Import Administration, International Trade Administration, Department of Commerce.
In response to requests from interested parties, the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on polyethylene retail carrier bags (PRCBs) from Thailand. The review covers five exporters/producers. The period of review (POR) is August 1, 2008, through July 31, 2009. We have preliminarily determined that sales have been made below normal value by companies subject to this review.
We invite interested parties to comment on these preliminary results. Parties who submit comments in this review are requested to submit with each argument (1) a statement of the issue and (2) a brief summary of the argument.
Effective Date: September 2, 2010.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Thomas Schauer or Richard Rimlinger, AD/CVD Operations, Office 5, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-0410 or (202) 482-4477, respectively.End Further Info End Preamble Start Supplemental Information
On August 9, 2004, the Department published in the Federal Register the antidumping duty order on PRCBs from Thailand. See Antidumping Duty Order: Polyethylene Retail Carrier Bags From Thailand, 69 FR 48204 (August 9, 2004). On September 22, 2009, we published a notice of initiation of an administrative review of six companies. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 74 FR 48224 (September 22, 2009). Since initiation of the review, we selected Landblue and TPBI for individual examination. See Memorandum to Laurie Parkhill dated October 15, 2009. In addition, we extended the due date for completion of these preliminary results. See Polyethylene Retail Carrier Bags from Thailand: Extension of Time Limit for Preliminary Results of Antidumping Duty Administrative Review, 75 FR 23673 (May 4, 2010), and Polyethylene Retail Carrier Bags From Thailand: Extension of Time Limit for Preliminary Results of Antidumping Duty Administrative Review, 75 FR 36359 (June 25, 2010). Finally, we rescinded the review with respect to Landblue. See Polyethylene Retail Carrier Bags from Thailand: Rescission of Antidumping Duty Administrative Start Printed Page 53954Review in Part, 75 FR 34699 (June 18, 2010).
The POR is August 1, 2008, through July 31, 2009. We are conducting this review in accordance with section 751(a) of the Tariff Act of 1930, as amended (the Act).
Scope of the Order
The merchandise subject to the antidumping duty order is PRCBs, which may be referred to as t-shirt sacks, merchandise bags, grocery bags, or checkout bags. The subject merchandise is defined as non-sealable sacks and bags with handles (including drawstrings), without zippers or integral extruded closures, with or without gussets, with or without printing, of polyethylene film having a thickness no greater than 0.035 inch (0.889 mm) and no less than 0.00035 inch (0.00889 mm), and with no length or width shorter than 6 inches (15.24 cm) or longer than 40 inches (101.6 cm). The depth of the bag may be shorter than 6 inches but not longer than 40 inches (101.6 cm).
PRCBs are typically provided without any consumer packaging and free of charge by retail establishments, e.g., grocery, drug, convenience, department, specialty retail, discount stores, and restaurants, to their customers to package and carry their purchased products. The scope of the order excludes (1) polyethylene bags that are not printed with logos or store names and that are closeable with drawstrings made of polyethylene film and (2) polyethylene bags that are packed in consumer packaging with printing that refers to specific end-uses other than packaging and carrying merchandise from retail establishments, e.g., garbage bags, lawn bags, trash-can liners.
As a result of changes to the Harmonized Tariff Schedule of the United States (HTSUS), imports of the subject merchandise are currently classifiable under statistical category 3923.21.0085 of the HTSUS. Furthermore, although the HTSUS subheading is provided for convenience and customs purposes, the written description of the scope of the order is dispositive.
Selection of Respondents
Due to the large number of companies in the review and the resulting administrative burden to examine each company for which a request had been made and not withdrawn, the Department exercised its authority to limit the number of respondents selected for examination. Where it is not practicable to examine all known exporters/producers of subject merchandise because of the large number of such companies, section 777A(c)(2) of the Act allows the Department to limit its examination to either a sample of exporters, producers, or types of products that is statistically valid, based on the information available at the time of selection, or exporters and producers accounting for the largest volume of subject merchandise from the exporting country that can be reasonably examined.
Accordingly, based on our analysis of U.S. Customs and Border Protection (CBP) import data on the record of this review (see letters from Laurie Parkhill to Daniel L. Schneiderman and to Victor S. Mroczka dated September 28, 2009) and our available resources, we decided to examine the sales of Landblue and TPBI. See Memorandum to Laurie Parkhill regarding respondent selection, dated October 15, 2009.
Because we rescinded the review with respect to Landblue, for the companies which remain under review and which we did not select for individual examination, we have determined the margin based on the weighted-average margin of TPBI, the sole remaining respondent selected for individual examination in this review.
TPBI has argued that a certain company (Company A) is not affiliated with TPBI although TPBI and Company A mutually own a company in Vietnam that produces PRCBs. See TPBI's Section A response dated December 9, 2009, at page A-6. We have preliminarily determined that Company A is “operationally in a position to exercise restraint or direction” over TPBI, pursuant to section 771(33)(F) of the Act. Accordingly, we have preliminarily determined that Company A is affiliated with TPBI. Because of the proprietary nature of this analysis, see the Memorandum to Laurie Parkhill entitled “Polyethylene Retail Carrier Bags from Thailand—Affiliation” dated August 26, 2010, for a complete discussion of this determination.
For the price to the United States for TPBI, we used export price (EP) as defined in section 772(a) of the Act. We calculated EP based on the packed free-on-board or delivered price to unaffiliated purchasers in, or for exportation to, the United States. See section 772(c) of the Act. We made deductions for any movement expenses in accordance with section 772(c)(2)(A) of the Act. We made adjustments for duty drawback under the Investment Promotion Act and under Section 19 BIS of the Customs Act claimed by TPBI in accordance with section 772(c)(1)(B) of the Act. For a detailed explanation of these adjustments, see Memorandum entitled “Polyethylene Retail Carrier Bags from Thailand—Thai Plastic Bags Industries Group Preliminary Results Analysis Memorandum 8/1/08—7/31/09,” dated August 26, 2010 (Analysis Memo).
Based on a comparison of the aggregate quantity of home-market and U.S. sales and absent any information that a particular market situation in the exporting country did not permit a proper comparison, we determined that the quantity of foreign like product sold by TPBI in Thailand was sufficient to permit a proper comparison with the sales of the subject merchandise to the United States, pursuant to section 773(a) of the Act. TPBI's quantity of sales in Thailand was greater than five percent of its quantity of sales to the U.S. market. See section 773(a)(1) of the Act. Therefore, in accordance with section 773(a)(1)(B)(i) of the Act, we based normal value on the prices at which the foreign like product was first sold for consumption in Thailand in the usual commercial quantities, in the ordinary course of trade, and at the same level of trade as the U.S. sales.
Cost of Production
In accordance with section 773(b) of the Act, we disregarded the below-cost sales of TPBI in the most recent administrative review of this company completed before the initiation of this review. See Polyethylene Retail Carrier Bags from Thailand: Final Results of Antidumping Duty Administrative Review and Partial Rescission of Antidumping Duty Administrative Review, 72 FR 64580, 64581 (November 16, 2007). Therefore, we have reasonable grounds to believe or suspect that TPBI's sales of the foreign like product under consideration for the determination of normal value in this review may have been made at prices below the cost of production (COP) as provided by section 773(b)(2)(A)(ii) of the Act. Accordingly, pursuant to section 773(b)(1) of the Act, we have conducted a COP analysis of TPBI's sales in Thailand in this review.
In accordance with section 773(b)(3) of the Act, we calculated the COP based on the sum of the costs of materials and fabrication employed in producing the foreign like product, the selling, general, and administrative (SG&A) expenses, and all costs and expenses incidental to packing the merchandise. In our COP analysis, we used the home-market sales Start Printed Page 53955and COP information TPBI provided in its questionnaire responses.
We relied on the COP data submitted by TPBI except as follows:
1. In accordance with the transactions-disregarded rule (section 773(f)(2) of the Act), we adjusted TPBI's cost of manufacturing (COM) to reflect the market value of printing plates that were purchased from an affiliate.
2. In accordance with the major-input rule (section 773(f)(3) of the Act), we adjusted TPBI's COM to reflect the market value of certain resin that was purchased from an affiliate.
3. With respect to the allocation of direct labor, variable overhead, and fixed overhead costs, we have preliminarily determined that the methodology reported by TPBI unreasonably distorts the COM for the subject merchandise and the foreign like product. This reported methodology is not only inconsistent with the methodology applied by TPBI in its books and records, it also results in a large variability in costs that have nothing to do with physical differences in the merchandise. Accordingly, pursuant to section 776(a) of the Act, as facts otherwise available, we have weight-averaged these costs on a per-unit basis in order to prevent such significant differences in costs between physically similar merchandise. See Statement of Administrative Action, URAA, H. Doc. 316, Vol. 1, 103rd Cong. (1994), at 834-5 (stating that, if the Department determines that costs reported by a respondent “shifted away costs from the production of the subject merchandise, or the foreign like product,” the Department has the authority to “adjust costs appropriately to ensure that they (the costs) are not artificially reduced”).
3. We adjusted TPBI's reported COM to remove an offset claimed by TPBI for revenue associated with the Government of Thailand's Blue Corner Rebate program.
For additional details on these adjustments, see Memorandum to Neal M. Halper entitled “Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Results” dated August 26, 2010 (Cost Memo).
Alternative Cost Methodology
The Department's normal practice is to calculate an annual weighted-average cost for the entire period of investigation (POI) or POR. See, e.g., Certain Pasta from Italy: Final Results of Antidumping Duty Administrative Review, 65 FR 77852 (December 13, 2000), and the accompanying Issues and Decision Memorandum at Comment 18. We recognize that possible distortions may result if we use our normal annual-average cost methodology during a period of significant cost changes. In determining whether to deviate from our normal methodology of calculating an annual weighted-average cost, we evaluate the case-specific record evidence using two primary factors: (1) The change in the COM recognized by the respondent during the POI or POR must be deemed significant; (2) the record evidence must indicate that sales prices during the shorter averaging periods (e.g., quarters rather than the POR) could be reasonably linked with the COP during the same shorter averaging periods. See, e.g., Stainless Steel Plate in Coils From Belgium: Final Results of Antidumping Duty Administrative Review, 73 FR 75398 (December 11, 2008), and the accompanying Issues and Decision Memorandum at Comment 4 and Stainless Steel Sheet and Strip in Coils From Mexico; Final Results of Antidumping Duty Administrative Review, 75 FR 6627 (February 10, 2010), and the accompanying Issues and Decision Memorandum at Comment 6. This methodology was recently upheld by the Court of International Trade in SeAH Steel Corporation v. United States, Slip. Op. 10-60 (CIT May 19, 2010), as supported by substantial evidence and otherwise in accordance with law.
1. Significance of Cost Changes
Record evidence shows that TPBI experienced significant changes in its total COM during the POR and that these changes were primarily attributable to the price volatility of its raw-material inputs used to produce the merchandise under consideration. Because of the proprietary nature of this analysis, see the Cost Memo for a more complete discussion of this determination.
2. Linkage Between Cost and Sales Information
If the Department finds cost changes to be significant in a given investigation or administrative review, the Department evaluates whether there is evidence of linkage between the cost changes and the sales prices for the POI or POR. Our definition of linkage does not require direct traceability between specific sales and their specific production cost but, rather, relies on whether there are elements which would demonstrate a reasonable correlation between the underlying costs and the final sales prices charged by the company.
Because we received the data necessary for a determination with respect to the linkage between the cost changes and the sales prices for the POR shortly before the statutory due date for the issuance of these preliminary results, we have not yet reached a conclusion as to whether there is evidence of such linkage in this review. After these preliminary results are published, we will issue our analysis regarding quarterly costs as well as any margin recalculations, if appropriate. Thus, for these preliminary results, we have not applied our quarterly cost methodology but, rather, have applied our standard methodology of using annual costs based on the data TPBI reported, adjusted as described in the “Cost of Production” section above.
Results of Cost Test and Cost-Recovery Test
After calculating the COP in accordance with section 773(b)(1) of the Act, we tested whether home-market sales of the foreign like product were made at prices below the COP within an extended period of time in substantial quantities and whether such prices permitted the recovery of all costs within a reasonable period of time. See section 773(b)(2) of the Act. We compared model-specific COPs to the reported home-market prices less any applicable movement charges, discounts, and rebates.
Pursuant to section 773(b)(2)(C) of the Act, when less than 20 percent of TPBI's sales of a given product were made at prices less than the COP, we did not disregard any below-cost sales of that product because the below-cost sales were not made in substantial quantities within an extended period of time. When 20 percent or more of TPBI's sales of a given product during the POR were made at prices less than the COP, we disregarded the below-cost sales because they were made in substantial quantities within an extended period of time pursuant to sections 773(b)(2)(B) and (C) of the Act.
Further, in accordance with section 773(b)(2)(D) of the Act, we compared prices to weighted-average per-unit COPs for the POR and determined that these sales were at prices which would not permit recovery of all costs within a reasonable period of time. Because we are applying our standard annual-average cost test in these preliminary results, we have also applied our standard cost-recovery test with no adjustments. Based on both of these tests, we disregarded certain sales made by TBPI in the home market which were made at below-cost prices.Start Printed Page 53956
In making our comparisons of U.S. sales with sales of the foreign like product in the home market, we used the following methodology. If an identical comparison-market model with identical physical characteristics as listed below was reported, we made comparisons to weighted-average home-market prices that were based on all sales which passed the COP test of the identical product during a contemporaneous month. If there were no contemporaneous sales of an identical model, we identified the most similar home-market model. To determine the most similar model, we matched the foreign like product based on physical characteristics reported by the respondent in the following order of importance: (1) Quality, (2) bag type, (3) length, (4) width, (5) gusset, (6) thickness, (7) percentage of high-density polyethylene resin, (8) percentage of low-density polyethylene resin, (9) percentage of low linear-density polyethylene resin, (10) percentage of color concentrate, (11) percentage of ink coverage, (12) number of ink colors, and (13) number of sides printed.
We based home-market prices on the packed, ex-factory, or delivered prices to unaffiliated purchasers. When applicable, we made adjustments for differences in packing and for movement expenses in accordance with sections 773(a)(6)(A) and (B) of the Act. We also made adjustments for differences in cost attributable to differences in physical characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411, adjusted as described in the “Cost of Production” section above, and for differences in circumstances of sale in accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. We made circumstance-of-sale adjustments by deducting home-market direct selling expenses from and adding U.S. direct selling expenses to normal value.
In accordance with section 773(a)(1)(B)(i) of the Act, we based normal value at the same level of trade as the EP sales. See the “Level of Trade” section below.
In accordance with section 773(a)(4) of the Act, we used constructed value as the basis for normal value when there were no contemporaneous comparable sales of the foreign like product in the comparison market. We calculated constructed value in accordance with section 773(e) of the Act. We included the cost of materials and fabrication, adjusted as described in the “Cost of Production” section above, SG&A expenses, U.S. packing expenses, and profit in the calculation of constructed value. In accordance with section 773(e)(2)(A) of the Act, we based SG&A expenses and profit on the amounts incurred and realized by TPBI in connection with the production and sale of the foreign like product in the ordinary course of trade for consumption in the home market.
When appropriate, we made adjustments to constructed value in accordance with section 773(a)(8) of the Act, 19 CFR 351.410, and 19 CFR 351.412 for circumstance-of-sale differences and level-of-trade differences. We made circumstance-of-sale adjustments by deducting home-market direct selling expenses from and adding U.S. direct selling expenses to constructed value. We also made adjustments, when applicable, for home-market indirect selling expenses to offset U.S. commissions. We calculated constructed value at the same level of trade as the EP. For a detailed explanation of the calculations, see Analysis Memo.
TPBI argued that the Department should not exclude home-market sales that fail the cost test from its calculation of profit for constructed value (CV profit). Citing Atar, S.r.l. v. United States, 637 F. Supp. 2d 1068, 1092 (CIT 2009) (Atar), TPBI asserts that the Court of International Trade has found the Department's practice of excluding home-market sales that fail the cost test from its calculation of CV profit to be contrary to law. TPBI misunderstands the Court's analysis in Atar. That decision does not apply to the facts of this case because the Atar decision was made with regard to a statutory provision not at issue here.
Section 773(e)(2)(A) of the Act provides that, in calculating CV profit, the Department will only use “actual amounts” incurred “in the ordinary course of trade” in the home market. Section 771(15)(A) of the Act makes clear that home-market sales that failed the cost test are outside the ordinary course of trade. Section 773(e)(2)(B) of the Act, on the other hand, applies if those actual amounts are not available. In the administrative review challenged in Atar, Notice of Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review: Ninth Administrative Review of the Antidumping Duty Order on Certain Pasta from Italy, 71 FR 45017 (August 8, 2006) (unchanged in final; 72 FR 7011, February 14, 2007) (Pasta from Italy), the respondent did not have a viable home market so the Department calculated CV profit pursuant to section 773(e)(2)(B) of the Act.
At issue in Atar was the fact that there is no “ordinary course of trade” language in section 773(e)(2)(B) of the Act yet the Department nonetheless excluded sales that failed the cost test from its calculation of CV profit. The plaintiff, Atar, argued that the Department must calculate these respondent companies' profit rates based on all sales, above and below cost, for purposes of calculating CV profit pursuant to section 773(e)(2)(B) of the Act. The Court agreed with Atar, finding that the Department erred in excluding below-cost sales in its calculation of CV profit because such a requirement only applies when a viable home market exists, pursuant to section 773(e)(2)(A) of the Act. See Atar, 637 F. Supp. 2d 1068, 1092 (CIT 2009).
In this review, by contrast, TPBI does have a viable home market and, therefore, we can determine selling expenses and profit under section 773(e)(2)(A) of the Act. Accordingly, consistent with that provision, we have used only sales made within the ordinary course of trade in calculating CV profit.
Level of Trade
To the extent practicable, we determined normal value for sales at the same level of trade as the U.S. sales. The normal-value level of trade is that of the starting-price sales in the home market. When normal value is based on constructed value, the level of trade is that of the sales from which we derived SG&A and profit.
To determine whether home-market sales are at a different level of trade than U.S. sales, we examined stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. This analysis revealed that there were not any significant differences in selling functions between different channels of distribution or customer type in either the home or U.S. markets. Therefore, we determined that TPBI made all home-market sales at one level of trade. Moreover, we determined that all home-market sales by TPBI were made at the same level of trade as its U.S. sales. For a more detailed discussion, see Analysis Memo. Accordingly, we compared TPBI's U.S. sales to its home-market sales, all of Start Printed Page 53957which were made at the same level of trade.
Preliminary Results of Review
As a result of our review, we preliminarily determine that the following percentage weighted-average dumping margins on PRCBs from Thailand exist for the period August 1, 2008, through July 31, 2009:
|C.P. Packaging Co., Ltd.||20.41|
|Giant Pack Co., Ltd.||20.41|
|Sahachit Watana Plastics Ind. Co., Ltd.||20.41|
|Thantawan Industry Public Co., Ltd.||20.41|
We will disclose the calculations used in our analysis to interested parties to this review within five days of the date of publication of this notice. See 19 CFR 351.224(b). Any interested party may request a hearing within 30 days of the date of publication of this notice. See 19 CFR 351.310. Interested parties who wish to request a hearing or to participate in a hearing if a hearing is requested must submit a written request to the Assistant Secretary for Import Administration within 30 days of the date of publication of this notice. Requests should contain the following information: (1) The party's name, address, and telephone number; (2) the number of participants; (3) a list of issues to be discussed. See 19 CFR 351.310(c).
Issues raised in the hearing will be limited to those raised in the case briefs. See 19 CFR 351.310(c). Case briefs from interested parties may be submitted not later than seven (7) days after the date on which we issue our determination regarding quarterly costs. See 19 CFR 351.309(c)(1)(ii). Rebuttal briefs from interested parties, limited to the issues raised in the case briefs, may be submitted not later than five days after the time limit for filing the case briefs or comments. See 19 CFR 351.309(d)(1). If requested, any hearing will be held two days after the scheduled date for submission of rebuttal briefs. See 19 CFR 351.310(d). Parties who submit case briefs or rebuttal briefs in this review are requested to submit with each argument a statement of the issue, a summary of the arguments not exceeding five pages, and a table of statutes, regulations, and cases cited. See 19 CFR 351.309(c)(2). The Department will issue the final results of this administrative review, including the results of its analysis of issues raised in any such written briefs or at the hearing, if held, not later than 120 days after the date of publication of this notice. See section 751(a)(3)(A) of the Act.
The Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b)(1), we have calculated for TPBI an importer (or customer)-specific assessment value for merchandise subject to this review by dividing the total dumping margin (calculated as the difference between normal value and EP) for each importer or customer by the total kilograms the exporter sold to that importer or customer. We will instruct CBP to assess the resulting per-kilogram amount against each kilogram of merchandise in each of that importer's/customer's entries during the POR.
The Department clarified its “automatic assessment” regulation on May 6, 2003. This clarification applies to entries of subject merchandise during the POR produced by TPBI for which it did not know its merchandise was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction. For a full discussion of this clarification, see Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).
For the companies which were not selected for individual examination, we will instruct CBP to apply the rates listed above to all entries of subject merchandise produced and/or exported by such firms.
We intend to issue liquidation instructions to CBP 15 days after publication of the final results of review.
The following deposit requirements will be effective upon publication of the notice of final results of administrative review for all shipments of PRCBs from Thailand entered, or withdrawn from warehouse, for consumption on or after the date of publication, as provided by section 751(a)(2) of the Act: (1) The cash-deposit rates for the reviewed companies will be the rates established in the final results of review; (2) for previously reviewed or investigated companies not listed above, the cash-deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or the less-than-fair-value investigation but the manufacturer is, the cash-deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; (4) if neither the exporter nor the manufacturer has its own rate, the cash-deposit rate will be 2.80 percent, the all-others rate for this proceeding. These deposit requirements, when imposed, shall remain in effect until further notice.
Notification to Importer
This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Department's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of doubled antidumping duties.
These preliminary results of administrative review are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.Start Signature
Dated: August 26, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
1. We stated that the review covers the following companies: C.P. Packaging Co., Ltd., Giant Pack Co., Ltd., Landblue (Thailand) Co., Ltd. (Landblue), Sahachit Watana Plastics Ind. Co., Ltd., Thai Plastic Bags Industries Co., Ltd. (TPBI), and Thantawan Industry Public Co., Ltd. Id., 74 FR at 48226. The Department has determined previously that TPBI, APEC Film Ltd., and Winner's Pack Co., Ltd., comprise the Thai Plastic Bags Group. See Notice of Final Determination of Sales at Less than Fair Value: Polyethylene Retail Carrier Bags From Thailand, 69 FR 34122, 34123 (June 18, 2004).Back to Citation
2. A similar decision to reject the Department's interpretation under section 773(e)(2)(B) of the Act was reversed in Thai I-Mei Frozen Foods Co., Ltd., v. United States, 2010 U.S. App. LEXIS 16677 (Fed. Cir. 2010).Back to Citation
[FR Doc. 2010-21985 Filed 9-1-10; 8:45 am]
BILLING CODE 3510-DS-P