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Notice

Laminated Woven Sacks From the People's Republic of China: Initiation of Anti-Circumvention Inquiry

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AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to a request from the Laminated Woven Sacks Committee and its individual members, Coating Excellence International, LLC and Polytex Fibers Corporation (collectively “Petitioners”), the Department of Commerce (“Department”) is initiating an anti-circumvention inquiry to determine whether certain imports are circumventing the antidumping and countervailing duty orders on laminated woven sacks from the People's Republic of China (“PRC”).

DATES:

Effective Date: April 28, 2011.

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FOR FURTHER INFORMATION CONTACT:

Catherine Bertrand, telephone: (202) 482-3207, or Jamie Blair-Walker, telephone: (202) 482-2615; AD/CVD Operations, Office 9, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

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SUPPLEMENTARY INFORMATION:

Background

On January 26, 2011, pursuant to sections 781(c) and 781(d) of the Tariff Act of 1930, as amended (“Act”), and 19 CFR 351.225(i) and (j), Petitioners submitted requests for the Department to initiate and conduct a minor alterations and a later-developed merchandise anti-circumvention inquiry to determine whether laminated woven sacks printed with two colors in register and with the use of a screening process are circumventing the antidumping and countervailing duty orders on laminated woven sacks from the PRC. See Notice of Antidumping Duty Order: Laminated Woven Sacks From the People's Republic of China, 73 FR 45941 (August 7, 2008) and Laminated Woven Sacks From the People's Republic of China: Countervailing Duty Order, 73 FR 45955 (August 7, 2008) (collectively, “Orders”). On March 25, 2011, Petitioners withdrew their request for the Department to initiate a minor alterations anti-circumvention inquiry pursuant to 781(c) of the Act and 19 CFR 351.225(i). The later-developed merchandise anti-circumvention request filed pursuant to 781(d) of the Act and 19 CFR 351.225(j) remains active.

In their request, Petitioners allege that PRC manufacturers of subject merchandise have been circumventing the Orders by using two ink colors printed in register and a screening process [1] which allows for one of the original inks to print on the sacks in a different shade than the original ink color. Specifically, Petitioners allege that the sacks produced using a screening process are a later-developed product of the subject merchandise because there was no knowledge of such a product being commercially available in the U.S. market at the time of the investigation. No other parties submitted comments regarding Petitioners' allegations in the circumvention of the Orders.

On February 24, 2011, the Department extended the deadline to initiate the anti-circumvention inquiry by 45 days, pursuant to 19 CFR 351.302(b).[2] On April 8, 2011, Commercial Packaging, a U.S. supplier of packaging and packaging materials, provided comments.

Scope of the Orders

The merchandise covered by the orders is laminated woven sacks. Laminated woven sacks are bags or sacks consisting of one or more plies of fabric consisting of woven polypropylene strip and/or woven polyethylene strip, regardless of the Start Printed Page 23792width of the strip; with or without an extrusion coating of polypropylene and/or polyethylene on one or both sides of the fabric; laminated by any method either to an exterior ply of plastic film such as biaxially-oriented polypropylene (“BOPP”) or to an exterior ply of paper that is suitable for high quality print graphics; [3] printed with three colors or more in register; with or without lining; whether or not closed on one end; whether or not in roll form (including sheets, lay-flat tubing, and sleeves); with or without handles; with or without special closing features; not exceeding one kilogram in weight. Laminated woven sacks are typically used for retail packaging of consumer goods such as pet foods and bird seed.

Effective July 1, 2007, laminated woven sacks are classifiable under Harmonized Tariff Schedule of the United States (“HTSUS”) subheadings 6305.33.0050 and 6305.33.0080. Laminated woven sacks were previously classifiable under HTSUS subheading 6305.33.0020. If entered with plastic coating on both sides of the fabric consisting of woven polypropylene strip and/or woven polyethylene strip, laminated woven sacks may be classifiable under HTSUS subheadings 3923.21.0080, 3923.21.0095, and 3923.29.0000. If entered not closed on one end or in roll form (including sheets, lay-flat tubing, and sleeves), laminated woven sacks may be classifiable under other HTSUS subheadings including 3917.39.0050, 3921.90.1100, 3921.90.1500, and 5903.90.2500. If the polypropylene strips and/or polyethylene strips making up the fabric measure more than 5 millimeters in width, laminated woven sacks may be classifiable under other HTSUS subheadings including 4601.99.0500, 4601.99.9000, and 4602.90.0000. Although HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of this order is dispositive.

Merchandise Subject to the Anti-Circumvention Request

The merchandise subject to the anti-circumvention request is laminated woven sacks produced with two ink colors printed in register and a screening process. The screening process described only uses two colored inks printed in register at two different print stations. However, one of the colors is printed using a screen, allowing for different shades of that one color to appear on the bag. Thus, when two shades of one color are printed along with a second colored ink from the second print station, three distinct colors are visible on the bag.

Later-Developed Merchandise Anti-Circumvention Request

Section 781(d)(1) of the Act provides that the Department may find circumvention of an antidumping or countervailing duty order when merchandise is developed after an investigation is initiated (“later-developed merchandise”). In conducting later-developed merchandise anti-circumvention inquiries, under section 781(d)(1) of the Act, the Department will also evaluate whether the general physical characteristics of the merchandise under consideration are the same as subject merchandise covered by the order,[4] whether the expectations of the ultimate purchasers of the merchandise under consideration are no different than the expectations of the ultimate purchasers of subject merchandise,[5] whether the ultimate use of the subject merchandise and the merchandise under consideration are the same,[6] whether the channels of trade of both products are the same,[7] whether there are any differences in the advertisement and display of both products,[8] and if the merchandise under consideration was commercially available at the time of the investigation.[9]

A. General Physical Characteristics

Petitioners contend that there are no differences in the physical characteristics of subject merchandise and sacks produced using two ink colors printed in register and a screening process.[10] At issue is only the printing process used to create graphics on the sack, not the physical construction of the sack itself. Petitioners supported this allegation with an affidavit from the President of one of the petitioners.[11]

B. Expectations of the Ultimate Purchasers

Petitioners allege that the expectations of ultimate purchasers of both types of laminated woven sacks are the same. Petitioners state that when choosing to purchase laminated woven sacks in general, ultimate purchasers are concerned with the construction and durability of the laminated woven sacks in comparison to paper sacks.[12] Petitioners supported this allegation with affidavits from the Presidents of two of the petitioners.[13]

C. Ultimate Use of Merchandise, Channels of Trade, and Advertisement and Display of Product

Petitioners maintain that the ultimate uses, channels of trade, and methods of advertisement and display of laminated woven sacks produced using two ink colors printed in register and a screening process are the same as those for subject merchandise, because the only difference between subject merchandise and the merchandise under consideration is the printing process used to produce graphics.[14] Petitioners supported this allegation with affidavits from the Presidents of two of the petitioners.[15]

D. Commercial Availability

Petitioners state that, at the time of the investigation, laminated woven sacks produced using two ink colors printed in register and a screening process were unknown in the U.S. industry. Petitioners cite the International Trade Commission (“ITC”) final determination in the laminated woven sacks investigation, in which the ITC deemed the domestic industry to be present, but found that the industry was young and hindered by the significant level of imports from the PRC.[16] Petitioners contend that no domestic producer was using or was aware of the printing process involving a screen to produce different shades of one ink color at the time of the investigation. In addition, Petitioners note that at no point during the investigation was there any discussion by the Department, the ITC, the respondents, or other interested parties of sacks being printed with an alternative screening printing process.

Thus, Petitioners allege that laminated woven sacks produced using two ink colors printed in register and a Start Printed Page 23793screening process were not commercially available at the time of the investigation. Petitioners supported this allegation with affidavits from the Presidents of two of the petitioners.[17]

Comments From Commercial Packaging

On April 8, 2011, Commercial Packaging submitted comments to the Department stating there is no basis for initiation of the anti-circumvention inquiry because sacks printed with two colors in register are not later-developed products of the subject sacks. Specifically, Commercial Packaging contends that an anti-circumvention inquiry is not warranted because the anti-circumvention provisions of the statute do not apply to merchandise that is originally unambiguously outside the scope of the Orders and, here, sacks printed with less than three colors in register are excluded from the Orders.[18] Commercial Packaging also argues that the sacks at issue are not later-developed merchandise because sacks printed with two colors in register were available during the investigation and the screening process is decades old.[19]

Analysis of Commercial Packaging Comments

We disagree with Commercial Packaging's contention that an anti-circumvention inquiry is not warranted in this case for the reason that sacks printed with two colors in register are expressly excluded from the Orders. The language of the Orders does not discuss laminated woven sacks printed with two colors in register using a screening process. Therefore, unlike in Wheatland Tube,[20] as cited by Commercial Packaging, we conclude that the Orders do not expressly exclude the merchandise under consideration. Although the Department previously concluded in a scope ruling that found sacks printed with two colors in register to be outside the scope of the Orders, we are not precluded from now conducting an anti-circumvention inquiry because the factors to be considered in 19 CFR 351.225(k)(1) are not the same factors as those required under section 781(d)(1) of the Act.[21] Furthermore, by its very nature, a later-developed merchandise anti-circumvention inquiry examines merchandise that is either excluded from, or has been designed to elude, an order.[22] Thus, later-developed merchandise cannot pose a threat of injury to the domestic industry at the time of the order, because it either does not exist or is not commercially available.

We also disagree with Commercial Packaging's argument that information supporting the existence of sacks printed with two-colors in register prior to the investigation demonstrates that the sacks at issue here are not later-developed merchandise. We find the fact that sacks printed with two colors in register alone existed prior to the investigation is not relevant to our inquiry because the issue presented by this inquiry is whether sacks that are printed with two colors in register and with the use of a screen process constitute later-developed merchandise within the meaning of 781(d) of the Act. Commercial Packaging does not provide evidence that the screening process used in the production of laminated woven sacks was commercially available during or before the investigation.

Initiation of Later-Developed Merchandise Antidumping and Countervailing Duty Anti-Circumvention Inquiry

Based on the information provided by Petitioners, the Department finds that there is sufficient basis to initiate an antidumping and countervailing duty anti-circumvention inquiry pursuant to section 781(d) of the Act to determine whether laminated woven sacks produced using two ink colors printed in register and a screening process are later-developed products that can be considered subject to the Orders under the later-developed merchandise provision. As a result, we are initiating this inquiry under section 781(d) of the Act.

The Department will not order the suspension of liquidation of entries of any additional merchandise at this time. However, in accordance with 19 CFR 351.225(l)(2), if the Department issues an affirmative preliminary determination, we will instruct U.S. Customs and Border Protection to suspend liquidation and require a cash deposit of estimated duties, at the applicable rate, for each unliquidated entry of the merchandise at issue, entered or withdrawn from warehouse for consumption on or after the date of initiation of the inquiry.

We intend to notify the International Trade Commission in the event of an affirmative preliminary determination of circumvention, in accordance with 781(e)(1) of the Act and 19 CFR 351.225(f)(7)(i)(C), if applicable. The Department will, following consultation with interested parties, establish a schedule for questionnaires and comments on the issues. The Department intends to issue its final determination within 300 days of the date of publication of this initiation notice.

This notice is published in accordance with section 781(d) of the Act and 19 CFR 351.225(i) and (j).

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Dated: April 22, 2011.

Paul Piquado,

Acting Deputy Assistant Secretary for Import Administration.

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Footnotes

1.  In essence, Petitioners allege that the screening process, which they contend is a later-developed process, in effect permits manufacturers to replace a print stand in register with the screen, thereby circumventing the Orders.

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2.  See Letter to Petitioners dated February 24, 2011.

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3.  “Paper suitable for high quality print graphics,” as used herein, means paper having an ISO brightness of 82 or higher and a Sheffield Smoothness of 250 or less. Coated free sheet is an example of a paper suitable for high quality print graphics.

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4.  See section 781(d)(1)(A) of the Act.

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5.  See section 781(d)(1)(B) of the Act.

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6.  See section 781(d)(1)(C) of the Act.

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7.  See section 781(d)(1)(D) of the Act.

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8.  See section 781(d)(1)(E) of the Act.

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9.  See Later-Developed Merchandise Anticircumvention Inquiry of the Antidumping Duty Order on Petroleum Wax Candles from the People's Republic of China: Affirmative Preliminary Determination of Circumvention of the Antidumping Duty Order, 71 FR 32033, 32035 (June 2, 2006).

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10.  See Petitioners' Request for Determination of Circumvention, dated January 26, 2011, at 16.

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11.  See id. at Exhibit 11.

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12.  See id. at 19.

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13.  See id. at Exhibits 11 and 12.

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14.  See id. at 19 and footnote 76.

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15.  See id. at Exhibits 11 and 12.

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16.  See Laminated Woven Sacks from China, Investigation Nos. 701-TA-450 and 731-TA-1122 (Final), ITC Publication 4025 (July, 2008) at 30.

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17.  See id. at Exhibits 11 and 12.

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18.  See Notice of Scope Rulings, 75 FR 14138 (March 24, 2010) (Shapiro Packaging's three imported sacks are outside the scope of the orders (July 29, 2009)).

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19.  See Commercial Packaging's submission, dated April 8, 2011.

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20.  See Wheatland Tube Co. v. United States, 161 F.3d 1365, 1371 (Fed. Cir. 1998) (“Wheatland Tube”).

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21.  See Later-Developed Merchandise Anticircumvention Inquiry of the Antidumping Duty Order on Petroleum Wax Candles from the People's Republic of China: Affirmative Final Determination of Circumvention of the Antidumping Duty Order, 71 FR 59075 (October 6, 2006) and accompanying Issues and Decision Memorandum at Comment 2, remanded on other grounds, 578 F. Supp. 2d 1369 (CIT 2008), aff'd, 626 F. Supp. 2d 1285 (CIT June 17, 2009), aff'd 609 F.3d 1352 (June 21, 2010).

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22.  See Erasable Programmable Read Only Memories From Japan; Final Scope Ruling, 57 FR 11599 (April 6, 1992) at Comment 6; see also Electrolytic Manganese Dioxide From Japan; Preliminary Scope Ruling, 56 FR 56977 (November 7, 1991).

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[FR Doc. 2011-10325 Filed 4-27-11; 8:45 am]

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