily implies that the
value of the PRC–origin jumbo rolls and
cut–to-length sheets used by Max
Fortune Vietnam is a significant portion
of the total value of the merchandise
exported to the United States, because
there are no other operations or
components to take into account. In
addition, the petitioner states that the
factors of production data reported in
the 2007–2008 administrative review of
tissue paper from the PRC by Max
Fortune Vietnam’s parent company
demonstrates that the value of the
converting portion of the tissue paper
production process is only a small
proportion of the value of the
merchandise exported to the United
States. See February 18, 2010, anti–
circumvention inquiry request at page
36, and Exhibit 16.
E. Factors To Consider in Determining
Whether Action Is Necessary
The petitioner states that, pursuant to
sections 781(b)(1)(E) and (b)(3),
additional factors must be considered in
the Department’s decision to issue a
finding of circumvention regarding
imports of tissue paper from Vietnam.
These factors are discussed below.
Pattern of Trade
The petitioner states that section
781(b)(3)(A) of the Act directs the
Department to take into account
patterns of trade when making a
decision in an anti–circumvention case.
According to the petitioner, at the time
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the PRC tissue paper petition was filed
in February 2004, the only source of
imports of tissue paper products was the
PRC. Based on publicly available ship
manifest (PIERS) data and foreign
market research, the petitioner contends
that a few months after the petition was
filed, Max Fortune established Max
Fortune Vietnam with the intention of
using it to fold and pack PRC–origin
tissue paper to be exported to the
United States; and in 2005, Max Fortune
Vietnam began commercial shipments.
Subsequently, the petitioner asserts,
Vietnam rapidly emerged as a source of
substantial U.S. imports of tissue paper.
See February 18, 2010, anti–
circumvention inquiry request at pages
37- 40, and Exhibits 3 and 13B.
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Affiliation
The petitioner states that section
781(b)(3)(B) of the Act directs the
Department to take into account
whether the manufacturer or exporter of
the merchandise is affiliated with the
person who uses the merchandise to
assemble or complete in the foreign
country that is subsequently imported
into the United States when making a
decision in an anti–circumvention case.
The petitioner points out that Max
Fortune has stated on the records of past
segments of the PRC tissue paper
proceeding that it is affiliated with Max
Fortune Vietnam. The petitioner also
points out that information obtained
from its foreign market researcher
indicates that Tian Jun is affiliated with
Max Fortune, that Tian Jun has exported
tissue paper from the PRC to Max
Fortune Vietnam, and that all of Max
Fortune Vietnam’s sourcing and sales
decisions are made by Max Fortune. See
February 18, 2010, anti–circumvention
inquiry request at Exhibit 1. The
petitioner argues that the affiliation
between Max Fortune Vietnam, Tian Jun
and Max Fortune, and the timing of Max
Fortune Vietnam’s establishment and
export shipments, coupled with Max
Fortune Vietnam’s complete lack of
independent decision–making, makes it
clear that Max Fortune controls all
aspects of Max Fortune Vietnam’s
operations. See February 18, 2010, anti–
circumvention request at page 41.
Subsequent Import Volume
The petitioner states that section
781(b)(3)(C) of the Act directs the
Department to take into account
whether imports of the merchandise
into the foreign country have increased
after the initiation of the investigation,
which resulted in the issuance of the
order, when making a decision in an
anti–circumvention case. According to
the petitioner, given that Vietnam was
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not a source of tissue paper products at
the time the LTFV investigation of
tissue paper from the PRC was initiated,
it is reasonable to infer that jumbo rolls
and cut–to-length sheets of tissue paper
were not being shipped to Vietnam for
completion or assembly into finished
tissue paper products because Chinese
producers and exporters had no
restrictions on their imports into the
United States. In addition, the petitioner
notes that Max Fortune Vietnam did not
exist at the time the original
investigation was initiated. Therefore,
before that time, Max Fortune Vietnam
could not have imported tissue paper
jumbo rolls and sheets from the PRC.
However, since its creation in
September 2004, Max Fortune Vietnam
has directly imported significant
quantities of jumbo rolls and cut–tolength sheets of tissue paper from the
PRC. See February 18, 2010, anti–
circumvention inquiry request at page
42 and Exhibit 13C.
Furthermore, the petitioner points out
that while the data from foreign market
research indicate that Max Fortune
Vietnam’s direct imports of tissue paper
declined after 2007, this does not mean
that Max Fortune Vietnam has ceased
sourcing PRC jumbo rolls and sheets
and converting them, because the data
do not capture shipments of PRC tissue
paper that were imported into Vietnam
by third parties. Additionally, the
petitioner points out that the reduction
in trade volume in 2008 and 2009 must
be viewed in the context of the overall
reduction of global trade caused by
recent economic events. The petitioner
maintains that as the U.S. economy
improves and in the event Max
Fortune’s ability to ship from the PRC
is further impaired by increases to its
dumping margin, Max Fortune will
most certainly return to shipping large
volumes of its tissue paper to Max
Fortune Vietnam for completion or
assembly into finished tissue paper
products and subsequent export to the
United States. See February 18, 2010,
anti–circumvention inquiry request at
pages 42 and 43.
Analysis
Based on our analysis of the
petitioner’s February 18, 2010, anti–
circumvention inquiry request, the
Department determines that a formal
anti–circumvention inquiry is
warranted. In accordance with 19 CFR
351.225(e), if the Department finds that
the issue of whether a product is
included within the scope of an order
cannot be determined based solely upon
the request and the descriptions of the
merchandise, the Department will notify
by mail all parties on the Department’s
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scope service list of the initiation of a
scope inquiry, including an anti–
circumvention inquiry. In addition, in
accordance with 19 CFR 351.225(f)(1), a
notice of the initiation of an anti–
circumvention inquiry issued under 19
CFR 351.225(e) will include a
description of the product that is the
subject of the anti–circumvention
inquiry -- in this case, cut–to-length
tissue paper that has the characteristics
identified in the scope of the order, as
provided above -- and an explanation of
the reasons for the Department’s
decision to initiate an anti–
circumvention inquiry, as provided
below.
With regard to whether the
merchandise from Vietnam is of the
same class or kind as the merchandise
produced in the PRC, the petitioner has
presented information indicating that
the merchandise being imported from
Vietnam is of the same class or kind as
the tissue paper produced in the PRC,
which is subject to the antidumping
duty order. The merchandise from
Vietnam shares physical characteristics
with the merchandise covered by the
antidumping duty order.
With regard to completion of
merchandise in a foreign country, the
petitioner has also presented
information that the tissue paper
exported from Vietnam is tissue paper
of PRC origin which is further processed
in Vietnam.
With regard to whether the
conversion of PRC jumbo rolls and/or
sheets of tissue paper into cut–to-length
tissue paper from Vietnam is a ‘‘minor
or insignificant process,’’ the petitioner
addressed the relevant statutory factors
used to determine whether the
processing of jumbo rolls and sheets of
tissue paper is minor or insignificant
with the best information available to it
at the time of its anti–circumvention
inquiry request. The petitioner relied on
information obtained primarily from its
foreign market researcher for this
purpose. See February 18, 2010, anti–
circumvention inquiry request at
Exhibit 1.
Having established through direct
contact the reliability of the data
presented by the foreign market
researcher in Exhibit 1, we find that the
information presented by the petitioner
supports its request to initiate an anti–
circumvention inquiry. In particular, the
petitioner provided evidence for each of
the criteria enumerated in the statute,
including the following: (1) the nature
of Max Fortune Vietnam’s operations
(i.e., limited to converting operations)
suggest little investment has been made
in Max Fortune Vietnam; (2) because
Max Fortune has a fully integrated
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jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 64 / Monday, April 5, 2010 / Notices
production facility in the PRC and is
affiliated with Max Fortune Vietnam, it
is reasonable to infer that R&D takes
place in the PRC; (3) the cutting, folding
and packaging activities (i.e., the
converting process) performed by Max
Fortune Vietnam do not alter the
fundamental characteristics of the tissue
paper, and therefore, reflect a
production process which is minor or
insignificant; (4) Max Fortune Vietnam’s
labor–intensive converting operations
suggest a significantly lower level of
investment in production assets than
that required by the capital–intensive
nature of the papermaking process; and
5) Max Fortune Vietnam’s limited
operations suggest that converting tissue
paper adds little value to the
merchandise imported into the United
States.
With respect to the value of the
merchandise produced in the PRC, the
petitioner relied on the information and
arguments in the ‘‘minor or insignificant
process’’ portion of its anti–
circumvention request to indicate that
the value of the PRC jumbo rolls and
sheets of tissue paper is significant
relative to the total value of finished
merchandise exported to the United
States. We find that this information
adequately meets the requirements of
this factor, as discussed above.
Finally, the petitioner argued that the
Department should also consider the
pattern of trade, affiliation, and
subsequent import volume as factors in
determining whether to initiate the
anti–circumvention inquiry. The import
information submitted by the petitioner
indicates that Vietnamese imports of
tissue paper from the PRC and U.S.
imports of tissue paper from Vietnam
rose significantly after the initiation of
the investigation and the establishment
of Max Fortune Vietnam. In addition,
the petitioner provides information
suggesting that Max Fortune Vietnam’s
affiliation with a known producer of the
subject merchandise in the PRC, the
timing of Max Fortune Vietnam’s
establishment, and the nature of Max
Fortune Vietnam’s operations reflect an
intention to shift completion of
merchandise subject to the PRC tissue
paper order from the PRC to Vietnam.
Accordingly, we are initiating a
formal anti–circumvention inquiry
concerning the antidumping duty order
on certain tissue paper products from
the PRC, pursuant to section 781(b) of
the Act. In accordance with 19 CFR
351.225(l)(2), if the Department issues a
preliminary affirmative determination,
we will then instruct U.S. Customs and
Border Protection to suspend
liquidation and require a cash deposit of
estimated duties, at the applicable rate,
VerDate Nov<24>2008
16:35 Apr 02, 2010
Jkt 220001
for each unliquidated entry of the
merchandise at issue, entered or
withdrawn from warehouse for
consumption on or after the date of
initiation of the inquiry.
The Department is focusing its
analysis of the significance of the
production process in Vietnam on the
single company identified by the
petitioner, namely Max Fortune
Vietnam, in its February 18, 2010, anti–
circumvention inquiry request and
about which sufficient information to
initiate an anti–circumvention inquiry
has been provided. If the Department
receives a formal request from an
interested party regarding potential
circumvention by other Vietnamese
companies involved in processing PRC
jumbo rolls and/or sheets for export to
the United States within sufficient time,
we will consider conducting the
inquiries concurrently.
The Department will, following
consultation with interested parties,
establish a schedule for questionnaires
and comments on the issues. The
Department intends to issue its final
determination within 300 days of the
date of publication of this initiation
consistent with the language of section
781(f) of the Act.
This notice is published in
accordance with 19 CFR 351.225(f).
Dated: March 29, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import
Administration.
[FR Doc. 2010–7662 Filed 4–2–10; 8:45 am]
BILLING CODE 3510–DS–S
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric
Administration
RIN 0648–XV14
Pacific Halibut Fishery; Guideline
Harvest Levels for the Charter Vessel
Fishery for Pacific Halibut in
International Pacific Halibut
Commission Areas 2C and 3A
AGENCY: National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA),
Commerce.
ACTION: Notice of guideline harvest
level.
SUMMARY: NMFS provides notice of the
2010 Pacific halibut guideline harvest
levels (GHLs) for the charter vessel
fishery in International Pacific Halibut
Commission (IPHC) regulatory areas
(Area) 2C and 3A. This notice is
necessary to meet the regulatory
requirement to publish notice
PO 00000
Frm 00012
Fmt 4703
Sfmt 4703
17131
announcing the GHLs and to inform the
public about the 2010 GHLs for the
charter vessel fishery for halibut. The
GHLs are benchmark harvest levels for
participants in the charter vessel
fishery. The 2010 GHLs remain the same
as the 2009 GHLs; the Area 2C GHL is
788,000 lb (357.4 mt), and the Area 3A
GHL is 3,650,000 lb (1,655.6 mt).
DATES: The GHLs are effective beginning
February 1, 2010, through December 31,
2010. This period is specified by IPHC
as the sport fishing season in all waters
in and off Alaska.
FOR FURTHER INFORMATION CONTACT:
Peggy Murphy, (907) 586–7228.
SUPPLEMENTARY INFORMATION:
Background
In 2003, NMFS implemented a final
rule (68 FR 47256, August 8, 2003) to
establish GHLs for Pacific halibut
(Hippoglossus stenolepis) harvested by
the charter vessel fishery in IPHC
regulatory area (Area) 2C and Area 3A.
Regulations implementing the GHLs
have been amended twice. In 2008, the
GHL table was corrected at 50 CFR
300.65(c)(1) (73 FR 30504, May 28,
2008). In 2009, regulatory provisions
were amended for NMFS’ annual
publication of the GHL notice and to
clarify NMFS’ authority to take action at
any time to limit the charter vessel
angler catch to the GHL (74 FR 21194,
May 6, 2009).
This notice is consistent with
§ 300.65(c) and announces the 2010
GHLs for the charter vessel fishery for
halibut in IPHC Areas 2C and 3A.
Regulations at § 300.65(c)(1) specify the
GHLs based on the total constant
exploitation yield (CEY) that is
established annually by the IPHC. The
total CEY for 2010 is 5,020,000 lb (2,277
mt) in Area 2C, and 26,192,000 lb
(11,880 mt) in Area 3A. The
corresponding GHLs are 788,000 lb
(357.4 mt) in Area 2C, and 3,650,000 lb
(1,655.6 mt) in Area 3A. The GHLs in
Areas 2C and 3A did not change from
the 2009 level. NMFS may take action
at any time to limit the charter halibut
harvest to as close to the GHL as
practicable (50 CFR 300.65 (c)(3)).
NMFS is in the process of
implementing a new limited entry
system for charter vessels in the guided
sport fishery for halibut in Areas 2C and
3A. Beginning in 2011, the limited
access system limits the number of
charter vessels that may participate in
the fishery to qualified business owners
(75 FR 554, January 5, 2010). The North
Pacific Fishery Management Council
also has proposed alternative
management measures to allocate an
annual halibut catch limit established
E:\FR\FM\05APN1.SGM
05APN1
]]>Agencies
[Federal Register Volume 75, Number 64 (Monday, April 5, 2010)]
[Notices]
[Pages 17127-17131]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-7662]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-894]
Certain Tissue Paper Products from the People's Republic of
China: Notice of Initiation of Anti-circumvention Inquiry
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: In response to a request from Seaman Paper Company of
Massachusetts, Inc. (the petitioner), the Department of Commerce (the
Department) is initiating an anti-circumvention inquiry to determine
whether certain imports of tissue paper from Vietnam are circumventing
the antidumping duty order on certain tissue paper products (tissue
paper) from the People's Republic of China (PRC). See Notice of Amended
Final Determination of Sales at Less than Fair Value and Antidumping
Duty Order: Certain Tissue Paper Products from the People's Republic of
China, 70 FR 16223 (March 30, 2005) (Tissue Paper Order).
EFFECTIVE DATE: April 5, 2010.
FOR FURTHER INFORMATION CONTACT: Brian Smith or Gemal Brangman, AD/CVD
Operations, Office 2, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
1766 or (202) 482-3773, respectively.
SUPPLEMENTARY INFORMATION:
Background
On February 18, 2010, the petitioner submitted a letter requesting
that the Department initiate and conduct an anti-circumvention inquiry,
pursuant to section 781(b) of the Tariff Act of 1930, as amended (the
Act), and 19 CFR 351.225(h), to determine whether imports of tissue
paper from Vietnam which the petitioner alleges Max Fortune (Vietnam)
Paper Products Company Limited (Max Fortune Vietnam) made from jumbo
rolls and cut sheets of tissue paper produced in the PRC are
circumventing the antidumping duty order on tissue paper from the PRC.
Specifically, the petitioner alleges that Max Fortune Vietnam is
importing into Vietnam PRC-produced jumbo rolls and cut sheets of
tissue paper for completion or assembly into merchandise of the same
class or kind as that covered by the antidumping duty order on tissue
paper from the PRC prior to exporting that merchandise to the United
States; and that such activity on the part of Max Fortune Vietnam
constitutes circumvention of the PRC tissue paper order.
On February 24, 2010, the Department requested that the petitioner
provide additional information pertinent to its anti-circumvention
inquiry request. See Letter to Seaman Paper Company of Massachusetts,
Inc., dated February 24, 2010. The petitioner provided the requested
information on March 1, 2010.
On March 10, 2010, Department officials spoke with the foreign
market researcher who provided certain information contained in the
anti-circumvention inquiry request. See memorandum to the file
entitled, ``Telephone Conversation with Foreign Market Researcher,''
dated March 17, 2010.
On March 16, 2010, Max Fortune Vietnam responded to the
petitioner's circumvention allegation. In its submission, Max Fortune
Vietnam asserts, among other things, that it has never imported raw
tissue paper from the PRC, and that its tissue paper production and
processing operations in Vietnam are significant. Therefore, Max
Fortune Vietnam requests that the Department reject the petitioner's
request to initiate an anti-circumvention inquiry with respect to its
operations.
Scope of the Order
The tissue paper products subject to order are cut-to-length sheets
of tissue paper having a basis weight not exceeding 29 grams per square
meter. Tissue paper products subject to this order may or may not be
bleached, dye-colored, surface-colored, glazed, surface decorated or
printed, sequined, crinkled, embossed, and/or die cut. The tissue paper
subject to this order is in the form of cut-to-length sheets of tissue
paper with a width equal to or greater than one-half (0.5) inch.
Subject tissue paper may be flat or folded, and may be packaged by
banding or wrapping with paper or film, by placing in plastic or film
bags, and/or by placing in boxes for distribution and use by the
ultimate consumer. Packages of tissue paper subject to this order may
consist solely of tissue paper of one color and/or style, or may
contain multiple colors and/or styles.
Tissue paper products subject to this order do not have specific
classification numbers assigned to them under the Harmonized Tariff
Schedule of the United States (HTSUS) and appear to be imported under
one or more of the several different ``basket'' categories, including
but not necessarily limited to the following subheadings: HTSUS
4802.30, HTSUS 4802.54, HTSUS 4802.61, HTSUS 4802.62, HTSUS 4802.69,
HTSUS 4804.39, HTSUS 4806.40, HTSUS 4808.30, HTSUS 4808.90, HTSUS
4811.90, HTSUS 4823.90, HTSUS 9505.90.40.
Although the HTSUS subheadings are provided for convenience and
customs purposes, the written description of the scope of the
investigation is dispositive.
Excluded from the scope of the order are the following tissue paper
products: (1) tissue paper products that are coated in wax, paraffin,
or polymers, of a kind used in floral and food service applications;
(2) tissue paper products that have been perforated, embossed, or die-
cut to the shape of a toilet seat, i.e., disposable sanitary covers for
toilet seats; and (3) toilet or facial tissue stock, towel or napkin
stock, paper of a kind used for household or sanitary purposes,
cellulose wadding, and webs of cellulose fibers (HTSUS 4803.00.20.00
and 4803.00.40.00).
Initiation of Anti-circumvention Proceeding
Applicable Statute
Section 781(b) of the Act provides that the Department may find
circumvention of an antidumping duty order when merchandise of the same
class or kind subject to the order is completed or assembled in a
foreign
[[Page 17128]]
country other than the country to which the order applies. In
conducting anti-circumvention inquiries under section 781(b) of the
Act, the Department relies upon the following criteria: (A) merchandise
imported into the United States is of the same class or kind as any
merchandise produced in a foreign country that is subject to an
antidumping duty order; (B) before importation into the United States,
such imported merchandise is completed or assembled in another foreign
country from merchandise which is subject to the order or produced in
the foreign country that is subject to the order; (C) the process of
assembly or completion in the foreign country referred to in (B) is
minor or insignificant; (D) the value of the merchandise produced in
the foreign country to which the antidumping duty order applies is a
significant portion of the total value of the merchandise exported to
the United States; and (E) the administering authority determines that
action is appropriate to prevent evasion of such order or finding. As
discussed below, the petitioner presented evidence with respect to
these criteria.
A. Merchandise of the Same Class or Kind
The petitioner claims that the tissue paper from Vietnam, which it
alleges Max Fortune Vietnam completes or assembles (i.e., by cutting to
length if necessary, folding, and packaging) in Vietnam before
exporting it to the United States, is produced from jumbo rolls and
sheets of PRC-origin tissue paper obtained from Max Fortune Vietnam's
affiliate in the PRC, Fuzhou Tian Jun Trading Co. Ltd., (Tian Jun), and
other Chinese sources, and is physically identical to the subject
merchandise cut-to-length tissue paper from the PRC. The petitioner
states that its claim is supported by the fact that Max Fortune
Industrial Limited (Max Fortune), which wholly owns Max Fortune Vietnam
and exports the subject merchandise to the United States, has
consistently stated in its questionnaire responses submitted to the
Department in past and ongoing administrative reviews of the
antidumping duty order on tissue paper from the PRC, that the tissue
paper Max Fortune Vietnam exports to the United States is of the same
class or kind of merchandise as that covered by the antidumping duty
order. See February 18, 2010, anti-circumvention inquiry request at
pages 11-12. Accordingly, pursuant to section 781(b)(1)(A)(i) of the
Act, the petitioner claims that the tissue paper from Max Fortune
Vietnam is of the same class or kind as the tissue paper produced in
the PRC, which is subject to the antidumping duty order.
B. Completion of Merchandise in a Foreign Country
The petitioner alleges that the tissue paper that is the subject of
the anti-circumvention inquiry request is made from jumbo rolls and
sheets of tissue paper produced in the PRC which are completed or
assembled (i.e., cut-to-length (if starting from jumbo rolls), folded,
and packaged) into finished tissue paper products in Vietnam for export
to the United States. Based largely on information obtained from a
foreign market researcher, the petitioner asserts that: 1) Max Fortune
Vietnam has been importing significant amounts of tissue paper jumbo
rolls and sheets since the company was established in 2004 (shortly
after the original less-than-fair-value (LTFV) investigation segment of
this proceeding was initiated) from Tian Jun and other Chinese sources;
2) Max Fortune Vietnam has been exporting significant quantities of
tissue paper products to the United States since 2005; and 3) Max
Fortune's facility in Vietnam performs labor-intensive converting
operations (i.e., cutting, folding and packing activities), rather than
capital-intensive papermaking operations. See February 18, 2010, anti-
circumvention inquiry request at pages 12-21, and Exhibits 1, 13 and
14; and the March 1, 2010, supplemental submission. Based on this
information, the petitioner concludes that, pursuant to section
781(b)(1)(B)(ii) of the Act, Max Fortune Vietnam's tissue paper
products are completed or assembled in another foreign country
(Vietnam) from merchandise (tissue paper sheets or jumbo rolls) which
is produced in the foreign country (the PRC) that is subject to the
antidumping duty order.
C. Minor or Insignificant Process
The petitioner maintains that for the purpose of section
781(b)(1)(C) of the Act, conversion of jumbo rolls and/or sheets of
tissue paper produced in the PRC into cut-to-length tissue paper in
Vietnam is a ``minor or insignificant process'' as defined by the Act.
According to the petitioner, the record evidence in the PRC tissue
paper proceeding demonstrates that converting jumbo rolls and sheets of
tissue paper is a minor or insignificant process. The petitioner states
that cutting, folding and packaging tissue paper are operations that
merely impart the final sheet size and form in which the product is
delivered to the ultimate customer. The petitioner also states that the
most fundamental aspects of the merchandise, such as the basis weight,
texture, quality, and other special characteristics that may be
required if the paper is intended for printing, are established when
the paper is produced. Furthermore, the petitioner claims that the
types of minor assembly operations described above (and below) with
respect to converting jumbo rolls and sheets of tissue paper is
consistent with the information its foreign market researcher obtained
with respect to the operations of Max Fortune Vietnam's facility in
Vietnam. See February 18, 2010, anti-circumvention inquiry request at
pages 22-26, and Exhibits 1 and 2.
The petitioner states that converting jumbo rolls and pre-cut
sheets of tissue paper involves two to three minor processes typically
performed by hand in Vietnam: cutting the tissue to a specific size (if
starting from jumbo rolls), folding it (by hand typically) and
packaging it for export (by hand). The petitioner contends that, based
on the information obtained from its foreign market researcher, Max
Fortune Vietnam only performs labor-intensive converting operations in
Vietnam (i.e., cutting, folding and packing activities), which are
minor or insignificant processes in the overall production of tissue
paper products, not capital-intensive papermaking operations. See
February 18, 2010, anti-circumvention inquiry request at Exhibit 1.
The petitioner argues that an analysis of the relevant statutory
factors of section 781(b)(2) of the Act further supports its conclusion
that the processing in Vietnam is ``minor or insignificant.'' These
factors include: (1) the level of investment in the foreign country;
(2) the level of research and development in the foreign country; (3)
the nature of the production process in the foreign country; (4) the
extent of production facilities in the foreign country; and (5) whether
the value of the processing performed in the foreign country represents
a small proportion of the value of the merchandise imported into the
United States.
The petitioner argues that the processing in Vietnam is ``minor and
insignificant'' as the term is defined in section 781(b)(2) of the Act
when compared to the complex and capital-intensive processes involved
in producing lightweight tissue paper from pulp, chemicals, and dyes.
The petitioner's analysis of the statutory factors follows below.
(1) Level of Investment
The petitioner claims that available information concerning Max
Fortune Vietnam's operations indicates that the
[[Page 17129]]
level of investment is minor or insignificant. According to the
petitioner, Max Fortune Vietnam's production model (i.e., importing
jumbo rolls and cut-to-length sheets from Tian Jun and other companies
in China, cutting to length if necessary and using manual labor to
hand-fold and package the tissue paper before export to the United
States) requires at most paper cutting machines, table chairs and
lights, and the investment associated with this equipment is not
significant. The petitioner states that its claim is supported by data
obtained from its foreign market researcher. See February 18, 2010,
anti-circumvention inquiry request at pages 27-28, and Exhibit 1.
Accordingly, the petitioner concludes that the level of investment in
Max Fortune Vietnam's processing facility is low.
(2) Level of Research and Development
The petitioner maintains that the evidence reasonably available
indicates that no research and development (R&D) is taking place in
Vietnam. The petitioner states that because Max Fortune Vietnam is
wholly-owned by Max Fortune, it is reasonable to presume that any R&D
efforts would originate with Max Fortune's affiliated tissue paper
supplier in the PRC. Furthermore, the petitioner states that tissue
paper production involves mature technologies and processes, and any
technical developments are refinements rather than new technologies.
Converting operations also reflect mature technologies, according to
the petitioner, and the Vietnamese converting operations involve hand-
folding and packaging, which are inherently mature processes. See
February 18, 2010, anti-circumvention inquiry request at pages 29 and
30, and Exhibit 1.
(3) Nature of the Production Process in Vietnam
The petitioner states that its research indicates that Max Fortune
Vietnam's operations in Vietnam are limited to PRC-origin jumbo rolls
and sheets being cut to size (if necessary), and folded and packed by
hand prior to export. As such, they involve unskilled manual labor in
contrast to skilled labor required for papermaking. While cutting jumbo
rolls into sheets of tissue paper may involve some skill and machinery,
according to the petitioner, the nature of this activity is not
complex. Therefore, the petitioner contends that Max Fortune Vietnam's
``production process'' is minor or insignificant. See February 18,
2010, anti-circumvention inquiry request at page 30-32.
(4) Extent of Production Facilities in Vietnam
The petitioner asserts, based on information obtained from its
foreign market researcher, that Max Fortune Vietnam's facility is
relying on significant amounts of PRC tissue paper in its operations.
According to the petitioner, Max Fortune Vietnam has imported
converting equipment from Tian Jun and employs unskilled labor to
convert the tissue paper it imports from the PRC. Therefore, the
petitioner concludes that Max Fortune Vietnam's production facility in
Vietnam is minimal. See February 18, 2010, anti-circumvention inquiry
request at pages 32-33, and Exhibit 1A; and the March 1, 2010
supplemental submission at pages 10-11, and Exhibit Supp-6.
(5) Value of Processing in Vietnam Compared to Value of Tissue Paper
Imported Into United States
The petitioner states that it does not have access to information
concerning the value of the jumbo rolls and sheets of tissue paper
exported from the PRC to Max Fortune Vietnam, or the value associated
with Max Fortune Vietnam's converting operations performed in Vietnam;
however, it contends that data (i.e., Max Fortune Vietnam's parent
company's factors of production and usage rates) from the record of the
2007-2008 administrative review of the antidumping duty order on tissue
paper from the PRC support a determination that the value of processing
performed in Vietnam represents a small portion of the value of the
merchandise imported into the United States. See February 18, 2010,
anti-circumvention inquiry request at pages 34-35, and Exhibit 16.
In addition, the petitioner contends that data from the record of a
prior anti-circumvention inquiry regarding tissue paper exports from
Vietnam support a determination that the value of processing performed
in Vietnam represents a small portion of the value of the merchandise
imported into the United States. Specifically, in the prior anti-
circumvention inquiry, the Department determined that the same type of
conversion processes were minor or insignificant for purposes of the
statute, and that inclusion of the resulting tissue paper in the order
was appropriate to avoid circumvention of the order. See Certain Tissue
Paper Products From the People's Republic of China: Affirmative
Preliminary Determination of Circumvention of the Antidumping Duty
Order and Extension of Final Determination, 73 FR 21580 (April 22,
2008) (which was upheld in Certain Tissue Paper Products From the
People's Republic of China: Affirmative Final Determination of
Circumvention of the Antidumping Duty Order, 73 FR 57591 (October 3,
2008)). In fact, the petitioner notes that in the prior anti-
circumvention inquiry, the activities performed by the Vietnamese
entity at issue included more involved forms of processing (such as
dip-dying), which would add greater amounts of value than merely
converting jumbo rolls and sheets. In contrast, the petitioner contends
that Max Fortune Vietnam is only converting the imported jumbo rolls
and sheets without performing additional processing (such as dip-
dying). See February 18, 2010, anti-circumvention inquiry request at
page 35.
D. Value of Merchandise Produced in PRC
For the reasons stated in section C.5. above and for the purpose of
section 781(b)(1)(D) of the Act, the petitioner contends that the value
of the processing performed by Max Fortune Vietnam is a minor portion
of the value of the completed merchandise. According to the petitioner,
in this case, that analysis necessarily implies that the value of the
PRC-origin jumbo rolls and cut-to-length sheets used by Max Fortune
Vietnam is a significant portion of the total value of the merchandise
exported to the United States, because there are no other operations or
components to take into account. In addition, the petitioner states
that the factors of production data reported in the 2007-2008
administrative review of tissue paper from the PRC by Max Fortune
Vietnam's parent company demonstrates that the value of the converting
portion of the tissue paper production process is only a small
proportion of the value of the merchandise exported to the United
States. See February 18, 2010, anti-circumvention inquiry request at
page 36, and Exhibit 16.
E. Factors To Consider in Determining Whether Action Is Necessary
The petitioner states that, pursuant to sections 781(b)(1)(E) and
(b)(3), additional factors must be considered in the Department's
decision to issue a finding of circumvention regarding imports of
tissue paper from Vietnam. These factors are discussed below.
Pattern of Trade
The petitioner states that section 781(b)(3)(A) of the Act directs
the Department to take into account patterns of trade when making a
decision in an anti-circumvention case. According to the petitioner, at
the time
[[Page 17130]]
the PRC tissue paper petition was filed in February 2004, the only
source of imports of tissue paper products was the PRC. Based on
publicly available ship manifest (PIERS) data and foreign market
research, the petitioner contends that a few months after the petition
was filed, Max Fortune established Max Fortune Vietnam with the
intention of using it to fold and pack PRC-origin tissue paper to be
exported to the United States; and in 2005, Max Fortune Vietnam began
commercial shipments. Subsequently, the petitioner asserts, Vietnam
rapidly emerged as a source of substantial U.S. imports of tissue
paper. See February 18, 2010, anti-circumvention inquiry request at
pages 37- 40, and Exhibits 3 and 13B.
Affiliation
The petitioner states that section 781(b)(3)(B) of the Act directs
the Department to take into account whether the manufacturer or
exporter of the merchandise is affiliated with the person who uses the
merchandise to assemble or complete in the foreign country that is
subsequently imported into the United States when making a decision in
an anti-circumvention case. The petitioner points out that Max Fortune
has stated on the records of past segments of the PRC tissue paper
proceeding that it is affiliated with Max Fortune Vietnam. The
petitioner also points out that information obtained from its foreign
market researcher indicates that Tian Jun is affiliated with Max
Fortune, that Tian Jun has exported tissue paper from the PRC to Max
Fortune Vietnam, and that all of Max Fortune Vietnam's sourcing and
sales decisions are made by Max Fortune. See February 18, 2010, anti-
circumvention inquiry request at Exhibit 1. The petitioner argues that
the affiliation between Max Fortune Vietnam, Tian Jun and Max Fortune,
and the timing of Max Fortune Vietnam's establishment and export
shipments, coupled with Max Fortune Vietnam's complete lack of
independent decision-making, makes it clear that Max Fortune controls
all aspects of Max Fortune Vietnam's operations. See February 18, 2010,
anti-circumvention request at page 41.
Subsequent Import Volume
The petitioner states that section 781(b)(3)(C) of the Act directs
the Department to take into account whether imports of the merchandise
into the foreign country have increased after the initiation of the
investigation, which resulted in the issuance of the order, when making
a decision in an anti-circumvention case. According to the petitioner,
given that Vietnam was not a source of tissue paper products at the
time the LTFV investigation of tissue paper from the PRC was initiated,
it is reasonable to infer that jumbo rolls and cut-to-length sheets of
tissue paper were not being shipped to Vietnam for completion or
assembly into finished tissue paper products because Chinese producers
and exporters had no restrictions on their imports into the United
States. In addition, the petitioner notes that Max Fortune Vietnam did
not exist at the time the original investigation was initiated.
Therefore, before that time, Max Fortune Vietnam could not have
imported tissue paper jumbo rolls and sheets from the PRC. However,
since its creation in September 2004, Max Fortune Vietnam has directly
imported significant quantities of jumbo rolls and cut-to-length sheets
of tissue paper from the PRC. See February 18, 2010, anti-circumvention
inquiry request at page 42 and Exhibit 13C.
Furthermore, the petitioner points out that while the data from
foreign market research indicate that Max Fortune Vietnam's direct
imports of tissue paper declined after 2007, this does not mean that
Max Fortune Vietnam has ceased sourcing PRC jumbo rolls and sheets and
converting them, because the data do not capture shipments of PRC
tissue paper that were imported into Vietnam by third parties.
Additionally, the petitioner points out that the reduction in trade
volume in 2008 and 2009 must be viewed in the context of the overall
reduction of global trade caused by recent economic events. The
petitioner maintains that as the U.S. economy improves and in the event
Max Fortune's ability to ship from the PRC is further impaired by
increases to its dumping margin, Max Fortune will most certainly return
to shipping large volumes of its tissue paper to Max Fortune Vietnam
for completion or assembly into finished tissue paper products and
subsequent export to the United States. See February 18, 2010, anti-
circumvention inquiry request at pages 42 and 43.
Analysis
Based on our analysis of the petitioner's February 18, 2010, anti-
circumvention inquiry request, the Department determines that a formal
anti-circumvention inquiry is warranted. In accordance with 19 CFR
351.225(e), if the Department finds that the issue of whether a product
is included within the scope of an order cannot be determined based
solely upon the request and the descriptions of the merchandise, the
Department will notify by mail all parties on the Department's scope
service list of the initiation of a scope inquiry, including an anti-
circumvention inquiry. In addition, in accordance with 19 CFR
351.225(f)(1), a notice of the initiation of an anti-circumvention
inquiry issued under 19 CFR 351.225(e) will include a description of
the product that is the subject of the anti-circumvention inquiry -- in
this case, cut-to-length tissue paper that has the characteristics
identified in the scope of the order, as provided above -- and an
explanation of the reasons for the Department's decision to initiate an
anti-circumvention inquiry, as provided below.
With regard to whether the merchandise from Vietnam is of the same
class or kind as the merchandise produced in the PRC, the petitioner
has presented information indicating that the merchandise being
imported from Vietnam is of the same class or kind as the tissue paper
produced in the PRC, which is subject to the antidumping duty order.
The merchandise from Vietnam shares physical characteristics with the
merchandise covered by the antidumping duty order.
With regard to completion of merchandise in a foreign country, the
petitioner has also presented information that the tissue paper
exported from Vietnam is tissue paper of PRC origin which is further
processed in Vietnam.
With regard to whether the conversion of PRC jumbo rolls and/or
sheets of tissue paper into cut-to-length tissue paper from Vietnam is
a ``minor or insignificant process,'' the petitioner addressed the
relevant statutory factors used to determine whether the processing of
jumbo rolls and sheets of tissue paper is minor or insignificant with
the best information available to it at the time of its anti-
circumvention inquiry request. The petitioner relied on information
obtained primarily from its foreign market researcher for this purpose.
See February 18, 2010, anti-circumvention inquiry request at Exhibit 1.
Having established through direct contact the reliability of the
data presented by the foreign market researcher in Exhibit 1, we find
that the information presented by the petitioner supports its request
to initiate an anti-circumvention inquiry. In particular, the
petitioner provided evidence for each of the criteria enumerated in the
statute, including the following: (1) the nature of Max Fortune
Vietnam's operations (i.e., limited to converting operations) suggest
little investment has been made in Max Fortune Vietnam; (2) because Max
Fortune has a fully integrated
[[Page 17131]]
production facility in the PRC and is affiliated with Max Fortune
Vietnam, it is reasonable to infer that R&D takes place in the PRC; (3)
the cutting, folding and packaging activities (i.e., the converting
process) performed by Max Fortune Vietnam do not alter the fundamental
characteristics of the tissue paper, and therefore, reflect a
production process which is minor or insignificant; (4) Max Fortune
Vietnam's labor-intensive converting operations suggest a significantly
lower level of investment in production assets than that required by
the capital-intensive nature of the papermaking process; and 5) Max
Fortune Vietnam's limited operations suggest that converting tissue
paper adds little value to the merchandise imported into the United
States.
With respect to the value of the merchandise produced in the PRC,
the petitioner relied on the information and arguments in the ``minor
or insignificant process'' portion of its anti-circumvention request to
indicate that the value of the PRC jumbo rolls and sheets of tissue
paper is significant relative to the total value of finished
merchandise exported to the United States. We find that this
information adequately meets the requirements of this factor, as
discussed above.
Finally, the petitioner argued that the Department should also
consider the pattern of trade, affiliation, and subsequent import
volume as factors in determining whether to initiate the anti-
circumvention inquiry. The import information submitted by the
petitioner indicates that Vietnamese imports of tissue paper from the
PRC and U.S. imports of tissue paper from Vietnam rose significantly
after the initiation of the investigation and the establishment of Max
Fortune Vietnam. In addition, the petitioner provides information
suggesting that Max Fortune Vietnam's affiliation with a known producer
of the subject merchandise in the PRC, the timing of Max Fortune
Vietnam's establishment, and the nature of Max Fortune Vietnam's
operations reflect an intention to shift completion of merchandise
subject to the PRC tissue paper order from the PRC to Vietnam.
Accordingly, we are initiating a formal anti-circumvention inquiry
concerning the antidumping duty order on certain tissue paper products
from the PRC, pursuant to section 781(b) of the Act. In accordance with
19 CFR 351.225(l)(2), if the Department issues a preliminary
affirmative determination, we will then instruct U.S. Customs and
Border Protection to suspend liquidation and require a cash deposit of
estimated duties, at the applicable rate, for each unliquidated entry
of the merchandise at issue, entered or withdrawn from warehouse for
consumption on or after the date of initiation of the inquiry.
The Department is focusing its analysis of the significance of the
production process in Vietnam on the single company identified by the
petitioner, namely Max Fortune Vietnam, in its February 18, 2010, anti-
circumvention inquiry request and about which sufficient information to
initiate an anti-circumvention inquiry has been provided. If the
Department receives a formal request from an interested party regarding
potential circumvention by other Vietnamese companies involved in
processing PRC jumbo rolls and/or sheets for export to the United
States within sufficient time, we will consider conducting the
inquiries concurrently.
The Department will, following consultation with interested
parties, establish a schedule for questionnaires and comments on the
issues. The Department intends to issue its final determination within
300 days of the date of publication of this initiation consistent with
the language of section 781(f) of the Act.
This notice is published in accordance with 19 CFR 351.225(f).
Dated: March 29, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-7662 Filed 4-2-10; 8:45 am]
BILLING CODE 3510-DS-S
