Multilayered Wood Flooring From the People's Republic of China: Initiation of Countervailing Duty Investigation, 70719-70722 [2010-29117]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 75, Number 222 (Thursday, November 18, 2010)]
[Notices]
[Pages 70719-70722]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-29117]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-570-971]


Multilayered Wood Flooring From the People's Republic of China: 
Initiation of Countervailing Duty Investigation

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

DATES: Effective Date: November 18, 2010.

FOR FURTHER INFORMATION CONTACT: Yasmin Nair and Joshua Morris, AD/CVD 
Operations, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-3813 and (202) 482-1779, 
respectively.

SUPPLEMENTARY INFORMATION: 

The Petition

    On October 21, 2010, the Department of Commerce (``Department'') 
received a petition filed in proper form by the Coalition for American 
Hardwood Parity (``Petitioner''), whose members (Anderson Hardwood 
Floors, LLC; Award Hardwood Floors; Baker's Creek Wood Floors, Inc.; 
From the Forest; Howell Hardwood Flooring; Mannington Mills, Inc.; 
Nydree Flooring; Shaw Industries Group, Inc.) are domestic producers of 
multilayered wood flooring.\1\ In response to the Department's 
requests, Petitioner provided timely information supplementing the 
Petition on October 29, 2010, November 2, 2010, and November 3, 2010. 
Petitioner also provided information supplementing the Petition on 
November 9, 2010.
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    \1\ See Petition for the Imposition of Antidumping and 
Countervailing Duties: Multilayered Wood Flooring from the People's 
Republic of China, dated October 21, 2010 (``Petition'').
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    In accordance with section 702(b)(1) of the Tariff Act of 1930, as 
amended (``the Act''), Petitioner alleges that manufacturers, 
producers, or importers of multilayered wood flooring from the People's 
Republic of China (``PRC'') received countervailable subsidies within 
the meaning of section 701 of the Act, and that such imports are 
materially injuring, or threatening material injury to, the domestic 
industry producing multilayered wood flooring in the United States.
    The Department finds that Petitioner filed the Petition on behalf 
of the domestic industry because it is an interested party as defined 
in section 771(9)(C), (E), and (F) of the Act, and Petitioner has 
demonstrated sufficient industry support with respect to the 
countervailing duty (``CVD'') investigation (see ``Determination of 
Industry Support for the Petition'' section below).
    On November 4, 2010, we received comments from Lumber Liquidators 
Services, LLC (``Lumber Liquidators'') and Home Legend, LLC (``Home 
Legend''), U.S. importers of multilayered wood flooring (collectively, 
``importers''). Lumber Liquidators and Home Legend are interested 
parties as defined by section 771(9)(A) of the Act. The importers and 
U.S. Floors LLC (``US Floors'') filed additional comments on November 
9, 2010.

Period of Investigation

    The period of investigation is January 1, 2009, through December 
31, 2009.

Scope of Investigation

    The products covered by the investigation are multilayered wood 
flooring products from the PRC. For a full description of the scope of 
the investigation, please see ``Scope of the Investigation,'' in 
Appendix I of this notice.

Comments on Scope of Investigation

    During our review of the Petition, we discussed the scope with 
Petitioner to ensure that it is an accurate reflection of the products 
for which the domestic industry is seeking relief. As a result, the 
``Scope of Investigation'' language has been modified from the language 
in the Petition to reflect these clarifications. Moreover, as discussed 
in the preamble to the Department's regulations (Antidumping Duties; 
Countervailing Duties; Final rule, 62 FR 27296, 27323 (May 19, 1997)), 
we are setting aside a period for interested parties to raise issues 
regarding product coverage. The Department encourages all interested 
parties to submit such comments by November 30, 2010, twenty calendar 
days from the signature date of this notice. Comments should be 
addressed to Import Administration's APO/Dockets Unit, Room 1870, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230. The period of the scope consultations is intended 
to provide the Department with ample opportunity to consider all 
comments and to consult with parties prior to the issuance of the 
preliminary determination.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, on October 22, 
2010, the Department invited representatives of

[[Page 70720]]

the Government of the PRC (``GOC'') for consultations with respect to 
the CVD petition. On October 27, 2010, the GOC's Ministry of Commerce, 
under the Bureau of Fair Trade for Imports & Exports, requested 
consultations. These consultations were held by telephone on November 
1, 2010. See Memorandum from Joshua Morris to the File, entitled, 
``Consultations with Officials from the Government of the People's 
Republic of China on the Countervailing Duty Petition regarding 
Multilayered Wood Flooring,'' (November 8, 2010), which is on file in 
the Central Records Unit (``CRU'') of the main Department of Commerce 
building, Room 7046. On November 9, 2010, Deputy Assistant Secretary 
for Import Administration Ronald Lorentzen met with representatives 
from the GOC to discuss the Petition. See Memorandum from Joshua Morris 
to the File, entitled, ``Meeting with Officials from the Embassy of the 
People's Republic of China on the Countervailing Duty Petition 
regarding Multilayered Wood Flooring,'' (November 10, 2010) which is on 
file in the CRU.

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (i) At least 
25 percent of the total production of the domestic like product; and 
(ii) more than 50 percent of the production of the domestic like 
product produced by that portion of the industry expressing support 
for, or opposition to, the petition. Moreover, section 702(c)(4)(D) of 
the Act provides that, if the petition does not establish support of 
domestic producers or workers accounting for more than 50 percent of 
the total production of the domestic like product, the Department 
shall: (i) poll the industry or rely on other information in order to 
determine if there is support for the petition, as required by 
subparagraph (A); or (ii) determine industry support using a 
statistically valid sampling method to poll the industry.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers as a whole of a domestic like product. Thus, to determine 
whether a petition has the requisite industry support, the statute 
directs the Department to look to producers and workers who produce the 
domestic like product. The International Trade Commission (``ITC''), 
which is responsible for determining whether ``the domestic industry'' 
has been injured, must also determine what constitutes a domestic like 
product in order to define the industry. While both the Department and 
the ITC must apply the same statutory definition regarding the domestic 
like product (see section 771(10) of the Act), they do so for different 
purposes and pursuant to a separate and distinct authority. In 
addition, the Department's determination is subject to limitations of 
time and information. Although this may result in different definitions 
of the like product, such differences do not render the decision of 
either agency contrary to law. See USEC, Inc. v. United States, 132 F. 
Supp. 2d 1, 8 (CIT 2001), citing Algoma Steel Corp., Ltd. v. United 
States, 688 F. Supp. 639, 644 (CIT 1988), aff'd 865 F.2d 240 (Fed. Cir. 
1989), cert. denied 492 U.S. 919 (1989).
    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation'' (i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition).
    With regard to the domestic like product, Petitioner does not offer 
a definition of domestic like product distinct from the scope of the 
investigations. Based on our analysis of the information submitted on 
the record, we have determined that multilayered wood flooring 
constitutes a single domestic like product and we have analyzed 
industry support in terms of that domestic like product. For a 
discussion of the domestic like product analysis in this case, see 
``Countervailing Duty Investigation Initiation Checklist: Multilayered 
Wood Flooring from the People's Republic of China'' (``Initiation 
Checklist''), at Attachment II, Analysis of Industry Support for the 
Petitions Covering Multilayered Wood Flooring from the People's 
Republic of China, on file in the CRU.
    In determining whether Petitioner has standing under section 
702(c)(4)(A) of the Act, we considered the industry support data 
contained in the Petition with reference to the domestic like product 
as defined in the ``Scope of Investigation'' section above. To 
establish industry support, Petitioner provided its production volume 
of the domestic like product in 2009, and compared this to the 
estimated total production volume of the domestic like product for the 
entire domestic industry. See Volume I of the Petitions, at 4-5, and 
Exhibit I-3; see also Supplement to the AD/CVD Petitions dated November 
2, 2010 at 2; see also Supplement to the AD/CVD Petitions dated 
November 3, 2010 at 1-2 and Exhibit I-K. Petitioner estimated 2009 
production volume of the domestic like product by non-petitioning 
companies based on its knowledge of the industry. We have relied upon 
data Petitioner provided for purposes of measuring industry support. 
For further discussion, see Initiation Checklist at Attachment II.
    On November 4, 2010, we received a submission on behalf of 
importers of multilayered wood flooring, interested parties to this 
proceeding as defined in section 771(9)(A) of the Act, questioning the 
industry support calculation. See Initiation Checklist at Attachment 
II. On November 8 and 9, 2010, Petitioner filed replies to the 
importers' industry support challenge. The importers filed an 
additional submission on November 9, 2010, on behalf of the importers 
and US Floors, in which they voice US Floors' opposition to the 
Petitions. For further discussion of these submissions, see Initiation 
Checklist at Attachment II.
    Based on information provided in the Petition, supplemental 
submissions, and other information readily available to the Department, 
we determine that the domestic producers and workers have met the 
statutory criteria for industry support under section 702(c)(4)(A)(i) 
of the Act because the domestic producers (or workers) who support the 
Petition account for at least 25 percent of the total production of the 
domestic like product. Because the Petition and supplemental 
submissions did not establish support from domestic producers (or 
workers) accounting for more than 50 percent of the total production of 
the domestic like product, the Department was required to take further 
action in order to evaluate industry support. See section 702(c)(4)(D) 
of the Act. In this case, the Department was able to rely on other 
information, in accordance with section 702(c)(4)(D)(i) of the Act, to 
determine industry support. See Initiation Checklist at Attachment II. 
Based on information provided in the Petition, other submissions, and 
additional information obtained by the Department, the domestic 
producers and workers have met the statutory criteria for industry 
support under section 702(c)(4)(A)(ii) of the Act because the domestic 
producers (or workers) who support the Petition account for more than 
50 percent of the production of the domestic like product produced by 
that portion of the industry expressing support for, or opposition to,

[[Page 70721]]

the Petition. Accordingly, the Department determines that the Petition 
was filed on behalf of the domestic industry within the meaning of 
section 702(b)(1) of the Act. See Initiation Checklist at Attachment 
II.
    The Department finds that Petitioner filed the Petition on behalf 
of the domestic industry because it is an interested party as defined 
in sections 771(9)(C), (E), and (F) of the Act and it has demonstrated 
sufficient industry support with respect to the CVD investigation that 
it is requesting the Department initiate. Id.

Injury Test

    Because the PRC is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, section 701(a)(2) of the Act 
applies to this investigation. Accordingly, the ITC must determine 
whether imports of subject merchandise from the PRC materially injure, 
or threaten material injury to, a U.S. industry.

Allegations and Evidence of Material Injury and Causation

    Petitioner alleges that imports of multilayered wood flooring from 
the PRC are benefitting from countervailable subsidies and that such 
imports are causing, or threaten to cause, material injury to the 
domestic industry producing multilayered wood flooring. In addition, 
Petitioner alleges that subject imports exceed the negligibility 
threshold provided for under section 771(24)(A) of the Act.
    Petitioner contends that the industry's injured condition is 
illustrated by reduced market share, reduced production, reduced 
shipments, reduced capacity and capacity utilization, underselling and 
price depression or suppression, reduced employment, hours worked, and 
wages paid, decline in financial performance, lost sales and revenue, 
and increase in import penetration. See Volume I of the Petition, at 
16-60. We have assessed the allegations and supporting evidence 
regarding material injury, threat of material injury, and causation, 
and we have determined that these allegations are properly supported by 
adequate evidence and meet the statutory requirements for initiation. 
See Initiation Checklist at Attachment III, Injury.

Initiation of Countervailing Duty Investigation

    Section 702(b) of the Act requires the Department to initiate a CVD 
proceeding whenever an interested party files a petition on behalf of 
an industry that: (1) Alleges the elements necessary for an imposition 
of a duty under section 701(a) of the Act; and (2) is accompanied by 
information reasonably available to Petitioner(s) supporting the 
allegations. The Department has examined the CVD petition on 
multilayered wood flooring from the PRC and finds that it complies with 
the requirements of section 702(b) of the Act. Therefore, in accordance 
with section 702(b) of the Act, we are initiating a CVD investigation 
to determine whether manufacturers, producers, or exporters of 
multilayered wood flooring in the PRC receive countervailable 
subsidies. For a discussion of evidence supporting our initiation 
determination, see Initiation Checklist.
    We are including in our investigation the following programs 
alleged in the Petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in the PRC:

A. Tax Benefit Programs

    1. Income Tax Exemption/Reduction under ``Two-Free/Three Half'' 
Program.
    2. Local Income Tax Exemption and Reductions for ``Productive'' 
Foreign-Invested Enterprises (``FIEs'').
    3. Tax Subsidies to FIEs Based on Geographic Location.

B. Indirect Tax and Import Tariff Programs

    4. Value Added Tax and Tariff Exemptions on Imported Equipment.

C. Provision of Goods or Services for Less Than Adequate Remuneration 
(``LTAR'')

    5. Electricity for LTAR.
    6. Provision of Electricity at LTAR for FIEs and ``Technologically 
Advanced'' Enterprises by Jiangsu Province.

For further information explaining why the Department is investigating 
these programs, see Initiation Checklist.

    We are not including in our investigation the following program 
alleged to benefit producers and exporters of the subject merchandise 
in the PRC:
1. Currency Undervaluation
    Petitioner alleges that the GOC ensures that the Renminbi (``RMB'') 
exchange rate significantly understates the value of the RMB against 
the U.S. Dollar (``USD'') from 25 to 50 percent. Petitioner alleges 
that Chinese exporters earning USD through export transactions receive 
an artificially inflated amount of RMB when they exchange the USD at 
the People's Bank of China, a Chinese government entity. Petitioner 
states that the GOC thus ensures exporters who receive USD from export 
activities receive more RMB than they otherwise would if the value of 
the RMB was set through market mechanisms. Petitioner alleges that the 
GOC's program to maintain artificial exchange rates qualifies as a 
financial contribution or, in the alternative, Petitioner alleges that 
GOC foreign exchange market interventions constitute a price support 
within the meaning of Article XVI of the GATT 1994. In both cases, 
Petitioner describes the benefit conferred as the excess of RMB 
received over what would have been received at a market rate (``excess 
RMB''), and alleges specificity within the meaning of section 
771(5A)(B) of the Act. Petitioner notes that the U.S. House of 
Representatives has recently passed legislation in regard to subsidies 
relating to a fundamentally undervalued currency. According to 
Petitioner, this legislation states that a subsidy may be considered 
export contingent, even if the subsidy is also provided in non-export 
circumstances.
    Section 771(5A)(B) of the Act describes an export subsidy as ``* * 
* a subsidy that is, in law or fact, contingent upon export 
performance, alone or as 1 of 2 or more conditions.'' Petitioner has 
failed to sufficiently allege that the receipt of the excess RMB is 
contingent on export or export performance because receipt of the 
excess RMB is independent of the type of transaction or commercial 
activity for which the dollars are converted or of the particular 
company or individuals converting the dollars. Petitioner's reliance on 
legislation passed by the U.S. House of Representatives is premature as 
the proposed language does not yet equate to an enforceable statute. 
Consequently, consistent with previous cases, we do not plan on 
investigating this program because Petitioner has failed to properly 
allege the specificity element.\2\
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    \2\ See Certain Coated Paper Suitable for High-Quality Print 
Graphics Using Sheet-Fed Presses From the People's Republic of 
China: Final Affirmative Countervailing Duty Determination, 75 FR 
59212 (September 27, 2010); see also Aluminum Extrusions From the 
People's Republic of China: Preliminary Affirmative Countervailing 
Duty Determination, 75 FR 54302 (September 7, 2010).
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    Respondent Selection:
    For this investigation, the Department expects to select 
respondents based on U.S. Customs and Border Protection (``CBP'') data 
for U.S. imports during the period of investigation. We intend to 
release the CBP data under Administrative Protective Order (``APO'') to 
all parties with access to information protected by APO within five 
days of the announcement of the

[[Page 70722]]

initiation of this investigation. Interested parties may submit 
comments regarding the CBP data and respondent selection within seven 
calendar days of publication of this notice. We intend to make our 
decision regarding respondent selection within 20 days of publication 
of this Federal Register notice.
    Interested parties must submit applications for disclosure under 
APO in accordance with 19 CFR 351.305(b). Instructions for filing such 
applications may be found on the Department's Web site at https://ia.ita.doc.gov/apo.
    Distribution of Copies of the Petition:
    In accordance with section 702(b)(4)(A)(i) of the Act, a copy of 
the public version of the Petition has been provided to the GOC. 
Because of the large number of producers/exporters identified in the 
Petition, the Department considers the service of the public version of 
the Petition to the foreign producers/exporters satisfied by the 
delivery of the public version to the GOC, consistent with 19 CFR 
351.203(c)(2).
    ITC Notification:
    We have notified the ITC of our initiation, as required by section 
702(d) of the Act.
    Preliminary Determination by the ITC:
    The ITC will preliminarily determine, within 25 days after the date 
on which it receives notice of the initiation, whether there is a 
reasonable indication that imports of subsidized multilayered wood 
flooring from the PRC are causing material injury, or threatening to 
cause material injury, to a U.S. industry. See section 703(a)(2) of the 
Act. A negative ITC determination will result in the investigation 
being terminated; otherwise, the investigation will proceed according 
to statutory and regulatory time limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    November 10, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.

APPENDIX I

Scope of the Investigation

    Multilayered wood flooring is composed of an assembly of two or 
more layers or plies of wood veneer(s) \3\ in combination with a 
core. The several layers, along with the core, are glued or 
otherwise bonded together to form a final assembled product. 
Multilayered wood flooring is often referred to by other terms, 
e.g., ``engineered wood flooring'' or ``plywood flooring.'' 
Regardless of the particular terminology, all products that meet the 
description set forth herein are intended for inclusion within the 
definition of subject merchandise.
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    \3\ A ``veneer'' is a thin slice of wood, rotary cut, sliced or 
sawed from a log, bolt or flitch. Veneer is referred to as a ply 
when assembled.
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    All multilayered wood flooring is included within the definition 
of subject merchandise, without regard to: dimension (overall 
thickness, thickness of face ply, thickness of back ply, thickness 
of core, and thickness of inner plies; width; and length); wood 
species used for the face, back and inner veneers; core composition; 
and face grade. Multilayered wood flooring included within the 
definition of subject merchandise may be unfinished (i.e., without a 
finally finished surface to protect the face veneer from wear and 
tear) or ``prefinished'' (i.e., a coating applied to the face 
veneer, including, but not exclusively, oil or oil-modified or 
water-based polyurethanes, ultra-violet light cured polyurethanes, 
wax, epoxy-ester finishes, moisture-cured urethanes and acid-curing 
formaldehyde finishes.) The veneers may be also soaked in an 
acrylic-impregnated finish. All multilayered wood flooring is 
included within the definition of subject merchandise regardless of 
whether the face (or back) of the product is smooth, wire brushed, 
distressed by any method or multiple methods, or hand-scraped. In 
addition, all multilayered wood flooring is included within the 
definition of subject merchandise regardless of whether or not it is 
manufactured with any interlocking or connecting mechanism (for 
example, tongue-and-groove construction or locking joints). All 
multilayered wood flooring is included within the definition of the 
subject merchandise regardless of whether the product meets a 
particular industry or similar standard.
    The core of multilayered wood flooring may be composed of a 
range of materials, including but not limited to hardwood or 
softwood veneer, particleboard, medium-density fiberboard (MDF), 
high-density fiberboard (HDF), stone and/or plastic composite, or 
strips of lumber placed edge-to-edge.
    Multilayered wood flooring products generally, but not 
exclusively, may be in the form of a strip, plank, or other 
geometrical patterns (e.g., circular, hexagonal). All multilayered 
wood flooring products are included within this definition 
regardless of the actual or nominal dimensions or form of the 
product.
    Specifically excluded from the scope are cork flooring and 
bamboo flooring, regardless of whether any of the sub-surface layers 
of either flooring are made from wood. Also excluded is laminate 
flooring. Laminate flooring consists of a top wear layer sheet not 
made of wood, a decorative paper layer, a core-layer of high-density 
fiberboard, and a stabilizing bottom layer.
    Imports of the subject merchandise are provided for under the 
following subheadings of the Harmonized Tariff Schedule of the 
United States (HTSUS): 4412.31.0520; 4412.31.0540; 4412.31.0560; 
4412.31.2510; 4412.31.2520; 4412.31.4040; 4412.31.4050; 
4412.31.4060; 4412.31.4070; 4412.31.5125; 4412.31.5135; 
4412.31.5155; 4412.31.5165; 4412.31.3175; 4412.31.6000; 
4412.31.9100; 4412.32.0520; 4412.32.0540; 4412.32.0560; 
4412.32.2510; 4412.32.2520; 4412.32.3125; 4412.32.3135; 
4412.32.3155; 4412.32.3165; 4412.32.3175; 4412.32.3185; 
4412.32.5600; 4412.39.1000; 4412.39.3000; 4412.39.4011; 
4412.39.4012; 4412.39.4019; 4412.39.4031; 4412.39.4032; 
4412.39.4039; 4412.39.4051; 4412.39.4052; 4412.39.4059; 
4412.39.4061; 4412.39.4062; 4412.39.4069; 4412.39.5010; 
4412.39.5030; 4412.39.5050; 4412.94.1030; 4412.94.1050; 
4412.94.3105; 4412.94.3111; 4412.94.3121; 4412.94.3131; 
4412.94.3141; 4412.94.3160; 4412.94.3171; 4412.94.4100; 
4412.94.5100; 4412.94.6000; 4412.94.7000; 4412.94.8000; 
4412.94.9000; 4412.94.9500; 4412.99.0600; 4412.99.1020; 
4412.99.1030; 4412.99.1040; 4412.99.3110; 4412.99.3120; 
4412.99.3130; 4412.99.3140; 4412.99.3150; 4412.99.3160; 
4412.99.3170; 4412.99.4100; 4412.99.5100; 4412.99.5710; 
4412.99.6000; 4412.99.7000; 4412.99.8000; 4412.99.9000; 
4412.99.9500; 4418.71.2000; 4418.71.9000; 4418.72.2000; and 
4418.72.9500.
    In addition, imports of subject merchandise may enter the U.S. 
under the following HTSUS subheadings: 4409.10.0500; 4409.10.2000; 
4409.29.0515; 4409.29.0525; 4409.29.0535; 4409.29.0545; 
4409.29.0555; 4409.29.0565; 4409.29.2530; 4409.29.2550; 
4409.29.2560; 4418.71.1000; 4418.79.0000; and 4418.90.4605.
    While HTSUS subheadings are provided for convenience and customs 
purposes, the written description of the subject merchandise is 
dispositive.

[FR Doc. 2010-29117 Filed 11-17-10; 8:45 am]
BILLING CODE 3510-DS-P