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Notice of Final Results of Countervailing Duty Administrative Review and Rescission of Certain Company-Specific Reviews: Certain Softwood Lumber Products From Canada

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Information about this document as published in the Federal Register.

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AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On June 14, 2004, the Department of Commerce (the Department) published in the Federal Register its preliminary results of administrative review of the countervailing duty order on certain softwood lumber products (subject merchandise) from Canada for the period May 22, 2002, through March 31, 2003 (see Notice of Preliminary Results of Countervailing Duty Administrative Review: Certain Softwood Lumber Products From Canada, 69 FR 33204 (June 14, 2004) (Preliminary Results)). The Department has now completed this administrative review in accordance with section 751(a) of the Tariff Act of 1930, as amended (the Act).

Based on information received since the Preliminary Results and our analysis of comments received, the Department has revised the net subsidy rate. For further discussion of the changes we have made since the Preliminary Results, see the “Issues and Decision Memorandum from Barbara E. Tillman, Acting Deputy Assistant Secretary for Import Administration, to James J. Jochum, Assistant Secretary for Import Administration, concerning the “Final Results of Countervailing Duty Administrative Review: Certain Softwood Lumber Products from Canada” (Decision Memorandum) dated December 13, 2004. The final net subsidy rate is listed below in the section entitled “Final Results of Review.”

DATES:

Effective Date: December 20, 2004.

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FOR FURTHER INFORMATION CONTACT:

Kristen Johnson (202) 482-4793, or James Terpstra (202) 482-3965, AD/CVD Operations, Office 3, Import Administration, International Trade Administration, U.S. Department of Commerce, Room 4012, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

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SUPPLEMENTARY INFORMATION:

Background

On June 14, 2004, the Department published in the Federal Register the Preliminary Results. We invited interested parties to comment on the results. Since the preliminary results, the following events have occurred.

In the Preliminary Results we stated that, in order to provide parties an opportunity to comment, the Department intended to issue a decision memorandum related to subsidy rate calculations involving the companies selected for individual review prior to issuing the final results of this review (69 FR at 33206). On October 8, 2004, we issued a memorandum detailing our analysis of Fontaine Inc. (formerly J.A. Fontaine), Les Produits Forestiers Dube Inc., Scierie West Brome Inc., and Scierie Lapointe & Roy Ltee. and announcing our intent to rescind the reviews with respect to Bear Lumber Ltd., Bois Daaquam Inc., Cambie Cedar Products Ltd., Midway Lumber Mills Ltd., Nickel Lake Lumber, Twin Rivers Cedar Products Ltd., and Uphill Wood Supply Inc.

In the Preliminary Results we stated that we had not yet received any responses to our request for sales data for the period of review (POR) from the companies that were excluded from the countervailing duty order as a result of the exclusion and expedited review process (69 FR at 33207). On June 28, 2004, we received a response from only one of the companies. See J.D. Irving, Limited (J.D. Irving) June 28, 2004, submission.

In connection with the Human Resources & Skills Development Worker Assistance Programs administered by Start Printed Page 75918the Government of Canada (GOC), in the Preliminary Results we stated that we intended to seek further information to confirm the GOC's claim regarding the retraining obligations that softwood lumber producers have assumed (69 FR at 33232). On August 16, 2004, we received responses to our supplemental questionnaire.

On August 13, 2004, the Department granted the petitioner's [1] request to allow interested parties to submit new information relevant to the use of data from the provinces of Nova Scotia and New Brunswick and the comparability of this data to similar data in other Canadian provinces subject to this review. We received such new information on August 31 and September 10, 2004.

As provided in section 782(i) of the Act, we conducted verification of the information regarding New Brunswick and Nova Scotia from September 13 to September 16, 2004, and from September 21 to September 24, 2004. We used standard verification procedures, including meeting with government officials and examining relevant records and original source documents. Our verification results are outlined in detail in the public versions of the verification reports, which are on file in the Central Records Unit (CRU), room B-099 of the main Department building.

On September 20, 2004, we issued a supplemental questionnaire to the GOC and the government of British Columbia (GBC) regarding B.C.'s Private Forest Land Property Tax Program. We received a response on October 5, 2004, and, on October 22, 2004, we issued a memorandum detailing our analysis of this program.

On October 28, 2004, we rejected untimely filed, new factual information submitted by petitioners on October 22, 2004, and by the GOC on October 26, 2004.

We received case briefs and rebuttal briefs from parties. A public hearing was held on November 4, 2004.

Scope of the Order

The products covered by this order are softwood lumber, flooring and siding (softwood lumber products). Softwood lumber products include all products classified under subheadings 4407.1000, 4409.1010, 4409.1090, and 4409.1020, respectively, of the Harmonized Tariff Schedule of the United States (HTSUS), and any softwood lumber, flooring and siding described below. These softwood lumber products include:

(1) Coniferous wood, sawn or chipped lengthwise, sliced or peeled, whether or not planed, sanded or finger-jointed, of a thickness exceeding six millimeters;

(2) Coniferous wood siding (including strips and friezes for parquet flooring, not assembled) continuously shaped (tongued, grooved, rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like) along any of its edges or faces, whether or not planed, sanded or finger-jointed;

(3) Other coniferous wood (including strips and friezes for parquet flooring, not assembled) continuously shaped (tongued, grooved, rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like) along any of its edges or faces (other than wood moldings and wood dowel rods) whether or not planed, sanded or finger-jointed; and

(4) Coniferous wood flooring (including strips and friezes for parquet flooring, not assembled) continuously shaped (tongued, grooved, rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like) along any of its edges or faces, whether or not planed, sanded or finger-jointed.

Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise subject to this order is dispositive.

As specifically stated in the Issues and Decision Memorandum accompanying the Notice of Final Determination of Sales at Less Than Fair Value: Certain Softwood Lumber Products from Canada, 67 FR 15539 (April 2, 2002) (see comment 53, item D, page 116, and comment 57, item B-7, page 126), available at http://www.ia.ita.doc.gov/​frn, drilled and notched lumber and angle cut lumber are covered by the scope of this order.

The following softwood lumber products are excluded from the scope of this order provided they meet the specified requirements detailed below:

(1) Stringers (pallet components used for runners): If they have at least two notches on the side, positioned at equal distance from the center, to properly accommodate forklift blades, properly classified under HTSUS 4421.90.98.40.

(2) Box-spring frame kits: if they contain the following wooden pieces—two side rails, two end (or top) rails and varying numbers of slats. The side rails and the end rails should be radius-cut at both ends. The kits should be individually packaged, they should contain the exact number of wooden components needed to make a particular box spring frame, with no further processing required. None of the components exceeds 1″ in actual thickness or 83″ in length.

(3) Radius-cut box-spring-frame components, not exceeding 1″ in actual thickness or 83″ in length, ready for assembly without further processing. The radius cuts must be present on both ends of the boards and must be substantial cuts so as to completely round one corner.

(4) Fence pickets requiring no further processing and properly classified under HTSUS 4421.90.70, 1″ or less in actual thickness, up to 8″ wide, 6′ or less in length, and have finials or decorative cuttings that clearly identify them as fence pickets. In the case of dog-eared fence pickets, the corners of the boards should be cut off so as to remove pieces of wood in the shape of isosceles right angle triangles with sides measuring 3/4 inch or more.

(5) U.S. origin lumber shipped to Canada for minor processing and imported into the United States, is excluded from the scope of this order if the following conditions are met: (1) The processing occurring in Canada is limited to kiln-drying, planing to create smooth-to-size board, and sanding, and (2) if the importer establishes to the satisfaction of U.S. Customs and Border Protection (CBP) that the lumber is of U.S. origin.

(6) Softwood lumber products contained in single family home packages or kits,[2] regardless of tariff classification, are excluded from the scope of this order if the importer certifies to items 6 A, B, C, D, and requirement 6 E is met:

A. The imported home package or kit constitutes a full package of the number of wooden pieces specified in the plan, design or blueprint necessary to produce a home of at least 700 square feet produced to a specified plan, design or blueprint;

B. The package or kit must contain all necessary internal and external doors and windows, nails, screws, glue, sub floor, sheathing, beams, posts, connectors, and if included in the purchase contract, decking, trim, drywall and roof shingles specified in the plan, design or blueprint.

C. Prior to importation, the package or kit must be sold to a retailer of complete home packages or kits pursuant to a valid purchase contract referencing the particular home design plan or Start Printed Page 75919blueprint, and signed by a customer not affiliated with the importer;

D. Softwood lumber products entered as part of a single family home package or kit, whether in a single entry or multiple entries on multiple days, will be used solely for the construction of the single family home specified by the home design matching the entry.

E. For each entry, the following documentation must be retained by the importer and made available to CBP upon request:

i. A copy of the appropriate home design, plan, or blueprint matching the entry;

ii. A purchase contract from a retailer of home kits or packages signed by a customer not affiliated with the importer;

iii. A listing of inventory of all parts of the package or kit being entered that conforms to the home design package being entered;

iv. In the case of multiple shipments on the same contract, all items listed in E(iii) which are included in the present shipment shall be identified as well.

Lumber products that CBP may classify as stringers, radius cut box-spring-frame components, and fence pickets, not conforming to the above requirements, as well as truss components, pallet components, and door and window frame parts, are covered under the scope of this order and may be classified under HTSUS subheadings 4418.90.45.90, 4421.90.70.40, and 4421.90.97.40.

Finally, as clarified throughout the course of the investigation, the following products, previously identified as Group A, remain outside the scope of this order. They are:

1. Trusses and truss kits, properly classified under HTSUS 4418.90;

2. I-joist beams;

3. Assembled box spring frames;

4. Pallets and pallet kits, properly classified under HTSUS 4415.20;

5. Garage doors;

6. Edge-glued wood, properly classified under HTSUS 4421.90.98.40;

7. Properly classified complete door frames;

8. Properly classified complete window frames;

9. Properly classified furniture.

In addition, this scope language was further clarified to specify that all softwood lumber products entered from Canada claiming non-subject status based on U.S. country of origin will be treated as non-subject U.S.-origin merchandise under the countervailing duty order, provided that these softwood lumber products meet the following condition: Upon entry, the importer, exporter, Canadian processor and/or original U.S. producer establish to CBP's satisfaction that the softwood lumber entered and documented as U.S.-origin softwood lumber was first produced in the United States as a lumber product satisfying the physical parameters of the softwood lumber scope.[3] The presumption of non-subject status can, however, be rebutted by evidence demonstrating that the merchandise was substantially transformed in Canada.

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to this review are addressed in the Decision Memorandum, which is hereby adopted by this notice. A list of issues which parties have raised and to which we have responded, all of which are in the Decision Memorandum, is attached to this notice as Appendix I. Parties can find a complete discussion of all issues raised in this review and the corresponding recommendations in this public memorandum which is on file in the CRU. In addition, a complete version of the Decision Memorandum can be accessed directly on the World Wide Web at http://ia.ita.doc.gov/​frn. The paper copy and electronic version of the Decision Memorandum are identical in content.

Final Results of Review

In accordance with section 777(A)(e)(2)(B) of the Act, we have calculated a single country-wide ad valorem subsidy rate of 17.18 percent to be applied to all producers and exporters of the subject merchandise from Canada, other than those producers that have been excluded from the order and those producers receiving an individual rate in this review.

We have determined that Fontaine Inc., Les Produits Forestiers Dube Inc., Scierie West Brome Inc., and Scierie Lapointe & Roy Ltee. each received zero or de minimis net subsidies during the POR. We have also determined to rescind the reviews with respect to Bear Lumber Ltd., Bois Daaquam Inc., Cambie Cedar Products Ltd., Midway Lumber Mills Ltd., Nickel Lake Lumber, Twin Rivers Cedar Products Ltd., and Uphill Wood Supply Inc.

The Department has previously excluded the following companies from this order:

Armand Duhamel et fils Inc.

Bardeaux et Cedres

Beaubois Coaticook Inc.

Busque & Laflamme Inc.

Carrier & Begin Inc.

Clermond Hamel

J.D. Irving, Ltd.

Les Produits Forestiers D.G., Ltee

Marcel Lauzon Inc.

Mobilier Rustique

Paul Vallee Inc.

Rene Bernard, Inc.

Roland Boulanger & Cite. Ltee

Scierie Alexandre Lemay

Scierie La Patrie, Inc.

Scierie Tech, Inc.

Wilfrid Paquet et fils, Ltee

B. Luken Logging Ltd.

Frontier Lumber

Sault Forest Products Ltd.

Interbois Inc.

Les Moulures Jacomau

Richard Lutes Cedar Inc.

Boccam Inc.

Indian River Lumber

Sechoirs de Beauce Inc.

See Notice of Amended Final Affirmative Countervailing Duty Determination and Notice of Countervailing Duty Order: Certain Softwood Lumber Products from Canada, 67 FR 36068 (May 22, 2002), as corrected (67 FR 37775, May 30, 2002), Final Results of Countervailing Duty Expedited Reviews: Certain Softwood Lumber Products from Canada, 68 FR 24436 (May 7, 2003), and Final Results, Reinstatement, Partial Rescission of Countervailing Duty Expedited Reviews, and Company Exclusions: Certain Softwood Lumber Products From Canada, 69 FR 10982 (March 9, 2004).

Finally, certain softwood lumber products from the Maritime Provinces are exempt from this countervailing duty order. This exemption, however, does not apply to softwood lumber products produced in the Maritime Provinces from Crown timber harvested in any other province.

We will instruct CBP, within 15 days of publication of the final results of this review, to liquidate shipments of certain softwood lumber products from Canada entered, or withdrawn from warehouse, for consumption from May 22, 2002, through March 31, 2003, at the above indicated company-specific and aggregate ad valorem net subsidy rates. We will direct CBP to exempt from the application of the order only entries of softwood lumber products from Canada which are accompanied by an original Certificate of Origin issued by the Maritime Lumber Bureau (MLB), and those of the excluded companies listed above.

In addition, we will instruct CBP to collect cash deposits of estimated countervailing duties in the amounts indicated above of the f.o.b. price on all shipments of the subject merchandise entered, or withdrawn from warehouse, Start Printed Page 75920for consumption on or after the date of publication of these final results of review.

Return or Destruction of Proprietary Information

This notice serves as a reminder to parties subject to administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of return/destruction of APO material or conversion to judicial protective order is hereby requested. Failure to comply is a violation of the APO.

This administrative review and this notice are issued and published in accordance with sections 751(a)(1) and 777(i) of the Act.

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Dated: December 13, 2004.

James J. Jochum,

Assistant Secretary for Import Administration.

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Appendix I

Summary

Methodology And Background Information

I. Company-Specific Reviews

II. Subsidies Valuation Information

A. Aggregation and Company-Specific Rates

B. Allocation Period

C. Recurring and Non-Recurring Benefits

D. Benchmarks for Loans and Discount Rate

E. Aggregate Subsidy Rate Calculation

1. Provincial Crown Stumpage Programs

2. Other Programs

3. Excluded Companies

F. Pass-through

III. Denominator

Analysis Of Programs

I. Provincial Stumpage Programs Determined to Confer Subsidies 1

A. Financial Contribution and Specificity

B. Benefit—Benchmark

Private Provincial Market Prices

Private Stumpage Prices in New Brunswick and Nova Scotia

Benchmark Prices for B.C.

1. The Maritimes Benchmarks Are Not the Most Appropriate for B.C.

2. World Market Prices

3. B.C. Log Prices Are Not An Appropriate Benchmark

4. U.S. Log Prices are a More Appropriate Benchmark

5. Comparative Advantage

C. Benefit—Calculations

Adjustments

Calculation of the Benefit

Country-Wide Rate for Stumpage

Other Non-Stumpage Programs

Other Programs Determined To Confer Subsidies

Programs Administered by the Government of Canada

1. Federal Economic Development Initiative in Northern Ontario (FEDNOR)

2. Western Economic Diversification Program Grants and Conditionally Repayable Contributions (WDP)

3. Natural Resources Canada (NRCAN) Softwood Marketing Subsidies

4. Payments to the Canadian Lumber Trade Alliance (CLTA) & Independent Lumber Remanufacturers Association (ILRA)

Programs Administered by the Province of British Columbia

1. Forest Renewal British Columbia (FRBC)

2. Forestry Innovation Investment Program (FIIP)

3. British Columbia Private Forest Property Tax Program

Programs Administered by the Province of Quebec

1. Private Forest Development Program

Programs Determined Not To Be Countervailable

Program Administered by the Government of Canada

1. Human Resources & Skills Development Worker Assistance Programs (HRSD)

2. Litigation-Related Payments to Forest Products Association of Canada (FPAC)

Program Administered by the Province of Alberta

1. Timber Damage Compensation for Forest Management Agreement (FMA) Holders

Programs Determined Not to Confer A Benefit During the POR

Program Administered by the Province of Manitoba

1. Timber Damage Compensation for Timber Licensees

Programs Administered by the Province of Quebec

1. Assistance from the Societe de Recuperation d'Exploitation et de Developpement Forestiers du Quebec (Rexfor)

2. Assistance under Article 28 of Investissement Quebec

Other Programs

Program Administered by the Province of British Columbia

1. “Allowances” for Harvesting Beetle-Infested Timber

Program Administered by the Province of British Columbia

2. Land Base Investment Program (LBIP)

Programs Determined Not to Be Used

Program Administered by the Government of Canada

1. Canadian Forest Service Industry, Trade & Economics Program (CFS-ITE)

Total Ad Valorem Rate

Analysis of Comments

A. Company-Specific Review Issues

Comment 1: Legal and International Obligations to Conduct Company Reviews

Comment 2: Rescission of Company-Specific Reviews Was Unlawful and Unreasonable

Comment 3: Burden and Difficulty of Company-Specific Reviews Was Exaggerated

Comment 4: Review of Bois Daaquam Inc.

Comment 5: Reconsideration of Midway Lumber's Company-Specific Review is Not Supported

Comment 6: Zero/De Minimis Rate Companies Should be Verified

Comment 7: Decision Not to Review Leggett & Platt was Based on a Factual Error

Comment 8: Quebec Border Mills' Wood Sourcing is Unique and Warrants Individual Reviews

Comment 9: Individual Calculations for Blanchet and Maibec

B. Subsidies Valuation Issues

1. Numerator Issues

a. Pass-through

Comment 10: Record Evidence Demonstrates the Existence of Arm's-Length Purchases of Logs

Comment 11: Definition of a Log Sale Transaction

b. Alberta

Comment 12: Timber Going to Non-Sawmills

c. Quebec

Comment 13: Numerator of the Subsidy Benefit Calculation Should be Recalculated

Comment 14: Whether the Calculation of Numerator is Sufficient to Produce the Volume in the Denominator

d. Excluded Companies

Comment 15: Benefits to Excluded Companies Should be Deducted in the Calculations

2. Denominator Issues

a. Attribution of Stumpage Benefit

Comment 16: Attribution of Stumpage Subsidies to All Products from Subsidized Logs

b. Use of Adverse Facts Available for Manitoba and Saskatchewan

Comment 17: Use of Adverse Facts Available to Derive Lumber and Co-Product Shipment Data

C. Provincial Stumpage Program Issues

1. Specificity

Comment 18: Stumpage Program is Not Specific

2. Benchmark: In-Province Stumpage Prices

a. Alberta

Comment 19: Timber Damage Assessment Data as a Provincial Benchmark

b. Ontario

Comment 20: DGM Survey Prices are Useable Private Prices under the First Tier of the Benchmark Hierarchy

Comment 21: Whether Ontario Crown Supply is Inelastic and Whether Marginal Demand is Met by the Private Market

c. Quebec

Comment 22: Effect That Mills Sourcing Exclusively from the Private Forest Have on Start Printed Page 75921the Price of Standing Timber in Quebec's Private Forest

Comment 23: Effect That Mills Sourcing from Both the Public and Private Forests Have on the Price of Standing Timber in Quebec's Private Forest

Comment 24: Whether Quebec's Public Forests Are Residual to Private Forests

Comment 25: Annual Allowable Cut in Quebec is Binding

Comment 26: Incentive Structure of Dual-Source Mills

Comment 27: Relevance of Collusion Concerning the Analysis of Quebec's Private Forest

Comment 28: Barriers to Entry in Quebec's Private Forests

Comment 29: Relevance of Log Exports Concerning the Analysis of Quebec's Private Forest

Comment 30: Whether Quebec's Forest Marketing Boards and Syndicates Mitigates the Market Power Held by Tenure Holding Mills

Comment 31: The Significance of Log Imports Into Quebec

Comment 32: Whether Anecdotal Evidence Cited by Department is Relevant

Comment 33: Whether the Department Acted As An Impartial Fact Finder

3. Maritimes Stumpage Prices

a. Distortion

Comment 34: Whether the Market Conditions for Private Standing Prices in New Brunswick and Nova Scotia Are Distinct from Those in Quebec

b. Country vs. Province

Comment 35: Maritimes “In-country” Prices: Tier One of Benchmark Hierarchy

Comment 36: Quebec Province-Specific Rate

c. Non-representative

Comment 37: Use of AGFOR Reports of Maritimes Stumpage Prices

Comment 38: Maritimes Do Not Reflect Prevailing Market Conditions

d. Adjustments

Comment 39: Benchmark Adjustments

Adjustments for British Columbia

Adjustments for Alberta

Adjustments for Quebec

Adjustments for Manitoba

Adjustments for Saskatchewan

Adjustments to Ontario

e. Calculation of Maritimes Prices

Comment 40: Errors Using Maritimes Benchmark

f. Ministerial Errors

Comment 41: Errors Concerning Quebec's Forestry Fund Adjustment and Non-credited Silviculture Costs

Comment 42: Volume and Value Data for B.C. Softwood Logs

g. East-West Adjustment

1. Alberta

Comment 43: Timber in Western Alberta: East-West Adjustment for Quality

4. Tier Three Benchmarks

Comment 44: Market Principles under Third-tier Category as Benchmark

D. Other Program Issues

Comment 45: Federal Economic Development Initiative in Northern Ontario (FEDNOR)

Comment 46: Western Economic Diversification Program Grants and Conditionally Repayable Contributions (WDP)

Comment 47: Natural Resources Canada (NRCAN) Softwood Lumber Marketing Research Subsidies Under the Value-to-Wood Program (VWP) and the National Research Institutes Initiative (NRII)

Comment 48: Payments to the Canadian Lumber Trade Alliance (CLTA) & Independent Lumber Remanufacturers Association (ILRA)

Comment 49: Denominator Used to Calculate the Forest Renewal B.C. Subsidy Rate

Comment 50: Whether the Land Base Investment Program is (LBIP) Countervailable

Comment 51: Whether Forestry Innovation Investment (“FII”) Expenditures Are Countervailable

Comment 52: Denominator Used to Calculate the FII Subsidies

Comment 53: Whether the Private Forest Development Program (PFDP) Is Countervailable

Comment 54: Worker Assistance Programs Administered by Human Resources & Skills Development (HRSD)

Comment 55: Litigation-Related Payments to Forest Products Association of Canada (FPAC)

Comment 56: Whether Timber Damage Assessments (TDA) Confer a Countervailable Benefit

Comment 57: Affirm Preliminary Findings for Timber Damage Compensation for Timber Licensees

Comment 58: Whether Assistance Under Article 28 of Investissement Quebec is a Countervailable Program

Comment 59: Canadian Forest Service Industry, Trade & Economics Program (IT&E)

Comment 60: British Columbia Private Forest Land Tax Program

Comment 61: Tenureholders Underreporting Volumes of Timber Harvested in Quebec

Comment 62: Whether British Columbia's Skeena Cellulose and NWBC Timber & Pulp Ltd Received Any Benefits During the POR

End Supplemental Information

Footnotes

1.  The petitioner is the Executive Committee of the Coalition for Fair Lumber Imports, an ad hov coalition of softwood lumber producers.

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2.  To ensure administrability, we clarified the language of exclusion number 6 to require an importer certification and to permit single or multiple entries on multiple days as well as instructing importers to retain and make available for inspection specific documentation in support of each entry.

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3.  See the scope clarification message (#30304202), dated February 3, 2003, to CBP, regarding treatment of U.S. origin lumber on file in the CRU.

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[FR Doc. E4-3748 Filed 12-17-04; 8:45 am]

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