[Federal Register Volume 78, Number 147 (Wednesday, July 31, 2013)]
[Notices]
[Pages 46319-46322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-18430]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-583-843]
Polyethylene Retail Carrier Bags From Taiwan: Initiation of Anti-
Circumvention Inquiry on Antidumping Duty Order
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
DATES: Effective Date: July 31, 2013.
[[Page 46320]]
SUMMARY: In response to a request from The Polyethylene Retail Carrier
Bag Committee and its individual members PCL Packaging, Inc., Hilex
Poly Co., LLC, and Superbag Corp. (collectively, the petitioners), the
Department of Commerce (the Department) is initiating an anti-
circumvention 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) on a roll from Taiwan are
circumventing the antidumping duty order on PRCBs from Taiwan.\1\
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\1\ See Antidumping Duty Order: Polyethylene Retail Carrier Bags
from Indonesia, Taiwan, and the Socialist Republic of Vietnam, 75 FR
23667 (May 4, 2010) (PRCB Orders).
FOR FURTHER INFORMATION CONTACT: Hermes Pinilla, AD/CVD Operations,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue NW.,
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Washington, DC 20230; telephone: (202) 482-3477.
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 a series or roll of
unfinished PRCBs. The particular sample measures roughly 42.5 inches by
9 inches and the front surface is printed with multi-color graphics and
the words ``Brush,'' ``Floss,'' and ``Smile.'' The sample also shows
the location of oval handles that have not yet been die cut out of the
bags and the color printing registration marks used to print the bag in
Taiwan are contained in the location of the oval handles. The sample
resembles in-scope, finished PRCBs on a roll in all respects except
that the bottoms are open and they lack handles. The merchandise
appears ready to undergo the final processing of cutting the unfinished
PRCBs to length, sealing the bottoms, and die-cutting the unfinished
PRCBs to create the handles of the finished PRCBs. In addition, the
Department received from CBP documentation associated with the shipment
of this product.
In April 2013, the Department placed two memoranda on to the record
stating that it received this sample unfinished PRCB along with
proprietary documentation associated with the shipment, and inviting
parties to view the sample and submit comments.\2\
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\2\ See Memoranda to the File dated April 18, 2013, and April
24, 2013.
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On May 3, 2013, SmileMakers Inc. (SmileMakers) submitted a scope
ruling request to the Department regarding certain rolls of unfinished
PRCBs that are to be used to ``produce customized bags for dentists'
and doctors' offices.'' \3\
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\3\ See SmileMakers' letter to the Department, ``Polyethylene
Retail Carrier Bags from Taiwan (A-583-843): SmileMakers, Inc.,
Scope Ruling Request: Rolls of Polyethylene Film Tube'' dated May 3,
2013 (SmileMakers' scope ruling request).
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On May 20, 2013, the petitioners requested that the Department
issue an affirmative anti-circumvention determination, pursuant to
section 781(a) of the Act and 19 CFR 351.225(g).\4\ The petitioners
further state that CBP officials had advised them that the practice of
importing unfinished PRCBs is increasing and expanding to multiple
ports.\5\ The petitioners claim 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.\6\
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\4\ See the petitioners' letter to the Department,
``Polyethylene Retail Carrier Bags From Taiwan/Request For An
Affirmative Anti-Circumvention Determination'' dated May 20, 2013
(the petitioners' request).
\5\ Id. at 3.
\6\ Id.
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After considering the information placed on the record, the
Department has determined to conduct one proceeding in the context of
an anti-circumvention inquiry. The parties' submissions demonstrate
that both requests cover identically described merchandise. For this
reason, we find that it is reasonable and practical to address whether
the merchandise at issue is subject to the order on PRCBs from Taiwan
in the context of an anti-circumvention inquiry, which will provide for
the most comprehensive analysis, under section 781(a) of the Act and 19
CFR 351.225(g). As a result of our determination to initiate this
inquiry, we are placing SmileMakers' scope ruling request and the
information we received from CBP on the record of this anti-
circumvention inquiry.
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 Anti-Circumvention Inquiry
This anti-circumvention inquiry covers merchandise from Taiwan that
appears to be a series or roll of unfinished PRCBs that is ready to
undergo the final steps in the production process, i.e., cutting-to-
size the merchandise, sealing the bag on one end to form a closure, and
creating the handles of a finished PRCB (using a die press to stamp out
the opening).\7\
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\7\ The unfinished PRCBs, as described by SmileMakers in its
scope request, ``are made from polyethylene formed into the shape of
a tube that is open (unsealed) on both ends; they do not contain any
handles, perforations, seams, or seals; they are imprinted with a
variety of pictures and designs, depending on SmileMakers
requirements; and they all serve the same purpose (i.e., after
importation, they are imprinted with medical practitioners' contact
information, cut, punched, and sealed to form small bags that are
given out at dentists' and doctors' offices, etc.).''
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The Petitioners' Request for Initiation of Anti-Circumvention
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 from Taiwan. The petitioners allege that
[[Page 46321]]
while the imported unfinished PRCBs are sealed on the sides, the bottom
and top are open, and the oval handle has not been die cut. The
petitioners contend that completion of these steps would make the bags
subject merchandise if they were imported in this condition.\8\
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\8\ See the petitioners' request at 6.
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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.\9\
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\9\ Id. 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.
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The final, normal ``conversion'' step is described in information
submitted by the petitioners as follows: ``After the printing process
is complete, the large roll of film is then cut to size with hot knives
that seam the sides of the bags together when cut. Then, the film is
fed into bag manufacturing machines where the top and bottom seals are
formed and handles are cut out.'' \10\ The petitioners contend that the
unfinished PRCBs that are the subject of their request represent an
interruption in this continuous production process because, while they
have been sealed on their sides, the bottom and top are open and the
oval handle has not been die cut.\11\ Completion of these steps would
make the bags subject of the antidumping duty order if they were
imported in this finished condition.\12\
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\10\ See the petitioners' request at Exhibit 5.
\11\ Id. at 6.
\12\ Id.
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Initiation of Anti-Circumvention Proceeding
Applicable Law
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 as merchandise that is subject to
the order is completed or assembled in the United States. In conducting
anti-circumvention 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 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 merchandise sold in the United
States is of the same class or kind as the subject merchandise. The
petitioners agree with the Department's statement that the samples
``closely resemble'' a PRCB.\13\ Moreover, the merchandise is made of
polyethylene film and the dimensions of the finished PRCBs are within
those of the scope definition. Finally, the petitioners state, because
the bag is completely and exclusively dedicated to use as a Dentist
PRCB and has been finished to the point where there can be no doubt of
its intended use, the merchandise will be subject merchandise within
the order on PRCBs Taiwan scope definition when completed.\14\
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\13\ See Memorandum to the File, dated April 18, 2013.
\14\ Id. at 10.
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B. Completion of Merchandise in the United States
The petitioners cite to the CBP referral and SmileMakers' scope
ruling request to support their claim that the imported rolls are
completed in the United States from parts and components produced in
Taiwan. All the necessary raw materials for a finished PRCB are
entered. Performing the final die-cutting operation in the United
States simply finishes the PRCB.\15\
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\15\ Id. at 11.
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C. Minor or Insignificant Process
According to the petitioners, the process of converting this
product into a finished PRCB is minor or insignificant, particularly
relative to the production process as a whole. The petitioners assert
that the sealing and cutting operation is a simple step that occurs
only at the very end of the multi-step production process.
Specifically, the bottom of the bag is sealed with a hot knife and the
handles cut by clamping a die to a press and then pressing on the
pillow pack.\16\ Consequently, the only equipment that is needed seals
the bag and cuts out an oval handle.\17\ According to the advertisement
provided by the petitioners, the equipment needed to accomplish these
tasks can be purchased new for $11,000 to $13,000.\18\ In contrast, the
operations performed in Taiwan, the petitioners contend, are highly
capital-intensive and technologically sophisticated.
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\16\ Id. at 12.
\17\ Id. at 11.
\18\ Id. and Exhibit 10.
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The petitioners further argue that no research and development
expenditures are required to perform the simple sealing, and die-
cutting operations, as the technically complex research and development
activities are performed prior to this stage in Taiwan.\19\ Similarly,
the petitioners state that minor production facilities are required and
that the operations could be performed in a small single-story
room.\20\
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\19\ Id. at 12.
\20\ Id.
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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. 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
imported merchandise performed in Taiwan.\21\ The petitioners further
explain that the Department need not collect precise information on the
amount of the 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.\22\
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\21\ Id.
\22\ Id. at 10 n. 37 (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
Countervailing Duty Orders, 68 FR 54888 (September 19, 2003)).
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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
[[Page 46322]]
of the completed merchandise.\23\ Therefore, because most of the value
of the finished PRCB is created in Taiwan, the value of the merchandise
as entered is certainly a significant portion of the total value of the
finished PRCB.
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\23\ Id. at 13.
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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 anti-
circumvention inquiry. Of these, the petitioners argue that importation
of the circumventing merchandise represents a change in the pattern of
trade.\24\ The petitioners assert that prior to imposition of the PRCB
Orders, no party imported such merchandise for completion into finished
PRCBs. The petitioners argue that interrupting the production process
prior to completion is neither economical nor rational, and that the
only reason not to complete the PRCB in the country of origin is to
evade application of antidumping duties upon importation.\25\
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\24\ Id.
\25\ Id.
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Analysis
Section 351.225(f)(1) of our regulations directs that a notice of
the initiation of an anti-circumvention inquiry issued under 19 CFR
351.225(e) will include a description of the product that is the
subject of the anti-circumvention inquiry and an explanation of the
reasons for the Department's decision to initiate an anti-circumvention
inquiry.
The product that is subject of this anti-circumvention inquiry
covers merchandise from Taiwan that appears to be series or roll of
unfinished PRCBs that is ready to undergo the final steps in the
production process, i.e., cutting-to-size the merchandise, sealing the
bag on one end to form a closure, and creating the handles of a
finished PRCB (using a die press to stamp out the opening).
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 the initiation of an anti-circumvention inquiry.
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 completed and sold in the United States is of the same
class or kind as PRCBs from Taiwan which are subject to the order on
PRCBs from Taiwan.\26\ With regard to whether the process of converting
this product into finished PRCBs 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 anti-
circumvention inquiry request.\27\ 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 Taiwanese producer or
the U.S. importer, the petitioners relied on their own knowledge of the
production process to draw their conclusions and demonstrate that,
qualitatively, the value of the conversion of the imported merchandise
into subject merchandise is minor or insignificant.\28\
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\26\ Id. at 10-11.
\27\ Id. at 11-13.
\28\ Id.
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With respect to the value of the merchandise produced in Taiwan,
the petitioners relied on the information and arguments in the ``minor
or insignificant process'' portion of their anti-circumvention request
to indicate that the value of Taiwan production for unfinished PRCBs is
significant relative to the total value of finished PRCBs sold in the
United States.\29\
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\29\ Id. at 13.
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Finally, the petitioners argued that the Department should also
consider the pattern of trade as a factor in determining whether to
initiate the anti-circumvention inquiry. In particular, the petitioners
asserted that no party imported merchandise that must undergo the final
step of the production process to be converted into finished PRCBs
prior to the imposition of the order on PRCBs from Taiwan, as doing so
is irrational and uneconomical.\30\
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\30\ Id.
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Based on these allegations, we are initiating an anti-circumvention
inquiry concerning the antidumping duty order on PRCBs from Taiwan,
pursuant to section 781(a) of the Act and 19 CFR 351.225(g). The
Department is initiating this anti-circumvention inquiry with respect
to all such merchandise from Taiwan 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)(A), 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 anti-circumvention inquiry. The Department invites
all potential respondents to identify themselves as producers,
importers, or further processors of such merchandise and to 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 inquiry. 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).
Dated: July 25, 2013.
Paul Piquado,
Assistant Secretary for Import Administration.
[FR Doc. 2013-18430 Filed 7-30-13; 8:45 am]
BILLING CODE 3510-DS-P