71 FR 47174, August 16 ,2006
DEPARTMENT OF COMMERCE
International Trade Administration
[C-560-819]
Final Affirmative Countervailing Duty Determination and Final Negative
Critical Circumstances Determination: Certain Lined Paper Products
from Indonesia
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce (Department) has made a final
determination that countervailable subsidies are being provided to
producers and exporters of certain lined paper products (CLPP) from
Indonesia. For information on the estimated countervailing duty rates,
please see the "Suspension of Liquidation" section, below.
EFFECTIVE DATE:  August 16, 2006.
FOR FURTHER INFORMATION CONTACT: David Layton or David Neubacher, AD/
CVD Operations, Office 1, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0371 or (202) 482-5823, respectively.
SUPPLEMENTARY INFORMATION:
Petitioner
    The petitioner in this investigation is the Association of American
School Paper Suppliers and its individual members (MeadWestvaco Corporation;
Norcom, Inc.; and Top Flight, Inc.) (petitioner).
Period of Investigation
    The period for which we are measuring subsidies, or period of
investigation, is January 1, 2004 through December 31, 2004.
Case History
    The following events have occurred since the announcement of the
preliminary determination on February 7, 2006, and subsequent publication
in the Federal Register on February 13, 2006. See Notice of Preliminary
Affirmative Countervailing Duty Determination: Certain Lined Paper
Products from Indonesia, 71 FR 7524 (February 13, 2006) (Preliminary
Determination).
    Prior to the Preliminary Determination, the petitioner submitted
comments alleging that the Government of Indonesia (GOI) provided
partial forgiveness of the debt owed by the Sinar Mas Group (SMG)/Asia
Pulp & Paper (APP) to the Indonesian Bank Restructuring Agency (IBRA)
and entrusted and directed creditors of APP to agree to a Master
Restructuring Agreement (MRA), which resulted in preferential repayment
terms and possible debt forgiveness. The Department did not include
these alleged subsidies in its investigation. See Memorandum to Stephen
J. Claeys, Deputy Assistant Secretary for Import Administration,
entitled New Subsidy Allegation, dated February 10, 2006, which is on
file in the Department's Central Records Unit in Room B-099 of the main
Department building (CRU).
    Also on February 10, 2006,\1\ PT. Pabrik Kertas Tjiwi Kimia Tbk
(TK) submitted comments on the Department's release of proprietary
information to the counsel of an ineligible interested party and TK
withdrew from the investigation as an active participant, but reserved
its right as an interested party\2\ to participate in briefings or
hearings. The Department spoke with TK's counsel and confirmed the
company would not answer further questionnaires and did not expect
verification of its information on the record.\3\ Following TK's
withdrawal from the investigation, TK and the GOI submitted further
comments on the record concerning the Department's APO procedures. The
petitioner submitted comments on TK's and the GOI's filings on April
21, 2006. We addressed TK's and the GOI's concerns in a letter to the
parties on April 26, 2006.\4\
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    \1\ Per the Department's request, the submission was refiled on
March 22, 2006.
    \2\ Upon learning of this possibility, we immediately contacted
counsel for the company to determine its status on the case. The law
firm promptly withdrew its application under the Administrative
Protective Order (APO) in the cases involving Indonesia and
certified destruction of all APO material it had received related to
the Indonesia cases. This was done before February 10, 2006. The
respondents did not express concern about any other party with APO
access.
    \3\ See Memorandum from Susan Kuhbach, Director, to the File
regarding Conversation with Counsel for PT. Pabrik Kertas Tjiwi
Kimia Tbk.: Respondent's Withdrawal from Active Participation (March
17, 2006, replacing memo placed on the record on February 17, 2006).
    \4\ See Letter from Stephen J. Claeys, Deputy Assistant
Secretary for Import Administration to Claire Reade, Arnold & Porter
LLP regarding Countervailing Duty Investigation: Certain Lined Paper
Products from Indonesia (April 26, 2006).
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    On February 15, 2006, TK submitted ministerial error allegations
relating to the Preliminary Determination. We addressed these
ministerial error allegations in an March 8, 2006 memorandum to Stephen
J. Claeys, Deputy Assistant Secretary for Import Administration,
entitled Ministerial Error Allegations, which is on file in the CRU.
    We issued a supplemental questionnaire to the GOI on February 16,
2006. On February 24, 2006,\5\ the GOI submitted a letter to the
Department in which it stated that it would not provide a response to
the Department's questionnaire. The GOI reiterated TK's concerns over
the Department's APO procedures (see above) and stated that the GOI
would not respond to any request from the Department that would involve
the release of proprietary information. However, the GOI did state that
it would respond to any requests by the Department for "understanding
Indonesian government laws and regulations and policies on the broader
[[Page 47175]]
level."\6\ On March 28, 2006, we sent a letter to the GOI requesting
that it clarify statements in its March 27, 2006 letter and also
reissued the February 16, 2006 supplemental questionnaire to the
government. We received a response to our clarification letter and
partial response to our February 16, 2006 supplemental questionnaire on
April 7, 2006. As the GOI refused to provide a complete response to our
questionnaire and refused to allow the Department to conduct a
comprehensive verification of its information on the record, we did not
conduct verification.\7\
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    \5\ Per the Department's request, the submission was refiled on
March 27, 2006.
    \6\ See id. at 6.
    \7\ See Memorandum from Constance Handley, Program Manager, to
Stephen J. Claeys, Deputy Assistant Secretary for Import
Administration, regarding Verification of Government of Indonesia
Information (April 19, 2006).
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    On March 7, 2006, the Department published notification of
alignment of the final determinations in the antidumping and
countervailing duty investigations of CLPP from Indonesia. See Certain
Lined Paper Products From India and Indonesia: Alignment of First
Countervailing Duty Determination With Antidumping Duty Determination,
71 FR 11379 (March 7, 2006). The Department subsequently postponed the
final determinations for the antidumping and countervailing
investigations of CLPP from Indonesia. See Notice of Postponement of
Final Determination of Antidumping and Countervailing Duty
Investigations and Extension of Provisional Measures: Certain Lined
Paper Products from Indonesia, 71 FR 26925 (May 9, 2006).
    On March 30, 2006, the GOI requested that the Department provide
clarification on its possible use of adverse facts available. We
addressed the GOI's concerns in a letter to the GOI on April 5,
2006.\8\
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    \8\ See Letter from Stephen J. Claeys, Deputy Assistant
Secretary for Import Administration to Claire Reade, Arnold & Porter
LLP regarding Countervailing Duty Investigation: Certain Lined Paper
Products from Indonesia (April 5, 2006).
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    On April 19, 2006, we issued a deadline for the receipt of factual
information. The GOI, TK and the petitioner submitted factual
information on April 24, 2006. The GOI and TK filed responses to the
petitioner's factual information on April 26 and 28, 2006,
respectively.
    We received case briefs from the GOI, TK, and the petitioner on May
1, 2006. The same parties submitted rebuttal briefs on May 8, 2006. No
public hearing was held.
    On August 4, 2006, we placed publicly available data on the record
of the investigation and requested comments from parties on the
information. The petitioner, TK and the GOI provided comments and
rebuttal comments to the information on August 7 and 8, 2006,
respectively.
Scope of the Investigation
    The scope of this investigation includes certain lined paper
products, typically school supplies,\9\ composed of or including paper
that incorporates straight horizontal and/or vertical lines on ten or
more paper sheets,\10\ including but not limited to such products as
single- and multi-subject notebooks, composition books, wireless
notebooks, looseleaf or glued filler paper, graph paper, and laboratory
notebooks, and with the smaller dimension of the paper measuring 6
inches to 15 inches (inclusive) and the larger dimension of the paper
measuring 8-3/4 inches to 15 inches (inclusive). Page dimensions are
measured size (not advertised, stated, or "tear-out" size), and are
measured as they appear in the product (i.e., stitched and folded pages
in a notebook are measured by the size of the page as it appears in the
notebook page, not the size of the unfolded paper). However, for
measurement purposes, pages with tapered or rounded edges shall be
measured at their longest and widest points. Subject lined paper
products may be loose, packaged or bound using any binding method
(other than case bound through the inclusion of binders board, a spine
strip, and cover wrap). Subject merchandise may or may not contain any
combination of a front cover, a rear cover, and/or backing of any
composition, regardless of the inclusion of images or graphics on the
cover, backing, or paper. Subject merchandise is within the scope of
this petition whether or not the lined paper and/or cover are hole
punched, drilled, perforated, and/or reinforced. Subject merchandise
may contain accessory or informational items including but not limited
to pockets, tabs, dividers, closure devices, index cards, stencils,
protractors, writing implements, reference materials such as
mathematical tables, or printed items such as sticker sheets or
miniature calendars, if such items are physically incorporated ,
included with, or attached to the product, cover and/or backing
thereto.
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    \9\ For purposes of this scope definition, the actual use of or
labeling these products as school supplies or non-school supplies is
not a defining characteristic.
    \10\ There shall be no minimum page requirement for looseleaf
filler paper.
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    Specifically excluded from the scope of this petition are:
 unlined copy machine paper;
 writing pads with a backing (including but not limited to
products commonly known as "tablets," "note pads," "legal pads,"
and "quadrille pads"), provided that they do not have a front cover
(whether permanent or removable). This exclusion does not apply to such
writing pads if they consist of hole-punched or drilled filler paper;
 three-ring or multiple-ring binders, or notebook organizers
incorporating such a ring binder provided that they do not include
subject paper;
 index cards;
 printed books and other books that are case bound through the
inclusion of binders board, a spine strip, and cover wrap;
 newspapers;
 pictures and photographs;
 desk and wall calendars and organizers (including but not
limited to such products generally known as "office planners," "time
books," and "appointment books");
 telephone logs;
 address books;
 columnar pads & tablets, with or without covers, primarily
suited for the recording of written numerical business data;
 lined business or office forms, including but not limited to:
preprinted business forms, lined invoice pads and paper, mailing and
address labels, manifests, and shipping log books;
 lined continuous computer paper;
 boxed or packaged writing stationary (including but not
limited to products commonly known as "fine business paper,"
"parchment paper, " and "letterhead"), whether or not containing a
lined header or decorative lines;
 Stenographic pads ("steno pads"), Gregg ruled,\11\ measuring
6 inches by 9 inches;
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    \11\ "Gregg ruling" consists of a single- or double-margin
vertical ruling line down the center of the page. For a six-inch by
nine-inch stenographic pad, the ruling would be located
approximately three inches from the left of the book.
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    Also excluded from the scope of these investigations are the
following trademarked products:
 FlyTM lined paper products: A notebook, notebook
organizer, loose or glued note paper, with papers that are printed with
infrared reflective inks and readable only by a FlyTM pen-
top computer. The product must bear the valid trademark
FlyTM.\12\
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    \12\ Products found to be bearing an invalidly licensed or used
trademark are not excluded from the scope.
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 ZwipesTM: A notebook or notebook organizer made
with a blended polyolefin writing surface as the cover and pocket
surfaces of the notebook, suitable for writing using a specially-
developed permanent marker and erase system (known as a
ZwipesTM pen).
[[Page 47176]]
This system allows the marker portion to mark the writing surface with
a permanent ink. The eraser portion of the marker dispenses a solvent
capable of solubilizing the permanent ink allowing the ink to be
removed. The product must bear the valid trademark
ZwipesTM.\13\
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    \13\ Products found to be bearing an invalidly licensed or used
trademark are not excluded from the scope.
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 FiveStar[reg]AdvanceTM: A notebook or notebook
organizer bound by a continuous spiral, or helical, wire and with
plastic front and rear covers made of a blended polyolefin plastic
material joined by 300 denier polyester, coated on the backside with
PVC (poly vinyl chloride) coating, and extending the entire length of
the spiral or helical wire. The polyolefin plastic covers are of
specific thickness; front cover is .019 inches (within normal
manufacturing tolerances) and rear cover is .028 inches (within normal
manufacturing tolerances). Integral with the stitching that attaches
the polyester spine covering, is captured both ends of a 1" wide
elastic fabric band. This band is located 2-3/8" from the top of the
front plastic cover and provides pen or pencil storage. Both ends of
the spiral wire are cut and then bent backwards to overlap with the
previous coil but specifically outside the coil diameter but inside the
polyester covering. During construction, the polyester covering is sewn
to the front and rear covers face to face (outside to outside) so that
when the book is closed, the stitching is concealed from the outside.
Both free ends (the ends not sewn to the cover and back) are stitched
with a turned edge construction. The flexible polyester material forms
a covering over the spiral wire to protect it and provide a comfortable
grip on the product. The product must bear the valid trademarks
FiveStar[reg]AdvanceTM.\14\
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    \14\ Products found to be bearing an invalidly licensed or used
trademark are not excluded from the scope.
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 FiveStar FlexTM: A notebook, a notebook organizer,
or binder with plastic polyolefin front and rear covers joined by 300
denier polyester spine cover extending the entire length of the spine
and bound by a 3-ring plastic fixture. The polyolefin plastic covers
are of a specific thickness; front cover is .019 inches (within normal
manufacturing tolerances) and rear cover is .028 inches (within normal
manufacturing tolerances). During construction, the polyester covering
is sewn to the front cover face to face (outside to outside) so that
when the book is closed, the stitching is concealed from the outside.
During construction, the polyester cover is sewn to the back cover with
the outside of the polyester spine cover to the inside back cover. Both
free ends (the ends not sewn to the cover and back) are stitched with a
turned edge construction. Each ring within the fixture is comprised of
a flexible strap portion that snaps into a stationary post which forms
a closed binding ring. The ring fixture is riveted with six metal
rivets and sewn to the back plastic cover and is specifically
positioned on the outside back cover. The product must bear the valid
trademark FiveStar FlexTM.\15\
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    \15\ Products found to be bearing an invalidly licensed or used
trademark are not excluded from the scope.
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    Merchandise subject to this investigation is typically imported
under headings 4820.10.2010, 4820.102020, 4820.10.2050, 4810.22.5044,
4811.90.9090 of the Harmonized Tariff Schedule of the United States
(HTSUS). The tariff classifications are provided for convenience and
U.S. Customs and Border Protection (CBP) purposes; however, the written
description of the scope of the investigation is dispositive.
Scope Comments
    On October 25, 2005, Continental Accessory Corporation
(Continental) filed a request to exclude its fashion notebooks from the
scope of the investigation of CLPP from India, Indonesia and the
People's Republic of China. The petitioner submitted comments on
Continental's request on November 16, 2005.
    The Department has analyzed both parties' comments and denied
Continental's request to have its fashion notebooks excluded from the
scope of the investigation. See Memorandum from Damian Felton,
International Trade Compliance Analyst, to Stephen J. Claeys, Deputy
Assistant Secretary for Import Administration, regarding Scope
Exclusion/Clarification Request: Continental Accessory Corporation,
dated March 20, 2006, which is on file in the CRU.
Injury Test
    Because Indonesia is a "Subsidies Agreement Country" within the
meaning of section 701(b) of the Tariff Act of 1930, as amended, (the
Act), section 701(a)(2) of the Act applies to this investigation.
Accordingly, the ITC must determine whether imports of the subject
merchandise from Indonesia materially injure, or threaten material
injury to, a U.S. industry. On October 31, 2005, the ITC published its
preliminary determination that there is a reasonable indication that an
industry in the United States is materially injured by reason of
imports from China, India, and Indonesia. See Certain Lined Paper
School Supplies From China, India and Indonesia, 70 FR 62329 (October
31, 2005).
Critical Circumstances
    In the Preliminary Determination, the Department preliminary
determined that critical circumstances did not exist with respect to
imports of CLPP from Indonesia, in accordance with 703(e)(1) of the
Act, because there was no indication that the respondent in this
investigation received subsidies inconsistent with the WTO Subsidies
Agreement, i.e., export subsidies.
    Since the Preliminary Determination, the Department has not
received or found additional information on the record that would
contradict our preliminary decision that TK does not receive subsidies
inconsistent with the WTO Subsidies Agreement. Therefore, in accordance
with 705(a)(2) of the Act, we continue to find that critical
circumstances do not exist with respect to imports of subject
merchandise from Indonesia.
Analysis of Comments Received
    All issues raised in the case and rebuttal briefs by parties to this
investigation are addressed in the "Issues and Decision Memorandum" from
Stephen J. Claeys, Deputy Assistant Secretary for Import Administration,
to Joseph A. Spetrini, Acting Assistant Secretary for Import Administration,
dated August 9, 2006 (Decision Memorandum), which is hereby adopted by this
notice. Attached to this notice as an Appendix is a list of the issues which
parties have raised and to which we have responded in the Decision Memorandum.
Parties can find a complete discussion of all issues raised in this investigation
and the corresponding recommendations in this public memorandum which is on
file in the CRU. In addition, a complete version of the Decision Memorandum can
be accessed directly on the Internet at http://ia.ita.doc.gov/frn/index.html.
The paper copy and electronic version of the Decision Memorandum are identical
in content.
Suspension of Liquidation
    In accordance with section 705(c)(1)(B)(i)(I) of the Act, we have
calculated an individual rate for the company under investigation, TK.
With respect to the "all others" rate, section 705(c)(5)(A)(ii) of
the Act provides that if the countervailable subsidy rates established
for all exporters and
[[Page 47177]]
producers individually investigated are determined entirely under
section 776 of the Act, the Department may use any reasonable method to
establish an "all others" rate for exporters and producers not
individually investigated. In this case, although the rate for the only
investigated company is based entirely on facts available under section
776 of the Act, there is no other information on the record upon which
we could determine an "all others" rate. As a result, we have used
the rate for TK as the "all others" rate.
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                Exporter/Manufacturer                  Net Subsidy Rate
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PT. Pabrik Kertas Tjiwi Kimia Tbk...................       40.55 percent
All Others..........................................       40.55 percent
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    As a result of our Preliminary Determination and pursuant to
section 703(d) of the Act, we instructed the CBP to suspend liquidation
of all entries of certain lined paper products from Indonesia which
were entered or withdrawn from warehouse, for consumption on or after
February 13, 2006, the date of the publication of the Preliminary
Determination in the Federal Register. In accordance with section
703(d) of the Act, we instructed CBP to discontinue the suspension of
liquidation for subject merchandise for countervailing duty purposes
entered on or after June 13, 2006, but to continue the suspension of
liquidation of entries made from February 13, 2006, through June 12,
2006.
    We will issue a countervailing duty order and reinstate the
suspension of liquidation under section 706(a) of the Act if the ITC
issues a final affirmative injury determination, and will require a
cash deposit of estimated countervailing duties for such entries of
merchandise in the amounts indicated above. If the ITC determines that
material injury, or threat of material injury, does not exist, this
proceeding will be terminated and all estimated duties deposited or
securities posted as a result of the suspension of liquidation will be
refunded or canceled.
ITC Notification
    In accordance with section 705(d) of the Act, we will notify the
ITC of our determination. In addition, we are making available to the
ITC all non-privileged and non-proprietary information related to this
investigation. We will allow the ITC access to all privileged and
business proprietary information in our files, provided the ITC
confirms that it will not disclose such information, either publicly or
under an Administrative Protective Order (APO), without the written
consent of the Assistant Secretary for Import Administration.
Return or Destruction of Proprietary Information
    In the event that the ITC issues a final negative injury
determination, this notice will serve as the only reminder to parties
subject to an APO of their responsibility concerning the destruction of
proprietary information disclosed under APO in accordance with 19 CFR
351.305(a)(3). Failure to comply is a violation of the APO.
    This determination is published pursuant to sections 703(f) and
777(i) of the Act.
    Dated: August 9, 2006.
Joseph A. Spetrini,
Acting Assistant Secretaryfor Import Administration.
APPENDIX
List of Comments and Issues in the Decision Memorandum
Comment 1: Application of Adverse Facts Available
Comment 2: Attribution of Subsidies Received by Cross-owned Companies
           on Input Products
Comment 3: Are Subsidized Logs "Primarily Dedicated" to Certain Lined
           Paper Products?
Comment 4: Provision of Standing Timber at Preferential Rates
Comment 5: Government Ban on Log Exports
Comment 6: Subsidized Funding of Reforestation (Hutan Tanaman Industria
           (HTI) Program)
Comment 7: Loan Guarantee
Comment 8: Calculation of Subsidy Denominator
[FR Doc. E6-13472 Filed 8-15-06; 8:45 am]
BILLING CODE 3510-DS-S