Artists’ Canvas From China

Investigation No. 731-TA-1091 (Preliminary)

Publication 3777 May 2005
U.S. International Trade Commission

Robert A. Rogowsky

Director of Operations

COMMISSIONERS

Address all communications to

Secretary to the Commission

United States International Trade Commission

Washington, DC 20436

Staff assigned:

Megan Spellacy, Investigator

Nancy Bryan, Economist

Eric Land, Industry Analyst

Justin Lee, Accountant

Mark Rees, Attorney

Steve Hudgens, Statistician

Diane Mazur, Supervisory Investigator

Jennifer A. Hillman

Deanna Tanner Okun, Vice Chairman

Marcia E. Miller

Stephen Koplan, Chairman

Charlotte R. Lane

Daniel R. Pearson
U.S. International Trade Commission

Washington, DC 20436

May 2005

www.usitc.gov

Publication 3777

Artists’ Canvas From China

Investigation No. 731-TA-1091 (Preliminary)

i

CONTENTS

Page

Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Views of the Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Part I: Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

U.S. market summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Previous investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Organization of report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2

Nature and extent of alleged sales at LTFV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

Summary data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

The subject product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

The domestic like product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4

Physical characteristics and uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4

Manufacturing facilities and production employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5

Interchangeability and customer and producer perceptions . . . . . . . . . . . . . . . . . . . . . . . . . . I-5

Channels of distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6

Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6

Part II: Conditions of competition in the U.S. market ................................... II-1

U.S. market segments/channels of distribution and market characteristics . . . . . . . . . . . . . . . . . II-1

Supply and demand considerations ................................................ II-1

U.S. supply ............................................................... II-1

U.S. demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3

Substitutability issues ....................................................... II-4

Comparison of domestic and imported product and subject imports ................... II-4

Other country comparisons ................................................... II-5

Part III: U.S. producers’ production, shipments, and employment .......................... III-1

U.S. producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1

U.S. capacity, production, and capacity utilization ................................... III-2

U.S. producers’ U.S. shipments and export shipments ................................. III-3

U.S. producers’ inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-3

U.S. employment, wages, and productivity ......................................... III-4

U.S. producers’ imports and purchases ............................................. III-5

Part IV: U.S. imports, apparent consumption, and market shares . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1

U.S. imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1

Apparent U.S. consumption and market shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-3

Part V: Pricing and related information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Factors affecting prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Raw material costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Transportation costs to the U.S. market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

U.S. inland transportation costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Exchange rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Pricing practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2

Pricing methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2

Sales terms and discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2

Price data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3
ii

CONTENTS

Page

Part V: Pricing and related information–Continued

Price trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3

Price comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-5

Lost sales and lost revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-5

Part VI: Financial condition of U.S. producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1

Operations on artists’ canvas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1

Capital expenditures and research and development expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-2

Assets and return on investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-3

Capital and investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-3

Part VII: Threat considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1

The industry in China .......................................................... VII-1

U.S. importers’ inventories from China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1

U.S. importers’ imports subsequent to March 31, 2005 ................................ VII-2

Dumping in third-country markets ................................................ VII-2

Appendixes

A. Federal Register notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

B. Conference witnesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

C. Summary data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1

D. Alleged effects of subject imports on U.S. producers’ existing development and production 

efforts, growth, investment, and ability to raise capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1

Note.–Information that would reveal confidential operations of individual concerns may not be published

and therefore has been deleted from this report. Such deletions are indicated by asterisks.
 1

 The record is defined in sec. 207.2(f) of the Commission’s Rules of Practice and Procedure (19 CFR § 207.2(f)).

UNITED STATES INTERNATIONAL TRADE COMMISSION

Investigation No. 731-TA-1091 (Preliminary)

ARTISTS’ CANVAS FROM CHINA

DETERMINATION

On the basis of the record1

 developed in the subject investigation, the United States International

Trade Commission (Commission) determines, pursuant to section 733(a) of the Tariff Act of 1930 (19

U.S.C. § 1673b(a)) (the Act), that there is a reasonable indication that an industry in the United States is

materially injured by reason of imports from China of artists’ canvas, provided for in subheadings

5901.90.20 and 5901.90.40 of the Harmonized Tariff Schedule of the United States, that are alleged to be

sold in the United States at less than fair value (LTFV).

COMMENCEMENT OF FINAL PHASE INVESTIGATION

Pursuant to section 207.18 of the Commission’s rules, the Commission also gives notice of the

commencement of the final phase of its investigation. The Commission will issue a final phase notice of

scheduling, which will be published in the Federal Register as provided in section 207.21 of the

Commission’s rules, upon notice from the Department of Commerce (Commerce) of an affirmative

preliminary determination in the investigation under section 733(b) of the Act, or, if the preliminary

determination is negative, upon notice of an affirmative final determination in that investigation under

section 735(a) of the Act. Parties that filed entries of appearance in the preliminary phase of the

investigation need not enter a separate appearance for the final phase of the investigation. Industrial

users, and, if the merchandise under investigation is sold at the retail level, representative consumer

organizations have the right to appear as parties in Commission antidumping and countervailing duty

investigations. The Secretary will prepare a public service list containing the names and addresses of all

persons, or their representatives, who are parties to the investigation.

BACKGROUND

On April 1, 2005, a petition was filed with the Commission and Commerce by Tara Materials

Inc., Lawrenceville, Georgia, alleging that an industry in the United States is materially injured or

threatened with material injury by reason of LTFV imports of artists’ canvas from China. Accordingly,

effective April 1, 2005, the Commission instituted antidumping duty investigation No. 731-TA-1091

(Preliminary).

Notice of the institution of the Commission’s investigation and of a public conference to be held

in connection therewith was given by posting copies of the notice in the Office of the Secretary, U.S.

International Trade Commission, Washington, DC, and by publishing the notice in the Federal Register

of April 6, 2005 (70 FR 17467). The conference was held in Washington, DC, on April 22, 2005, and all

persons who requested the opportunity were permitted to appear in person or by counsel.
 
 1

 The deadline for filing a petition with the Commission on any given business day is noon, following which the

petition is deemed filed the next business day. Commission Rule 207.10(a), as amended, 70 Fed. Reg. 8510 (Feb.

22, 2005), 19 C.F.R. § 207.10(a) (2005). Petitioner, having missed the noon deadline on March 31, 2005, sought

leave to have its petition nevertheless deemed filed with the Commission that day. The request was denied because

of the absence of good cause demonstrated. The petition was therefore filed on April 1, 2005.

 2

 See 19 U.S.C. § 1673b(a); see also American Lamb Co. v. United States, 785 F.2d 994, 1001-04 (Fed Cir.

1986); Ranchers-Cattlemen Action Legal Found. v. United States, 74 F. Supp.2d 1353, 1368-69 (Ct. Int’l Trade

1999); Aristech Chemical Corp. v. United States, 20 CIT 353, 354-55 (1996). This investigation does not raise the

issue whether the establishment of an industry is materially retarded by reason of the allegedly unfairly traded

imports.

 3

 See American Lamb, 785 F.2d at 1001; see also Texas Crushed Stone Co. v. United States, 35 F.3d 1535, 1543

(Fed. Cir. 1994).

 4

 19 U.S.C. § 1677(4)(A).

3

VIEWS OF THE COMMISSION

Based on the record in this preliminary phase investigation, we find that there is a reasonable

indication that an industry in the United States is materially injured by reason of imports of artists’ canvas

from China that are allegedly sold in the United States at less than fair value (LTFV).

The petition was filed on April 1, 2005, by the largest domestic producer of artists’ canvas, Tara

Materials, Inc. (Tara).1

 Ten importers and three foreign producers/exporters have participated as

respondent parties (collectively, Respondents): importers Michaels Stores, Inc., Aaron Brothers, Inc.

(Aaron Brothers), MacPherson’s, ColArt Americas, Inc., Dick Blick Art Materials, Sbars, Inc., Hobby

Lobby Stores, Inc., A.C. Moore, Jerry’s Artarama, and Jo-Ann’s Stores, Inc.; and Chinese

producers/exporters Wuxi Phoenix Artist Materials Co., Ltd., Ningbo Conda Import & Export Co., Ltd.,

and Ningbo Two Birds Industry Co., Ltd.

I. THE LEGAL STANDARD FOR PRELIMINARY DETERMINATIONS

The legal standard for preliminary antidumping and countervailing duty determinations requires

the Commission to determine, based upon the information available at the time of the preliminary

determination, whether there is a reasonable indication that a domestic industry is materially injured or

threatened with material injury, or that the establishment of an industry is materially retarded, by reason

of the allegedly unfairly traded imports.2

 In applying this standard, the Commission weighs the evidence

before it and determines whether “(1) the record as a whole contains clear and convincing evidence that

there is no material injury or threat of such injury; and (2) no likelihood exists that contrary evidence will

arise in a final investigation.”3

II. DOMESTIC LIKE PRODUCT

A. In General

To determine whether an industry in the United States is materially injured or threatened with

material injury by reason of imports of the subject merchandise, the Commission first defines the

“domestic like product” and the “industry.”4

 Section 771(4)(A) of the Tariff Act of 1930, as amended

(the Act), defines the relevant domestic industry as the “producers as a [w]hole of a domestic like

product, or those producers whose collective output of a domestic like product constitutes a major
 5

 19 U.S.C. § 1677(4)(A).

 6

 19 U.S.C. § 1677(10).

 7 See, e.g., NEC Corp. v. Department of Commerce, 36 F. Supp.2d 380, 383 (Ct. Int’l Trade 1998); Nippon

Steel Corp. v. United States, 19 CIT 450, 455 (1995); Torrington Co. v. United States, 747 F. Supp. 744, 749 n.3

(Ct. Int’l Trade 1990), aff’d, 938 F.2d 1278 (Fed. Cir. 1991) (“every like product determination ‘must be made on

the particular record at issue’ and the ‘unique facts of each case’”). The Commission generally considers a number

of factors including: (1) physical characteristics and uses; (2) interchangeability; (3) channels of distribution;

(4) customer and producer perceptions of the products; (5) common manufacturing facilities, production processes,

and production employees; and, when appropriate, (6) price. See, e.g., Nippon, 19 CIT at 455 n.4; Timken Co. v. 

United States, 913 F. Supp. 580, 584 (Ct. Int’l. Trade 1996).

 8

 See, e.g., S. Rep. No. 96-249, at 90-91 (1979).

 9

 See, e.g., Nippon, 19 CIT at 455; Torrington, 747 F. Supp. at 748-49; S. Rep. No. 96-249, at 90-91 (Congress

has indicated that the domestic like product standard should not be interpreted in “such a narrow fashion as to permit

minor differences in physical characteristics or uses to lead to the conclusion that the product and article are not

‘like’ each other, nor should the definition of ‘like product’ be interpreted in such a fashion as to prevent

consideration of an industry adversely affected by the imports under consideration.”).

 10 See, e.g., Hosiden Corp. v. Advanced Display Mfrs., 85 F.3d 1561, 1568 (Fed. Cir. 1996) (Commission may

find determination of six domestic like products in investigations where Commerce found five classes or kinds);

Torrington, 747 F. Supp. at 748-52 (affirming Commission’s determination of six domestic like products in

investigations where Commerce found five classes or kinds).

 11 See Acciai Speciali Terni S.p.A. v. United States, 118 F. Supp.2d 1298, 1304-05 (Ct. Int’l Trade 2000);

Nippon Steel Corp. v. United States, 19 CIT 450, 455 (1995); Asociacion Colombiana de Exportadores de Flores v.

United States, 693 F. Supp. 1165, 1169 n.5 (Ct. Int’l Trade 1998) (particularly addressing like product

determination); Citrosuco Paulista, S.A. v. United States, 704 F. Supp. 1075, 1087-88 (Ct. Int’l. Trade 1988). 

4

proportion of the total domestic production of the product.”5

 In turn, the Act defines “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.”6

The decision regarding the appropriate domestic like product(s) in an investigation is a factual

determination, and the Commission has applied the statutory standard of “like” or “most similar in

characteristics and uses” on a case-by-case basis.7

 No single factor is dispositive, and the Commission

may consider other factors it deems relevant based on the facts of a particular investigation.8

 The

Commission looks for clear dividing lines among possible like products, and disregards minor

variations.9

 Although the Commission must accept the determination of the Department of Commerce

(Commerce) as to the scope of the imported merchandise allegedly subsidized or sold at LTFV, the

Commission determines what domestic product is like the imported articles that Commerce has

identified.10 The Commission must base its domestic like product determination on the record in the

investigation before it. The Commission is not bound by prior determinations, even those pertaining to

the same imported products, but may draw upon previous determinations in addressing pertinent like

product issues.11

B. Product Description

In its notice of initiation, Commerce defined the imported merchandise within the scope of

investigation as – 

artist canvases regardless of dimension and/or size, whether assembled or unassembled (i.e., kits

that include artist canvas and other items, such as a wood frame), that have been primed/coated,

whether or not made from cotton, whether or not archival, whether bleached or unbleached, and

whether or not containing an ink receptive top coat. . . . Artist canvases (i.e., pre-stretched
 12 70 Fed. Reg. 21996 (April 28, 2005). Imports of artists’ canvas are classifiable (with certain nonsubject

merchandise) under two subheadings of the HTS, 5901.90.20.00 and 5901.90.20.00. Imports of artists’ canvas in

coated rolls may also be classified under the HTS headings 5903 and 5907. Confidential Staff Report (May 9, 2005)

(CR) at I-4, V-1 n.4, Public Staff Report (PR) at I-3, V-1 n.4; CR, PR at Table I-1. For imports from China

classified under 5901.90.20.00 and 5901.90.20.00, respectively, normal trade relations tariff rates of 7 percent ad

valorem and 4.1 percent ad valorem apply. CR, PR at Table I-1. 

 13 70 Fed. Reg. at 21996.

 14 The woven fabrics out of which it is made include linen, cotton, polyester, muslin, and jute.

 15 Revised and Corrected Transcript of April 22, 2005, Conference (Tr.) at 22-26 (Paul Straquadine, Vice

President of Sales, Tara). 

 16 Petitioner’s Postconference Brief at 4-7.

 17 Respondents’ Postconference Brief at 8-9. 

 18 Tr. at 24-26, 71-72 (Mr. Straquadine), 75-76 (George Thompson, Petitioner’s counsel, and Peter Delin, Vice

President of Marketing, Tara), 101-02 (Mr. Straquadine); CR at I-6, PR at I-5; Petitioner’s Postconference Brief at 3

& Exh. 3. 

 19 Tr. at 102 (Mr. Straquadine) (Tara sought their inclusion because of concerns of possible circumvention of

any antidumping order). 

 20 Respondents’ Postconference Brief at 8-9 (noting that the scope covers products not actually produced by

Petitioner, such as kits and bleached canvas).

5

canvases, canvas panels, canvas pads, canvas rolls . . . , printable canvases, floor cloths, and

placemats) are tightly woven prepared painting and/or printing surfaces.12

Specifically excluded from the scope are “tracing cloths and stretcher strips . . . so long as they are not

incorporated into artist canvases or sold as part of an artist canvas kit.”13

Subject artists’ canvas is a surface for the graphic presentation of painted or printed images. 

Made from woven fabric14 that is primed and coated (“gessoed”) to accept paints or inks, it is sold in a

variety of sizes, shapes, textures, and formats.15

C. Analysis

Petitioner argues that all artists’ canvas, regardless of size, shape, texture, fabric, or format,

constitutes a single domestic like product.16 Respondents concur for purposes of this phase of the

investigation.17

The record warrants finding a single like product for the myriad artists’ canvas products covered

by the scope of the investigation. Commonly marketed physical formats of artists’ canvas include prestretched canvas (coated canvas that is stretched and affixed to stretcher bars, typically made of wood);

canvas panels (coated canvas that is adhered to a chipboard or a cardboard core); archival board (coated

canvas of high professional grade that is adhered to hardboard); canvas pads (coated canvas sheets that

are bound together in notebook form); canvas rolls or bulk/rolled canvas (coated canvas sold in various

widths and lengths); print canvas (coated canvas used to make art reproductions or giclées on digital

printers); floor cloths and placemats (heavyweight canvas coated on one side for use as decorative floor or

table coverings); and canvas kits (artists’ canvas of varying formats sold in an ensemble with additional

art supplies, such as paintbrushes or paint).18 

Kits are included within the investigation’s scope insofar as they incorporate artists’ canvas.19 

The volume of such kits fabricated domestically, if any, is not known, other than the fact that Tara itself

does not make them.20 Because kits are included within the scope, even if there were no domestic

production the Commission would still have to find the next “most similar” article to such kits that is 
 21 See, e.g., Certain Frozen Fish Fillets from Vietnam, Inv. No. 731-TA-1012 (Prelim.), USITC Pub. 3533

(Aug. 2002) at 5-7 (“Where, as here, there is no domestic product that is ‘like’ the subject imports, the statute calls

for the Commission to find the domestic product that is ‘most similar’ in characteristics and uses.”); Nepheline

Syenite from Canada, Inv. No. 731-TA-525 (Final), USITC Pub. 2502 (Apr. 1992) at 7 (Since nepheline syenite was

not produced in the United States, the Commission defined the domestic like product to include two similar

products, feldspar and aplite), aff’d, Feldspar Corp. v. United States, 825 F. Supp. 1095 (Ct. Int’l Trade 1993).

 22 We also note that we have no data from manufacturers of product other than artists’ canvas.

 23 There is no basis upon which to consider the expansion of the domestic like product definition beyond the

scope. 

 24 CR at I-5, PR at I-4-I-5.

 25 Tr. at 26 (Mr. Straquadine).

 26 See, e.g., Petition at 29.

 27 Some professional artists also prefer to purchase in bulk and perform their own stretching rather than

purchasing pre-stretched canvas. See Tr. at 25 (Mr. Straquadine).

 28 See Respondents’ Brief at 9; See also Tr. at 28 (Mr. Straquadine) (“The term artists’ canvas is . . . a very

specific descriptor for fabric prepared with an artists’ coating intended for painting or printing.”) 

 29 CR at I-7, II-1, PR at I-6, II-1. 

6

domestically produced (as it would with respect to bleached canvas, which Respondents contend Tara

also does not produce).21

Tara does not claim that resort to this form of like product analysis is necessary, however, and

Respondents have not challenged a single like product definition that includes canvas kits. Based on the

limited information available, the next most similar article to canvas kits (or bleached canvas) would

appear to be other artists’ canvas products of the same canvas type.22 Thus, the appropriateness of a

single like product is the only domestic like product issue raised in the preliminary phase.23 

The current record does not establish clear dividing lines among the various artists’ canvas

products covered by the scope sufficient to warrant a finding of two or more domestic like products. 

While the record shows that there are numerous grades, textures, shapes, and sizes of canvas, and that

the canvas itself may be delivered in various formats or packages as described above, the physical

characteristics and uses of artists’ canvas products are similar. All artists’ canvas is used as a medium

for the graphic expression of art, particularly involving paints or inks. It is made of a canvas fabric that,

once coated with a specific chemical product, known as gesso or primer, will allow the paint or ink to be

applied without penetrating the fabric. Such coated canvas is used exclusively for artists’ canvas. The

coating provides the artist with the surface upon which to produce a graphic presentation, and the canvas

serves as the material that best supports the coated surface.24 Regardless of the type or form in which it

is sold, artists’ canvas always serves the same function in the creative process.

Artists use an array of canvas types for the same general purpose, and an artist’s show may

incorporate multiple types of canvas hanging side by side.25 Artists’ canvas is therefore interchangeable,

within limits. Canvas presented on a stretcher strip, for example, may not be used for printing.26 The

costs associated with certain materials may also limit their use for particular applications.27 The parties

generally agree that artists’ canvas should be treated as one like product, and the perceptions of

importers and producers conveyed in this phase of the investigation do not support drawing definitional

distinctions based on differences among the various types.28 

In terms of channels of distribution, all types of artists’ canvas are sold to retailers and to

distributors/wholesalers, the two main channels for most domestically-produced product.29 Thus, all

types of artists’ canvas products compete for sales in the same channels of distribution in the U.S.

market.
 30 We note that Tara performs a limited amount of hand priming in its production facility. Tr. at 28 (Mr.

Straquadine). Tara also ***. Petitioner’s Postconference Brief at 7-8.

 31 The *** accounted for *** of U.S. production of artists’ canvas in 2004. See CR/PR at III-1 (*** accounted

for *** percent).

 32 CR at I-6-I-7, PR at I-5.

 33 Tr. at 29 (Mr. Straquadine).

 34 CR/PR at Table I-3. 

 35 We will explore the domestic like product issue further in any final phase investigation, particularly with

respect to the treatment of canvas kits, and whether bulk/rolled canvas and assembled canvas should be treated as

separate domestic like products. 

 36 19 U.S.C. § 1677(4)(A). In defining the domestic industry, the Commission’s general practice has been to

include in the industry all domestic production of the domestic like product, whether toll-produced, captively

consumed, or sold in the domestic merchant market. See United States Steel Group v. United States, 873 F. Supp.

673, 681-84 (Ct. Int’l Trade 1994), aff’d, 96 F.3d 1352 (Fed. Cir. 1996). Thus, toll producers that engage in

sufficient production-related activity are typically included in the industry.

7

There is also overlap in terms of manufacturing facilities, processes, and employees. The

primary material used in the manufacture of artists’ canvas is raw canvas. The coatings are mixed using

various chemical compounds that make a specialized paint-like material that is receptive to specific artist

paints or printing inks. All canvas is generally coated in the same facility, on the same machine coating

lines, by the same production employees.30

Once the coating process is complete, the canvas is inspected and may be placed on bulk rolls or

smaller rolls, or sheeted and cut to size for use in a lithographic printing, pre-stretched artists’ canvas or

panels, or other artist substrate. There are currently *** domestic producers, ***, that manufacture both

canvas rolls and pre-stretched canvas;31 other firms are engaged in the production of pre-stretched canvas

from purchased canvas rolls. Pre-stretched canvas requires the construction of a type of frame for

stretching, the canvas to be cut to a specific size, and the attachment of cut canvas to the frame.32 Tara

reports that its roll-up, pre-stretch, and panel processing take place in the same facility within 100 yards

of its coating machines, and are often performed by the same employees.33 

Artists’ canvas products vary in price depending on such factors as the materials used, size, and

physical format. Bulk/rolled canvas, for example, is used in the production of assembled canvas,

including pre-stretched canvas. Domestic average unit values (AUVs) in 2004 for artists’ canvas in

bulk/rolled form were $*** per square meter; domestic AUVs in the same period for assembled canvas

were $***.34

The existence of pricing differences is consistent with an expected price continuum of different

types of the same product. Given the overlap among artists’ canvas products with respect to physical

characteristics and uses, interchangeability, the perceptions of those in the trade, channels of distribution,

and manufacturing facilities, processes, and employees, and notwithstanding some differences in terms

of post-coating production and interchangeability, we conclude that there is no clear dividing line

separating them under the traditional six-factor test. Accordingly, we find one domestic like product –

all artists’ canvas – co-extensive with the scope of the investigation.35 

 

III. DOMESTIC INDUSTRY 

The domestic industry is defined as the “producers as a [w]hole of a domestic like product, or

those producers whose collective output of a domestic like product constitutes a major proportion of the

total domestic production of the product.”36 Petitioner argues that the relevant domestic industry is all

U.S. producers of artists’ canvas, including converters that transform bulk/rolled canvas into prestretched canvas. Petitioner contends, however, that the *** amount of toll processing for which ***
 37 Petitioner’s Postconference Brief at 6-8.

 38 Respondents’ Postconference Brief at 9 & Exh. 5. Respondents note that the definition may cover Holliston

Mills (Holliston), Avondale Mills (Avondale), Seaboard Textile (Seaboard), Snyder Textile (Snyder), and Encad,

Inc. (Encad) – firms with coating operations. We note that Holliston, Avondale, Snyder, and Encad did not respond

to Commission questionnaires, and that Staff has confirmed that Seaboard purchases but does not produce artists’

canvas. CR/PR at Table III-1 nn.1-2.

 39 In assessing the domestic activity associated with a particular operation and whether it constitutes sufficient

activity to bring that operation within the meaning of domestic industry for purposes of the Act, the Commission

generally considers six factors:

(1) source and extent of the firm’s capital investment; 

(2) technical expertise involved in U.S. production activities;

(3) value added to the product in the United States;

(4) employment levels;

(5) quantity and type of parts sourced in the United States; and

(6) any other costs and activities in the United States directly leading to production of the like product.

See, e.g., Prestressed Concrete Steel Wire Strand from Brazil, India, Korea, Mexico, and Thailand, Inv. Nos. 701-

TA-432 (Final) and 731-TA-1024-1028 (Final), USITC Pub. 3663 (Jan. 2004) at 10-11. No single factor is

determinative, and the Commission may consider any other factors it deems relevant in light of the specific facts of

any investigation. See, e.g., Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide from the Netherlands,

Inv. No. 731-TA-652 (Final), USITC Pub. 2783 (June 1994) at I-8-I-9 & n.34 (“no single factor – including value

added – is determinative and ... value added information becomes more meaningful when other production activity

indicia are taken into account”), aff’d, Aramide Maatschappij V.O.F. v. United States, 19 CIT 884 (1995).

 40 Whether toll processors warrant inclusion in the domestic industry is a moot issue for preliminary phase

purposes. The only available evidence concerns ***. See Petitioner’s Postconference Brief at 7-8; Tr. at 49

(Michael Benator, President and CEO, Tara). The record reflects an important but minor additional processing step

in the fabrication of certain ***. Whether *** engage in toll processing and, if so, whether such arrangements

extend to aspects of the production of other types of artists’ canvas are not clear, however. Cf. Tr. at 97 (Mr.

Benator). Moreover, the Commission has received no trade, production, or financial data from any firms identified

as toll processors. Accordingly, the issue is moot; we will solicit further information on this point in any final phase

investigation. 

 41 Petitioner’s Postconference Brief at 8.

 42 Tr. at 29 (Mr. Straquadine).

 43 CR/PR at Table I-3 ($*** per square meter in bulk/rolled form; $*** per square meter in assembled form). 

8

contracts involves a minor finishing step that does not qualify *** as a domestic industry member.37

Respondents do not challenge Petitioner’s domestic industry definition for preliminary phase purposes.38

Based on our domestic like product definition, we consider whether firms that engage in the

production of pre-stretched canvas but do not produce the coated canvas itself (so-called converters) are

part of the domestic industry producing artists’ canvas.39 40 There is limited information in the record

respecting such firms. It appears that operations to transform the bulk/rolled canvas into pre-stretched

canvas require a capital investment that is not minimal. Petitioner has represented that the additional

processing involved is “significant.”41 Some technical expertise or training is required, but employees

need not be dedicated to performing these operations alone.42 There also appears to be significant value

added to the product from such additional processing.43 Based on the current record, we include such

converters in our definition of the domestic industry, but will explore this issue further in any final phase

investigation and will attempt to gather additional information on converters. 
 44 ***, imported *** square meters of subject merchandise from China in 2004 and thus *** as a related party

within the purview of 19 U.S.C. 

§ 1677(4)(B), the Act’s related party provision. CR/PR at Table IV-1. We decline to exercise our discretion to

exclude ***, which *** position on the petition, from the domestic industry. *** produced *** square meters of

artists’ canvas in 2004, representing *** percent of total U.S. production of artists’ canvas that year. CR/PR at

Table III-1. Its import volume is thus *** in relation to its domestic production (***). Moreover, *** operating

income as a ratio to net sales *** percentage points during the period examined, from *** percent in 2002 to ***

percent in 2004. CR/PR at Table VI-4. In light of this information and the insubstantial levels of *** subject

imports from China, we find that *** operations in the domestic production of artists’ canvas do not appear to have

benefitted substantially from *** imports of subject merchandise. Appropriate circumstances therefore do not exist

to exclude *** from the domestic industry.

 45 Negligibility is not an issue in this investigation. Subject imports from China are not negligible under 19

U.S.C. § 1677(24) because they accounted for more than three percent of the volume of all subject artists’ canvas

imported into the United States in the most recent twelve-month period for which data are available preceding the

filing of the petition. CR/PR at Table IV-2 (40 percent or more measured by quantity or value in 2004).

 46 19 U.S.C. §§ 1671b(a), 1673b(a).

 47 19 U.S.C. § 1677(7)(B)( i). The Commission “may consider such other economic factors as are relevant to the

determination” but shall “identify each [such] factor . . . [a]nd explain in full its relevance to the determination.”

19 U.S.C. § 1677(7)(B). See also Angus Chemical Co. v. United States, 140 F.3d 1478 (Fed. Cir. 1998).

 48 19 U.S.C. § 1677(7)(A).

 49 19 U.S.C. § 1677(7)(C)(iii).

 50 19 U.S.C. § 1677(7)(C)(iii).

9

For these reasons, we define the domestic industry as all U.S. producers of artists’ canvas,

including firms that convert bulk/rolled canvas into pre-stretched canvas.44

IV. REASONABLE INDICATION OF MATERIAL INJURY BY REASON OF THE

SUBJECT IMPORTS45

In the preliminary phase of antidumping or countervailing duty investigations, the Commission

determines whether there is a reasonable indication that an industry in the United States is materially

injured by reason of the imports under investigation.46 In making this determination, the Commission

must consider the volume of subject imports, their effect on prices for the domestic like product, and

their impact on domestic producers of the domestic like product, but only in the context of U.S.

production operations.47 The statute defines “material injury” as “harm which is not inconsequential,

immaterial, or unimportant.”48 In assessing whether there is a reasonable indication that the domestic

industry is materially injured by reason of subject imports, we consider all relevant economic factors that

bear on the state of the industry in the United States.49 No single factor is dispositive, and all relevant

factors are considered “within the context of the business cycle and conditions of competition that are

distinctive to the affected industry.”50

For the reasons discussed below, we find that there is a reasonable indication that the domestic

industry producing artists’ canvas is materially injured by reason of subject imports from China.

A. Conditions of Competition

Several conditions of competition inform our analysis of whether there is a reasonable indication

that the domestic industry is materially injured by reason of subject imports from China.
 51 CR/PR at II-1.

 52 CR at II-4, PR at II-3.

 53 See, e.g., Petitioner’s Postconference Brief at 10-11.

 54 See, e.g., Respondents’ Postconference Brief at 22-23. 

 55 Memorandum INV-CC-065 (May 12, 2005) (Mem. INV-CC-065) at Table C-1 (apparent U.S. consumption

increased from *** square meters in 2002 to *** square meters in 2004, and was *** square meters in interim 2004

as compared to *** square meters in interim 2005). 

 56 CR at II-4, PR at II-3.

 57 CR at II-5, PR at II-3. We intend to collect additional information on demand conditions for artists’ canvas,

including in bulk/rolled versus assembled formats, in any final phase investigation.

 58 Mem. INV-CC-065 at Table C-1.

 59 CR/PR at III-1.

 60 Mem. INV-CC-065 at Table C-1. The increase in reported capacity is attributable to ***. CR at III-3, PR at

III-2. 

 61 The decrease may be attributable to higher than normal capacity utilization rates in interim 2004. Mem. INVCC-065 at Table C-1; CR at III-3, PR at III-2. 

10

Demand for artists’ canvas is driven by the ultimate consumer that uses the product for graphic

presentation of painted or printed images. The demand tends to be seasonal, peaking in the spring and

summer months as retailers stock up for back-to-school promotions.51

U.S. producers and most importers reported that demand for artists’ canvas increased since the

beginning of the period (January 2002).52 Petitioner attributes the growth in demand to new product

offerings by the domestic industry, citing as examples print canvas used for art reproduction or giclées,

as well as its own patented water color canvas.53 Respondents, on the other hand, contend that growth is

the result of innovative marketing and display techniques utilized by suppliers such as MacPherson’s and

Aaron Brothers, as well as by the offering of Chinese product at lower prices. In their view, demand

increases reflect new consumption created by Chinese product that would not otherwise have taken place

in the U.S. market.54

Data on the record show that, overall, apparent U.S. consumption has increased *** for artists’

canvas during the period. Apparent consumption increased *** percent between 2002 and 2004, and

was *** percent higher in interim 2005 than in interim 2004.55 According to questionnaire responses,

the increase in demand for pre-stretched canvas was most commonly attributed to the rapid growth of the

home decor and scrapbook markets.56 Growth in computer art and digital printing on canvas was cited as

the reason behind increased demand for bulk/rolled canvas.57

The U.S. market for artists’ canvas is supplied by domestic production as well as by subject and

nonsubject imports. The domestic industry supplied a declining majority of the U.S. market by quantity

during the period. At the start of the period (2002), the domestic industry’s share of apparent

consumption was *** percent; as of interim 2005, its share was *** percent. As a share of apparent

consumption by value, the declines were ***: the domestic industry’s share was *** percent in 2002

and, as of interim 2005, *** percent.58

Four firms accounted for *** U.S. production in 2004, with Tara accounting for *** percent of

U.S. production.59 Overall, the industry’s capacity increased *** percent between 2002 and 2004, and

was *** percent higher in interim 2005 than in interim 2004.60 Capacity utilization rates increased ***

percentage points between 2002 and 2004, and decreased by *** percentage points in comparing interim

2004 and interim 2005.61
 62 Maquila operations involve the importation of foreign merchandise into Mexico on a temporary basis, where

it is assembled, manufactured, or repaired, and then exported either to the country of origin or a third country. 

CR/PR at Table IV-1 n.3.

 63 The production operations performed in Mexico are described in the Staff Report, CR at III-11, PR at III-5.

Data regarding Tara’s imports of artists’ canvas from Mexico are presented in the tabulation in Mem. INV-CC-065

at III-11 (showing that Tara’s imports from Mexico as a ratio to production were *** percent in 2002, *** percent in

2003, and *** percent in 2004).

 64 CR/PR at Table IV-1 n.3.

 65 See, e.g., CR at III-11, PR at III-5.

 66 See, e.g., Respondents’ Postconference Brief at 32-33.

 67 Mem. INV-CC-065 at C-1. These data are based on import statistics for China and Mexico that are derived

from responses to Commission questionnaires rather than official statistics, which proved unreliable. See Mem.

INV-CC-065 at 1 (citing example of February 2005 artists’ canvas imports into the Customs district of ColumbiaSnake, Oregon: 5.8 million square meters at $0.01 per square meter). The coverage of questionnaire data with

respect to imports from China and Mexico is approximately 95-100 percent. We understand that Customs is

reviewing the official import statistics for possible future revision. 

 68 Bulk/rolled canvas represented *** percent of reported subject imports from China in 2004. CR/PR at Table

I-3 n.2.

 69 Mem. INV-CC-065 at Table C-1. 

 70 Mem. INV-CC-065 at Table C-1.

 71 For example, according to proprietary Customs data, *** percent of imports from Mexico in 2003 and ***

percent in 2004. Staff Worksheets, EDIS documents 231345, 231347. 

 72 CR/PR at Table I-2.

11

Tara moved a large portion of its U.S. production of pre-stretched canvas during the period to a

maquiladora facility62 in Tijuana, Mexico, Decoracion Colonel.63 Tara had acquired the Mexican

manufacturing facility’s corporate parent, the California firm Hy-Jo Manufacturing (subsequently

renamed to Tara Picture Frames), in September 1990.64 Tara claims that this production shift to its

Mexican affiliate, whose operations had been devoted to the manufacture of picture frames, reflected an

effort on Tara’s part to lower costs as a direct consequence of the lower-priced merchandise imported

from China.65 Respondents counter that Tara actually made the decision to shift some artists’ canvas

production to Mexico before 2002 and before China was a significant factor in the U.S. market.66 

Imports from China supplied an increasing share of the U.S. market in quantity during the period

examined, rising from *** percent in 2002 to *** percent in 2004, and were *** percent in interim 2005

as compared to *** percent in interim 2003.67 With assembled canvas constituting the vast majority of

artists’ canvas imports from China,68 China’s market share by value increased from *** percent in 2002

to *** percent in 2004, and was *** percent in interim 2005 as compared to *** percent in interim

2004.69 The market share for nonsubject imports, of which Mexico constituted the largest source,

declined in quantity overall between 2002 and 2004 (from *** percent in 2002 to *** percent in 2004)

but increased in value (from *** percent to *** percent), and was higher in interim 2005 than in interim

2004.70 Tara accounts for most of the imports from Mexico.71 

The majority of domestically produced artists’ canvas was shipped to retailers. In 2004, ***

percent of U.S. producers’ U.S. shipments were to retailers, *** percent to distributors, and *** percent

to end users. However, the share of domestic shipments to retailers declined by *** percentage points

between 2002 and 2004, as shipments to distributors rose from *** percent in 2002 to *** percent in

2004.72 Most U.S. shipments of imports from China during the period examined were also to retailers

(*** percent (in 2004) or more during the period examined), with the remainder shipped to distributors
 73 CR/PR at Table I-2.

 74 See, e.g., CR at II-6-II-7, PR at II-5 (noting various responses). 

 75 CR/PR at Table II-2. 

 76 19 U.S.C. § 1677(7)(C)(i).

 77 Mem. INV-CC-065 at Table IV-2. 

 78 Mem. INV-CC-065 at Table C-1. 

 79 Mem. INV-CC-065 at Table C-1. 

12

and end users. Shipments of subject imports to end users increased from *** percent in 2002 to ***

percent in 2004.73

As noted above, a myriad of products of artists’ canvas are covered by the scope of this

investigation. Certain types of U.S.-produced artists’ canvas, such as print canvas and canvas in the

bulk/rolled format, are not imported from China in any significant volumes; and there appears to be no

U.S. production of canvas of bleached cotton, which is imported from China. The record indicates at

least moderate substitutability between the U.S. product and subject imports. We intend to examine

further product mix differences between U.S.-produced and Chinese produced artists’ canvas in any final

phase investigation. The evidence in the preliminary phase also indicates that factors such as quality,

service, and supply play a role in artists’ canvas purchasing decisions, with producer responses

suggesting the superiority of the domestic product and importer responses showing no clear consensus.74

The majority of U.S. producers that compared domestic and Chinese product noted that differences other

than price are “sometimes” significant; the majority of importers making the same comparison noted that

such differences are “frequently” significant.75

 

 B. Volume of Subject Imports

Section 771(7)(C)(i) of the Act provides that the “Commission shall consider whether the

volume of imports of the merchandise, or any increase in that volume, either in absolute terms or relative

to production or consumption in the United States, is significant.”76

Subject import volume increased sharply throughout the period examined, rising from 206,000

square meters in 2002 to 633,000 square meters in 2003, and further to 1.5 million square meters in 2004

– an increase overall of 628.6 percent. Subject import volume was 109.8 percent higher during the first

three months of 2005 (535,000 square meters) than the first three months of 2004 (255,000 square

meters), already approaching the full year total for 2003.77

Subject imports’ share of apparent U.S. consumption by quantity also rose sharply, increasing

*** percentage points between 2002 and 2004 (from *** percent to *** percent in 2004), and was ***

percent in interim 2005 as compared to *** percent in interim 2003.78 Subject imports’ share by value

increased almost *** percentage points (to *** percent in 2004), and was *** percent in interim 2005 as

compared to *** percent in interim 2004.79

The increase in subject imports’ share of apparent consumption came largely at the expense of

the share held by the domestic industry, particularly during the three full years of the period. The

domestic industry’s share of apparent consumption decreased *** percentage points between 2002 and

2004 (from *** percent to *** percent in 2004). In interim 2005, the domestic industry’s share of

apparent consumption was *** percent, down from *** percent in interim 2004. As a share of apparent

consumption by value, the domestic industry experienced declines of *** percentage points between

2002 and 2004 (to *** percent in 2004); by interim 2005, the share of apparent U.S. consumption held
 80 Mem. INV-CC-065 at Table C-1. The larger declines on a value basis appear to reflect the domestic

industry’s increasing shipments of lower-margin bulk/rolled canvas during the period examined.

 81 In terms of value, the share of apparent consumption of nonsubject imports increased from *** percent in

2002 to *** percent in 2004, and was *** percent in interim 2005 as compared to *** percent in interim 2004. 

Mem. INV-CC-065 at Table C-1.

 82 Mem. INV-CC-065 at Table IV-2.

 83 19 U.S.C. § 1677(7)(C)(ii).

 84 CR/PR at Table II-1.

 85 See, e.g., Tr. at 12-13 (Mr. Delin).

 86 See, e.g., Tr. at 131-32 (Harvey Kanter, President, Aaron Brothers).

 87 We note that the pricing products encompassed all of the varying grades of canvas (e.g., linen, cotton, or

polyester) that otherwise met the definition. U.S. producers manufacture all grades of canvas, while subject imports

were primarily of cotton. CR at II-6, PR at II-4. Reported U.S. prices thus may include higher grades of canvas,

which would correspond to higher prices. 

13

by the domestic industry was *** percent, as compared to *** percent in interim 2004.80 The share of

apparent consumption for nonsubject imports declined *** percentage points overall through 2004, and

was *** percentage points higher in interim 2005 than in interim 2004.81 The domestic industry’s share

of consumption was therefore displaced primarily by subject imports and, late in the period and to a

lesser degree, by nonsubject imports.

Subject import volume relative to production in the United States also increased throughout the

period, rising from *** percent in 2002 to *** percent in 2003, and further to *** percent in 2004. The

same ratio was *** percent in interim 2005 as compared to *** percent in interim 2004.82

The volume of subject imports thus increased substantially over the period examined, and

market share gains came at the expense of U.S. producers. We find that subject import volume, and the

increase in that volume, were significant during the period examined, both in absolute terms and relative

to domestic consumption and production.

C. Price Effects of Subject Imports

Section 771(C)(ii) of the Act provides that, in evaluating the price effects of subject imports, 

the Commission shall consider whether – (I) there has been significant price

underselling by the imported merchandise as compared with the price of domestic like

products of the United States, and (II) the effect of imports of such merchandise

otherwise depresses prices to a significant degree or prevents price increases, which

otherwise would have occurred, to a significant degree.83

Based on the current record, we find that domestically produced canvas and subject imports

from China are generally substitutable. The majority of U.S. producers reported that the two are

“always” interchangeable, and the majority of importers reported that they are “frequently”

interchangeable.84 In the competition for sales of artists’ canvas, price is an important factor. Producers

have identified it as the most significant factor,85 while importers also noted the importance of factors

other than price, such as quality and service.86 

The Commission collected quarterly pricing information from U.S. producers and importers with

respect to four artists’ canvas products, three of pre-stretched canvas of different styles and dimensions

and a fourth of canvas panel of a particular dimension.87 The reported pricing data only accounted for

approximately 2.7 percent of U.S. producers’ U.S. shipments during the period examined, and 6.5

percent of U.S. imports of subject imports from China during the same period, and encompassed arms-
 88 CR at V-4, PR at V-3.

 89 CR at V-4 n.7, PR at V-3 n.7.

 90 CR/PR at Tables V-1-V-4 & V-5-V-6. The seven quarters for which overselling was demonstrated involved

product 4, for which import volume was minuscule. CR/PR at Table V-4. 

 91 CR/PR at Figures V-1-V-4.

 92 CR at V-5, PR at IV-4-IV-5. Insofar as the specific product pricing shows increasing prices while average

unit values declined, the data appear anomalous. See CR/PR at Table VI-1. This may reflect the limited coverage

for pricing data, product mix issues, or the movement of the domestic industry to producing more higher-valued

assembled canvas in Mexico. We intend to examine this issue further in any final phase investigation. 

 93 See Mem. INV-CC-065 at Table C-1 (COGS/sales decreased from *** percent in 2002 to *** percent in

2003, and then increased to *** percent in 2004; this ratio was *** percent in interim 2004 compared to *** percent

in interim 2005). Overall, per-square meter COGS and total cost (which includes SG&A expenses) decreased

continuously from 2002 to 2004, and decreased slightly in comparing interim 2004 and interim 2005. CR/PR at

Table VI-5. However, due to differences in bulk/rolled versus assembled canvas, product mix may have a

significant impact on the average unit cost (and sales value) calculations. CR at VI-8, PR at VI-2. 

 94 Mem. INV-CC-065 at Table C-1.

 95 CR/PR at Tables V-7, V-8; CR at V-13-V-15, PR at V-5-V-7. 

14

length sales of product to the first unrelated purchaser in the U.S. market.88 The data collected from U.S.

producers thus included sales to both distributors and retailers, while that for importers generally

included sales to retailers. Sales by direct importers, that is, large retailers that conduct their own

importing for their own retail sales, were not included in the price comparisons.89 In any final phase

investigation, we will also solicit data respecting the purchase prices of direct importers, as well as the

sales prices of U.S. producers identified by specific purchaser channel (i.e., distributor or retailer). 

The data in the preliminary phase show that the prices of imports from China were lower than

those of the domestic product in 39 of 46 possible quarterly comparisons. The margins of underselling

in these quarters ranged from 13.3 percent to 45.2 percent. The domestic product undersold subject

imports from China in 7 quarterly comparisons, with margins ranging from 7.6 percent to 27.8 percent.90

Based on the record evidence, we find significant underselling by subject imports from China

during the period examined. During this period, however, domestic prices trended upward, while subject

import prices trended downward.91 There were no overall price declines experienced by the domestic

industry with respect to three of the four pricing products, and the overall decline of *** percent noted

with respect to the fourth product was accompanied by the underselling of subject imports by the

domestic product.92 Nor do the cost data clearly indicate significant price suppression experienced by

the domestic industry.93 However, the value and unit value of domestic producers’ sales declined over

the period and, as their expenses rose, profitability declined.94

The domestic industry also reported *** allegations of lost sales in the amount of at least $***,

and *** lost revenue *** in the amount of $***. Staff was able to confirm three lost sales allegations

that, to the extent specified, accounted for $*** in yearly sales.95

The preliminary phase record thus shows evidence of significant underselling by the subject

imports and some evidence of lost sales, but is unclear as to the extent to which the increasing volume of

subject imports accounted for the decline in the values and unit values of domestic producers’ sales over

the period. We intend to explore this issue more fully in any final phase investigation.
 96 In its preliminary affirmative determination for subject artists’ canvas from China, Commerce found estimated

dumping margins ranging from 242.09 percent ad valorem to 264.09 percent ad valorem. 70 Fed. Reg. at 21998.

 97 19 U.S.C. § 1677(7)(C)(iii).

 98 See 19 U.S.C. § 1677(7)(C)(iii); see also SAA at 851, 885; Live Cattle from Canada and Mexico, Inv. Nos.

701-TA-386 (Preliminary) and 731-TA-812-813 (Preliminary), USITC Pub. 3155 (Feb. 1999) at 25 n.148.

 99 Mem. INV-CC-065 at Table C-1.

 100 As noted above, the decrease may be attributable to higher than normal capacity utilization rates in interim

2004. 

 101 Mem. INV-CC-065 at Table C-1. 

 102 Mem. INV-CC-065 at Table C-1 (*** square meters in 2002, *** square meters in 2003, and *** square

meters in 2004). 

 103 Mem. INV-CC-065 at Table C-1 (*** square meters in interim 2004 to *** square meters in interim 2005).

 104 CR/PR at Table III-5.

 105 Overall, average unit sales values (AUVs) declined from $*** in 2002 to $*** in 2003, and further to $***

in 2004, but increased *** in interim 2005 relative to interim 2004 ($*** compared to $***). CR/PR at Table VI-1. 

The shift in U.S. shipments from *** assembled canvas to *** bulk/rolled canvas is perhaps reflected in this AUV

data, although other product mix issues might be present. As noted above, the shift in assembly of canvas to Mexico

will be further examined. We note further that, based on available information, AUVs and total costs in connection

with bulk/rolled canvas and assembled canvas were quite different, and the financial results for sales of each also

differed. CR/PR at VI-1-VI-2; CR/PR at Tables VI-2-VI-3. 

15

D. Impact of Subject Imports96

 Section 771(7)(C)(iii) provides that the Commission, in examining the impact of the subject

imports on the domestic industry, “shall evaluate all relevant economic factors which have a bearing on

the state of the industry.”97 These factors include output, sales, inventories, capacity utilization, market

share, employment, wages, productivity, profits, cash flow, return on investment, ability to raise capital,

research and development, and factors affecting domestic prices. No single factor is dispositive and all

relevant factors are considered “within the context of the business cycle and conditions of competition

that are distinctive to the affected industry.”98

As the U.S. market for artists’ canvas grew over the period, the domestic industry increased its

capacity and production. The industry’s capacity increased between 2002 and 2004 (from *** square

meters in 2002 to *** square meters in 2004), and was *** square meters in interim 2005 compared to

*** square meters in interim 2004.99 Domestic output also increased between 2002 and 2004 (from ***

square meters in 2002 to *** square meters in 2004), but was *** percent lower in interim 2005 than in

interim 2004 (declining from *** square meters in interim 2004 to *** square meters in interim 2005). 

Capacity utilization increased between 2002 and 2004 (from *** percent in 2002 to *** percent in

2004), before declining *** percentage points in interim period 2005 relative to interim period 2004

(from *** percent in interim 2004 to *** percent in interim 2005.100

However, notwithstanding a steadily growing U.S. market for artists’ canvas, the domestic

industry’s condition worsened over the period with respect to a number of measures. The domestic

industry lost market share, from *** percent in 2002 to *** percent in 2004, to an even lower ***

percent in interim 2005.101 U.S. shipment volumes declined from 2002 to 2003 but increased *** overall

between 2002 and 2004.102 Shipment volumes declined *** percent in interim 2005 relative to interim

2004.103 In terms of value, U.S. shipments decreased by *** percent between 2002 and 2003, by ***

percent between 2003 and 2004, and by *** percent in interim 2005 relative to interim 2004.104 The unit

values of U.S. producers’ shipments and sales also fell over the period.105 While the quantity and value
 106 CR/PR at Table III-5. The quantity of U.S. shipments of bulk/rolled canvas increased by *** percent from

2002 to 2003, and by *** percent between 2003 and 2004, before decreasing by *** percent in interim 2005 relative

to interim 2004. 

 107 CR/PR at Table III-5. The quantity of U.S. shipments of assembled artists’ canvas decreased by *** percent

from 2002 to 2003, by *** percent from 2003 to 2004, and increased by *** percent in interim 2005 relative to

interim 2004. 

 108 We will explore further in any final phase investigation Tara’s decision to shift some production to Mexico

and the effect on its business of its imports of finished product from Mexico. 

 109 CR at III-10, PR at III-4; CR/PR at Table III-7.

 110 Mem. INV-CC-065 at Table C-1. Average hourly wages increased *** percent between 2002 and 2004, and

were *** percent higher in interim 2005 relative to interim 2004. Mem. INV-CC-065 at Table C-1. 

 111 Mem. INV-CC-065 at Table C-1.

 112 Mem. INV-CC-065 at Table C-1. *** inventories represent *** percent of total reported inventories during

the period examined. Tara has reported that shortages of supply are common given the large variety of sizes and

types of product and that, to prevent future shortages, it increased the size of one of its warehouses and will continue

to work on improvements to forecasting consumer demand. CR at III-8-III-9, PR at III-4. 

 113 Respondents have argued that industry operating profitability is distorted by an inexplicable *** in 2004. We

will explore this issue further in any final phase investigation. 

 114 CR/PR at Table VI-1.

 115 CR/PR at Table VI-3.

 116 CR/PR at Table VI-7.

 117 CR at VI-10, PR at VI-2; CR/PR at Table VI-7.

 118 CR/PR at Table VI-9.

16

of U.S. shipments of bulk/rolled canvas increased between 2002 and 2004,106 the quantity and value of

assembled artists’ canvas decreased over the same period.107

 In April 2003, Tara laid off 39 employees; additional lay offs continued throughout the year as

Tara moved a large share of its stretching operation to Mexico, as discussed above.108 The total number

of workers in the domestic industry declined from *** in 2002, to *** in 2003, to *** in 2004, and was

*** in interim 2005 relative to *** in interim 2004.109 Total wages paid similarly declined (*** percent

between 2002 and 2004, and *** percent in interim 2005 relative to interim 2004).110 Productivity

increased and unit labor costs decreased as the number of workers shrank.111 Inventories declined ***

percent from 2002 to 2004 and were *** percent lower in interim 2005 than in interim 2004.112 

The domestic industry’s financial indicators worsened over the period. The domestic industry

saw its profitability decline overall, as operating income of $*** (*** percent operating margin) in 2002

fell to $*** (*** operating margin) in 2004.113 Operating income showed some recovery from interim

2004 to interim 2005, from $*** (*** percent operating margin) to $*** (*** percent operating

margin).114 *** firms reported net operating losses in 2004.115

Capital expenditures from 2002 to 2004 increased, but then decreased significantly in interim

2005 relative to interim 2004.116 In addition, ***, reported research and development expenses.117

Finally, the domestic industry’s return on investment (ROI) increased from *** percent in 2002 to ***

percent in 2003, before declining to *** percent in 2004.118

In a market that has grown approximately *** percent from 2002 to 2004, and further increased

in the interim periods, the domestic industry’s condition worsened as measured by several indicia of

performance. These declines occurred as a significant volume of subject imports gained market share at

the expense of U.S. producers, consistently undersold the domestic product, and took sales from U.S.

producers. For purposes of this preliminary determination, we therefore find that the subject imports

have had a negative impact on the condition of the domestic industry during the period examined. 
17

CONCLUSION

For the reasons stated above, we find a reasonable indication that the domestic industry

producing artists’ canvas is materially injured by reason of subject imports from China that are allegedly

sold in the United States at less than fair value.
 
 1

 A complete description of the imported products subject to investigation is presented in The Subject Product

section of this part of the report.

I-1

PART I: INTRODUCTION

BACKGROUND

This investigation results from a petition filed by Tara Materials, Inc. (“Tara”), Lawrenceville,

Georgia, on April 1, 2005, alleging that an industry in the United States is materially injured and

threatened with material injury by reason of less-than-fair-value (“LTFV”) imports of artists’ canvas1

from China. Information relating to the background of the investigation is provided below.

Date Action Federal Register notice1

April 1, 2005 Petition filed with the Commerce and the

Commission;2 institution of Commission

investigation

70 FR 17467, April 6, 2005

April 21, 2005 Commerce’s initiation 70 FR 21996, April 28, 2005

April 22, 2005 Commission’s conference2

May 16, 2005 Commission’s vote and determination to

Commerce

May 23, 2005 Commission’s views to Commerce

 1 Federal Register notices cited in the tabulation are presented in app. A.

 2

 A list of witnesses appearing at the conference is presented in app. B.

U.S. MARKET SUMMARY

Tara, the largest domestic producer of artists’ canvas, accounted for over *** of U.S. production

in 2004. The second largest producer, Duro Art Ind. Inc. (“Duro”), produced *** percent of artists’

canvas in 2004. The remaining six producers accounted for *** percent of the industry.

The three largest importers, ***, accounted for approximately *** percent of subject imports

from China in 2004. Mexico is the largest nonsubject exporter of artists’ canvas. During 2004, ***

accounted for *** percent of imports of artists’ canvas from Mexico. 

PREVIOUS INVESTIGATIONS

The Commission has not previously conducted import injury investigations concerning artists’

canvas.
I-2

ORGANIZATION OF REPORT

Section 771(7)(B) of the Tariff Act of 1930 (the “Act”) (19 U.S.C. § 1677(7)(B)) provides that in

making its determinations of injury to an industry in the United States, the Commission–

shall consider (I) the volume of imports of the subject merchandise, (II)

the effect of imports of that merchandise on prices in the United States

for domestic like products, and (III) the impact of imports of such

merchandise on domestic producers of domestic like products, but only

in the context of production operations within the United States; and. . . 

may consider such other economic factors as are relevant to the

determination regarding whether there is material injury by reason of

imports.

Section 771(7)(C) of the Act (19 U.S.C. § 1677(7)(C)) further provides that--

In evaluating the volume of imports of merchandise, the Commission

shall consider whether the volume of imports of the merchandise, or any

increase in that volume, either in absolute terms or relative to production

or consumption in the United States is significant.

. . .

In evaluating the effect of imports of such merchandise on prices, the

Commission shall consider whether. . .(I) there has been significant price

underselling by the imported merchandise as compared with the price of

domestic like products of the United States, and (II) the effect of imports

of such merchandise otherwise depresses prices to a significant degree

or prevents price increases, which otherwise would have occurred, to a

significant degree.

. . .

In examining the impact required to be considered under subparagraph

(B)(i)(III), the Commission shall evaluate (within the context of the

business cycle and conditions of competition that are distinctive to the

affected industry) all relevant economic factors which have a bearing on

the state of the industry in the United States, including, but not limited to

. . . (I) actual and potential decline in output, sales, market share, profits,

productivity, return on investments, and utilization of capacity, (II) factors

affecting domestic prices, (III) actual and potential negative effects on cash flow,

inventories, employment, wages, growth, ability to raise capital, and investment,

(IV) actual and potential negative effects on the existing development and

production efforts of the domestic industry, including efforts to develop a

derivative or more advanced version of the domestic like product, and (V) in ***,

the magnitude of the margin of dumping.

Information on the subject merchandise, margins of dumping, and domestic like product is

presented in Part I. Information on conditions of competition and other relevant economic factors is

presented in Part II. Part III presents information on the condition of the U.S. industry, including data on

capacity, production, shipments, inventories, and employment. The volume and pricing of imports of the

subject merchandise are presented in Parts IV and V, respectively. Part VI presents information on the

financial experience of U.S. producers. The statutory requirements and information obtained for use in

the Commission’s consideration of the question of threat of material injury are presented in Part VII. 
 3

 70 FR 21996, April 28, 2005.

 4

 Ibid.

I-3

NATURE AND EXTENT OF ALLEGED SALES AT LTFV

Commerce has initiated an antidumping investigation based on petitioner’s allegations of LTFV

sales. The estimated dumping margins (in percent ad valorem) as alleged by petitioner and revised by

Commerce are 242.09 to 264.09 percent.3

SUMMARY DATA

A summary of data collected in the investigation is presented in appendix C, table C-1. Except as

noted, U.S. industry data are based on questionnaire responses of four firms that accounted for

approximately *** percent of U.S. production of artists’ canvas during 2004. U.S. imports are based on

responses to the Commission’s questionnaires and official Commerce statistics.

THE SUBJECT PRODUCT

Commerce has defined the scope of the imported product subject to this investigation as:

...artist canvases regardless of dimension and/or size, whether

assembled or unassembled (i.e., kits that include artist canvas

and other items, such as a wood frame), that have been

primed/coated, whether or not made from cotton, whether or

not archival, whether bleached or unbleached, and whether or

not containing an ink receptive top coat. Priming/coating

includes the application of a solution, designed to promote the

adherence of artist materials, such as paint or ink, to the

fabric. Artist canvases (i.e., pre-stretched canvases, canvas

panels, canvas pads, canvas rolls (including bulk rolls that

have been primed), printable canvases, floor cloths, and

placemats) are tightly woven prepared painting and/or printing

surfaces.4

 Artists’ canvas is provided for in subheadings 5901.90.20 and 5901.90.40 of the Harmonized

Tariff Schedule of the United States (“HTS”), and imports of coated canvas in rolls may be covered under

headings 5903 and 5907. A normal trade relations tariff rate of 7 percent ad valorem under subheading

5901.90.20 and 4.1 percent ad valorem under subheading 5901.90.40 are applicable to imports from

China. Table I-1 presents current tariff rates for artists’ canvas.
 5

 “There is a single domestic product that is like the imported artist canvas. That like product consists of all artist

canvas regardless of size, quality, and whether or not it is sold in pre-stretched, panel, board, pad or roll form. The

like product definition is identical to the scope of the subject merchandise as defined in the petition.” Petition, p. 28.

 6

 However, respondents note that “the Petitioner’s definition is very broad and includes some product not

produced by Petitioner (i.e., kits, bleached canvas).” Respondents’ postconference brief, p. 9.

 7

 Petitioner stated that all artists canvas is characterized by the use of treated canvas, a woven textile product, and

its sole use is for graphic presentation by painters or printers. Petition, p. 28.

 8

 Oil paint, acrylic paint, alkyd paint, tempera paints, pen or ink, water colors, casein paints, inks, and pigments.

I-4

Table I-1

Artists’ canvas: Tariff rates, 2005

General1 Special2 Column 23

HTS provision Article description Rates (percent ad valorem)

5901

 5901.90

5901.90.20

 

5901.90.40

Textile fabrics coated with gum or

amylaceous substances, of a kind used for

the outer covers of books or the like; tracing

cloth; prepared painting canvas; buckram and

similar stiffened textiles of a kind used for hat

foundations.

Other

Of man-made fibers

 Other

7%

4.1%

(

2

)

(

2

)

74.5%

35%

1

 Normal trade relations, formerly known as the most-favored-nation duty rate, applicable to imports from China. 2

 Special rates apply to imports of artists’ canvas from certain trading partners to the United States. The notes to the HTS

indicate that duty-free entry is available to products under U.S. free-trade agreements with Canada, Mexico, Australia, Chile,

Israel, Jordan, Singapore and (for 5901.90.40 only) under the Caribbean Basin Economic Recovery Act. 3

 Applies to imports from a small number of countries that do not enjoy normal trade relations duty status.

Source: Harmonized Tariff Schedule of the United States (2005).

THE DOMESTIC LIKE PRODUCT

The Commission’s determination regarding the appropriate domestic products that are “like” the

subject imported product is based on a number of factors, including (1) physical characteristics and uses;

(2) common manufacturing facilities and production employees; (3) interchangeability; (4) customer and

producer perceptions; (5) channels of distribution; and, where appropriate, (6) price. 

The petitioner contends there is one domestic like product.5

 The respondents do not challenge the

petitioner’s definition of the domestic like product.6

Physical Characteristics and Uses

The petitioner asserts that all artists’ canvas has the same physical characteristics and uses.7

 Artists’

canvas is used as a medium for the graphic expression of art, particularly involving paints, inks or another

graphic medium. Artists’ canvas is made of a canvas fabric that, once coated with a specific chemical

product, known as gesso or primer, will allow paint8

 to be placed upon it without penetrating the original
 9

 Petition, p. 5.

 10 Ibid.

 11 Conference transcript, p. 23 (Straquadine).

 12 Petition, p. 31.

 13 Petition, pp. 8-9.

 14 “While a canvas presented on a stretcher strip could not be used for (for example) printing, they are all used for

the same purpose of graphic presentation and, accordingly, are interchangeable under the Commission’s like product

analysis.” Petition, p. 29. 

 15 “Substitute products are very limited. There is nothing like the real thing when it comes to an artist's painting. 

There are papers, and there are paperboards that are used, and some are gaining popularity, which are either gessoed

boards or papers intended to imitate canvas. They are a very small part of the industry, and they are certainly not

part of the scope that we've focused upon.” Conference transcript, p. 83 (Straquadine). “Stretch canvas, there's a

little romance to it. It looks like you're an artist. You know, you're kind of feeling like there's something special

about that. If you really just took it down to the raw thing, you know, what is the cheapest possible product that you

(continued...)

I-5

fabric.9

 The coating provides the artist with the surface upon which to produce a graphic presentation,

while the canvas provides the material which best supports the coated surface.

Variations within the range of materials woven into canvas that may be used to produce artists’

canvas include cotton, linen (from flax), muslin, jute, and polyester. Such canvas is the primary material

used to produce artists’ canvas.10 The raw uncoated canvas may be used in such applications as sails for

sailboats, tents, awnings, book covers, and various industrial products, although once coated it is used

exclusively for artists’ canvas.11

Once coated, artists’ canvas can be sold in a variety of physical formats: assembled canvas, in

which the coated canvas is wrapped and stapled to either the edge or back of wooden frames, or

bulk/rolled, in which the canvas is coated and sold in various widths and lengths. Other commonly

marketed physical formats of artists’ canvas include: panels (canvas glued to a chipboard surface),

printing canvases (coated canvas with an additional ink receptive coating for use in inkjet printers),

canvas pads (loose coated canvas sheets bound together), archival boards (coated canvas adhered to a

hard board), floor cloths (heavy-weight artists’ canvas coated on one side to used as decorative floor

covering), and placemats (canvas cut in oval or rectangular shapes and coated on both sides).

Manufacturing Facilities and Production Employees

Petitioner states that all artists’ canvas is produced in the same manufacturing facilities, using the

same production processes and production employees, and that no other products are or can be

manufactured using the production process or production equipment for the artists’ canvas.12

Most producers of artists’ canvas purchase the raw woven canvas material upon which they apply a

coating material. The coatings are mixed using various chemical compounds to make a specialized latex

paint that is receptive to specific artist paints or printing inks. The production process is known as the

printing line, and multiple passes of the canvas through this process may be required. Once the canvas is

coated, it is inspected and may be placed on bulk rolls or smaller rolls, or sheeted and cut to size for use

in a lithographic printing, pre-stretched artist canvas and artist panels, or other artist substrate. If

designated for use as a pre-stretched canvas, the cut material is stretched over a frame of four wooden

stretcher strips and stapled on the edge or the back. Canvas designated for use in artist panels is attached

to a fiber board backing with adhesive.13

Interchangeability and Customer and Producer Perceptions

Petitioner argues that all artists’ canvas is interchangeable, regardless of size, shape, or format and

that customers consider different styles of artists’ canvas to be interchangeable.14 15 The majority of
 15(...continued)

could buy that performs well, look at Leonardo. He painted on hardwood.” Conference transcript, p. 203

(Stapelton).

 16 Petition, p. 29; Petitioner’s postconference brief, p. 6.

 17 Construction of a wooden frame involves cutting and sizing lumber, tenoning wood to form “stretcher strips”

(wood panels with 45 degree angles cut in their ends), and assembling stretcher strips into frames. Petitioner’s

postconference brief, exh. 1.

I-6

producers reported that the domestic and Chinese artists’ canvas are always comparable. The majority of

importers reported that they are frequently comparable.

Channels of Distribution

All types of artists’ canvas are sold to art specialty stores, retailers, wholesalers, and mail order or

internet suppliers.16 Data on the share of quantity according to channels of distribution are presented in

table I-2. 

The majority of U.S.-produced products were shipped to retailers; during 2004, *** percent of

U.S.-produced shipments were sold to distributors, *** percent to end users and *** percent to retailers. 

However, the share of U.S.-produced artists’ canvas shipped to retailers decreased by *** percentage

points between 2002 and 2004, as shipments to distributors rose from *** percent in 2002 to *** percent

in 2004. Over the period of investigation, the majority of imports from China were sold to retailers,

although the share shipped directly to end users increased from *** percent of total U.S. shipments in

2002 to *** percent in 2004. 

Table I-2

Artists’ canvas: Shares of U.S. producers’ and U.S. importers’ U.S. shipments of artists’ canvas,

by channels of distribution, 2002-04, January-March 2004, and January-March 2005

* * * * * * *

Price

As stated in the aforementioned text, once the canvas is coated, it can be packaged in bulk/rolled

form, sheeted, and cut to size for use in a lithographic printing, or assembled onto a wooden frame. The

transformation of coated bulk/rolled artists’ canvas into assembled artists’ canvas requires construction of

a frame,17 canvas to be cut to a specified size, and the attachment of cut canvas to the frame. 

As bulk canvas is used in the production of assembled canvas, U.S. producers and importers were

asked to provide U.S. commercial shipment data and the cost of production of both forms of artists’

canvas. In 2004, U.S. producers’ U.S. commercial shipments of bulk/rolled artists’ canvas averaged $***

per square meter, compared with $*** per square meter for assembled artists’ canvas. In contrast,

imports from China of bulk/rolled canvas averaged $*** per square meter and assembled artists’ canvas

averaged $*** per square meter. A summary of average unit values for bulk/rolled and assembled canvas

is presented in table I-3.

Table I-3

Artists’ canvas: Average unit values per square meter, U.S.-produced, imports from China, and

imports from all other sources, by type, 2004

* * * * * * *
 1

 Petition, p. 5.

 2

 Conference transcript, p. 193 (Gallas, Stapleton).

 3

 Petitioner’s postconference brief, exhibit 1, p. 5.

 4

 Petitioner reports there are three primary coaters in the United States that specialize in gesso coating for artists’

canvas. Conference transcript, pp. 49-50 (Benator, Straquadine). There are other coaters in the United States that

specialize in inkjet receptive coats for canvases used in digital printing. Conference transcript, p. 49 (Benator).

 5

 Conference transcript, p. 97 (Benator).

II-1

PART II: CONDITIONS OF COMPETITION IN THE U.S. MARKET

U.S. MARKET SEGMENTS/CHANNELS OF DISTRIBUTION

Artists’ canvas is sold in four principal forms: pre-stretched canvas (and stapled either on the

side or on the back), canvas panels, canvas pads, and canvas rolls. The product is used for graphic

presentation of painted or printed images.1

 The demand for artists’ canvas tends to be seasonal, peaking

in the spring and summer months as retailers stock up for back-to-school promotions.2

Practically all sales of artists’ canvas go to retailers and distributors/wholesalers. In 2004,

approximately *** percent of sales went to distributors and *** percent went to retailers. Among

retailers, large arts and crafts chains account for roughly *** the amount of sales when compared to

independent fine art stores.3

 A smaller portion of sales of artists’ canvas goes to converters that specialize

in coating.4

 Some of these transactions with converters may involve tolling, but the extent to which this

occurs is unclear.5

When firms were asked to list market areas in the United States where they sell artists’ canvas,

the responses showed that the market areas tended to be nationwide. Among the four U.S. producers,

three reported that they sell nationally while the other reported that it sells specifically in the Southeast

and Southwest. Among importers of artists’ canvas from China, three reported that they sold nationally. 

The three others listed specific geographic regions, including the Southeast, Northeast, Mid-Atlantic,

Midwest, and Southwest.

U.S. inland shipping distances for U.S.-produced artists’ canvas were compared with those for

imports from China. For U.S. producers, *** percent of their U.S. sales occur within 100 miles of their

storage or production facility, *** percent were within distances of 101 to 1,000 miles, and *** percent

were at distances of over 1,000 miles from their facilities. For imports from the subject country, ***

percent of sales occurred within 100 miles of importers’ storage facilities, *** percent were within 101 to

1,000 miles, and *** percent were over 1,000 miles.

Lead times for delivery of artists’ canvas ranged widely for both producers and importers. For

producers they ranged from three days to as much as eight weeks. For importers they ranged from one

day to as much as 150 days. 

SUPPLY AND DEMAND CONSIDERATIONS

U.S. Supply

Domestic Production

The supply response of domestic artists’ canvas producers to changes in price depends on such

factors as the level of excess capacity, the availability of alternate markets for U.S.-produced artists’

canvas, inventory levels, and the ability to shift to the manufacture of other products. The evidence
II-2

indicates that the U.S. supply is likely to be fairly elastic, due primarily to the availability of unused

capacity, the existence of alternative markets, and considerable inventory levels. 

Industry capacity

U.S. producers’ annual capacity utilization rates ranged from a low of *** percent in 2002 to a

high of *** percent in 2004. This level of capacity utilization indicates that U.S. producers have unused

capacity with which they could increase production of artists’ canvas in the event of a price change. 

Alternative markets

Total exports by U.S. producers, as a share of total shipments, increased from *** percent in

2002 to *** percent in 2003 and increased further to *** percent in 2004. These data indicate that U.S.

producers have the ability to divert some shipments to or from alternative markets in response to changes

in the price of artists’ canvas. 

Inventory levels

The ratio of end-of-period inventories to U.S. shipments decreased from *** percent in 2002 to

*** percent in 2004. These data indicate that U.S. producers have the ability to use inventories as a

means of increasing shipments of artists’ canvas to the U.S. market.

Production alternatives

None of the firms reported using the actual machinery and equipment used to make artists’

canvas in the production of other products. However, one producer reported that it uses the workers that

produce artists’ canvas in the production of other products at its facilities.

Subject Imports

The responsiveness of supply of imports from China to changes in price in the U.S. market is

affected by such factors as capacity utilization rates and the availability of home markets and other export

markets. Based on available information, producers in China are likely to respond to changes in demand

with slight changes in the quantity of shipments of artists’ canvas to the U.S. market. The main

contributing factor to the slight degree of responsiveness of supply is the lack of unused capacity in

conjunction with the availability of alternate markets. 

Industry capacity

During the period of investigation, the capacity utilization rate for Chinese producers of artists’

canvas was *** percent; it is projected to fall to *** percent in 2005. 

Alternative markets

Available data indicate that foreign producers in China have the ability to divert shipments to or

from alternative markets in response to changes in the price of artists’ canvas. Shipments of artists’

canvas from China to the United States increased from approximately *** percent of total shipments in

2002 and 2003 to *** percent in 2004. The share of China's shipments to export markets other than the

United States decreased from about *** percent in 2002 and 2003 to *** percent in 2004 with the

remainder going to its home market, including internal consumption. 
 6

 Respondents credited shows like “Trading Spaces” for contributing to the trend in non-traditional uses for

artists’ canvas, especially in home decor. Conference transcript, p. 134 (Urnes). 

 7

 Respondents stated that the increasing availability of low-priced artists’ canvas furthers the growth of the entire

art industry, proposing that hobbyists who are introduced to low-priced canvas eventually cross over to higher grades

and various shapes and sizes, which leads to an increase in overall demand for artists’ canvas. Conference

transcript, pp. 153-154 (Stapleton). On the other hand, the petitioner stated that low-priced imports do not expand

the artists’ canvas market as they are merely cheap imitations of the higher-quality domestic product and only serve

to displace the domestic product. Conference transcript, pp. 25 and 100 (Straquadine). 

 8

 Respondents stated that the introduction of “faced-out” marketing, in which artists’ canvas is displayed

prominently on store shelves, has attracted the attention of consumers who otherwise would not typically purchase

artists’ canvas. Conference transcript, p. 116 (Stapleton).

II-3

Inventory levels

Chinese producers' inventories, as a share of total shipments, decreased from *** percent in 2002

to *** percent in 2003 and decreased further to *** percent in 2004. These data indicate that foreign

producers have a limited ability to use inventories as a means of increasing shipments of artists’ canvas to

the U.S. market.

Nonsubject Imports

Based on responses to Commission questionnaires, U.S. imports of artists’ canvas from

nonsubject sources accounted for *** percent of the quantity of total U.S. imports in 2004.

U.S. Demand

Demand Characteristics

The availability of substitutes for artists’ canvas discussed below indicates that the demand for

this product is likely to be relatively price elastic. When asked how the overall demand for artists’ canvas

has changed since January 2002, all the U.S. producers and all but three of the importers stated that the

demand had increased. The increase in demand for pre-stretched artists’ canvas was most commonly

attributed to the rapid growth of the home decor and scrapbook markets.6

 One importer and four retailers

also reported that consumer demand had increased due to the increasing availability of low-priced artists’

canvas.7

 One importer also attributed the increased demand to better marketing strategies

of retailers.8

 Growth in computer art and digital printing on canvas was cited as the reason behind

increased demand for artists’ canvas in bulk. 

Substitute Products

When asked whether there are substitutes for artists’ canvas, all U.S. producers and most

responding importers cited one or more alternative materials. One producer named particle board panel,

which reportedly has a similar texture to pre-stretched artists’ canvas. One importer named masonite

panel as a possible substitute. Other materials such as fine-art papers, scrapbook paper, wood panels, and

plastic panels, once treated and primed, were also named. However, one importer maintained that there

are no perfect substitutes for artists’ canvas, as there is an unparalleled sense of romance attached to
 9

 Conference transcript, p. 195 (Stapleton).

 10 Ibid.

 11 Conference transcript, pp. 82-83 (Straquadine) and pp. 90-91 (Benator).

 12 Conference transcript, pp. 40-41 (Cicherski).

II-4

painting on an authentic artists’ canvas set on an easel.9 This importer also reported that demand for the

substitute products has increased alongside increasing demand for artists’ canvas due to the growth in the

craft and home decor markets.10 None of the producers or importers said that changes in the prices of

these substitutes would affect the price of artists’ canvas. However, one importer said that low-priced

artists’ canvas is increasingly attracting students and young artists away from other economical

alternatives such as paper and particle board.

SUBSTITUTABILITY ISSUES

The extent of substitutability between domestic products and subject and nonsubject imports and

between subject and nonsubject imports is examined in this section. The discussion is based upon the

results of questionnaire responses from producers and importers.

Comparison of Domestic Product and Subject Imports

In order to determine whether U.S.-produced artists’ canvas can generally be used in the same

applications as imports from China, producers and importers were asked whether the products can

“always,” “frequently,” “sometimes,”or “never” be used interchangeably. The majority of producers that

compared China with the United States reported that they are always comparable, as shown in table II-1.

The majority of importers that compared China with the United States reported that they are frequently

comparable, as shown in table II-1. One factor limiting interchangeability is the fact that artists’ canvas

imported from China is primarily made from cotton, either bleached or unbleached, which is generally

considered to be of slightly lower quality than linen canvas.11 Two retailers reported serious quality

problems with the domestic product from ***, while one potential importer said that the Chinese product

did not meet its quality standards.12 Nearly all grades and varieties of artists’ canvases are available from

all producers, with the exception of a patented watercolor-grade canvas, which is only available from U.S.

producer Tara. 

Table II-1

Artists’ canvas: Perceived degree of interchangeability of product produced in the United States

and in other countries

Country comparison

U.S. producers U.S. importers

AF SNA F SN

U.S. vs. China 2 0 1 0 1 5 2 1

U.S. vs. Nonsubject 2 0 1 0 0 2 3 0

China vs. Nonsubject 2 0 1 0 0 2 4 0

Note: “A” = Always, “F” = Frequently, “S” = Sometimes, and “N” = Never.

Source: Compiled from data submitted in response to Commission questionnaires.
 13 Conference transcript, p. 190 (Dowers).

II-5

As indicated in table II-2, the majority of U.S. producers that compared the United States with

China said that differences other than price are sometimes significant. One producer said that among

professional artists who value high quality, the U.S. product has the advantage over the product from

China. Another producer reported that the domestic industry has better availability and product range

than the Chinese producers.

Table II-2

Artists’ canvas: Differences other than price between products from different sources1

Country comparison

U.S. producers U.S. importers

AFSNAFSN

U.S. vs. China 0 0 2 1 0 3 1 0

U.S. vs. Nonsubject 0 0 2 1 0 0 0 0

China vs. Nonsubject 0 0 2 1 0 000

 1

 Producers and importers were asked if differences other than price between artists’ canvas produced in the

United States and in other countries are a significant factor in their firms’ sales of artists’ canvas.

Note: “A” = Always, “F” = Frequently, “S” = Sometimes, and “N” = Never.

Source: Compiled from data submitted in response to Commission questionnaires.

The majority of importers that compared the United States with China said that the differences are

frequently significant (see table II-2); however, there was no clear consensus on which product was

superior in these comparisons. Among importers, one firm reported that the delivery time of the Chinese

product is superior to that of the United States. Another importer said that Chinese producers offer more

styles and sizes than U.S. producers. Another importer reported that Chinese producers are more flexible

in their supply, especially in the availability of non-traditional shapes and sizes.13 Another importer

stated, however, that its imports from China are limited by the fact that U.S. producers offer a wider

product range than Chinese producers, including heavier-weight cotton canvas, linen canvas, and

specialty canvases such as convex and oval shapes. 

Other Country Comparisons

In addition to comparisons between the U.S. product and imports from the subject country, U.S.

producer and importer comparisons between the United States and imports from nonsubject countries and

between subject imports and nonsubject imports are also shown in tables II-1 and II-2. One producer

reported that European canvases are mostly interchangeable with the U.S. product in terms of quality and

product range and that artists’ canvas from India tends to be of lower quality and lower price relative to

the U.S. product. One importer also reported that artists’ canvas from India is of lower quality than both

the domestic and Chinese product and that the Indian producers do not offer all the varieties of artists’

canvas. This importer also noted that artists’ canvas from Italy is of higher quality and higher price than

both domestic and Chinese artists’ canvas.
 
 1

 ***’s producer questionnaire response, section I-3, “***.” ***’s producer questionnaire response, section I-3,

“***.”

III-1

PART III: U.S. PRODUCERS’ PRODUCTION, SHIPMENTS, AND

EMPLOYMENT

U.S. PRODUCERS

Four firms accounted for *** percent of U.S. production of artists’ canvas during 2004. The

largest domestic producer of artists’ canvas, ***, accounted for *** percent of U.S. production. The

second largest producer, ***, manufactured *** percent of domestically produced artists’ canvas in 2004. 

The remaining two reporting firms, *** and ***, are both small manufacturers that focus on high end

users and together account for *** percent of domestic production.1

 Domestic producers’ plant locations,

positions on the petition, and individual shares of U.S. production are presented in table III-1.

Table III-1

Artists’ canvas: U.S. producers, U.S. production locations, shares of U.S. production of artists’

canvas in 2004, and positions on the petition

Firm

Production

locations

Production

(thousand

square meters)

Share of

production

(percent)

Position on

the petition

Responding producers:

Tara Lawrenceville, GA *** *** Petitioner

Duro Chicago, IL *** *** Support

Masterpiece San Francisco, CA *** *** ***

Stretch Art Gardena, CA *** *** ***

 Subtotal responding producers *** ***

 Subtotal nonresponding producers1

: ***2 ***

 Total *** 100.0

 1 In addition to producers identified in the petition and through staff research, on April 8, 2005, respondents’

counsel identified three additional potential producers: ***. Questionnaires were sent to the three firms on April 8,

2005. *** reported that they are ***. *** did not respond to the Commission’s questionnaire. At the conference on

April 22, 2005, petitioners identified three firms they believed produced printing canvas: Holliston Mills, Seaboard

Textile, and Snyder Textile. Staff had previously confirmed Seaboard Textile, *** of artists’ canvas. Holliston Mills

and Snyder Textiles have not responded to staff’s request for information.

 2

 The production quantity in 2004 for nonresponding producers was estimated based on the following: ***. 

Source: Compiled from data submitted in response to Commission questionnaires.
 2

 ***. Although ***. Staff interview with ***.

 3

 *** is partially attributable to the transfer of a portion of MacPherson’s business from Tara to Masterpiece. 

“When Tara fired us in 2003, our canvas purchases from them were nearly a million and a half dollars....After Tara

dropped us, we significantly increased our selection and purchases from U.S. producer Masterpiece Artist Canvas. ”

Conference transcript, pp. 126-127 (Stapleton).

III-2

U.S. PRODUCERS’ CAPACITY, PRODUCTION, AND CAPACITY UTILIZATION

The U.S. industry’s production, capacity, and capacity utilization data for artists’ canvas are

presented in table III-2. U.S. producers’ capacity increased by *** percent from *** million square

meters in 2002 to *** million square meters in 2004. The increase in reported capacity is attributable to

***.2

Total U.S. production rose *** percent between 2002 and 2003 and *** percent between 2003

and 2004, while decreasing *** percent between first quarter 2004 and 2005. ***’s production level

increased by *** percent between 2003 and 2004, while ***’s increased *** percent and ***’s increased

*** percent.3

Capacity utilization increased from *** percent in 2002 to *** percent in 2003, and to ***

percent in 2004. Capacity utilization rates decreased by *** percentage points from first quarter 2004 to

first quarter 2005; however, this decrease can be attributed to higher than normal capacity utilization rates

in first quarter 2004. Increased production levels by *** and *** in 2004 led to both firms operating

above their normal capacity rate in first quarter 2004, *** respectively, thus raising the capacity

utilization rate to *** percent in the first quarter of 2004 compared to the annual rate for 2004 of ***

percent.

Table III-2

Artists’ canvas: U.S. producers’ capacity, production, and capacity utilization, 2002-04, JanuaryMarch 2004, and January-March 2005

* * * * * * *

All four producers reported production of ***. However, only *** produced both bulk/rolled and

assembled artists’ canvas. The U.S. producers’ costs of production for assembled and bulk/rolled artists’

canvas in 2004 are provided in table III-3.

Table III-3

Artists’ canvas: U.S. producers’ cost of production for bulk/rolled form and assembled product,

2004 (average unit values in dollars per square meter, except as noted)

* * * * * * *
 4

 Respondents’ postconference brief, p. 15. Petitioner’s postconference brief, p. 11.

 5

 Decreasing value accompanying increasing quantity is consistent with petitioner’s argument that ***. 

Petitioner’s postconference brief, p. 18.

 6

 The quantity of bulk/rolled commercial shipments increased by *** percent from 2002 to 2003 and *** percent

from 2003 to 2004, before decreasing by *** percent between first quarter 2004 and first quarter 2005. 

III-3

U.S. PRODUCERS’ U.S. SHIPMENTS AND EXPORT SHIPMENTS

Table III-4 provides U.S. producers’ shipment data for all artists’ canvas. Producers reported no

internal consumption or company transfers. Throughout the period of investigation, U.S. producers’ U.S. 

shipments accounted for *** percent of total shipments. The quantity of U.S. shipments decreased by

*** percent between 2002 and 2003, increased by *** percent between 2003 and 2004, and decreased by

*** percent between the first quarters of 2004 and 2005. The increase in volume may be attributed to

increased consumer demand for new products such as printing canvas.4

 

Over the period of investigation, the value of U.S. shipments decreased by *** percent between

2002 and 2003, by *** percent between 2003 and 2004, and by *** percent from first quarter 2004 to

first quarter 2005.5

 The unit value per square meter fell by *** percent from $*** in 2002 to $*** in

2004.

Table III-5 presents U.S. producers’ U.S. shipments data for artists’ canvas in bulk/rolled form

and assembled. From January 2002 to March 2005, bulk/rolled artists’ canvas constituted *** percent of

the total U.S. producers’ commercial shipments of artists’ canvas. While the quantity and value of

commercial shipments of bulk/rolled artists’ canvas increased from 2002 to 2004,6

 the quantity and value

of assembled artists’ canvas shipments decreased over the same period. The quantity of assembled

artists’ canvas commercial shipments decreased by *** percent from 2002 to 2003, by *** percent

between 2003 and 2004, and then increased by *** percent between first quarter 2004 and first quarter

2005. The value of assembled artists’ canvas decreased by *** percent between 2002 and 2003, by ***

percent from 2003 to 2004, and increased by *** percent between first quarter 2004 and first quarter

2005. The average unit value of assembled canvas decreased by *** percent from $*** in 2002 to $***

in 2004 and remained unchanged between first quarter 2004 and first quarter 2005.

Table III-4

Artists’ canvas: U.S. producers’ shipments, by types, 2002-04, January-March 2004, and JanuaryMarch 2005

* * * * * * *

Table III-5

Artists’ canvas: U.S. producers’ U.S. commercial shipments of artists’ canvas in bulk/rolled form

and assembled, 2002-04, January-March 2004, and January-March 2005

* * * * * * *

U.S. PRODUCERS’ INVENTORIES

Data regarding U.S. producers’ end-of-period inventories are presented in table III-6. U.S.

producers’ end-of-period inventories decreased from 2002 to 2003 by *** percent, by *** percent from

2003 to 2004, and by *** percent between the first quarters of 2004 and 2005. Respondents note “the
 7

 Respondents’ postconference brief, p. 19.

 8

 ***.

 9

 “In 2003, we experienced an anomaly, one that is common in this specific industry, or in the art materials

industry, and that's when some of our largest coalition members, without the normal notice, hit us with very, very

large orders, above-and-beyond orders, quite often private-label orders that are manufactured specifically in their

house brand, and that caused a delay and a back order of product and depleted our shelves of both our branded and

our house-brand products, private-label products. That's happened in 2003. We went through a brief period in 2002

where a similar thing happened.” Conference transcript, p. 66 (Straquadine).

 10 “I also would like to say that we have done quite a bit of work on improving our forecasting method. That's

something very difficult in our niche artists' canvas industry where we've got a lot of sizes, a lot of depths of

material, and so one blip of certain sizes will cause a temporary shortage. And what we have done, two major things

that we have done, one is we've established, through quite a bit of work and correspondence with key customers, a

minimum stocking volume in two warehouses. So we are building towards minimum levels, both in our San Diego

warehouse and in our Lawrenceville, Georgia, warehouse. In addition to that, our San Diego warehouse, we

increased from a 20,000-square-foot facility that was only one story to a 60,000-foot, 28-foot-high.” Conference

transcript, p. 68 (Benator).

 11 Conference transcript, p. 36, (Benator).

III-4

*** in inventories during the period of investigation, almost ***, occurred in 2004 when subject imports

were ***.”7

***’s inventories represent *** percent of total reported inventories over the period of

investigation.8

 Tara reported brief periods of inventory shortages in 2002 and 2003, indicating that in the

artists’ canvas industry temporary shortages are common given the large variety of sizes and types of

materials.9

 To prevent future shortages Tara indicated that in addition to working on improving

forecasting methods for consumer demand they increased the size of one of their warehouses.10

Table III-6

Artists’ canvas: U.S. producers’ end-of-period inventories, 2002-04, January-March 2004, and

January-March 2005

* * * * * * *

U.S. EMPLOYMENT, WAGES, AND PRODUCTIVITY

Data provided by U.S. producers on the number of production and related workers (“PRWs”)

engaged in the production of artists’ canvas, the total hours worked by such workers, and wages paid to

such PRWs from 2002 through 2004 and the first quarters of 2004 and 2005 are presented in table III-7.

In April 2003, Tara closed Precision Manufacturing and laid off 39 employees; additional layoffs

continued throughout the year as Tara moved some of its canvas stretching operations to Decoracion

Colonel in Mexico.11 

Average hourly wages increased *** percent from $*** in 2002 to $*** in 2004, and rose from

$*** in first quarter 2004 to $*** in first quarter 2005. Productivity increased *** percent from ***

square meters per hour in 2002 to *** square meters per hour in 2003, and again by *** percent to ***

square meters per hour in 2004. Productivity also increased by *** percent between first quarter 2004

and first quarter 2005.
 12 *** square meters of artists’ canvas from China in 2004, which amounted to *** percent of its U.S. production

during that period.

 13 ***’s importer questionnaire response, section II-4.

 14 Conference transcript, p. 7 (Thompson).

 15 Petitioner’s postconference brief, exhibit 1.

III-5

Table III-7

Artists’ canvas: Average number of production and related workers producing assembled artists’

canvas, hours worked, wages paid to such employees, and hourly wages, productivity, and unit

labor costs, 2002-04, January-March 2004-05

* * * * * * *

U.S. PRODUCERS’ IMPORTS AND PURCHASES

*** U.S. producer reported imports of assembled artists’ canvas from China,12 and *** U.S.

producers reported imports of bulk artists’ canvas from China. *** reported that it imported artists’

canvas from China “***.”13

The only producer to import from nonsubject countries, Tara, indicated it moved a large portion

of its U.S. production to Mexico, to lower its cost as a direct consequence of the lower-priced

merchandise imported from China.14 Tara described the production operations performed in Mexico as

follows.15 Tara *** in the United States and ships it to Decoracion Colonel. The ***. Four stretcher

strips of appropriate lengths are assembled ***. The completed frame is then ready for the application of

canvas stretched over the frame. Raw canvas *** to Decoracion Colonel. ***, and then stretched over a

wood frame and attached. Labels are attached to the assembled product and then processed through a

shrink wrap machine and packed in boxes. The packaged assembled units are then exported to Tara’s

facilities in the United States. Data regarding Tara’s imports of artists’ canvas from its related firm in

Mexico are presented in the following tabulation:

* * * * * * *
 
 1

 The Commission sent questionnaires to those firms identified in the petition and proprietary Customs data as

importers of artists’ canvas between 2002 and 2004.

 2

 While it seems all importing firms have responded to the Commission’s questionnaire, the reported data are not

consistent with official statistics. Importer questionnaire respondents reported $*** million of imports from China

in 2004, or *** percent of the total value as reported by official Commerce statistics. However, importers reported

*** million square meters of subject product in 2004, or *** percent of total quantity as reported by official

Commerce statistics. 

 3

 According to data submitted in response to Commission questionnaires.

IV-1

PART IV: U.S. IMPORTS, APPARENT CONSUMPTION, AND

MARKET SHARES

The Commission sent importer questionnaires to 20 firms believed to be importers of artists’

canvas from China; in addition, each of the nine domestic producers received an importer questionnaire.1

Questionnaire responses were received from 14 companies accounting for nearly 100 percent of U.S.

imports from China in 2004.2

 Because of the unreliability of quantity data from official Commerce

statistics, import data rely on questionnaire responses for China and Mexico, and official import statistics

for all other sources.

U.S. IMPORTS

Questionnaire data on U.S. imports in 2004, by firm are provided in table IV-1. During 2004, the

three largest reporting importers of artists’ canvas from China, by quantity, were: ***.3

 

In addition to China, importers identified foreign producers in Belgium, India, Italy, Latvia,

Mexico, and Switzerland. During 2004, reported imports from China totaled *** thousand square meters

and imports of artists’ canvas from nonsubject countries totaled *** thousand square meters, or ***

percent of total imports.

Table IV-1

Artists’ canvas: Importers, imports from China, share of total reported imports from China, and

nonsubject imports, 2004

* * * * * * *

Data on U.S. imports by source are provided in table IV-2. The volume of imports from China

increased 207.3 percent between 2002 and 2003, by 137.1 percent between 2003 and 2004, and over

109.8 percent between the first quarters of 2004 and 2005. Over the same period, the volume of imports

from Mexico increased by *** percent between 2002 and 2003 and decreased by *** percent between

2003 and 2004, but rose *** percent between first quarter 2004 and first quarter 2005. 

Unit values of imports from China fluctuated, decreasing from $6.21 per square meter in 2002 to

$5.43 in 2003, before rising to $6.53 in 2004. The unit value fell from $5.96 in first quarter 2004 to $5.05

in first quarter 2005. The unit values of imports from Mexico also decreased, from $*** in 2002 to $***

in 2003 down to $*** in 2004 and were comparable in the first quarters of 2004 and 2005. China’s share

of imports by quantity rose from *** percent in 2002 to *** percent in 2003, to *** percent in 2004 and

*** percent during the first quarters of 2004 and 2005. China’s share of imports by value has risen from

*** in 2002 to *** percent in 2003, *** percent in 2004, and declined by *** percent in the first quarters

of 2004 and 2005.
IV-2

Table IV-2

Artists’ canvas: U.S. imports, by source, 2002-04, January-March 2004, and January-March 2005

Item

Calendar year January-March

2002 2003 2004 2004 2005

 Quantity (1,000 square meters)

China 206 633 1,501 255 535

Mexico *** *** *** *** *** 

All other sources *** *** *** *** *** 

 Subtotal nonsubject *** *** *** *** *** 

 Total *** *** *** *** *** 

 Value ($1,000 )

1

China 1,278 3,438 9,795 1,518 2,700

Mexico *** *** *** *** *** 

All other sources *** *** *** *** *** 

 Subtotal nonsubject *** *** *** *** *** 

 Total *** *** *** *** *** 

 Unit value (per square meter)

China $6.21 $5.43 $6.53 $5.96 $5.05

Mexico *** *** *** *** *** 

All other sources *** *** *** *** *** 

 Average nonsubject *** *** *** *** *** 

 Average *** *** *** *** *** 

 Share of quantity (percent)

China *** *** *** *** *** 

Mexico *** *** *** *** *** 

All other sources *** *** *** *** *** 

 Subtotal nonsubject *** *** *** *** *** 

 Total *** *** *** *** *** 

Table continued on next page.
IV-3

Table IV-2--Continued

Artists’ canvas: U.S. imports, by source, 2002-04, January-March 2004, and January-March 2005

Item

Calendar year January-March

2002 2003 2004 2004 2005

 Share of value (percent)

China *** *** *** *** *** 

Mexico *** *** *** *** *** 

All other sources *** *** *** *** *** 

 Subtotal nonsubject *** *** *** *** *** 

 Total *** *** *** *** *** 

 Ratio of imports to U.S. production (percent)

China *** *** *** *** *** 

Mexico *** *** *** *** *** 

All other sources *** *** *** *** *** 

 Subtotal nonsubject *** *** *** *** *** 

 Total *** *** *** *** *** 

 1 Landed, duty-paid.

Source: Data compiled from official Commerce statistics.

APPARENT U.S. CONSUMPTION AND MARKET SHARES

Data on apparent U.S. consumption are presented in table IV-3. Apparent U.S. consumption by

quantity increased by *** percent between 2002 and 2004 and by *** percent between first quarter 2004

and first quarter 2005. The value of U.S. consumption rose *** percent between 2002 and 2003 and ***

percent between 2003 and 2004 and increased by *** percent between the first quarters of 2004 and

2005.

The ratio of imports from China to U.S. production increased from *** percent in 2002 to ***

percent in 2004, and increased from *** percent in first quarter 2004 to *** percent in first quarter 2005. 

The ratio of imports from Mexico to U.S. production increased from *** percent in 2002 to *** percent

in 2003 before decreasing to *** percent in 2004 and rising from *** percent in first quarter 2004 to ***

percent in first quarter 2005. 
IV-4

Table IV-3

Artists’ canvas: U.S. shipments of domestic product, U.S. imports, apparent U.S. consumption,

and market shares, by source, 2002-04, January-March 2004, and January-March 2005

Item

Calendar year January-March

2002 2003 2004 2004 2005

 Quantity (1,000 square meters)

U.S. producers’ U.S. shipments *** *** *** *** *** 

U.S. shipments of imports from-- 

 China 159 494 1,317 278 519

 Mexico *** *** *** *** *** 

 All other sources *** *** *** *** *** 

 Subototal nonsubject *** *** *** *** *** 

 Total imports *** *** *** *** *** 

Apparent consumption *** *** *** *** *** 

 Value ($1,000)

U.S. producers’ U.S. shipments *** *** *** *** *** 

U.S. shipments of imports from-- 

 China 1,283 4,777 10,429 2,252 3,591

 Mexico *** *** *** *** *** 

 All other sources *** *** *** *** *** 

 Subtotal nonsubject *** *** *** *** *** 

 Total imports *** *** *** *** *** 

Apparent consumption *** *** *** *** *** 

 Share of quantity (percent)

U.S. producers’ U.S. shipments *** *** *** *** *** 

U.S. shipments of imports from-- 

 China *** *** *** *** *** 

 Mexico *** *** *** *** *** 

 All other sources *** *** *** *** *** 

 Subtotal nonsubject *** *** *** *** *** 

 Total imports *** *** *** *** *** 
IV-5

Table IV-3--Continued

Artists’ canvas: U.S. shipments of domestic product, U.S. imports, apparent U.S. consumption,

and market shares, by source, 2002-04, January-March 2004, and January-March 2005

Item

Calendar year January-March

2002 2003 2004 2004 2005

 Share of value (percent)

U.S. producers’ U.S. shipments *** *** *** *** *** 

U.S. shipments of imports from-- 

 China *** *** *** *** *** 

 Mexico *** *** *** *** *** 

 All other sources *** *** *** *** *** 

 Subtotal nonsubject *** *** *** *** *** 

 Total imports *** *** *** *** *** 

Source: Data compiled from responses to Commission questionnaires and official Commerce statistics.
 
 1

 Canvas may be made of cotton, linen, polyester, or a cotton and polyester blend. Lumber used by the petitioner

is typically eastern pine. Petition, p. 9. Of these two inputs, lumber accounts for a larger share of the total material

cost of assembled artists’ canvas (***) percent. Petitioner’s postconference brief, exhibit 1-C. 

 2

 Dyes and tannins include ***, ***, titanium dioxide, and Lamp Black. Petition, pp. 19-20. Additives include

calcium carbonate, ***, ***, and ***. Petition, pp. 21-22.

 3

 There is some evidence that prices of raw materials may have begun to rise in 2005. However, data are only

available for the first quarter of 2005 and staff has made no conclusions regarding the price change of future periods.

 4

 The estimated cost was obtained by subtracting the customs value from the c.i.f. value of the imports for 2004

and then dividing by the customs value. This calculation used import data on HTS subheadings 5901.90.20 and

5901.90.40 that also include tracing paper and buckram and similar stiffened textile fabrics used in hat foundations,

both of natural and man-made fibers.

V-1

PART V: PRICING AND RELATED INFORMATION

FACTORS AFFECTING PRICES

Raw Material Costs

Two principal raw materials, raw canvas and lumber, together account for approximately ***

percent of the cost of producing artists’ canvas.1

 Other raw materials may include staples; dyes and

tannins; additives; shrink film or other packaging materials; and labels.2

 The cost of raw materials per

square meter of artists’ canvas as reported by U.S. producers has fallen *** percent from January 2002 to

December 2004.3

 Additionally, there are four principal processing steps in the production of artists’

canvas. These steps include coating, sheeting/cutting, stretching, and framing/trimming. Other steps may

include milling and packaging.

Transportation Costs to the U.S. Market

Transportation costs for artists’ canvas shipped from China to the United States averaged 26.5

percent of the customs value during 2004. This estimate is derived from official import data.4

U.S. Inland Transportation Costs

Transportation costs on U.S. inland shipments of artists’ canvas generally account for a small to

moderate share of the delivered price of these products. For the four U.S. producers, reported costs

ranged from 5 to 10 percent of the delivered price. For importers from China, the costs ranged from 5

percent to as much as 20 percent of the delivered price. 

Exchange Rate

The currency of China is fixed relative to the U.S. dollar. Quarterly data reported by the

International Monetary Fund indicate that the nominal value of the Chinese yuan remained stable relative

to the U.S. dollar from January 2002 to March 2005. A real value is unavailable.
 5

 Conference transcript, pp. 193 and 197 (Stapleton).

 6

 Conference transcript, p. 196 (Kanter).

V-2

PRICING PRACTICES

Pricing Methods

When questionnaire respondents were asked how they determined the prices that they charge for

artists’ canvas, responses were varied. Among U.S. producers, customer-by-customer negotiations, or

transaction-by-transaction negotiations, were cited by some firms. Two producers and three importers

reported the use of price lists. In other cases, the responses focused upon competitive conditions. 

Prices of artists’ canvas are most commonly quoted on an f.o.b. basis rather than a delivered

basis. One producer offers *** on orders above $***. Another producer offers a freight program in

which its customers will never pay more than *** percent of transportation costs on orders over $*** and

in which freight is *** on orders above $***. Most of the responding importers quote on an f.o.b. basis.

Sales Terms and Discounts

U.S. producers and importers of artists’ canvas from China were asked what share of their sales

were on a (1) long-term contract basis (multiple deliveries for more than 12 months), (2) short-term

contract basis, and (3) spot sales basis (for a single delivery) during 2004. Among producers, two firms

reported that they sell nearly entirely on a spot basis and the other two producers reported a mixture of

both long and short-term contracts. Among the seven importers that reported sales of imports from the

subject country, five reported that they sell exclusively on a spot basis, one sells exclusively on a longerterm basis, and one reported a mixture of spot sales and both long and short contracts. For U.S. producers

selling on a contract basis, provisions varied from company to company. Long-term contracts are

typically for periods of three years, while short-term contracts are for periods of two months. For longterm contracts, neither price nor quantity are fixed while for short-term contracts, both quantities and

prices are fixed during the contract period. These producer contracts usually have a meet-or-release

provision. In the case of importers, short-term contracts are typically for periods of one year, with prices

typically fixed during the contract period. For long-term contracts, the period is typically indefinite with

prices sometimes fixed and quantities not fixed. These importer contracts typically do not contain meetor-release provisions.

Discount policies on sales of artists’ canvas vary widely. All four producers reported that they

offer discounts. These discounts are based on early payment, volumes, or dollar values of the order and

vary by type of customer (i.e., retailer or distributor). One producer also reported the use of temporary

promotional discounts in the range of *** percent and more aggressive discounts in cases where it must

compete head-to-head with Chinese imports. Among importers, three importers reported the use of

discounts. These discounts are mostly temporary promotional discounts ranging from *** percent. Three

retailers reported the use of temporary promotional discounts which tend to occur as schools resume

session, typically beginning in August and running through mid-October.5

 Some retailers may also offer

a promotional discount for the winter school term in January.6
 7

 The pricing data presented here exclude retail sales prices of direct importers. The pricing data therefore only

include data as reported by ***.

V-3

PRICE DATA

The Commission requested U.S. producers and importers of artists’ canvas to provide quarterly

data for the total quantity and value of selected products that were shipped to unrelated customers in the

U.S. market.7

 Data were requested for the period January 2002-March 2005. The products for which

pricing data were requested are as follows:

Product 1.--16x20 traditional style with spline or stapled on back.

Product 2.--18x24 traditional style with spline or stapled on back.

Product 3.--30x40 gallery style with spline.

Product 4.--16x20 canvas panel with chipboard core.

Three U.S. producers and seven importers provided usable pricing data for sales of the requested

products, although not all firms reported pricing for all products for all quarters. Pricing data reported by

these firms accounted for approximately 2.7 percent of U.S. producers’ shipments of artists’ canvas

during January 2002-March 2005 and 6.5 percent of U.S. imports from China over the same period.

Price Trends

Weighted-average prices reported for U.S. producers and importers are presented in tables V-1

through V-4 and in figures V-1 through V-4 on a quarterly basis during January 2002-March 2005.

Domestic prices trended upwards over the period of investigation and prices of the product imported from

China trended downwards.

Table V-1

Artists’ canvas: Weighted-average f.o.b. prices and quantities of domestic and imported product 1

and margins of underselling/(overselling), by quarters, January 2002-March 2005

* * * * * * *

Table V-2

Artists’ canvas: Weighted-average f.o.b. prices and quantities of domestic and imported product 2

and margins of underselling/(overselling), by quarters, January 2002-March 2005

* * * * * * *

Table V-3

Artists’ canvas: Weighted-average f.o.b. prices and quantities of domestic and imported product 3

and margins of underselling/(overselling), by quarters, January 2002-March 2005

* * * * * * *
 8

 One price on imported product 1 as reported by *** was excluded as it was deemed to be an outlier. Annual

pricing data for imported product 1 reported by *** and *** were converted into quarterly figures.

 9

 Annual pricing data for imported product 2 reported by *** and *** were converted into quarterly figures.

 10 One price reported by *** on a product similar to product 3 was excluded as the product did not match the

definition of product 3.

V-4

Table V-4

Artists’ canvas: Weighted-average f.o.b. prices and quantities of domestic and imported product 4

and margins of underselling/(overselling), by quarters, January 2002-March 2005

* * * * * * *

Figure V-1

Artists’ canvas: Weighted-average f.o.b prices and quantities of domestic and imported product 1,

by quarters, January 2002-March 2005

* * * * * * *

Figure V-2

Artists’ canvas: Weighted-average f.o.b prices and quantities of domestic and imported product 2,

by quarters, January 2002-March 2005

* * * * * * *

Figure V-3

Artists’ canvas: Weighted-average f.o.b prices and quantities of domestic and imported product 3,

by quarters, January 2002-March 2005

* * * * * * *

Figure V-4

Artists’ canvas: Weighted-average f.o.b prices and quantities of domestic and imported product 4,

by quarters, January 2002-March 2005

* * * * * * *

The weighted-average sales price of U.S.-produced product 1 increased *** percent from the first

quarter of 2002 to the first quarter of 2005. The weighted-average sales price of product 1 imported from

China decreased *** percent over the same period.8

The weighted-average sales price of U.S.-produced product 2 increased *** percent from the first

quarter of 2002 to the first quarter of 2005. The weighted-average sales price of product 2 imported from

China decreased *** percent over the same period.9

The weighted-average sales price of U.S.-produced product 3 increased *** percent from the first

quarter of 2002 to the first quarter of 2005. The weighted-average sales price of product 3 imported from

China decreased *** percent over the same period.10
V-5

The weighted-average sales price of U.S.-produced product 4 decreased *** percent from the first

quarter of 2002 to the first quarter of 2005. The weighted-average sales price of product 4 imported from

China decreased *** percent from the first quarter of 2003 to the first quarter of 2005.

Price Comparisons

Margins of underselling and overselling for the period are presented by product category in tables

V-5 and V-6 below. The data show that prices of imports from China were lower than the U.S. producer

prices in all 39 quarterly comparisons of products 1-3, by margins of 13.3 percent to 45.2 percent. In all

seven comparisons related to product 4, the imported product was priced above the comparable domestic

product; margins of overselling ranged from 7.6 percent to 27.8 percent.

Table V-5

Artists’ canvas: Margins of underselling/(overselling) by product, quarterly, January 2002-March

2005

* * * * * * *

Table V-6

Artists’ canvas: Instances of underselling/overselling and the range and average of margins for

products 1-4, January 2002-March 2005

Item

Underselling Overselling

Number of

instances

Range

(percent)

Average

margin

(percent)

Number of

instances

Range

(percent)

Average

margin

(percent)

 Product 1 13 14.7 to 40.3 27.7 0 (1) (1)

 Product 2 13 13.3 to 45.2 28.3 0 (1) (1)

 Product 3 13 20.2 to 35.4 25.4 0 (1) (1)

 Product 4 0 (1) (1) 7 7.6 to 27.8 14.6

 Total2 39 13.3 to 45.2 27.2 7 7.6 to 27.8 14.6

 1

 Not applicable.

 2 Total number of instances for all cited products, range of margins for all cited products, and average margin for

all cited products. 

Source: Compiled from data submitted in response to Commission questionnaires.

LOST SALES AND LOST REVENUES

The Commission requested U.S. producers of artists’ canvas to report any instances of lost sales

or revenues they experienced due to competition from imports of artists’ canvas from China from January

2002 to March 2005. *** U.S. producers reported that they had to either reduce prices or roll back

announced price increases and they provided *** lost sales allegations and *** lost revenue ***. ***

U.S. producer made a general comment that distributors of artists’ canvas have an incentive to purchase

low-priced Chinese imports in order to maximize profit margins. *** U.S. producer commented that it

cannot get new business from distributors because it cannot meet the Chinese prices. The *** lost sales

allegations totaled at least $*** and the *** lost revenue *** totaled $***. Staff contacted the ***

purchasers cited in the allegations; *** responded. The results are summarized in tables V-7 and V-8 and

are discussed below.
 11 Conference transcript, pp. 86-87 (Straquadine).

V-6

Table V-7

Artists’ canvas: U.S. producers’ lost sales allegations

* * * * * * *

Table V-8

Artists’ canvas: U.S. producers’ lost revenue allegations

* * * * * * *

*** was named in a lost sale allegation involving artists’ canvas valued at $*** allegedly

occurring in ***. It disagreed with the allegation, stating that it switched only a portion of its purchases

(*** percent) to a Chinese source and that the decision was based on a combination of price and quality.

*** was cited in a lost sale allegation and agreed that, since January 2002, it has switched

purchases of artists’ canvas from U.S. producers to Chinese imports due to the lower price of the imports. 

It stated, however, that it also continues to buy some U.S.-produced artists’ canvas. While *** stated that

it generally considers the Chinese product to be inferior to the domestic product, art students opt to buy

the cheaper product. No specific quantities or values were cited in this allegation.

*** was cited in a lost sale allegation and agreed that since January 2002 it has switched

purchases of artists’ canvas from U.S. producers to Chinese imports due to the lower price of the imports.

No specific quantities or values were cited in this allegation.

*** was named in *** lost sale allegations involving pre-stretched artists’ canvas and canvas

panels valued at $***. *** disagreed with the allegations, stating that it did not receive any price quotes

from U.S. producers at the time of these purchases. It further stated that the product it imported from

China was a “wrapped” canvas that was not offered by its U.S. supplier at the time.

*** was named in a lost sale allegation involving artists’ canvas valued at $***. It agreed that it

did switch purchases of artists’ canvas from U.S. producers to Chinese imports, but disagreed with the

alleged value of the transaction, stating that it was only $***.

*** was named in a lost sale allegation, but no specific quantities or values were cited. It

disagreed with the allegation.

*** was named in a lost sale allegation involving artists’ canvas valued at $*** allegedly

occurring in ***. It disagreed with the allegation, stating that it switched purchases of artists’ canvas

from domestic producer *** to both a different domestic source and a Chinese source. *** stated that

price was only one of many factors that resulted in its decision. *** reported that it had experienced

many quality problems with *** over a long period of time, that *** had reneged on an agreement for a

*** percent damage allowance, that *** did not upgrade its quality or offer innovative styles, and that

*** did not have a proactive marketing strategy.

MacPherson’s was cited in a lost revenue allegation valued at $*** allegedly occurring in 2002. 

Tara alleged that in 2002, MacPherson’s began replacing its product with Chinese imports and misled

customers to believe that the Chinese imports were being made by Tara and were identical in quality to

Tara’s product. Tara also alleged that MacPherson’s began excluding Tara from its marketing programs

and sales meetings and engaged in minimal promotion of its products while aggressively promoting the

product imported from China.11 MacPherson’s denied these allegations, stating that its *** purchases

from Tara appeared lower than its *** purchases because it placed an extremely large order at the end of

*** in order to qualify for Tara’s *** percent growth rebate for the year. Moreover, MacPherson’s stated

that in December 2003 Tara cancelled its business relationship with MacPherson’s against MacPherson’s
 12 Conference transcript, pp.118-119 (Stapleton).

V-7

wishes. MacPherson’s said that as a result of this cancellation, in *** it shifted the business that had been

supplied by Tara to another U.S. producer, Masterpiece, as well as a Chinese source. MacPherson’s

maintained that its marketing strategy is to continue purchasing its high-end and specialty canvases from

U.S. suppliers.12 Moreover, it stated that prior to the cancellation by Tara, MacPherson’s had been

commended by Tara in 2002 and 2003 for faithfully promoting Tara’s products.
 
 1

 The producer with a fiscal year ending other than December 31 is ***.

VI-1

PART VI: FINANCIAL CONDITION OF U.S. PRODUCERS

BACKGROUND

Four producers1

 provided financial results for their operations on artists’ canvas. *** were ***

producers which reported on operations for both bulk/rolled and assembled canvas. 

OPERATIONS ON ARTISTS’ CANVAS

Results of operations of the U.S. producers on their artists’ canvas operations (both bulk/rolled

and assembled/finished) are presented in table VI-1 which includes data on a per-square meter basis as

well as operating income (loss) to net sales ratio. Aggregate income-and-loss data for producers on their

bulk/rolled canvas operations are presented in table VI-2, while those data on assembled canvas are

separately shown in table VI-3.

Table VI-1

Artists’ canvas: Results of operations of U.S. producers, fiscal years 2002-04, January-March

2004, and January-March 2005

* * * * * * *

Table VI-2

Artists’ canvas–bulk/rolled: Results of operations of U.S. producers, fiscal years 2002-04, JanuaryMarch 2004, and January-March 2005

* * * * * * *

Table VI-3

Artists’ canvas–assembled: Results of operations of U.S. producers, fiscal years 2002-04,

January-March 2004, and January-March 2005

* * * * * * *

The financial results of the producers fluctuated from 2002 to 2004. While the quantity sold

increased continuously between 2002 and 2004, net sales value decreased continuously for the same

period. Operating income actually increased from 2002 to 2003, due mainly to the decrease of total

costs/expenses, and decreased substantially from 2003 to 2004, which resulted from a substantial decrease

in the average unit selling price (from $*** to $*** per square meter). Even though sales quantity and

value both decreased slightly from interim 2004 to interim 2005, operating income increased somewhat

between two interim periods, due primarily to an increase in the average unit sales value (from $*** to

$*** per square meter) as well as a small decrease in the average unit total cost (from $*** to $***).

The financial results and trends of bulk/rolled sales were different from those for assembled

canvas sales. *** reported sales of both bulk/rolled and assembled canvas. Average unit sales values and

total costs between bulk/rolled and assembled canvas were quite different, for instance, $*** vs. $*** for

sales values and $*** vs. $*** for total costs, respectively, in 2004. While the average unit selling prices

and total costs for assembled canvas were naturally consistently higher compared to those for bulk/rolled

canvas for all periods, average unit operating income for assembled canvas decreased to a much greater
VI-2

degree than was the case for bulk/rolled canvas in 2004. Therefore, separate unit value data for each

producer for combined products and each product group are also presented in table VI-4.

 Selected financial data, by firm, are presented in table VI-4. While *** showed an improved

profitability (in terms of operating margin ratio) over the period, the remaining three producers showed

mixed operations results. Average operating income margins increased from 2002 to 2003 and decreased

in 2004, but increased from interim 2004 to interim 2005. 

Table VI-4

Artists’ canvas: Results of operations of U.S. producers, by firm, fiscal years 2002-04, JanuaryMarch 2004, and January-March 2005

* * * * * * *

Selected aggregate per-square-meter cost data of the producers on their operations, i.e., cost of

goods sold (COGS) and selling, general, and administrative (SG&A) expenses, are presented in table VI5. Overall per-square-meter COGS and total cost (which includes SG&A expenses) decreased

continuously from 2002 to 2004, and decreased slightly from interim 2004 to interim 2005. However,

due to the two different types of product, bulk/rolled and assembled canvas, product mix may have a

significant impact on the average unit sales values and costs. 

Table VI-5

Artists’ canvas: Average unit costs of U.S. producers, fiscal years 2002-04, January-March 2004,

and January-March 2005

* * * * * * *

A variance analysis showing the effects of prices and volume on the producers’ sales of artists’

canvas, and of costs and volume on their total cost, is shown in table VI-6. The analysis is summarized at

the bottom of the table. The analysis indicates that the decrease in operating income ($*** million)

between 2002 and 2004 was attributable mainly to the negative effect of decreased price ($*** million)

which was offset by the positive effects of decreased costs/expenses ($*** million) and increased sales

volume ($*** million).

Table VI-6

Artists’ canvas: Variance analysis of operations of U.S. producers, fiscal years 2002-04, JanuaryMarch 2004, and January-March 2005

* * * * * * *

CAPITAL EXPENDITURES AND RESEARCH AND DEVELOPMENT EXPENSES

The responding firms’ aggregate data on capital expenditures and research and development

“(R&D)” expenses are presented in table VI-7. *** that reported substantial amounts of capital

expenditures during the period examined, in addition to ***, which spent some amounts on capital

expenditures. *** reported R&D expenses. Capital expenditures, by firm, are presented in table VI-8. 

Capital expenditures increased during FY 2002-04, but decreased significantly from interim 2004 to

interim 2005.
VI-3

Table VI-7

Artists’ canvas: Capital expenditures and R&D expenses by U.S. producers, fiscal years 2002-04,

January-March 2004, and January-March 2005

* * * * * * *

Table VI-8

Artists’ canvas: Capital expenditures by U.S. producers, by firms, fiscal years 2002-04, JanuaryMarch 2004, and January-March 2005

* * * * * * *

ASSETS AND RETURN ON INVESTMENT

U.S. producers were requested to provide data on their assets used in the production and sales of

artists’ canvas during the period for which data were collected to assess their return on investment

(“ROI”). Although ROI can be computed in different ways, a commonly used method is income earned

during the period divided by the total assets utilized for the operations. Therefore, staff calculated ROI as

operating income divided by total assets used in the production and sales of artists’ canvas. Data on the

U.S. producers’ total assets and their ROI are presented in table VI-9. 

The value of total assets remained at relatively the same level between 2002 to 2004 while the

return on investment increased somewhat from 2002 to 2003, then decreased substantially from 2003 to

2004. The trend of ROI over the period was the same as the trend of the operating income margin shown

in table VI-1.

Table VI-9

Artists’ canvas: Value of assets and return on investment of U.S. producers, fiscal years 2002-04

* * * * * * *

CAPITAL AND INVESTMENT

The Commission requested U.S. producers to describe any actual negative effects on their return

on investment, or their growth, investment, ability to raise capital, existing development and production

efforts, or the scale of capital investments as a result of imports of artists’ canvas from China. The

producers’ comments are presented in appendix D.
 
 1

 *** exports, *** , artists’ canvas.

 2

 *** estimated it accounts for *** percent of Chinese exports of artists’ canvas to the United States. Foreign

producer questionnaire response, section II-8. Proprietary Customs data reports *** exported *** million square

meters, or *** percent of total Chinese exports from 2002 to 2004. 

 3

 ***’s importer questionnaire responses, section II-5.

 4

 Conference transcript, pp. 132, 219, and 221 (Market, Urnes, Stapleton).

 5

 The ratio of home market sales to total shipments, as presented in table VII-1, is lower as it includes data from

***, a firm that does producer artists’ canvas. 

VII-1

PART VII: THREAT CONSIDERATIONS

THE INDUSTRY IN CHINA

Three firms responded to the Commission’s foreign producer questionnaire, Ningbo CONDA

Import Export Co., Ltd. (“Conda”);1

 Wuxi Phoenix Artist Materials Co. Ltd. (“Phoenix Artist”); and ***. 

Phoenix is believed to be the largest manufacturer of artists’ canvas in China.2

 Over the period of

investigation, Phoenix Artist accounted for *** percent of reported production. Furthermore, the two

largest importers reported Phoenix Artist as *** of their imported artists’ canvas products.3

Data on capacity, production, shipments, and inventories of artists’ canvas in China are presented

in table VII-1. The firms are estimated to cover almost all of Chinese exports of artists’ canvas to the

United States. Importers identified manufacturers of artists canvas in China through trade shows,

catalogs, and through existing joint venture relationships.4

Table VII-1

Artists’ canvas: China’s capacity, production, shipments, and inventories, 2002-04, January-March

2004, January-March 2005, and projected 2005-06 

* * * * * * *

Reported production capacity and production grew *** percent between 2002 and 2004. 

Capacity is projected to increase by *** percent between 2004 and 2005. Shipments to the Chinese

home market represented approximately *** percent of production between January 2002 and March

2005.5

 Over the period of investigation, exports to Australia, Europe, and the United States accounted for

approximately *** percent of total shipments. The United States’ share of export shipments grew from

*** percent in 2002 to *** percent in 2004, but decreased from *** percent in first quarter 2004 to ***

percent in first quarter 2005. 

U.S. IMPORTERS’ INVENTORIES FROM CHINA

Importers’ end-of-period inventories based upon data submitted in response to Commission

questionnaires are provided in table VII-2. Inventories of imports from China rose *** percent between

2002 and 2004, and *** percent between the first quarters of 2004 and 2005, but fluctuated downward

both as a ratio to imports and as a ratio to U.S. shipments of imports during 2002-04. Inventories of

imports from all other sources remained constant from 2002 to 2004 and fell *** percent between the first

quarters of 2004 and 2005. The ratio of imports from all other sources to imports and U.S. shipments of

imports fell *** and *** percentage points respectively, between 2002 and 2003, and rose by ***

percentage points between 2003 and 2004.
VII-2

Table VII-2

Artists’ Canvas: U.S. importers’ end-of-period inventories of imports, 2002-04, January-March

2004, and January-March 2005

Item

Calendar year January-March

2002 2003 2004 2004 2005

Imports from China:

 Inventories (1,000 square meters) 61 200 376 173 389

 Ratio to imports (percent) 29.5 31.5 25.1 17.0 18.2

 Ratio to U.S. shipments of imports (percent) 38.1 40.4 28.6 15.6 18.7

Imports from all other sources:

 Inventories (1,000 square meters) *** *** *** *** *** 

 Ratio to imports (percent) *** *** *** *** *** 

 Ratio to U.S. shipments of imports (percent) *** *** *** *** *** 

Imports from all sources:

 Inventories (1,000 square meters) *** *** *** *** *** 

 Ratio to imports (percent) *** *** *** *** *** 

 Ratio to U.S. shipments of imports (percent) *** *** *** *** *** 

Source: Compiled from data submitted in response to Commission questionnaires.

U.S. IMPORTERS’ IMPORTS SUBSEQUENT TO MARCH 31, 2005

Ten of the responding importers indicated that they imported or arranged for the importation of

*** square meters of artists’ canvas from China for delivery after March 31, 2005. 

Table VII-3

Artists’ canvas: U.S. importers and import orders of artists’ canvas from China, end delivery date,

2005 

* * * * * * *

DUMPING IN THIRD-COUNTRY MARKETS

Based on available information, artists’ canvas from China has not been subject to any other

import relief investigation in other countries.
A-1

APPENDIX A

FEDERAL REGISTER NOTICES

Federal Register / Vol. 70, No. 65 / Wednesday, April 6, 2005 / Notices 17467

1The products covered by this investigation are 

artist canvases regardless of dimension and/or size, 

whether assembled or unassembled (i.e., kits that 

include artist canvas and other items, such as a 

wood frame), that have been primed/coated, 

whether or not made from cotton, whether or not 

archival, whether bleached or unbleached, and 

whether or not containing an ink receptive top coat. 

Artist canvases (i.e., pre-stretched canvases, canvas 

panels, canvas pads, canvas rolls (including bulk 

rolls that have been primed), printable canvases, 

floor cloths, and placements) are tightly woven 

prepared painting and/or printing surfaces. The 

written description of the scope of this investigation 

is dispositive.

others affected by NAGPRA are being 

contacted for comments and input.

Dated: February 14, 2005. 

Cyd Martin, 

Director, Office of Indian Affairs & American 

Culture, IMR.

[FR Doc. 05–6831 Filed 4–5–05; 8:45 am] 

BILLING CODE 4312–50–P

INTERNATIONAL TRADE 

COMMISSION 

[Investigation No. 731–TA–1091 

(Preliminary)] 

Artists’ Canvas From China

AGENCY: United States International 

Trade Commission.

ACTION: Institution of antidumping 

investigation and scheduling of a 

preliminary phase investigation. 

SUMMARY: The Commission hereby gives 

notice of the institution of an 

investigation and commencement of 

preliminary phase antidumping 

investigation No. 731–TA–1091 

(Preliminary) under section 733(a) of the 

Tariff Act of 1930 (19 U.S.C. 1673b(a)) 

(the Act) to determine whether there is 

a reasonable indication that an industry 

in the United States is materially 

injured or threatened with material 

injury, or the establishment of an 

industry in the United States is 

materially retarded, by reason of 

imports from China of artists’ canvas 1, 

provided for in statistical reporting 

numbers 5901.90.2000 and 591.90.4000 

of the Harmonized Tariff Schedule of 

the United States, that are alleged to be 

sold in the United States at less than fair 

value. Unless the Department of 

Commerce extends the time for 

initiation pursuant to section 

732(c)(1)(B) of the Act (19 U.S.C. 

1673a(c)(1)(B)), the Commission must 

reach a preliminary determination in 

antidumping investigations in 45 days, 

or in this case by May 16, 2005. The 

Commission’s views are due at 

Commerce within five business days 

thereafter, or by May 23, 2005.

For further information concerning 

the conduct of this investigation and 

rules of general application, consult the 

Commission’s Rules of Practice and 

Procedure, part 201, subparts A through 

E (19 CFR part 201), and part 207, 

subparts A and B (19 CFR part 207).

DATES: Effective Date: April 1, 2005.

FOR FURTHER INFORMATION CONTACT:

Megan Spellacy (202–205–3190), Office 

of Investigations, U.S. International 

Trade Commission, 500 E Street SW., 

Washington, DC 20436. Hearingimpaired persons can obtain 

information on this matter by contacting 

the Commission’s TDD terminal on 202–

205–1810. Persons with mobility 

impairments who will need special 

assistance in gaining access to the 

Commission should contact the Office 

of the Secretary at 202–205–2000. 

General information concerning the 

Commission may also be obtained by 

accessing its Internet server (http://

www.usitc.gov). The public record for 

this investigation may be viewed on the 

Commission’s electronic docket (EDIS) 

at http://edis.usitc.gov.

SUPPLEMENTARY INFORMATION: 

Background.—This investigation is 

being instituted in response to a petition 

filed on April 1, 2005, by Tara 

Materials, Inc., Lawrenceville, GA. 

Participation in the investigation and 

public service list.—Persons (other than 

petitioners) wishing to participate in the 

investigation as parties must file an 

entry of appearance with the Secretary 

to the Commission, as provided in 

sections 201.11 and 207.10 of the 

Commission’s rules, not later than seven 

days after publication of this notice in 

the Federal Register. Industrial users 

and (if the merchandise under 

investigation is sold at the retail level) 

representative consumer organizations 

have the right to appear as parties in 

Commission antidumping 

investigations. The Secretary will 

prepare a public service list containing 

the names and addresses of all persons, 

or their representatives, who are parties 

to this investigation upon the expiration 

of the period for filing entries of 

appearance. 

Limited disclosure of business 

proprietary information (BPI) under an 

administrative protective order (APO) 

and BPI service list.—Pursuant to 

section 207.7(a) of the Commission’s 

rules, the Secretary will make BPI 

gathered in this investigation available 

to authorized applicants representing 

interested parties (as defined in 19 

U.S.C. 1677(9)) who are parties to the 

investigation under the APO issued in 

the investigation, provided that the 

application is made not later than seven 

days after the publication of this notice 

in the Federal Register. A separate 

service list will be maintained by the 

Secretary for those parties authorized to 

receive BPI under the APO. 

Conference.—The Commission’s 

Director of Operations has scheduled a 

conference in connection with this 

investigation for 9:30 a.m. on April 22, 

2005, at the U.S. International Trade 

Commission Building, 500 E Street SW., 

Washington, DC. Parties wishing to 

participate in the conference should 

contact Megan Spellacy (202–205–3190) 

not later than April 19, 2005, to arrange 

for their appearance. Parties in support 

of the imposition of antidumping duties 

in this investigation and parties in 

opposition to the imposition of such 

duties will each be collectively 

allocated one hour within which to 

make an oral presentation at the 

conference. A nonparty who has 

testimony that may aid the 

Commission’s deliberations may request 

permission to present a short statement 

at the conference. 

Written submissions.—As provided in 

sections 201.8 and 207.15 of the 

Commission’s rules, any person may 

submit to the Commission on or before 

April 27, 2005, a written brief 

containing information and arguments 

pertinent to the subject matter of the 

investigation. Parties may file written 

testimony in connection with their 

presentation at the conference no later 

than three days before the conference. If 

briefs or written testimony contain BPI, 

they must conform with the 

requirements of sections 201.6, 207.3, 

and 207.7 of the Commission’s rules. 

The Commission’s rules do not 

authorize filing of submissions with the 

Secretary by facsimile or electronic 

means, except to the extent permitted by 

section 201.8 of the Commission’s rules, 

as amended, 67 FR 68036 (November 8, 

2002). 

In accordance with sections 201.16(c) 

and 207.3 of the rules, each document 

filed by a party to the investigation must 

be served on all other parties to the 

investigation (as identified by either the 

public or BPI service list), and a 

certificate of service must be timely 

filed. The Secretary will not accept a 

document for filing without a certificate 

of service.

Authority: This investigation is being 

conducted under authority of title VII of the 

Tariff Act of 1930; this notice is published 

pursuant to section 207.12 of the 

Commission’s rules.

Issued: April 1, 2005. 

17468 Federal Register / Vol. 70, No. 65 / Wednesday, April 6, 2005 / Notices 

By order of the Commission.

Marilyn R. Abbott, 

Secretary to the Commission.

[FR Doc. 05–6827 Filed 4–5–05; 8:45 am] 

BILLING CODE 7020–02–P

INTERNATIONAL TRADE 

COMMISSION 

[Inv. No. 337–TA–501] 

In the Matter of Certain Encapsulated 

Integrated Circuit Devices and 

Products Containing Same; Notice of 

Commission Determination To 

Remand Investigation to the 

Administrative Law Judge; Extension 

of Target Date for Completion of the 

Investigation

AGENCY: U.S. International Trade 

Commission.

ACTION: Notice.

SUMMARY: Notice is hereby given that 

the U.S. International Trade 

Commission has determined to remand 

the above-referenced investigation to the 

presiding administrative law judge (ALJ) 

for further proceedings and findings in 

light of claim construction 

determinations made by the 

Commission and an expected ruling by 

the U.S. Court of Appeals for the District 

of Columbia (D.C. Court of Appeals) in 

U.S. International Trade Commission v. 

ASAT Inc., Appeal No. 05–5009. The 

Commission also has determined to 

extend the target date in this 

investigation by seven (7) months and 

twenty-one (21) days, i.e., until 

November 21, 2005.

FOR FURTHER INFORMATION CONTACT:

Michael Liberman, Esq., Office of the 

General Counsel, U.S. International 

Trade Commission, 500 E Street, SW., 

Washington, DC 20436, telephone 202–

205–3115. Copies of the public version 

of the IDs and all nonconfidential 

documents filed in connection with this 

investigation are or will be available for 

inspection during official business 

hours (8:45 a.m. to 5:15 p.m.) in the 

Office of the Secretary, U.S. 

International Trade Commission, 500 E 

Street, SW., Washington, DC 20436, 

telephone 202–205–2000. Hearingimpaired persons are advised that 

information on this matter can be 

obtained by contacting the 

Commission’s TDD terminal on 202–

205–1810. General information 

concerning the Commission may also be 

obtained by accessing its Internet server 

(http://www.usitc.gov). The public 

record for this investigation may be 

viewed on the Commission’s electronic 

docket (EDIS) at http://edis.usitc.gov.

SUPPLEMENTARY INFORMATION: On 

December 19, 2003, the Commission 

instituted an investigation under section 

337 of the Tariff Act of 1930, 19 U.S.C. 

1337, based on a complaint filed by 

Amkor Technology, Inc. (‘‘Amkor’’) 

alleging a violation of section 337 in the 

importation, sale for importation, and 

sale within the United States after 

importation of certain encapsulated 

integrated circuit devices and products 

containing same in connection with 

claims 1–4, 7, 17, 18 and 20–23 of U.S. 

Patent No. 6,433,277 (‘‘the ‘277 patent’’); 

claims 1–4, 7 and 8 of U.S. Patent No. 

6,630,728 (‘‘the ‘728 patent’’); and 

claims 1, 2, 13 and 14 of U.S. Patent No. 

6,455,356 (‘‘the ‘356 patent’’). 68 FR 

70836 (December 19, 2003). The 

complainant named Carsem (M) Sdn 

Bhd; Carsem Semiconductor Sdn Bhd; 

and Carsem, Inc. (collectively, 

‘‘Carsem’’) as respondents. 

The evidentiary hearing in this 

investigation was held from July 6 

through July 30, 2004, and August 9 

through August 11, 2004. On November 

18, 2004, the presiding ALJ issued a 

final ID finding no violation of section 

337. All parties to the investigation, 

including the Commission investigative 

attorney filed timely petitions for review 

of various portions of the final ID. 

Respondents designated their petition 

contingent upon the granting of any 

other petition for review or upon the 

Commission’s reviewing the ALJ’s ID on 

its own motion pursuant to 19 CFR 

210.44. All parties filed timely 

responses to the petitions for review. 

On February 1, 2005, the Commission 

determined to review the final ID in its 

entirety. 70 FR 6454 (February 7, 2005). 

The Commission requested briefing, 

based on the evidentiary record, on the 

issue of claim interpretation only. Id.

The Commission also extended the 

target date for completion of this 

investigation until March 31, 2005. Id.

All the parties to this investigation filed 

timely written submissions and timely 

reply submissions regarding the issues 

under review. 

On February 15, 2005, respondent 

Carsem filed a motion and 

memorandum to strike complainant’s 

initial written submission regarding the 

issues under review. On February 25, 

2005, both complainant Amkor and the 

IA filed responsive pleadings in 

opposition to Carsem’s motion. 

Having reviewed the record in this 

investigation, including the ID and the 

written submissions of the parties, the 

Commission has determined to make 

various claim construction 

determinations with regard to the patent 

claims under review, and to remand the 

investigation to the ALJ for additional 

proceedings and findings in light of 

those claim constructions. The 

Commission has also directed the ALJ to 

reopen the evidentiary record to receive, 

and make findings based on, evidence 

that may become available after the D.C. 

Court of Appeals rules in U.S. 

International Trade Commission v. 

ASAT, Inc., Appeal No. 05–5009. In 

order to allow sufficient time to 

complete the remand, the Commission 

has extended the target date for 

completion of the investigation by seven 

(7) months and twenty-one (21) days, 

i.e., until November 21, 2005. The 

Commission also determined to deny 

respondent Carsem’s motion to strike. 

The authority for the Commission’s 

determination is contained in section 

337 of the Tariff Act of 1930, as 

amended (19 U.S.C. 1337), and in 

sections 210.45 and 210.51 of the 

Commission’s Rules of Practice and 

Procedure (19 CFR 210.45 and 210.51).

Issued: March 31, 2005.

By order of the Commission. 

Marilyn R. Abbott, 

Secretary to the Commission.

[FR Doc. 05–6736 Filed 4–5–05; 8:45 am] 

BILLING CODE 7020–02–P

DEPARTMENT OF JUSTICE

Notice of Lodging of First Amendment 

to Consent Decree Pursuant to the 

Comprehensive Environmental 

Response Compensation and Liability 

Act (‘‘CERCLA’’) 

Notice is hereby given that on March 

23, 2005, a proposed First Amendment 

to Consent Decree in United States v. 

Boise Cascade Corp., et al., Civil Action 

7:97–cv–1704 (‘‘Amendment’’), was 

lodged with the United States District 

Court for the Northern District of New 

York. 

On November 20, 1997, the court 

entered a Consent Decree regarding the 

Sealand Restoration Superfund Site in 

Lisbon, New York (‘‘Site’’). The Consent 

Decree required five Settling Defendants 

to implement the groundwater remedy 

that EPA selected in a 1995 Record of 

Decision (‘‘ROD’’) for the Site. In 

November 2001, EPA issued an 

Explanation of Significant Differences 

(‘‘ESD’’) which modified the selected 

groundwater remedy (requiring the 

construction of a permeable reactive 

barrier) and provided for 

implementation of institutional controls 

and the performance of a supplemental 

study. The proposed Amendment 

conforms the Decree to the ESD. In 

addition, the Amendment calls for a 

revised threshold above which the 

21996 Federal Register / Vol. 70, No. 81 / Thursday, April 28, 2005 / Notices 

DEPARTMENT OF COMMERCE

International Trade Administration 

[A–570–899] 

Initiation of Antidumping Duty 

Investigation: Certain Artist Canvas 

From the People’s Republic of China

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce.

EFFECTIVE DATE: April 28, 2005.

FOR FURTHER INFORMATION CONTACT: Jon 

Freed or Michael Holton, Import 

Administration, International Trade 

Administration, U.S. Department of 

Commerce, 14th Street and Constitution 

Avenue, NW., Washington, DC 20230; 

telephone: (202) 482–3818 and (202) 

482–1324, respectively. 

Initiation of Investigation 

The Petition 

On March 31, 2005, the Department of 

Commerce (‘‘Department’’) received a 

Petition on imports of certain artist 

canvas from the People’s Republic of 

China (‘‘PRC’’) (‘‘Petition’’) filed in 

proper form by Tara Materials Inc. 

(‘‘Tara’’ or ‘‘Petitioner’’) on behalf of the 

domestic industry and workers 

producing certain artist canvas. On 

April 7, 2005, the Department clarified 

that the official filing date for the 

Petition was April 1, 2005, and that the 

proper period of investigation (‘‘POI’’) is 

July 1, 2004, through December 31, 

2004. See Memorandum from Edward 

Yang to Barbara Tillman: Decision 

Memo Concerning Petition Filing Date 

and Period of Investigation, April 7, 

2005. On April 7, 2005, and April 14, 

2005, the Department requested 

clarification of certain areas of the 

Petition and received responses to those 

requests on April 12, 2005, April 15, 

2005, and April 18, 2005. 

In accordance with section 732(b) of 

the Tariff Act of 1930, as amended (‘‘the 

Act’’), Petitioner alleged that imports of 

certain artist canvas 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. 

Scope of Investigation 

The products covered by this 

investigation are artist canvases 

regardless of dimension and/or size, 

whether assembled or unassembled (i.e.,

kits that include artist canvas and other 

items, such as a wood frame), that have 

been primed/coated, whether or not 

made from cotton, whether or not 

archival, whether bleached or 

unbleached, and whether or not 

containing an ink receptive top coat. 

Priming/coating includes the 

application of a solution, designed to 

promote the adherence of artist 

materials, such as paint or ink, to the 

fabric. Artist canvases (i.e., prestretched canvases, canvas panels, 

canvas pads, canvas rolls (including 

bulk rolls that have been primed), 

printable canvases, floor cloths, and 

placemats) are tightly woven prepared 

painting and/or printing surfaces. 

Artist canvases subject to this 

investigation are currently classifiable 

under subheadings 5901.90.20.00 and 

5901.90.40.00 of the Harmonized Tariff 

Schedule of the United States (HTSUS). 

Specifically excluded from the scope of 

this investigation are tracing cloths and 

stretcher strips, whether or not made 

from wood, so long as they are not 

incorporated into artist canvases or sold 

as part of an artist canvas kit. While 

HTSUS subheadings are provided for 

convenience and customs purposes, our 

written description of the scope of this 

proceeding is dispositive. 

Comments on Scope of Investigation 

During our review of the Petition, we 

discussed the scope with Petitioner 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, we are setting aside a 

period for interested parties to raise 

issues regarding product coverage. See 

Antidumping Duties; Countervailing 

Duties; Final Rule, 62 FR 27295, 27323 

(1997). The Department encourages all 

interested parties to submit such 

comments within 20 calendar days of 

publication of this initiation notice. 

Comments should be addressed to 

Import Administration’s Central 

Records Unit in Room 1870, U.S. 

Department of Commerce, 14th Street 

and Constitution Avenue, NW., 

Washington, DC 20230—Attn: Michael 

Holton. 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. 

Determination of Industry Support for 

the Petition 

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 the 

Department’s industry support 

determination, which is to be made 

before the initiation of the investigation, 

be based on whether a minimum 

percentage of the relevant industry 

supports the Petition. A Petition meets 

this requirement if the domestic 

producers or workers who support the 

Petition account for: (i) At least 25 

percent of the total production of the 

domestic like product; and (ii) 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. Moreover, 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 Department 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 of a 

domestic like product. Thus, to 

determine whether a 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 both 

the Department and the ITC must apply 

the same statutory definition regarding 

the domestic like product (section 

771(10) of the Act), they do so for 

different purposes and pursuant to a 

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 

like product, such differences do not 

render the decision of either agency 

contrary to law. See USEC, Inc. v. 

United States, 132 F. Supp. 2d 1, 8 (Ct. 

Int’l Trade 2001), citing Algoma Steel 

Corp. Ltd. v. United States, 688 F. Supp. 

639, 642–44 (Ct. Int’l Trade 1988).

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. 

With regard to the domestic like 

product, Petitioner does not offer a 

Federal Register / Vol. 70, No. 81 / Thursday, April 28, 2005 / Notices 21997

definition of domestic like product 

distinct from the scope of the 

investigation. Based on our analysis of 

the information submitted in the 

Petition, we have determined there is a 

single domestic like product, certain 

artist canvas, which is defined further in 

the ‘‘Scope of the Investigation’’ section 

above, and we have analyzed industry 

support in terms of that domestic like 

product. 

Our review of the data provided in the 

petition and other information readily 

available to the Department indicates 

that Petitioner has established industry 

support representing at least 25 percent 

of the total production of the domestic 

like product; and more than 50 percent 

of the production of the domestic like 

product produced by that portion of the 

industry, requiring no further action by 

the Department pursuant to section 

732(c)(4)(D) of the Act. In addition, the 

Department received no opposition to 

the petition from domestic producers of 

the 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) 

of the Act are met. Furthermore, the 

domestic producers 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) of the Act also are 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 Import Administration: 

Antidumping Duty Investigation 

Initiation Checklist of Certain Artist 

Canvas from the PRC (‘‘Initiation 

Checklist’’), dated April 21, 2005, at 

Attachment II (Industry Support). 

The Department finds that Petitioner 

filed this petition on behalf of the 

domestic industry because it is an 

interested party as defined in section 

771(9)(G) of the Act and it has 

demonstrated sufficient industry 

support with respect to the antidumping 

investigation that it is requesting the 

Department initiate. See Initiation 

Checklist at Attachment II (Industry 

Support). 

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 the U.S. 

price and the factors of production are 

also discussed in the Initiation 

Checklist. Petitioner submits that the 

particular export prices and normal 

values chosen represent equivalent 

forms of artist canvas. Petitioner 

identified the proper products for 

comparison by matching the dimensions 

of the artist canvas, the type and depth 

of stretcher strip, the weight of the 

cotton canvas, the number of coating 

applications, and the number and 

locations of staples in the artist canvas. 

See Petition Exhibit 34, April 12, 2005, 

Supplement to the Petition at pages 19–

20, and April 15, 2005, Supplement to 

Petition at Exhibit 4. 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.

Export Price 

Petitioner based export price on a 

price list for artist canvas offered for 

sale by a producer and exporter of artist 

canvas located in the PRC. See Petition 

at page 26 and Exhibit 34. Petitioner 

also submitted promotional materials. 

Petitioner made no adjustments or 

deductions to the export price. Because, 

for the reasons discussed in the 

Initiation Checklist, this resulted in a 

conservative estimate of the export 

price, we relied on the data in the 

Petition. 

Using the product codes contained in 

the price list provided to the U.S. buyer, 

Petitioner chose four of the most 

common types of artist canvas sold in 

the U.S. to be used for the dumping 

margin calculation. See Petition Exhibit 

34, April 12, 2005, Supplement to the 

Petition at pages 19–20, and April 15, 

2005, Supplement to Petition at Exhibit 

4. 

Normal Value 

Petitioner asserted that the PRC is a 

non-market economy country (‘‘NME’’) 

and no determination to the contrary 

has yet been made by the Department. 

In previous investigations, the 

Department has determined that the 

PRC is an NME. See Notice of Final 

Determination of Sales at Less Than 

Fair Value: Magnesium Metal from the 

People’s Republic of China, 70 FR 9037 

(February 24, 2005), Notice of Final 

Determination of Sales at Less Than 

Fair Value: Certain Tissue Paper 

Products From the People’s Republic of 

China, 70 FR 7475 (February 14, 2005), 

and Notice of Final Determination of 

Sales at Less Than Fair Value: Certain 

Frozen and Canned Warmwater Shrimp 

From the People’s Republic of China, 69 

FR 70997 (December 8, 2004). In 

accordance with section 771(18)(C)(i) of 

the Act, the presumption of NME status 

remains in effect until revoked by the 

Department. The presumption of NME 

status for the PRC has not been revoked 

by the Department and remains in effect 

for purposes of the initiation of this 

investigation. Accordingly, the normal 

value of the product is appropriately 

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. 

Petitioner selected India as the 

surrogate country. See Petition at pages 

14–16. Petitioner explained that India 

was selected as the appropriate 

surrogate for purposes of this Petition 

because India is economically 

comparable to the PRC and is a 

significant producer of comparable 

merchandise. See Petition at page 14. 

Petitioner identified three Indian 

companies that produce artist canvas. 

See Petition at page 15, April 12, 2005, 

Supplement to the Petition at page 13, 

and April 15, 2005, Supplement to the 

Petition at page 2 and Exhibit 1. In 

addition, Petitioner submitted import 

statistics indicating that India exported 

about 555,000 square meters of artist 

canvas to the United States in 2004. See

Petition at page 15. 

Petitioner provided a dumping margin 

calculation using the Department’s NME 

methodology as required by 19 CFR 

351.202(b)(7)(i)(C). See Petition Exhibits 

12–15, see also, April 15, 2005, 

Supplement to the Petition, at Exhibits 

6A–7D. To determine the quantities of 

inputs used by the PRC producers to 

produce each of the selected artist 

canvases, Petitioner relied on the 

production experience and actual 

consumption rates of Tara during 2004. 

Petitioner stated that the products 

selected were chosen because they are 

representative of the U.S. production of 

artist canvas and the artist canvas 

imported from the PRC. See Petition at 

page 17. For each product selected for 

comparison to export price, Petitioner 

provided two sets of normal value 

calculations. One set of normal value 

calculations reported consumption 

based on total material inventory 

withdrawals and did not account for 

scrap materials that were recovered and 

used for other production purposes. See

April 15, 2005, Supplement to the 

Petition at Exhibits 6A–6D and Exhibits 

7A–7D, respectively. Petitioner 

contends that the consumption rates 

21998 Federal Register / Vol. 70, No. 81 / Thursday, April 28, 2005 / Notices 

that are based on actual inventory 

withdrawals are the more appropriate 

basis for calculating normal value 

because the scrap is a ‘‘dead loss’’ with 

no further application in the 

manufacturing process. 

Notwithstanding this argument, an 

employee of Petitioner provided an 

affidavit that indicates that Tara’s re-use 

of scrap material reduces its 

manufacturing costs. See April 15, 2005, 

Supplement to the Petition at Exhibit 2. 

However, Petitioner did not incorporate 

an offset for recovered scrap in its 

normal value calculations. As a result, 

Petitioner’s calculation of normal value 

could be overstated because it did not 

account for scrap materials that are 

recovered and used for other production 

purposes. Therefore, for the purposes of 

initiation, the Department has 

conservatively determined to analyze 

the normal value calculations submitted 

by Petitioner that accounted for 

materials consumed (net of scrap). See

April 15, 2005, Supplement to the 

Petition at Exhibits 6A–6D. 

For the normal value calculation, 

Petitioner valued the factors of 

production for artist canvas using 

surrogate values derived from official 

Indian government import statistics. See

Petition at Exhibits 16–31, see also April 

15, 2005, Supplement to the Petition at 

Exhibit 3. Petitioner explained that, 

when surrogate values were not 

contemporaneous, it calculated the 

surrogate values using the best data 

available and relied on wholesale price 

indices in India as published in the 

International Financial Statistics of the 

International Monetary Fund to 

determine the appropriate adjustments 

for inflation. See Petition at Exhibit 32 

and the April 12, 2005, Supplement to 

the Petition at Exhibit 32. Using the 

foreign currency exchange rates posted 

on the Department’s Web site, Petitioner 

converted the surrogate values from 

rupees to U.S. dollars based on the 

average exchange rate for the POI. See

April 12, 2005, Supplement to the 

Petition at Exhibit K. Additionally, in 

calculating the surrogate values, 

Petitioner excluded those values 

reflecting imports from countries 

previously determined by the 

Department to be NME countries and 

imports into India from Indonesia, 

Korea and Thailand, because the 

Department has previously excluded 

prices from these countries because they 

maintain broadly-available, nonindustry specific export subsidies. See 

Automotive Replacement Glass 

Windshields From the People’s Republic 

of China: Final Results of 

Administrative Review, 69 FR 61790 

(October 21, 2004), and accompanying 

Issues and Decision Memorandum at 

Comment 5. 

For each of the inputs detailed in the 

normal value calculations, Petitioner 

provided surrogate values based on 

Indian Import Statistics. See April 15, 

2005, Supplement to the Petition at 

Exhibit 3. The surrogate values 

submitted for the material and packing 

inputs consist of information reasonably 

available, and are therefore acceptable 

for purposes of initiation. However, the 

Department has recalculated the 

surrogate value for raw canvas and 

expressed it in U.S. dollars per square 

yard to be consistent with the unit of 

measure in which the consumption of 

raw canvas is reported. See Initiation 

Checklist at Attachment V.

The Department calculates and 

publishes the surrogate values for labor 

to be used in NME cases. Therefore, to 

value labor, Petitioner used a labor rate 

of $0.93 per hour, in accordance with 

the Department’s regulations. See 19 

CFR 351.408(c)(3) and Petition at 

Exhibits 6A–6D. 

Petitioner did not include amounts for 

energy consumption as a separate factor 

of production in its calculation of 

normal value. Since Petitioner did not 

directly value energy consumption in its 

normal value calculation and because 

the Department does not normally 

include energy costs in the numerator of 

its factory overhead ratio, the 

Department has not included an amount 

for energy in its recalculation of 

Petitioner’s normal values. See 

Initiation Checklist at pages 7–8. 

Factory overhead, selling, general and 

administrative expenses, interest, and 

profit were derived from the 2003–2004 

financial statements of Arvind Mills 

Limited, an Indian fabric producer. See

Petition at pages 15–16, and Exhibit 33. 

Petitioner stated it was unable to obtain 

financial data from any Indian 

producers that specifically produce 

artist canvas. See Petition at page 15. 

The Department agrees with Petitioner’s 

contention that, in the absence of 

surrogate financial data for the specific 

subject merchandise, the Department 

may consider financial data for 

surrogate companies with similar 

characteristics and production 

processes. See Petition at page 16, see 

also, Notice of Initiation of 

Antidumping Duty Investigations: 4,4′- 

Diamino-2,2′-Stilbenedisulfonic Acid 

(DAS) and Stilbenic Fluorescent 

Whitening Agents (SFWA) from 

Germany, India, and the People’s 

Republic of China, 68 FR 34579, 34581 

(June 10, 2003). In this case, the 

Department has accepted the financial 

information for the Indian fabric 

producer for the purposes of initiation, 

because these data appear to be the best 

information on such expenses currently 

available to Petitioner. Petitioner 

submitted calculations of the surrogate 

financial ratios in Exhibit 33 of the 

Petition and revised calculations in 

Exhibit 8 of the April 15, 2005, 

Supplement to the Petition. However, 

the Department has recalculated the 

surrogate financial ratios to be 

consistent with its normal practice with 

regard to the treatment of energy, 

purchase of traded goods, taxes, duties, 

and movement expenses. See Initiation 

Checklist at Attachment VII. 

In addition to the changes discussed 

above, the Department has adjusted 

Petitioner’s normal value calculations 

with regard to how amounts for packing 

materials are incorporated into the 

normal value calculation. Petitioner 

stated that it had excluded the packing 

material amounts from the components 

of the normal value calculation to which 

the surrogate financial ratios were 

applied in the normal value 

calculations. However, Petitioner’s 

calculation of normal value for the 

16x20 stretched canvas and the 18x24 

stretched canvas applied the surrogate 

financial ratios to the packing materials 

as well as to the material and labor 

amounts, which Petitioner valued 

directly. As a result, Petitioner’s 

calculation overstated normal value to a 

certain extent for those two products. In 

light of this, the Department has 

recalculated the normal values for the 

16x20 stretched canvas and the 18x24 

stretched canvas so that packing costs 

are added to normal value after 

application of the surrogate financial 

ratios to the cost of manufacturing. See 

Initiation Checklist at Attachment VI. 

Fair Value Comparisons

Based on the data provided by 

Petitioner, there is reason to believe that 

imports of certain artist canvas from the 

PRC are being, or are likely to be, sold 

in the United States at less than fair 

value. Based upon comparisons of 

export price to the normal value, 

calculated in accordance with section 

773(c) of the Act, the estimated 

recalculated dumping margins for 

certain artist canvas range from 242.09 

percent to 264.09 percent. 

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 petitioner contends that the 

Federal Register / Vol. 70, No. 81 / Thursday, April 28, 2005 / Notices 21999

industry’s injured condition is evident 

in: (1) Declining market share; (2) 

declining domestic prices and lost sales; 

(3) declining production and sales; (4) 

reductions in employment levels; and 

(5) declining profitability. See Initiation 

Checklist at Attachment IV (Injury). 

The Department has assessed the 

allegations and supporting evidence 

(e.g., import statistics, etc) regarding 

material injury and causation and 

determined that these allegations are 

supported by accurate and adequate 

evidence and meet the statutory 

requirements for initiation. 

Separate Rates and Quantity and Value 

Questionnaire 

The Department recently modified the 

process by which exporters and 

producers may obtain separate-rate 

status in NME investigations. This 

change is described in Policy Bulletin 

05.1: Separate-Rates Practice and 

Application of Combination Rates in 

Antidumping Investigations involving 

Non-Market Economy Countries, (April 

5, 2005), (‘‘Policy Bulletin 05.1’’) 

available at http://ia.ita.doc.gov/.

Although the process has changed, now 

requiring submission of a separate-rate 

status application, the standard for 

eligibility for a separate rate (which is 

whether a firm can demonstrate an 

absence of both de jure and de facto

governmental control over its export 

activities) has not changed. 

The specific requirements for 

submitting a separate-rates application 

are outlined in detail in the application 

itself, and in Policy Bulletin 05.1, which 

is also available on the Department’s 

Web site at http://ia.ita.doc.gov/policy/

bull05-1.pdf. Regarding deadlines, 

Policy Bulletin 05.1 explains that ‘‘[a]ll 

applications are due sixty calendar days 

after publication of the initiation notice. 

This deadline applies equally to NMEowned and wholly foreign-owned firms 

for completing the applicable provisions 

of the application and for submitting the 

required supporting documentation.’’

See Policy Bulletin 05.1 at page 5. 

The deadline for submitting a 

separate-rates application applies 

equally to NME-owned firms, wholly 

foreign-owned firms, and foreign sellers 

who purchase the subject merchandise 

and export it to the United States. 

Therefore, this notice constitutes public 

notification to all firms eligible to seek 

separate-rate status in the investigation 

of artist canvas from the PRC that they 

must submit a separate-rates application 

within 60 calendar days of the date of 

publication of this initiation notice in 

the Federal Register. All potential 

respondents should also bear in mind 

that firms to which the Department 

issues a Quantity and Value (‘‘Q&V’’) 

questionnaire must respond both to this 

questionnaire and to the separate-rates 

application by the respective deadlines 

in order to receive consideration for a 

separate-rate status. In other words, the 

Department will not give consideration 

to any separate rate-status application 

made by parties that were issued a Q&V 

questionnaire by the Department but 

failed to respond to that questionnaire 

within the established deadline. The 

particular separate-rate status 

application for this investigation is 

available on the Department’s Web site 

http://ia.ita.doc.gov/ia-highlights-andnews.html.

Combination Rates 

The Department will calculate 

combination rates for certain 

respondents that are eligible for a 

separate rate in this investigation. The 

Separate Rates and Combination Rates 

Bulletin, states:

[w]hile continuing the practice of assigning 

separate rates only to exporters, all separate 

rates that the Department will now assign in 

its NME investigations will be specific to 

those producers that supplied the exporter 

during the period of investigation. Note, 

however, that one rate is calculated for the 

exporter and all of the producers which 

supplied subject merchandise to it during the 

period of investigation. This practice applies 

both to mandatory respondents receiving an 

individually calculated separate rate as well 

as the pool of non-investigated firms 

receiving the weighted-average of the 

individually calculated rates. This practice is 

referred to as the application of ‘‘combination 

rates’’ because such rates apply to specific 

combinations of exporters and one or more 

producers. The cash-deposit rate assigned to 

an exporter will apply only to merchandise 

both exported by the firm in question and 

produced by a firm that supplied the exporter 

during the period of investigation.

Separate Rates and Combination Rates 

Bulletin, at page 6. 

Initiation of Antidumping Investigation 

Based upon our examination of the 

Petition on certain artist canvas 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 

artist canvas from the PRC are being, or 

are likely to be, sold in the United States 

at less than fair value. Unless it is 

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 Government of the PRC. 

ITC 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 May 16, 2005, whether 

there is a reasonable indication that 

imports of certain artist canvas from the 

PRC are causing material injury, or are 

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 issued and published 

pursuant to section 777(i) of the Act.

Dated: April 21, 2005. 

Joseph A. Spetrini, 

Acting Assistant Secretary for Import 

Administration.

[FR Doc. E5–2047 Filed 4–27–05; 8:45 am] 

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration 

[A–201–831] 

Notice of Rescission of Antidumping 

Duty Administrative Review: 

Prestressed Concrete Steel Wire 

Strand From Mexico

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce.

SUMMARY: On February 24, 2005, the 

Department of Commerce (the 

Department) published in the Federal 

Register a notice announcing the 

initiation of an administrative review of 

the antidumping duty order on 

prestressed concrete steel wire strand 

from Mexico, covering the period July 

17, 2003, to December 31, 2004. See 

Notice of Initiation of Antidumping and 

Countervailing Duty Administrative 

Reviews, Mexico: Prestressed Concrete 

Steel Wire Strand, 70 FR 9035 (February 

24, 2005). The review covers Cablesa 

S.A. de C.V. (Cablesa). We are now 

rescinding this review as a result of 

Cablesa’s timely withdrawal of its 

request for an administrative review .

DATES: Effective Date: April 28, 2005.

FOR FURTHER INFORMATION CONTACT:

Constance Handley or Saliha Loucif, at 

(202) 482–0631 or (202) 482–1779, 

respectively, AD/CVD Enforcement, 

Office 1, Import Administration, 

International Trade Administration, 

U.S. Department of Commerce, 14th 

B-1

APPENDIX B

CONFERENCE WITNESSES

B-3

CALENDAR OF THE PUBLIC CONFERENCE

Those listed below appeared as witnesses at the United States International Trade

Commission’s conference held in connection with the following investigation:

Subject: ARTISTS’ CANVAS FROM CHINA

Inv. No.: 731-TA-1091 (Preliminary)

Date and Time: April 22, 2005 - 9:30 am

The conference was held in Room 101 (Main Hearing Room) of the United States

International Trade Commission Building, 500 E Street, SW, Washington, DC.

IN SUPPORT OF THE IMPOSITION OF ANTIDUMPING DUTIES:

Neville Peterson LLP

Washington, DC

on behalf of

Tara Materials Inc.

I. Michael Benator, President and CEO, Tara Materials, Inc.

Peter Delin, Vice President-Marketing, Tara Materials, Inc.

Paul Straquadine, Vice President-Sales, Tara Materials, Inc.

Ron Freeman, Vice President-Manufacturing, Tara Materials, Inc.

Bill Cichherski, President, Azel Art Supply, Inc. 

George Thompson )--OF COUNSEL
B-4

IN OPPOSITION TO THE IMPOSITION OF ANTIDUMPING DUTIES:

Sonnenschein Nath & Rosenthal LLP

 Washington, DC

 on behalf of

Wuxi Phoenix Artists Material Col, Ltd., Michaels Stores, Inc., Aaron Brothers, Inc.,

MacPherson’s, ColArt Americas, Inc., Dick Blick Art Materials, Sbars, Inc., Hobby

Lobby Stores, Inc., A.C. Moore Arts & Crafts, Inc., Jerry’s Artarama, Ningbo Conda

Import & Export Co., Ltd., Ningbo Two Birds Industry Co., Ltd., and Jo-Ann Stores, Inc.

Frank Stapleton, President, MacPherson’s

Alan Marek, Director of Importing, Michaels Stores, Inc.

Harvey Kanter, President, Aaron Brothers

Eric Urnes, General Manager, ColArt Americas, Inc.

John Dowers, President and Chief Executive Officer, Utrecht Art Supplies

Daniel Klett, Principal, Capital Trade Inc.

Philip Gallas )--OF COUNSEL

Mark Ludwikowski
C-1

APPENDIX C

SUMMARY DATA

Table C-1

Artists' canvas: Summary data concerning the U.S. market, 2002-04, January-March 2004, and January-March 2005

(Quantity=1,000 square meters, value=1,000 dollars, unit values, unit labor costs, and unit expenses are per square meter; period changes=percent, except where noted)

Reported data Period changes

January-March Jan.-Mar.

Item 2002 2003 2004 2004 2005 2002-04 2002-03 2003-04 2004-05

U.S. consumption quantity:

 Amount . . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Producers' share (1) . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Importers' share (1): *** *** *** *** *** *** *** *** ***

 China . . . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Other sources . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Total imports . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

U.S. consumption value:

 Amount . . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Producers' share (1) . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Importers' share (1): *** *** *** *** *** *** *** *** ***

 China . . . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Other sources . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Total imports . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

U.S. shipments of imports from:

 China:

 Quantity . . . . . . . . . . . . . . . . . . . . . 159 494 1,317 278 519 727.6 210.4 166.6 86.5

 Value . . . . . . . . . . . . . . . . . . . . . . . 1,283 4,777 10,429 2,252 3,591 712.5 272.2 118.3 59.5

 Unit value . . . . . . . . . . . . . . . . . . . $8.07 $9.67 $7.92 $8.09 $6.92 -1.8 19.9 -18.1 -14.5

 Ending inventory quantity . . . . . . . 61 200 376 173 389 520.8 229.2 88.6 124.3

 All other sources (2):

 Quantity . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . . . . *** *** *** *** *** *** *** *** ***

 All sources:

 Quantity . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . . . . *** *** *** *** *** *** *** *** ***

U.S. producers':

 Average capacity quantity . . . . . . . . *** *** *** *** *** *** *** *** ***

 Production quantity . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Capacity utilization (1) . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 U.S. shipments:

 Quantity . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Export shipments:

 Quantity . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . . . . . *** *** *** *** *** *** *** *** ***

 Inventories/total shipments (1) . . . . *** *** *** *** *** *** *** *** ***

 Production workers . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Hours worked (1,000s) . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Wages paid ($1,000s) . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Hourly wages . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Productivity (square meters/hour) . . *** *** *** *** *** *** *** *** ***

 Unit labor costs . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Net sales (3):

 Quantity . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Cost of goods sold (COGS) . . . . . . *** *** *** *** *** *** *** *** ***

 Gross profit or (loss) . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 SG&A expenses . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Operating income or (loss) . . . . . . . *** *** *** *** *** *** *** *** ***

 Capital expenditures . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit COGS . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit SG&A expenses . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit operating income or (loss) . . . . *** *** *** *** *** *** *** *** ***

 COGS/sales (1) . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Operating income or (loss)/

 sales (1) . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 (1) "Reported data" are in percent and "period changes" are in percentage points.

 (2) Shipments of imports from Mexico (from Commission questionnaires) plus imports from all other sources (from official Commerce statistics).

 (3) Financial data are for bulk/rolled canvas plus assembled finished canvas.

Note.--Financial data are reported on a fiscal year basis and may not necessarily be comparable to data reported on a calendar year basis. Because of rounding,

figures may not add to the totals shown. Unit values and shares are calculated from the unrounded figures.

Source: Compiled from data submitted in response to Commission questionnaires and from official Commerce statistics.
 
D-1

APPENDIX D

ALLEGED EFFECTS OF SUBJECT IMPORTS ON U.S. PRODUCERS’

EXISTING DEVELOPMENT AND PRODUCTION EFFORTS,

 GROWTH, INVESTMENT, AND ABILITY TO RAISE CAPITAL
D-2
D-3

Responses of U.S. producers to the following questions:

1. Since January 1, 2002, has your firm experienced any actual negative effects on its return on

investment or its growth, investment, ability to raise capital, existing development and production efforts

(including efforts to develop a derivative or more advanced version of the product), or the scale of capital

investments as a result of imports of artists’ canvas from China?

Responses of the producers are:

Duro ***

Masterpiece ***

Stretch Art *** 

Tara ***

2. Does your firm anticipate any negative impact of imports of artists’ canvas from China?

Responses of the producers are:

Duro ***

 

Masterpiece ***

Stretch Art *** 

Tara ***