[Federal Register Volume 76, Number 66 (Wednesday, April 6, 2011)]
[Notices]
[Pages 19043-19049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-8213]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-894]


Certain Tissue Paper Products From the People's Republic of 
China: Preliminary Affirmative Determination of Circumvention of the 
Antidumping Duty Order

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

Preliminary Determination

    We preliminarily determine that certain tissue paper products 
(tissue paper) produced and/or exported by Max Fortune (Vietnam) Paper 
Products Company, Limited (MFVN) \1\ to the United States from Vietnam 
are made from jumbo rolls and/or cut sheets of tissue paper produced in 
the People's Republic of China (PRC), and are circumventing the 
antidumping duty order on tissue paper from the 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) (PRC Tissue 
Paper Order).
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    \1\ MFVN is a company located in Vietnam and is a wholly owned 
subsidiary of Max Fortune Industrial Co., Ltd. (Max Fortune HK) 
located in Hong Kong.

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DATES:  Effective Date: April 6, 2011.

FOR FURTHER INFORMATION CONTACT: Brian Smith or Gemal Brangman, AD/CVD 
Operations, Office 2, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
1766 or (202) 482-3773, respectively.

SUPPLEMENTARY INFORMATION: 

Background

    On February 19, 2010, the Seaman Paper Company of Massachusetts, 
Inc. (the petitioner) requested that the Department of Commerce (the 
Department) initiate an anti-circumvention inquiry pursuant to section 
781(b) of the Act, and 19 CFR 351.225(h), to determine whether U.S.

[[Page 19044]]

imports of tissue paper exported from Vietnam by MFVN were made from 
jumbo rolls and/or cut sheets of tissue paper produced in the PRC, and 
thus circumventing PRC Tissue Paper Order. See the petitioner's 
February 19, 2010, anti-circumvention inquiry request (February 19 
Submission) at pages 13-14; and PRC Tissue Paper Order. Specifically, 
the petitioner alleged that Chinese-produced jumbo rolls and/or cut 
sheets of tissue paper sent to Vietnam for completion or assembly into 
merchandise of the same class or kind as that covered by the PRC Tissue 
Paper Order constituted circumvention pursuant to section 781(b) of the 
Act. The petitioner also alleged in its February 19 Submission that 
MFVN had been obtaining Chinese-produced tissue paper jumbo rolls and/
or cut sheets and using that merchandise in its U.S. tissue paper sales 
since it commenced its operations in 2005.
    On March 29, 2010, the Department initiated an anti-circumvention 
inquiry on imports of tissue paper from Vietnam produced and/or 
exported by MFVN. See Certain Tissue Paper Products from the People's 
Republic of China: Notice of Initiation of Anti-circumvention Inquiry, 
75 FR 64 (April 5, 2010) (Initiation Notice).
    On April 23, 2010, the Department issued an anti-circumvention 
questionnaire to MFVN, asking for sales and production information with 
respect to the period January 1, 2005, to the present (April 23 
Questionnaire). On May 13, 2010, MFVN entered a notice of appearance in 
this proceeding. Also, on May 13, 2010, MFVN requested additional time 
to file a response to the anti-circumvention questionnaire. Pursuant to 
this request, the Department extended the questionnaire response 
deadline until June 28, 2010, and MFVN submitted its response to the 
questionnaire on that date (June 28 Response). In its June 28 Response, 
MFVN admitted that it was possible that it manufactured some tissue 
paper in Vietnam from PRC-origin jumbo rolls before and during 2007. 
MFVN also stated that its records before 2008 were incomplete and 
unreliable. However, MFVN asserted that it could conclusively 
demonstrate that as of January 1, 2008, it did not convert any PRC-
origin jumbo rolls and/or cut sheets of tissue paper in Vietnam into 
its own tissue paper products. See pages 3 and 12 of MFVN's June 28 
Response.
    In the April 23 Questionnaire, the Department requested factors of 
production (FOP) information for purposes of determining whether the 
value of the processing performed in Vietnam represented a small 
portion of the value of the merchandise imported into the United 
States. MFVN responded that it would not submit FOP data to the 
Department because it claimed that since January 1, 2008, it no longer 
included Chinese-origin tissue paper jumbo rolls and/or cut sheets in 
its U.S. sales. See pages 14-15 of MFVN's June 28 Response.
    The Department issued a supplemental questionnaire to MFVN on July 
23, 2010, and received MFVN's supplemental questionnaire response on 
September 1, 2010.
    Also on September 1, 2010, MFVN filed a submission in which it 
rebutted the petitioner's February 19, 2010, allegations and provided 
information with respect to certain transactions with an affiliated 
Chinese company, Fuzhou Tian Jun Trading Co., Ltd. (Tian Jun), during 
the 2008-2009 period, which were alleged by the petitioner in its 
February 19 Submission to have involved tissue paper.
    The Department issued an additional supplemental questionnaire to 
MFVN on October 12, 2010, and received MFVN's supplemental 
questionnaire response on November 12, 2010.
    On November 16, 2010, the Department placed on the record certain 
data from the 2008-2009 administrative review of tissue paper from the 
PRC. See Memorandum from Brian Smith, Senior Analyst, to The File, 
dated November 16, 2010.
    On November 18, 2010, the Department issued a verification outline 
to MFVN.
    On November 22, 2010, the Department met with the petitioner's 
counsel to discuss agenda items in the verification outline issued to 
MFVN.\2\
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    \2\ See Memorandum to The File from Brian Smith, Senior Analyst, 
entitled ``Ex-Parte Meeting with Petitioner's Counsel,'' dated 
November 22, 2010.
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    The petitioner submitted pre-verification comments on November 24, 
2010.
    Pursuant to section 782(i) of the Act, the Department conducted 
verification of the questionnaire responses submitted by MFVN and its 
affiliates Max Fortune HK, Tian Jun, and Max Fortune (FZ) Paper 
Products Co., Ltd., from November 30 to December 16, 2010.\3\ This 
verification report is on file and available in the Central Records 
Unit (CRU) of the Department's main building.
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    \3\ See Memorandum to The File from Case Analysts entitled 
``Verification of the Questionnaire Response of Max Fortune 
(Vietnam) Paper Products Co., Ltd. and Its Affiliates in the Anti-
circumvention Inquiry and 2009-2010 Antidumping Duty Administrative 
Review of Certain Tissue Paper Products from the People's Republic 
of China,'' dated March 31, 2011 (MFVN verification report).
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    On January 18, 2011, the Department notified the parties by letter 
that it was postponing the final determination of this inquiry until 
August 1, 2011.\4\
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    \4\ See Letter to the Interested Parties from James Maeder, 
Office Director, entitled ``Anti-Circumvention Inquiry on Certain 
Tissue Paper Products from the People's Republic of China: Extension 
of Final Determination,'' dated January 18, 2011.
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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.\5\
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    \5\ 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.
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    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

[[Page 19045]]

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 tissue paper products, as 
described above in the ``Scope of the Antidumping Duty Order'' section, 
which are produced in Vietnam from Chinese-origin jumbo rolls and/or 
cut sheets of tissue paper, and exported from Vietnam to the United 
States by MFVN.

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 anti-circumvention inquiries under section 781(b)(1) 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; (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; and (E) the administering authority determines that 
action is appropriate to prevent evasion of such order.
    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 (R&D) 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 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.
    Section 781(b)(3) of the Act further provides that, in determining 
whether to include merchandise assembled or completed in a foreign 
country in an antidumping duty order, the Department shall consider: 
(A) The pattern of trade, including sourcing patterns; (B) whether the 
manufacturer or exporter of the merchandise described in accordance 
with section 781(b)(1)(B) of the Act is affiliated with the person who 
uses the merchandise described in accordance with section 781(b)(1)(B) 
to assemble or complete in the foreign country the merchandise that is 
subsequently imported into the United States; and (C) whether imports 
into the foreign country of the merchandise described in accordance 
with section 781(b)(1)(B) have increased after the initiation of the 
investigation which resulted in the issuance of such order.
    In this case, the PRC Tissue Paper 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 MFVN 
produced from Chinese-origin jumbo rolls and/or cut sheets of tissue 
paper. The list of products MFVN provided in its questionnaire 
responses indicates that the tissue paper products it exported to the 
United States meet the written description of the products subject to 
the PRC Tissue Paper Order. See June 28 Response at Exhibit 6. 
Accordingly, we find that the merchandise subject to this inquiry is 
the same class or kind of merchandise as that subject to the PRC Tissue 
Paper Order, pursuant to section 781(b)(1)(A) of the Act. With respect 
to the remaining statutory criteria for determining whether 
circumvention exists, the Department finds it necessary to rely on 
facts available, as the respondent failed to provide necessary, 
verifiable information upon which the Department could rely. Further, 
as discussed in detail below, we find it appropriate in this inquiry to 
apply facts available with an adverse inference, as the respondent 
failed to cooperate to the best of its ability in providing the 
necessary information.

Adverse Facts Available

    Section 776(a) of the Act, provides that, if (1) necessary 
information is not available on the record or (2) an interested party: 
(A) Withholds information that has been requested by the Department; 
(B) fails to provide such information in a timely manner or in the form 
or manner requested subject to sections 782(c)(1) and (e) of the Act; 
(C) significantly impedes a proceeding under the antidumping statute; 
or (D) provides such information but the information cannot be 
verified, the Department shall, subject to subsection 782(d) of the 
Act, use facts otherwise available in reaching the applicable 
determination.
    Furthermore, section 776(b) of the Act states that if the 
Department ``finds that an interested party has failed to cooperate by 
not acting to the best of its ability to comply with a request for 
information from the administering authority * * * , the administering 
authority * * * , in reaching the applicable determination under this 
title, may use an inference that is adverse to the interests of that 
party in selecting from among the facts otherwise available.'' See also 
SAA, H.Rep. No. 103-316 at 870 (1994). It is the Department's practice 
to make an adverse inference ``to ensure that the party does not obtain 
a more favorable result by failing to cooperate than if it had 
cooperated fully.'' Id. An adverse inference may include reliance on 
information derived from the petition, the final determination in the 
investigation, any previous review, or any other information placed on 
the record. See section 776(b) of the Act.
    In this case, MFVN informed the Department that it could not 
provide any information with respect to the production of the 
merchandise exported from Vietnam during the period January 1, 2005, to 
December 31, 2007. In fact, MFVN admitted that ``it is possible that 
MFVN might have made tissue paper in Vietnam from jumbo rolls from the 
PRC'' during this time period. See MFVN's June 28 Response at page 3. 
Furthermore, the data provided in the petitioner's February 19 
Submission

[[Page 19046]]

show that MFVN obtained a significant amount of Chinese-origin jumbo 
rolls and/or cut sheets of tissue paper during this time period. See 
February 19 Submission at pages 13-14. This is the extent of 
information on the record with regard to MFVN's production during this 
time period.
    Absent any further information on the record, pursuant to section 
776(a) of the Act, the Department has concluded that the application of 
facts available is warranted with respect to exports of tissue paper 
from MFVN to the United States from January 1, 2005, to December 31, 
2007 (2005-2007 period). Production information for the 2005-2007 
period is necessary for purposes of this anti-circumvention inquiry and 
without it on the administrative record, the Department cannot conduct 
its anti-circumvention analysis for the 2005-2007 period. MFVN claims 
that it was unable to maintain such records during the above-referenced 
time period. However, we find this claim to be unreasonable. A company 
is expected to maintain its production records in the normal course of 
business. For companies doing business in Vietnam, the Vietnamese 
Government has even issued regulations which require companies like 
MFVN to retain such records for up to 10 years.\6\ This is especially 
true in this case where MFVN demonstrated at verification that it 
maintained such records in both 2009 and 2010. Therefore, because MFVN 
did not provide the Department with necessary information with respect 
to MFVN's exports of tissue paper during the 2005-2007 period, the 
application of facts available pursuant to sections 776(a)(1) and (2) 
of the Act is warranted.
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    \6\ See Memorandum to the File dated March 31, 2011 which 
contains the following document, ``Decree No. 129/2004/ND-CP of May 
31, 2004 Detailing and Guiding the Implementation of a Number of 
Articles of the Accounting Law, Applicable to Business Activities,'' 
issued by the Government of the Socialist Republic of Vietnam on May 
31, 2004.
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    Furthermore, MFVN's admission that it ``possibly'' made tissue 
paper in Vietnam from Chinese-origin jumbo rolls, coupled with the fact 
that the petitioner's data show that MFVN obtained PRC-origin jumbo 
rolls and/or cut sheets from January 1, 2005, to December 31, 2007, 
leads us to conclude that MFVN failed to cooperate by not acting to the 
best of its ability to comply with the Department's request for 
information with respect to its commercial activities during this 
period. Therefore, pursuant to section 776(b) of the Act, an adverse 
inference is warranted. Accordingly, as adverse facts available (AFA), 
the Department preliminarily finds that all tissue paper produced and/
or exported by MFVN to the United States from January 1, 2005, to 
December 31, 2007, was made with Chinese-origin jumbo rolls and/or cut 
sheets of tissue paper.
    With respect to MFVN's exports of tissue paper to the United States 
during the calendar year 2008, the Department also concludes that the 
application of AFA is warranted. Although MFVN stated in its June 28 
Response that it could conclusively demonstrate through its accounting 
and production records that it did not use Chinese-origin tissue paper 
jumbo rolls and/or cut sheets in its U.S. sales during 2008, the 
Department was unable to verify this claim. In fact, at verification, 
MFVN provided inadequate and incomplete accounting records for calendar 
year 2008. Specifically, MFVN did not support its claim that it had 
ceased using Chinese-origin jumbo rolls and/or cut sheets of tissue 
paper in its U.S. sales during 2008, nor did it provide the necessary 
accounting records at verification to show the type and origin of the 
materials it used in its tissue paper exports to the United States from 
January 1, 2008, to December 31, 2008. See MFVN verification report at 
pages 2, 35-36, and 39-40.
    For example, at verification, MFVN provided a worksheet which 
reconciled the cost-of-sales figure in its 2008 audited financial 
statements to its purchases, beginning and ending inventory values and 
conversion costs, as reflected in its annual summary trial balance for 
2008. We subsequently requested that MFVN reconcile its monthly trial 
balances or other monthly general ledger-type reports to the annual 
summary trial balance for 2008. MFVN, however, claimed at verification 
that it could not locate its monthly trial balances or any other 
detailed accounting records for 2008 to support its annual summary 
trial balance amounts. See MFVN verification report at pages 35-36.
    In addition, we requested that MFVN provide the company's 2008 
monthly inventory movement ledgers for raw materials, work in process 
(WIP), and finished goods. While MFVN provided its detailed inventory 
ledger as of December 31, 2008, the company informed Department 
officials at verification that it could not provide any of the other 
requested 2008 monthly detailed inventory movement ledgers. Without the 
detailed trial balances or inventory movement ledgers, Department 
officials were unable to rely on the company's monthly production cost 
and inventory movement activity (for raw materials, WIP and finished 
goods) noted in its warehouse records for purposes of testing at 
verification the production quantity data contained in MFVN's 
submissions for calendar year 2008. See MFVN verification report at 
pages 35-36.
    Also, MFVN did not provide at verification, upon request, details 
of its raw material and WIP inventory as of January 1, 2008. Thus, 
Department officials were unable to obtain details of the amounts 
reflected in MFVN's beginning inventory value noted in its 2008 audited 
financial statements (e.g., quantity of pulp versus Chinese-sourced 
jumbo rolls in the beginning raw material inventory amount reflected in 
the 2008 audited financial statements). See MFVN verification report at 
pages 35-37.
    All of the above examples demonstrate that MFVN did not provide to 
the Department verifiable production data for calendar year 2008, was 
unable to tie its export sales data to its production data for calendar 
year 2008, and did not respond fully to the Department's questionnaires 
with regard to its production during that period. The absence of 
verifiable production data on the record for 2008 impeded the conduct 
of this anti-circumvention inquiry. Therefore, pursuant to section 
776(a)(2) of the Act, the Department concludes that the use of facts 
available is warranted with regard to MFVN's U.S. tissue paper sales 
transactions from January 1 to December 31, 2008.
    Furthermore, because MFVN did not provide verifiable data showing 
that it used only non-Chinese-origin jumbo rolls and/or sheets in its 
production of all of the tissue paper it exported to the United States 
from its facility during 2008, the Department concludes that MFVN did 
not act to the best of its ability in this inquiry. As noted above, a 
company is expected to maintain its production records in the normal 
course of business. MFVN was aware that these records were necessary 
for the Department's anti-circumvention analysis, but did not provide 
them at verification, as requested. Therefore, pursuant to section 
776(b) of the Act, an adverse inference is warranted because MFVN did 
not provide all of the necessary information on the record and failed 
to provide at verification the accounting records the Department needed 
to analyze the relevant production data for the calendar year 2008. 
Accordingly, as AFA, the Department preliminarily concludes that all of 
MFVN's exports of tissue paper to the United States during 2008 were 
produced with Chinese-origin jumbo rolls and/or cut sheets of tissue 
paper.

[[Page 19047]]

    In addition, MFVN's books and records, as verified, reflect that on 
January 1, 2009, the company had significant amounts of tissue paper in 
finished goods and WIP inventory. This entire inventory was produced 
and/or purchased during 2008 or earlier. At verification, MFVN stated 
that it did not have records to show the source of the material it used 
in the production of that inventory. Furthermore, Department officials 
discovered in the records MFVN provided at verification that there were 
jumbo rolls of Chinese-origin in inventory at the end of December 2008, 
which remained in inventory throughout 2009, and were later withdrawn 
from inventory in March 2010. See MFVN verification report at pages 40-
41. Therefore, the Department finds that adverse facts available is 
also warranted with respect to the beginning inventory amount in 2009. 
Accordingly, as AFA, the Department determines that any tissue paper 
exported by MFVN to the United States on or after January 1, 2009, 
which was withdrawn from, or produced from merchandise in, finished 
goods or WIP inventory as of January 1, 2009, was produced from Chinese 
jumbo rolls and/or cut sheets.
    Based on the foregoing analysis, as AFA, the Department 
preliminarily finds that MFVN used Chinese-origin jumbo rolls and/or 
cut-sheets of tissue paper in its production of tissue paper that it 
exported to the United States from January 1, 2005, to December 31, 
2008, and that MFVN continued to use such merchandise from inventory 
during that period to produce and/or sell tissue paper on or after 
January 1, 2009. Accordingly, the Department preliminarily concludes 
that MFVN's tissue paper exports to the United States during 2009 and 
2010 included tissue paper produced from Chinese jumbo rolls and/or cut 
sheets.
    However, the Department was able to verify based on its examination 
of Vietnamese Customs data from January 1, 2008, to December 10, 2010, 
MFVN had not imported any additional Chinese-origin jumbo rolls and/or 
cut sheets of tissue paper. See MFVN verification report at page 3. In 
light of these verified data and the Department's observation of MFVN's 
tissue-paper production operations at verification, we find that MFVN 
now has the capacity and ability to produce tissue paper for export.
    In determining whether circumvention of an order is occurring, 
section 781(b)(1) of the Act directs the Department to address, among 
other things, whether before importation into the United States, the 
imported merchandise is completed or assembled in another country from 
merchandise which is subject to the order or produced in the foreign 
country that is subject to the order. See section 781(b)(1)(B) of the 
Act. Based on the preceding analysis, there is little dispute that 
during the period of analysis of this inquiry, MFVN completed some 
tissue paper in Vietnam using jumbo rolls and/or cut sheets produced in 
the PRC.
    Section 781(b)(1) of the Act also directs the Department to examine 
whether (1) the process of assembly or completion in the foreign 
country (i.e., Vietnam) is minor or insignificant and (2) the value of 
the merchandise produced in the country subject to the order (i.e., the 
PRC) is a significant portion of the total value of the merchandise 
exported to the United States. See sections 781(b)(1)(C) and (D) of the 
Act. Because the PRC and Vietnam are non-market economies, in any 
review of merchandise produced in those countries, section 773(c)(4) of 
the Act provides that the Department shall value the FOP utilizing 
prices or costs 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. Pursuant to this 
provision, in its questionnaire to MFVN, the Department requested the 
FOP data for both the Chinese-origin jumbo rolls and/or sheets imported 
by MFVN, and the processing and packaging operations performed by MFVN 
in Vietnam. See the Department's April 23 Questionnaire at pages 9-10. 
See also Certain Tissue Paper Products from the People's Republic of 
China: Affirmative Final Determination of Circumvention of the 
Antidumping Duty Order, 73 FR 57591 (October 3, 2008); and 
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).
    In determining whether the process of assembly or completion of 
tissue paper from jumbo rolls and/or cut sheets is ``minor or 
insignificant'' as required by section 781(b)(1), section 781(b)(2) of 
the Act directs the Department to consider various factors including 
(a) MFVN's level of investment in Vietnam; (b) MFVN's level of R&D in 
Vietnam; (c) the nature of MFVN's production process in Vietnam; (d) 
the extent of MFVN's production facilities in Vietnam; and (e) whether 
the value of the processing performed in Vietnam represents a small 
proportion of the value of the merchandise MFVN exported to the United 
States. With respect to the first criterion, the Department verified 
that the level of investment by MVFN for equipment used in converting 
the PRC-origin jumbo rolls and/or cut sheets into finished tissue paper 
is minor or insignificant. See MFVN verification report at page 6. 
Moreover, the record evidence for this circumvention inquiry 
demonstrates that MFVN has not undertaken a significant level of R&D in 
order to process tissue paper products. See June 28 Response at pages 
12-13. Furthermore, the production process conducted by MFVN in 
converting the PRC-origin jumbo rolls or sheets to cut-to-length tissue 
paper is limited and minor when compared to the production process of 
the jumbo rolls or sheets. See June 28 Response at pages 13-14. In 
addition, the Department did verify that MFVN has production facilities 
in Vietnam in terms of the capital equipment and the types of employees 
used in the production process. See MFVN verification report at pages 6 
and 19-20. However, as noted above, MFVN was unable to provide evidence 
that, before January 1, 2009, it used its full capacity of production 
to manufacture tissue paper.
    With respect to the criterion of section 781(b)(2)(e) of the Act, 
however, MFVN did not provide the Department with sufficient 
information to determine whether the value of the processing MFVN 
performed in Vietnam represents a small proportion of the value of the 
merchandise MFVN exported to the United States. In response to our 
questionnaire, MFVN refused to submit FOP information, because it 
stated that it could definitively demonstrate through its books and 
records that as of January 1, 2008, it did not use Chinese-origin jumbo 
rolls and/or cut sheets of tissue paper in its U.S. tissue paper sales. 
See June 28 Response at pages 3 and 12. However, as explained above, 
MFVN was unable to substantiate this claim at verification. 
Accordingly, for this factor, the application of facts available is 
also warranted pursuant to section 776(a) of the Act.
    In its February 19 Submission, the petitioner provided evidence 
based on foreign market research that the conversion by MFVN of jumbo 
rolls and/or sheets of tissue paper produced in the PRC into finished 
tissue paper products in Vietnam is a minor or insignificant process as 
defined under sections 781(b)(1)(C) and (b)(2) of the Act, and that the 
value of the processing performed by MFVN is a minor portion

[[Page 19048]]

of the value of the completed merchandise. Accordingly, the petitioner 
reasoned that the value of the PRC-origin jumbo rolls and/or sheets 
used by MFVN is a significant portion of the total value of the 
merchandise exported to the United States, pursuant to section 
781(b)(1)(D) of the Act. See Initiation Notice, 75 FR 17128-17131. 
Further, in a prior anti-circumvention segment of this proceeding, the 
Department determined that the process of converting Chinese-origin 
jumbo rolls in Vietnam was minor or insignificant, and that the value 
of the Chinese-origin jumbo rolls was a significant portion of the 
total value of the finished tissue paper products the respondent 
exported to the United States.\7\
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    \7\ The Department came to this conclusion based on its analysis 
of both the qualitative and quantitative data submitted by the 
respondent. See Certain Tissue Paper Products From the People's 
Republic of China: Affirmative Final Determination of Circumvention 
of the Antidumping Duty Order, 73 FR 57591 (October 3, 2008).
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    Therefore, based on data contained in the petitioner's February 19 
Submission, as well as our findings in a prior anti-circumvention 
segment of the PRC tissue paper proceeding, the Department determines 
in this case, as facts available, that the value of the processing MFVN 
performed in Vietnam represents a small proportion of the value of the 
merchandise MFVN exported to the United States.
    Taking into consideration all of the factors under section 
781(b)(2) of the Act, the Department concludes that the process of 
converting the jumbo rolls and/or cut sheets of tissue paper into the 
finished tissue paper products in Vietnam is minor or insignificant, 
pursuant to sections 781(b)(1)(C) of the Act. Accordingly, the 
Department concludes, based on the facts available, that the value of 
the jumbo rolls and/or cut sheets produced in the PRC is a significant 
portion of the total value of the finished tissue paper products MFVN 
exported to the United States, pursuant to section 781(b)(1)(D) of the 
Act.
    Furthermore, in accordance with section 781(b)(1)(E) of the Act, we 
find that action is appropriate to prevent evasion of the PRC Tissue 
Paper Order.
    In conclusion, the Department preliminarily determines under 
section 781(b) of the Act, that exports to the United States of tissue 
paper products produced from PRC-origin jumbo rolls and/or cut sheets 
and further processed in Vietnam by MFVN constitute circumvention of 
the PRC Tissue Paper Order.
    The Department notes that this represents the third instance in 
which the Department has found an exporting company to have 
circumvented the PRC Tissue Paper Order. See also Certain Tissue Paper 
Products from the People's Republic of China: Affirmative Final 
Determination of Circumvention of the Antidumping Duty Order, 74 FR 
29172 (June 19, 2009); and Certain Tissue Paper Products From the 
People's Republic of China: Affirmative Final Determination of 
Circumvention of the Antidumping Duty Order, 73 FR 57591 (October 3, 
2008). The Department has an obligation to administer the law in a 
manner that prevents evasion of the order. See Tung Mung Development v. 
United States, 219 F. Supp. 2d 1333, 1343 (CIT 2002), affirmed 354 F.3d 
1371 (January 15, 2004) (finding that the Department has a 
responsibility to prevent the evasion of payment of antidumping 
duties). Further, section 781(b)(1)(E) of the Act directs the 
Department to take necessary action to ``prevent evasion'' of 
antidumping or countervailing duty orders when it concludes that 
``merchandise has been completed or assembled in other foreign 
countries'' and is circumventing an order. Accordingly, to prevent 
future evasion of the PRC Tissue Paper Order, in light of our 
preliminary determination, the Department will instruct CBP to suspend 
liquidation of all entries of tissue paper produced and/or exported by 
MFVN that were entered, or withdrawn from warehouse, for consumption on 
or after the date of initiation of the circumvention inquiry.
    As noted above, the Department did determine that MFVN now has the 
capacity and ability to produce tissue paper for export from 
domestically-sourced input materials. Should the Department conduct an 
administrative review in the future, and determine in the context of 
that review that MFVN has not produced for export tissue paper using 
Chinese-origin jumbo rolls and/or cut sheets, the Department will 
consider initiating a changed circumstances review pursuant to section 
751(b) of the Act to determine if the continued suspension of 
merchandise produced and/or exported by MFVN from Vietnam is warranted.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, the Department will 
direct CBP to suspend liquidation and to require a cash deposit of 
estimated duties, at the PRC-wide rate of 112.64 percent, on all 
unliquidated entries of tissue paper produced and/or exported by MFVN 
that were entered, or withdrawn from warehouse, for consumption on or 
after March 29, 2010, the date of initiation of the circumvention 
inquiry.

Notification to the International Trade Commission

    The Department, consistent with section 781(e) of the Act and 19 
CFR 351.225(f)(7)(i)(B), has notified the International Trade 
Commission (ITC) of this preliminary determination to include the 
merchandise subject to this inquiry within the PRC Tissue Paper Order. 
Pursuant to section 781(e) of the Act, the ITC may request 
consultations concerning the Department's proposed inclusion of the 
subject merchandise. If, after consultations, the ITC believes that a 
significant injury issue is presented by the proposed exclusion, it 
will have 15 days to provide written advice to the Department.

Public Comment

    Case briefs from interested parties may be submitted no later than 
30 days from the date of publication of this notice. A list of 
authorities used and an executive summary of issues should accompany 
any briefs submitted to the Department. See 19 CFR 351.309(c). This 
summary should be limited to five pages total, including footnotes. 
Rebuttal briefs limited to issues raised in the case briefs may be 
filed no later than 35 days after the date of publication of this 
notice. See 19 CFR 351.309(d).
    Interested parties, who wish to request a hearing, or to 
participate if one is requested, must submit a written request to the 
Assistant Secretary for Import Administration within 30 days after the 
date of publication of this notice. See 19 CFR 351.310. Requests should 
contain the party's name, address, and telephone number, the number of 
participants, and a list of the issues to be discussed. At the hearing, 
each party may make an affirmative presentation only on issues raised 
in that party's case brief and may make rebuttal presentations only on 
arguments included in that party's rebuttal brief. We intend to hold a 
hearing, if requested, no later than 40 days after the date of 
publication of this notice.

Final Determination

    The final determination with respect to this circumvention inquiry, 
including the results of the Department's analysis of any written 
comments, will be issued no later than August 1, 2011.
    This preliminary affirmative circumvention determination is 
published in accordance with section 781(b) of the Act and 19 CFR 
351.225.


[[Page 19049]]


    March 31, 2011.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2011-8213 Filed 4-5-11; 8:45 am]
BILLING CODE 3510-DS-P