[Federal Register: October 25, 2007 (Volume 72, Number 206)]
[Notices]
[Page 60642-60645]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25oc07-52]
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DEPARTMENT OF COMMERCE
International Trade Administration
C-560-821
Coated Free Sheet Paper from Indonesia: Final Affirmative
Countervailing Duty Determination
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) has reached a
final determination that countervailable subsidies are being provided
to producers and exporters of coated free sheet paper (CFS) from
Indonesia. For information on the countervailable subsidy rates, please
see the ``Final Determination'' section of this notice.
EFFECTIVE DATE: October 25, 2007.
FOR FURTHER INFORMATION CONTACT: Sean Carey, Nicholas Czajkowski, or
Gene Calvert, AD/CVD Operations, Office 6, Import Administration,
International Trade Administration, U.S. Department of Commerce, Room
7866, 14th Street and Constitution Avenue, NW, Washington, DC 20230;
telephone: (202) 482-3964, (202) 482-1395, or (202) 482-3586,
respectively.
SUPPLEMENTARY INFORMATION:
Case History
On April 9, 2007, the Department published Coated Free Sheet Paper
from Indonesia: Notice of Preliminary Affirmative Countervailing Duty
Determination, 72 FR 17498 (April 9, 2007) (Preliminary Determination).
Since the issuance of the Preliminary Determination, the following
events have occurred. On April 10 and May 18, 2007, the Department
issued supplemental questionnaires to the Government of Indonesia (GOI)
and to PT. Pabrik Kertas Tjiwi Kimia Tbk. (TK) and Pindo Deli Pulp and
Paper Mills (PD) (the respondent companies). On April 20 and May 24,
2007, the Department issued initial and supplemental questionnaires to
the GOI and to the respondent companies regarding the petitioner's
December 15, 2007 additional allegations concerning debt forgiveness.
Both parties submitted timely responses to all of the Department's
questionnaires and supplemental questionnaires.
On May 2, 2007, the Department aligned the final determination in
this countervailing duty investigation with the final determination in
the companion antidumping duty investigation. See Coated Free Sheet
Paper from Indonesia, the People's Republic of China, and the Republic
of Korea: Alignment of Final Countervailing Duty Determinations with
Final Antidumping Duty Determinations, 72 FR 24277 (May 2, 2007). On
May 10, 2007, NewPage Corporation (the petitioner) requested a hearing
pursuant to 19 CFR 351.310(c) and the Department's Preliminary
Determination.
On June 18 and June 19, 2007, the petitioner and the respondent
companies submitted new factual information concerning the Department's
investigation of the ``GOI Provision of Standing Timber for Less than
Adequate Remuneration,'' or ``stumpage.'' On June 28, 2007, the
petitioner submitted rebuttal comments regarding the respondent
companies' new factual information submission.
From June 25 through July 13, 2007, the Department conducted
verification of the questionnaire responses provided by the GOI and the
respondent companies. On July 13, 2007, the petitioner filed an
upstream subsidy allegation, claiming, in accordance with section
771A(a) of the Tariff Act of 1930, as amended, (the Act), that (1) a
subsidy, other than an export subsidy, has been paid or bestowed on an
input product that is used in the manufacture or production of
merchandise subject to a countervailing duty proceeding; (2) the
subsidy bestows a competitive benefit on the merchandise; and (3) the
subsidy has a significant effect on the cost of manufacturing or
producing the merchandise. On July 23, 2007, the respondent companies
filed rebuttal comments, and on August 10, 2007, the petitioner filed
surrebuttal comments on this allegation.
The Department issued verification reports on August 24, 2007: see
Memoranda to the File, Countervailing Duty Investigation of Coated Free
Sheet (CFS) Paper from Indonesia: Verification of the Questionnaire
Responses Submitted by Ministry of Forestry and the Ministry of
Finance; Countervailing Duty Investigation of Coated Free Sheet Paper
from Indonesia: Verification of Cross-Ownership and Debt Restructuring
for the Asia Pulp and Paper/Sinar Mas Group; Countervailing Duty
Investigation of Coated Free Sheet Paper from Indonesia: Verification
of PT Pindo Deli Pulp & Paper Mills and PT. Pabrik Kertas Tjiwi Kimia
(Paper Producers/Exports) and PT Cakrawala Mega Indah (trading
company); Countervailing Duty Investigation of Coated Free Sheet (CFS)
Paper from Indonesia: Verification of the Questionnaire Responses
Submitted by Pulp Producers PT. Lontar Papyrus Pulp and Paper and Indah
Kiat Pulp and Paper Tbk.; and, Countervailing Duty Investigation of
Coated Free Sheet (CFS) Paper from Indonesia: Verification of the
Questionnaire Responses Submitted by Forestry Companies PT. Arara
Abadi, PT. Wirakarya Sakti, PT. Finnantara Intiga, and PT. Riau Abadi
Lestari.
On September 5 and September 6, 2007, the petitioner, the GOI, the
respondent companies, and the United Steel, Paper and Forestry, Rubber,
Manufacturing, Energy, Allied Industrial and Service Workers
International Union, AFL-CIO, CLC
[[Page 60643]]
(USW), a domestic interested party to this proceeding, timely filed
case briefs regarding our Preliminary Determination. On September 11,
2007, the petitioner, the GOI, the respondent companies, and the USW
each filed rebuttal comments regarding our Preliminary Determination.
At the Department's request, the petitioner, the GOI, and the
respondent companies removed what the Department determined to be new
factual information from their comments and rebuttal comments regarding
the Department's Preliminary Determination, and resubmitted those
comments to the Department on September 18 and September 19, 2007.
On September 7, 2007, the Department issued the interim analysis of
two additional subsidy allegations. We explained in the Preliminary
Determination that because we had only recently initiated
investigations of these two programs, there was not sufficient time to
gather information and analyze the countervailability of the programs
for the purposes of the Preliminary Determination. See the Memorandum
to David M. Spooner, Assistant Secretary for Import Administration from
Barbara E. Tillman, Director, Office 6, AD/CVD Operations,
Countervailing Duty Investigation: Coated Free Sheet Paper from
Indonesia; Post-Preliminary Analysis of Two New Subsidy Allegations
(Post-Preliminary Analysis). The Department set a separate briefing
schedule for parties to file comments and rebuttal comments on our
Post-Preliminary Analysis. On September 18, 2007, such comments were
filed by the GOI and the respondent companies. The petitioner filed
rebuttal comments regarding the Department's Post-Preliminary Analysis
on September 25, 2007. The petitioner withdrew its request for a
hearing on September 10, 2007.
Period of Investigation
The period of investigation (POI) for which we are measuring
subsidies is
January 1, 2005 through December 31, 2005, which corresponds to the
most recently completed fiscal year for the respondent companies. See
19 CFR 351.204(b)(2).
Scope of the Investigation
The merchandise covered by this investigation includes coated free
sheet paper and paperboard of a kind used for writing, printing or
other graphic purposes. Coated free sheet paper is produced from not-
more-than 10 percent by weight mechanical or combined chemical/
mechanical fibers. Coated free sheet paper is coated with kaolin (China
clay) or other inorganic substances, with or without a binder, and with
no other coating. Coated free sheet paper may be surface-colored,
surface-decorated, printed (except as described below), embossed, or
perforated. The subject merchandise includes single- and double-side-
coated free sheet paper; coated free sheet paper in both sheet or roll
form; and is inclusive of all weights, brightness levels, and finishes.
The terms ``wood free'' or ``art'' paper may also be used to describe
the imported product.
Excluded from the scope are: (1) Coated free sheet paper that is
imported printed with final content printed text or graphics; (2) base
paper to be sensitized for use in photography; and, (3) paper
containing by weight 25 percent or more cotton fiber.
Coated free sheet paper is classifiable under subheadings
4810.13.1900, 4810.13.2010, 4810.13.2090, 4810.13.5000, 4810.13.7040,
4810.14.1900, 4810.14.2010, 4810.14.2090, 4810.14.5000, 4810.14.7040,
4810.19.1900, 4810.19.2010, and 4810.19.2090 of the Harmonized Tariff
Schedule of the United States (HTSUS). While HTSUS subheadings are
provided for convenience and customs purposes, our written description
of the scope of this investigation is dispositive.
Scope Comments
On January 12, 2007, the respondent companies filed a request to
exclude cast-coated free sheet paper from the scope of the
investigations of CFS from Indonesia, Korea, and the People's Republic
of China. The petitioner submitted comments on the respondent
companies' request on January 19, 2007. The Department analyzed both
parties' comments and denied the respondent companies' request to
exclude cast-coated free sheet paper from the scope of these
investigations. See the Memorandum to Stephen J. Claeys, Deputy
Assistant Secretary for Import Administration, Request to Exclude Cast-
Coated Free Sheet Paper from the Antidumping Duty and Countervailing
Duty Investigations on Coated Free Sheet Paper, dated March 22, 2007,
which is on file in the Central Records Unit (CRU), Room B099 of the
main Commerce building.
On August 20, August 28, and September 10, 2007, the petitioner
requested that the Department clarify the scope of the antidumping and
countervailing duty investigations of CFS paper from Indonesia, Korea
and the People's Republic of China (PRC). Specifically, the petitioner
asked the Department to ``clarify that the scope of the investigation
includes coated free sheet paper containing hardwood BCTMP.''
Because this was a general issue pertaining to all six
investigations, the Department set up a general issues file to handle
this scope request. A hearing on the scope request was held on
September 26, 2007. The hearing comprised a public session, a closed
session for the antidumping investigation from Korea, and a closed
session for the countervailing duty investigation from the PRC. After
considering the comments submitted by the parties to these
investigations, we have determined not to adopt the scope clarification
sought by the petitioner. See Memorandum to Stephen J. Claeys, Deputy
Assistant Secretary for Import Administration, entitled ``Scope
Clarification Request: NewPage Corporation'' dated concurrently with
this notice, which is appended to ``Issues and Decision Memorandum for
the Final Determination in the Countervailing Duty Investigation of
Coated Free Sheet Paper from the People's Republic of China.''
Initiation and Deferral of Upstream Subsidy Investigation
On July 13, 2007, the petitioner filed an upstream subsidy
allegation, claiming, in accordance with section 771A(a) of the Act,
that (1) a subsidy, other than an export subsidy, has been paid or
bestowed on an input product, i.e., pulpwood, that is used in the
manufacture or production of merchandise subject to a countervailing
duty proceeding, i.e., CFS paper; (2) the subsidy bestows a competitive
benefit on the merchandise; and (3) the subsidy has a significant
effect on the cost of manufacturing or producing the merchandise. See
19 CFR 351.523. The respondent companies filed rebuttal arguments on
July 23, 2007, and the petitioner filed additional comments and
clarifications of its allegation on August 13, 2007.
After fully considering all of these submissions, we have
determined that the threshold requirements set forth in the Act and the
Department's regulations for initiation of an upstream subsidy
investigation have been met. However, we have simultaneously decided to
defer the conduct of the upstream subsidy investigation until the first
administrative review, if a countervailing duty order is issued and
such a review is requested. See section 703(g)(2)(B)(i) of the Act. A
complete discussion of our decisions to both initiate an upstream
investigation and defer the conduct of such investigation can be found
in the ``Issues and
[[Page 60644]]
Decision Memorandum'' from Stephen J. Claeys, Deputy Assistant
Secretary for Import Administration, to David M. Spooner, Assistant
Secretary for Import Administration, dated concurrently with this
notice (Decision Memorandum) and hereby adopted by this notice.
Analysis of Subsidy Programs and Comments Received
The subsidy programs under investigation and the issues raised by
interested parties in their case briefs and rebuttal briefs on the
Preliminary Determination and the Post-Preliminary Analysis, are
discussed in the Decision Memorandum. A list of the subsidy programs
and of the issues which parties have raised is attached to this notice
as Appendix I. Parties can find a complete discussion of all of the
subsidy programs, and issues raised in this investigation and the
corresponding recommendations in this public memorandum, which is on
file in the CRU. A complete version of the Decision Memorandum is
available at http://www.trade.gov/ia under the heading ``Federal
Register Notices.'' The paper copy and the electronic version of the
Decision Memorandum are identical in content.
Final Determination
In accordance with section 705(c)(1)(B)(i) of the Act, we have
determined a single subsidy rate for the two cross-owned producers/
exporters of the subject merchandise. We determine the total
countervailable subsidy rate to be:
------------------------------------------------------------------------
Producer/Exporter Rate
------------------------------------------------------------------------
PT. Pabrik Kertas Tjiwi Kimia Tbk./PT. Pindo Deli 22.48%
Pulp and Paper Mills...............................
All Others.......................................... 22.48%
------------------------------------------------------------------------
In accordance with sections 703(d) and 705(c)(5)(A) of the Act, we
have set the all- others rate as the rate for TK/PD because it was the
only producer/exporter under investigation.
Suspension of Liquidation
In accordance with our affirmative Preliminary Determination, we
instructed U.S. Customs and Border Protection (CBP) to suspend
liquidation of all entries of CFS from Indonesia, which were entered or
withdrawn from warehouse, for consumption on or after
April 9, 2007, the date of the publication of our Preliminary
Determination in the Federal Register. In accordance with section
703(d) of the Act, we instructed CBP to discontinue the suspension of
liquidation for merchandise entered on or after August 7, 2007, but to
continue the suspension of liquidation of entries made on or after
April 9, 2007 and before August 7, 2007.
If the International Trade Commission (ITC) issues a final
affirmative injury determination, we will issue a countervailing duty
order, reinstate suspension of liquidation under section 706(a) of the
Act for all entries, and require a cash deposit of estimated
countervailing duties for such entries of merchandise at the rates
indicated above. If the ITC determines that material injury, or threat
of material injury, does not exist, this proceeding will be terminated
and all estimated duties deposited or securities posted as a result of
the suspension of liquidation will be refunded or canceled.
ITC Notification
In accordance with section 705(d) of the Act, we will notify the
ITC of our determination. In addition, we are making available to the
ITC all non-privileged and non-proprietary information related to this
investigation. We will allow the ITC access to all privileged and
business proprietary information in our files, provided the ITC
confirms it will not disclose such information, either publicly or
under an administrative protective order (APO), without the written
consent of the Assistant Secretary for Import Administration.
Return or Destruction of Proprietary Information
In the event that the ITC issues a final negative injury
determination, this notice will serve as the only reminder to parties
subject to APO of their responsibility concerning the destruction of
proprietary information disclosed under APO in accordance with section
351.305(a)(3) of the Department's regulations. Failure to comply is a
violation of the APO.
This determination is issued and published pursuant to sections
705(d) and 777(i) of the Act.
Dated: October 17, 2007.
David M. Spooner,
Assistant Secretary for Import Administration.
Appendix I: Issues and Decision Memorandum
I. Summary
II. Background
III. Initiation and Deferral of Upstream Subsidy Investigation
IV. Subsidies Valuation Information
A. Cross-Ownership
B. Attribution of Subsidies Provided to Cross-Owned Input Suppliers
C. Allocation Period
D. Loan Benchmark and Discount Rate
E. Creditworthiness
V. Application of Facts Available and Use of an Adverse Inference
VI. Analysis of Programs
A. Programs Determined to Be Countervailable
1. GOI Provision of Standing Timber for Less Than Adequate
Remuneration
2. GOI's Log Export Ban
3. Subsidized Funding for Reforestation (Hutan Tanaman Industria or
HTI Program): ``Zero Interest'' Rate Loans
4. Debt Forgiveness Through the GOI's Acceptance of Instruments
that Had No Market Value
5. Debt Forgiveness through SMG/APP's the Buyback of Its Own Debt
from the GOI
B. Program Determined to Be Not Countervailable
Subsidized Funding for Reforestation (Hutan Tanaman Industria or
HTI Program): Government Capital Infusions into Joint Venture Forest
Plantation
C. Program Determined To Be Not Used
Subsidized Funding for Reforestation (Hutan Tanaman Industria or
HTI Program): Commercial Rate Loans
VII. Analysis of Comments
Comment 1: Whether the Department Should Find that SMG/APP Received
Upstream Subsidies on Purchases of Timber from Non-Cross Owned Entities
and Consider the Legality Under which This Timber was Harvested
Comment 2: Whether the Department's Cross-Ownership Regulations Provide
for the Attribution of Upstream Subsidies to Cross-Owned Companies
Comment 3: Cross-Ownership of AA and WKS with IK, Lontar, TK and PD
Comment 4: Widjaja Family Interest In Purinusa and Cross-Ownership
Comment 5: Cross-Ownership Between AA and WKS
Comment 6: Cross-Ownership Between WKS and Purinusa
Comment 7: Cross-Ownership Between AA and Purinusa
Comment 8: Cross-Ownership of Certain Additional Companies That Were
Preliminarily Found to be Cross-Owned with Companies in the APP/SMG CFS
Group
Comment 9: Whether the Provision of Standing Acacia is the Provision of
a Good by the GOI to the SMG/APP Forestry Companies
Comment 10: Specificity of the GOI's Provision of Standing Timber for
Less Than Adequate Remuneration
[[Page 60645]]
Comment 11: Use of Malaysian Export Statistics as the Starting Point
for Deriving Stumpage Benchmarks
Comment 12: The Stumpage Rate Calculation Provided by Respondents in
their Expert's Report
Comment 13: Calculation of Species-Specific Benchmarks
Comment 14: Whether to Adjust the Benchmark for Movement Expenses
Comment 15: Whether to Use Monthly Exchange Rates
Comment 16: Whether to Adjust the Benchmark for Export Royalty Fees and
G&A Expenses
Comment 17: Profit Adjustment to the Benchmark
Comment 18: Use of Actual Versus Accrued Stumpage Payments
Comment 19: Use of the FAO's Conversion Factors
Comment 20: Whether to Adjust WKS' Log Harvest
Comment 21: Adjustments to the Sales Denominator
Comment 22: Treatment of Alleged Illegal Logging in Indonesia
Comment 23: Indications of Illegal Logging Practices in Subsidizing
Indonesia's CFS Paper Industry
Comment 24: Examination of Log Purchases from Non-Cross Owned Entities
Under the Log Export Ban
Comment 25: The Legality of the WTO's Findings on Export Restraints
Comment 26: Whether Respondent Companies Cured Any Deficiency with
Respect to Settling Debt with COEs
Comment 27: Specificity of IBRA's Acceptance of BII Shares and COEs for
the Repayment of SMG/APP Debt
Comment 28: The Effect of IBRA's Outright Debt Forgiveness on the
Specificity of the Acceptance of COEs for SMG/APP Debt
Comment 29: Benefit from IBRA's Acceptance of COEs as Settlement of
Debt
Comment 30: Whether an Adverse Inference Can be Applied in Determining
that Orleans was Affiliated with SMG/APP
Comment 31: Specificity of IBRA's Sale of SMG/APP Debt to an Affiliate
of the Original Debtor
Comment 32: Whether the Information the Department Relied Upon Was
Speculative and Circumstantial
Comment 33: Procedural Abnormalities in IBRA's Sale of the SMG/APP Debt
and Specificity
Comment 34: Effect of the Lack of Reduction in Debt on the
Countervailability of the Sale of SMG/APP's Debt to Orleans
Comment 35: The Appropriateness of the Department's Reliance on Facts
Available with an Adverse Inference
Comment 36: Whether A Government Can Provide a Financial Contribution
When the Act is Illegal
VIII. Recommendation
[FR Doc. E7-21040 Filed 10-24-07; 8:45 am]
BILLING CODE 3510-DS-S