[Federal Register Volume 76, Number 66 (Wednesday, April 6, 2011)]
[Notices]
[Pages 19043-19049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-8213]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-894]
Certain Tissue Paper Products From the People's Republic of
China: Preliminary Affirmative Determination of Circumvention of the
Antidumping Duty Order
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
Preliminary Determination
We preliminarily determine that certain tissue paper products
(tissue paper) produced and/or exported by Max Fortune (Vietnam) Paper
Products Company, Limited (MFVN) \1\ to the United States from Vietnam
are made from jumbo rolls and/or cut sheets of tissue paper produced in
the People's Republic of China (PRC), and are circumventing the
antidumping duty order on tissue paper from the PRC, as provided in
section 781(b) of the Tariff Act of 1930, as amended (the Act). 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) (PRC Tissue
Paper Order).
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\1\ MFVN is a company located in Vietnam and is a wholly owned
subsidiary of Max Fortune Industrial Co., Ltd. (Max Fortune HK)
located in Hong Kong.
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DATES: Effective Date: April 6, 2011.
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 19, 2010, the Seaman Paper Company of Massachusetts,
Inc. (the petitioner) requested that the Department of Commerce (the
Department) initiate an anti-circumvention inquiry pursuant to section
781(b) of the Act, and 19 CFR 351.225(h), to determine whether U.S.
[[Page 19044]]
imports of tissue paper exported from Vietnam by MFVN were made from
jumbo rolls and/or cut sheets of tissue paper produced in the PRC, and
thus circumventing PRC Tissue Paper Order. See the petitioner's
February 19, 2010, anti-circumvention inquiry request (February 19
Submission) at pages 13-14; and PRC Tissue Paper Order. Specifically,
the petitioner alleged that Chinese-produced jumbo rolls and/or cut
sheets of tissue paper sent to Vietnam for completion or assembly into
merchandise of the same class or kind as that covered by the PRC Tissue
Paper Order constituted circumvention pursuant to section 781(b) of the
Act. The petitioner also alleged in its February 19 Submission that
MFVN had been obtaining Chinese-produced tissue paper jumbo rolls and/
or cut sheets and using that merchandise in its U.S. tissue paper sales
since it commenced its operations in 2005.
On March 29, 2010, the Department initiated an anti-circumvention
inquiry on imports of tissue paper from Vietnam produced and/or
exported by MFVN. See Certain Tissue Paper Products from the People's
Republic of China: Notice of Initiation of Anti-circumvention Inquiry,
75 FR 64 (April 5, 2010) (Initiation Notice).
On April 23, 2010, the Department issued an anti-circumvention
questionnaire to MFVN, asking for sales and production information with
respect to the period January 1, 2005, to the present (April 23
Questionnaire). On May 13, 2010, MFVN entered a notice of appearance in
this proceeding. Also, on May 13, 2010, MFVN requested additional time
to file a response to the anti-circumvention questionnaire. Pursuant to
this request, the Department extended the questionnaire response
deadline until June 28, 2010, and MFVN submitted its response to the
questionnaire on that date (June 28 Response). In its June 28 Response,
MFVN admitted that it was possible that it manufactured some tissue
paper in Vietnam from PRC-origin jumbo rolls before and during 2007.
MFVN also stated that its records before 2008 were incomplete and
unreliable. However, MFVN asserted that it could conclusively
demonstrate that as of January 1, 2008, it did not convert any PRC-
origin jumbo rolls and/or cut sheets of tissue paper in Vietnam into
its own tissue paper products. See pages 3 and 12 of MFVN's June 28
Response.
In the April 23 Questionnaire, the Department requested factors of
production (FOP) information for purposes of determining whether the
value of the processing performed in Vietnam represented a small
portion of the value of the merchandise imported into the United
States. MFVN responded that it would not submit FOP data to the
Department because it claimed that since January 1, 2008, it no longer
included Chinese-origin tissue paper jumbo rolls and/or cut sheets in
its U.S. sales. See pages 14-15 of MFVN's June 28 Response.
The Department issued a supplemental questionnaire to MFVN on July
23, 2010, and received MFVN's supplemental questionnaire response on
September 1, 2010.
Also on September 1, 2010, MFVN filed a submission in which it
rebutted the petitioner's February 19, 2010, allegations and provided
information with respect to certain transactions with an affiliated
Chinese company, Fuzhou Tian Jun Trading Co., Ltd. (Tian Jun), during
the 2008-2009 period, which were alleged by the petitioner in its
February 19 Submission to have involved tissue paper.
The Department issued an additional supplemental questionnaire to
MFVN on October 12, 2010, and received MFVN's supplemental
questionnaire response on November 12, 2010.
On November 16, 2010, the Department placed on the record certain
data from the 2008-2009 administrative review of tissue paper from the
PRC. See Memorandum from Brian Smith, Senior Analyst, to The File,
dated November 16, 2010.
On November 18, 2010, the Department issued a verification outline
to MFVN.
On November 22, 2010, the Department met with the petitioner's
counsel to discuss agenda items in the verification outline issued to
MFVN.\2\
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\2\ See Memorandum to The File from Brian Smith, Senior Analyst,
entitled ``Ex-Parte Meeting with Petitioner's Counsel,'' dated
November 22, 2010.
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The petitioner submitted pre-verification comments on November 24,
2010.
Pursuant to section 782(i) of the Act, the Department conducted
verification of the questionnaire responses submitted by MFVN and its
affiliates Max Fortune HK, Tian Jun, and Max Fortune (FZ) Paper
Products Co., Ltd., from November 30 to December 16, 2010.\3\ This
verification report is on file and available in the Central Records
Unit (CRU) of the Department's main building.
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\3\ See Memorandum to The File from Case Analysts entitled
``Verification of the Questionnaire Response of Max Fortune
(Vietnam) Paper Products Co., Ltd. and Its Affiliates in the Anti-
circumvention Inquiry and 2009-2010 Antidumping Duty Administrative
Review of Certain Tissue Paper Products from the People's Republic
of China,'' dated March 31, 2011 (MFVN verification report).
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On January 18, 2011, the Department notified the parties by letter
that it was postponing the final determination of this inquiry until
August 1, 2011.\4\
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\4\ See Letter to the Interested Parties from James Maeder,
Office Director, entitled ``Anti-Circumvention Inquiry on Certain
Tissue Paper Products from the People's Republic of China: Extension
of Final Determination,'' dated January 18, 2011.
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Scope of the Antidumping Duty Order
The tissue paper products subject to this 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.
The merchandise subject to this order does not have specific
classification numbers assigned to them under the Harmonized Tariff
Schedule of the United States (HTSUS). Subject merchandise may be under
one or more of several different subheadings, including: 4802.30;
4802.54; 4802.61; 4802.62; 4802.69; 4804.31.1000; 4804.31.2000;
4804.31.4020; 4804.31.4040; 4804.31.6000; 4804.39; 4805.91.1090;
4805.91.5000; 4805.91.7000; 4806.40; 4808.30; 4808.90; 4811.90;
4823.90; 4820.50.00; 4802.90.00; 4805.91.90; 9505.90.40. The tariff
classifications are provided for convenience and customs purposes;
however, the written description of the scope of this order is
dispositive.\5\
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\5\ On January 30, 2007, at the direction of U.S. Customs and
Border Protection (CBP), the Department added the following HTSUS
classifications to the AD/CVD module for tissue paper: 4802.54.3100,
4802.54.6100, and 4823.90.6700. However, we note that the six-digit
classifications for these numbers were already listed in the scope.
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Excluded from the scope of this 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
[[Page 19045]]
that have been perforated, embossed, or die-cut to the shape of a
toilet seat, i.e., disposable sanitary covers for toilet seats; (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).
Scope of the Circumvention Inquiry
The products covered by this inquiry are tissue paper products, as
described above in the ``Scope of the Antidumping Duty Order'' section,
which are produced in Vietnam from Chinese-origin jumbo rolls and/or
cut sheets of tissue paper, and exported from Vietnam to the United
States by MFVN.
Statutory Provisions Regarding Circumvention
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 country other than the country to which the order applies. In
conducting anti-circumvention inquiries under section 781(b)(1) 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.
Section 781(b)(2) of the Act provides the criteria for determining
whether the process of assembly or completion is minor or
insignificant. These criteria are: (a) The level of investment in the
foreign country; (b) the level of research and development (R&D) in the
foreign country; (c) the nature of the production process in the
foreign country; (d) the extent of the production facilities in the
foreign country; and (e) 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 Statement of Administrative Action (SAA) accompanying the
Uruguay Round Agreements Act, H. Doc. No. 103-316, at 893 (1994),
provides some guidance with respect to these criteria. It explains that
no single factor listed in section 781(b)(2) of the Act will be
controlling. Accordingly, it is the Department's practice to evaluate
each of the factors as they exist in the foreign country depending on
the particular circumvention scenario. Therefore, the importance of any
one of the factors listed under section 781(b)(2) of the Act can vary
from case to case depending on the particular circumstances unique to
each circumvention inquiry.
Section 781(b)(3) of the Act further provides that, in determining
whether to include merchandise assembled or completed in a foreign
country in an antidumping duty order, the Department shall consider:
(A) The pattern of trade, including sourcing patterns; (B) whether the
manufacturer or exporter of the merchandise described in accordance
with section 781(b)(1)(B) of the Act is affiliated with the person who
uses the merchandise described in accordance with section 781(b)(1)(B)
to assemble or complete in the foreign country the merchandise that is
subsequently imported into the United States; and (C) whether imports
into the foreign country of the merchandise described in accordance
with section 781(b)(1)(B) have increased after the initiation of the
investigation which resulted in the issuance of such order.
In this case, the PRC Tissue Paper Order covers cut-to-length
sheets of tissue paper equal to or greater than 0.5 inches in width,
with a basis weight not exceeding 29 grams per square meter and other
specified characteristics of the scope. The merchandise subject to this
inquiry is tissue paper products exported to the United States by MFVN
produced from Chinese-origin jumbo rolls and/or cut sheets of tissue
paper. The list of products MFVN provided in its questionnaire
responses indicates that the tissue paper products it exported to the
United States meet the written description of the products subject to
the PRC Tissue Paper Order. See June 28 Response at Exhibit 6.
Accordingly, we find that the merchandise subject to this inquiry is
the same class or kind of merchandise as that subject to the PRC Tissue
Paper Order, pursuant to section 781(b)(1)(A) of the Act. With respect
to the remaining statutory criteria for determining whether
circumvention exists, the Department finds it necessary to rely on
facts available, as the respondent failed to provide necessary,
verifiable information upon which the Department could rely. Further,
as discussed in detail below, we find it appropriate in this inquiry to
apply facts available with an adverse inference, as the respondent
failed to cooperate to the best of its ability in providing the
necessary information.
Adverse Facts Available
Section 776(a) of the Act, provides that, if (1) necessary
information is not available on the record or (2) an interested party:
(A) Withholds information that has been requested by the Department;
(B) fails to provide such information in a timely manner or in the form
or manner requested subject to sections 782(c)(1) and (e) of the Act;
(C) significantly impedes a proceeding under the antidumping statute;
or (D) provides such information but the information cannot be
verified, the Department shall, subject to subsection 782(d) of the
Act, use facts otherwise available in reaching the applicable
determination.
Furthermore, section 776(b) of the Act states that if the
Department ``finds that an interested party has failed to cooperate by
not acting to the best of its ability to comply with a request for
information from the administering authority * * * , the administering
authority * * * , in reaching the applicable determination under this
title, may use an inference that is adverse to the interests of that
party in selecting from among the facts otherwise available.'' See also
SAA, H.Rep. No. 103-316 at 870 (1994). It is the Department's practice
to make an adverse inference ``to ensure that the party does not obtain
a more favorable result by failing to cooperate than if it had
cooperated fully.'' Id. An adverse inference may include reliance on
information derived from the petition, the final determination in the
investigation, any previous review, or any other information placed on
the record. See section 776(b) of the Act.
In this case, MFVN informed the Department that it could not
provide any information with respect to the production of the
merchandise exported from Vietnam during the period January 1, 2005, to
December 31, 2007. In fact, MFVN admitted that ``it is possible that
MFVN might have made tissue paper in Vietnam from jumbo rolls from the
PRC'' during this time period. See MFVN's June 28 Response at page 3.
Furthermore, the data provided in the petitioner's February 19
Submission
[[Page 19046]]
show that MFVN obtained a significant amount of Chinese-origin jumbo
rolls and/or cut sheets of tissue paper during this time period. See
February 19 Submission at pages 13-14. This is the extent of
information on the record with regard to MFVN's production during this
time period.
Absent any further information on the record, pursuant to section
776(a) of the Act, the Department has concluded that the application of
facts available is warranted with respect to exports of tissue paper
from MFVN to the United States from January 1, 2005, to December 31,
2007 (2005-2007 period). Production information for the 2005-2007
period is necessary for purposes of this anti-circumvention inquiry and
without it on the administrative record, the Department cannot conduct
its anti-circumvention analysis for the 2005-2007 period. MFVN claims
that it was unable to maintain such records during the above-referenced
time period. However, we find this claim to be unreasonable. A company
is expected to maintain its production records in the normal course of
business. For companies doing business in Vietnam, the Vietnamese
Government has even issued regulations which require companies like
MFVN to retain such records for up to 10 years.\6\ This is especially
true in this case where MFVN demonstrated at verification that it
maintained such records in both 2009 and 2010. Therefore, because MFVN
did not provide the Department with necessary information with respect
to MFVN's exports of tissue paper during the 2005-2007 period, the
application of facts available pursuant to sections 776(a)(1) and (2)
of the Act is warranted.
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\6\ See Memorandum to the File dated March 31, 2011 which
contains the following document, ``Decree No. 129/2004/ND-CP of May
31, 2004 Detailing and Guiding the Implementation of a Number of
Articles of the Accounting Law, Applicable to Business Activities,''
issued by the Government of the Socialist Republic of Vietnam on May
31, 2004.
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Furthermore, MFVN's admission that it ``possibly'' made tissue
paper in Vietnam from Chinese-origin jumbo rolls, coupled with the fact
that the petitioner's data show that MFVN obtained PRC-origin jumbo
rolls and/or cut sheets from January 1, 2005, to December 31, 2007,
leads us to conclude that MFVN failed to cooperate by not acting to the
best of its ability to comply with the Department's request for
information with respect to its commercial activities during this
period. Therefore, pursuant to section 776(b) of the Act, an adverse
inference is warranted. Accordingly, as adverse facts available (AFA),
the Department preliminarily finds that all tissue paper produced and/
or exported by MFVN to the United States from January 1, 2005, to
December 31, 2007, was made with Chinese-origin jumbo rolls and/or cut
sheets of tissue paper.
With respect to MFVN's exports of tissue paper to the United States
during the calendar year 2008, the Department also concludes that the
application of AFA is warranted. Although MFVN stated in its June 28
Response that it could conclusively demonstrate through its accounting
and production records that it did not use Chinese-origin tissue paper
jumbo rolls and/or cut sheets in its U.S. sales during 2008, the
Department was unable to verify this claim. In fact, at verification,
MFVN provided inadequate and incomplete accounting records for calendar
year 2008. Specifically, MFVN did not support its claim that it had
ceased using Chinese-origin jumbo rolls and/or cut sheets of tissue
paper in its U.S. sales during 2008, nor did it provide the necessary
accounting records at verification to show the type and origin of the
materials it used in its tissue paper exports to the United States from
January 1, 2008, to December 31, 2008. See MFVN verification report at
pages 2, 35-36, and 39-40.
For example, at verification, MFVN provided a worksheet which
reconciled the cost-of-sales figure in its 2008 audited financial
statements to its purchases, beginning and ending inventory values and
conversion costs, as reflected in its annual summary trial balance for
2008. We subsequently requested that MFVN reconcile its monthly trial
balances or other monthly general ledger-type reports to the annual
summary trial balance for 2008. MFVN, however, claimed at verification
that it could not locate its monthly trial balances or any other
detailed accounting records for 2008 to support its annual summary
trial balance amounts. See MFVN verification report at pages 35-36.
In addition, we requested that MFVN provide the company's 2008
monthly inventory movement ledgers for raw materials, work in process
(WIP), and finished goods. While MFVN provided its detailed inventory
ledger as of December 31, 2008, the company informed Department
officials at verification that it could not provide any of the other
requested 2008 monthly detailed inventory movement ledgers. Without the
detailed trial balances or inventory movement ledgers, Department
officials were unable to rely on the company's monthly production cost
and inventory movement activity (for raw materials, WIP and finished
goods) noted in its warehouse records for purposes of testing at
verification the production quantity data contained in MFVN's
submissions for calendar year 2008. See MFVN verification report at
pages 35-36.
Also, MFVN did not provide at verification, upon request, details
of its raw material and WIP inventory as of January 1, 2008. Thus,
Department officials were unable to obtain details of the amounts
reflected in MFVN's beginning inventory value noted in its 2008 audited
financial statements (e.g., quantity of pulp versus Chinese-sourced
jumbo rolls in the beginning raw material inventory amount reflected in
the 2008 audited financial statements). See MFVN verification report at
pages 35-37.
All of the above examples demonstrate that MFVN did not provide to
the Department verifiable production data for calendar year 2008, was
unable to tie its export sales data to its production data for calendar
year 2008, and did not respond fully to the Department's questionnaires
with regard to its production during that period. The absence of
verifiable production data on the record for 2008 impeded the conduct
of this anti-circumvention inquiry. Therefore, pursuant to section
776(a)(2) of the Act, the Department concludes that the use of facts
available is warranted with regard to MFVN's U.S. tissue paper sales
transactions from January 1 to December 31, 2008.
Furthermore, because MFVN did not provide verifiable data showing
that it used only non-Chinese-origin jumbo rolls and/or sheets in its
production of all of the tissue paper it exported to the United States
from its facility during 2008, the Department concludes that MFVN did
not act to the best of its ability in this inquiry. As noted above, a
company is expected to maintain its production records in the normal
course of business. MFVN was aware that these records were necessary
for the Department's anti-circumvention analysis, but did not provide
them at verification, as requested. Therefore, pursuant to section
776(b) of the Act, an adverse inference is warranted because MFVN did
not provide all of the necessary information on the record and failed
to provide at verification the accounting records the Department needed
to analyze the relevant production data for the calendar year 2008.
Accordingly, as AFA, the Department preliminarily concludes that all of
MFVN's exports of tissue paper to the United States during 2008 were
produced with Chinese-origin jumbo rolls and/or cut sheets of tissue
paper.
[[Page 19047]]
In addition, MFVN's books and records, as verified, reflect that on
January 1, 2009, the company had significant amounts of tissue paper in
finished goods and WIP inventory. This entire inventory was produced
and/or purchased during 2008 or earlier. At verification, MFVN stated
that it did not have records to show the source of the material it used
in the production of that inventory. Furthermore, Department officials
discovered in the records MFVN provided at verification that there were
jumbo rolls of Chinese-origin in inventory at the end of December 2008,
which remained in inventory throughout 2009, and were later withdrawn
from inventory in March 2010. See MFVN verification report at pages 40-
41. Therefore, the Department finds that adverse facts available is
also warranted with respect to the beginning inventory amount in 2009.
Accordingly, as AFA, the Department determines that any tissue paper
exported by MFVN to the United States on or after January 1, 2009,
which was withdrawn from, or produced from merchandise in, finished
goods or WIP inventory as of January 1, 2009, was produced from Chinese
jumbo rolls and/or cut sheets.
Based on the foregoing analysis, as AFA, the Department
preliminarily finds that MFVN used Chinese-origin jumbo rolls and/or
cut-sheets of tissue paper in its production of tissue paper that it
exported to the United States from January 1, 2005, to December 31,
2008, and that MFVN continued to use such merchandise from inventory
during that period to produce and/or sell tissue paper on or after
January 1, 2009. Accordingly, the Department preliminarily concludes
that MFVN's tissue paper exports to the United States during 2009 and
2010 included tissue paper produced from Chinese jumbo rolls and/or cut
sheets.
However, the Department was able to verify based on its examination
of Vietnamese Customs data from January 1, 2008, to December 10, 2010,
MFVN had not imported any additional Chinese-origin jumbo rolls and/or
cut sheets of tissue paper. See MFVN verification report at page 3. In
light of these verified data and the Department's observation of MFVN's
tissue-paper production operations at verification, we find that MFVN
now has the capacity and ability to produce tissue paper for export.
In determining whether circumvention of an order is occurring,
section 781(b)(1) of the Act directs the Department to address, among
other things, whether before importation into the United States, the
imported merchandise is completed or assembled in another country from
merchandise which is subject to the order or produced in the foreign
country that is subject to the order. See section 781(b)(1)(B) of the
Act. Based on the preceding analysis, there is little dispute that
during the period of analysis of this inquiry, MFVN completed some
tissue paper in Vietnam using jumbo rolls and/or cut sheets produced in
the PRC.
Section 781(b)(1) of the Act also directs the Department to examine
whether (1) the process of assembly or completion in the foreign
country (i.e., Vietnam) is minor or insignificant and (2) the value of
the merchandise produced in the country subject to the order (i.e., the
PRC) is a significant portion of the total value of the merchandise
exported to the United States. See sections 781(b)(1)(C) and (D) of the
Act. Because the PRC and Vietnam are non-market economies, in any
review of merchandise produced in those countries, section 773(c)(4) of
the Act provides that the Department shall value the FOP utilizing
prices or costs in one or more market-economy countries that are at a
level of economic development comparable to that of the NME country and
are significant producers of comparable merchandise. Pursuant to this
provision, in its questionnaire to MFVN, the Department requested the
FOP data for both the Chinese-origin jumbo rolls and/or sheets imported
by MFVN, and the processing and packaging operations performed by MFVN
in Vietnam. See the Department's April 23 Questionnaire at pages 9-10.
See also 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); and
Circumvention and Scope Inquiries on the Antidumping Duty Order on
Certain Frozen Fish Fillets from the Socialist Republic of Vietnam:
Partial Affirmative Final Determination of Circumvention of the
Antidumping Duty Order, Partial Final Termination of Circumvention
Inquiry and Final Rescission of Scope Inquiry, 71 FR 38608 (July 7,
2006).
In determining whether the process of assembly or completion of
tissue paper from jumbo rolls and/or cut sheets is ``minor or
insignificant'' as required by section 781(b)(1), section 781(b)(2) of
the Act directs the Department to consider various factors including
(a) MFVN's level of investment in Vietnam; (b) MFVN's level of R&D in
Vietnam; (c) the nature of MFVN's production process in Vietnam; (d)
the extent of MFVN's production facilities in Vietnam; and (e) whether
the value of the processing performed in Vietnam represents a small
proportion of the value of the merchandise MFVN exported to the United
States. With respect to the first criterion, the Department verified
that the level of investment by MVFN for equipment used in converting
the PRC-origin jumbo rolls and/or cut sheets into finished tissue paper
is minor or insignificant. See MFVN verification report at page 6.
Moreover, the record evidence for this circumvention inquiry
demonstrates that MFVN has not undertaken a significant level of R&D in
order to process tissue paper products. See June 28 Response at pages
12-13. Furthermore, the production process conducted by MFVN in
converting the PRC-origin jumbo rolls or sheets to cut-to-length tissue
paper is limited and minor when compared to the production process of
the jumbo rolls or sheets. See June 28 Response at pages 13-14. In
addition, the Department did verify that MFVN has production facilities
in Vietnam in terms of the capital equipment and the types of employees
used in the production process. See MFVN verification report at pages 6
and 19-20. However, as noted above, MFVN was unable to provide evidence
that, before January 1, 2009, it used its full capacity of production
to manufacture tissue paper.
With respect to the criterion of section 781(b)(2)(e) of the Act,
however, MFVN did not provide the Department with sufficient
information to determine whether the value of the processing MFVN
performed in Vietnam represents a small proportion of the value of the
merchandise MFVN exported to the United States. In response to our
questionnaire, MFVN refused to submit FOP information, because it
stated that it could definitively demonstrate through its books and
records that as of January 1, 2008, it did not use Chinese-origin jumbo
rolls and/or cut sheets of tissue paper in its U.S. tissue paper sales.
See June 28 Response at pages 3 and 12. However, as explained above,
MFVN was unable to substantiate this claim at verification.
Accordingly, for this factor, the application of facts available is
also warranted pursuant to section 776(a) of the Act.
In its February 19 Submission, the petitioner provided evidence
based on foreign market research that the conversion by MFVN of jumbo
rolls and/or sheets of tissue paper produced in the PRC into finished
tissue paper products in Vietnam is a minor or insignificant process as
defined under sections 781(b)(1)(C) and (b)(2) of the Act, and that the
value of the processing performed by MFVN is a minor portion
[[Page 19048]]
of the value of the completed merchandise. Accordingly, the petitioner
reasoned that the value of the PRC-origin jumbo rolls and/or sheets
used by MFVN is a significant portion of the total value of the
merchandise exported to the United States, pursuant to section
781(b)(1)(D) of the Act. See Initiation Notice, 75 FR 17128-17131.
Further, in a prior anti-circumvention segment of this proceeding, the
Department determined that the process of converting Chinese-origin
jumbo rolls in Vietnam was minor or insignificant, and that the value
of the Chinese-origin jumbo rolls was a significant portion of the
total value of the finished tissue paper products the respondent
exported to the United States.\7\
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\7\ The Department came to this conclusion based on its analysis
of both the qualitative and quantitative data submitted by the
respondent. See 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).
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Therefore, based on data contained in the petitioner's February 19
Submission, as well as our findings in a prior anti-circumvention
segment of the PRC tissue paper proceeding, the Department determines
in this case, as facts available, that the value of the processing MFVN
performed in Vietnam represents a small proportion of the value of the
merchandise MFVN exported to the United States.
Taking into consideration all of the factors under section
781(b)(2) of the Act, the Department concludes that the process of
converting the jumbo rolls and/or cut sheets of tissue paper into the
finished tissue paper products in Vietnam is minor or insignificant,
pursuant to sections 781(b)(1)(C) of the Act. Accordingly, the
Department concludes, based on the facts available, that the value of
the jumbo rolls and/or cut sheets produced in the PRC is a significant
portion of the total value of the finished tissue paper products MFVN
exported to the United States, pursuant to section 781(b)(1)(D) of the
Act.
Furthermore, in accordance with section 781(b)(1)(E) of the Act, we
find that action is appropriate to prevent evasion of the PRC Tissue
Paper Order.
In conclusion, the Department preliminarily determines under
section 781(b) of the Act, that exports to the United States of tissue
paper products produced from PRC-origin jumbo rolls and/or cut sheets
and further processed in Vietnam by MFVN constitute circumvention of
the PRC Tissue Paper Order.
The Department notes that this represents the third instance in
which the Department has found an exporting company to have
circumvented the PRC Tissue Paper Order. See also Certain Tissue Paper
Products from the People's Republic of China: Affirmative Final
Determination of Circumvention of the Antidumping Duty Order, 74 FR
29172 (June 19, 2009); and 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). The Department has an obligation to administer the law in a
manner that prevents evasion of the order. See Tung Mung Development v.
United States, 219 F. Supp. 2d 1333, 1343 (CIT 2002), affirmed 354 F.3d
1371 (January 15, 2004) (finding that the Department has a
responsibility to prevent the evasion of payment of antidumping
duties). Further, section 781(b)(1)(E) of the Act directs the
Department to take necessary action to ``prevent evasion'' of
antidumping or countervailing duty orders when it concludes that
``merchandise has been completed or assembled in other foreign
countries'' and is circumventing an order. Accordingly, to prevent
future evasion of the PRC Tissue Paper Order, in light of our
preliminary determination, the Department will instruct CBP to suspend
liquidation of all entries of tissue paper produced and/or exported by
MFVN that were entered, or withdrawn from warehouse, for consumption on
or after the date of initiation of the circumvention inquiry.
As noted above, the Department did determine that MFVN now has the
capacity and ability to produce tissue paper for export from
domestically-sourced input materials. Should the Department conduct an
administrative review in the future, and determine in the context of
that review that MFVN has not produced for export tissue paper using
Chinese-origin jumbo rolls and/or cut sheets, the Department will
consider initiating a changed circumstances review pursuant to section
751(b) of the Act to determine if the continued suspension of
merchandise produced and/or exported by MFVN from Vietnam is warranted.
Suspension of Liquidation
In accordance with section 733(d) of the Act, the Department will
direct CBP to suspend liquidation and to require a cash deposit of
estimated duties, at the PRC-wide rate of 112.64 percent, on all
unliquidated entries of tissue paper produced and/or exported by MFVN
that were entered, or withdrawn from warehouse, for consumption on or
after March 29, 2010, the date of initiation of the circumvention
inquiry.
Notification to the International Trade Commission
The Department, consistent with section 781(e) of the Act and 19
CFR 351.225(f)(7)(i)(B), has notified the International Trade
Commission (ITC) of this preliminary determination to include the
merchandise subject to this inquiry within the PRC Tissue Paper Order.
Pursuant to section 781(e) of the Act, the ITC may request
consultations concerning the Department's proposed inclusion of the
subject merchandise. If, after consultations, the ITC believes that a
significant injury issue is presented by the proposed exclusion, it
will have 15 days to provide written advice to the Department.
Public Comment
Case briefs from interested parties may be submitted no later than
30 days from the date of publication of this notice. A list of
authorities used and an executive summary of issues should accompany
any briefs submitted to the Department. See 19 CFR 351.309(c). This
summary should be limited to five pages total, including footnotes.
Rebuttal briefs limited to issues raised in the case briefs may be
filed no later than 35 days after the date of publication of this
notice. See 19 CFR 351.309(d).
Interested parties, who wish to request a hearing, or to
participate if one is requested, must submit a written request to the
Assistant Secretary for Import Administration within 30 days after the
date of publication of this notice. See 19 CFR 351.310. Requests should
contain the party's name, address, and telephone number, the number of
participants, and a list of the issues to be discussed. At the hearing,
each party may make an affirmative presentation only on issues raised
in that party's case brief and may make rebuttal presentations only on
arguments included in that party's rebuttal brief. We intend to hold a
hearing, if requested, no later than 40 days after the date of
publication of this notice.
Final Determination
The final determination with respect to this circumvention inquiry,
including the results of the Department's analysis of any written
comments, will be issued no later than August 1, 2011.
This preliminary affirmative circumvention determination is
published in accordance with section 781(b) of the Act and 19 CFR
351.225.
[[Page 19049]]
March 31, 2011.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2011-8213 Filed 4-5-11; 8:45 am]
BILLING CODE 3510-DS-P