[Federal Register Volume 78, Number 93 (Tuesday, May 14, 2013)]
[Notices]
[Pages 28194-28198]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-11314]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-886]
Polyethylene Retail Carrier Bags From the People's Republic of
China: Initiation of Anticircumvention Inquiry on Antidumping Duty
Order
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
DATES: Effective Date: May 14, 2013.
SUMMARY: In response to a request from The Polyethylene Retail Carrier
Bag Committee and its individual members: PCL Packaging, Inc., Hilex
Poly Co., LLC, Superbag Corp., and Inteplast Group, Ltd.,
(collectively, the petitioners), the Department of Commerce (the
Department) is initiating an anticircumvention inquiry pursuant to
section 781(a) of the Tariff Act of 1930, as amended (the Act), to
determine whether imports of unfinished polyethylene retail carrier
bags (PRCBs) from the People's Republic of China (PRC) are
circumventing the antidumping duty order on PRCBs from the PRC.\1\
---------------------------------------------------------------------------
\1\ See Antidumping Duty Order: Polyethylene Retail Carrier Bags
From the People's Republic of China, 69 FR 48201 (August 9, 2004)
(PRCB Order).
FOR FURTHER INFORMATION CONTACT: Dustin Ross, AD/CVD Operations, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and
[[Page 28195]]
Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-
---------------------------------------------------------------------------
0747.
SUPPLEMENTARY INFORMATION:
Background
The Department received from U.S. Customs and Border Protection
(CBP) a sample of merchandise that was part of a larger shipment
imported into the United States and that resembles an unfinished PRCB.
The sample resembles an in-scope, finished PRCB in all respects except
that it is sealed on all four sides and appears ready to undergo the
final processing step of die-cutting the unfinished PRCB, which will
create the opening and the handles of the finished PRCB.\2\ On August
29, 2012, the Department placed a memorandum onto the record stating
that it received this sample unfinished PRCB along with proprietary
documentation associated with the shipment and invited parties to view
the sample and submit comments.
---------------------------------------------------------------------------
\2\ This particular CBP sample measures roughly 19 inches by
11.5 inches; the front surface includes red print that reads ``THANK
YOU'' six times; it contains the number ``2'' within the recycling
symbol in the bottom left area; the product displays the caution,
``WARNING: TO AVOID DANGER OF SUFFOCATION. KEEP THIS PLASTIC BAG
AWAY FROM BABIES AND CHILDREN. DO NOT USE THIS BAG IN CRIBS, BEDS.
CARRIAGES OR PLAYPENS.'' The merchandise also includes the text,
``PLEASE RETURN TO A PARTICIPATING STORE FOR RECYCLING.'' There are
two holes near the top border of the CBP sample.
---------------------------------------------------------------------------
On March 15, 2013, the petitioners requested that the Department
issue an affirmative anticircumvention determination (the petitioners'
Request), pursuant to section 781(a) of the Act and 19 CFR 351.225(g).
Specifically, the petitioners stated that CBP officials advised them
that some importers have been entering merchandise described by the CBP
officials as unfinished ``t-shirt'' style PRCBs. The petitioners
explain that CBP officials conveyed that the unfinished PRCBs are
sealed on all four sides and lack handles when entered into the United
States, but that they are clearly intended for use as finished PRCBs.
Furthermore, they explained that the CBP officials advised the
petitioners that the practice of importing unfinished PRCBs is
increasing and expanding to multiple ports. The petitioners further
assert that there is no commercial justification for not completing the
PRCB production process at the place of manufacture and instead
locating the final minor finishing operation in the United States
except to evade imposition of antidumping duties.
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. Imports of the subject merchandise are currently
classifiable under statistical category 3923.21.0085 of the Harmonized
Tariff Schedule of the United States (HTSUS). This subheading also
covers products that are outside the scope of the order. Furthermore,
although the HTSUS subheading is provided for convenience and customs
purposes, our written description of the scope of the order is
dispositive.
Scope of the Anticircumvention Inquiry
This anticircumvention inquiry covers merchandise from the PRC that
appears to be an unfinished PRCB which is sealed on all four sides, cut
to length, and which appears ready to undergo the final step in the
production process, i.e., to use a die press to stamp out the opening
and create the handles of a finished PRCB. The unfinished PRCBs subject
to this inquiry may or may not have printing and may be of different
dimensions as long as they meet the description of the scope of the
order.
The Petitioners' Request for Initiation of Anticircumvention Proceeding
As stated above, the petitioners filed a request for a
circumvention determination, in which they commented on the
relationship of this merchandise to merchandise covered by the scope of
the PRCB Order. The petitioners allege that the product is intended to
be a finished PRCB and is dedicated to PRCB use, as it has gone through
every stage of the production process except for the final die cut
operation.\3\ According to the petitioners, the number ``2'' in the
recycling symbol indicates that the product is made out of
polyethylene.\4\ The petitioners also allege that the two holes near
the top of the unfinished PRCBs are alignment holes that allow the
merchandise to be slipped over pins to ensure that the stack of
unfinished PRCBs is properly positioned for the die-cutting operation
that opens the top and creates the handles of the finished PRCB. The
petitioners explain that, once aligned, a simple press is used to cut
the stack of unfinished PRCBs to create finished PRCBs that are ready
for use.\5\
---------------------------------------------------------------------------
\3\ See The petitioners' Request at 7.
\4\ See The petitioners' Request at 7, referencing ``The
American Chemistry Council Plastic Packaging Resin Codes,'' provided
at Exhibit 9 of the petitioners' Request.
\5\ See The petitioners' Request at 7.
---------------------------------------------------------------------------
Citing the International Trade Commission (ITC)'s recent sunset
review determination of PRCBs from the PRC, the petitioners explain
that the PRCB production process can be described as a four-step
process consisting of (1) blending polyethylene resin pellets, color
concentrates, and other additives; (2) extrusion and film forming; (3)
printing; and (4) PRCB conversion.\6\ The final step in the conversion
process for die-cut PRCBs, such as t-shirt bags, involves the use of an
automated die and press at the end of an integrated PRCB conversion
line to cut the film, which serves the dual purpose of opening the top
of the PRCB and creating the PRCB handles, at which point the
merchandise is ready for inspection, packing, and shipment.\7\ For the
unfinished PRCBs subject to this circumvention inquiry, the product is
taken off-line prior to completion of this final step, which the
petitioners allege is subsequently performed after importation into the
United States.\8\ Additionally, the petitioners continue, no material
is added to complete the finished PRCBs, but rather the scrap film is
typically removed for recycling.\9\
---------------------------------------------------------------------------
\6\ See The petitioners' Request at 4, citing Polyethylene
Retail Carrier Bags from China, Malaysia, and Thailand, Inv. Nos.
731-TA-1043-1045 (Review), USITC Pub. 4160 (June 2010) at I-17.
\7\ See The petitioners' Request at 6.
\8\ Id.
\9\ Id.
---------------------------------------------------------------------------
[[Page 28196]]
Initiation of Anticircumvention Proceeding
Applicable Statute
Section 781(a) of the Act and 19 CFR 351.225(g) provide that the
Department may find circumvention of an antidumping duty order when
merchandise of the same class or kind subject to the order is completed
or assembled in the United States. In conducting anticircumvention
inquiries under section 781(a)(1) of the Act, the Department relies
upon the following criteria: (A) Merchandise sold in the United States
is of the same class or kind as any other merchandise that is produced
in a foreign country that is subject to an antidumping duty order; (B)
such merchandise sold in the United States is completed or assembled in
the United States from parts or components produced in the foreign
country with respect to which the antidumping duty order applies; (C)
the process of assembly or completion in the United States is minor or
insignificant; and (D) the value of the parts or components referred to
in (B) is a significant portion of the total value of the merchandise.
As discussed below, the petitioners presented evidence with respect to
these criteria.
A. Merchandise of the Same Class or Kind
The petitioners state that the unfinished PRCB sold in the United
States is of the same class or kind as subject merchandise, as it is
dedicated as a generic ``Thank You'' t-shirt bag and only requires a
simple die-cutting to become proto-typical subject merchandise.\10\ The
petitioners assert that the script on the merchandise identifies the
product twice as a ``bag'' and states that it should be returned to the
participating store for recycling, indicating it is used by retail
establishments.\11\ Petitioners also assert that the merchandise is
made of polyethylene film, as indicated by the ``2'' in the recycle
triangle, and that it falls within the dimensions of in-scope
merchandise.\12\ For these reasons, the petitioners argue, it is
completely and exclusively intended for use as a finished PRCB once it
undergoes the final ``bag conversion'' step of the production process
and, therefore, is of the same class or kind as subject merchandise.
---------------------------------------------------------------------------
\10\ See The petitioners' Request at 10.
\11\ Id.
\12\ Id.
---------------------------------------------------------------------------
B. Completion of Merchandise in the United States
The petitioners assert that the unfinished PRCBs are imported from
the PRC and CBP officials described the product as only needing to
undergo the final die-cutting operation to open the top and create the
handles of finished PRCBs, which means that no materials are added in
the United States.\13\ Rather, the merchandise as entered has all the
necessary raw materials for a finished PRCB. Performing the final die-
cutting operation in the United States simply removes the material to
finish the PRCB.\14\
---------------------------------------------------------------------------
\13\ See The petitioners' Request at 11.
\14\ Id.
---------------------------------------------------------------------------
C. Minor or Insignificant Process
According to the petitioners, the process of converting this
product into a finished PRCB is minor or insignificant.\15\ Based on
publicly-available information, and their own industry experience, the
petitioners argue that an analysis of the relevant statutory factors of
section 781(a)(2) of the Act supports their conclusion that the final
processing in the United States is ``minor or insignificant'' as the
only operation remaining to transform this unfinished PRCB into subject
merchandise is to perform the final die-cutting operation.\16\ The
petitioners assert that the Statement of Administrative Action (SAA)
for the Uruguay Round Agreements Act provides that no single factor
will be controlling in determining whether the process of assembly or
completion is minor or insignificant, and that the Department will
evaluate each of the factors as they exist in the United States
depending on the particular factual pattern of each case.\17\ These
factors include: (1) The level of investment in the United States; (2)
the level of research and development in the United States; (3) the
nature of the production process in the United States; (4) the extent
of production facilities in the United States; and (5) whether the
value of the processing performed in the United States represents a
small proportion of the value of the merchandise sold in the United
States.\18\
---------------------------------------------------------------------------
\15\ Id.
\16\ Id.
\17\ See The petitioners' Request at 9, citing SAA, Uruguay
Round Agreements Act, H. Doc. 103-316, Vol. 1 (1994) at 893.
\18\ See The petitioners' Request at 9.
---------------------------------------------------------------------------
The petitioners argue that the level of investment in the United
States is extremely limited. The only equipment needed is a small press
and a die for the cut-out. The petitioners assert that dies cost from
$45 to $65 each and a new press, according to the advertisement
provided by the petitioners, can be purchased for around $7,000.\19\ In
contrast, the operations performed in the PRC, the petitioners contend,
are highly capital-intensive and sophisticated.\20\
---------------------------------------------------------------------------
\19\ See The petitioners' Request at 12.
\20\ Id.
---------------------------------------------------------------------------
The petitioners argue that no research and development expenditures
are required to perform the simple die-cutting operation, as the
technically complex research and development activities are performed
prior to this stage in the PRC.\21\
---------------------------------------------------------------------------
\21\ Id.
---------------------------------------------------------------------------
Next, the petitioners explain that all production steps, with the
exception of the final die-cutting operation, are performed in the PRC
and, therefore, the nature of the production process in the United
States is minor in scope and elementary in technique, relative to the
production process as a whole.\22\
---------------------------------------------------------------------------
\22\ Id.
---------------------------------------------------------------------------
The petitioners also state that minor production facilities are
required to perform the final die-cutting operation in the United
States. Specifically, the operation could be performed in a small
single-story room.\23\
---------------------------------------------------------------------------
\23\ See The petitioners' Request at 13.
---------------------------------------------------------------------------
Finally, the petitioners assert that the value of processing
performed in the United States represents a negligible proportion of
the value of the merchandise sold in the United States.\24\ Completion
of the PRCB can be performed by a single employee, and the capital and
marginal costs of the die-cutting operations in the United States are
relatively insignificant in comparison to the manufacturing of the
unfinished PRCB performed in the PRC.\25\ The petitioners further
explain that the Department need not collect precise information on the
amount of value added in the United States to conclude that the process
is minor or insignificant but may rather rely on a qualitative
assessment to draw this conclusion, citing Anti-Circumvention Inquiry
of the Antidumping and Countervailing Duty Orders on Certain Pasta From
Italy: Affirmative Preliminary Determinations of Circumvention of
Antidumping and Countervailing Duty Orders, 68 FR 46571 (August 6,
2003), unchanged in Anti-Circumvention Inquiry of the Antidumping and
Countervailing Duty Orders on Certain Pasta from Italy: Affirmative
Final Determinations of Circumvention of Antidumping and
[[Page 28197]]
Countervailing Duty Orders, 68 FR 54888 (September 19, 2003).\26\
---------------------------------------------------------------------------
\24\ Id.
\25\ Id.
\26\ See The petitioners' Request at Footnote 40.
---------------------------------------------------------------------------
D. Value of Merchandise Produced in the Foreign Country Is a
Significant Portion of the Value of the Merchandise Sold in the United
States
As stated above, the petitioners contend that the value of the
processing performed in the United States represents a minor portion of
the value of the completed merchandise, as little value is added by
processing in the United States.\27\ Therefore, because virtually all
of the value of the finished PRCB is created in the PRC, the value of
the parts or components entered are certainly a significant portion of
the total value of merchandise.
---------------------------------------------------------------------------
\27\ See The petitioners' Request at 13.
---------------------------------------------------------------------------
E. Factors To Consider in Determining Whether Action Is Necessary
Section 781(a)(3) of the Act identifies additional factors that the
Department shall consider in determining whether to include parts or
components in an antidumping duty order as part of an anticircumvention
inquiry. Of these, the petitioners argue that importation of the
circumventing merchandise represents a change in the pattern of
trade.\28\ The petitioners assert that prior to imposition of the PRCB
Order, no party imported unfinished PRCBs. The petitioners argue that
interrupting the production process prior to completion is neither
economical nor rational, and the only reason not to complete the PRCB
in the country of origin is to evade application of antidumping duties
upon importation.\29\
---------------------------------------------------------------------------
\28\ See The petitioners' Request at 14.
\29\ Id.
---------------------------------------------------------------------------
Analysis
Based on our analysis of the petitioners' Request, the Department
determines that the criteria under section 781(a) of the Act have been
satisfied to warrant an initiation of an anticircumvention inquiry. In
accordance with 19 CFR 351.225(f)(1), a notice of the initiation of an
anticircumvention inquiry issued under 19 CFR 351.225(e) will include a
description of the product that is the subject of the anticircumvention
inquiry--in this case, unfinished PRCBs from the PRC--and an
explanation of the reasons for the Department's decision to initiate an
anticircumvention inquiry, as provided below.
With regard to whether the merchandise sold in the United States is
of the same class or kind as the merchandise covered by the antidumping
duty order, the petitioners presented information indicating that the
merchandise sold in the United States is of the same class or kind as
finished PRCBs from the PRC, which are subject to the antidumping duty
order.\30\ We note, however, that there only exists a presumption at
this time that the imported merchandise ultimately is sold in the
United States after undergoing further processing.
---------------------------------------------------------------------------
\30\ See The petitioners' Request at 10-11.
---------------------------------------------------------------------------
With regard to completion of merchandise in the United States, the
petitioners have also presented information to support their contention
that the unfinished PRCBs which are presumably further processed and
sold in the United States as in-scope merchandise are produced from
merchandise imported into the United States from the PRC.\31\
---------------------------------------------------------------------------
\31\ See The petitioners' Request at 11.
---------------------------------------------------------------------------
With regard to whether the process of converting this product into
a finished PRCB is a ``minor or insignificant process,'' the
petitioners addressed the relevant statutory factors with the best
information available to them at the time of their anticircumvention
inquiry request.\32\ The petitioners relied on publicly-available
information for this purpose, in addition to their own expertise in the
production process. Given that the petitioners do not have access to
cost or price data of either the PRC producer or the U.S. importer, the
petitioners therefore relied on their own knowledge of the production
process to draw their conclusions and demonstrate that, qualitatively,
the value of the conversion from an unfinished PRCB to subject
merchandise is minor or insignificant.\33\
---------------------------------------------------------------------------
\32\ See The petitioners' Request at 11-13.
\33\ Id.
---------------------------------------------------------------------------
With respect to the value of the merchandise produced in the PRC,
the petitioners relied on the information and arguments in the ``minor
or insignificant process'' portion of their anticircumvention request
to indicate that the value of the PRC production for unfinished PRCBs
is significant relative to the total value of finished PRCBs sold in
the United States.\34\ We find that this information adequately meets
the requirements of this factor, as discussed above.
---------------------------------------------------------------------------
\34\ See The petitioners' Request at 13.
---------------------------------------------------------------------------
Finally, the petitioners argued that the Department should also
consider the pattern of trade as a factor in determining whether to
initiate the anticircumvention inquiry. In particular, the petitioners
asserted that no party imported unfinished PRCBs that must undergo the
final step of the production process to be converted into finished
PRCBs prior to the imposition of the PRCB Order, as doing so is
irrational and uneconomical.\35\
---------------------------------------------------------------------------
\35\ See The petitioners' Request at 14.
---------------------------------------------------------------------------
Based on our analysis of the information in the petitioners'
submission, we find that the petitioners provided sufficient evidence
for each of the criteria enumerated in the statute to initiate an
anticircumvention inquiry.
Accordingly, we are initiating an anticircumvention inquiry
concerning the antidumping duty order on PRCBs from the PRC, pursuant
to section 781(a) of the Act and 19 CFR 351.225(g). The Department is
initiating this circumvention proceeding with respect to all such
unfinished PRCBs received by CBP from the PRC as described above,
regardless of producer or exporter. In accordance with 19 CFR
351.225(l)(2), if the Department issues a preliminary affirmative
determination, we will then instruct CBP 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. In accordance with section 781(e)(1) of the
Act and 19 CFR 351.225(f)(7)(i)(C), we intend to notify the ITC in the
event of an affirmative preliminary determination of circumvention
under section 781(d) of the Act.
This notice serves as an invitation to interested parties to
participate in this anticircumvention inquiry. The Department invites
all potential respondents to identify themselves as producers of such
merchandise, and provide their own evidence and information that may
inform the Department's determination. Please contact the official
listed under the above heading, FOR FURTHER INFORMATION CONTACT for
instructions for participating in this segment of the proceeding. 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 consistent with section
781(f) of the Act.
This notice is published in accordance with 781(a) of the Act and
19 CFR 351.225(f).
[[Page 28198]]
Dated: May 7, 2013.
Christian Marsh,
Deputy Assistant Secretary for Antidumping and Countervailing Duty
Operations.
[FR Doc. 2013-11314 Filed 5-13-13; 8:45 am]
BILLING CODE 3510-DS-P