66 FR 15400, March 19, 2001

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-866]
 
Initiation of Antidumping Duty Investigation: Certain Folding 
Gift Boxes From the People's Republic of China

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: March 19, 2001.

FOR FURTHER INFORMATION CONTACT: Thomas Schauer or Richard Rimlinger, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, DC 20230; telephone: (202) 482-0410 or (202) 482-4477, 
respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department of Commerce's (the 
Department's) regulations are to the provisions codified at 19 CFR Part 
351 (2000).

The Petition

    On February 20, 2001, the Department received a petition on imports 
of certain folding gift boxes from the People's Republic of China (PRC) 
filed in proper form by Harvard Folding Box Company, Inc., and Field 
Container Company, L.P., hereinafter referred to as ``the 
petitioners.'' On February 26, 2001, the Department requested 
clarification of certain areas of the petition and received responses 
on March 1, 2001, and March 5, 2001.
    In accordance with section 732(b) of the Act, the petitioners 
allege that imports of certain folding gift boxes from the PRC are 
being, or are likely to be, sold in the United States at less than fair 
value within the meaning of section 731 of the Act and that such 
imports are materially injuring and threaten to injure an industry in 
the United States.
    The Department finds that the petitioners filed this petition on 
behalf of the domestic industry because they are interested parties as 
defined in section 771(9)(C) and (D) of the Act and they have 
demonstrated sufficient industry support with respect to the 
antidumping duty investigation they are requesting the Department to 
initiate (see ``Determination of Industry Support for the Petition'' 
below).

Scope of the Petition

    The merchandise subject to this petition is certain folding gift 
boxes. Folding gift boxes are a type of folding or knock-down carton 
manufactured from paper or paperboard. Folding gift boxes are produced 
from a variety of recycled and virgin paper or paperboard materials, 
including, but not limited to, clay-coated paper or paperboard and 
kraft (bleached or unbleached) paper or paperboard. The scope of the 
petition excludes gift boxes manufactured from paper or paperboard of a 
thickness of more than 0.8 millimeters, corrugated paperboard, or paper 
mache.
    Folding gift boxes are typically decorated with a holiday motif 
using various processes, including printing, embossing, debossing, and 
foil stamping, but may also be plain white or printed with a single 
color. The subject merchandise includes folding gift boxes, with or 
without handles, whether finished or unfinished, and whether in one-
piece or multi-piece configuration. One-piece gift boxes are die-cut or 
otherwise formed so that the top, bottom, and sides form a single, 
contiguous unit. Two-piece gift boxes are those with a folded bottom 
and a folded top as separate pieces. Folding gift boxes are generally 
packaged in shrink-wrap, cellophane, or other packaging materials, in 
single or multi-box packs for sale to the retail customer. The scope of 
the petition excludes folding cartons that have a retailer's name, 
logo, trademark or similar company information printed prominently on 
the folding carton's top exterior (such folding cartons may be known as 
``not-for-resale'' gift boxes or ``give-away'' gift boxes and may be 
provided by department and specialty stores at no charge to their 
retail customers). Imports of the subject merchandise are classified 
under U.S. Harmonized Tariff Schedule subheadings 4819.20.00.40 and 
4819.50.40.60. These subheadings also cover products that are outside 
the scope of this petition. Furthermore, although the HTSUS subheadings 
are provided for convenience and customs purposes, our written 
description of the scope of this investigation is dispositive.
    During our review of the petition, we discussed the scope with the 
petitioners to ensure that it accurately reflects the product for which 
the domestic industry is seeking relief. Moreover, as discussed in the 
preamble to the Department's regulations (62 FR 27296, 27323), we are 
setting aside a period for interested parties to raise issues regarding 
product coverage. The Department encourages all interested parties to 
submit such comments within 20 calendar days of publication of this 
notice. Comments should be addressed to Import Administration's Central 
Records Unit at Room 1870, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230. The period of scope 
consultations is intended to provide the Department with ample 
opportunity to consider all comments and consult with interested 
parties prior to the issuance of the preliminary determination.

Period of Investigation

    Section 351.204(b) of the Department's regulations states that, in 
the case of a nonmarket-economy (NME) country, in an investigation, the 
Department normally will examine merchandise sold during the two most 
recently completed fiscal quarters as of the month preceding the month 
in which the petition was filed. The regulations further state that the 
Department may examine merchandise sold during any additional or 
alternate period it concludes is appropriate.
    Following the above-noted guidelines from section 351.204(b) of the 
Department's regulations, the two most

[[Page 15401]]

recently completed fiscal quarters as of the month preceding the month 
in which the petition was filed would be the third and fourth fiscal 
quarters of 2000, July through December 2000.
    For this investigation, the petitioners have requested that the 
Department expand the period of investigation (POI) to include the 
first two fiscal quarters of 2000, January through June 2000. According 
to the petitioners, the subject merchandise is sold using long-term 
contracts that require delivery to be made six to nine months after the 
contract is signed. The petitioners also contend that the folding gift 
box industry is highly seasonal and that the volume of folding gift box 
shipments is linked to the Christmas and Hanukkah holidays. The 
petitioners argue that, because of these two facts, most sales of 
folding gift boxes are made during January through April. Therefore, 
the petitioners claim that the normal POI would only capture a few non-
representative sales that will greatly distort the Department's 
conclusions.
    The Department is considering the petitioners' arguments on this 
matter and will make a determination on whether to expand the normal 
POI as established by section 351.204(b)(1) of the Department's 
regulations, July 1 through December 31, 2000, as the investigation 
proceeds.

Determination of Industry Support for the Petitions

    Section 732(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 732(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (1) at least 
25 percent of the total production of the domestic like product; and 
(2) more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition.
    Section 732(c)(4)(D) of the Act provides that, if the petition does 
not establish support of domestic producers or workers accounting for 
more than 50 percent of the total production of the domestic like 
product, the administering agency shall: (i) Poll the industry or rely 
on other information in order to determine if there is support for the 
petition as required by subparagraph (A), or (ii) determine industry 
support using a statistically valid sampling method.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers as a whole of a domestic like product. Thus, to determine 
whether the petition has the requisite industry support, the statute 
directs the Department to look to producers and workers who produce the 
domestic like product. The International Trade Commission (ITC), which 
is responsible for determining whether ``the domestic industry'' has 
been injured, must also determine what constitutes a domestic like 
product in order to define the industry. While the Department and the 
ITC must apply the same statutory definition regarding the domestic 
like product (see section 771(10) of the Act), they do so for different 
purposes and pursuant to separate and distinct authority. In addition, 
the Department's determination is subject to limitations of time and 
information. Although this may result in different definitions of the 
domestic like product, such differences do not render the decision of 
either agency contrary to law.\1\
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    \1\ See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp. 
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays 
and Display Glass from Japan: Final Determination; Rescission of 
Investigation and Partial Dismissal of Petition, 56 FR 32376, 32380-
81 (July 16, 1991).
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    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition.
    In this case, we have adopted the definition of the domestic like 
product defined in the ``Scope of Investigation'' section, above. That 
definition was developed n in consultation with the petitioners.
    The petitioners established industry support representing over 50 
percent of total production of the domestic like product. Therefore, 
the domestic producers or workers who support the petition account for 
at least 25 percent of the total production of the domestic like 
product, and the requirements of section 732(c)(4)(A)(i) are met. 
Furthermore, because the Department received no opposition to the 
petition, the domestic producers or workers who support the petition 
account for more than 50 percent of the production of the domestic like 
product produced by that portion of the industry expressing support for 
or opposition to the petition. Thus, the requirements of section 
732(c)(4)(A)(ii) are also met.
    Accordingly, the Department determines that the petition was filed 
on behalf of the domestic industry within the meaning of section 
732(b)(1) of the Act. See Industry Support Attachment to the Initiation 
Checklist.

Export Price and Normal Value

    The following is a description of the allegation of sales at less 
than fair value upon which the Department based its decision to 
initiate this investigation. The sources of data for the deductions and 
adjustments relating to U.S. price and factors of production are also 
discussed in the Initiation Checklist. Should the need arise to use any 
of this information as facts available under section 776 of the Act in 
our preliminary or final determination, we may reexamine the 
information and revise the margin calculations, if appropriate.
    Based on their knowledge and experience in the market place and on 
their examination of publicly available ship manifest data, the 
petitioners identified the following PRC companies as producers of 
certain folding gift boxes in the PRC: Bigfield Goldenford Holdings, 
Ltd., Century Distributing, Inc., China Arts Huajia Import & Export, 
Chung Tai Printing Company, Ltd., Dexon Workshop Company, Fangyuan 
International Economy and Trade Co., Gold Mile Enterprise, Ltd., Homay 
Paper Products Company, Ltd., Hong Kong Dasan Paper Products Co., Ltd., 
Hung Hing Off-Set Printing Company, Ltd., K.C. (Hong Kong), Ltd., Leo 
Paper Products, Ltd., Luk Ka Printing Company, Ltd., Man Sang Envelope 
Manufacturing Co., Ltd., Max Fortune Industrial, Ltd., Ningbo Jude 
Trading Company, Ltd., Rank Sharp Investments, Ltd., and Red Point 
Paper Products Company, Ltd. Of these 18 companies the petitioners 
identified Bigfield Goldenford Holdings, Ltd., Luk Ka Printing Company, 
Ltd., Max Fortune Industrial, Ltd., and Red Point Paper Products 
Company, Ltd., as the producers of a large quantity of certain folding 
gift boxes exported to the United States.
    The petitioners based export price on the price of Chinese-
manufactured folding gift boxes from a Chinese exporter. In order to 
obtain ex-factory prices, the petitioners deducted foreign inland 
freight and foreign port charges from the sales value. According to an 
affidavit from a person familiar with the folding gift box industry in 
the PRC, folding gift boxes are transported to the port by truck. To 
calculate foreign inland freight, the petitioners used a surrogate 
value based on information developed by the Department in prior cases 
and inflated this value to current prices using the Department's normal 
methodology. To calculate foreign port

[[Page 15402]]

charges, the petitioners used a price quote from a shipping company for 
port charges from Hong Kong. We reviewed the information provided 
regarding export price and have determined that it represents 
information reasonably available to the petitioners and have reviewed 
it for adequacy and accuracy. See Initiation Checklist.
    The petitioners assert that the Department considers the PRC to be 
an NME country and, therefore, constructed normal value based on the 
factors-of-production methodology pursuant to section 773(c) of the 
Act. In previous cases, the Department has determined that the PRC is 
an NME country. See e.g., Final Determination of Sales at Less Than 
Fair Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel 
Products from the People's Republic of China (Cold-Rolled Steel from 
China), 65 FR 34660 (May 31, 2000). In accordance with section 
771(18)(c)(i) of the Act, the NME status remains in effect until 
revoked by the Department. The NME status of the PRC has not been 
revoked by the Department and, therefore, remains in effect for 
purposes of the initiation of this investigation. Accordingly, the 
normal value of the product appropriately is based on factors of 
production valued in a surrogate market-economy country in accordance 
with section 773(c) of the Act. In the course of this investigation, 
all parties will have the opportunity to provide relevant information 
related to the issues of the PRC's NME status and the granting of 
separate rates to individual exporters.
    As required by 19 CFR 351.202(b)(7)(i)(C), the petitioners provided 
a dumping margin calculation using the Department's NME methodology 
described in 19 CFR 351.408. For the normal value calculation, the 
petitioners based the factors of production, as defined by section 
773(c)(3) of the Act (raw materials, labor, and overhead), for certain 
folding gift boxes on the quantities of inputs used by a U.S. producer 
of certain folding gift boxes. Based on our analysis of the data in the 
petition, we believe that the petitioners' normal value calculations to 
be reasonable and accurate. See Initiation Checklist.
    The petitioners selected Indonesia as their surrogate country. The 
petitioners stated that Indonesia is comparable to the PRC in its level 
of economic development and is the only producer of certain folding 
gift boxes among the ten countries most comparable to the PRC. Based on 
the information provided by the petitioners, we believe that the 
petitioners' use of Indonesia as a surrogate country is appropriate for 
purposes of initiation of this investigation. See Initiation Checklist.
    In accordance with section 773(c)(4) of the Act, the petitioners 
valued factors of production for certain folding gift boxes, where 
possible, on reasonably available, public surrogate-country data. To 
value paperboard, the petitioners used the value for exports as 
reported in the World Trade Atlas, Indonesian Export Statistics 
published by the Government of Indonesia. To value ink, glue, 
shrinkwrap, corrugated boxes, and casing tape, the petitioners used the 
value for imports as reported in the World Trade Atlas, Indonesian 
Export Statistics published by the Government of Indonesia. To value 
labels, the petitioners used the value for exports as reported in the 
World Trade Atlas, Indonesian Export Statistics published by the 
Government of Indonesia. The petitioners valued labor using the 
regression-based wage rate for the PRC, in accordance with 19 CFR 
351.408(c)(3). For factory overhead expenses, the petitioners used a 
rate derived from the experience of the producer of certain folding 
gift boxes used for the factors of production. Based on information 
provided in exhibit 13 of the petition, we have found that this is a 
conservative estimate for purposes of this initiation. For selling, 
general and administrative expenses and profit, the petitioners applied 
rates derived from the publicly available annual report of an 
Indonesian producer of comparable merchandise, PT Pabrik Kertas Tjiwi 
Kimia Tbk.
    The petitioners provided two sets of calculations of CV: one 
calculation includes packing expenses in the cost of manufacture of the 
folding gift boxes and the other follows our normal practice of not 
including packing expenses in the cost of manufacture. The petitioners 
argued that, unlike other manufactured products where the packaging 
material is simply an addition to the finished product, folding gift 
boxes are sold in units of ``retail packs'' which incorporate the 
packaging materials as an integral part of the product. For purposes of 
this initiation, however, we have used the calculation that follows our 
normal methodology. As noted above, should the need arise to use any of 
this information as facts available under section 776 of the Act in our 
preliminary or final determination, we may reexamine this issue and 
revise the margin calculations accordingly.
    Based on comparisons of export price to normal value, calculated in 
accordance with section 773(c) of the Act, the estimated dumping 
margins for certain folding gift boxes from the PRC range from 65.00 
percent to 87.68 percent.

Fair Value Comparisons

    Based on the data provided by the petitioners, there is reason to 
believe that imports of certain folding gift boxes from the PRC are 
being, or are likely to be, sold in the United States at less than fair 
value.

Allegations and Evidence of Material Injury and Causation

    The petition alleges that the U.S. industry producing the domestic 
like product is being materially injured and is threatened with 
material injury, by reason of the imports of the subject merchandise 
sold at less than normal value. The petitioners contend that the 
industry's injured condition is evident in the declining trends in the 
following: (1) U.S. market share, (2) domestic production, (3) 
shipments, (4) capacity utilization, (5) employment, and (6) profit 
margins.
    The allegations of injury and causation are supported by relevant 
evidence including ITC section 332 import data, lost sales, and pricing 
information. The Department assessed the allegations and supporting 
evidence regarding material injury and causation and determined that 
these allegations are supported by accurate and adequate evidence and 
meet the statutory requirements for initiation (see Attachments to 
Initiation Checklist, Re: Material Injury).

Initiation of Antidumping Investigation

    Based upon our examination of the petition on certain folding gift 
boxes from the PRC, we find that the petition meets the requirements of 
section 732 of the Act. Therefore, we are initiating an antidumping 
duty investigation to determine whether imports of certain folding gift 
boxes from the PRC are being, or are likely to be, sold in the United 
States at less than fair value. Unless postponed, we will make our 
preliminary determination no later than 140 days after the date of this 
initiation.

Distribution of Copies of the Petition

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of the petition has been provided to the representatives 
of the PRC. We will attempt to provide a copy of the public version of 
the petition to each exporter named in the petition, as appropriate.

[[Page 15403]]

International Trade Commission Notification

    We have notified the ITC of our initiation, as required by section 
732(d) of the Act.

Preliminary Determination by the ITC

    The ITC will preliminarily determine, no later than April 6, 2001, 
whether there is a reasonable indication that imports of certain 
folding gift boxes from the PRC are causing material injury, or 
threatening to cause material injury, to a U.S. industry. A negative 
ITC determination will result in this investigation being terminated; 
otherwise, this investigation will proceed according to statutory and 
regulatory time limits.
    This notice is published pursuant to section 777(i) of the Act. 
Effective January 20, 2001, Bernard T. Carreau is fulfilling the duties 
the Assistant Secretary for Import Administration.

    Dated: March 12, 2001.
Bernard T. Carreau,
Deputy Assistant Secretary, AD/CVD Enforcement II.
[FR Doc. 01-6756 Filed 3-16-01; 8:45 am]
BILLING CODE 3510-DS-P