[Federal Register Volume 81, Number 215 (Monday, November 7, 2016)]
[Notices]
[Pages 78117-78120]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26847]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-602-807, A-351-842, A-570-022, C-570-023, A-560-828, C-560-829, A-
471-807]
Certain Uncoated Paper From Australia, Brazil, the People's
Republic of China, Indonesia, and Portugal: Initiation of Anti-
Circumvention Inquiry
AGENCY: Enforcement and Compliance, International Trade Administration,
Department of Commerce.
SUMMARY: In response to a request from the United Steel, Paper and
Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service
Workers International Union; Domtar Corporation; Finch Paper LLC; P.H.
Glatfelter Company; and Packaging Corporation of America (collectively,
the petitioners), the Department of Commerce (the Department) is
initiating an anti-circumvention inquiry pursuant to section 781(c) of
the Tariff Act of 1930, as amended (the Act), to determine under the
minor alterations provision whether uncoated paper with a GE brightness
of 83 +/- 1% (83 Bright paper) is ``altered in form or appearance in
minor respects'' from in-scope merchandise such that it may be
considered subject to the antidumping (AD) and countervailing duty
(CVD) orders on certain uncoated paper.
DATES: Effective November 7, 2016.
FOR FURTHER INFORMATION CONTACT: Ross Belliveau, AD/CVD Operations,
Office II, Enforcement and Compliance, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-
4952.
SUPPLEMENTARY INFORMATION:
Background
On March 3, 2016, the Department issued AD orders on certain
uncoated paper from Australia, Brazil, the People's Republic of China
(PRC), Indonesia, and Portugal and CVD orders on certain uncoated paper
from the PRC and Indonesia.\1\ On July 15, 2016, the petitioners
alleged that Asia Pulp and Paper (APP), one of the major
[[Page 78118]]
Indonesian producers of uncoated paper that is subject to the AD and
CVD orders, is engaged in circumvention of the Orders by exporting
uncoated paper with a GE brightness level of 83 to the United
States.\2\ The petitioners requested that the Department initiate an
anti-circumvention proceeding, pursuant to both sections 781(c) and
781(d) of the Act and 19 CFR 351.225(i)-(j), to determine whether the
merchandise at issue involves either a minor alteration to subject
merchandise such that it should be subject to the Orders, and/or
represents a later-developed product that should be considered subject
to the Orders.\3\ In the alternative, the petitioners requested that
the Department initiate a scope inquiry pursuant to 19 CFR 351.225(k)
to determine whether 83 Bright paper falls within the scope of the
Orders because it is ``colored paper.'' \4\ On August 1, 2016, in
response to a request from the Department, the petitioners clarified
that, consistent with 19 CFR 351.225(m), the intent of their request
was that the Department conduct a single inquiry and issue a single
ruling applicable to each of the seven outstanding orders on certain
uncoated paper identified in their original request.\5\
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\1\ See Certain Uncoated Paper From Australia, Brazil,
Indonesia, the People's Republic of China, and Portugal: Amended
Final Affirmative Antidumping Determinations for Brazil and
Indonesia and Antidumping Duty Orders; 81 FR 11174 (March 3, 2016)
and Certain Uncoated Paper from Indonesia and the People's Republic
of China: Amended Final Affirmative Countervailing Duty
Determination and Countervailing Duty Order (Indonesia) and
Countervailing Duty Order (People's Republic of China); 81 FR 11187,
(March 3, 2016) (collectively, the Orders).
\2\ See Letter from the petitioners entitled, ``Certain Uncoated
Paper From Australia, Brazil, The People's Republic of China,
Indonesia, and Portugal: Petitioners' Request For Minor Alterations
And Later-Developed Merchandise Anti-Circumvention Inquiry Or,
Alternatively, For A Scope Ruling,'' dated July 15, 2016 (Initiation
Request). As indicated in the ``Scope of the Orders'' section,
below, the GE brightness level specified in the scope of the Orders
is 85 or higher.
\3\ Id., at 2.
\4\ Id.
\5\ See Letter from Petitioners entitled ``Certain Uncoated
Paper From Australia, Brazil, The People's Republic Of China,
Indonesia, and Portugal: Petitioners' Correspondence Pursuant To 19
CFR 351.225(m),'' dated August 1, 2016.
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Scope of the Orders
The merchandise subject to these orders includes uncoated paper in
sheet form; weighing at least 40 grams per square meter but not more
than 150 grams per square meter; that either is a white paper with a GE
brightness level \6\ of 85 or higher or is a colored paper; whether or
not surface-decorated, printed (except as described below), embossed,
perforated, or punched; irrespective of the smoothness of the surface;
and irrespective of dimensions (Certain Uncoated Paper).
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\6\ One of the key measurements of any grade of paper is
brightness. Generally speaking, the brighter the paper the better
the contrast between the paper and the ink. Brightness is measured
using a GE Reflectance Scale, which measures the reflection of light
off a grade of paper. One is the lowest reflection, or what would be
given to a totally black grade, and 100 is the brightest measured
grade. ``Colored paper'' as used in this scope definition means a
paper with a hue other than white that reflects one of the primary
colors of magenta, yellow, and cyan (red, yellow, and blue) or a
combination of such primary colors.
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Certain Uncoated Paper includes (a) uncoated free sheet paper that
meets this scope definition; (b) uncoated ground wood paper produced
from bleached chemi-thermo-mechanical pulp (BCTMP) that meets this
scope definition; and (c) any other uncoated paper that meets this
scope definition regardless of the type of pulp used to produce the
paper.
Specifically excluded from the scope of these orders are (1) paper
printed with final content of printed text or graphics and (2) lined
paper products, typically school supplies, composed of paper that
incorporates straight horizontal and/or vertical lines that would make
the paper unsuitable for copying or printing purposes. For purposes of
this scope definition, paper shall be considered ``printed with final
content'' where at least one side of the sheet has printed text and/or
graphics that cover at least five percent of the surface area of the
entire sheet.
Imports of the subject merchandise are provided for under
Harmonized Tariff Schedule of the United States (HTSUS) categories
4802.56.1000, 4802.56.2000, 4802.56.3000, 4802.56.4000, 4802.56.6000,
4802.56.7020, 4802.56.7040, 4802.57.1000, 4802.57.2000, 4802.57.3000,
and 4802.57.4000. Some imports of subject merchandise may also be
classified under 4802.62.1000, 4802.62.2000, 4802.62.3000,
4802.62.5000, 4802.62.6020, 4802.62.6040, 4802.69.1000, 4802.69.2000,
4802.69.3000, 4811.90.8050 and 4811.90.9080. While HTSUS subheadings
are provided for convenience and customs purposes, the written
description of the scope is dispositive.
Initiation of Minor Alterations Anti-Circumvention Proceeding
Statutory Criteria for Initiation of Anti-Circumvention Proceeding
Under Section 781(c) of the Act
Section 781(c)(1) of the Act provides that the Department may find
circumvention of an AD and/or CVD order when products which are of the
class or kind of merchandise subject to an AD and/or CVD order have
been ``altered in form or appearance in minor respects . . . whether or
not included in the same tariff classification.'' Section 781(c)(2) of
the Act provides an exception that ``{p{time} aragraph 1 shall not
apply with respect to altered merchandise if the administering
authority determines that it would be unnecessary to consider the
altered merchandise within the scope of the {AD or CVD{time}
order{.{time} ''
While the statute is silent as to what factors to consider in
determining whether alterations are properly considered ``minor,'' the
legislative history of this provision indicates that there are certain
factors which should be considered before reaching a circumvention
determination. In conducting a circumvention inquiry under section
781(c) of the Act, the Department has generally relied upon ``such
criteria as the overall physical characteristics of the merchandise,
the expectations of the ultimate users, the use of the merchandise, the
channels of marketing and the cost of any modification relative to the
total value of the imported products.'' \7\ Concerning the allegation
of minor alteration under section 781(c) of the Act and 19 CFR
351.225(i), the Department examines such factors as: (1) Overall
physical characteristics; (2) expectations of ultimate users; (3) use
of merchandise; (4) channels of marketing; and (5) cost of any
modification relative to the value of the imported products.\8\ Each
case is highly dependent on the facts on the record, and must be
analyzed in light of those specific facts. Thus, although not specified
in the Act, the Department has also included additional factors in its
analysis, such as commercial availability of the product at issue prior
to the issuance of the order as well as the circumstances under which
the products at issue entered the United States, the timing and
quantity of said entries during the circumvention review period, and
the input of consumers in the design phase of the product at issue.\9\
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\7\ See S. Rep. No.71, 100th Cong., 1st Sess. 100 (1987) (``In
applying this provision, the Commerce Department should apply
practical measurements regarding minor alterations, so that
circumvention can be dealt with effectively, even where such
alterations to an article technically transform it into a
differently designated article.'').
\8\ See, e.g., Affirmative Preliminary Determination of
Circumvention of the Antidumping Duty Order on Certain Cut-to-Length
Steel Plate from the People's Republic of China, 74 FR 33991, 33992
(July 14, 2009) (CTL Plate from the PRC) (unchanged in Affirmative
Final Determination of Circumvention of the Antidumping Duty Order
on Certain Cut-to-Length Carbon Steel Plate From the People's
Republic of China; 74 FR 40565 (August 12, 2009)).
\9\ See, e.g., CTL Plate from the PRC, 74 FR at 33992-33993.
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[[Page 78119]]
The Petitioners' Request for Initiation of an Anti-Circumvention
Proceeding Under Section 781(c) of the Act
As discussed above, the petitioners identify the product subject to
their request as 83 Bright paper. Specifically, the petitioners state
that, after the issuance of the preliminary determinations, APP, one of
the major Indonesian producers of uncoated paper, began exporting 8\1/
2\ inch by 11 inch copier paper with a GE brightness level of 83,
called ``Paperline Classic,'' from Indonesia to the West Coast of the
United States. The petitioners obtained and tested a sample of this
paper, demonstrating that it has a GE brightness level of 83.\10\
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\10\ See Initiation Request at 3.
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The petitioners also provided a bill of lading supporting their
claim that imports of the 83 Bright paper were classified under HTSUS
category 4802.56.4000--a category identified as subject to the
Orders.\11\ According to the petitioners, APP first imported 83 Bright
paper in February 2016 and, to date, there have been numerous entries
of this product totaling 2,300 metric tons.\12\ The petitioners argue
that APP is adding black dye to the pulp to create a paper product
which does not meet the brightness level of uncoated paper covered by
the scope of the Orders, but is otherwise subject merchandise. The
petitioners assert that, as a result, 83 Bright paper represents a
minor alteration of subject merchandise, which is thereby circumventing
the Orders pursuant to section 781(c) of the Act. Although the
petitioners noted that the Court of Appeals for the Federal Circuit has
held that minor alteration inquiries are inappropriate when the
allegedly altered product is expressly excluded from an order, they
claim that such is not the case here, where 83 Bright paper is not
expressly excluded from the order.\13\
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\11\ Id., at 5.
\12\ Id.
\13\ See Initiation Request at 12, citing to Deacero S.A. de
C.V. v. United States, 817 F.3d 1332, 1338 (Fed. Cir. 2016)
(Deacero).
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In the Initiation Request, the petitioners presented the following
evidence with respect to each of the aforementioned criteria:
A. Overall Physical Characteristics
The petitioners state that 83 Bright paper is nearly identical to
other uncoated paper in the market--it has the same dimensions, the
same basis weight, and is advertised for the same printing and copying
purposes.\14\ The petitioners assert that the only difference between
83 Bright paper and paper covered by the scope of the Orders is the
paper's GE brightness level.\15\ In support of their allegation, the
petitioners provide a declaration from a member of the U.S.
industry.\16\
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\14\ See Initiation Request at 14 and Exhibit 2.
\15\ Id., at 15.
\16\ Id., at Exhibit 2.
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B. Expectations of the Ultimate Users
The petitioners assert that the expectations of the ultimate users
of 83 Bright paper and other uncoated paper covered by the scope of the
Orders are exactly the same. Specifically, the petitioners state that
83 Bright paper is advertised for use in the same printing and copying
applications as other uncoated paper covered by the scope of the
Orders.\17\ In support of their allegation, the petitioners provide a
declaration from a member of the U.S. industry.\18\
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\17\ Id., at 15 and Exhibit 2.
\18\ Id., at Exhibit 2.
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C. Use of Merchandise
The petitioners assert that 83 Bright paper is used in printing and
copying applications, similar to other uncoated paper covered by the
Orders.\19\ The petitioners also claim that the brightness of 83 Bright
paper has no apparent impact on its ultimate use.\20\ In support of
their allegation, the petitioners provide a declaration from a member
of the U.S. industry.\21\
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\19\ Id., at 3.
\20\ Id., at 15.
\21\ Id., at Exhibit 2.
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D. Channels of Marketing
The petitioners assert that the marketing channels for 83 Bright
paper and other uncoated paper covered by the Orders are the same.\22\
The petitioners provided documentation demonstrating that 83 Bright
paper is offered to the same customers and in the same manner.\23\
According to the petitioners, this demonstrates that GE brightness
level does not affect the marketing channel in which the paper is sold
and that for end-users these products are interchangeable.
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\22\ See Initiation Request at 15.
\23\ Id., at 15-16 and Exhibits 10 and 11.
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E. Cost of Modification Relative to Total Value
The petitioners assert that the cost of the minor alteration
necessary to shift the GE brightness level of 83 Bright paper is
minimal.\24\ Moreover, the petitioners state that the increased costs
are insignificant both when compared to either the total value of the
imported product or APP's combined AD/CVD cash deposit rate.\25\ In
support of their allegation, the petitioners provide a declaration from
a member of the U.S. industry.\26\
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\24\ Id., at Exhibit 1.
\25\ Id., at 17 and Exhibit 2.
\26\ Id., at Exhibit 1.
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APP responded to the petitioners' allegations, noting that
merchandise with a brightness level comparable to 83 Bright paper was
produced and sold in commercial volumes at the time of the filing of
the petitions and, thus, it cannot be considered later-developed
merchandise.\27\ In addition, APP stated the following regarding each
criteria under section 781(c) of the Act:
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\27\ See Letter from APP entitled, ``Certain Uncoated Paper From
Australia, Brazil, The People's Republic of China, Indonesia, and
Portugal--Response to Request for Inquiry'' dated August 19, 2016
(APP Response), at 10 and Exhibit 3.
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A. Overall Physical Characteristics
APP states that there are numerous and significant physical
differences between 83 Bright paper and other uncoated paper covered by
the Orders in addition to GE brightness, including whiteness, bleaching
chemicals, shade, and opacity.\28\ Further, APP explains that optical
brightening agents (OBAs) are often added during production to increase
the GE brightness of paper. APP considers it significant that its 83
Bright paper is produced without adding OBAs and, thus, is ``OBA-
free.'' 29 30
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\28\ See APP Response at 24.
\29\ Id., at Exhibit 7.
\30\ APP noted that the petitioners incorrectly described the
production process for 83 Bright paper. Specifically, APP stated
that black dye is not added during the production process and, as a
result, 83 Bright paper cannot be considered colored paper. See APP
Response at 5 Exhibit 2.
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B. Expectations of the Ultimate Users
APP disagrees that the expectations of the ultimate users of 83
Bright paper are the same as users of other uncoated paper covered by
the Orders. According to APP, users of 83 Bright paper expect to
benefit from reduced eyestrain, cost savings, and appreciate the
generally warmer tones of this paper.\31\ Further, APP notes that
certain purchasers of paper covered by the Orders require photocopy
paper with a minimum GE brightness of 92 and, thus, 83 Bright paper
would not meet the requirements of such purchasers.\32\
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\31\ See APP Response at 26.
\32\ Id., at 24-25.
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C. Use of the Merchandise
APP states that 83 Bright paper is best for black-and-white copier
applications
[[Page 78120]]
and not suitable for ink- or laser-jet printing.\33\
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\33\ Id., at 27-28.
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D. Channels of Marketing
APP claims that 83 Bright paper is marketed differently from other
uncoated paper covered by the Orders because it is advertised as a
lower brightness product produced to reduce eyestrain, manufactured for
2-sided copying, and is OBA Free.\34\
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\34\ Id., at 29.
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E. Cost of Modification Relative to Total Value
APP states that 83 Bright paper is not produced with additional
OBAs and contains fewer bleaching chemicals. As a result, APP notes
that it is less expensive to produce than other uncoated paper cover by
the Orders.\35\
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\35\ Id., at 30.
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Analysis
After analyzing the information summarized above, we determine that
the petitioners have satisfied the criteria to warrant an initiation of
a formal anti-circumvention inquiry, pursuant to section 781(c) of the
Act and 19 CFR 351.225(i).
As described above, the petitioners included declarations from
members of the U.S. industry addressing the five factors the Department
typically examines as part of a minor alterations inquiry under section
781(c) of the Act and 19 CFR 351.225(i). These declarations attest
that: (1) With the exception of brightness, the overall physical
characteristics of 83 Bright paper and other uncoated paper cover by
the Orders are the same; (2) the expectations of ultimate users of 83
Bright paper and other uncoated paper cover by the Orders are the same;
(3) the uses of 83 Bright paper and other uncoated paper cover by the
Orders are the same; (4) the channels of marketing 83 Bright paper and
other uncoated paper cover by the Orders are the same; and (5) the
relative cost to reduce the brightness of 83 Bright paper to a GE
brightness level below 85 is minimal.\36\ We examined the declarations
and found that the persons making them are in a position to have
knowledge about the facts described in the declarations with respect to
each of the aforementioned factors.
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\36\ See Initiation Request at Exhibits 1 and 2.
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However, we note that APP provided information demonstrating the
relative cost of producing 83 Bright paper and the process by which it
is produced which differs from that provided by the petitioners.
Specifically, by APP's own admission, 83 Bright paper is less expensive
to produce because it does not contain the OBAs needed to raise the
paper's brightness level to 85 or above and has fewer bleaching
chemical than other uncoated paper covered by the Orders. Thus, there
is an evidentiary basis to conclude that APP has altered its production
process in order to produce a low-brightness paper.\37\
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\37\ Id.
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As noted above, we are initiating a minor alterations anti-
circumvention inquiry pursuant to section 781(c) of the Act regarding
83 Bright paper. We do not find it appropriate to initiate a later-
developed merchandise circumvention inquiry pursuant to section 781(d)
of the Act because APP provided information demonstrating that
merchandise with a brightness level comparable to 83 Bright paper was
produced and sold in commercial volumes at the time of the filing of
the petitions and, thus, 83 Bright paper cannot be considered later-
developed merchandise.\38\ Finally, we do not find it appropriate to
initiate a scope inquiry pursuant to 19 CFR 351.225(k) because APP
provided information demonstrating that 83 Bright paper is not colored
paper.\39\
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\38\ See APP Response at 10 and Exhibit 3.
\39\ See APP Response at 5 and Exhibit 2.
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Merchandise Subject to the Minor Alterations Anti-Circumvention
Proceeding
This minor alterations anti-circumvention inquiry covers uncoated
paper with a GE brightness level of 83 +/- 1. Although only APP
Indonesia is discussed in their request, as discussed above, the
petitioners clarified that, consistent with 19 CFR 351.225(m), the
intent of their request was that the Department conduct a single
inquiry and issue a single ruling applicable to each of the Orders. In
accordance with 19 CFR 351.225(m), if the Secretary considers it
appropriate, the Secretary may conduct a single inquiry and issue a
single scope ruling that applies to all such orders. Therefore, we will
examine whether it is appropriate to apply the results of this inquiry
to each of the seven Orders.
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 a
preliminary affirmative determination, we will then instruct U.S.
Customs and Border Protection to suspend liquidation and require a cash
deposit of estimated duties on the merchandise.
Following consultation with interested parties, the Department will
establish a schedule for questionnaires and comments on the issues
related to each of the Orders. The Department intends to issue its
final determinations within 300 days of the date of publication of this
initiation.
This notice is published in accordance with sections 781(c) of the
Act and 19 CFR 351.225(i) and (j).
Dated: October 31, 2016.
Paul Piquado,
Assistant Secretary for Enforcement and Compliance.
[FR Doc. 2016-26847 Filed 11-4-16; 8:45 am]
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