“米国　ティッシュ A/D、CVD 仮決定” への1件のコメント

1. [Federal Register: April 22, 2008 (Volume 73, Number 78)]
   [Notices]
   [Page 21580-21588]
   From the Federal Register Online via GPO Access [wais.access.gpo.gov]
   [DOCID:fr22ap08-28]
   =======================================================================
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   DEPARTMENT OF COMMERCE
   International Trade Administration
   [A-570-894]
   Certain Tissue Paper Products From the People’s Republic of
   China: Affirmative Preliminary Determination of Circumvention of the
   Antidumping Duty Order and Extension of Final Determination
   AGENCY: Import Administration, International Trade Administration,
   Department of Commerce.
   Preliminary Determination
   We preliminarily determine that certain tissue paper products
   (“tissue paper”) produced by Vietnam Quijiang Paper Co., Ltd.
   (“Quijiang”) are circumventing the antidumping duty order on tissue
   paper from the People’s Republic of China (“PRC”), as provided in
   section 781(b) of the Tariff Act of 1930, as amended (“the Act”). See
   Notice of Amended Final Determination of Sales at Less than Fair Value
   and Antidumping Duty Order: Certain Tissue Paper Products from the
   People’s Republic of China, 70 FR 16223 (March 30, 2005) (“Order”).
   DATES: Effective Date: April 22, 2008.
   FOR FURTHER INFORMATION CONTACT: Julia Hancock, Office 9, Import
   Administration, International Trade Administration, U.S. Department of
   Commerce, 14th Street and Constitution Avenue, NW., Washington, DC,
   20230; telephone: (202) 482-1394.
   SUPPLEMENTARY INFORMATION:
   Background
   On July 19, 2006, the Seaman Paper Company of Massachusetts, Inc.
   (“Petitioner”) requested that the Department of Commerce (“the
   Department”) initiate a circumvention inquiry pursuant to section
   781(b) of the Act, and 19 CFR 351.225(h), to determine whether imports
   of tissue paper from Vietnam made from PRC-origin jumbo rolls are
   circumventing the antidumping duty order on tissue paper from the PRC.
   See Petitioner’s Request for a circumvention Inquiry, (July 19, 2006)
   (“Circumvention Petition”); Order. Petitioner alleged that sending
   PRC-origin jumbo rolls of tissue paper to Vietnam for completion or
   assembly into tissue paper products covered by the Order constitutes
   circumvention pursuant to section 781(b) of the Act.
   On July 21, 2006, Petitioner amended the Circumvention Petition to
   include certain business proprietary information. On August 11, 2006,
   Quijiang submitted comments regarding Petitioner’s July 21, 2006,
   request for an anti-circumvention inquiry. On August 14, 2006, the
   Department requested that the Petitioner submit documentation
   referenced, but not included, in its July 21, 2006, request. On August
   18, 2006, Petitioner submitted a response to the Department’s August
   14, 2006, request. On August 21, 2006, Petitioner submitted comments on
   Quijiang’s August 11, 2006, submission.
   On September 5, 2006, the Department initiated a circumvention
   inquiry on certain imports of tissue paper from Vietnam. See Certain
   Tissue Paper Products from the People’s Republic of China: Initiation
   of Circumvention Inquiry, 71 FR 53662 (September 12, 2006)
   (“Initiation”). In the Initiation notice, the Department stated that
   it would focus its analysis on the significance of the production
   process in Vietnam by Quijiang, the company the Petitioner identified
   in its circumvention request.
   However, in the Initiation notice, the Department also stated that
   Quijiang had admitted on the record of the first administrative review
   of the Order that it received jumbo rolls of tissue paper produced by
   its PRC parent company, Guilin Qifeng Paper Co., Ltd. (“Guilin
   Qifeng”). Guilin Qifeng is the sole owner of Quijiang. According to
   Quijiang, Guilin Qifeng, which is a tissue paper processor and exporter
   located in Guangxi, PRC, established Quijiang in June 2004.
   Additionally, Quijiang stated that Guilin Qifeng was the sole supplier
   of the PRC-origin jumbo rolls, which Quijiang converted to cut-to-
   length tissue paper that was exported to the United States. See
   Quijiang’s First Questionnaire Response, (December 11, 2006) at 4-8.
   Accordingly, for purposes of this circumvention inquiry, the Department
   has focused its analysis on whether PRC-origin jumbo rolls supplied by
   Guilin Qifeng that were converted to cut-to-length tissue paper
   products by Quijiang are circumventing the Order, as provided in
   section 781(b) of the Act.
   Questionnaires
   On September 27, 2006, Petitioner submitted comments concerning the
   initial questionnaire to be issued to Quijiang. On October 6, 2006,
   Cleo Inc. (“Cleo”), a U.S. importer, submitted rebuttal comments to
   Petitioner’s September 27, 2006, submission. On October 26, 2006,
   Petitioner submitted surrebuttal comments to Cleo’s October 6, 2006,
   submission.
   Between November 2, 2006, and December 3, 2007, the Department
   issued six questionnaires to Quijiang soliciting information regarding
   Quijiang’s tissue paper production and exports to the United States to
   which Quijiang responded. Between January 8, 2007, and April 3, 2008,
   Petitioner and Cleo submitted comments on Quijiang’s questionnaire
   responses and whether the Department should suspend liquidation and
   collect cash deposits on all entries of tissue paper from Quijiang.
   Surrogate Country Comments
   In this case, both the country that produced the jumbo rolls and
   the country that produced the tissue paper products from the jumbo
   rolls are considered non-market economy (“NME”) countries.\1\
   Therefore, because the production of jumbo rolls and the cut-to-length
   tissue paper are performed in NME countries, we used surrogate values
   to determine whether the value of processing performed in Vietnam
   represents a small portion of the value of the merchandise sold in the
   United States. Accordingly, pursuant to section 773(c)(4) of the Act,
   in valuing the FOPs, the Department shall utilize, to the extent
   possible, the prices or costs of factors of production (“FOPs”) in
   one or more market-economy countries that are at a level of economic
   development comparable to that of the NME country and are significant
   producers of comparable merchandise.
   —————————————————————————
   \1\ In accordance with section 771(18)(C)(i) of the Act, any
   determination that a foreign country is an NME country shall remain
   in effect until revoked by the administering authority. See
   Preliminary Determination of Sales at Less Than Fair Value and
   Postponement of Final Determination: Coated Free Sheet Paper from
   the People’s Republic of China, 72 FR 30758, 30760 (June 4, 2007),
   unchanged in Final Determination of Sales at Less Than Fair Value:
   Coated Free Sheet Paper from the People’s Republic of China, 72 FR
   60632 (October 25, 2007); Certain Frozen Fish Fillets from the
   Socialist Republic of Vietnam: Final Results of the Second
   Administrative, 72 FR 13242 (March 21, 2007) (“FFF2 Final
   Results”). No party has challenged the designation of the PRC or
   Vietnam as an NME country in this investigation. Therefore, we
   continue to treat the PRC and Vietnam as NME countries for purposes
   of the preliminary determination of this circumvention inquiry.
   —————————————————————————
   On November 5, 2007, the Department determined that India,
   Indonesia, Sri Lanka, the Philippines, and Egypt are countries
   comparable to the PRC and also determined that Bangladesh, Pakistan,
   India, Sri Lanka, and Indonesia are countries comparable to
   [[Page 21581]]
   Vietnam in terms of economic development. See Memorandum from Ron
   Lorentzen, Director, Office of Policy, to Alex Villanueva, Program
   Manager, China/NME Group, Office 9: Circumvention Inquiry of the
   Antidumping Duty Order of Certain Tissue Paper Products from the
   People’s Republic of China (PRC): Request for a List of Surrogate
   Countries, (November 5, 2007) (“Surrogate Country List”).
   On November 8, 2007, the Department requested comments on the
   selection of a surrogate country from the interested parties in this
   circumvention inquiry. On November 29, 2007, Petitioner submitted
   surrogate country comments requesting that India be selected as the
   appropriate surrogate country for valuing factors of production for
   both the PRC and Vietnam. No other interested party commented on the
   selection of a surrogate country. For a detailed discussion of the
   selection of the surrogate country, see “Surrogate Country” section
   below.
   Surrogate Value Comments
   On December 20, 2008, Petitioner submitted surrogate factor
   valuation comments. No other interested party submitted surrogate
   factor valuation comments. For a detailed discussion of the selection
   of the surrogate values, see “Calculation of Value-Added” section
   below.
   Verification
   On January 10, 2008, the Department issued the verification outline
   to Guilin Qifeng and Quijiang notifying them that the Department would
   verify Guilin Qifeng from February 19 to February 22, 2008, and would
   verify Quijiang from February 25 to February 27, 2008.
   On February 14, 2008, Quijiang submitted a letter requesting that
   the Department postpone the scheduled verification by one month because
   neither Quijiang nor Guilin Qifeng would be prepared when verification
   was scheduled to commence. On Feburary 15, 2008, Petitioner submitted a
   letter opposing Quijiang’s request to delay the scheduled verification.
   On February 15, 2008, the Department notified Quijiang and Petitioner
   that it was not going to conduct the verification scheduled for
   February 19, 2008.
   Extension of Determination
   On June 29, 2007, August 14, 2007, and January 4, 2008, the
   Department extended the determination deadline of this circumvention
   inquiry. The preliminary determination of this circumvention inquiry is
   currently due April 14, 2008.
   Scope of the Antidumping Duty Order
   The tissue paper products subject to this order are cut-to-length
   sheets of tissue paper having a basis weight not exceeding 29 grams per
   square meter. Tissue paper products subject to this order may or may
   not be bleached, dye-colored, surface-colored, glazed, surface
   decorated or printed, sequined, crinkled, embossed, and/or die cut. The
   tissue paper subject to this order is in the form of cut-to-length
   sheets of tissue paper with a width equal to or greater than one-half
   (0.5) inch. Subject tissue paper may be flat or folded, and may be
   packaged by banding or wrapping with paper or film, by placing in
   plastic or film bags, and/or by placing in boxes for distribution and
   use by the ultimate consumer. Packages of tissue paper subject to this
   order may consist solely of tissue paper of one color and/or style, or
   may contain multiple colors and/or styles.
   The merchandise subject to this order does not have specific
   classification numbers assigned to them under the Harmonized Tariff
   Schedule of the United States (“HTSUS”). Subject merchandise may be
   under one or more of several different subheadings, including: 4802.30;
   4802.54; 4802.61; 4802.62; 4802.69; 4804.31.1000; 4804.31.2000;
   4804.31.4020; 4804.31.4040; 4804.31.6000; 4804.39; 4805.91.1090;
   4805.91.5000; 4805.91.7000; 4806.40; 4808.30; 4808.90; 4811.90;
   4823.90; 4820.50.00; 4802.90.00; 4805.91.90; 9505.90.40. The tariff
   classifications are provided for convenience and customs purposes;
   however, the written description of the scope of this order is
   dispositive.\2\
   —————————————————————————
   \2\ On January 30, 2007, at the direction of U.S. Customs and
   Border Protection (“CBP”), the Department added the following
   HTSUS classifications to the AD/CVD module for tissue paper:
   4802.54.3100, 4802.54.6100, and 4823.90.6700. However, we note that
   the six-digit classifications for these numbers were already listed
   in the scope.
   —————————————————————————
   Excluded from the scope of this order are the following tissue
   paper products: (1) Tissue paper products that are coated in wax,
   paraffin, or polymers, of a kind used in floral and food service
   applications; (2) tissue paper products that have been perforated,
   embossed, or die-cut to the shape of a toilet seat, i.e., disposable
   sanitary covers for toilet seats; (3) toilet or facial tissue stock,
   towel or napkin stock, paper of a kind used for household or sanitary
   purposes, cellulose wadding, and webs of cellulose fibers (HTSUS
   4803.00.20.00 and 4803.00.40.00).
   Scope of the Circumvention Inquiry
   The products covered by this inquiry are jumbo rolls of tissue
   paper that are exported from the PRC to Vietnam where they are
   converted, possibly dyed and/or printed, into tissue paper products, as
   described above in the “Scope of the Antidumping Duty Order” section.
   This inquiry only covers such products that are exported to the United
   States by Quijiang.
   Statutory Provisions Regarding Circumvention
   Section 781(b) of the Act provides 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 a
   foreign country other than the country to which the order applies. In
   conducting circumvention inquiries under section 781(b) of the Act, the
   Department relies upon the following criteria: (A) Merchandise imported
   into the United States is of the same class or kind as any merchandise
   produced in a foreign country that is subject to an antidumping duty
   order; (B) before importation into the United States, such imported
   merchandise is completed or assembled in another foreign country from
   merchandise which is subject to the order or produced in the foreign
   country that is subject to the order; (C) the process of assembly or
   completion in the foreign country referred to in (B) is minor or
   insignificant; and (D) the value of the merchandise produced in the
   foreign country to which the antidumping duty order applies is a
   significant portion of the total value of the merchandise exported to
   the United States.
   The Department’s questionnaires issued to Quijiang and its PRC
   parent company, Guilin Qifeng, were designed to elicit information for
   purposes of conducting both qualitative and quantitative analyses in
   accordance with the criteria enumerated in section 781(b) of the Act,
   as outlined above. This approach is consistent with our analyses in
   prior circumvention inquiries. See Circumvention and Scope Inquiries on
   the Antidumping Duty Order on Certain Frozen Fish Fillets from the
   Socialist Republic of Vietnam: Partial Affirmative Final Determination
   of Circumvention of the Antidumping Duty Order, Partial Final
   Termination of Circumvention Inquiry and Final Rescission of Scope
   Inquiry, 71 FR 38608 (July 7, 2006) (“FFF Circumvention Final”);
   Anti-Circumvention Inquiry of the Antidumping and Countervailing Duty
   [[Page 21582]]
   Orders on Certain Pasta from Italy: Affirmative Final Determinations of
   Circumvention of Antidumping and Countervailing Duty Orders, 68 FR
   54888 (September 19, 2003) (“Pasta Circumvention Final”); Hot-Rolled
   Lead and Bismuth Carbon Steel Products from Germany and the United
   Kingdom; Negative Final Determinations of Circumvention of Antidumping
   and Countervailing Duty Orders, 64 FR 40336 (July 26, 1999). To
   ascertain the value of the completed merchandise exported to the United
   States we requested PRC production data of jumbo rolls produced by
   Guilin Qifeng and Vietnam production data of the processing and
   packaging operations performed by Quijiang.
   Statutory Analysis
   (A) Whether Merchandise Sold in the United States Is of the Same Class
   or Kind as Other Merchandise That Is Subject to the Order
   The Order covers cut-to-length sheets of tissue paper equal to or
   greater than 0.5 inches in width, with a basis weight not exceeding 29
   grams per square meter and other specified characteristics of the
   scope. The merchandise subject to this inquiry is tissue paper products
   exported to the United States by Quijiang produced from PRC-origin
   jumbo rolls. The information provided by Quijiang in its questionnaire
   responses indicates that the tissue paper products produced from PRC-
   origin jumbo rolls it exported to the United States meet the written
   description of the products subject to the Order. See Quijiang’s First
   Questionnaire Response, (December 11, 2006) at Appendix 7. Quijiang
   submitted a product list showing that all the tissue paper products it
   produced and exported to the United States were below the basis weight
   of 29 grams per square meter, which is the weight that merchandise
   subject to the Order is not to exceed. See Quijiang’s Second
   Questionnaire Response, (April 3, 2007) at Exhibit S1-2. A review of
   the product list also shows that Quijiang’s tissue paper products meet
   other criteria identified in the Order such as dyed, printed, etc.
   Finally, we note that Quijiang has not argued that its exports of
   tissue paper products to the United States are not of the same class or
   kind of merchandise as that subject to the Order. Accordingly, we find
   that the merchandise subject to this inquiry is the same class or kind
   of merchandise as that subject to the Order.
   (B) Whether Merchandise Sold in the United States Is Completed or
   Assembled in Another Foreign Country From Merchandise Which Is Subject
   to the Order or Produced in the Foreign Country That Is Subject to the
   Order
   In this proceeding, the merchandise exported to the United States
   is tissue paper products processed in Vietnam from PRC-origin jumbo
   rolls of tissue paper. Qujiang has reported that it exported tissue
   paper that was processed in Vietnam using PRC-origin jumbo rolls of
   tissue paper as the input. See Quijiang’s First Questionnaire Response,
   at 6. Specifically, Quijiang stated that it imported PRC-origin jumbo
   rolls of tissue paper produced by its parent company, Guilin Qifeng,
   which were then converted, possibly dyed and/or printed, into cut-to-
   length tissue paper. See id. at 6 and Appendix 1. Additionally,
   Quijiang reported that it exported tissue paper that was processed in
   Vietnam using PRC-origin jumbo rolls between July 2004 and July 2006.
   See Quijiang’s Sixth Questionnaire Response, (January 4, 2008) at 22.
   Accordingly, we find that the merchandise subject to this circumvention
   inquiry was completed in Vietnam from PRC-origin jumbo rolls that were
   produced in the country to which this Order applies.
   (C) Whether the Process of Assembly or Completion in the Foreign
   Country Is Minor or Insignificant
   Section 781(b)(2) of the Act provides the criteria for determining
   whether the process of assembly or completion is minor or
   insignificant. These criteria are:
   (a) The level of investment in the foreign country;
   (b) the level of research and development in the foreign country;
   (c) the nature of the production process in the foreign country;
   (d) the extent of the production facilities in the foreign country;
   and
   (e) whether the value of the processing performed in the foreign
   country represents a small proportion of the value of the merchandise
   imported into the United States.
   The Statement of Administrative Action (“SAA”) accompanying the
   Uruguay Round Agreements Act, H. Doc. No. 103-316, at 893 (1994),
   provides some guidance with respect to these criteria. It explains that
   no single factor listed in section 781(b)(2) of the Act will be
   controlling. Accordingly, it is the Department’s practice to evaluate
   each of the factors as they exist in the United States or foreign
   country depending on the particular circumvention scenario. Therefore,
   the importance of any one of the factors listed under section 781(b)(2)
   of the Act can vary from case to case depending on the particular
   circumstances unique to each circumvention inquiry.
   In this circumvention inquiry, we based our analysis on both
   qualitative and quantitative factors in determining whether the process
   of converting the jumbo rolls in Vietnam was minor or insignificant, in
   accordance with the criteria of section 781(b)(2) of the Act. This
   approach is consistent with our analysis in prior circumvention
   inquiries. See 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) (“Pasta
   Circumvention Prelim”) (unchanged in Pasta Circumvention Final, 68 FR
   54888).
   (a) The Level of Investment in Vietnam
   For purposes of this circumvention inquiry, we analyzed the level
   of investment in Quijiang that is associated with converting the PRC-
   origin jumbo rolls into finished cut-to-length tissue paper.
   Specifically, we reviewed the level of investment in Quijiang for the
   conversion process by Quijiang’s parent company, Guilin Qifeng, and
   Quijiang’s investment on its own behalf.
   Quijiang reported that its operations in Vietnam for converting
   jumbo rolls into cut-to-length tissue paper are comprised of equipment
   sourced in three ways: (1) Assets identified as “purchase from
   China,” which consist of equipment that Quijiang purchased from its
   parent company, Guilin Qifeng; (2) assets identified as “Guilin Qifeng
   Investment,” which are assets that Guilin Qifeng physically moved to
   Quijiang but nevertheless retained ownership; and (3) assets identified
   as “Vietnam domestic purchase,” which are assets or equipment that
   Quijiang purchased in Vietnam. See Quijiang’s Second Questionnaire
   Response, at 7. Additionally, Quijiang identified the types of
   equipment and where that equipment was used in the production of cut-
   to-length tissue paper products, (i.e., Quijiang identified what type
   of equipment, such as cutting machines, was used in the processing
   workshop where the jumbo rolls were converted). Id., at Exhibit S2-5.
   Moreover, Quijiang stated that for the assets that were sourced in
   these three ways, the first method, which is identified as “purchases
   from China,” is Guilin Qifeng’s investment and that the second
   [[Page 21583]]
   and third method, which are identified as “purchases from China” and
   “Vietnamese domestic purchases,” is Quijiang’s investment. Id.
   With respect to Guilin Qifeng’s investment in Quijiang for the
   conversion of the jumbo rolls, Quijiang stated that these assets were
   in use by Guilin Qifeng immediately prior to their physical transfer to
   Quijiang. See Quijiang’s Second Questionnaire Response, at 7.
   Specifically, Quijiang stated that these assets were transferred to
   Quijiang from Guilin Qifeng in the following manner: (1) Dissembling,
   packing, and loading the assets or equipment onto a truck; (2)
   transporting the assets or equipment across the border from China to
   Quijiang in Vietnam; and (3) unloading, assembling, and testing the
   assets or equipment. See Quijiang’s Sixth Questionnaire Response, at 25
   and Appendix S6-29. The facts show that the vast majority of the
   equipment or assets that were transferred from Guilin Qifeng to
   Quijiang to be used in converting the PRC-origin jumbo rolls to cut-to-
   length tissue paper were not new assets as nearly all of this equipment
   had been in use by Guilin Qifeng prior to their transfer. Therefore, we
   find that Guilin Qifeng’s investment in Quijiang that was used for
   converting the PRC-origin jumbo rolls to cut-to-length tissue paper was
   not new investment because almost all of the assets that consist of
   this investment were in prior use by Guilin Qifeng. However, we will
   use Guilin Qifeng’s investment in Quijiang for the conversion process
   in determining whether Quijiang’s own investment was minor or
   insignificant because the assets or equipment representing Guilin
   Qifeng’s investment were used in the conversion process and there were
   some expenses incurred for moving the equipment and getting it situated
   in Vietnam.
   We calculated the total level of investment in Quijiang for
   converting PRC-origin jumbo rolls into cut-length tissue paper and find
   that the Guilin Qifeng’s investment (i.e., assets transferred from
   Guilin Qifeng) is significant as compared to the level of investment,
   (i.e., purchases from China and Vietnamese domestic purchases),
   provided by Quijiang. See Memorandum to the File from Julia Hancock,
   Senior Case Analyst, through Alex Villanueva, Program Manager, AD/CVD
   Operations, Office 9: Circumvention Inquiry on Certain Tissue Paper
   Products from the People’s Republic of China: Proprietary Analysis of
   Certain Statutory Factors for Vietnam Quijiang for the Preliminary
   Determination, (April 14, 2008) (“Analysis Memorandum”).
   Specifically, Guilin Qifeng’s overall investment in the conversion of
   the PRC-origin jumbo rolls accounts for approximately 75 percent of
   total investment whereas Quijiang’s total investment accounts for
   approximately only 25 percent of the total investment for equipment
   used in converting PRC-origin jumbo rolls.\3\ Id. Accordingly, we find
   that the level of investment by Quijiang for equipment used in
   converting the PRC-origin jumbo rolls is minor or insignificant
   compared to the level of investment provided by Guilin Qifeng.
   —————————————————————————
   \3\ Because this information is business proprietary, the values
   have been ranged by plus or minus 10 percent.
   —————————————————————————
   (b) The Level of Research and Development (“R&D”) in Vietnam
   We find that the record evidence for this circumvention inquiry
   demonstrates that Quijiang has not undertaken a significant level of
   R&D in order to process tissue paper products. In describing the level
   of R&D in the tissue paper industry in Vietnam, Quijiang reported that
   the tissue paper industry is a mature, traditional and labor intensive
   industry and that there is not much research and development involved
   in this industry. See Quijiang’s First Questionnaire Response, at 10.
   Additionally, the limited role of R&D in the tissue paper industry in
   Vietnam is further supported by the fact that Quijiang confirmed that
   it did not undertake any R&D initiatives and expenditures involved with
   tissue paper processing. See Quijiang’s Sixth Questionnaire Response,
   at 25. Accordingly, based on facts on the record of this circumvention
   inquiry and because the conversion of jumbo rolls to tissue paper
   products is a technically mature process, we find that R&D into the
   process of producing tissue paper products is not a significant factor
   in the Vietnamese tissue paper industry.
   (c) The Nature of the Production Process in Vietnam
   As discussed above, the element of the tissue paper production
   process performed by Quijiang in Vietnam is the conversion of the PRC-
   origin jumbo rolls to cut-to-length tissue paper. According to
   Quijiang, the entire process to produce cut-to-length tissue paper from
   the raw input, paper pulp, occurs in six stages. See Quijiang’s First
   Questionnaire Response, at Exhibit 1. However, according to Quijiang’s
   questionnaire responses, Quijiang’s conversion of the PRC-origin jumbo
   rolls covers only the last two stages of the overall production
   process.\4\ Id. According to Quijiang, seasonal workers were used in
   the conversion of the PRC-origin jumbo rolls to cut-to-length tissue
   paper during the final stage of the overall production process, which
   is primarily a manual operation. In contrast to the production process
   of converting PRC-origin jumbo rolls to cut-to-length tissue, Quijiang
   stated that Guilin Qifeng’s production of the PRC-origin jumbo rolls
   involved the first four stages of the overall production process
   required to produce cut-to-length tissue paper.\5\ According to
   Quijiang, the fourth stage of the overall production process requires
   three shifts of workers and is labor intensive. Id.
   —————————————————————————
   \4\ The first of the final two stages of the overall production
   process that involve the conversion of the jumbo rolls involves the
   following: (1) Workers unrolling and re-rolling the jumbo roll
   during the surface coloring, decorating, or embossing process; (2)
   preparing the dye and dip-dying the jumbo rolls; (3) multi-color
   printing the jumbo rolls on the printing machines; and (4) cutting
   the jumbo rolls to length on the cutting machines. The second of the
   final two stages of the overall production process that involve the
   conversion of the jumbo rolls involves the following: (1) Counting
   and folding the sheets prior to packaging; (2) packaging the sheets
   in polyethylene bags, sealing, and labeling the bags; and (3)
   packing the bags of tissue paper in cartons, which are tied in
   plastic strip and then shipped to the customer.
   \5\ The first of the first four stages of the overall production
   process that involve the production of the jumbo rolls is the
   blending stage (i.e., this involves water and paper pulp being
   blended in a tank into a pulp mixture, which is pumped into crude
   stock storage). The second of the first four stages of the overall
   production process that involves the production of the jumbo rolls
   is the stock grinding stage (i.e., this involves refining the crude
   stock by grinding the fibers into shorter lengths and then
   cleaning). The third of the first four stages of the overall
   production process that involve the production of the jumbo rolls is
   the stock preparation stage (i.e., this involves the refined stock
   being pumped from a storage vat into a preparation tank where
   whiteners, dyes, or other fixatives may be added). The fourth of the
   first four stages of the overall production process that involve the
   production of the jumbo rolls is the paper-making stage (i.e., this
   involves the prepared stock being moved onto a porous cylinder where
   the wet paper is then transferred to a second spinning cylinder and
   is wrapped onto and passes over a heated drum as it rotates).
   —————————————————————————
   Based on the above descriptions, we find that, in contrast to the
   first four stages of the overall production process that involved the
   production of jumbo rolls, which require significant equipment involved
   in the process and labor, the final two stages of the overall
   production process that involved the conversion of PRC-origin jumbo
   rolls are limited to cutting, dyeing, printing, and packaging/packing
   the cut-to-length tissue paper. Moreover, the facts on the record show
   that there is limited equipment and labor involved in these two stages
   of the production process. Accordingly, we find that the
   [[Page 21584]]
   production process conducted by Quijiang in converting the PRC-origin
   jumbo rolls to cut-to-length tissue paper is limited and minor when
   compared to the production process of the jumbo rolls.
   (d) The Extent of Production Facilities in Vietnam
   In analyzing the extent of the production facilities, we have
   considered the capital equipment used in the production process, the
   types of employees, and whether the facilities used by Quijiang in the
   conversion process were permanent facilities.
   Quijiang states that when it began operations in July 2004, the
   facility had four conversion lines and dip-dyeing machines that were
   used to convert PRC-origin jumbo rolls to cut-to-length paper. See
   Quijiang’s First Questionnaire Response, at 8. A review of the records
   of the equipment at this facility shows that the capital equipment used
   to convert PRC-origin jumbo rolls to cut-to-length tissue paper
   consisted of paper-cutting machines, electronic scales, trolleys, and
   bed-plate. See Quijiang’s Second Questionnaire Response, at Exhibit S1-
   5. Additionally, Quijiang also reports that it leased two facilities to
   conduct the printing and packaging processes. A review of the records
   of the equipment at these facilities shows that the capital equipment
   used to print and package the cut-to-length tissue paper consisted of
   packaging working tables and printing machines. Id., at Exhibits S1-4
   and S1-5.
   In comparison, Quijiang states that Guilin Qifeng produced the PRC-
   origin jumbo rolls at one location in Guilin, PRC. See Quijiang’s Fifth
   Questionnaire Response, at 6. A review of Guilin Qifeng’s production
   process shows that the capital equipment used to produce the stock for
   the paper mixture consisted of numerous blending lines that have stock
   storage, storage vats, and numerous stock preparation tanks. See
   Quijiang’s Fourth Questionnaire Response, at Appendix S4-5.
   Additionally, Guilin Qifeng’s production process shows that the capital
   equipment used to produce the jumbo roll from the paper mixture
   consisted of two facilities that had numerous long net machines and
   numerous round net machines. Id. The facts on the record show that the
   capital equipment used by Guilin Qifeng to produce the PRC-origin jumbo
   rolls requires sophisticated machinery, such as blending lines and long
   net machines. In contrast, the capital equipment used by Quijiang to
   convert the PRC-origin jumbo rolls to cut-to-length tissue paper did
   not require sophisticated capital equipment since the machinery only
   consisted of paper-cutting machines, packaging tables, etc. Therefore,
   based on the facts on the record, we find that Quijiang has not made
   substantial purchases of sophisticated machinery to convert PRC-origin
   jumbo rolls to cut-to-length tissue paper.
   With regard to the level of employees involved in the conversion of
   PRC-origin jumbo rolls to cut-to-length tissue paper, Quijiang reported
   that skilled labor is involved in the first of the final two stages of
   the overall production process, cutting, dyeing, and printing of the
   jumbo rolls, is a semi-automatic operation. However, according to
   Quijiang, the last of the final two stages of the overall production
   process for converting the PRC-origin jumbo rolls to cut-to-length
   tissue paper is a manual operation, which involves unskilled labor
   folding and packaging the tissue paper. See Quijiang’s First
   Questionnaire Response, at 12. Additionally, Quijiang reported that the
   workers involved in the packaging and packing of the cut-to-length
   tissue paper are seasonal workers. Id., at Exhibit S1-5. Moreover,
   according to Quijiang, there are more workers involved during the last
   of the final two stages. Id. Based on a review of the labor involved in
   the conversion of PRC-origin jumbo rolls to cut-to-length tissue paper,
   we find that most of Quijiang’s labor force consists of unskilled
   workers that are employed on a temporary basis.
   Quijiang reports that the headquarters facility, which housed the
   conversion lines, and the two facilities which conducted the printing
   and packaging, were all leased by Quijiang from other, unaffiliated
   parties between July 2004 and July 2006. See Quijiang’s Second
   Questionnaire Response, at Exhibit S1-3. Because the three facilities
   where Quijiang converted the PRC-origin jumbo rolls to cut-to-length
   tissue paper were leased rather than owned, we find that Quijiang’s
   production facilities were temporary, rather than permanent.
   Accordingly, based on the fact that Quijiang’s capital equipment was
   not substantial, Quijiang’s labor force primarily consisted of
   unskilled temporary workers, and the facilities were leased, we find
   that the extent of Quijiang’s production facilities to convert PRC-
   origin jumbo rolls to cut-to-length tissue paper was minimal.
   (e) Whether the Value of the Processing Performed in Vietnam Represents
   a Small Portion of the Value of the Merchandise Sold in the United
   States
   In prior circumvention cases pursuant to section 781(a) and section
   781(b) of the Act, where the Department must determine whether the
   value of processing either in the United States or in a third country
   is minor, we used the U.S. sales and cost of production data because
   the countries at issue were market economy countries. See Pasta
   Circumvention Prelim, 68 FR at 46575 (unchanged in Pasta Circumvention
   Final, 68 FR 54888); Certain Carbon Steel Butt-Weld Pipe Fittings from
   the People’s Republic of China: Affirmative Final Determination of
   Circumvention of Antidumping Duty Order, 59 FR 15155, 15156 (March 31,
   1994). However, in this case, both the country that produced the jumbo
   rolls and the country that produced the tissue paper products from the
   jumbo rolls are considered NME countries. Therefore, because the
   production of jumbo rolls and the cut-to-length tissue paper is
   performed in NME countries, we used surrogate values to determine
   whether the value of processing performed in Vietnam represents a small
   portion of the value of the merchandise sold in the United States.
   In accordance with section 773(c)(4) of the Act, in valuing the
   factors of production (“FOPs”), the Department shall utilize, to the
   extent possible, the prices or costs of FOPs in one or more market-
   economy countries that are at a level of economic development
   comparable to that of the NME country and are significant producers of
   comparable merchandise. The Department selected India as the surrogate
   country for both the PRC and Vietnam on the basis that: (1) It is at a
   similar level of economic development pursuant to section 773(c)(4) of
   the Act; (2) it is a significant producer of comparable merchandise;
   and (3) we have reliable data from India. See Memorandum to the File
   from Julia Hancock, through Alex Villanueva, Program Manager, AD/CVD
   Operations, Office 9, and James C. Doyle, Director, AD/CVD Operations,
   Office 9: Circumvention Inquiry on Certain Tissue Paper Products from
   the People’s Republic of China: Surrogate Country and Surrogate Values
   for the Preliminary Determination (April 14, 2008) (“Surrogate Country
   and Value Memorandum”). Thus, we have calculated the value of
   processing performed in Vietnam and the value of the PRC-origin jumbo
   rolls using surrogate prices from India. The sources
   [[Page 21585]]
   of the surrogate values we have used in this circumvention inquiry are
   discussed in the Surrogate Country and Value Memorandum.
   To calculate the value of the PRC-origin jumbo rolls, we used
   publicly available Indian import prices for Harmonized Tariff Schedule
   (“HTS”) 4802.54.50, described as “Uncoated Paper in Rolls, under 40
   grams, Tissue Paper,” as reported in the Monthly Statistics of the
   Foreign Trade of India.\6\ We calculated the surrogate value for PRC-
   origin jumbo rolls using monthly data for July 2004 to July 2006
   because Quijiang reported that July 2006 was the last month that Guilin
   Qifeng produced jumbo rolls that were sold to Quijiang. See Quijiang’s
   Sixth Questionnaire Response, at 12 and Appendix S6-16. We converted
   the surrogate value into U.S. dollars, in accordance with section
   773A(a) of the Act, based on the exchange rates in effect for July 1,
   2004, to July 31, 2006, as certified by the Federal Reserve Bank. For
   further information, see Surrogate Country and Value Memorandum.
   —————————————————————————
   \6\ The same import prices are also available from the World
   Trade Atlas (“WTA”), published by Global Trade Information
   Services, Inc., which is a secondary electronic source based upon
   the publication Monthly Statistics of the Foreign Trade of India.
   Volume II: Imports.
   —————————————————————————
   To calculate the value of Quijiang’s processing of the finished
   merchandise, we used Quijiang’s FOPs for each stage of converting PRC-
   origin jumbo rolls to tissue paper, i.e., from the cutting of the jumbo
   rolls into cut-to-length sheets of tissue paper, dyeing (where
   appropriate), printing (where appropriate), and packaging of the final
   product. See Quijiang’s First Questionnaire Response, at Exhibit 1. We
   multiplied the reported per-unit factor consumption rates by the Indian
   surrogate values.\7\ In selecting the surrogate values, we considered
   the quality, specificity, and contemporaneity of the data.
   —————————————————————————
   \7\ As appropriate, we adjusted input prices by including
   freight costs to make them delivered prices. Specifically, we added
   to Indian import surrogate values a surrogate freight cost using the
   shorter of the reported distance from the domestic supplier to the
   factory or the distance from the nearest seaport to the factory
   where appropriate. This adjustment is in accordance with the Court
   of Appeals for the Federal Circuit’s decision in Sigma Corp. v.
   United States, 117 F.3d 1401, 1407-08 (Fed. Cir. 1997).
   Additionally, we made currency conversions into U.S. dollars, in
   accordance with section 773A(a) of the Act, based on the exchange
   rates in effect on the dates of the U.S. sales as certified by the
   Federal Reserve Bank.
   —————————————————————————
   To derive the value added to the finished merchandise by Quijiang’s
   processing, we divided the total value of the finished merchandise
   (i.e., sum of the surrogate value of the PRC-origin jumbo rolls and
   Quijiang’s value of processing), by Quijiang’s value of processing. The
   value added to the finished merchandise by Quijiang’s processing is an
   average value of approximately 34 percent.\8\ Based on our analysis of
   the value added, we find that the value of the processing performed by
   Quijiang to convert the PRC-origin jumbo rolls to cut-to-length tissue
   paper does not represent a small proportion of the value of the
   finished merchandise sold in the United States. See Analysis
   Memorandum.
   —————————————————————————
   \8\ Because this information is business proprietary, we have
   ranged the values by plus or minus 10 percent.
   —————————————————————————
   Summary of Analysis of Whether the Process of Assembly or Completion in
   the Foreign Country Is Minor or Insignificant
   In sum, we preliminarily conclude that the record evidence of this
   circumvention inquiry supports a finding that the process or completion
   of the PRC-origin jumbo rolls to cut-to-length tissue paper in Vietnam
   is minor or insignificant. Pursuant to section 781(b)(2)(A) of the Act,
   we find that the level of investment by Quijiang in the equipment used
   to convert the PRC-origin jumbo rolls is minor compared to the level of
   investment provided by Guilin Qifeng. Pursuant to section 781(b)(2)(B)
   of the Act, we find that the absence of R&D initiatives by Quijiang in
   the production of tissue paper products shows that R&D is not a
   significant factor in the Vietnamese tissue paper industry. Pursuant to
   section 781(b)(2)(C) of the Act, we find that the portion of the
   overall production process of cut-to-length tissue paper conducted by
   Quijiang in converting the PRC-origin jumbo rolls to cut-to-length
   tissue paper is limited and minor when compared to Guilin Qifeng’s
   share of the overall production process in the production of the jumbo
   rolls. Pursuant to section 781(b)(2)(D) of the Act, we find that the
   extent of Quijiang’s production facilities is minor with respect to
   converting PRC-origin jumbo rolls to cut-to-length tissue paper because
   the capital equipment used by Quijiang in converting the PRC-origin
   jumbo rolls is not substantial in comparison to the capital equipment
   used by Guilin Qifeng to produce the jumbo rolls, the labor force used
   by Quijiang is composed primarily unskilled workers, and Quijiang’s
   facilities were leased, not permanent. Finally, pursuant to section
   781(b)(2)(E) of the Act, we find that value of the processing performed
   by Quijiang to convert the PRC-origin jumbo rolls to cut-to-length
   tissue paper does not represent a small proportion of the value of the
   finished merchandise sold in the United States.
   While the statutory factor, section 781(b)(2)(E) of the Act, is
   inconclusive, the information on the record regarding the four other
   statutory factors, sections 781(b)(2)(A),(B),(C), and (D) of the Act,
   shows that the processing operation to convert PRC-origin jumbo rolls
   to cut-to-length tissue paper in Vietnam is minor or insignificant. We
   have based our decision as to whether the processing operation to
   convert PRC-origin jumbo rolls to cut-to-length tissue paper is minor
   or insignificant based on the totality of the record evidence of this
   circumvention inquiry. Specifically, the legislative history to section
   781(b) indicates that Congress intended the Department to make
   determinations regarding circumvention on a case-by-case basis in
   recognition that the facts of individual cases and the nature of
   specific industries vary widely. See S. Rep. No. 103-412 (1994), at 81-
   82.
   Although we find pursuant to section 781(b)(2)(E) of the Act, that
   the value of the processing performed by Quijiang to convert the PRC-
   origin jumbo rolls to cut-to-length tissue paper does not represent a
   small proportion of the value of the finished merchandise sold in the
   United States, the preponderance of the other record evidence, pursuant
   to sections 781(b)(2)(A),(B),(C), and (D) of the Act, shows that the
   value of the processing operation in Vietnam is minor or insignificant.
   Accordingly, based on a review of the record evidence, it is clear that
   the majority of the actual production process for cut-to-length tissue
   paper is concentrated in Guilin Qifeng’s production facilities in the
   PRC. Therefore, we find that the processing operation to convert PRC-
   origin jumbo rolls to cut-to-length tissue paper in Vietnam is minor or
   insignificant, pursuant to section 781(b)(1)(C) of the Act.
   (D) Whether the Value of the Merchandise Produced in the Foreign
   Country to Which the Order Applies Is a Significant Portion of the
   Total Value of the Merchandise Exported to the United States
   Under section 781(b)(1)(D) of the Act, the value of the merchandise
   produced in the foreign country to which the Order applies must be a
   significant portion of the total value of the merchandise sold in the
   United States in order to find circumvention. The major parts and
   components that consist of the total value of the cut-to-length tissue
   paper sold in the United States are: PRC-origin jumbo rolls, inks and
   dyes, and packaging materials. As
   [[Page 21586]]
   discussed in the section of “Whether Merchandise Sold in The United
   States is Completed or Assembled in Another Foreign Country From
   Merchandise Which Is Subject to the Order or Produced In the Foreign
   Country That Is Subject to the Order,” in all instances the PRC-origin
   jumbo rolls are imported from Guilin Qifeng, which is located in the
   PRC. Additionally, the value of the PRC-origin jumbo rolls is
   approximately an average value of 66 percent of the total value of the
   finished merchandise.\9\ As discussed above, although the value of the
   processing conducted in Vietnam is not small, we find that the value of
   the PRC-origin jumbo rolls constitutes a great majority of the value of
   the finished merchandise. Based on our analysis, the value of the PRC-
   origin jumbo rolls taken as a whole constitutes a significant portion
   of the value of the finished product ultimately sold in the United
   States.
   —————————————————————————
   \9\ Because this information is business proprietary, we have
   ranged the values by plus or minus 10 percent.
   —————————————————————————
   Other Factors To Consider
   In making a determination whether to include merchandise assembled
   or completed in a foreign country within an order, section 781(b)(3) of
   the Act instructs us to take into account such factors as: (A) The
   pattern of trade, including sourcing patterns; (B) whether affiliation
   exists between the exporter of the merchandise and the person who uses
   the merchandise to assemble or complete in the foreign country the
   merchandise that is sold in the United States; and (C) whether imports
   into the foreign country of the merchandise described in section
   781(b)(1)(B) have increased since the initiation of the original
   investigation. Each of these factors is examined below.
   (A) Pattern of Trade and Sourcing
   The first factor to consider under section 781(b)(3) is changes in
   the pattern of trade, including changes in the sourcing patterns. To
   evaluate the pattern of trade in this case, we examined Quijiang’s
   source channel of jumbo rolls. According to Quijiang, it started
   sourcing PRC-origin jumbo rolls from Guilin Qifeng in July 2004 to
   produce tissue paper products that Quijiang exported to the United
   States. See Quijiang’s First Questionnaire Response, at 12.
   Additionally, the record of this circumvention inquiry shows that
   between July 2004 and July 2006, Quijiang did not purchase PRC-origin
   jumbo rolls from any other supplier. See id., at Exhibit 11; Quijiang’s
   Sixth Questionnaire Response, at 13 and Appendix S6-16. Based on the
   facts on the record, we find that the fact that Quijiang sourced jumbo
   rolls from a PRC supplier to produce tissue paper products, which were
   exported to the United States, supports a finding that circumvention
   was occurring during this period.\10\
   —————————————————————————
   \10\ The Department recognizes that Petitioner submitted
   comments on February 4, 2008, alleging that Quijiang, contrary to
   its own declarations, continued to import semi-completed tissue
   paper products from the PRC after July 2006. However, the Department
   finds Petitioner’s evidence in support of its allegations to be
   inconclusive. Accordingly, a factual finding that Quijiang was not
   truthful in its statements to the Department with respect to this
   issue is not warranted. Thus, the Department cannot conclude either
   as a factual matter or based upon an adverse inference resulting
   from Quijiang’s failure to cooperate to the best of its ability that
   all exports of subject merchandise by Quijiang were produced from
   Chinese-origin semi-finished tissue paper products. However, if the
   Department reaches a final determination of circumvention in this
   proceeding, the 2007/2008 administrative review will cover all of
   Quijiang’s entries as of the date of initiation of this
   circumvention inquiry, and the Department will further investigate
   the issue of origin of all covered entries in the context of such
   review.
   —————————————————————————
   We also examined the timing and quantities of Quijiang’s exports to
   the United States of tissue paper that were produced from PRC-origin
   jumbo rolls since the initiation of the LTFV investigation in March
   2004. A review of Quijiang’s monthly total exports shows that from July
   2004 to July 2006, Quijiang’s exports of tissue paper products produced
   from PRC-origin rolls to the United States consisted of the majority of
   Quijiang’s total monthly exports. See Quijiang’s Fifth Questionnaire
   Response, at Exhibit 6. These data indicate that the monthly volume of
   Quijiang’s exports of tissue paper products produced from PRC-origin
   jumbo rolls to the United States was significant subsequent to the
   initiation of the LTFV investigation. Additionally, we examined the
   timing and quantities of exports of tissue paper from the PRC to the
   United States between 2004 and 2006, and exports of tissue paper from
   Vietnam to the United States between 2004 and 2006. A review of the
   data shows that PRC exports of tissue paper to the United States
   decreased by 59.2 percent between 2004 and 2006, whereas Vietnam
   exports of tissue paper to the United States increased by 1739.11
   percent between 2004 and 2006. See Analysis Memorandum. Accordingly,
   the data show that PRC exports have decreased significantly whereas
   Vietnamese exports have increased significantly since the initiation of
   the LTFV investigation. Therefore, based on the facts on the record, we
   find that the pattern of trade has changed since the initiation of the
   LTFV investigation and the imposition of the Order and thus, supports a
   finding that circumvention has occurred.
   (B) Affiliation
   The second factor to consider under section 781(b)(3) of the Act is
   whether the manufacturer or exporter of the tissue paper is affiliated
   with the entity that assembles or completes the merchandise sold in the
   United States from the imported PRC-origin jumbo rolls. Generally, we
   consider circumvention to be more likely to occur when the manufacturer
   of the covered merchandise is related to the third country assembler
   and is a critical element in our evaluation of circumvention. See Color
   Picture Tubes From Canada, Japan, Republic of Korea & Singapore:
   Negative Final Determinations of Circumvention of Antidumping Duty
   Orders, 56 FR 9667 (March 7, 1991) and accompanying Issues and Decision
   Memorandum at Comment 8. The record evidence of this circumvention
   inquiry indicates that the Vietnamese assembler, Quijiang, which
   converted the PRC-origin jumbo rolls into tissue paper products, is a
   wholly-owned subsidiary of Guilin Qifeng. See Quijiang’s First
   Questionnaire Response, at 4. Accordingly, because Quijiang is 100
   percent owned by Guilin Qifeng, we find that Quijiang and Guilin Qifeng
   are affiliated, pursuant to section 771(33) of the Act. Additionally,
   the record evidence shows that Guilin Qifeng was Quijiang’s sole
   supplier of PRC-origin jumbo rolls. See Quijiang’s Second Questionnaire
   Response, at 3. In sum, we find that the record evidence demonstrates
   that the relationship between Quijiang and Guilin Qifeng supports a
   finding that circumvention of the Order may have occurred during the
   period of investigation.
   (C) Whether Imports Have Increased
   The third factor to consider under section 781(b)(3) is whether
   imports into the foreign country of the merchandise described in
   section 781(b)(1)(B) have increased since the initiation of the
   original investigation. Generally, we consider circumvention to be more
   likely when imports of jumbo rolls, the merchandise imported from the
   PRC, have increased into Vietnam. Because Quijiang was not established
   until June 2004, we reviewed Quijiang’s imports of PRC-origin jumbo
   rolls from July 2004, which was when it began importing PRC-origin
   jumbo rolls, to the issuance of the Order, and compared these imports
   to those after the issuance of the Order. See Quijiang’s First
   [[Page 21587]]
   Questionnaire Response, at Exhibit 11. The Department finds that
   Quijiang’s imports of PRC-origin jumbo rolls were at their highest
   levels in the months after the issuance of the Order through July 2006.
   Id.
   Additionally, the Department obtained PRC export data of tissue
   paper products to Vietnam since 2004, which was the year that the LTFV
   investigation was initiated. The Department has obtained PRC export
   data of HTS 4802.54, which is defined as “Paper/Paperboard (Excluding
   Mechanical Fibers), Weighing

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