Artists’ Canvas From China

Investigation No. 731-TA-1091 (Final)

Publication 3853 May 2006
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

Jennifer A. Hillman

Deanna Tanner Okun, Vice Chairman

Stephen Koplan, Chairman

Charlotte R. Lane

Daniel R. Pearson

Shara L. Aranoff

Staff assigned

Jai Motwane, Investigator

Heidi Colby-Oizumi, Industry Analystr

Nancy Bryan, Economist

Justin Jee, Accountant

Mark Rees, Attorney

Mara Alexander, Statistician

Diane Mazur, Supervisory Investigator
U.S. International Trade Commission

Washington, DC 20436

May 2006

www.usitc.gov

Publication 3853

Artists’ Canvas From China

Investigation No. 731-TA-1091 (Final)
 
i

CONTENTS

Page

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

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

Views of Chairman Stephen Koplan and Commissioner Shara L. Aranoff . . . . . . . . . . . . . . . . . . . . 27

Additional and dissenting views of Commissioner Daniel R. Pearson . . . . . . . . . . . . . . . . . . . . . . . 49

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

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

Statutory criteria and organization of report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Summary data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2

Extent of sales at less than fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

Summary of U.S. market participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

The subject product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4

U.S. tariff treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4

Description and uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4

Manufacturing processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6

Domestic like product issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6

Physical characteristics and uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7

Interchangeability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7

Manufacturing facilities, processes, and production employees . . . . . . . . . . . . . . . . . . . . . . . I-7

Channels of distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8

Customer and producer perceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8

Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8

Semi-finished product factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8

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

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

Supply and demand considerations ................................................ II-2

U.S. supply ............................................................... II-2

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

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

Factors affecting purchasing decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-4

Comparison of domestic product and subject imports ............................... II-6

Other country comparisons ................................................... II-8

Elasticity estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-9

U.S. supply elasticity ........................................................ II-9

U.S. demand elasticity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-10

Substitution elasticity ....................................................... II-10

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

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

Tara’s Mexico operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-2

U.S. producers’ capacity, production, and capacity utilization .......................... III-3

U.S. producers’ shipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-4

U.S. producers’ inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-6

U.S. producers’ employment, wages, and productivity ................................ III-6
ii

CONTENTS

Page

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

U.S. importers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1

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

Apparent U.S. consumption and market shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-6

Ratio of subject imports to U.S. production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-8

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-1

Pricing methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

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

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

Price trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-4

Price comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-7

Lost sales and lost revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-7

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-4

Assets and return on investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-6

Capital and investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-7

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

The industry in China .......................................................... VII-2

Chinese producers’ capacity, production, and shipments ............................ VII-3

Product shifting and dumping in third-country markets ............................. VII-4

U.S. importers’ inventories and imports after 2005 ................................... VII-4

U.S.-China textile agreement .................................................... VII-5

Appendices

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

B. Hearing witnesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

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

D. Responses to Commission like product factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1

E. Responses to the producers’ questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1

F. Pricing data broken out by channel of distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

G. Purchase prices of direct imports and of domestic products . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1

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

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

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)).

 2

 Commissioner Daniel R. Pearson dissenting.

1

UNITED STATES INTERNATIONAL TRADE COMMISSION

Investigation No. 731-TA-1091 (Final)

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 735(b) of the Tariff Act of 1930 (19

U.S.C. § 1673d(b)) (the Act), 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 have been found by the Department of Commerce

(Commerce) to be sold in the United States at less than fair value (LTFV).2

BACKGROUND

The Commission instituted this investigation effective April 1, 2006, following receipt of a

petition filed with the Commission and Commerce by Tara Materials, Inc., of Lawrenceville, GA. The

final phase of the investigation was scheduled by the Commission following notification of a preliminary

determination by Commerce that imports of artists’ canvas from China were being sold at LTFV within

the meaning of section 733(b) of the Act (19 U.S.C. § 1673b(b)). Notice of the scheduling of the final

phase of the Commission’s investigation and of a public hearing 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 November 17, 2005 (70 FR

69781). The hearing was held in Washington, DC, on March 28, 2006, and all persons who requested the

opportunity were permitted to appear in person or by counsel.

 1

 Commissioner Pearson dissenting. See Additional and Dissenting Views of Commissioner Daniel R. Pearson. 

 2

 This investigation does not raise the issues of whether the establishment of an industry is materially retarded, or

the existence of critical circumstances under 19 U.S.C. § 1673d(b)(4)(A)(i).

 3

 Confidential Staff Report, INV-DD-047 (Apr. 13, 2006) (CR) at I-6, Public Staff Report (PR) at I-4-I-5. 

 4

 19 U.S.C. § 1677(4)(A).

 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 Nippon, 19 CIT at 455 n.4; Timken Co. v. United

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

3

VIEWS OF THE COMMISSION

Based on the record in this investigation, we determine that an industry in the United States is

materially injured by reason of imports of artists’ canvas from China that are sold in the United States at

less than fair value (LTFV).1 2

 Artists’ canvas is a surface for the graphic presentation of painted or

printed images. Made from woven fabric that is primed and coated (“gessoed”) to accept paints or inks, it

is sold in a variety of shapes, sizes, textures, and formats.3

 

The petition was filed with the Commission on April 1, 2005, by the largest domestic producer of

artists’ canvas, Tara Materials, Inc. (Tara or Petitioner). Ten importers and two foreign

producers/exporters have participated as respondent interested parties (collectively, Respondents): 

Importers Michaels Stores, Inc. (Michaels), Aaron Brothers, Inc. (Aaron Bros.), MacPherson’s (also Art

Supply Enterprises) (MacPherson’s), ColArt Americas, Inc. (ColArt), Dick Blick Art Materials (Dick

Blick), Sbars, Inc. (Sbars), Hobby Lobby Stores, Inc. (Hobby Lobby), A.C. Moore, Jerry’s Artarama

(Artarama), Jo-Ann’s Stores, Inc. (Jo-Ann’s); and Chinese producers/exporters Wuxi Phoenix Artist

Materials Co., Ltd. (Phoenix Artist) and Ningbo Conda Import & Export Co., Ltd. (Conda).

I. DOMESTIC LIKE PRODUCT 

A. In General

In determining 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 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
 8

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

 9

 Nippon Steel, 19 CIT at 455; Torrington, 747 F. Supp. at 748-49. See also S. Rep. No. 96-249 at 90-91 (1979)

(Congress has indicated that the 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 Hosiden Corp. v. Advanced Display Mfrs., 85 F.3d 1561, 1568 (Fed. Cir. 1996) (Commission may find single

like product corresponding to several different classes or kinds defined by Commerce); Torrington, 747 F. Supp. at

748-752 (affirming Commission determination of six like products in investigations in which Commerce found five

classes or kinds).

 11 71 Fed. Reg. 16116 (Mar. 30, 2006).

 12 Id. at 16117 (footnote omitted). Commerce also made a scope ruling that canvas woven and primed in India

but cut and stretched in China does not constitute subject merchandise from China. See id. at 16116-16117.

 13 The woven fabrics used in artists’ canvas include cotton, linen, muslin, jute, or polyester. CR at I-6, PR at I-5.

4

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 Commerce as to the scope of the imported

merchandise that has been found to be subsidized or sold at LTFV, the Commission determines what

domestic product is like the imported articles Commerce has identified.10

B. Product Description

 In its final determination, 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

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

placemats) are tightly woven prepared painting and/or printing surfaces.11

Specifically excluded from the scope are “tracing cloths, ‘paint-by-number’ or ‘paint-it-yourself’ artist

canvases with a copyrighted preprinted outline, pattern, or design,” as well as “stretcher strips . . . so long

as they are not incorporated into artist canvases or sold as part of an artist canvas kit or set.”12

Artists’ canvas is made from raw canvas13 that receives two to four coats of gesso depending

upon the application of the final product. The coated canvas may be sold in bulk rolls of various widths

or lengths or it may be converted into a finished canvas product, the most common form of which is

“assembled” canvas that is stretched around and affixed to wooden frames by staple or spline (tucked into
 14 Bulk rolls may also be characterized as “finished” product for certain consumers (typically professional artists)

who purchase it in this form so that they may perform their own customized stretching. There are also end uses for

bulk products independent of finished canvas, such as floor cloths. See CR at I-6, I-12 & II-1, PR at I-4-I-5, I-9, &

II-1; see also Artists’ Canvas from China, Inv. No. 731-TA-1091 (Prelim.), USITC Pub. 3777 (May 2005)

(Preliminary Determination) at 6 n.27. (Where we need to refer to the confidential version of the preliminary phase

opinion, we cite to “Confidential Views.”) 

 15 Coated canvas that is adhered to a chipboard or a cardboard core. Preliminary Determination at 5.

 16 Coated canvas of high professional grade that is adhered to hardboard. Id.

 17 CR at I-6, PR at I-5. Less common forms of finished product include floor cloths and place mats. CR at I-6,

PR at I-5.

 18 Preliminary Determination at 5-7. 

 19 Preliminary Determination at 7 & n.35.

 20 E.g., Petitioner’s Prehearing Brief at 3-18; Respondents’ Prehearing Brief at 2-3.

 21 In the preliminary determination, the Commission noted that it would further examine the treatment of artists’

canvas kits in a final phase investigation. While ***, kits were included in the scope based on concerns of the

Petitioner of possible circumvention of any resulting order. Preliminary Determination at 5 n.19. Information

collected during the final phase indicates that kits are fabricated domestically, albeit in limited quantities. CR at I-8

n.22, PR at I-7 n.22 (***). Thus, we need not turn to the “next most similar” product analysis addressed in the

preliminary phase. The factual record is otherwise unchanged regarding kits, and the parties raise no issue regarding

their inclusion as defined in the scope. Accordingly, we do not find that artists’ canvas kits constitute a separate

domestic like product. 

5

a slat in the frame).14 Other common finished forms include panels,15 archival boards,16 and print canvas,

the last of which is treated with an additional ink receptive coating for use in digital printers.17 

In the preliminary phase of this investigation, the Commission applied the traditional six factor

test and determined that artists’ canvas is a continuum of different types of a single domestic like product. 

The Commission found that the various types of artists’ canvas share significant similarities, particularly

in terms of physical characteristics and uses, the perceptions of producers and importers, channels of

distribution, and manufacturing facilities, processes, and employees. While differences in finishing

processes and price exist between artists’ canvas in bulk rolls and the various forms of converted product,

and the interchangeability of certain types of artists’ canvas may be limited (digital printing, for example,

may only be performed on print canvas), the Commission concluded that these distinctions do not

establish clear dividing lines between artists’ canvas products that would justify finding two or more

domestic like products.18 The Commission thus found a single domestic like product, co-extensive with

the scope, but noted that it would further examine the like product definition in any final phase,

particularly with respect to the treatment of artists’ canvas kits and the treatment of bulk rolls as

compared to finished product.19 

C. Parties’ Arguments and Analysis

The definition of the domestic like product is not in dispute. Petitioner and Respondents concur

with the Commission’s treatment of the issue in its preliminary determination. Petitioner also contends

that application of a semi-finished products analysis, which it claims is not required because bulk canvas

is not necessarily a “semi-finished” product, leads to the same finding of a single domestic like product.20

We conclude that the record in the final phase of this investigation has not changed so as to warrant a

departure from the definition adopted by the Commission in the preliminary phase, that is, a single

domestic like product corresponding to the scope.21
 22 See, e.g., Outboard Engines from Japan, Inv. No. 731-TA-1069 (Final), USITC Pub. 3752 (Feb. 2005) at 6. 

 23 CR, PR at Table I-3. We note that these data tend to understate the amount of bulk canvas production

dedicated to finished artists’ canvas because of the internal consumption of some bulk canvas by integrated

producers to produce finished product. CR, PR at Table I-3 n.1; see CR, PR at Table III-5.

 24 Petitioner’s Prehearing Brief at 16.

 25 CR at I-10, PR at I-8.

 26 Generally, only the professional or experienced artist will purchase the upstream product. CR, PR at II-1. We

note that print canvas is mostly used for art reproduction. Id. 

 27 See, e.g., Revised and Corrected Transcript of Public Hearing on March 28, 2006 (Tr.) at 28 (Mr.

Straquadine). 

 28 CR, PR at Tables III-5-III-6.

6

Bulk Rolls/Finished Product. Bulk rolls, in limited circumstances, are used as finished product or

may be sold to artists who prefer to perform their own stretching as part of their artistic work; however,

the record shows that the vast majority of bulk rolls is used in the production of finished artists’ canvas

before sale to the ultimate end user. We have therefore considered both the semi-finished products

analysis and traditional six factor test in examining the domestic like product issue.

Under the semi-finished products analysis, in making its determination on whether to treat the

semi-finished and finished products as one like product or two, the Commission considers: (1) whether

the upstream article is dedicated to the production of the downstream article or has independent uses; (2)

whether there are perceived to be separate markets for the upstream and downstream articles; (3)

differences in the physical characteristics and functions of the upstream and downstream articles; (4)

differences in the cost or value of the vertically differentiated articles; and (5) the significance and extent

of the process used to transform the upstream into the downstream articles.22

The record reveals no meaningful vertical distinction between these two general types of artists’

canvas so as to warrant a finding of two domestic like products under a semi-finished products analysis. 

In terms of dedication to production, bulk rolls generally, although not always, are dedicated to the

production of finished artist canvas. In 2005, *** percent of U.S. producers’ U.S. shipments were sold to

converters – firms that produce finished artists’ canvas products using bulk canvas purchased from

unrelated firms.23

Petitioner argues that there is a perceived common market for bulk rolls and finished product.24

Respondents have not disputed that, for purposes of the Commission’s like product analysis, the two

types of product overlap. While bulk canvas is sold primarily to converters and the majority of finished

canvas is sold to retailers,25 the ultimate end user of either is the artist.26

Bulk rolls and finished product share the same fundamental physical characteristics and

functions: all artist canvas is woven fabric gessoed to accepts paints or inks, and functions as a building

block to artistic expression.27 The additional processing required to convert bulk rolls to finished product

creates differences in costs or value, with average unit values for the finished product at least twice that of

bulk rolls per square meter.28

Given the extent to which bulk rolls go into the production of finished canvas, the inherent

similarities of the two types of product, and the lack of any argument suggesting that the two should be

treated as separate domestic like products, we do not find that the semi-finished products analysis points

to separate domestic like products.

The additional information obtained in the final phase of the investigation also supports the

preliminary determination that, under the traditional six factor domestic like product test, bulk rolls and

finished product are also sufficiently similar to warrant a single domestic like product definition. The

physical characteristics and uses of the two, as noted above, are similar. All artists’ canvas is used as a

medium for the graphic expression of art. It is made of a canvas fabric that, once coated with gesso, will
 29 CR at I-6-I-9, PR at I-4-I-7; Tr. at 28-30 (Mr. Straquadine); Preliminary Determination at 6. 

 30 See, e.g., CR at D-17, PR at D-18.

 31 See, e.g., CR at I-9 n.27 (use of bulk rolls for floor coverings) & D-8 (use of bulk rolls for large murals), PR at

I-7 n.27 & D-8. 

 32 See, e.g., CR at D-17-D-20, PR at D-17-D-20.

 33 Tr. at 137 (Mr. Benator) (noting that Tara sells bulk rolls of print canvas and that print converters may also sell

print canvas in rolls of varying sizes).

 34 CR at I-10, D-17-D-20, PR at I-8, D-17-D-20. See also CR, PR at II-1 (noting that 5 of 15 purchasers reported

that bulk rolls and finished product are interchangeable; 10 reported that interchangeability is limited due to the skill,

tools, and time required to transform the product into finished product). 

 35 CR, PR at Table I-3.

 36 CR at I-10, PR at I-8.

 37 CR, PR at Table I-3.

 38 Preliminary Determination at 7.

 39 CR at I-7, PR at I-4.

7

allow the paint or ink to be applied without penetrating the fabric. Such coated canvas is used exclusively

for artists’ canvas, giving the product its unique qualities. The coating provides the ultimate end user

with the surface upon which to produce a graphic presentation, and the canvas serves as the material that

best supports the coated surface. Whether sold in bulk or finished form, artists’ canvas serves the same

elemental function in the creative process.29

In terms of interchangeability, most of the larger bulk rolls are converted to cut sheets to make

stretched canvas, panels, or pads. The smaller bulk rolls (typically 3 yards to 6 yards) are purchased by

professional or other serious artists who prefer to stretch their own canvas.30 Therefore, bulk rolls

usually, although not exclusively,31 undergo further processing before use by the artist, but the artist

herself in certain circumstances may perform those finishing steps.32

The parties do not perceive a clear dividing line between bulk rolls and finished product. Indeed,

print canvas, a finished product, may be sold in bulk form.33 Questionnaire responses regarding producer

and customer perceptions show that finished canvas products tend to appeal to a broader group of artists

that includes students, hobbyists, and first time painters because it is ready-to-use, while bulk rolls are for

the artist with special quality and size needs.34 In either case, the end user and the use to which the canvas

is ultimately put are generally the same: artists of varying proficiency creating expressions of art. 

In terms of channels of distribution, the majority of U.S. producers’ commercial shipments of

finished artist canvas is sold directly to retailers, with the remainder sold primarily through distributors. 

The percentage of bulk rolls sold to retailers during the period examined ranged from *** percent (2005)

to *** percent (2002); the percentage sold to distributers ranged between *** percent (2005) and ***

percent (2002).35 Bulk rolls are sold primarily to converters or firms that further process the bulk canvas

to produce finished artist canvas.36 Direct sales to end users by U.S. producers exist for both bulk rolls

and finished product, but account for *** percent of U.S. producers’ shipments.37 

Because bulk rolls are the input for finished artists’ canvas products, there is overlap, as found by

the Commission in the preliminary phase, in terms of manufacturing facilities, processes, and

employees.38 The raw canvas for all artists’ canvas products is purchased by the producer and coated or

primed with two to four layers of gesso, which is mixed using various chemical compounds based on the

application for which it is intended. This paint-receptive coating, as noted, provides the surface upon

which the art is produced and creates the barrier that prevents the paint from penetrating the canvas

fibers.39

Moreover, three U.S. firms, including the Petitioner, produce both bulk rolls and finished artists’

canvas products. With respect to these firms, the bulk rolls and finished artists’ canvas products are
 40 CR at I-9-I-10, PR at I-7; Tr. at 127-128 (Mr. Freeman) (noting that the same employees make bulk and

finished canvas).

 41 See, e.g., CR at I-7-I-8, I-13; PR at I-6, I-9-I-10. 

 42 CR, PR at Tables III-5-III-6.

 43 Preliminary Determination at 7.

 44 Preliminary Determination at 6.

 45 Commissioner Pearson, reaching a negative final determination, does not join in the remainder of these Views. 

See Additional and Dissenting Views of Commissioner Daniel R. Pearson. Chairman Koplan and Commissioner

Aranoff concur in the affirmative material injury determination, but do not join in the rest of the opinion. See Views

of Chairman Stephen Koplan and Commissioner Shara L. Aranoff. 

 46 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.

(continued...)

8

produced in the same facilities and the workers performing the converting may also be employed in the

production of the bulk canvas, although the machines used are different.40

The converting processes consist of additional steps in the manufacture of artists’ canvas,41 and

these additional steps increase the price of the product. In 2005, for example, the average unit value of

U.S. producers’ commercial shipments of bulk rolls was $*** per square meter, compared to $*** per

square meter for finished canvas.42 The Commission noted in the preliminary phase that the existence of

pricing differences was consistent with an expected price continuum of different types of the same

product.43

The other differences evidenced in this final phase, particularly with respect to the finishing

processes and interchangeability, are also consistent with the continuum of artists’ canvas found in the

preliminary phase. Any dividing lines among artists’ canvas products, including between bulk rolls and

finished product, are not clear on this record. Limits on interchangeability, for example, are not reserved

to comparing bulk rolls and finished product. As the Commission noted in its preliminary determination,

canvas presented on a stretcher strip (assembled canvas) may not be used for printing; the costs for certain

materials may also limit their use for particular applications.44 Moreover, the processes that take place

after gessoing the bulk canvas, the facilities in which they are performed, and the employees who perform

them vary depending on the particular type of finished product.

Instead of showing a clear dividing line between bulk rolls and finished product, the record

continues to demonstrate a continuum of artists’ canvas products sold in numerous grades, textures,

shapes, sizes, formats, and packages, sharing varying degrees of similarity in terms of physical

characteristics and uses, interchangeability, customer and producer perceptions, channels of distribution,

and manufacturing facilities, processes, and employees. The parties are in agreement that no one artists’

canvas product or type of product constitutes a separate domestic like product. Based on the record in

this final phase investigation, whether we apply the traditional six factor test or a semi-finished products

analysis, we find a single domestic like product, all artists’ canvas, co-extensive with the scope of the

investigation.

II. DOMESTIC INDUSTRY45

A. In General

The domestic industry is defined as “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.”46 In assessing the domestic production activity associated with a
 46 (...continued)

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.

 47 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.

 48 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) (Aramid Fiber) 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).

 49 Confidential Views at 11 n.40.

 50 Preliminary Determination at 8 n.40. 

 51 Preliminary Determination at 7-8.

 52 See, e.g., Petitioner’s Prehearing Brief at 18-20; Respondents’ Prehearing Brief at 3-6. 

 53 See, e.g., Petitioner’s Responses to Commissioner Questions at 5-9. 

9

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.47 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.48

In the preliminary phase of this investigation, the Commission addressed whether firms that

engage in the production of pre-stretched canvas but do not produce the bulks rolls (so-called converters)

are part of the domestic industry producing artists’ canvas. In addition to these firms, there was evidence

of a toll-processing arrangement whereby ***. Based on the available information in the preliminary

phase, *** appeared to be an “important but minor” additional processing step in the fabrication of certain

finished product.49 However, the record was unclear as to whether there were other such toll processors

and the Commission had no trade, production, or financial data from firms engaged in this sort of

converting operation. Therefore, the Commission did not address their inclusion in the domestic

industry.50 In contrast, the available information indicated that firms converting bulk rolls into prestretched canvas were engaged in sufficient production-related activity to constitute members of the

domestic industry. Accordingly, the Commission defined the industry to include these converters, but

noted it would explore the issue further in any final phase investigation.51

B. Parties’ Arguments

The parties are in agreement with respect to the inclusion in the domestic industry of firms that

convert bulk rolls into pre-stretched or assembled canvas.52 Whether such firms engage in sufficient

production-related activity is not disputed in the final phase of this investigation. The significant issue,

they contend, is whether firms that convert canvas rolls into print canvas, for use in digital printing,

should be included in the domestic industry.

Petitioner argues that print converting operations are not sufficient to qualify as artists’ canvas

production under the Commission’s traditional production-related activity test and, thus, print converters

do not qualify as domestic producers.53 Respondents argue that the Commission need not engage in the

six-factor sufficient production-related activity test because there appear to exist only non-integrated
 54 We note that, based on our definition of the domestic industry, producers of bulk canvas are producers of the

domestic like product, including print canvas.

 55 See, e.g., Respondents’ Posthearing Brief at 6-7 & Exh. 1 at 4-5.

 56 See, e.g., Respondents’ Posthearing Brief Exh. 1 at 5-10 

 57 See, e.g., Respondents’ Posthearing Brief at 4-6, 8-10 & Exh. 1 at 1-6. They also contend that comparing the

value-added data for these two types of finished canvas production is irrelevant. See, e.g., Respondents’ Posthearing

Brief Exh. 1 at 5-6. 

 58 Petitioner’s Response to Commissioner Questions at 1-4. 

 59 Coated canvas sheets that are bound together in notebook form. Preliminary Determination at 5.

 60 CR, PR at III-1.

10

producers of print canvas – the so-called print converters.54 Absent inclusion of non-integrated producers,

they continue, there would be no U.S. producers of the domestic like product. Including print converters

in the domestic industry is therefore warranted regardless of the extent of their production activity.55

Respondents further argue that, even under the six-factor test, print converters should be included in the

domestic industry because they engage in sufficient production-related activity.56 

Respondents also charge that Tara did not properly report in the petition, or at any time during the

investigation, the identity of print converters to the Commission, even though print canvas is included

within the scope of their petition and this investigation. Tara’s failure to identify such producers, they

claim, has impeded the Commission’s investigation, resulting in significant numbers of producers of

artists’ canvas that did not receive and have not responded to questionnaires regarding their operations. 

They further argue data on the amount of value added by various converters, in particular, are unreliable

for converters of assembled canvas and insufficient for print converters and that, for the latter, the

Commission should assume that the value-added data for non-responding firms is similar to the data from

those that have responded.57

Tara counters that it has been forthcoming in identifying firms involved in the coating of canvas

produced by domestic manufacturers. Tara states it was clear from the outset of the investigation that

there were inkjet coaters in the United States, and that Tara does not consider the coating process to

constitute production, but instead to be a mere finishing step. Tara also states it did not include such

finishers in the petition precisely because it does not consider them domestic producers, and that it has

been fully responsive to Commission requests for information about inkjet coaters when this issue was

raised. Tara argues that any deficiencies in questionnaire responses cannot be held against Tara, and that

any request for taking adverse inferences is baseless.58

C. Analysis

Two types of firms produce the artists’ canvas that are subject to this investigation – “coaters” 

( i.e., firms that produce bulk canvas) and “converters” ( i.e., firms that produce finished canvas

products). Converters can be further divided into firms that produce assembled canvas products (such as

stretched canvas, canvas panels, and canvas pads59), and firms that produce canvas suitable for use with

digital printers (“print converters”).60

A complete list of the potential U.S. producers identified in this investigation, and the status and

extent of their individual responses to the Commission’s questionnaires, is set forth in appendix E to the

staff report. All 30 potential producers listed by Respondents received questionnaires. In addition, the

Commission identified and sent questionnaires to 13 other firms. Of the 43 firms that received producer

questionnaires, 3 are integrated producers, 4 producers of bulk canvas, and 36 potential finished canvas

producers, including 26 print canvas producers. Responses were received from 33 firms, including all 3

integrated producers, all 4 coaters, and 26 potential converters, including 20 print canvas producers. The
 61 CR, PR at III-1 & nn.1-2.

 62 CR at III-2, PR at III-1-III-2.

 63 CR at I-13 n.38, PR at I-9 n.38.

 64 See American Bearing Manufacturers Association v. United States, 350 F. Supp. 2d 1100, 1124 n. 22 (Ct.

Int’l Trade 2004), quoting United States Steel Group v. United States, 873 F. Supp. 673, 688 (Ct. Int’l Trade 1994),

aff’d, 96 F. 3d 1352 (Fed. Cir. 1996).

 65 EDIS Doc. No. 246308 (letter dated January 25, 2006 from ***).

 66 See, e.g., EDIS Doc. No. 252206 (email dated April 14, 2006 from ***);

11

Commission thus received responses from 33 of 43 of the identified firms. For 5 of the 10 nonresponding firms, the Commission either confirmed that they did not produce artists’ canvas or received

no confirmation that they actually engage in production activities of any sort; staff obtained production

level information from 4 of the remaining 5 converters.61

Table III-1 of the staff report identifies the U.S. firms that provided trade and financial data. The

firms identified in this table account for over 93 percent of total U.S. production of bulk artists’ canvas,

and over 90 percent of U.S. production of finished canvas products.62 Domestic converters’ costs of

conversion from bulk to finished canvas, for both non-print and print converters, set forth in table I-4 of

the final report, are discussed below. Two significant converters of print canvas reported data relating to

conversion costs; one converter of non-print canvas reported conversion costs, and staff derived from the

financial data reported by the integrated producers their non-print canvas conversion costs based on their

reported costs of production for finished canvas products.63 

Any suggestion by Respondents that we must obtain 100 percent coverage in questionnaire

responses in order to make our determinations is incorrect. While the Commission endeavors to obtain

the most complete set of data as is practicably possible within the limits imposed by the statutory

deadlines and the ability of questionnaire respondents to comply with the data requests, the Court of

International Trade has made clear that 100 percent coverage is not required before the Commission can

make a determination.64 We are satisfied that this investigation’s final phase record provides a sound

basis for deciding the issues presented. When necessary to fill any gap in the record, as discussed below,

we rely upon facts available, thus accepting Respondents’ premise that the available information at a

minimum reflects practices or percentages applicable to the group.

Rather than reflect negatively on the cooperation of the Petitioner, the Commission’s experience

in obtaining information from print converters in this investigation suggests to us a large gap in

perception between Respondents and print converting firms in terms of how each would characterize print

converting operations: Print converters do not perceive themselves to be artists’ canvas manufacturers

and have a hard time allocating expenses associated with their business operations to the production of

artists’ canvas. ***, illustrates the point. ***.65 ***.66 This contrasts with the business of coaters and/or

non-print converters, whose operations are defined by their artists’ canvas production.

Below, we examine the production-related activity of non-print converters and print converters

using the traditional six-factor test. The test demonstrates that non-print converters are engaged in

sufficient production-related activity to constitute domestic producers, while print converters are not

engaged in sufficient production-related activity to constitute domestic producers. 

1. Non-Print Converters

The parties agree that such firms engage in sufficient production-related activity to constitute

producers. The manufacture of the most common form of finished non-print canvas, stretched canvas,

begins with the production of “stretcher strips” that are made out of wood. Raw lumber is machineripped and fed into a chop saw that removes imperfections. The pieces are then cut to appropriate size,
 67 CR at I-7-I-8, PR at I-6. The production of canvas panels and archival boards ***. CR at I-8 n.18, PR at I-6

n.18.

 68 CR at I-9-I-10, PR at I-7-I-8.

 69 Staff table VI-8.

 70 CR at I-7-I-8, I-10, PR at I-6-I-8.

 71 Memorandum, INV-DD-056 (Apr. 19, 2006) at Table I-4, PR at Table I-4; Memorandum, INV-DD-061 (Apr.

25, 2006) (INV-DD-061) at Table I-4A, PR at Table I-4A. 

 72 Memorandum, INV-DD–057 (Apr. 21, 2006) (INV-DD-057) at Table C-5, PR at Table C-5.

 73 INV-DD-057 at Table C-5, PR at Table C-5.

 74 CR, PR at Table I-4 n.2. 

12

producing what is referred to as a “blank.” The blanks are fed into a moulder that creates a rounded edge

over which canvas can be smoothly stretched. Once moulded, blanks are fed into tennoners that cut a 45-

degree interlocking corner that allows blanks to be joined together. This product is called a “stretcher

strip.” Four stretcher strips are joined to form a frame, and a piece of cut canvas (the canvas is cut from

bulk rolls) is stretched over the frame. The stretched canvas is then stapled to the side or rear of the

frame, or tucked into a groove in the frame (splined), to complete the assembled canvas.67

The capital investment for non-print converting operations requires the equivalent of a

commercial carpentry shop and machinery different from that used to produce the bulk canvas.68 Capital

expenditures increased steadily during the period of investigation. Such expenditures increased from

$*** in 2002 to $*** in 2005, and reported research and development (R&D) expenses increased from

$*** in 2002 to $*** in 2005.69 The additional processing requires skilled employees, although they

need not be dedicated to performing only these operations.70 

The Commission did not possess conversion cost data for the preliminary determination, but the

original pricing data suggested a high value added. This has been confirmed in the final phase of the

investigation. The costs of conversion from bulk to finished product for producers of non-print canvas

products ranged from *** percent (basing bulk canvas costs on the unit value of integrated producers’

reported commercial shipments of bulk canvas applied to the quantity of reported internal consumption)

to *** percent (basing bulk canvas costs on the value of internal consumption reported by integrated

producers).71

Employment for non-print finished canvas totaled *** production workers in 2002 and ***

production workers in 2005.72 Based on hourly wages and productivity (in square meters per hour), unit

labor costs for production employees were $*** in 2002 and $*** in 2005.73 Finally, while non-domestic

sourcing is available, no converters reported purchasing raw materials from foreign sources.74 

Taken together, these factors support a finding that non-print converters engage in sufficient

production-related activity to constitute producers in the domestic industry. Accordingly, and consistent

with the Commission’s preliminary determination and the position of the parties in the final phase, we

continue to define the domestic industry to include non-print converters. 

2. Print Converters

We are persuaded that the two types of converters – print and non-print – are qualitatively

different and that, on balance, the factors with respect to print converters tip against a finding of sufficient

production-related activity to qualify print converters as producers of artists’ canvas.

As an initial matter, we reject Respondents’ attempt to avoid altogether the question of

production-related activities of print converters. We may not, under the statute, include in the domestic

industries all sellers or distributors of a like product simply because those sellers handle the goods. The

statute defines the domestic industry as domestic “producers” of the like product, and as the Commission
 75 Cf., e.g., Certain Frozen or Canned Warmwater Shrimp and Prawns from Brazil, China, Ecuador, India,

Thailand, and Vietnam, Inv. Nos. 731-TA-1063-68 (Final), USITC Pub. 3748 (Jan. 2005) at 13 (finding, for

example, that shrimp processing involving cooking constituted domestic production while that involving marinating,

also within the domestic like product definition, did not).

 76 INV-DD-051 at I-13, PR at I-9.

 77 See id. at I-13 n.36, PR at I-9 n.36 (Petitioner’s estimate; neither Respondents nor converters supplied data

respecting the cost of ink jet coating machinery); cf. Producer Questionnaire of *** at 17 (***). 

 78 INV-DD-051 at I-13 n.36, PR at I-9 n.36.

 79 EDIS Doc. No. 252206 at 3 (email from *** dated April 14, 2006).

 80 Petitioner’s Responses to Commissioner Questions at 7. As noted in the preliminary phase investigation, ***

has a tolling relationship with ***. See also CR, PR at III-2 n.6. No other toll processing arrangement was

identified by the Commission. This arrangement constitutes ***. ***. CR, PR at III-2 & n.6. We see no basis

upon which to treat *** differently than other converters of print canvas simply because ***.

 81 EDIS Doc. No. 254131 at 2 (*** response to question III-8 of producers’ questionnaire).

 82 CR, PR at Table VI-9; INV-DD-061 at Table C-6 n.3, PR at Table C-6 n.3.

 83 Staff Worksheet 2.

 84 Producer Questionnaire Response of *** at 17.

 85 CR, PR at Table I-4. Respondent points to Wax and Wax/Resin Thermal Transfer Ribbons from France and

Japan, Inv. No. 731-TA-1039-1040 (Final), USITC Pub. 3683 (Apr. 2004) as supportive of finding sufficient

(continued...)

13

has consistently recognized, this requires, when appropriate, that the activity of a given firm be analyzed

to determine whether its activities should be deemed production.75 Contrary to Respondents’ argument,

finding that print converters are not engaged in sufficient production-related activity to be included in the

industry does not result in a lack of “production.” In this case, bulk roll producers (coaters) and non-print

converters constitute the production of the domestic like product being produced. For a firm to qualify as

a producer without sufficient production-related activity would expand the definition of domestic industry

beyond the Commission’s consistent application of the statutory definition of domestic industry and

render the domestic industry requirement of “production” devoid of content.

Accordingly, we apply the six-factor test to print converters to determine whether they engage in

sufficient production-related activity, the issue ultimately deemed moot in the preliminary phase due to

the lack of data from such firms. Print canvas, like non-print canvas, ***.76

The inkjet coating machinery is estimated to cost from $1 million to $3 million.77 According to

***. This firm reports that ***.78 Similarly, *** reported that ***. Print canvas for this firm accounted

for ***.79 *** of its coating capacity for print canvas production.80 

The capital investment required for print converters thus must be considered in light of the

machinery being used for the production of various other (non-subject) products. *** was unable to make

such an allocation, reporting instead that it ***.81 Three other print converters reported ***.82 The nonsubject products to which print converters’ coating machinery is dedicated varies depending on the

business, as noted above. In sales terms, print canvas constituted a weighted average of 22.6 percent of

total net sales for the responding print converters, the major known converters of print canvas.83

Technical expertise is required in the development of the proprietary coating typically used for

print canvas. However, such coating is used for a wide range of the converters’ products and is not

limited to print canvas. Coating the canvas is done by machine, but the process, as with other finished

canvas products, requires skilled labor. The cutting and packaging that follow require less expensive

equipment and unskilled labor, and represent a fraction of the total cost of conversion.84

The costs of conversion from bulk to print canvas account for *** percent of the total cost of

producing these items.85 Production workers for print converters, as reported by the major known
 85 (...continued)

production-related activity based on such value added levels (there 30 percent). However, each investigation is sui

generis, and value added, as with any other single factor, is not determinative. See, e.g., Aramid Fiber, USITC Pub.

2783 at I-8-I-9 & n.34 (“no single factor – including value added – is determinative . . .”).

 86 INV-DD-061 at Table C-6, PR at Table C-6.

 87 INV-DD-061 at Table C-6, PR at Table C-6.

 88 CR, PR at Table I-4 n.2.

 89 Petitioner’s Responses to Commissioner Questions at 7.

 90 No responding U.S. producers in the final phase of the investigation reported any related firm, foreign or

domestic, engaged in the production, export, or importation of subject merchandise from China, nor did any ***. 

CR, PR at III-2. In the preliminary phase of the investigation, the Commission considered whether to exercise its

discretion to exclude ***, which reported that it imported *** square meters of subject product from China, from the

domestic industry under the related parties provision of the statute. The Commission found that appropriate

circumstances did not exist to exclude the firm from the domestic industry. Confidential Views at 11-12 n.44. In the

final phase, the parties have not argued that any firm should be excluded from the domestic industry as a related

party, and the record is unchanged on this point from the preliminary phase with respect to ***. Accordingly, we

find no basis to revisit that determination and no new related party issue has arisen. 

14

converters, ranged from *** in 2002 to *** in 2005.86 Employment levels, even accounting for any gaps

in the record, are far less than the more labor intensive non-print converting operations that ranged from

*** to *** during the period of investigation. With the high volume sheet runs of the print converters,

unit labor costs (hourly wages divided by production) ranged from $*** per hour in 2002 to $*** per

hour in 2005.87 

As with non-print canvas, the bulk rolls used in the production of print canvas may be sourced

from abroad, but the reporting firms sourced domestically during the period of investigation.88 

On balance, and considering the evidence with respect to each factor, we are not persuaded that

print converting activity constitutes sufficient production-related activity to qualify these firms as

members of the domestic industry that produces artists’ canvas. Allocations of the required capital

investment are difficult to make, as demonstrated by print converter responses. Print canvas production is

growing but remains just a part of the overall operations of print converting firms. While technical

expertise is required in the production of the proprietary coating used for print canvas, the coating is used

for all of these firms’ products, including various nonsubject products that constitute a large share of sales

for these firms. The value added by print converters is not insignificant, but the value added, like the

number of production workers, is small as compared to non-print converters.

Petitioner also makes the point that the production-related activities of the coaters – the makers of

the bulk canvas – are significantly greater than the production-related activities of print converters. In

Tara’s case, for example, the capital investment for producing bulk canvas that is used by print converters

is approximately $***, including coating lines (***), $*** for inspection equipment, $*** million for

chemical making equipment, and $*** for handling equipment. Bulk operations at Tara alone employ

*** production workers.89

Print converters, unlike the producers of bulk or assembled canvas, are part of a digital imaging

industry for which canvas coating, overall, remains one portion of the business. The finishing work that

they perform, while important, does not qualify them, based on all of the production activity indicia, as

members of the domestic industry producing artists’ canvas. We therefore decline to expand the

definition of the domestic industry to include these firms.

Based on the final phase record in this investigation, we continue to define the domestic industry

as all U.S. producers of artists’ canvas, that is, the producers of bulk canvas and non-print converters. 

These firms include Tara, Duro, Signature, Holliston Mills, Avondale Mills, and Masterpiece.90 
 91 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-1 (*** percent by quantity and *** percent by value in 2004).

 92 19 U.S.C. § 1673d(b).

 93 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).

 94 19 U.S.C. § 1677(7)(A).

 95 19 U.S.C. § 1677(7)(C)(iii).

 96 Id.

 97 CR, PR at II-1.

 98 CR at II-5, PR at II-3.

 99 The growth of print canvas was also cited as contributing to increased demand for artists’ canvas.

 100 CR at II-5, PR at II-3.

 101 CR at II-6, PR at II-4.

15

III. MATERIAL INJURY BY REASON OF LESS THAN FAIR VALUE IMPORTS91

In the final phase of antidumping duty investigations, the Commission determines whether an

industry in the United States is materially injured by reason of the imports under investigation.92 In

making this determination, the Commission must consider the volume of 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.93 The statute defines “material injury” as “harm which

is not inconsequential, immaterial, or unimportant.”94 In assessing whether 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.95 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.”96

A. Conditions of Competition

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

presentation of painted or printed images. The demand for assembled artists’ canvas tends to be seasonal,

peaking in the spring and summer months as retailers stock up for back-to-school promotions.97

When asked how overall demand has changed during the period of investigation, four of the

responding U.S. producers and all of the responding importers reported that it had increased.98 The

increase in demand for assembled canvas was most commonly attributed to the rapid growth of the home

decor market.99 Two producers reported that sales of low-priced, non-branded artists’ canvas have

increased overall demand for artists’ canvas.100

Eighteen of 26 purchasers also reported that demand for assembled canvas had increased. The

increase was most commonly attributed to growth in the craft and home decor markets. Nine purchasers

specifically noted that lower prices of canvas have led to the increased demand.101
 102 CR, PR at Table C-4. Consistent with the Commission’s domestic industry definition, the data in this table

excludes trade, production, and financial data from domestic print converters. *** are included in this table, but are

consistent with the treatment of print converters because the included print canvas is made from ***. In fact, ***. 

***. Producers’ Questionnaire of *** at 14. 

 103 CR, PR at Table C-4.

 104 CR, PR at Table C-4. We note that U.S. producers’ share of consumption value may be *** in this table

because it identifies the shipment values that ***. The financial performance indicators in this table also may be ***

because of such inclusion. The data were not reported in such a fashion as to ***. 

 105 CR, PR at Tables C-2 & C-5; INV-DD-057 at Table C-5.

 106 CR, PR at Tables C-2 & C-5; INV-DD-057 at Table C-5.

 107 CR, PR at III-1.

 108 CR, PR at Table III-1.

 109 Staff Table III-1.

 110 Staff Table III-1.

 111 CR at III-3-III-4, PR at III-3.

 112 CR, PR at Table C-4.

16

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

canvas during the period of investigation. Apparent consumption increased *** percent between 2002

and 2005, from *** square meters to *** square meters.102

The U.S. market is supplied by domestic production as well as subject and nonsubject imports.

The domestic industry remains the largest supplier of the market, although its share of consumption by

quantity has *** declined from *** percent in 2002 to *** percent in 2005.103 The domestic industry’s

share of consumption by value has declined ***, from *** percent in 2002 to *** percent in 2005.104 The

industry’s capacity to produce bulk artists’ canvas increased *** percent during the period of

investigation, while its capacity to produce finished canvas remained level.105 Capacity utilization rates

for bulk artists’ canvas increased during the period of investigation (by *** percentage points) while

those for finished artists’ canvas declined (by *** percentage points).106 

Three U.S. firms (***) are integrated producers, firms that produce bulk and assembled artists’

canvas; other firms produce one or the other.107 The Commission received data from two other producers

of bulk canvas, ***, and one other producer of assembled artists’ canvas (***).108 Tara is the largest

producer of artists’ canvas, accounting for over *** percent of reported U.S. production of bulk canvas in

2005 and *** percent of reported production of finished canvas.109 *** is the second largest producer of

artists’ canvas, accounting for *** percent or reported production of bulk canvas in 2005, and *** percent

of reported production of finished canvas.110 

Tara moved a large portion of its U.S. production of assembled canvas during the period of

investigation to its Mexican subsidiary, Decoracion Colonial (Decoracion). In 1990, Tara acquired Hy-Jo

Picture Frames (Hy-Jo), a California producer of wood-based frames. The acquisition included Hy-Jo’s

Mexican subsidiary, Decoracion. In ***, Tara began production of *** artists’ canvas, a *** product, at

Decoracion’s facility in Tijuana. Tara expanded production of artists’ canvas at Decoracion in ***

beginning with the production of ***. Later that year, Tara shifted a portion of the production of its core

stretched canvas products to Mexico and, over the course of the following three years, eliminated ***

jobs at its Georgia facility.111

Subject imports from China supplied an increasing share of the U.S. consumption by quantity

during the period of investigation, from *** percent in 2002 to *** percent in 2005.112 With assembled
 113 Bulk canvas imports from China ranged from approximately *** square meters (in 2002) to *** square meters

(in 2005). CR, PR at Table C-2. 

 114 CR, PR at Table C-4.

 115 CR, PR at Table IV-1.

 116 CR, PR at Table C-4.

 117 CR, PR at IV-2 nn.7-8.

 118 INV-DD-057 at Table IV-4 (shares of shipments), PR at Table IV-4.

 119 CR at I-10, PR at I-8; CR, PR at Table I-3.

 120 CR at II-9, PR at II-7; CR, PR at Table II-3. 

 121 CR at II-10, PR at II-7; CR, PR at Table II-3.

 122 CR, PR at Table II-5 (12 of 20 reported that product consistency is comparable; 14 of 20 reported that the two

are comparable in terms of meeting industry quality standards; 12 of 20 reported that the two are comparable in

terms of exceeding industry quality standards; 10 of 19 reported that product range is comparable). 

 123 CR at II-6-II-9, PR at II-5; CR, PR at Tables II-1-II-2. 

 124 CR, PR at Table II-5. 

 125 19 U.S.C. § 1677(7)(C)( i).

17

canvas constituting the vast majority of artists’ canvas imports from China,113 the share of consumption

by value increased from *** percent in 2002 to *** percent in 2005.114 The share of consumption of

nonsubject imports, of which Mexico constituted the largest source,115 increased irregularly in quantity

from *** percent in 2002 to *** percent in 2005, and increased in value from *** percent in 2002 to ***

percent in 2005.116 Tara accounts for essentially all of the imports of artists’ canvas from Mexico.117

As noted above, there are two general categories of artists’ canvas, bulk canvas and finished

canvas, and a continuum of product sold in various grades, textures, shapes, sizes and formats

encompasses them. Reported subject imports from China are mostly, although not exclusively, of the

finished canvas and, in particular, the more labor intensive stretched canvas (approximately ***

percent).118 Subject imports from China are ***. Most of the U.S. finished canvas is sold to retailers.119 

Subject imports and the domestically produced artists’ canvas are generally substitutable. The

majority of importers and purchasers that compared bulk canvas from China with that from the United

States reported that the two are always or frequently interchangeable. All responding U.S. producers

reported that the two are at least sometimes interchangeable.120 The majority of importers and purchasers

that compared assembled canvas from China with that from the United States reported that the two are

always or frequently interchangeable. The majority of U.S. producers reported that the two are always

interchangeable.121 Most purchasers reported that domestically produced artists’ canvas and subject

imports are comparable in terms of quality and product range.122 

Price was identified as a very important factor in the artists’ canvas purchasing decisions by 22 of

27 purchasers.123 Purchasers generally found that Chinese artists’ canvas and the U.S. product were

comparable, with one exception: 17 of 20 indicated that Chinese artists’ canvas is lower priced than U.S.

product.124 

B. Volume

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.”125

Subject import volume increased steadily and sharply throughout the period of investigation,

rising from 202,000 square meters in 2002 to 2.3 million square meters in 2005, an increase overall of
 126 CR, PR at Tables IV-1 & C-4.

 127 CR, PR at Table C-4.

 128 CR, PR at Table C-4.

 129 CR, PR at Table C-4.

 130 CR, PR at Table C-4.

 131 CR, PR at Table IV-5.

 132 CR, PR at Table C-4.

 133 See, e.g., Respondents’ Prehearing Brief at 29.

 134 See, e.g., Respondents’ Posthearing Brief at 12.

 135 Tr. at 16-17 (Mr. Delin).

18

1031.7 percent.126 Subject imports’ share of U.S. consumption also increased steadily and sharply, in

quantity and value terms. Subject imports’ share by quantity increased from *** percent in 2002 to ***

percent in 2005, representing an overall increase of *** percentage points.127 Subject imports’ share by

value increased from *** percent in 2002 to *** percent in 2005, or by *** percentage points.128 

The increase in subject imports’ share of apparent U.S. consumption came at the expense of the

share held by the domestic industry. The domestic industry’s share of apparent consumption decreased

from *** percent in 2002 to *** percent in 2005, or by *** percent.129 Even more tellingly, the domestic

industry’s share of apparent consumption by value showed a greater decline, from *** percent in 2002 to

*** percent in 2005, a decline of *** percentage points.130 The steeper decline in the domestic industry’s

share of apparent U.S. consumption by value reflects the shift domestic producers had to make, due to the

increasing presence of subject imports from China, from selling higher value finished canvas to selling

more lower value bulk canvas. As the presence of Chinese finished canvas grew in the market, domestic

producers were increasingly relegated to lower value bulk canvas shipments. The quantity data, while

significant in itself, thus understates the harmful impact of Chinese imports on U.S. producers. The value

data confirm that subject imports from China have taken a significant share of the higher value and more

lucrative finished canvas market.

Subject import volume relative to production in the Unites States also increased during the period

of investigation. Subject imports from China were equivalent to *** percent of U.S. production during

2002 and increased throughout the period, reaching *** percent in 2005.131

The domestic industry’s share of U.S. consumption was also displaced, albeit to a far lesser

degree, by nonsubject imports. Nonsubject imports’ share of U.S. consumption by quantity grew by ***

percentage points between 2002 and 2005, and by *** percentage points by value.132 With imports from

Mexico representing the largest source of nonsubject imports, these increases are largely attributable to

Tara’s production move of certain finished canvas operations from the United States to Mexico, the

impetus for which we discuss in the impact section below.

Respondents claim that the increases in subject import volume and market share during the period

of investigation are not significant. Subject imports, they claim, have created the growth in market

demand for their product through innovative marketing, diversified new products, and attractive price

points.133 Such growth, they claim, would not have occurred without subject imports.134 We are

unpersuaded. First, demand in the U.S. market was not stagnant prior to the entry of subject imports from

China. Tara has testified to consistent growth dating back to 1990.135 As noted above, the increased

demand for finished products during the period of investigation is attributed to the growing home decor

market. While imports from China have capitalized on that new demand and may have helped fuel it with

their LTFV prices, they did not create it. The domestic industry also produces hobby quality products,
 136 See, e.g., Tr. at 35-38 (Mr. Straquadine); CR at V-4 (pricing products 1-2), PR at V-3. 

 137 See, e.g., Tr. at 173 (Mr. Marek).

 138 See, e.g., Tr. at 35 (Mr. Straquadine), 106 (Mr. Thompson); CR at V-22-V-25, PR at V-7-V-9; Petitioner’s

Posthearing Brief at 7-8 & Exh. C. The lost sales and revenue allegations of the domestic industry are discussed in

the price effects section (IIIC) below. 

 139 INV-DD-057 at Table C-5, PR at Table C-5.

 140 19 U.S.C. § 1677(7)(C)(ii).

 141 CR, PR at Table II-1.

 142 CR, PR at Table II-5.

19

but faces a significant competitive disadvantage: the lower price associated with subject imports.136

Respondents themselves concede the importance of price in this market.137

Moreover, import purchasers’ acquisitions of subject merchandise are not confined to serving

only those customers that would not otherwise buy domestic artists’ canvas for price reasons. For

example, Michaels Stores, A.C. Moore, Aaron Bros., and Utrecht had previously purchased their private

label finished canvas from Tara. All have since switched to purchasing subject merchandise at some

point during the period of investigation based at least in part on price. Instead of supplementing their

domestic sources with low-priced imports to serve only purchasers that would not otherwise buy artists’

canvas, they have replaced existing lines of domestically produced product with lower-priced Chinese

product.138 

Finally, Respondents’ new market theory fails to explain the domestic industry’s *** percent

decline in shipments of finished artists’ canvas between 2002 and 2005.139 Rather than create a new

market, low-priced subject imports have merely served to decrease the U.S. industry’s participation in the

existing market. Based on this record, the volume of subject imports increased substantially over the

period of investigation, 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 of

investigation, both in absolute terms and relative to domestic consumption and production. 

C. Price Effects of the Subject Imports

Section 771(7)(C)(ii) of the Act provides that, in evaluating the price effects of the 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.140

As noted, we have found that domestically produced artists’ canvas and subject imports from

China are substitutable. In the competition for sales of artists’ canvas, price is an important factor, as are

quality and availability.141 The quality and availability of the two are generally considered comparable by

purchasers. Indeed, purchasers tend to view the two overall as comparable, with the exception of price,

which purchasers generally report is lower for subject imports.142

The Commission collected quarterly pricing data from U.S. producers and importers for various

artists’ canvas products. The pricing data reported by these firms accounted for approximately ***

percent of the value of U.S. producers’ commercial shipments of artists’ canvas and *** percent of the
 143 CR at V-4-V-5, PR at V-3.

 144 CR, PR at Tables V-9-V-10.

 145 CR, PR at Tables V-1-V-2.

 146 CR, PR at Table V-3.

 147 CR, PR at Table V-4.

 148 See, e.g., Tr. at 322 (Mr. Benator) .

 149 CR, PR at Table V-5.

 150 CR, PR at Table V-6.

20

value of U.S. imports from China during the period of investigation.143 For two of the products, products

7 (bulk rolls) and 8 (print canvas rolls), there were no sales reported of the product from China. Neither

are imported in significant volumes to the United States. Price comparisons were available for 6 of the

pricing products for which we collected data.

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

the period of investigation. Prices of imports from China were lower than the U.S. producer prices in 78

out of 83 quarterly comparisons, by margins ranging from 0.7 percent to 72.1 percent. For products 1

through 5, the prices of imports from China were lower than the U.S. producer prices in all 71 quarterly

comparisons. In 7 out of 12 comparisons relating to product 6, the imported product was priced lower

than the U.S. producer prices. In the remaining 5 instances, the imported product oversold the domestic

product by margins ranging from 1.2 percent to 16.6 percent.144

For five of the six products for which price comparisons were available, domestic prices declined

to varying degrees during the period of investigation. Data for products 1 and 2 showed the highest

degree of head-to-head competition. The weighted-average sales price for U.S.-produced product 1

decreased *** percent, while product 1 from China decreased *** percent over the same period. The

weighted-average sales price for U.S.-produced product 2 decreased *** percent, while product 2 from

China decreased by *** percent.145 

The weighted-average sales price for U.S.-produced product 3 fluctuated over the period of

investigation, decreasing overall by *** percent; the margins of underselling for product 3 from China

decreased, coincident with an increase in the price of product 3 from China of *** percent during the

period of investigation.146

Product 4 is the only product with available comparisons for which the U.S.-produced product

increased in price (*** percent); product 4 from China also increased *** percent in price.147 We do not

accord great weight to this comparison, however, due to limited data based on the minimal production of

this product (splined canvas) in the United States.148

Data for product 5 shows that the U.S.-produced product price declined minimally overall during

the period of investigation; the sales prices reported for product 5 from China decreased by only ***

percent during the period for which comparisons were available, but the underselling margins were

consistently the highest of any product.149

Finally, the weighted-average sales price for U.S.-produced product 6 declined *** percent

during the period of investigation, while that for product 6 from China declined *** percent during the

period for which comparisons were available.150

These data show evidence of significant price depression, particularly for products 1 through 3

and 5. There was also evidence of price declines for product 6, but we do not rely on those comparisons

as showing adverse price effects due to the mixed evidence of underselling and overselling for that

product.

In addition, there is evidence that import underselling has prevented U.S. producers from raising

their prices to cover increased material and production costs. The domestic industry’s average cost of

goods sold (COGS) as a ratio of net sales increased *** percentage points from *** percent in 2002 to
 151 CR, PR at Table C-4.

 152 CR, PR at Table C-2; INV-DD-057 at Table C-5, PR at Table C-5. 

 153 CR, PR at Table V-11.

 154 CR at V-22, PR at V-8.

 155 *** disputed *** claims that *** was to blame for the switch, and noted that *** quality complaints were

mostly limited to linen artists’ canvas that it was addressing but that *** nevertheless replaced the entire product line

with Chinese imports. CR at V-25, PR at V-9. Documentation submitted by Tara confirms that a key issue for ***

was price. Petitioner’s Prehearing Brief Exh. B. 

Aaron Brothers similarly complained about quality issues, but Tara appears to have been addressing these

when the firm’s decision was made to import from China, and documentation submitted by Tara convey the

company’s demands on Tara for lower pricing and the decision to source from China when Tara was unable to

reduce its price sufficiently. Tr. at 36 (Mr. Straquadine); Petitioner’s Prehearing Brief Exh. A. 

 156 CR at V-23, PR at V-8. We note further that *** did not respond to the lost sales allegations against it. The

firm’s purchases from ***. Purchasers’ Questionnaire Response of *** at II-1. While limited quantities of

purchases may have been of ***, the data show a ***, with ***. Id. at II-2. 

 157 See, e.g., Respondents’ Posthearing Brief at 1.

 158 Petitioner’s Posthearing Brief at 6.

 159 See, e.g., Tr. at 160-62, 165 (Mr. Stapleton).

 160 Petitioner’s Prehearing Brief at 40 & Exh. C.

21

*** in 2005.151 The COGS/net sales ratio for finished canvas rose from *** percent in 2002 to ***

percent in 2005. However, the COGS/net sales ratio for bulk canvas increased somewhat less from ***

percent to *** percent in the same period.152 Thus, the aggregate increase in the COGS/net sales ratio was

mitigated by the displacement of U.S. shipments out of the finished canvas market by subject imports. 

These data suggest that domestic producers have faced a cost-price squeeze in which they have been

unable to increase prices notwithstanding increased costs, particularly raw material and labor costs for

finished canvas. 

Further evidence of significant adverse price effects caused by subject imports’ significant

underselling of domestic product is found in the confirmed lost sales allegations. At least four purchasers

confirmed making the switch from domestic sources to subject imports from China based on price.153 In

addition, while *** disagreed with the particular allegation, it confirmed that it switched *** percent of

its purchases to a Chinese source based at least in part on price.154 *** also confirmed that it had switched

sourcing to Chinese and nonsubject imports based at least in part on price.155 *** was named in two lost

sales allegations involving artists’ canvas valued at $***. *** confirmed that it has switched purchases to

the lower-priced imports, but pointed out that it remains a major customer of ***.156

MacPherson’s was also cited in a lost revenue allegation that it denied. Respondents suggest that

Tara caused its own injuries by terminating its business relationship with MacPherson’s, forcing

MacPherson’s to become ***.157 Tara counters that MacPherson’s began purchasing Chinese canvas for

price reasons for a private label line in December 2000, and that Tara’s decision to terminate its

relationship with MacPherson’s in December 2003 was based on various factors that led it to conclude

that MacPherson’s was “actively working against Tara’s interests.”158 MacPherson’s has denied these

allegations and claims the termination was against its wishes.159 Tara notes that its decision to terminate

the relationship has not harmed it as a company, ***.160

 Based on the evidence gathered in the final phase of this investigation, we find that lower-priced

subject imports have had significant price depressing effects with some evidence of price suppression. 

Respondents depend (and have depended) for the success of their marketing strategies on “value”
 161 See, e.g., Tr. at 161, 167 (Mr. Stapleton).

 162 19 U.S.C. § 1677(7)(C)(iii). See also SAA at 851, 885 (“In material injury determinations, the Commission

considers, in addition to imports, other factors that may be contributing to overall injury. While these factors, in

some cases, may account for the injury to the domestic industry, they also may demonstrate that an industry is facing

difficulties from a variety of sources and is vulnerable to dumped or subsidized imports.”).

 163 19 U.S.C. § 1677(7)(C)(iii). See also SAA at 851, 885; Live Cattle from Canada and Mexico, Invs. Nos. 701-

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

 164 The Act instructs the Commission to consider the “magnitude of the dumping margin” in an antidumping

proceeding as part of its consideration of the impact of imports. 19 U.S.C. § 1677(7)(C)(iii)(V). In its final

affirmative determination for subject artist canvas from China, Commerce found dumping margins of 78 percent ad

valorem for eight specific producer/exporters, and a China-wide rate of 264 percent ad valorem, applicable to all

other producer/exporters. 71 Fed. Reg. at 16116.

 165 CR, PR at Table C-2. 

 166 INV-DD-057 at Table C-5, PR at Table C-5.

 167 CR, PR at Table C-2.

 168 INV-DD-057 at Table C-5, PR at Table C-5.

22

products, that is, products that undersell the competition.161 The underselling demonstrated on this record

has been significant and has fueled the rapidly increasing volume and market share of subject imports,

resulting in the direct displacement of sales by domestic producers. This underselling has also placed a

downward pressure on domestic prices as domestic producers have attempt to maintain a diminishing

share of the market, resulting in the declining price trends shown in our pricing data, and the cost-price

squeeze that we find the domestic industry is experiencing. 

Based on the significant and rising volume of subject imports, the general substitutability of the

products, the importance of price to purchasers of artists’ canvas, the consistent pattern of significant

underselling by subject imports, generally declining U.S. prices, the cost-price squeeze that subject

imports have placed on the domestic industry, and confirmed lost sales allegations, we find that subject

imports have had significant adverse price effects on the U.S. industry.

D. Impact

In examining the impact of the subject imports on the domestic industry, we consider all relevant

economic factors that bear on the state of the industry in the United States.162 These factors include

output, sales, inventories, capacity utilization, market share, employment, wages, productivity, profits,

cash flow, return on investment, ability to raise capital, and research and development. 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.”163 164

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

increased its capacity and production for bulk canvas, while capacity for finished canvas remained flat

and the production of finished canvas declined. The industry’s bulk canvas capacity increased ***

percent between 2002 and 2005 from *** square meters to *** square meters. Bulk canvas production

increased *** percent between 2002 and 2005 from *** square meters to *** square meters.165 Finished

canvas capacity started and concluded the period of investigation at *** square meters, while production

dropped *** percent from *** square meters in 2002 to *** square meters in 2005.166

Capacity utilization for bulk canvas increased *** percentage points during the period of

investigation, from *** percent to *** percent.167 In contrast, capacity utilization for finished canvas

declined *** percentage points from *** percent to *** percent.168
 169 CR, PR at Table C-4.

 170 Staff worksheet 1; CR, PR at Table V-7.

 171 CR, PR at Table C-4. Inventories declined *** percent between 2002 and 2005. CR, PR at Table C-4.

 172 Shipment values declined from $*** per square meter to $*** per square meter; average unit sales values

declined from $*** per square meter to $*** per square meter. CR, PR at Table C-4. We note that data mix issues

might be present.

 173 CR, PR at Table C-4.

 174 CR, PR at Table C-4.

 175 CR, PR at Table C-4 (from $*** in 2002 to $*** in 2005).

 176 CR, PR at Table C-2 (for bulk canvas, productivity increased *** percent, while unit labor costs remained at

$*** at the start and finish of the period of investigation); INV-DD-057 at Table C-5, PR at Table C-5 (for finished

canvas, productivity increased *** percent, and unit labor costs declined *** percent from $*** to $***). 

 177 CR, PR at Table C-4.

 178 CR, PR at Table C-4.

 179 CR, PR at Table VI-4.

 180 INV-DD-057 at Table C-5, PR at Table C-5.

23

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 2005 in quantity terms, and from

*** percent in 2002 to *** percent in value terms.169 As previously described, the increasing presence of

Chinese finished product relegated domestic producers to selling more bulk canvas; therefore, the square

meter production increased but at significantly lower prices. On a square meter basis, based on fourth

quarter 2005 prices, the bulk roll product for which we collected pricing data (product 7) was $***,

whereas the highest volume stretched products ranged from $*** (product 2) to $*** (product 1).170

While U.S. shipment volumes increased *** percent from *** square meters in 2002 to ***

square meters in 2005, the values of those shipments, reflecting the shift from finished to bulk canvas,

declined *** percent, from $*** in 2002 to $*** in 2005.171 The unit values of U.S. producers’

shipments and sales also declined in the same period, by *** percent and *** percent, respectively.172 

The total number of production workers declined during the period of investigation from *** in

2002 to *** in 2005.173 Total wages paid similarly declined, from $*** in 2002 to $*** in 2005.174

Hourly wages increased as the number of workers shrank.175 Productivity increased for bulk canvas and

finished canvas production, while unit labor costs for the former remained flat and declined for the

latter.176 

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

income declined *** percent, from $*** in 2002 to $*** in 2005.177 Operating margins declined from ***

percent in 2002 to *** percent in 2005.178 *** (***) reported *** in 2005, and another that year reported

a margin of *** (***).179 The domestic industry’s deteriorating financial performance reflects the impact

of the shift to lower value bulk canvas and the losses sustained in connection with finished canvas. For

finished canvas, operating income of $*** in 2002 declined to a loss of $*** in 2004 and to a further loss

of $*** in 2005; a net operating income of *** percent in 2002 turned into net operating losses of ***

percent in 2004 and *** percent in 2005.180
 181 Staff Table VI-8.

 182 Staff Table VI-10.

 183 See, e.g., Respondents’ Prehearing Brief at 29.

 184 See, e.g., Petitioner’s Prehearing Brief Exh. A at 1; Tr. at 21-24 (Mr. Freeman). We note that this growth in

the finished canvas market predated the surge of subject imports from China. 

 185 See, e.g., Petitioner’s Prehearing Brief Exh. 1 at 1-2; Petitioner’s Posthearing Brief Exh. A at 1.

 186 See, e.g., Petitioner’s Posthearing Brief Exh. C.

 187 See, e.g., Tr. at 22-23 (Mr. Freeman).

 188 A follow-up letter from ***. Petitioner’s Posthearing Brief Exh. C at 2.

 189 See, e.g., Tr. at 22-23 (Mr. Freeman).

24

The domestic industry’s capital expenditures increased from $*** in 2002 to $*** in 2005; R&D

expenses increased from $*** in 2002 to $*** in 2005.181 Finally, the domestic industry’s return on

investment (ROI) decreased from *** percent in 2002 to *** percent in 2005.182

We attribute the domestic industry’s performance declines over the period of investigation in

significant part to the rapid increases in subject import volume and market share that have had significant

adverse price effects. Subject imports have used their price advantage to wrest a significant share of the

U.S. market and to become the market leader in finished artists’ canvas products.

While Respondents argue that the impact on the domestic industry of Petitioner’s move of certain

production to Mexico should not be attributed to subject imports in the U.S. market,183 we find that Tara

moved its production capacity to Mexico in significant part due to low-priced competition from subject

imports. As discussed above, Tara had produced splined canvas in Mexico since ***. Because the

Mexican facility was located near a major customer’s distribution facility in southern California,

production was increased to accommodate a large increase in that customer’s orders. This splined canvas

did not replace domestic production, however, because Tara never made splined canvas in the United

States. Sales of splined Mexican product increased between 1996 and 2002, and included the branded

Fredrix Creative Edge product, and two firms’ private labels (Aaron Bros. and The Art Store). None of

this production was moved from the U.S. to Mexico, and imports from Mexico increased as a result of

splined product’s growth in the U.S. market.184 This more limited Mexican production predated the surge

of Chinese product in the U.S. market. The production that was moved to Mexico was Tara’s traditional

stretched canvas, but the production was not moved until 2003.

In 2000, Tara was notified that *** was shifting its purchases to Chinese suppliers; in the same

time frame, *** started offering a private label canvas sourced from China. In March 2003, *** and ***,

which were sharing sourcing information, asked Tara to re-quote their artists’ canvas SKUs in light of

low-priced canvas sourcing in China.185 Later that month, *** informed Tara of its decision to source its

private label line from China, ***.186

In the face of these events, Tara determined that its private label production suffered from too

great a price disadvantage against the Chinese product to be competitive. In an effort to reduce labor

costs and narrow the price gap with Chinese imports, Tara moved a substantial portion of stretched

canvas production to Mexico in April 2003, and moved a large percentage of its West Coast stretcher bar

production there in November 2003.187 The move coincided with *** informing Tara of the decision to

source its private label line from China, as discussed above.188 Tara had explored various options of

greater automation and cost reduction, but was still unable to reduce costs to compete with the lowerpriced Chinese product. It determined that the only viable option was to move a significant volume of its

stretched canvas operation to the Mexico facility.189 

Respondents’ claim that Tara should have delayed the expansion until after imports had

significantly increased ignores the fact that the company’s largest customer had announced that it would

soon replace a huge portion of its purchases with Chinese product. Subject imports would rise sharply
 190 CR at III-4, PR at III-4; CR, PR at Table III-2.

 191 INV-DD-057 at Table C-5, PR at Table C-5. Nor do we find that this product, which is brought in by Tara, is

injurious to the domestic industry.

 192 INV-DD-057 at Table C-5, PR at Table C-5.

25

thereafter, both to fill *** account and as other retailers followed suit and began purchasing lower-priced

Chinese product. We therefore find that lower-priced competition from subject imports from China

played a significant role in Tara’s decision to move certain production capacity to Mexico. We note

further that Tara continues to produce finished products in Georgia, which reinforces the company’s

claim that it moved production to Mexico reluctantly. In fact, Tara’s capacity, production and shipment

of finished canvas in Georgia vastly exceed those of its Mexico operation, and part of that production

includes stretched canvas.190

We note further that the declines in U.S. finished canvas production and shipments are not

explained by the increase of imports of finished product from Mexico.191 The U.S. producers’ share of

apparent U.S. consumption of finished artists’ canvas has declined *** percentage points during the

period of investigation, from *** percent in 2002 to *** percent in 2005. Nonsubject imports’ share of

apparent U.S. consumption of finished canvas (including Tara’s imports from Mexico) has declined ***

percentage points during this same period, from *** percent in 2002 to *** percent in 2005. The share of

U.S. consumption of finished canvas products from China explains the differences: Subject imports’

share increased *** percentage points from *** percent in 2002 to *** percent in 2005.192 

The issue here is not one of attenuated competition where large shares of subject imports fail to

compete with U.S. product, as Respondents would argue. As noted, U.S. producers have experienced lost

sales to subject imports and subject imports have displaced U.S. shipments. In a market that has grown

more than *** percent from 2002 to 2005, the domestic industry’s condition has worsened as measured

by multiple indicia of performance. These declines occurred as significant volume of subject imports

gained market share at the expense of U.S. producers, consistently undersold the domestic product, took

sales from U.S. producers, and significantly depressed U.S. prices with some evidence of price

suppression. We therefore find that subject imports have had a negative impact on the condition of the

domestic industry during the period of investigation.

CONCLUSION

For the above-stated reasons, we determine that the domestic industry producing artists’ canvas is

materially injured by reason of subject imports of artists’ canvas from China that are sold in the United

States at less than fair value.

 1

 Commissioner Pearson dissenting. See Additional and Dissenting Views of Commissioner Daniel R. Pearson. 

 2 This investigation does not raise the issues of whether the establishment of an industry is materially retarded, or

the existence of critical circumstances under 19 U.S.C. § 1673d(b)(4)(A)(i).

 3

 Confidential Staff Report, INV-DD-047 (Apr. 13, 2006) (“CR”) at I-6, Public Staff Report (“PR”) at I-5. 

 4

 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.

 5

 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.

 6

 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 to 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).

 7

 In the preliminary determination, the Commission used the term “pre-stretched” artists’ canvas when referring

to canvas stretched over a wooden frame, as well as to other products such as canvas panels and pads. Artists’

Canvas from China, Inv. No. 731-TA-1091 (Preliminary), USITC Pub. 3777 (May 2005) (hereinafter “Preliminary

Determination”). In the present views, we use the term “non-print finished” artists’ canvas to refer to such products. 

We use the term “print canvas” to refer to artists’ canvas that has received an additional coating that allows it to be

used in inkjet and other printers. 

27

VIEWS OF CHAIRMAN STEPHEN KOPLAN AND

COMMISSIONER SHARA L. ARANOFF

Based on the record in this investigation, we join our colleagues in the majority in determining

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

China that are sold in the United States at less than fair value (“LTFV”).1 2

 We adopt Part I of the views

of our colleagues, and incorporate it herein by reference. Artists’ canvas is a surface for the graphic

presentation of painted or printed images. Made from woven fabric that is primed and coated (“gessoed”)

to accept paints or inks, it is sold in a variety of shapes, sizes, textures, and formats.3

 

II. DOMESTIC INDUSTRY

A. In General

The domestic industry is defined as “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.”4

 In assessing the domestic production 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.5

 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.6

In the preliminary phase of this investigation, the Commission addressed whether firms that

engage in the production of “pre-stretched” artists’ canvas7

 but do not produce the bulks rolls (so-called

converters) are part of the domestic industry producing artists’ canvas. In addition to these firms, there
 8

 Artists’ Canvas from China, Inv. No. 731-TA-1091 (Preliminary), Confidential Views at 11 n.40 (hereinafter

“Confidential Views”). Where possible, citation is made to the public version of the preliminary views (the

Preliminary Determination).

 9

 Confidential Views at 11 n.40.

 10 Preliminary Determination at 8 n.40. 

 11 Preliminary Determination at 7-8.

 12 See, e.g., Petitioner’s Prehearing Brief at 18-20; Respondents’ Prehearing Brief at 3-6. 

 13 See, e.g., Petitioner’s Posthearing Responses to Commissioner Questions at 5-9. 

 14 See, e.g., Respondents’ Posthearing Brief at 6-7 & Exh. 1 at 4-5.

 15 See, e.g., Respondents’ Posthearing Brief Exh. 1 at 5-10 

 16 See, e.g., Respondents’ Posthearing Brief at 4-6, 8-10 & Exh. 1 at 1-6. They also contend that comparing the

value-added data for these two types of finished canvas production is irrelevant. See, e.g., Respondents’ Posthearing

Brief Exh. 1 at 5-6. 

28

was evidence of a toll-processing arrangement whereby ***.8

 Based on the available information in the

preliminary phase, *** appeared to be an “important but minor” additional processing step in the

fabrication of the finished product.9

 However, the record was unclear as to whether there were other such

toll processors and the Commission had no trade, production, or financial data from firms engaged in this

sort of converting operation, rendering any issue as to their inclusion in the domestic industry moot.10 In

contrast, the available information indicated that firms converting bulk rolls into non-print finished

canvas were engaged in sufficient production-related activity to constitute members of the domestic

industry. Accordingly, the Commission defined the industry to include these converters, but noted it

would explore the issue further in any final phase investigation.11 

B. Parties’ Arguments

The parties are in agreement that firms that convert bulk rolls into non-print finished canvas

engage in sufficient production-related activity to be included in the domestic industry in the final phase

of this investigation.12 They disagree, however, on whether firms that convert canvas rolls into print

canvas, for use in digital printing, should be included in the domestic industry as well.

Petitioner argues that print converting operations are not sufficient to qualify as artists’ canvas

production under the Commission’s traditional production-related activity test and, thus, print converters

do not qualify as domestic producers.13 Respondents argue that the Commission need not engage in the

six-factor sufficient production-related activity test because there appear to exist only non-integrated

producers of print canvas – the so-called print converters. Absent inclusion of non-integrated producers,

they continue, there would be no U.S. producers of the domestic like product. Including print converters

in the domestic industry is therefore warranted regardless of the extent of their production activity.14

Respondents further argue that, even under the six-factor test, print converters should be included in the

domestic industry because they engage in sufficient production-related activity.15 

Respondents also charge that Petitioner Tara Materials, Inc. (“Tara”) did not properly report in

the petition, or at any time during the investigation, the identity of print converters to the Commission,

even though print canvas is included within the scope of the subject merchandise. Tara’s failure to

identify such producers, they claim, has impeded the Commission’s investigation, resulting in significant

numbers of producers of artists’ canvas that have not responded to the questionnaire. They further argue

that the value-added data, in particular, is unreliable for converters of non-print finished canvas and

insufficient for print converters and that, for the latter, the Commission should assume that the valueadded data for non-responding firms is similar to the data from those that have responded.16
 17 Petitioner’s Posthearing Responses to Commissioner Questions at 1-4. 

 18 CR, PR at III-1.

 19 CR, PR at III-1 n.1.

 20 CR, PR at III-1 & nn.1-2.

 21 CR at III-2, PR at III-1.

 22 CR at I-13 n.38, PR at I-9 n.38.

 23 See American Bearing Manufacturers Association v. United States, 350 F. Supp. 2d 1100, 1124 n. 22 (Ct.

Int’l Trade 2004), quoting United States Steel Group v. United States, 873 F. Supp. 673, 688 (Ct. Int’l Trade 1994),

(continued...)

29

Tara counters that it has been forthcoming about identifying firms involved in the coating of

canvas produced by domestic manufacturers. Tara states it was clear from the outset of the investigation

that there were inkjet coaters in the United States, and that Tara does not consider the coating process to

constitute production, but instead to be a mere finishing step. Tara also states it did not include such

finishers in the petition precisely because it does not consider them domestic producers, and that it has

been fully responsive to Commission requests for information. Tara argues that any deficiencies in

questionnaire responses cannot be held against Tara, and that any request for taking adverse inferences is

baseless.17

C. Analysis

Two types of firms produce the artists’ canvas that are subject to this investigation – producers of

bulk canvas and “converters” (i.e., firms that produce finished canvas products). Converters can be

further divided into firms that produce non-print finished canvas products (such as stretched canvas,

canvas panels, and canvas pads) (“non-print converters”), and firms that produce canvas suitable for use

with digital printers (“print converters”).18

A complete list of the potential U.S. producers identified in this investigation, and the status and

extent of their individual responses to the Commission’s questionnaires, is set forth in Appendix E to the

staff report. The Commission issued questionnaires to all 30 potential producers identified by

Respondents, as well as others identified in the course of the investigation.19 The Commission received

responses from 33 of 43 of the identified firms. For five of the 10 non-responding firms, the Commission

either confirmed that they did not produce artists’ canvas or received no confirmation that they actually

engage in production activities of any sort; staff obtained production level information from 4 of the

remaining 5 converters.20

Table III-1 of the staff report identifies the U.S. firms that provided trade and financial data. The

firms identified in this table are believed to account for over 93 percent of total U.S. production of bulk

artists’ canvas, and over 90 percent of U.S. production of finished canvas products.21 Domestic

converters’ costs of conversion from bulk to finished canvas, for both non-print and print converters, set

forth in Table I-4A of the final report, are discussed below. Two significant converters of print canvas

reported data relating to conversion costs; one converter of non-print finished canvas reported conversion

costs, and staff derived from the financial data reported by the integrated producers their finished canvas

conversion costs based on their reported costs of production for finished canvas products.22 

Any suggestion by Respondents that we must obtain 100 percent coverage in questionnaire

responses in order to make our determinations is incorrect. While the Commission endeavors to obtain

the most complete set of data as is practicably possible within the limits imposed by the statutory

deadlines and the ability of questionnaire respondents to comply with the data requests, the Court of

International Trade has made clear that 100 percent coverage is not required before the Commission can

make a determination.23 We are satisfied that this investigation’s final phase record provides a sound
 23 (...continued)

aff’d, 96 F.3d 1352 (Fed. Cir. 1996).

 24 CR at I-7 to I-8, PR at I-6. The production of canvas panels and archival boards ***. CR at I-8 n.18, PR at I-6

n.18.

 25 CR at I-9 to I-10, PR at I-7.

 26 CR, PR at Table VI-8.

 27 CR at I-7 to I-8, PR at I-8.

 28 Preliminary Determination at 8 n.43. 

 29 Memorandum, INV-DD-061 (Apr. 25, 2006) at Table I-4A, PR at Table I-4A. While conversion costs may

also be calculated basing bulk canvas costs on the value of internal consumption reported by integrated producers –

which yields a conversion cost of 83.8 percent – we believe that calculations based on market prices are a better

reflection of actual conversion costs. See Memorandum INV-DD-056 (April 19, 2006) at Table I-4, PR at Table I-4

(showing cost of conversion based on value of internal consumption). 

30

basis for deciding the issues presented. When necessary to fill any gap in the record, as discussed below,

we rely upon facts available.

Below, we examine the production-related activity of non-print converters and print converters

using the traditional six-factor test. The test demonstrates that both non-print converters and print

converters engage in sufficient production-related activity to be included in the domestic industry. 

1. Non-Print Converters

The parties agree that non-print converters engage in sufficient production-related activity to

constitute producers. The manufacture of the most common form of non-print finished artists’ canvas,

stretched canvas, begins with the production of “stretcher strips” that are made out of wood. Raw lumber

is machine-ripped and fed into a chop saw that removes imperfections. The pieces are then cut to

appropriate size, producing what is referred to as a “blank.” The blanks are fed into a moulder, which

creates a rounded edge over which canvas can be smoothly stretched. Once moulded, blanks are fed into

tennoners that cut a 45-degree interlocking corner that allows blanks to be joined together. This product

is called a “stretcher strip.” Four stretcher strips are joined to form a frame, and a piece of artists’ canvas

cut from a bulk roll is stretched over the frame. The stretched canvas is then stapled to the side or rear of

the frame, or tucked into a groove in the frame (splined), to complete the assembled canvas.24

The capital investment for non-print converting operations requires the equivalent of a

commercial carpentry shop and machinery different from that used to produce the bulk canvas.25 Capital

expenditures increased steadily during the period of investigation. Such expenditures increased from

$*** in 2002 to $*** in 2005, and reported research and development (“R&D”) expenses increased from

$*** in 2002 to $*** in 2005.26 The additional processing requires skilled employees, although they

need not be dedicated to performing only these operations.27 

Although we lacked data for the costs incurred in conversion operations at the time of the

preliminary determination, pricing data then available suggested that such operations contributed

significant added value. As noted in the preliminary determination, the average price for bulk canvas was

$*** per square meter compared to $*** per square meter for finished canvas.28 In this final phase

investigation, costs conversion data are now available, and pricing data have been updated. Both indicate

that non-print converters add substantial value to the final product. In 2005, the costs of conversion from

bulk to non-print finished product accounted for *** percent of the total cost of non-print finished canvas

products (basing bulk canvas costs on the unit value of integrated producers’ reported commercial

shipments of bulk canvas).29 In terms of price, the average unit value of U.S. shipments of bulk canvas in
 30 CR, PR at Table C-2. During 2005, reported quarterly prices for a domestic bulk artists’ canvas product

ranged from $*** to $*** per square meter. CR, PR at Table V-7. 

 31 Staff worksheet 1 (compiled from data from questionnaire responses and the National Institute for Standards

and Technology).

 32 Memorandum , INV-DD–057 (Apr. 21, 2006) at Table C-5, PR at Table C-5.

 33 INV-DD-057 at Table C-5, PR at Table C-5.

 34 INV-DD-061 at Table I-4A n.2, PR at Table I-4A n.2. 

 35 Cf., e.g., Certain Frozen or Canned Warmwater Shrimp and Prawns from Brazil, China, Ecuador, India,

Thailand, and Vietnam, Inv. Nos. 731-TA-1063-68 (Final), USITC Pub. 3748 (Jan. 2005) at 13 (finding, for

example, that shrimp processing involving cooking constituted domestic production while that involving marinating,

also within the domestic like product definition, did not).

31

2005 was $*** per square meter.30 Although average prices for all non-print finished canvas are not

available on the record, prices for representative canvas panel and stretched canvas products ranged from

$*** per square meter to $*** per square meter.31 

Employment for non-print finished canvas totaled *** production workers in 2002 and ***

production workers in 2005.32 Based on hourly wages and production (in square meters per hour), unit

labor costs for production employees were $*** in 2002 and $*** in 2005.33 Finally, while non-domestic

sourcing is available, no converters reported purchasing raw materials from foreign sources.34 

Taken together, these factors support a finding that non-print converters engage in sufficient

production-related activity to constitute producers in the domestic industry. Accordingly, and consistent

with the Commission’s preliminary determination and the position of the parties in the final phase, we

continue to define the domestic industry to include non-print converters. 

2. Print Converters

We are also persuaded that print converters engage in sufficient production-related activity to

qualify as domestic producers of artists’ canvas.

As an initial matter, we reject Respondents’ argument that we are precluded from considering the

extent of print converters’ production-related activities. We may not, under the statute, include in a

domestic industry all sellers of a like product simply because those sellers handle the goods. The statute

defines the domestic industry as domestic “producers” of the like product, and as the Commission has

consistently recognized, this requires, when appropriate, that the activity of a given firm be analyzed to

determine whether its activities should be deemed production.35 Contrary to Respondents’ argument,

finding that print converters are not engaged in sufficient production-related activity to be included in the

industry does not result in a lack of “production.” In such a case, bulk roll producers and non-print

converters would constitute the producers of the domestic like product. For a firm to qualify as a

producer without sufficient production-related activity would expand the definition of domestic industry

beyond the Commission’s consistent application of the statutory definition of domestic industry and

render the domestic industry requirement of “production” devoid of content.

Accordingly, we apply the six-factor test to determine whether print converters engage in

sufficient production-related activity, the issue ultimately deemed moot in the preliminary phase due to

the lack of data from such firms. Print canvas, like non-print finished canvas, is produced using pre-
 36 Petitioner’s Posthearing Responses to Commissioner Questions at 5.

 37 Petitioner’s Posthearing Responses to Commissioner Questions at 5; Revised and Corrected Transcript of

Public Hearing on March 28, 2006 (“Tr.”) at 136-37 (testimony of Mr. Benator); INV-DD-051 at I-13, PR at I-9.

 38 Tr. at 136-37 (Mr. Benator), INV-DD-051 at I-13, PR at I-9.

 39 CR, PR at Table E-1.

 40 CR at I-13 n.36, PR at I-9 n.36 (Petitioner’s estimate; neither Respondents nor converters supplied data

respecting the cost of ink jet coating machinery); cf. Producer Questionnaire of *** at 16 (***). 

 41 CR, PR at Table III-1.

 42 Petitioner’s Posthearing Responses to Commissioner Questions at 7.

 43 Petitioner’s Posthearing Responses to Commissioner Questions at 8. See CR at I-13 n.36, PR at I-9 n.36.

 44 In 2005, print canvas accounted for *** percent and *** percent of production on such equipment for IJ

Technologies and BF Inkjet, respectively. CR at I-13, n. 36, PR at I-9 n. 36. For Intelicoat Technologies, sales of

products produced on print canvas production equipment accounted for *** percent of sales of all products produced

on that equipment in 2005. Electronic mail message from *** In 2005, IJ Technologies and BF Inkjet accounted for

over *** percent of reported domestic production of print canvas. Figure derived from Staff Worksheet 2 (compiled

from responses to questionnaires). In the case of ***, print canvas accounts for a growing share of sales of products

made on its print canvas production line, rising from *** percent in 2002 to *** percent in 2005. Electronic mail

message from ***.

 45 In 2005, print canvas accounted for *** percent of the net sales of ***, *** percent of the net sales of ***, and

*** percent of the net sales of ***. Staff worksheet 2 (compiled from responses to questions III-5 and III-6 of the

producers questionnaires (and for *** the response to question II-14). 

 46 Producer Questionnaire of *** at 16.

32

gessoed bulk canvas.36 The canvas is *** and is then machine coated with a *** ink-receptive coating

***.37 When dried, the canvas ***, and then cut into rolls of a smaller size *** or into sheets.38

Although we lack data as to the actual extent of capital investments by print converters, evidence

in the record indicates that the investments are substantial. Because there are seven identified domestic

print converters, it appears that there are at least seven such production lines in the United States.39

Petitioner Tara estimates that the capital investment required for a single print canvas production line

ranges from $1 million to $3 million.40 Given the number of print canvas production lines and the

estimated cost of a single line, we can roughly estimate the minimum collective capital investment in

production lines by print converters to be in the range of $5 million to $20 million. This estimate does

not include capital investments made in other equipment, including that used to produce the proprietary

coatings. For purposes of comparison, Tara, which produced *** percent of domestic bulk canvas in

2005,41 reported that its capital investments totaled about $*** million, including investments in

production lines, inspection equipment, “chemical making equipment,” and handling equipment.42

Tara argues that the capital investments of print converters should be discounted, because the

production equipment used to make print canvas is used to produce other products as well.43 While print

converters ***44***.45 Accordingly, for most reporting print converters, print canvas is the most

important product produced on their coating lines in terms of both production volumes and net sales. 

While diversification of products coated on such machinery may help justify the capital investment, the

record does not suggest to us that the investment required for the production of print canvas is rendered

less than significant as a result of the varying usage of the machinery. Without the upfront capital

investment, print canvas could not be made at all. 

The technical expertise involved in the production of print canvas is no less than that required to

produce bulk or non-print finished canvas and may be greater. ***.46 Mixing the coating and properly

applying it require trained, skilled labor. The cutting and packaging that follow require less expensive
 47 Producer Questionnaire Response of *** at 16.

 48 Petitioner’s Responses to Commissioner Questions at 6. 

 49 CR at I-13, PR at I-9; Producer Questionnaire Response of *** at 16; electronic mail message dated April 14,

2006 from *** to Mark B. Rees at 3. 

 50 CR at I-7, PR at I-6.

 51 INV-DD-061 at Table I-4A n.2, PR at Table I-4A n.2.

 52 CR, PR at Table C-2, and INV-DD-061 at Table C-6, PR at Table C-6. 

 53 Although Tara argues that the value added by bulk producers is substantially greater than that added by print

converters, data supplied by the company do not confirm that assertion. Tara indicates that the average cost for the

basic fabric used in bulk canvas production averages $*** per square meter, that the average unit value for Tara’s

bulk sales in 2005 was $*** per square meter, and that Tara typically sells print canvas for $*** to $*** per square

meter. Petitioner’s Posthearing Responses to Commissioner Questions at 6 (Tara’s basic fabric costs and sales price

for print canvas) and CR and PR at Table VI-6 (Tara’s average unit values for bulk canvas). Based on Tara’s

reported data, the value added by converting basic fabric into bulk canvas is considerably less than the value added

by converting bulk canvas into print canvas.

 54 Each investigation is sui generis, and value added, as with any other single factor, is not determinative of our

finding. 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 to I-9 & n.34, aff’d Aramide Maatschappij V.O.F. v.

United States, 19 CIT 884 (1995). As noted by Respondents, however, the Commission recently found that certain

producers engaged in sufficient production related activity to be included in the domestic industry where the value

they added averaged 30 percent. Respondents’ Posthearing Brief at 7, citing Wax and Wax/Resin Thermal Transfer

Ribbons from France and Japan, Inv. No. 731-TA-1039-1040 (Final), USITC Pub. 3683 (Apr. 2004) at 13. In

addition, we found in the preliminary determination in the instant investigation that converters added significant

value based on the fact that prices for bulk canvas averaged $*** per square meter compared to $*** per square

meter for finished canvas, figures that are roughly similar to those found in this final phase investigation. 

Preliminary Determination at 8 n.43. 

 55 INV-DD-061 at Table C-6, PR at Table C-6.

 56 Comparing the same years respectively, employment levels ranged from *** to *** for bulk producers, and

*** to *** for non-print converters. CR, PR at Table C-2; INV-DD-057 at Table C-5, PR at Table C-5.

33

equipment and unskilled labor, and represent a fraction of the total cost of conversion.47 Operation of the

coating line alone requires up to three employees.48 The coating itself, which is typically proprietary, is

mixed separately; the finishing steps of transforming the master rolls into sizes and packaging suitable for

shipping are also performed separately.49 In terms of technical expertise, the process is broadly similar to

that performed by bulk producers, which purchase raw canvas and apply two or more coats of gesso.50

While the production process of non-print finished canvas is more labor intensive than the production of

print canvas, that process is not highly technical. 

With respect to value added, both conversion costs and average prices indicate a substantial

contribution by print converters. The operations performed in converting bulk canvas to print canvas

account for *** percent of the total cost of the finished product.51 In 2005, the average unit value of U.S.

shipments of bulk canvas was $*** per square meter compared to $*** per square meter for print

canvas.52 53 Both conversion costs and resulting differences in price indicate that print converters add

substantial value to print canvas.54 

The number of production workers for print converters, as reported by the major known

converters, ranged from *** in 2002 to *** in 2005.55 Even accounting for the lack of data from certain

print converters, these employment levels are substantially lower than those reported by bulk producers

and the far more labor intensive non-print finished canvas converting operations.56 On the other hand,

unit labor costs (total wages divided by production) for print converters ranged from $*** per square
 57 CR, PR at Table C-2; INV-DD-061 at Table C-6, PR at Table C-6.

 58 INV-DD-061 at Table I-4A n.2, PR at Table I-4A n.2.

 59 No responding U.S. producers in the final phase of the investigation reported any related firm, foreign or

domestic, engaged in the production, export, or importation of subject merchandise from China, nor did any ***. 

CR, PR at III-2. In the preliminary phase of the investigation, the Commission considered whether to exercise its

discretion to exclude ***, which reported that it imported *** square meters of subject product from China, from the

domestic industry under the related parties provision of the statute. The Commission found that appropriate

circumstances did not exist to exclude the firm from the domestic industry. Preliminary Determination at 9 n.44. In

the final phase, the parties have not argued that any firm should be excluded from the domestic industry as a related

party, and the record is unchanged on this point from the preliminary phase with respect to ***. Accordingly, we

find no basis to revisit that determination and no new related party issue has arisen. 

 60 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-1 (*** percent by quantity and *** percent by value in 2004) .

 61 19 U.S.C. § 1673d(b).

 62 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).

 63 19 U.S.C. § 1677(7)(A).

34

meter in 2002 to $*** per square meter in 2005, compared to only $*** per square meter in 2002 to $***

per square meter in 2005 for bulk producers.57 

As with non-print canvas, the bulk rolls used in the production of print canvas may be sourced

from abroad, but the reporting firms sourced domestically during the period of investigation.58 

On balance, we find that print converters engage in sufficient production-related activity to

qualify as members of the domestic industry. The extent of capital investment by print converters is

substantial. While the equipment is used to make other products, print canvas is the primary focus of two

of the three responding converters that provided such data, both in terms of production volume and net

sales. Print converters perform operations broadly similar to those performed by bulk producers, except

that print converting operations may require greater technical expertise. While print converters employ

fewer production workers than do bulk producers, the former incur substantially higher unit labor costs

than do the latter. Finally, the value added by print converters is substantial, as indicated by conversion

costs and the resulting price differentials. 

Based on the final phase record in this investigation, we define the domestic industry as all U.S.

producers of artists’ canvas, including the producers of bulk canvas, non-print converters, and print

converters.59 

III. MATERIAL INJURY BY REASON OF LESS THAN FAIR VALUE IMPORTS60

In the final phase of antidumping duty investigations, the Commission determines whether an

industry in the United States is materially injured by reason of the imports under investigation.61 In

making this determination, the Commission must consider the volume of 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.62 The statute defines “material injury” as “harm which

is not inconsequential, immaterial, or unimportant.”63 In assessing whether the domestic industry is

materially injured by reason of subject imports, we consider all relevant economic factors that bear on the
 64 19 U.S.C. § 1677(7)(C)(iii).

 65 Id.

 66 CR, PR at II-1.

 67 CR at II-5 to II-6, PR at II-3 to II-4.

 68 CR at II-5, PR at II-4.

 69 CR at II-5 to II-6, PR at II-3 to II-4.

 70 Tr. at 75-77 (Messrs. Straquadine and Benator), Staff Fieldwork Report (Feb., 24, 2006) at 3, CR and PR at II1, Petitioner’s Posthearing Responses to Commissioner Questions at 10. 

 71 See INV-DD-061 at Table C-6, PR at Table C-6.

 72 CR, PR at Table C-1. 

 73 CR, PR at Table C-1.

 74 CR, PR at Table C-1. 

 75 CR, PR at III-1.

 76 CR, PR at Table III-1.

 77 CR, PR at Table III-1.

35

state of the industry in the United States.64 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.”65

A. Conditions of Competition

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

presentation of painted or printed images. The demand for non-print finished artists’ canvas tends to be

seasonal, peaking in the spring and summer months as retailers stock up for back-to-school promotions.66

When asked how overall demand has changed during the period of investigation, four of the

responding U.S. producers, all of the responding importers, and 18 of 26 responding purchasers reported

that it had increased.67 With respect to non-print canvas, the increase in demand was most commonly

attributed to the rapid growth of the home decor market.68 Two producers and 9 purchasers also reported 

that sales of low-priced, non-branded artists’ canvas have increased overall demand for artists’ canvas.69

In addition, there was sharply increased demand in the print canvas segment of the market as printers and

publishers increasingly produced commercial artwork on artists’ canvas.70 Reported U.S. shipments of

print canvas more than *** in volume from 2002 to 2005.71 

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

canvas during the period of investigation. Apparent consumption increased *** percent between 2002

and 2005, from *** square meters to *** square meters.72

The U.S. market is supplied by domestic production as well as subject and nonsubject imports.

The domestic industry remains the largest supplier of the market, although its share of consumption by

quantity has steadily declined from *** percent in 2002 to *** percent in 2005.73 The domestic

industry’s share of consumption by value has ***, from *** percent in 2002 to *** percent in 2005.74

*** U.S. firms (***) are integrated producers, firms that produce bulk and finished artists’

canvas; other firms produce one or the other.75 The Commission received data from two other producers

of bulk canvas, ***, one other producer of non-print finished artists’ canvas (***), and four producers of

print canvas (***).76 Tara is the largest producer of artists’ canvas, accounting for over *** percent of

reported U.S. production of bulk canvas in 2005 and *** percent of reported production of finished

canvas.77 *** is the second largest producer of artists’ canvas, accounting for *** percent of reported
 78 CR, PR at Table III-1.

 79 CR, PR at Table III-1.

 80 Tr. at 21-22 (Freeman), 322 (Benator); CR at III-3; PR at III-2.

 81 Tr. at 21-22 (Freeman), 322 (Benator); CR, PR at III-3.

 82 Tr. at 21-22 (Freeman), 322 (Benator); CR, PR at III-3.

 83 CR at III-3 to III-4, PR at III-3

 84 CR at III-3 to III-4, PR at III-3.

 85 CR, PR at Table C-1.

 86 Bulk canvas imports from China ranged from approximately *** square meters (in 2002) to *** square meters

(in 2005). CR, PR at Table C-2. There were *** imports of print canvas from China during the period of

investigation. INV-DD-057 at Table IV-4, PR at Table IV-4.

 87 CR, PR at Table C-1.

 88 CR, PR at Table IV-1; INV-DD-057 at Table IV-1A, PR at Table IV-1A.

 89 CR, PR at Table C-1.

 90 CR at IV-2 nn.7-8, PR at IV-1 nn.7-8.

 91 INV-DD-057 at Table IV-4, PR at Table IV-4 (share of shipments).

 92 CR at I-10; PR at I-8; Tr. at 42 (Mr. Chicherski), 156-57 (Mr. Stapleton), 170-72 (Mr. Marek).

 93 CR at I-10; PR at I-8; CR, PR at Table I-3.

36

production of bulk canvas in 2005, and *** percent of reported production of finished canvas.78 BF

Inkjet and Intelicoat account for *** percent and *** percent of domestic production of finished canvas

products, respectively.79 

During the period of investigation, Tara moved a large portion of its U.S. production of finished

canvas to its Mexican subsidiary, Decoracion Colonial (“Decoracion”). Prior to the period, in 1990, Tara

acquired Hy-Jo Picture Frames (“Hy-Jo”), a California producer of wood-based frames.80 The acquisition

included Hy-Jo’s Mexican subsidiary, Decoracion.81 In ***, Tara began production at Decoracion’s

facility in Tijuana of *** artists’ canvas, a *** product that it had never produced in its U.S. facility.82

Tara expanded production of artists’ canvas at Decoracion in *** beginning with the production of ***.83

Later that year, Tara shifted a portion of the production of its core stretched canvas products to Mexico

and, over the course of the following three years, eliminated *** jobs at its Georgia facility.84

Subject imports from China supplied an increasing share of the U.S. consumption by quantity

during the period of investigation, from *** percent in 2002 to *** percent in 2005.85 With non-print

finished canvas constituting the vast majority of artists’ canvas imports from China,86 subject imports’

share of consumption by value increased from *** percent in 2002 to *** percent in 2005.87 The share of

consumption of nonsubject imports, of which Mexico constituted the largest source,88 increased

irregularly in quantity from *** percent in 2002 to *** percent in 2005, and increased in value from ***

percent in 2002 to *** percent in 2005.89 ***.90

There are three general categories of artists’ canvas – bulk canvas, non-print finished canvas, and

print canvas – and within these general categories a continuum of products is sold in various grades,

textures, shapes, sizes and formats. Reported subject imports from China are mostly, although not

exclusively, of non-print finished canvas products and, in particular, the more labor intensive stretched

canvas (approximately *** percent).91 Subject imports from China are either ***, or imported by retailers

and distributors themselves.92 Most of the U.S. finished canvas is sold to retailers, although some is sold

to large distributors who serve smaller retailers.93 

Subject imports and domestically produced artists’ canvas are generally substitutable. The

majority of importers and purchasers that compared bulk canvas from China with that from the United
 94 CR at II-9; PR at II-8; CR, PR at Table II-3. 

 95 CR at II-10; PR at II-7; CR, PR at Table II-3.

 96 CR, PR at Table II-5 (12 of 20 reported that product consistency is comparable; 14 of 20 reported that the two

are comparable in terms of meeting industry quality standards; 12 of 20 reported that the two are comparable in

terms of exceeding industry quality standards; 10 of 19 reported that product range is comparable). 

 97 CR at II-6 to II-9; PR at II-5; CR, PR at Tables II-1 & II-2. 

 98 CR, PR at Table II-5. 

 99 19 U.S.C. § 1677(7)(C)( i).

 100 CR, PR at Table C-2; INV-DD-057 at Table C-5, PR at Table C-5; INV-DD-0161 at Table C-6, PR at Table

C-6.

 101 CR, PR at Table C-2; INV-DD-057 at Table C-5, PR at Table C-5; INV-DD-0161 at Table C-6, PR at Table

C-6.

 102 INV-DD-057 at Table IV-4, PR at Table IV-4 (stretched canvas the highest volume non-print finished canvas

product); compare CR, PR at Table C-2; INV-DD-057 at Table C-5, PR at Table C-5; and INV-DD-061 at Table C6, PR at Table C-6 (showing average unit labor costs and average unit sales values for bulk, non-print finished, and

print canvas products); INV-DD-061 at Table I-4A, PR at Table I-4A (costs of converting bulk into non-print

finished and print canvas). 

 103 See, e.g., INV-DD-057 at Table IV-4, PR at Table IV-4.

 104 CR, PR at Table II-5.

37

States reported that the two are always or frequently interchangeable. All responding U.S. producers

reported that the two are at least sometimes interchangeable.94 The majority of importers and purchasers

that compared non-print finished canvas from China with that from the United States reported that the two

are always or frequently interchangeable. The majority of U.S. producers reported that the two are

always interchangeable.95 Most purchasers reported that domestically-produced artists’ canvas and

subject imports are comparable in terms of quality and product range.96 

Price was identified as a very important factor in the artists’ canvas purchasing decisions by 22 of

27 purchasers.97 Purchasers generally found that Chinese artists’ canvas and the U.S. product were

comparable, with one exception: 17 of 20 indicated that Chinese artists’ canvas is lower priced than U.S.

product.98 

B. Volume

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.”99

In considering the volume of subject imports, several important conditions of competition inform

our analysis. We consider that bulk canvas, non-print finished canvas, and print canvas each constitutes

an important segment of the domestic market.100 Bulk canvas generally represents the lowest-priced

product, while average prices for print canvas and non-print finished canvas are generally two and three

times higher, respectively, than prices for bulk canvas.101 Stretched canvas accounts for the great majority

of non-print finished canvas, and it is the most labor- intensive, highest-value added, and highest priced of

all artists’ canvas products.102 

While the domestic industry produces products sold in all three segments of the market, subject

imports are heavily concentrated in the non-print finished canvas segment, and in particular in stretched

canvas products.103 Among non-print finished canvas products, subject imports and domestic products are

comparable in terms of product range, availability, and quality.104 As a result, majorities of producers,

importers, and purchasers each indicated that subject and domestic non-print finished canvas are “always”
 105 CR, PR at Table II-3.

 106 CR, PR at Table C-1.

 107 CR, PR at Table C-1.

 108 CR, PR at Table C-1.

 109 CR, PR at Table C-1.

 110 CR, PR at Table C-1.

 111 INV-DD-057 at Table C-5, PR at Table C-5.

 112 INV-DD-057 at Table C-5, PR at Table C-5.

 113 Subject import volume relative to production of artists’ canvas in the Unites States also increased during the

period of investigation. Subject imports from China were equivalent to *** percent of U.S. production of bulk

artists’ canvas during 2002 and increased throughout the period, reaching *** percent in 2005. CR, PR at Table IV5.

 114 Nonsubject imports’ share of U.S. consumption by quantity grew by *** percentage points between 2002 and

2005, and by a relatively *** percentage points by value. CR, PR at Table C-1. With imports from Mexico

representing the largest source of nonsubject imports, these increases are largely attributable to Tara’s production

move of certain finished canvas operations from the United States to Mexico.

38

or “frequently” interchangeable.105 As we evaluate whether the volume of subject imports is significant,

we bear in mind that subject imports are heavily concentrated in those artists’ canvas products that are the

most labor-intensive to produce, the highest in value added, and the highest in price. Looking at the

market as a whole, the record shows that subject import volumes increased steadily and sharply

throughout the period of investigation. Subject import volumes rose from 202,000 square meters in 2002

to 2.3 million square meters in 2005, for an increase of 1031.7 percent.106 Despite rising U.S. demand,

subject imports’ share of U.S. consumption increased steadily and sharply, both in quantity and value

terms. Subject imports’ share by quantity increased from *** percent in 2002 to *** percent in 2005,

representing an overall increase of *** percentage points.107 Subject imports’ share by value increased

from *** percent in 2002 to *** percent in 2005, or by *** percentage points.108 

The increase in subject imports’ share of apparent U.S. consumption came at the expense of the

share held by the domestic industry. The domestic industry’s share of apparent consumption by quantity

decreased from *** percent in 2002 to *** percent in 2005, or by *** percentage points.109 The domestic

industry’s share of apparent consumption by value showed a greater decline, from *** percent in 2002 to

*** percent in 2005, a decline of *** percentage points.110 

The domestic industry’s greater loss of market share by value occurred as it lost sales volumes

and market share in the high-value non-print finished canvas products in which the subject imports were

concentrated. While apparent U.S. consumption of non-print finished canvas increased in value by ***

percent from 2002 to 2005, the value of U.S. shipments of domestically produced non-print finished

products fell by *** percent.111 As a result, the domestic industry’s market share in the highest valueadded and highest priced component of the market fell from *** percent in 2002 to just *** percent in

2005.112 As subject imports from China grew to hold the largest share of this portion of the market by

2005, domestic producers were increasingly relegated to lower value bulk and print canvas shipments. 

For the overall market, the quantity data, while significant, thus understate the significance of subject

imports in relation to U.S. producers. The value data confirm that subject imports from China have taken

a significant share of the higher value and higher priced non-print finished canvas market.113 114

Respondents argue that subject imports did not cause the domestic industry to curtail production

of non-print finished canvas, and they assert that Tara relocated certain non-print finished canvas

production to its Mexico operations for reasons unrelated to subject imports. The record, however,

indicates that Tara moved certain of its production activities to Mexico in significant part due to lowpriced competition from subject imports. As discussed above, Tara had produced splined canvas in
 115 CR, PR at III-3.

 116 CR at III-3 to III-4, PR at III-3.

 117 Tr. at 21 (Mr. Freeman), 322 (Mr. Benator).

 118 Tr. at 21-23 (Mr. Freeman).

 119 See, e.g., Petitioner’s Prehearing Brief Exh. A at 1; Tr. at 21-24 (Mr. Freeman). We note that this growth in

the finished canvas market predated the surge of subject imports from China. 

 120 See, e.g., Petitioner’s Prehearing Brief Exh. 1 at 1-2; Petitioner’s Posthearing Brief Exh. A at 1.

 121 See, e.g., Petitioner’s Posthearing Brief Exh. C.

 122 See, e.g., Tr. at 22-23 (Mr. Freeman).

 123 Id.

 124 A follow-up letter from ***. Petitioner’s Posthearing Brief Exh. C at 2.

39

Mexico since ***.115 Because ***, production was increased to accommodate a large increase in that

customer’s orders.116 This splined canvas did not replace domestic production, however, because Tara

never made splined canvas in the United States.117 Tara’s U.S. sales of its splined Mexican product

increased between 1996 and 2002, and included product sold under Tara’s own Fredrix Creative Edge

brand name, as well as two firms’ private labels (Aaron Brothers, Inc., and The Art Store).118 None of this

production was moved from the U.S. to Mexico, and imports from Mexico increased as a result of splined

product’s growth in the U.S. market.119 This more limited Mexican production predated the surge of

Chinese product in the U.S. market.

In 2000, Tara was notified that one of its large customers, ***, was shifting its purchases to

Chinese suppliers. In the same time frame, ***, a large distributor customer of Tara’s, started offering a

private label canvas sourced from China. In March 2003, *** and ***, which were sharing sourcing

information, asked Tara to re-quote their artists’ canvas prices in light of low-priced canvas sourcing in

China.120 Later that month, *** informed Tara of its decision to source its private label line from China,

***.121

In the face of these events, Tara determined that its private label production suffered from too

great a price disadvantage against the Chinese product to be competitive. In an effort to reduce labor

costs and narrow the price gap with Chinese imports, Tara moved a substantial portion of stretched

canvas production from its Georgia facility to Mexico in April 2003, and moved a large percentage of its

West Coast stretcher bar production there in November 2003.122 Tara had explored various options of

greater automation and cost reduction, but was still unable to reduce costs to compete with the lowerpriced Chinese product. It determined that the only viable option was to move a significant volume of its

stretched canvas operation to the Mexico facility.123 Accordingly, although the actual imports that ***

would use to replace the Tara products had not yet begun,124 we find that Tara’s actions were taken in

response to indisputable evidence of future lost sales. 

Respondents’ claim that Tara should have delayed the expansion of its Mexican operations until

after imports had significantly increased ignores the fact that the company’s largest customer had

announced that it would soon replace a huge portion of its purchases with Chinese product. Subject

imports would rise sharply thereafter, both to fill the *** account and as other retailers followed suit and

began purchasing lower-priced Chinese product. We therefore find that lower-priced competition from

subject imports from China played a significant role in Tara’s decision to move certain production

capacity to Mexico. We note further that Tara continues to produce finished products in Georgia, which

reinforces the company’s claim that it moved production to Mexico reluctantly. In fact, Tara’s capacity,
 125 CR, PR at Table III-2.

 126 From 2002 to 2005, domestic production of non-print finished canvas fell by *** percent, and the industry’s

U.S. shipments fell by *** percent in quantity and *** percent in value. INV-DD-067 at Table 

C-5, PR at Table C-5.

 127 Production by Tara’s Mexico affiliate increased from *** square meters in 2002 to *** square meters in 2005. 

CR, PR at Table III-2. 

 128 Domestic production of finished canvas by Tara fell from *** square meters in 2002 to *** square meters in

2005. CR, PR at Table III-2. 

 129 See, e.g., Respondents’ Prehearing Brief at 29.

 130 See, e.g., Respondents’ Posthearing Brief at 12.

 131 INV-DD-057 at Table IV-4, PR at Table IV-4 (subject import concentration in stretched and panel products),

Petitioner’s Posthearing Responses to Commissioner Questions at 12-13, 32 & Exh. 3 (broad product range offered

by domestic producers).

 132 CR, PR at Tables II-3 and II-5.

 133 Petitioner’s Posthearing Responses to Commissioner Questions at 32-34.

 134 CR at II-9, PR at II-6, Petitioner’s Posthearing Responses to Commissioner Questions at 32-35.

 135 Tr. at 33-34 (Mr. Straquadine), Petitioner’s Posthearing Responses to Commissioner Questions at 34-35.

 136 Tr. at 30, 33-34 (Mr. Straquadine) (patent pending on watercolor canvas product), Petitioner’s Posthearing

Responses to Commissioner Questions at 34-35. See Tr. at 41, 43 (Mr. Chicherski) (retailer reporting that Tara

offers new products, while subject imports are “knock offs”). 

40

production and shipments of finished canvas in Georgia continue to vastly exceed those of its Mexico

operation, and part of that production includes stretched canvas.125

Moreover, the decline in U.S. non-print finished canvas production and shipments is not

explained by the partial relocation of some Tara production to Mexico.126 After the relocation of certain

production operations to Mexico, production of finished artists’ canvas products in that facility increased

by *** square meters from 2002 to 2005.127 Over the same period, Tara’s U.S. production of finished

artists’ canvas products fell by *** square meters.128 Accordingly, most of the decline in Tara’s

production of finished canvas products is not attributable to its partial shift of production to Mexico. 

Respondents further claim that the increases in subject import volume and market share during

the period of investigation are not significant, because subject imports have created the growth in market

demand by offering diversified new products, innovative marketing, and attractive price points.129 Such

growth, they claim, would not have occurred without subject imports.130 We are unpersuaded. 

As an initial point, we find little or no evidence that subject producers introduced new products to

the U.S. market not available from domestic producers. Subject imports are heavily concentrated in

stretched canvas products, and to a lesser degree in canvas panels, each of which are product categories in

which domestic producers offer a broad selection of choices.131 In this respect, subject imports and the

domestic product are generally comparable in terms of quality,132 including with respect to the type of

canvas, the number of coats gesso applied to it, and the bars over which the product is stretched.133 While

subject merchandise includes stretched products in some dimensions not previously offered by domestic

producers,134 such instances appear to constitute the exception rather than the rule, given that market

participants generally reported that the products are interchangeable and comparable in terms of product

range and availability, as noted above. In any event, the offer of an existing product in a different

dimension can hardly be considered an innovation. New products were instead developed and offered

first by the domestic industry, including digital print canvas, watercolor canvas, and “sew-paintable”

canvas.135 Unlike simply offering stretched canvas in a new size, these products required significant

research and development and they are truly innovative.136 The domestic industry, therefore, was

responsible for any growth in demand spurred by new products.
 137 CR at II-5, PR at II-3.

 138 E.g., Tr. at 158-59, 219-20 (Mr. Stapleton).

 139 Tr. at 211-13, 219-21 (Mr. Stapleton). See Tr. at 26-27 (Mr. Straquadine), 123-24 (Mr. Delin), 317-18 (Mr.

Straquadine), Petitioner’s Posthearing Responses to Commissioner Questions at 35-37 (Tara representatives

confirming these marketing practices). 

 140 Tr. at 158-59, 219-20 (Mr. Stapleton).

 141 CR at II-7, PR at II-4 (lower price additional factor spurring consumption), Tr. at 16-17 (Mr. Delin) (demand

growing since 1990). 

 142 Respondents confuse an increase in consumption with an increase in demand. Consumption, in terms of

quantity, generally increases when a product is offered at lower prices. 

 143 CR at II-5 to II-6, PR at II-3 to II-4.

 144 See, e.g., Tr. at 35 (Mr. Straquadine), 106 (Mr. Thompson); CR at V-22 to V-25, PR at V-8 to V-9;

Petitioner’s Posthearing Brief at 7-8 & Exh. C. The lost sales and revenue allegations of the domestic industry are

discussed in the price effects section (III.C) below. 

 145 Tr. at 123-24 (Mr. Delin).

 146 INV-DD-057 at Table C-5, PR at Table C-5.

41

Nor is there evidence that foreign producers or importers of the subject merchandise somehow

created demand by engaging in innovative marketing campaigns. As noted above, increases in demand

are largely attributable to the increase in consumption for use in the do-it-yourself home decor market.137

While marketing innovations do appear to have capitalized on and contributed to this growth in demand,

those efforts occurred downstream at the retail level. Vendors reported boosting impulse purchases by

displaying artists’ canvas products more prominently in retail stores than had previously been the case,

and promoting their use in home decor projects.138 Retailers also indicated that they created the

appearance of value by routinely selling at prices heavily discounted off of “ordinary” prices, and by

displaying large in-store signs as to these discounts.139 Retailers reported that these techniques were

developed for use with existing domestic product offerings, and that they can be employed regardless of

the origin of the product, contrary to the notion that subject imports facilitated these efforts.140 

While there is some evidence that the low prices of subject imports contributed to increased

consumption, it appears that demand was already growing prior to the entry of subject imports from

China, since as far back as 1990.141 142 Moreover, most market participants providing information to the

Commission indicated that the primary factors driving increased demand during the period of

investigation were the growing use of artists’ canvas in home decor applications, sharply increased

demand for print canvas, and improved retail marketing techniques.143 

Moreover, import purchasers’ acquisitions of subject merchandise are not confined to serving

only those customers that would not otherwise buy domestic artists’ canvas for price reasons. For

example, Michaels Stores, A.C. Moore, Aaron Brothers, and Utrecht had previously purchased their

private label finished canvas from Tara. All have since switched to purchasing subject merchandise at

some point during the period of investigation based at least in part on price. Instead of supplementing

their domestic sources with low-priced imports to serve only purchasers that would not otherwise buy

artists’ canvas, they have replaced existing lines of domestically produced product with lower-priced

Chinese product.144 While other retailers still carry domestic products, even they often place these

products in direct competition with subject imports sold at heavily discounted prices.145

Finally, Respondents’ new market theory fails to explain the domestic industry’s *** percent

decline in shipments of non-print finished artists’ canvas between 2002 and 2005.146 Rather than create a

new market, low-priced subject imports have merely served to decrease the U.S. industry’s participation

in the existing market. Based on this record, the volume of subject imports increased substantially over

the period of investigation, and market share gains came at the expense of U.S. producers. Considering
 147 19 U.S.C. § 1677(7)(C)(ii).

 148 CR, PR at Tables II-3 & II-5.

 149 CR, PR at Table II-5.

 150 CR at V-4 to V-5, PR at V-3.

 151 CR, PR at Tables V-7 & V-8.

 152 CR at V-20, PR at V-7.

 153 CR at V-4 to V-5, V-20; PR at V-7. 

 154 CR at V-20, PR at V-7.

42

the market for artists’ canvas as a whole, we find that subject import volume, and the increase in that

volume, were significant during the period of investigation, both in absolute terms and relative to

domestic consumption and production. 

C. Price Effects of the Subject Imports

Section 771(7)(C)(ii) of the Act provides that, in evaluating the price effects of the 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.147

As noted, we have found that domestically produced artists’ canvas and subject imports from

China are substitutable. While purchasers indicate that quality, availability, and price are all important

factors in the competition for sales of artists’ canvas, they also reported that they generally considered the

quality and availability of the two to be comparable.148 Indeed, most purchasers reported that they view

domestic and subject artists’ canvas as comparable in nearly every respect, with the exception of price,

which purchasers generally report is lower for subject imports.149

The Commission collected quarterly pricing data from U.S. producers and importers for eight

different artists’ canvas products. Because of the wide variety of artists’ canvas products on the market,

the pricing data reported by these firms accounted for approximately *** percent of the value of U.S.

producers’ commercial shipments of artists’ canvas and *** percent of the value of U.S. imports from

China during the period of investigation.150 For two of the products, products 7 (bulk rolls) and 8 (print

canvas rolls), there were no reported sales of the product from China.151 Neither is imported in significant

volumes to the United States. Price comparisons were available for the other six pricing products for

which we collected data.

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

the period of investigation. Prices of imports from China were lower than the U.S. producer prices in 78

out of 83 quarterly comparisons, by margins ranging from 0.7 percent to 72.1 percent.152 For products 1-5

(each of which were stretched artists’ canvas products), the prices of imports from China were lower than

the U.S. producer prices in all 71 quarterly comparisons.153 In seven out of 12 comparisons relating to

product 6 (canvas panels), the imported product was priced lower than the U.S. producer prices.154 In the
 155 CR at V-20, PR at V-7.

 156 Tr. at 211-13, 219-20 (Mr. Stapleton). See Tr. at 26-27 (Mr. Straquadine), 123-24 (Mr. Delin), 317-18 (Mr.

Straquadine) (Tara representatives confirming these practices).

 157 Tr. at 26-27 (Mr. Straquadine), Petitioner’s Posthearing Responses to Questions at 35, 37. See Tr. at 214 (Mr.

Stapleton) (retailers wish to purchase at low prices in order to engage in routine discounting).

 158 Tr. at 317-18 (Mr. Straquadine). See Tr. at 36 (Mr. Straquadine), 162 (Mr. Stapleton), 177 (Mr. Kanter), 213-

14 (Mr. Stapleton) (meetings between Tara and retailers centering on price).

 159 CR, PR at Table V-11; CR at V-22, PR at V-8 to V-9.

 160 CR at V-22 to V-23, PR at V-8 to V-9.

 161 CR at V-25, PR at V-9.

 162 Petitioner’s Prehearing Brief at Exhibit B.

 163 CR at V-25, PR at V-9.

 164 Tr. at *** (Mr. Straquadine); Petitioner’s Prehearing Brief Exh. A. 

 165 MacPherson’s was cited in a lost revenue allegation that it denied. Respondents suggest that Tara caused its

own injuries by terminating its business relationship with MacPherson’s, forcing MacPherson’s to become ***. See,

e.g., Respondents’ Posthearing Brief at 1. Tara counters that MacPherson’s began purchasing Chinese canvas for

price reasons for a private label line in December 2000, and that Tara’s decision to terminate its relationship with

MacPherson’s in December 2003 was based on various factors that led it to conclude that MacPherson’s was

(continued...)

43

remaining 5 instances, the imported product oversold the domestic product by margins ranging from 1.2

percent to 16.6 percent.155

The underselling found in these price comparisons is consistent with the testimony of both

domestic producers and retailers that price is the primary consideration in purchasing decisions. 

Retailers testified at the hearing that they routinely sell the subject imports in retail stores at prices

advertised to customers as heavily discounted off of artificially inflated “ordinary” prices, in an attempt to

convince customers of the value and low price of the product.156 Retailers can afford to offer these

discounts because the low prices of subject imports allow them to make a higher margin on discounted

sales of subject product, giving them an incentive to switch away from domestic sourcing.157 In

negotiations with domestic producer Tara, retailers demanded that Tara support their “marketing

strategies” by selling to them certain artists’ canvas products at very low prices, or risk losing these

customers to subject imports.158 Unable to meet prices offered by importers and demanded by retailers,

domestic producers were forced to cede market share as demonstrated above.

The role of underselling in the domestic industry’s loss of market share is further demonstrated

by confirmed lost sales allegations. At least four purchasers confirmed outright that they switched from

domestic sources to subject imports from China based on price.159 Two other purchasers – *** –

confirmed that they have switched purchases to the lower-priced imports, partly on the basis of price.160 

While several other purchasers denied that they switched from domestic suppliers to subject

imports for price reasons, their accounts are unconvincing. For example, purchaser *** indicated that

price was only one of many factors in its decision to change suppliers.161 Documentation submitted by

Tara, however, indicates that *** indicated in contemporaneous discussions with Tara that price was the

key reason for the lost sale.162 Tara also explained that while *** did make certain complaints as to the

quality of Tara’s product, those comments were mostly limited to artists’ canvas made from linen, yet ***

replaced Tara’s entire product line with subject imports.163 Another purchaser – *** – also denied that it

shifted suppliers on the basis of price, but Tara appears to have been addressing this customer’s quality

concerns when the purchaser decided to import from China. Moreover, documentation submitted by Tara

conveys *** demands on Tara for lower pricing and the decision to source from China when Tara was

unable to reduce its price sufficiently.164 165 166 We consider that the domestic industry’s loss of sales
 165 (...continued)

“actively working against Tara’s interests.” Petitioner’s Posthearing Brief at 6. MacPherson’s has denied these

allegations and claims the termination was against its wishes. Tr. at 160-62, 165 (Mr. Stapleton). Tara notes that its

decision to terminate the relationship has not harmed it as a company, ***. Petitioner’s Prehearing Brief at 40 &

Exh. C. Irrespective of the wisdom of Tara’s actions in this isolated instance, this occurrence does not somehow

undermine the confirmed instances in which the domestic industry lost sales to subject imports on the basis of price.

 166 *** did not respond to the lost sales allegations against it. The firm’s purchases from ***. Purchaser’s

Questionnaire Response of *** at II-2. While limited quantities of purchases may have been of ***, the data show a

***, with ***. Id. at II-2. 

 167 CR, PR at Tables V-1 to V-2.

 168 CR, PR at Table V-3.

 169 CR, PR at Table V-4.

 170 See, e.g., Tr. at 322 (Mr. Benator) .

 171 CR, PR at Table V-5.

 172 CR, PR at Table V-6.

 173 CR, PR at Table C-1.

44

volumes due to competition with lower priced subject imports further supports our finding that

underselling by subject imports is significant in this investigation. 

We also find that subject imports are having significant price depressing effects on prices for

domestically produced artists’ canvas products. For five of the six products for which price comparisons

were available, domestic prices declined to varying degrees during the period of investigation. Data for

products 1 and 2 showed the highest degree of head-to-head competition. The weighted-average sales

price for U.S. produced product 1 decreased *** percent, while product 1 from China decreased ***

percent over the same period. The weighted-average sales price for U.S.-produced product 2 decreased

*** percent, while product 2 from China decreased by *** percent.167 

The weighted-average sales price for U.S.-produced product 3 fluctuated over the period of

investigation, decreasing overall by *** percent; the margins of underselling for product 3 from China

decreased over the period, with a price increase of *** percent during the period of investigation.168

Product 4 is the only product with available comparisons for which the U.S.-produced product

increased in price (*** percent); product 4 from China also increased *** percent in price.169 We do not

accord great weight to this comparison, however, due to limited data based on the minimal production of

this product (splined canvas) in the United States.170

Data for product 5 shows that the price of the U.S.-produced product declined minimally overall

during the period of investigation; the sales prices reported for product 5 from China decreased by only

*** percent during the period for which comparisons were available, but the underselling margins were

consistently the highest of any product.171

Finally, the weighted-average sales price for U.S.-produced product 6 declined *** percent

during the period of investigation, while that for product 6 from China declined *** percent during the

period for which comparisons were available.172

We find that these data, particularly for products 1 through 3 and 5, demonstrate that subject

import prices have depressed prices for the domestic like product to a significant degree. There was also

evidence of price declines for product 6, but we do not rely on those comparisons as showing adverse

price effects due to the mixed evidence of underselling and overselling for that product.

Overall, there appears to be little evidence of a cost/price squeeze, given that the domestic

industry’s cost of goods sold (“COGS”) to net sales ratio remained essentially unchanged over the period,

declining very slightly from *** percent in 2002 to *** percent in 2005.173 However, in the case of nonprint finished artists’ canvas products – the market segment in which the domestic industry competed
 174 INV-DD-057 at Table C-5, PR at Table C-5.

 175 CR at V-21, PR at V-8.

 176 See, e.g., Tr. at 161, 167 (Mr. Stapleton).

 177 19 U.S.C. § 1677(7)(C)(iii). See also SAA at 851, 885 (“In material injury determinations, the Commission

considers, in addition to imports, other factors that may be contributing to overall injury. While these factors, in

some cases, may account for the injury to the domestic industry, they also may demonstrate that an industry is facing

difficulties from a variety of sources and is vulnerable to dumped or subsidized imports.”).

 178 19 U.S.C. § 1677(7)(C)(iii). See also SAA at 851, 885; Live Cattle from Canada and Mexico, Invs. Nos. 701-

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

 179 The Act instructs the Commission to consider the “magnitude of the dumping margin” in an antidumping

proceeding as part of its consideration of the impact of imports. 19 U.S.C. § 1677(7)(C)(iii)(V). In its final

affirmative determination for subject artist canvas from China, Commerce found dumping margins of 78 percent ad

valorem for eight specific producer/exporters, and a China-wide rate of 264 percent ad valorem, applicable to all

other producer/exporters. 71 Fed. Reg. at 16116.

 180 CR, PR at Table C-1.

45

most directly with subject imports – the domestic industry’s average COGS as a ratio to net sales

increased *** from *** percent in 2002 to *** percent in 2005, or by *** percentage points.174

Moreover, several domestic producers reported either reducing prices or rolling back announced price

increases, due to competition with subject imports.175 This provides further evidence of the adverse price

effects of the subject imports.

Based on the evidence gathered in the final phase of this investigation, we find that lower-priced

subject imports have had significant price depressing effects. Respondents depend (and have depended)

for the success of their marketing strategies on “value” products, that is, products that undersell the

competition.176 The underselling demonstrated on this record has been significant and has fueled the

rapidly increasing volume and market share of subject imports, resulting in the direct displacement of

sales by domestic producers. This underselling has also placed a downward pressure on domestic prices

as domestic producers have attempted to maintain their diminishing share of the market, resulting in the

declining price trends shown in our pricing data. 

Based on the significant and rising volume of subject imports, the general substitutability of the

products, the importance of price to purchasers of artists’ canvas, the consistent pattern of significant

underselling by subject imports, evidence of adverse price effects demonstrated in the circumstances of

specific lost sales, and generally declining U.S. prices, we find that subject imports have had significant

adverse price effects on the U.S. industry. 

D. Impact

In examining the impact of the subject imports on the domestic industry, we consider all relevant

economic factors that bear on the state of the industry in the United States.177 These factors include

output, sales, inventories, capacity utilization, market share, employment, wages, productivity, profits,

cash flow, return on investment, ability to raise capital, and research and development. 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.”178 179

As we evaluate whether subject imports have had a significant adverse impact on the condition of

the domestic industry, we bear in mind conditions of competition that affect that statutory factors we are

to consider. Consumption of artists’ canvas increased by *** percent from 2002 to 2005.180 The

domestic industry also significantly increased its production of print canvas, a new and technologically

advanced product that created an new market segment for artists’ canvas and consistently generated ***
 181 Compare CR and PR at Table C-2; INV-DD-057 at Table C-5, PR at Table C-5; and INV-DD-061 at Table C2, PR at Table C-2 (operating margins by industry segment).

 182 As we consider the evidence, the issue here is not one of attenuated competition where large shares of subject

imports fail to compete with U.S. product, as Respondents would argue. Subject imports from China compete head

to head with domestically-produced finished canvas and, albeit to a more limited degree, with domestically produced

bulk canvas. 

 183 CR, PR at Table C-2. 

 184 CR, PR at Table C-2. 

 185 INV-DD-061 at Table C-6, PR at Table C-6.

 186 INV-DD-061 at Table C-6, PR at Table C-6.

 187 INV-DD-057 at Table C-5, PR at Table C-5.

 188 CR, PR at Table C-2.

 189 INV-DD-061 at Table C-6, PR at Table C-6.

 190 INV-DD-057 at Table C-5, PR at Table C-5.

 191 CR, PR at Table C-1.

 192 Derived from Questionnaire data, using the conversion rate of 1 square inch equaling .00065 square meters.

See CR at V-14 to V-15, PR at V-6.

46

operating income than either bulk or finished artists’ canvas products.181 These factors have had a

substantial and favorable effect on the condition of the domestic industry. We do not, however, find that

these favorable developments insulated the domestic industry from the adverse impact of subject

imports.182 

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

increased its capacity and production for bulk and print canvas, while capacity for non-print finished

canvas remained flat and the production of finished canvas declined. The industry’s bulk canvas capacity

increased *** percent between 2002 and 2005 from *** square meters to *** square meters.183 Bulk

canvas production increased *** percent between 2002 and 2005 from *** square meters to *** square

meters.184 The industry’s print canvas capacity increased *** percent from *** square meters to ***

square meters.185 Print canvas production increased *** percent between 2002 and 2005, from ***

million square meters to *** square meters.186 In contrast, non-print finished canvas capacity started and

concluded the period of investigation at *** square meters, while production dropped *** percent from

*** square meters in 2002 to *** square meters in 2005.187

Capacity utilization for bulk canvas increased *** percentage points during the period of

investigation, from *** percent to *** percent.188 For print canvas, capacity utilization increased by ***

percentage points between 2002 and 2005, from *** percent in 2002 to *** percent.189 In contrast,

capacity utilization for non-print finished canvas declined *** percent from an *** percent in 2002 to ***

percent in 2005.190

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. As it lost sales to lower- priced

subject imports, the domestic industry lost market share, from *** percent in 2002 to *** percent in 2005

in quantity terms, and from *** percent in 2002 to *** percent in value terms.191 As previously

described, the increasing presence of Chinese finished product relegated domestic producers to selling

relatively more bulk and print canvas; therefore, the square meter production increased but at significantly

lower prices. On a square meter basis, based on fourth quarter 2005 prices, the bulk roll and print canvas

products for which we collected pricing data (products 7 and 8) were $*** and $*** respectively,

whereas the highest volume stretched pricing products ranged in price from $*** (product 2) to $***

(product 1).192
 193 CR, PR at Table C-1. Inventories declined *** percent between 2002 and 2005. CR/ PR at Table C-1.

 194 Shipment values declined from $5.43 per square meter to $4.22 per square meter; average unit sales values

declined from $5.11 per square meter to $3.95 per square meter. CR, PR at Table C-1. We note that data mix issues

might be present.

 195 CR, PR at Table C-1.

 196 CR, PR at Table C-1.

 197 CR, PR at Table C-1 (hourly wages increasing from $12.08 in 2002 to $12.61 in 2005).

 198 CR, PR at Table C-2 (for bulk canvas, productivity increased *** percent, while unit labor costs remained at

$*** per square meter at the start and finish of the period of investigation); INV-DD-057 at Table C-5, PR at Table

C-5 (for finished canvas, productivity increased *** percent, and unit labor costs declined *** percent from $*** to

$*** per square meter); INV-DD-061 at Table C-6, PR at Table C-6 (for print canvas, productivity increased ***

percent, while unit labor costs fell *** percent from $*** per square meter to $*** per square meter). 

 199 The decline in labor costs for non-print finished canvas is not the positive development it would appear. Due

to competition with subject imports, stretched canvas products made up a far smaller share of the domestic industry’s

shipments of non-print finished canvas in 2005 than in 2002. INV-DD-057 at Table IV-4, PR at Table IV-4. While

this change in product mix gives the appearance of lower production costs, in fact subject imports large drove the

domestic industry out of the production of the highest value added and highest priced artists’ canvas product. 

 200 CR, PR at Table C-1.

 201 CR, PR at Table C-1; INV-DD-061 at Table C-6, PR at Table C-6.

 202 CR, PR at Table VI-4.

47

While U.S. shipment volumes increased 35.7 percent from 6.6 million square meters in 2002 to

9.0 million square meters in 2005, the values of those shipments, reflecting the shift from non-print

finished to bulk and print canvas, increased only 5.5 percent, from $36.0 million in 2002 to $38.0 million

in 2005.193 Thus, while the domestic industry produced in greater quantities in 2005, the value of its U.S.

shipments changed only slightly. This adverse phenomenon occurred as the domestic industry was

displaced from the highest value added and highest price component of the market, with the result that

unit values of U.S. producers’ shipments and sales each declined sharply over the period, by 22.3 percent

and 22.6 percent, respectively.194

Despite increases in domestic production, the total number of production workers declined during

the period of investigation from 448 in 2002 to 382 in 2005, as the domestic industry was displaced out of

the relatively labor-intensive non-print finished canvas segment by subject imports.195 Total wages paid

similarly declined, from $11.1 million in 2002 to $9.5 million in 2005.196 Hourly wages increased as the

number of workers shrank.197 Productivity increased for each component of domestic production, while

unit labor costs remained flat for bulk canvas and declined for non-print finished and print canvas.198 199 

Consistent with the adverse trends discussed above, the domestic industry’s financial indicators

worsened over the period of investigation. Operating income declined 8.9 percent, from $1.9 million in

2002 to $1.7 million in 2005, even as the quantity of the industry’s sales increased by 35.7 percent, as

noted above.200 Operating income margins for the overall industry declined from 4.6 percent in 2002 to

3.9 percent in 2005, even though operating margins increased sharply in the print canvas component of

the industry, and even though the print canvas sector has an increasing impact on the data for the industry

as a whole as it increased in size relative to the bulk and non-print finished canvas components.201 One

firm (***) reported a net operating loss in 2005, and another reported a margin of *** (***).202 The

domestic industry’s deteriorating financial performance reflects the impact of the shift to lower value bulk

and print canvas and the losses sustained in connection with non-print finished canvas. For non-print

finished canvas, operating income of $*** in 2002 declined to a loss of $*** in 2004 and to a further loss
 203 INV-DD-057 at Table C-5, PR at Table C-5.

 204 CR, PR at Table VI-8.

 205 CR, PR at Table VI-10.

48

of $*** in 2005; a net operating income of *** percent in 2002 turned into net operating losses of ***

percent in 2004 and *** percent in 2005.203

The domestic industry’s capital expenditures increased from $350,000 in 2002 to $1.6 million in

2005; R&D expenses increased from $*** in 2002 to $*** in 2005.204 Finally, the domestic industry’s

return on investment (“ROI”) decreased from *** percent in 2002 to *** percent in 2005.205

We attribute the domestic industry’s performance declines over the period of investigation in

significant part to the rapid increases in subject import volume and market share that have had significant

adverse price effects. Subject imports have used their price advantage to wrest a significant share of the

U.S. market and to become the *** in non-print finished artists’ canvas products. Subject imports

therefore displaced the domestic industry in non-print finished artists’ canvas products, which are the

most labor-intensive, highest value added, and highest priced of all artists’ canvas products.

Notwithstanding large gains in apparent U.S. consumption over the period, and the sharp growth

in production of the profitable print canvas product, the domestic industry experienced a significant

adverse impact due to competition with subject imports. In the critical non-print finished canvas

component – representing the highest value added and priced artists’ canvas products – the domestic

industry lost *** percentage points in market share, and it experienced lower sales volume and lower

average unit sales values, with the result that it went from *** in 2002 to *** in 2004, and greater *** in

2005. 

While the domestic industry benefitted from increased demand and the growth in sales of print

canvas, these developments do not negate the impact of subject imports on the domestic industry. In any

event, the effects of subject imports are readily apparent even examining data for the industry as a whole. 

As detailed above, the domestic industry experienced sharply falling market share by quantity and by

value, substantially reduced average unit shipment values and average unit sales values, and a significant

loss of production workers. Despite an increase in production quantities, operating income declined in

absolute terms, and operating margins and ROI also fell, even as the domestic industry sold increasing

quantities of profitable print canvas. On these combined bases, we conclude that subject imports have

had a significant adverse impact on the domestic industry.

CONCLUSION

For the above-stated reasons, we determine that the domestic industry producing artists’ canvas is

materially injured by reason of subject imports of artists’ canvas from China that are sold in the United

States at less than fair value.
 1

 Commerce made an affirmative final determination of sales at LTFV and calculated a weighted-average final

margin of 77.90 percent applicable to eight specific exporter-producer combinations, and a China-wide rate of 264

percent applicable to all other producer-exporter combinations. 71 Fed. Reg. 16,119, Mar. 30, 2006.

 2

 Material retardation is not an issue in this investigation.

 3

 19 U.S.C. §1677(4)(A).

 4

 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).

 5

 In deciding whether a firm’s production related activities are sufficient for it to be considered part of the

domestic industry, the Commission generally has analyzed the overall nature of a firm’s production-related activities

in the United States. 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. 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., DRAMs and DRAM Modules from Korea, Inv. No. 701-TA-431 (Final), USITC Pub.

3616 at 7-11 (Aug. 2003).

49

ADDITIONAL AND DISSENTING VIEWS OF COMMISSIONER

DANIEL R. PEARSON

Based on the record in this investigation, I determine that an industry in the United States is

neither materially injured nor threatened with material injury by reason of imports of artists’ canvas from

China that is sold in the United States at less than fair value (LTFV).1 2

I join my colleagues’ discussion regarding domestic like product. With regard to the definition of

the domestic industry, however, I define the industry somewhat differently from the majority of my

colleagues. Therefore, I write separately to discuss my definition of the industry, to discuss the

conditions of competition pertinent to my analysis, and to analyze the statutory factors.

I. THE DOMESTIC INDUSTRY INCLUDES CONVERTERS OF DIGITAL PRINT

CANVAS

The statute defines the 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

proportion of the total domestic production of the product.”3

 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.4

In this investigation, parties disagree as to whether to include in the industry producing artists’

canvas certain firms that convert bulk canvas rolls to digital print canvas. In particular, they differ as to

the degree to which these firms (“print converters”) engage in sufficient production-related activities to be

included as members of the domestic industry. In analyzing this issue, I apply the six factors that the

Commission generally considers in analyzing whether a firm’s production-related activities are sufficient

to constitute domestic production.5

Source and Extent of the Firms’ Capital Investment. The capital investment necessary in order to

coat the canvas for digital print applications is substantial, although less so than for production of either

the bulk canvas or the stretched (finished) variety. For digital print canvas, petitioners estimate that

coating machinery of the type employed in the production of print canvas requires at least a $1 million
 6

 CR at I-13, n. 36; PR at I-9, n. 36. 

 7

 Producer Questionnaire of *** at 16. I note that the record indicates that other non-subject digital imaging

products may be made on the same machinery used to produce digital print canvas. Given that digital print canvas,

however, accounts for as much as *** percent of print converters’ total production I do not consider that the

investment required for the production of digital print canvas is insignificant simply owing to production of nonsubject products. CR at I-13, n. 36; PR at I-9, n. 36; E-mail of Apr. 14, 2006 from counsel for *** at 3; Petitioner’s

posthearing brief, responses to Commission questions at 7.

 8 CR at I-13; PR at I-9.

 9

 Producer questionnaire response of *** at 17.

 10 CR, PR at table I-4.

 11 See, e.g., Chlorinated Isocyanurates from China and Spain, Inv. No. 731-TA-1082 & 1083 (Final), USITC

Pub. 3762 (June 2005), Aramid Fiber Formed of Poly Paraphenylene Terepthalamide from the Netherlands, Inv. No.

731-TA-652 (Review), USITC Pub. 3394 (February 2001); Low Fuming Brazing Copper Wire and Rod from New

Zealand, Inv. No. 731-TA-246 (Final), USITC Pub. 1779 (November 1985).

 12 CR, PR at table V-8 (compared to tables V-1-V-7).

 13 CR, PR at table III-8.

 14 Print converters account for *** percent of reported production of finished artists’ canvas. CR, PR at III-2.

 15 CR, PR at table I-4, n. 2.

50

investment, and could cost up to $3 million.6

 A key producer of print canvas, ***, noted that the

purchase of inkjet coating equipment requires large capital expenditures as well as substantial R&D

expenditures.7

Technical Expertise Involved in U.S. Production Activities. As the coating for digital print canvas

has a proprietary specification which needs to be mixed on-site, and because the final product needs to be

inspected before final slitting, it is likely that a modicum of technical expertise and training is necessary.8

Indeed, according to testimony from producers of digital print canvas, the level of technical expertise

involved in producing digital print canvas may be considerably greater than that associated with the

production of assembled canvas.9

Value Added to the Product in the United States. The costs of conversion from bulk to finished

article for producers of print canvas products account for *** percent of the total cost of producing these

items.10 This estimate is less than the value added involved in producing non-print canvas, but is well

within the range of percentages that, in other investigations, the Commission has considered sufficient to

include downstream processors in the domestic industry.11 In this regard, I also find it significant that

prices of print canvas are considerably higher, on a square meter basis, than prices of non-print canvas

products.12

Employment Levels. The record indicates that employment levels for the finished product greatly

exceed those associated with the bulk product.13 As production of stretched canvas and digital print

canvas are by far the two most significant finishing operations, this suggests that employment levels

associated with those processes are not insignificant.14

Quantity and Type of Parts Sourced in the United States. This factor is inconclusive because

there is no indication on the record that either producers of stretched canvas or digital print canvas

procure their raw materials from other than domestic sources.15

Conclusion. Although the record is not fully developed on this issue, based on the information

we have I find the level of capital investment, employment levels, the degree of technical expertise and, in

particular, the value-added percentage accounted for by print converters to be significant enough to make

print converters’ production-related activities sufficient to warrant their inclusion in the domestic industry

producing artists’ canvas. On balance, therefore, I include converters of digital print canvas in the

domestic industry.
 16 19 U.S.C. § 1673d(b).

 17 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).

 18 19 U.S.C. § 1677(7)(A).

 19 19 U.S.C. § 1677(7)(C)(iii).

 20 Id.

 21 CR, PR at table C-1 (including data from print converters).

 22 CR, PR at tables C-2 & C-3.

 23 CR, PR at table IV-4.

51

II. NO MATERIAL INJURY BY REASON OF SALES OF SUBJECT IMPORTS AT LESS

THAN FAIR VALUE

In the final phase of antidumping duty investigations, the Commission determines whether an

industry in the United States is materially injured by reason of the imports under investigation.16 In

making this determination, the Commission must consider the volume of 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.17 The statute defines “material injury” as “harm which

is not inconsequential, immaterial, or unimportant.”18 In assessing whether the domestic industry is

materially injured by reason of subject imports, I consider all relevant economic factors that bear on the

state of the industry in the United States.19 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.”20

For the reasons discussed below, I determine that the domestic industry producing artists’ canvas

is not materially injured by reason of subject imports from China found to be sold at LTFV.

A. Conditions of Competition

For the most part, I join the majority’s views concerning the pertinent conditions of competition

in the artists’ canvas industry. Because my definition of the industry, however, is different, there is an

additional condition of competition that is particularly important to my analysis. 

Specifically, the market for artists’ canvas currently looks very different than it did in 2002, the

first year of our period of investigation. Apparent consumption increased markedly over the period

examined, from *** square meters in 2002 to *** square meters in 2005, a ***-percent increase.21 This

increase in consumption is not only the result of an increase in imports, whether subject or non-subject. 

Rather, U.S. production also increased substantially, by *** percent over the four-year period in the case

of finished canvas, and *** percent in the case of bulk canvas.22 A significant component of the increase

in production and shipments of finished canvas is increased shipments of digital print canvas. U.S.

producers’ shipments of digital print canvas increased from *** square meters in 2002 to *** square

meters in 2005, while U.S. producers’ shipments of stretched canvas declined over that same period from

*** square meters in 2002 to *** square meters in 2005.23 Thus, by the end of the period digital print

canvas made up *** percent of U.S. producers’ total shipments of artists’ canvas, compared with only

*** percent at the beginning of the period. By contrast, at the end of the period stretched canvas made up

only *** percent of U.S. producers’ total shipments of artists’ canvas, as opposed to *** percent at the

start of the period.

These trends illustrate two points. First, U.S. producers of artists’ canvas are increasingly turning

to production of digital print canvas and away from stretched canvas, while at the same time managing to
 24 Id. Total U.S. producers’ shipments of finished canvas increased from *** square meters in 2002 to ***

square meters in 2005. 

 25 CR, PR at table IV-4. The record contains no evidence of shipments of imports of digital print canvas from

China. 

 26 U.S. producers’ shipments of bulk canvas increased from *** square meters in 2002 to *** square meters in

2005. By contrast, shipments of subject imports of bulk canvas increased from only *** square meters in 2002 to

*** square meters in 2005. CR, PR at table IV-4.

 27 CR at III-4, PR at III-3; CR, PR at table III-2.

 28 19 U.S.C. § 1677(7)(C)(i).

 29 CR at IV-3, PR at IV-2; CR, PR at table IV-1.

 30 CR at IV-7, PR at IV-6; CR, PR at table IV-3. 

 31 CR at IV-10, PR at IV-8; CR, PR at table IV-5.

 32 CR, PR at tables IV-4, C-1, & C-3.

52

increase their total production and shipments of the domestic like product.24 Thus, digital print canvas has

not substituted on a one-for-one basis for stretched canvas, but rather has contributed to making the total

size of the pie bigger. Second, in moving into production of digital print canvas, U.S. producers have reoriented their production to an area where there is as yet virtually no import competition, and none at all

from China.25 Moreover, a substantial minority of U.S. producers’ shipments continues to be in the bulk

segment, where, again, imports from China are barely present.26 Moreover, petitioner Tara has ***, and

produces the less import-sensitive bulk product ***.27 Hence, throughout the period examined, and

increasingly so by the end of the period, import competition from China in the broader artists’ canvas

market was significantly attenuated. This attenuation of competition has important implications for my

causation analysis, as discussed below.

B. Volume of the 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.”28

The volume of subject imports increased sharply and steadily from 202,000 square meters in

2002 to 2.3 million square meters in 2005.29 Overall, imports increased by over 1,000 percent over the

four years. As a share of domestic consumption, subject imports increased from *** percent of the

market in 2002 to *** percent in 2005.30 Nonsubject imports’ market share was more than subject

imports’ share in 2002 and 2003, but less in 2004 and 2005, and fluctuated with no clear pattern, holding

between *** and *** percent of the market. 

U.S. producers’ share of the market fell consistently from 2002 to 2005, dropping from ***

percent to *** percent. As a ratio to the volume of U.S. production, subject imports increased their share

steadily from *** percent in 2002 to *** percent in 2005.31

Although both the volume and market share of subject imports increased overall over the period

examined, I do not consider those increases to be significant when viewed in the context of the dramatic

changes in the market for artists’ canvas. In reaching this conclusion, I take account of the fact that,

throughout the period examined, the vast majority of subject imports were in the finished canvas segment

of the market. For example, in 2005, of a total of *** square meters of imports of all artists’ canvas, fully

*** square meters, or *** percent, were in the finished canvas segment, and the record indicates that,

within this category, there were no subject import shipments of digital print canvas.32 By 2005, however,

the focus of domestic producers had shifted into production of the bulk and digital print canvas segments

of the market, so much so that by 2005, only *** percent of domestic producers’ shipments were of non-
 33 CR, PR at table IV-4. Finished canvas in 2005 constituted *** percent of total U.S. producers’ shipments of

artists’ canvas. Digital print canvas constituted *** percent of total U.S. producers’ shipments. 

 34 This estimate of *** percent is somewhat overstated, as it includes shipments of archival boards, canvas pads,

canvas kits, and floor coverings/placemats, where, as with digital print canvas, there is *** of shipments of subject

imports. CR, PR at table IV-4.

 35 19 U.S.C. § 1677(7)(C)(ii).

 36 CR, PR at tables V-1 & V-10.

53

print finished canvas.33 Consequently, by the end of the period examined, nearly *** percent of the

subject imports were competing against only *** percent of total domestic shipments.34 Hence, although

when viewed in isolation the volume and market share of subject imports may appear significant, when

evaluated in the context of the marked attenuation of competition in this market, the volume of subject

imports and the increase in that volume are insufficient to demonstrate that the subject imports themselves

contributed materially to any injury to the domestic industry.

C. Price Effects of the Subject Imports

Section 771(7)(C)(ii) of the Act provides that, in evaluating the price effects of the 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.35

Commission staff collected pricing data on eight products: (1) 8x10 stretched canvas, mediumweight, 100% unbleached cotton duck, double-primed acrylic, standard stretcher strips (1-5/8" x 11/16"),

side-stapled; (2) 16x20 stretched canvas, medium-weight, 100% unbleached cotton duck, double-primed

acrylic, standard stretcher strips (1-5/8" x 11/16"), side-stapled; (3) 16x20 stretched canvas, mediumweight, 100% unbleached cotton duck, double-primed acrylic, standard stretcher strips (1-5/8" x 11/16"),

stapled on back; (4) 16x20 stretched canvas, medium-weight, 100% unbleached cotton duck, doubleprimed acrylic, standard stretcher strips (1-5/8" x 11/16"), with spline; (5) 12x12 stretched canvas, gallery

(or deep) stretcher bars (1-7/16" x 1-7/16" or 1-1/2" x 1-1/2"), 100% unbleached cotton duck, doubleprimed acrylic, stapled on back; (6) 8x10 canvas panel (non-archival) with chipboard core,

polyester/cotton canvas; (7) double-primed, medium-weight, 100% unbleached cotton duck, 73" x 6 yd.

roll, and; (8) inkjet printer canvas with top-coat for ink receptivity, polyester/cotton canvas, 36" x 40"

roll.

For product 1 (small side-stapled finished canvas), imports from China undersold U.S. product in

all 16 quarters where comparisons were possible, with margins of underselling ranging from *** to ***

percent, and averaging *** percent.36 U.S. prices remained fairly flat in calendar years 2002, 2003, and

2004, then dropped sharply beginning in early 2005. Underselling margins increased overall, with their

sharpest increase occurring in 2003. During the period that U.S. prices declined sharply (calendar year

2005), underselling margins declined. 

For product 2 (larger size side-stapled finished canvas), imports from China undersold U.S.

product by wide margins in all 16 quarters where comparisons were possible. Margins of underselling
 37 CR, PR at tables V-2 & V-10.

 38 CR, PR at table V-3.

 39 CR, PR at table V-4.

 40 CR, PR at table V-5.

 41 CR, PR at table V-6.

 42 CR, PR at tables V-7 & V-8.

 43 CR, PR at table V-10.

 44 CR, PR at table V-11.

 45 CR at V-21-V-23; PR at V-8-V-9.

 46 CR at V-25-V-26; PR at V-9.

 47 *** reported that its raw material costs increased by *** percent in 2005. CR, PR at V-1.

 48 CR, PR at table C-1.

54

ranged from *** to *** percent.37 As with product 1, U.S. prices declined only toward the end of the

period (2005). Prices and underselling margins for product 3 (larger size back-stapled finished canvas)

showed similar trends.38

For product 4 (larger size finished canvas with spline), underselling margins were exclusive and

fluctuated randomly, but U.S. prices increased overall notwithstanding the underselling.39 Similarly, for

product 5 (a more specialized back-stapled product), U.S. prices did not decline despite consistent

underselling.40

For product 6 (canvas panels), the pattern of underselling and overselling was mixed, with 5

instances of overselling among the 12 quarters of data. U.S. prices showed no clear trend.41 For product

7 (bulk canvas) and product 8 (digital print canvas), where there were no sales of Chinese product

reported (although there were some imports of bulk canvas), U.S. prices fluctuated randomly.42

These comparisons indicate that subject imports predominantly undersold domestic product, with

underselling occurring in 78 of 83 comparisons.43 Only for the more basic finished canvas products

(products 1-3), however, is there any evidence of consistent declines in U.S. prices. For the remaining

products, which consist of more specialized finished canvas, canvas panels, bulk canvas, and digital print

canvas, there is no evidence of declines in U.S. prices despite consistent underselling by imports for at

least some of the products. Accordingly, I find only minimal evidence that subject imports have

depressed domestic prices during the period examined.

With regard to lost sales and revenues, Commission staff was able to confirm a few lost sales

allegations, but due to the fact that Tara did not specify the dollar amount of the lost sales in those

instances, it is impossible to determine the proportion of Tara’s business that was affected.44 Further,

several of the customers that disagreed with the lost sales allegations acknowledged increasing their

purchases from China but noted that they continued to buy from domestic producers as well.45 The one

lost revenue allegation that was made, against MacPherson’s, was denied.46

Finally, I find that, despite the consistent underselling, there is little, if any, evidence of price

suppression. In addition to the fact that the Commission could not confirm any incidences of lost

revenues, I see no evidence of any kind that would lead me to conclude that the low prices of the subject

imports caused domestic producers to be unable to raise prices to cover increased costs; i.e., to experience

a cost-price squeeze.47 The lack of a cost-price squeeze in this industry is demonstrated by the fact that,

for the artists’ canvas industry, the ratio of cost of goods sold (COGS) to sales was essentially flat over

the period examined, fluctuating between 77 and 78 percent.48 Even for the market segment of finished

canvas, the COGS/sales ratio increased only very slightly over the period examined, from *** percent in
 49 CR, PR at table C-3.

 50 CR, PR at tables C-1 & C-3.

 51 19 U.S.C. § 1677(7)(C)(iii); see also SAA at 851 and 885 (“In material injury determinations, the Commission

considers, in addition to imports, other factors that may be contributing to overall injury. While these factors, in

some cases, may account for the injury to the domestic industry, they also may demonstrate that an industry is facing

difficulties from a variety of sources and is vulnerable to dumped or subsidized imports”).

 52 19 U.S.C. § 1677(7)(C)(iii); see also SAA at 851 and 885; Live Cattle from Canada and Mexico, Invs. Nos.

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

 53 The statute instructs the Commission to consider the “magnitude of the dumping margin” in an antidumping

proceeding as part of its consideration of the impact of imports. 19 U.S.C. § 1677(7)(C)(iii)(V). Commerce

calculated a weighted-average final margin of 77.90 percent applicable to eight specific exporter-producer

combinations, and a China-wide rate of 264 percent applicable to all other producer-exporter combinations. 71 Fed.

Reg. 16,119, Mar. 30, 2006.

 54 CR, PR at table C-1. As a percent of net sales, operating income declined overall from 4.6 percent of sales in

2002 to 3.9 percent of sales in 2005.

 55 CR, PR at table C-2. Capacity to produce the bulk product increased from *** square meters in 2002 to ***

square meters in 2005. Capacity increased *** percent between 2004 and 2005.

 56 CR, PR at table C-3. Capacity to produce the finished product declined from *** square meters in 2002 to ***

square meters in 2004, then increased markedly, by *** percent, to *** square meters in 2005, for an overall

increase during the period examined of *** percent.

55

2002 to *** percent in 2005.49 Moreover, unit COGS for both the global category of all artists’ canvas,

and for finished canvas separately, declined sharply over the period examined, by 23 percent for the

industry as a whole, reflecting strongly increasing net sales.50 

Consequently, in light of the lack of a relationship between underselling and price declines for

most of the domestic industry’s business, coupled with the lack of significant confirmed lost sales or lost

revenues, and the absence of any evidence of price suppression, I find that subject imports did not have a

significant effect on domestic prices during the period examined.

D. Impact of the Subject Imports

In examining the impact of the subject imports on the domestic industry, I consider all relevant

economic factors that bear on the state of the industry in the United States.51 These factors include output,

sales, inventories, capacity utilization, market share, employment, wages, productivity, profits, cash flow,

return on investment, ability to raise capital, and research and development. 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.”52 53

With respect to the impact of the subject imports, when the condition of the entire artists’ canvas

industry is examined (including producers of both bulk and finished canvas, including digital print canvas

producers), the domestic industry’s performance was generally good over the four full calendar years

reported. The industry was profitable in all periods examined, although it was slightly less profitable at

the end of the period than at the beginning.54 Capacity to produce the bulk product increased consistently

throughout the period, with its greatest increase between 2004 and 2005.55 Capacity to produce the

finished product fluctuated, first declining in 2003 and 2004, then rising rapidly in 2005.56 Production

trends for the bulk and finished products are generally similar to those for capacity, with production of the
 57 CR, PR at tables C-2 & C-3. Production of the bulk product increased from *** square meters in 2002 to ***

square meters in 2005. Production of the finished product increased from *** square meters in 2002 to *** square

meters in 2004, and then to *** square meters in 2005.

 58 CR, PR at table C-1. The quantity of net sales increased from 8.0 million square meters in 2002 to 11.0

million square meters in 2005. The value of net sales declined from $40.8 million in 2002 to $39.9 million in 2004,

before recovering to $43.4 million in 2005. The unit value of net sales declined from $5.11 per square meter in 2002

to $3.95 per square meter in 2005.

 59 CR, PR at table C-1. Operating income rose from $1.9 million in 2002 to $2.6 million in 2003. It then

declined to $1.4 million in 2004, before recovering to $1.7 million in 2005.

 60 CR at VI-11, PR at VI-3; CR, PR at table VI-6. Indeed, while overall cost of goods sold increased, cost of

goods sold declined steadily on a per-unit basis.

 61 CR, PR at table C-1. The number of production workers declined from 448 in 2002 to 382 in 2005. The total

hours worked by those workers declined from 916 in 2004 to 752 in 2005. Wages paid to those workers declined

from $11.1 million in 2002 to $9.5 million in 2005. Hourly wages increased irregularly from $12.08 in 2002 to

$12.61 in 2005. For the bulk canvas segment, unit labor costs were consistent at $0.22 per square meter. For the

finished canvas segment, such costs declined steadily from $3.12 per square meter in 2002 to $2.07 per square meter

in 2005.

 62 Between 2002 and 2004, the unit value of net sales declined from $5.11 per square meter to $4.30 per square

meter. CR, PR at table C-1. During the same period, however, except for products 5, 6, and 8, prices for the pricing

products selected by the Commission did not decline. CR, PR at tables V-1-V-8. 

56

bulk product increasing *** percent over the four-year period and production of the finished product

increasing *** percent overall, and *** percent between 2004 and 2005.57

The quantity of net sales increased steadily between 2002 and 2005, although the value of net

sales fluctuated, first declining, then increasing in 2005, resulting in a net decline in the unit value of net

sales.58 After increasing from its 2002 level, operating income declined between 2003 and 2004, although

it rebounded a bit in 2005 and, as noted above, the industry was consistently profitable with, at a

minimum, a 3.5 percent margin.59 The staff’s variance analysis shows that the overall small decline in

operating income between 2002 and 2005 was attributable mainly to the negative effect of decreases in

prices, which was partially offset by the positive effects of decreased costs/expenses (at least on a per unit

basis) and increased sales volume.60

As for employment, questionnaire data indicate an overall decline during the period examined in

total number of workers, hours worked, and wages paid, while hourly wages increased.61 Unit labor costs

decreased for the finished canvas segment and were flat for the bulk canvas segment. Declines in

employment indicators were consistent throughout the period.

Regardless of how the industry’s condition can be characterized, I find that subject imports did

not contribute importantly to that condition. The record indicates that the industry experienced some

adverse trends over the period examined; in particular, declines in the unit value of shipments and a drop

in profitability between 2003 and 2004. In order, however, to determine that subject imports contributed

to those trends, I would need to discern a link between either of these adverse trends and the volume and

price effects of the subject imports. With regard to the profitability drop in 2004, I note that subject

imports were increasing strongly in that period, indicating a possible link between the volume of imports

and the decline in profitability. On the price side, however, there is little evidence of price depression in

2004 (prices did not decline significantly until 2005) and, as noted above, there is virtually no evidence of

price suppression. In fact, in 2003 and 2004 we see declines in the unit value of net sales while prices, for

the most part, seem to be fairly flat.62 This likely reflects a change in the industry’s product mix towards

lower-value products, given Tara’s admitted relocation of much of its finished canvas production to
 63 Over the period examined, the unit value of shipments of finished canvas was at least *** as high as the unit

value of shipments of bulk canvas. In 2005, the unit value of U.S. commercial shipments of finished canvas was

$*** per square meter, as compared to $*** per square meter for bulk canvas. CR, PR at tables III-5 & III-6.

 64 Productivity ratios for bulk canvas were generally *** times higher than those for finished canvas, indicating

far less labor input for bulk canvas than for finished canvas. CR, PR at tables C-2 & C-3.

 65 19 U.S.C. § 1677(7)(F)(ii).

 66 Id.

 67 19 U.S.C. § 1677(7)(F)(i). Statutory threat factor (I) is inapplicable because Commerce made no subsidy

findings. Statutory threat factor (VII) also is inapplicable because these investigations do not involve imports of

both raw and processed agricultural products.

 68 CR, PR at tables VII-1 & VII-2. Capacity to produce the bulk product increased from *** square meters in

2002 to *** square meters in 2005. Capacity to produce the finished product increased from *** square meters in

2002 to *** square meters in 2005. 

 69 CR, PR at tables VII-1 & VII-2. Production of the bulk product increased from *** square meters in 2002 to

*** square meters in 2005. Production of the finished product increased from *** square meters in 2002 to ***

(continued...)

57

Mexico.63 Hence, I find that declines in the unit value of shipments have little to do with subject imports. 

Similarly, declines in overall employment also likely reflect the industry’s shift from production of

finished canvas into production of bulk and digital print canvas products, which are less labor-intensive.64

Again, although the presence of substantial volumes of subject imports of finished canvas may have

triggered this shift, and may therefore have negatively affected the finished canvas segment of the

industry, I must assess the impact of subject imports on the industry as a whole. As noted above in my

discussion of the volume of subject imports, because of the significant attenuation of competition in this

industry, I do not believe that subject imports have had a materially adverse impact on the artists’ canvas

industry as a whole.

In sum, even though subject imports increased significantly in volume and consistently undersold

the products of the domestic industry, it is difficult for me to see how these events had any adverse impact

on the industry, or that the industry is currently being injured by reason of those imports. Hence, I find

that the impact of the subject imports is not significant.

Based on the record in the final phase of this investigation, and in light of my analysis of the

significance of the volume, price effects, and impact of the LTFV sales of subject imports, I determine

that an industry in the United States is not materially injured by reason of imports of the subject artists’

canvas from China that is sold in the United States at less than fair value.

II. NO THREAT OF MATERIAL INJURY BY REASON OF SALES OF SUBJECT

IMPORTS AT LESS THAN FAIR VALUE

Section 771(F) of the Act directs the Commission to determine whether the U.S. industry is

threatened with material injury by reason of the subject imports by analyzing whether “further dumped or

subsidized imports are imminent and whether material injury by reason of imports would occur unless an

order is issued or a suspension agreement is accepted.”65 The Commission may not make such a

determination “on the basis of mere conjecture or supposition,” and considers the threat factors “as a

whole” in making its determination whether dumped or subsidized imports are imminent and whether

material injury by reason of imports would occur unless an order is issued.66 In making my

determination, I considered all statutory factors that are relevant to this investigation.67

Capacity to produce the subject product in China increased markedly over the four-year period

examined, both when bulk and finished canvas products are considered.68 Production likewise increased,

demonstrating similar trends.69 Capacity utilization for both bulk and finished canvas increased markedly
 69 (...continued)

square meters in 2005. 

 70 CR, PR at tables VII-1 & VII-2. Capacity utilization for the bulk product increased from *** percent in 2002

to *** percent in 2005. Capacity utilization for the finished product increased from *** percent in 2002 to ***

percent in 2005. 

 71 CR, PR at table VII-3. Shipments to the United States increased from *** square meters in 2002 to *** square

meters in 2005, an increase of over *** percent. Shipments to all other markets increased from *** square meters in

2002 to *** square meters in 2005, a comparable increase in percentage terms. Between 2004 and 2005, however,

shipments to all other markets nearly doubled, while the increase in shipments to the United States was more modest,

at *** percent.

 72 CR, PR at table VII-3. Shipments to all other markets accounted for *** percent of total shipments in 2005.

 73 CR, PR at table VII-3. Home market shipments grew from *** square meters in 2002 to *** square meters in

2005, a ***-percent increase.

 74 CR, PR at tables VII-3 and VII-4. In 2005, end-of-period inventories held in China as a percentage of

shipments were only *** percent. 

 75 The industry’s operating income as a percent of sales declined from 6.7 percent in 2003 to 3.5 percent in 2004,

but then recovered to 3.9 percent by 2005. CR, PR at table C-1. I do not consider this level of profitability as

indicating that the industry is vulnerable to increased imports.

 76 In 2005, capacity utilization for finished canvas, the variety constituting the vast majority of subject imports

over the period examined, was nearly *** percent. CR, PR at table VII-2.

 77 End-of-period inventories held by U.S. importers were *** square meters in 2005, an amount which is only

*** percent of U.S. apparent consumption of artists’ canvas in 2005. CR, PR at tables VII-4 & C-1.

 78 CR at VII-8, n.12, PR at VII-4, n.12.

58

from 2002 to 2005, exceeding *** percent in 2005.70 Shipments to the United States of the combined

product increased overall, but the rate of increase of shipments to third country markets was greater.71

Shipments to third country markets constituted a substantial majority of total shipments by 2005.72 Home

market shipments have also grown, but at a much slower pace than export shipments.73 End-of-period

inventories held in China are very small as a percentage of shipments, but U.S. importers do hold

inventories accounting for approximately *** percent of imports.74

The volume of subject imports and their market share increased toward the end of the period

examined, but as discussed above, any impact on the industry by such volume occurred earlier in the

period, as by 2005 the industry’s performance recovered, despite continued imports.75 There is very little

unused capacity in China.76 End-of-period inventories held by U.S. importers are somewhat significant,

but are not large in volume.77 Third-country markets, primarily European ones, appear to be of growing

importance to China.78 Also, there are no trade restrictions in European or other markets that would

divert exports to the United States, and there is no evidence on the record of any potential for productshifting.

On balance, given the current state of the market, where the performance of the industry is

improving reflecting a shift towards production of bulk and digital print canvas where subject imports

from China are not a factor, and where, in any event, there is little unused capacity in the Chinese

industry, I cannot find a possibility of imminent injury to the U.S. industry from subject imports. 

Consequently, I find that material injury by reason of subject imports will not occur absent issuance of an

antidumping order against the subject imports. I therefore conclude that the domestic artists’ canvas

industry is not threatened with material injury by reason of the subject imports.
59

CONCLUSION

For the foregoing reasons, I determine that the domestic artists’ canvas industry is neither

materially injured nor threatened with material injury by reason of subject imports from China.

 1

 A complete description of the subject merchandise, as contained in the scope definition of Commerce’s final

determination notice, is presented below in the section entitled “The Subject Product.”

 2

 Beginning with Commerce’s preliminary determination, Federal Register notices cited in the tabulation are

presented in appendix A.

I-1

PART I: INTRODUCTION

BACKGROUND

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

GA, 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 in the tabulation below.2

Effective date Action

April 1, 2005 Petition filed with Commerce and the Commission; institution of the Commission’s

investigation (70 FR 17467, April 6, 2005)

April 28, 2005 Initiation of Commerce’s investigation (70 FR 21996)

May 16, 2005 Commission’s preliminary determination (70 FR 29781, May 24, 2005)

November 7, 2005 Commerce’s preliminary determination (70 FR 67412); scheduling of final phase

of the Commission’s investigation (70 FR 69781, November 17, 2005)

March 28, 2006 Commission’s hearing1

March 30, 2006 Commerce’s final determination (71 FR 16116)

April 26, 2006 Commission’s vote

May 15, 2006 Commission’s determination transmitted to Commerce

 1 A list of hearing witnesses is presented in Appendix B.

STATUTORY CRITERIA AND 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 determination 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.
 3

 The precise methodology used in the calculation of U.S. imports is described at length in Part IV.

I-2

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 {an

antidumping investigation}, 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.

SUMMARY DATA

A summary of data collected in this investigation is presented in appendix C. Except as noted,

U.S. industry data are based on questionnaire responses of ten firms that are believed to account for the

vast majority of U.S. production of artists’ canvas during 2005. U.S. imports are based on a combination

of questionnaire data and official Commerce statistics.3
 4 Final Determination of Sales at Less Than Fair Value: Certain Artist Canvas from the People’s Republic of

China, 71 FR 16116, March 30, 2006.

I-3

EXTENT OF SALES AT LESS THAN FAIR VALUE

On March 30, 2006, the Department of Commerce published the results of its final determination

of sales at LTFV regarding artists’ canvas from China.4

 The results of Commerce’s final determination

are presented in table I-1. As indicated, Commerce determined a weighted-average dumping margin of

78 percent ad valorem for eight specific producer-exporter combinations, and a China-wide rate of 264

percent ad valorem, applicable to all other producer-exporter combinations.

Table I-1

Artists’ canvas: Commerce’s final dumping margins

Exporter Producer(s) Weighted average dumping

margin (percent ad valorem)

Ningbo Conda Jinhua Universal ............................................... 264.09

Wuxi Silver Eagle Cultural Goods .................................. 264.09

Conda Painting Wuxi Pegasus Cultural Goods .................................... 264.09

Jinhua Universal Jinhua Universal ............................................... 264.09

Phoenix Materials Phoenix Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.90

Phoenix Stationary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.90

Shuyang Phoenix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.90

Phoenix Stationary Phoenix Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.90

Phoenix Stationary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.90

Shuyang Phoenix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.90

Jiangsu By-products Wuxi Yinying Stationery and Sports Products . . . . . . . . . . . . . . . . . . . . . . . . . . 77.90

Su Yang Yinying Stationery and Sports Products . . . . . . . . . . . . . . . . . . . . . . . 77.90

China-wide rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264.09

Source: Commerce’s final determination (71 FR 16119, March 30, 2006).

SUMMARY OF U.S. MARKET PARTICIPANTS

Ten firms provided questionnaire data relating to their U.S. production of artists canvas during

the period examined in the final phase of this investigation (January 2002–December 2005). On the basis

of these data, petitioner Tara is the dominant U.S. producer of bulk artists’ canvas, accounting for ***

percent of reported U.S. production of this product in 2005. *** is the next largest U.S. producer of bulk

canvas, accounting for *** percent of reported 2005 production, with *** further firms each accounting

for less than *** percent. U.S. production of finished artists’ canvas is less concentrated, with Tara

accounting for *** percent of reported 2005 production of these products, and *** and ***, two

producers of digital print canvas, accounting respectively for *** and *** percent. In tandem, ***

producers of digital print canvas accounted for *** percent of reported U.S. production of finished canvas

products in 2005, while *** producers of non-print finished artists’ canvas products accounted for the

remaining *** percent (see Part III, table III-1).

Twenty U.S. importers provided data in response to the Commission’s questionnaires in the final

phase of this investigation. On the basis of data submitted by these firms, *** is the largest U.S. importer

of artists’ canvas, accounting for *** percent of total reported imports in 2005. *** is the second largest
 5 Final Determination of Sales at Less Than Fair Value: Certain Artist Canvas from the People’s Republic of

China, 71 FR 16117, March 30, 2006.

 6

 “Artist canvases with a non-copyrighted preprinted outline, pattern, or design are included in the scope of this

investigation, whether or not included in a painting set or kit.”

 7

 Petition, p. 5.

I-4

U.S. importer, accounting for *** percent of reported imports in 2005, followed by ***, which accounted

for *** percent.

THE SUBJECT PRODUCT

In its final LTFV determination, Commerce defined the scope of this investigation as follows:5

The products covered by this investigation are artists canvases regardless of

dimension and/or size, whether assembled or unassembled, 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. Artist canvas and stretcher strips

(whether or not made of wood, and whether or not assembled) included within a kit or set

are covered by this proceeding.

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, “paint-by-number” or “paint-it-yourself” artist canvases with a

copyrighted preprinted outline, pattern, or design, whether or not included in a painting

set or kit.6

 Also excluded are 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 or

set. While the HTSUS subheadings are provided for convenience and customs purposes,

our written description of the scope of this proceeding is dispositive.

Additionally, we have determined that canvas woven and primed in India but cut

and stretched in the PRC and exported from the PRC is not subject to the investigations

covering artist canvas from the PRC.

U.S. Tariff Treatment

Artists’ canvas subject to this investigation is provided for in subheadings 5901.90.20 and

5901.90.40 of the Harmonized Tariff Schedule of the United States (HTS). Table I-2 presents current

tariff rates for eligible imports under these subheadings.

Description and Uses

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 paint to be placed upon it without

penetrating the original fabric.7

 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. The
 8

 Ibid.

 9

 Conference transcript, p. 23 (Straquadine).

 10 Petition, p. 5.

 11 Petition, pp. 5-6.

 12 On the basis of questionnaire data, floor cloths and placemats accounted for *** percent of U.S. producers’

total U.S. shipments of artists’ canvas products in 2005 (see table IV-4 in Part IV).

I-5

Table I-2

Artists’ canvas: Tariff rates, 2006

General1 Special2 Column 23

HTS provision Article description Rates (percent ad valorem)

5901

5901.10

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 textile fabrics

of a kind used for hat foundations:

Textile fabrics coated with gum or amylaceous

substances, of a kind used for the outer covers of

books or the like:

Other:

Of man-made fibers

Other

7.0

4.1

3.54

2.14

74.5

35.0

1

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

 General note 3(c)(i) lists the special tariff treatment programs indicated in this column. Goods must meet eligibility rules set forth

in other general notes, and importers must properly claim such treatment. 3

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

 4

 Applies to eligible imports from Morocco, pursuant to the United States-Morocco Free Trade Agreement Implementation Act;

eligible imports from Australia, Canada, Chile, Israel, Jordan, Mexico and Singapore enter the United States free of duty, pursuant to

U.S. free trade agreements. Duty-free treatment also applies to eligible imports from El Salvador, Honduras, and Nicaragua pursuant

to the DR-CA-US free trade agreement, and to eligible imports under subheading 5901.90.40 from countries eligible for preferential

treatment pursuant to the Caribbean Basin Economic Recovery Act.

Source: Harmonized Tariff Schedule of the United States (2006).

range of woven materials that may be used to produce artists’ canvas include cotton, linen, muslin, jute,

and polyester.8

 Raw uncoated canvas may be used in a variety of applications, such as in sails for

sailboats, tents, awnings, book covers, and in various industrial products; but once primed, it is used

exclusively for artists’ canvas.9

Artists’ canvas can be sold in a variety of physical formats. The most common format is

stretched (or assembled) canvas, in which coated canvas is wrapped around (and attached to) wooden

frames.10 Stretched canvas is produced and sold in a variety of shapes and sizes. Artists’ canvas may also

be sold in bulk rolls, which are often used by converters - or by artists themselves - to produce stretched

canvas products. Other common formats of artists’ canvas include panels and archival boards, in which

canvas pieces are glued to either a chipboard or hard board surface; print canvas, in which artists’ canvas

is treated with an additional ink receptive coating for use in inkjet printers; and canvas pads, in which

loose artists’ canvas sheets are bound together.11 Less common formats of artists’ canvas include floor

cloths, or heavy-weight canvas coated on one side and used as decorative floor covering, and placemats,

in which artists’ canvas is cut into oval or rectangular shapes and coated on both sides.12
 13 Petitioner Tara, for instance, utilizes *** different types of primer in its production of bulk canvas, though ***

such compounds account for the majority of its production. Staff fieldwork report, February 24, 2006, p. 4.

 14 The exception to this principle is watercolor canvas, which, by definition, must allow paint to soak into its

fibers. At present, Tara is the only known U.S. producer of watercolor canvas, and has a patent pending on the

product. Staff fieldwork report, February 24, 2006, p. 3; hearing transcript, p. 33 (Straquadine).

 15 Throughout this report, the term “bulk” refers to artists’ canvas that has been coated with a primer; canvas

products that have undergone further processing from this bulk stage are referred to as “finished” artists’ canvas.

 16 “Defecting” refers to the process by which knots and other imperfections are removed from wood. This

process is necessary as imperfections may weaken the frame of a finished artists’ canvas product. ***.

 17 Stretcher strips are sold by Tara independently of its artists’ canvas products. See Tara product catalogue,

included at att. A, staff fieldwork report, February 24, 2006. 

 18 The production process for canvas panels and archival boards is ***. Staff fieldwork report, February 24,

2006, p. 4.

 19 Petition, p. 10 and exh. 7. Petitioner acknowledges, however, that the production process employed in China

“is less automated and hence involves a greater reliance on labor” than that employed by U.S. producers. Ibid., p.

10.

 20 Petitioner’s prehearing brief, pp. 3-11.

 21 Respondents’ prehearing brief, p. 2. Respondents have noted, however, that petitioner’s definition of the like

product is “very broad and includes some products not produced by petitioner (i.e., kits, bleached canvas).” 

Respondents’ postconference brief, p. 9.

I-6

Manufacturing Processes

The production process for artists’ canvas proceeds as follows: raw canvas is purchased by a

producer and coated (or primed) with a latex paint known as a gesso (or primer) that is mixed using

various chemical compounds, based on the application for which it is intended.13 This paint-receptive

coating provides the surface upon which art can be produced, and provides a barrier that prevents paint

from penetrating into the woven fibers of the canvas.14 Raw canvas will receive two to four coats of

gesso, depending upon the application of the final product. Coated canvas may be sold as-is, in bulk

rolls, or it may be converted into a finished canvas product, the most common of which is stretched

canvas.15

The production of stretched canvas begins with the production of “stretcher strips,” around which

canvas is stretched and fixed. Raw lumber is machine-ripped and fed into a chop saw that “defects”16 the

wood and cuts it to the appropriate size, producing a “blank.” Blanks are then fed into a moulder that

creates a rounded edge over which canvas can be smoothly stretched. Once moulded, blanks are fed into

tennoners that cut a 45-degree interlocking corner that allows blanks to be joined together. The resulting

product is called a stretcher strip.17 Four stretcher strips are joined to form a frame, and a piece of cut

canvas is stretched over the frame to produce a stretched canvas product. Stretched canvas is either

stapled to the side or rear of the frame, or tucked into a groove in the frame to produce what is known as a

“splined” canvas.18

Evidence submitted by petitioner in the preliminary phase of the Commission’s investigation

suggests that the production process for artists’ canvas employed by at least one major producer in China

is broadly similar to the process described above.19

DOMESTIC LIKE PRODUCT ISSUES

Petitioner in this investigation contends that all artists’ canvas constitutes a single domestic like

product.20 Respondents do not dispute petitioner’s position that there is a single like product.21 In its

preliminary determination, the Commission found one domestic like product – all artists’ canvas – co-
 22 ***.

 23 Artists’ Canvas from China, Investigation No. 731-TA-1091 (Preliminary), USITC Publication 3777, May 2005

(“Preliminary Determination”), p. 7.

 24 The six factors examined by the Commission in making its like product determination are: (1) physical

characteristics and uses, (2) interchangeability, (3) common manufacturing processes and production employees, (4)

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

 25 Petitioner’s postconference brief, pp. 3 and 5.

 26 Petition, p. 28.

 27 Based on record evidence, with the exception of floor coverings, which are sold in a form “remarkably similar

to rolled canvas,” all bulk canvas is used in the production of some or another form of finished artists’ canvas. See

petitioner’s postconference brief, pp. 1-4.

 28 Ibid., p. 6.; see also petition, p. 29.

 29 Although petitioner contends that “no other products are or can be manufactured using the production process

or production equipment for artist canvas,” (petition, p. 31) one U.S. producer of artists’ canvas reported that it

produces ***. ***’s response to the producers’ questionnaire, p. 5. Further, U.S. producers of digital print canvas

reported that ***. See, for example, producer questionnaire responses of ***. p. 5.

I-7

extensive with Commerce’s scope, but noted that it would explore the issue further in its final phase

investigation, “particularly with respect to the treatment of canvas kits,22 and whether bulk/rolled canvas

and assembled canvas should be treated as separate domestic like products.”23 Recipients of the

Commission’s questionnaires in this final phase investigation were asked to comment on the similarities

and differences between bulk/rolled and assembled/finished artists’ canvas, with respect to the

Commission’s six traditional like product factors.24 Firms’ responses to this question are presented in

appendix D, while other record evidence regarding the Commission’s like product factors is presented

below.

Physical Characteristics and Uses

Petitioner in this investigation has argued that all artists’ canvas, whether in bulk or finished

form, serves the same end-use, namely, as a medium for artistic expression.25 Petitioner further notes that

the defining physical characteristic of artists’ canvas, whether bulk or finished, is the same: a woven

textile fabric that is either gessoed or coated.26 As noted above, bulk canvas rolls are used in the

production of finished canvas products.27

Interchangeability

As noted above, bulk artists’ canvas is used almost exclusively to produce finished artists’ canvas

products. Petitioner in this investigation notes that, because all artists’ canvas share a common end-use,

the products are interchangeable.28

Manufacturing Facilities, Processes, and Production Employees

Based on record evidence in this investigation, seven firms in the United States engage in the

production of bulk artists’ canvas. Three of these firms, *** and Tara also produce finished artists’

canvas products. Twelve U.S. firms have been identified in the course of this investigation as producers

solely of finished artists’ canvas, including *** firms that produce only digital print canvas. As noted

above, although bulk and finished artists’ canvas may be produced in the same production facility (and is

in the case of ***), the two product types are produced using different machinery.29 However, according
 30 Hearing transcript, p. 128 (Freeman).

 31 Petitioner’s prehearing brief, p. 9.

I-8

to petitioner, workers employed in the production of bulk canvas may also be employed in the production

of finished artists’ canvas products.30

Channels of Distribution

Channels of distribution data for bulk and finished canvas, based on the questionnaire responses

of U.S. producers, are presented in table I-3 (data for shipments of imports of finished canvas from China

are also included in this table). On the basis of these data, the majority of U.S. producers’ commercial

shipments of finished artists’ canvas is sold directly to retailers, with the remainder sold primarily through

distributors. Bulk artists’ canvas is sold primarily to converters, or firms that further process bulk canvas

to produce finished artists’ canvas. Direct sales to end users account for *** percent of U.S. producers’

commercial shipments. By way of comparison, reported imports of artists’ canvas from China are all

either ***.

Table I-3

Artists’ canvas: U.S. producers’ and importers’ reported channels of distribution, 2005

* * * * * * *

Customer and Producer Perceptions

Petitioner in this investigation has argued that there is no difference in the way consumers

perceive different types of artists’ canvas.31 Respondents have not disagreed. The responses of

questionnaire recipients in this phase of the investigation relating to the question of customer and

producer perceptions is presented in appendix D.

Price

Questionnaire data submitted in the final phase of this investigation indicate that, in 2005, the

average unit value of U.S. producers’ commercial U.S. shipments of bulk artists’ canvas was $***,

compared to $*** for finished canvas (see Part III, tables III-5 and III-6). A more detailed discussion of

prices for U.S.-produced artists’ canvas is presented in Part V of this report.

Semi-Finished Product Factors

In cases such as artists’ canvas, in which one product within the scope of the investigation – in

this case bulk canvas – is used in the production of a downstream product that is also within the scope of

the investigation (finished canvas), the Commission may also apply a semi-finished product analysis, in

which it examines: (1) whether the upstream article is dedicated to the production of the downstream

article or has independent uses; (2) whether there are perceived to be separate markets for the upstream

and downstream articles; (3) differences in physical characteristics and functions of the upstream and

downstream articles; (4) differences in the costs or value of the vertically differentiated articles; and (5)

the significance and extent of the process used to transform the upstream into the downstream article.
 32 On the basis of questionnaire data, *** percent of U.S. producers’ total shipments of bulk canvas was

accounted for by internal consumption (to produce finished canvas products) in 2005, while *** percent of

commercial U.S. shipments was sold to converters (that produce finished products). See table I-3, above, and table 

III-5 in Part III.

 33 Petitioner’s posthearing brief (responses to Commission questions), pp. 2, 5-9, and exh. 1. Table C-4 in app. C

presents summary data with print converters excluded from U.S. producers’ data.

 34 Respondents’ posthearing brief, pp. 7-9. Table C-4 in app. C of this report presents summary data for artists’

canvas with print converters excluded from U.S. producers’ data.

 35 *** response to the producers’ questionnaire, p. 6; email from ***, April 14, 2006.

 36 ***. Petitioner estimates that coating machinery of the type employed in the production of print canvas

requires an investment of $1 million to $3 million. Petitioner’s posthearing brief (responses to Commission

questions), p. 6.

 37 ***. The production processes described by *** with the description of this process provided by petitioner in

its posthearing brief (responses to Commission questions) at pp. 5-6.

 38 Two converters of digital print canvas reported data in response to the question relating to conversion costs;

only one non-print converter responded to the Commission’s producers’ questionnaire, and this firm did not address

the conversion costs question. Data for non-print converters presented in table I-4 is therefore derived from financial

data provided by integrated producers, based on their reported costs of production for finished canvas products.

 39 Specifically, the bulk canvas costs for non-print converters in table I-4A are based on the unit value of reported

commercial shipments of bulk canvas by integrated producers, applied to their reported quantity of internal

consumption.

I-9

As noted above, the primary use for bulk artists’ canvas is in the production of finished canvas

products,32 though there are end-uses for bulk products (such as floorcloths) independent of finished

canvas. Customer and producer perceptions of bulk and finished canvas are presented in appendix D,

while the physical characteristics and function of the two products are described above. Differences in

the value of bulk and finished canvas are also discussed in the section above, as is a description of the

process by which finished canvas is produced from bulk canvas. Petitioner in this investigation has

argued that production of digital print canvas by converting firms (referred to as “finishers” by petitioner)

does not constitute U.S. production, and that firms only engaging in this type of production should not be

included in the domestic industry.33 Respondents contend that the value added by print converters is

“significant,” and that such firms should therefore be included in the domestic industry.34

Two producers of digital print canvas, ***, submitted descriptions of their production process for

this product as part of their questionnaire response. According to these two firms’ responses, print canvas

is produced as follows:35 ***.36 37

U.S. converters receiving the Commission’s questionnaire were asked to report their firms’ costs

of conversion relating to the production of finished canvas products. Data relating to this question are

presented in table I-4.38 As indicated in this table, the costs of conversion from bulk to finished article for

producers of print canvas products account for *** percent of the total cost of producing these items,

while the equivalent conversion costs for producers of non-print products is *** percent. Table I-4A

contains the same data as in table I-4, but with non-print converters’ bulk canvas costs adjusted to reflect

fair market value.39

Table I-4

Artists’ canvas: U.S. converters’ costs of conversion from bulk to finished canvas, 2005

* * * * * * *
I-10

Table I-4A

Artists’ canvas: U.S. converters’ costs of conversion from bulk to finished canvas, 2005

* * * * * * *
 1

 Less than five percent of digital print canvas is used for photography. Petitioner’s posthearing brief, responses

to questions, p. 10.

 2

 Petitioner’s posthearing brief, responses to questions, p. 1.

 3

 U.S. producers of assembled canvas (***) coat their own canvas, *** coats bulk canvas rolls, and *** are

coaters/converters of inkjet printable canvas. U.S. producer *** produces digital print canvas under a tolling

agreement with ***.

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 different forms: assembled canvas (pre-stretched and stapled either

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

graphic presentation of painted or printed images. The majority of digital print canvas is used for art

reproductions.1

 The demand for assembled artists’ canvas tends to be seasonal, peaking in the spring and

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

Practically all sales of assembled canvas go to retailers and distributors/wholesalers. Among the

varieties of assembled canvas, side-stapled artists’ canvas and canvas panels are considered the entrylevel products and reportedly accounted for 21 percent of total artists’ canvas sales in 2005.2

 Most sales

of bulk canvas go to converters that produce assembled artists’ canvas using bulk canvas or that specialize

in coating.3

 Some sales of bulk canvas go to retailers and distributors. 

When purchasers were asked about the interchangeability between assembled canvas and bulk

canvas rolls, five of 15 purchasers reported that they are interchangeable because both forms are used as a

painted surface. Ten purchasers reported that the interchangeability is limited because, in order for bulk

canvas rolls to be transformed into a finished product, the consumer must possess the skills, tools, and

time to cut stretcher bars and stretch and fit the canvas to the frame. Many purchasers reported that only

professional or experienced artists buy bulk canvas and stretch it themselves, often in order to achieve

non-traditional sizes or shapes. Assembled canvas, on the other hand, reportedly appeals more to students

and hobbyists because it is ready-to-use.

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 six responding U.S.

producers, five reported that they sell nationally while the other reported that it sells specifically in the

northeast. Among importers of artists’ canvas from China, all but one reported that they sold nationally. 

One reported that it sold specifically in the Midwest and on the east coast.

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 two days to as much as four weeks. For importers they ranged from one day

to as much as 17 weeks.
 4

 One producer, ***, reported that artists’ canvas accounts for *** percent of its production.

II-2

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

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

unused capacity and considerable inventory levels. 

Industry capacity

U.S. producers’ annual capacity utilization rates for assembled artists’ canvas increased from ***

percent in 2002 to *** percent in 2005. U.S. producers’ annual capacity utilization rates for bulk artists’

canvas ranged from a low of *** percent in 2002 to a high of *** percent in 2005. These levels of

capacity utilization indicate 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 of assembled artists’ canvas by U.S. producers, as a share of total shipments,

remained virtually unchanged from 2002 to 2003 at approximately *** percent, and then declined to ***

percent in 2005. Total exports of bulk artists’ canvas by U.S. producers, as a share of total shipments,

increased from *** percent in 2002 to *** percent in 2005. 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 of assembled artists’ canvas decreased

from *** percent in 2002 to *** percent in 2005. The ratio of end-of-period inventories to U.S.

shipments of bulk artists’ canvas decreased from *** percent in 2002 to *** percent in 2005. 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

Three out of four U.S. producers reported that they do not use the actual machinery, equipment,

and workers that produce artists’ canvas in the production of other products.4

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
 5

 Hearing transcript, p. 111 (Straquadine).

 6

 Hearing transcript, pp. 60-61 (Benator, Rathslag).

II-3

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 and

limited inventories in conjunction with the availability of alternative markets. 

Industry capacity

During the period of investigation, the capacity utilization rate for Chinese producers of

assembled artists’ canvas increased from *** percent in 2002 to *** percent in 2005; it is projected to

reach *** percent in 2006 and 2007. The capacity utilization rate for Chinese producers of bulk artists’

canvas increased from *** percent in 2002 to *** percent in 2005; it is projected to reach *** percent in

2006 and 2007. 

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 *** percent of total shipments in 2002 to ***

percent in 2005. The share of China's shipments to export markets other than the United States increased

from *** percent in 2002 to *** percent in 2005 with the remainder going to its home market, including

internal consumption. 

Inventory levels

Chinese producers' inventories, as a share of total shipments, decreased from *** percent in 2002

to *** percent in 2005. 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 40.0 percent of the quantity of total U.S. imports in 2005.

U.S. Demand

Demand Characteristics

Apparent U.S. consumption, in terms of quantity, increased by *** percent from 2002 to 2005.

When asked how the overall demand for artists’ canvas has changed since January 2002, four U.S.

producers and all of the responding importers reported that it had increased. The increase in demand for

assembled artists’ canvas was most commonly attributed to the rapid growth of the home decor market, as

well as growth in digital print canvas. One U.S. producer reported that demand has increased for backstapled and splined artists’ canvas relative to side-stapled artists’ canvas because the former varieties can

hang on a wall without a frame.5

 This producer and one other producer also reported that sales of lowpriced, non-branded artists’ canvas has increased overall demand for artists’ canvas.6

 Another U.S.

producer reported that growth in computer graphics may negatively impact demand for artists’ canvas. 
 7

 This producer, ***, reported its sales outlook for bulk canvas in 2006 was not good.

 8

 Hearing transcript, p. 212 (Stapleton).

 9

 One of these firms reported that demand for printable canvas has declined because some consumers have

experienced technical difficulties with printers when printing on canvas. 

 10 Hearing transcript, pp. 175-178 (Kanter).

II-4

One U.S. producer reported that demand has shifted to China. Another producer reported that demand for

bulk canvas is unchanged since 2002, but that it typically fluctuates from year to year.7

 

Two importers reported that consumer demand had increased due to the increasing availability of

inexpensive assembled artists’ canvas. Five importers reported that expanded size offerings has been a

significant change in the industry since 2002. One of these firms, along with one other importer, also

attributed the increased demand to the better marketing strategies of retailers, including strategic

placement in stores, lower prices, and expanded offerings of shapes and sizes.8

 When purchasers were

asked how demand for artists’ canvas has changed since 2002, six of 12 responding firms reported that

demand for bulk canvas was unchanged, four reported that it has decreased, and two reported that it

increased.9

 Eighteen of 26 responding purchasers reported that demand for assembled canvas has

increased. The increase was most commonly attributed to growth in the craft and home decor markets. 

Nine purchasers specifically noted that lower prices of canvas have led to the increased demand. Three

purchasers, one of which is also an importer, reported that improved marketing by retailers has

contributed to the increased demand.10 Five purchasers reported that demand for assembled canvas has

decreased since 2002, and three reported that demand is unchanged.

Substitute Products

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 whether there are substitutes for artists’

canvas, nearly all of the U.S. producers reported none. Most responding importers and purchasers cited

one or more alternative materials. These alternatives include masonite panels, paper, clayboard, premium

photo paper, wood boards, and other primed hard surfaces. None of the producers or importers said that

changes in the prices of these substitutes would affect the price of artists’ canvas.

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. 

Factors Affecting Purchasing Decisions

Available information indicates that a variety of factors are considered important in the

purchasing decision for artists’ canvas. While quality and price have been mentioned as being important

factors in the sale of artists’ canvas, other factors such as reliability of availability, supply, and delivery

are also important considerations. Purchasers were asked to list the top three factors that they consider

when choosing a supplier of artists’ canvas. Table II-1 summarizes the responses.
II-5

Table II-1

Artists’ canvas: Ranking of factors used in purchasing decisions as reported by U.S. purchasers

Factor

Number of firms reporting

Number one factor Number two factor Number three factor

Price 2 11 10

Quality 11 6 5

Availability 6 2 7

Other1 873

 1 Other factors include five instances of ”reliability or traditional supplier/brand” for number one factor; two

instances of “delivery time” for number one factor; one instance of “customer requests” for number one factor; three

instances of “reliability” for number two factor; three instances of “delivery time and consistency” for number two

factor; one instances of “support” for number two factor; one instance of “product assortment” for number three

factor; one instance of “reliability” for number three factor; and one instance of “delivery” for number three factor.

Source: Compiled from data submitted in response to Commission questionnaires.

Price was named by two purchasers as the number one factor generally considered in deciding

from whom to purchase artists’ canvas, while 11 other purchasers indicated that it was the number two

factor, and 10 responded it was the number three factor. As indicated in table II-2, 22 of 27 purchasers 

indicated that price was a “very important” factor in their purchasing decisions. One of the purchasers

reported that the lowest price will “always” win a contract or sale. Fourteen purchasers reported that the 

lowest price will “sometimes” win a contract or sale, seven purchasers reported “usually,” and three

reported “never.” 

Quality was named by 11 purchasers as the number one factor generally considered in deciding

from whom to purchase artists’ canvas, while six other purchasers indicated that it was the number two

factor and five responded it was the number three factor. All the responding purchasers indicated that

product consistency was a “very important” factor in their purchasing decisions and nearly all purchasers

indicated that quality meeting industry standards was a "very important" factor. 

Availability was named by six purchasers as the number one factor generally considered in

deciding from whom to purchase artists’ canvas, while two other purchasers indicated that it was the 

number two factor and seven responded it was the number three factor. Nearly all responding purchasers

indicated that availability was a “very important” factor in their purchasing decisions.

Reliability of supplier, or “traditional supplier”, was named by five purchasers as the number one

factor generally considered in deciding from whom to purchase artists’ canvas, while three other

purchasers indicated that it was the number two factor, and one responded it was the number three factor. 

All responding purchasers indicated that reliability of supply was a “very important” factor in their

purchasing decisions.

Twelve responding purchasers reported that they require their suppliers to become certified. 

Seven purchasers reported that since 2002 one or more suppliers have failed in their attempts to qualify

artists’ canvas. Three domestic sources (***), four suppliers of Chinese product (***), and nonsubject

Indian sources were named. *** was disqualified by one U.S. purchaser due to quality defects and

limited supply and by another purchaser for quality defects, poor delivery, poor customer service, and

high delivery charges. *** was disqualified by one purchaser for not meeting specifications. Chinese

products from *** were disqualified due to quality not meeting industry standards.

Four of 29 responding purchasers indicated that either they or their customers make purchasing

decisions involving artists’ canvas based on the country of origin. Two of these purchasers reported that

Chinese artists’ canvas is preferred for its quality and low price. One purchaser reported that some

customers prefer U.S. artists’ canvas because of the high quality of the pine wood used in the stretcher
II-6

Table II-2

Artists’ canvas: Importance of factors used in purchasing decisions, as reported by U.S.

purchasers

Factor

Number of firms reporting

Very important Somewhat Important Not important

Availability 25 2 0

Delivery terms 17 10 0

Delivery time 25 1 1

Discounts and rebates 14 9 4

Extension of credit 10 9 7

Price 22 5 0

Minimum qty requirements 9 14 4

Packaging 12 14 1

Product consistency 27 0 0

Quality meets industry standards 22 4 0

Quality exceeds industry standards 12 11 4

Product range 14 13 0

Reliability of supply 27 0 0

Technical support/service 6 15 6

U.S. transportation costs 11 14 2

Source: Compiled from data submitted in response to Commission questionnaires.

bars. This purchaser also noted that some customers may prefer Chinese artists’ canvas because it is

cheaper. One purchaser reported that it purchases linen canvas from Belgium because of its high quality.

Also, ten purchasers indicated that some grades/types of artists’ canvas are available from only

certain sources. Three purchasers reported that watercolor canvas is only available from U.S. producer

Tara. Two purchasers reported that some non-traditional sizes (including 8"x8", 12"x12", and 8"x20")

are only available from Chinese import sources. Two purchasers reported that high-quality linen canvas

is only available from European sources, especially Belgium. One purchaser reported that 12-ounce

cotton canvas is only available from U.S. producer Masterpiece. 

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, importers, and purchasers were asked whether the

products can “always,” “frequently,” “sometimes,”or “never” be used interchangeably. As indicated in

table II-3, responses of producers that compared bulk canvas from China with that from the United States

were mixed. The majority of importers and purchasers that compared bulk canvas from China with that

from the United States reported that it is always or frequently interchangeable.
II-7

Table II-3

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 Purchasers

AFSNAFSNAFSN

Bulk rolls:

U.S. vs. China 1 1 2 0 3 1 2 0 2 4 3 1

U.S. vs. nonsubject 112031201240

China vs. nonsubject 112031201320

Assembled canvas:

U.S. vs. China 3 1 1 0 1 3 2 0 5 7 7 0

U.S. vs. nonsubject 311012103440

China vs. nonsubject 311013202430

Note: “A” = Always, “F” = Frequently, “S” = Sometimes, and “N” = Never.

Source: Compiled from data submitted in response to Commission questionnaires.

Moreover, the majority of U.S. producers that compared assembled canvas from China with that

from the United States responded that it is always interchangeable. The one producer responding that

assembled canvas from China is frequently interchangeable with that from the United States also noted

that there is a wide range of quality variation in Chinese canvas and that a large portion of Chinese canvas

is inferior to domestically produced artists’ canvas. Another producer reported that knowledgeable artists

would only accept high quality artists’ canvas and that domestically produced artists’ canvas is most

interchangeable with European artists’ canvas. The majority of importers and purchasers that compared

assembled canvas from China with that from the United States reported that it is always or frequently

interchangeable. The principal factor limiting interchangeability is quality. Two purchasers reported that

the quality of U.S.-produced canvas is superior, citing the high quality of the priming coats and the wood

used in the stretcher bars. One importer also reported that U.S.-produced assembled canvas is higher

quality than that from China. Two purchasers reported that Chinese quality is superior. One of these

firms noted that Chinese canvas is triple-primed and that the wood used in the stretcher bars is lighterweight and sturdier than domestic stretcher bars.

As indicated in table II-4, the majority of U.S. producers indicated that the differences between

U.S.-produced bulk roll canvas and imports of bulk roll canvas from China are always or frequently

significant. Moreover, a majority of U.S. producers reported that the differences between U.S.-produced

assembled canvas and imports of assembled canvas from China are at least sometimes significant. The

majority of importers indicated that the differences between U.S.-produced artists’ canvas and imports of

artists’ canvas from China are sometimes significant, for both bulk canvas rolls and assembled canvas.
II-8

Table II-4

Artists’ canvas: Differences other than price between products from different sources1

Country comparison

U.S. producers U.S. importers

AFSNAFSN

Bulk rolls:

U.S. vs. China 2 1 2 0 0 0 2 1

U.S. vs. nonsubject 22102011

China vs. nonsubject 22101101

Assembled canvas:

U.S. vs. China 1 1 2 1 1 0 2 2

U.S. vs. nonsubject 12020102

China vs. nonsubject 12011002

 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.

For the factors that almost all responding purchasers indicated were “very important” in their

purchasing decisions (see table II-2), purchaser comparisons of U.S.-produced and subject imported

artists’ canvas indicate that the domestic product is mostly comparable to the subject imported product. 

As indicated in table II-5, a number of the responding purchasers reported that with respect to the

question of quality exceeding industry standards and technical support, U.S.-produced artists’ canvas was

“superior” to artists’ canvas produced in China. With respect to lower price, nearly all responding

purchasers indicated that U.S.-produced artists’ canvas was “inferior” (i.e., higher). With respect to

availability, quality meeting industry standards, product consistency, and reliability of supply, a majority

of responding purchasers indicated that U.S.-produced artists’ canvas was “comparable” to artists’ canvas

produced in China.

Other Country Comparisons

In addition to comparisons between the U.S. product and imports from China, 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-3 and II-4. The responses of U.S.

producers comparing both U.S.-produced and Chinese bulk canvas with nonsubject bulk canvas were

mixed. The majority of importers and purchasers comparing both U.S.-produced and Chinese bulk

canvas with nonsubject bulk canvas reported that they are always or frequently interchangeable. One

importer reported that bulk canvas from other countries is superior in quality to that from China. One

purchaser reported that the highest quality bulk linen canvas is from Belgium.

The majority of U.S. producers comparing both U.S.-produced and Chinese assembled canvas

with nonsubject assembled canvas reported that they are always interchangeable. The majority of

importers and purchasers comparing both U.S.-produced and Chinese assembled canvas with nonsubject

assembled canvas reported that they are frequently or sometimes interchangeable.
 11 A supply function is not defined in the case of a non-competitive market.

II-9

Table II-5

Artists’ canvas: Comparisons between U.S.-produced and subject imported product as reported

by U.S. purchasers

Factor

China

SC I

Availability 1 13 5

Delivery terms 1 15 4

Delivery time 5 7 8

Discounts offered 2 13 5

Extension of credit 1 15 4

Lower price1 0 3 17

Minimum quantity requirements 4 11 5

Packaging 2 15 3

Product consistency 4 12 4

Quality meets industry standards 2 14 4

Quality exceeds industry standards 5 12 3

Product range 4 10 5

Reliability of supply 2 15 3

Technical support/service 5 13 2

Lower U.S. transportation costs 2 12 6

 1

 A rating of superior means that the price is generally lower. For example, if a firm reports “U.S. superior,” this

means that it rates the U.S. price generally lower than the subject import price.

Note.--S=U.S. product is superior, C=U.S. product is comparable, I=U.S. product is inferior.

Source: Compiled from data submitted in response to Commission questionnaires.

ELASTICITY ESTIMATES

This section discusses the elasticity estimates. 

U.S. Supply Elasticity11

The domestic supply elasticity for artists’ canvas measures the sensitivity of the quantity supplied

by U.S. producers to changes in the U.S. market price of artists’ canvas. The elasticity of domestic

supply depends on several factors including the level of excess capacity, the ease with which producers

can alter capacity, producers’ ability to shift to production of other products, the existence of inventories,

and the availability of alternate markets for U.S.-produced artists’ canvas. Analysis of these factors

indicates that the U.S. industry is likely to be able to moderately increase or decrease shipments to the

U.S. market; an estimate in the range of 3 to 5 is suggested.
 12 The substitution elasticity measures the responsiveness of the relative U.S. consumption levels of the subject

imports and the domestic like products to changes in their relative prices. This reflects how easily purchasers switch

from the U.S. product to the subject products (or vice versa) when prices change.

 13 Respondents contend that staff’s estimate of the elasticity of substitution is too high and does not take into

account product mix differences between assembled artists’ canvas and bulk rolled artists’ canvas, specifically the

fact that imports from China are concentrated in the assembled artists’ canvas category. Respondents’ prehearing

brief, exh. 8. Staff has therefore slightly lowered the initial estimate from the prehearing staff report of 3 to 5. 

However, staff notes that the majority of purchasers reported that U.S.-produced artists’ canvas and artists’ canvas

imported from China are comparable for nearly all of the factors listed in table II-5.

II-10

U.S. Demand Elasticity

The U.S. demand elasticity for artists’ canvas measures the sensitivity of the overall quantity

demanded to a change in the U.S. market price of artists’ canvas. This estimate depends on factors

discussed above such as the existence, availability, and commercial viability of substitute products. 

Based on the available information, the aggregate demand for artists’ canvas is likely to be in the range of

2 to 4.

Substitution Elasticity

The elasticity of substitution depends upon the extent of product differentiation between the

domestic and imported products.12 Product differentiation, in turn, depends upon such factors as quality

(e.g., canvas weight, canvas tautness, stretcher bar durability, etc.) and conditions of sale (e.g.,

availability, sales terms/discounts, etc.). Based on available information, the elasticity of substitution

between U.S.-produced artists’ canvas and artists’ canvas from China is likely to be in the range of 2 to

4.13
 1

 The U.S. producer questionnaire mailing list for this final-phase investigation was constructed on the basis of

nine firms identified in the petition (see petition, exh. 1), four firms identified during the Commission’s preliminaryphase investigation (see Staff Report of May 9, 2005, Memorandum INV-CC-064, table III-1), and 30 firms

identified by respondents’ counsel as potential U.S. producers of subject artists’ canvas (see respondents’ comments

on draft questionnaires, December 1, 2005, att. 1; and email from D. Klett, December 16, 2005).

 2

 A complete list of potential U.S. producers identified in this investigation, and the status and extent of their

individual responses to the Commission’s questionnaires, is presented in appendix E. Of the 10 firms that did not

respond to the Commission’s producers’ questionnaire, three firms confirmed to staff that they did not produce

artists’ canvas subject to this investigation during the period examined. Five non-responding firms are known

producers of subject canvas, and anecdotal information regarding the size of four of these firms’ operations on

artists’ canvas is presented in appendix E. For only three remaining firms is there no record information regarding

the extent of their production activities, one a confirmed producer of digital print canvas, and two potential

producers (see table E-1).

 3

 Three additional U.S. producers of bulk canvas, and one potential producer of print canvas, were identified

during the course of this investigation, subsequent to the due date for the return of the Commission’s questionnaires. 

The additional three confirmed producers of bulk canvas are believed to account for no more than 7 percent of the

total reported value of U.S. shipments of U.S.-produced bulk canvas in 2005. See appendix E, table E-1.

 4

 All firms listed in table III-1 provided full trade and financial data for the entire period of investigation, with

two exceptions: *** provided only production and U.S. commercial shipments data (no export, employment, or

financial data) and *** provided no data for 2002 and 2003 (the firm ***).

 5

 As indicated in appendix E, the record in this investigation contains at least minimal anecdotal information

regarding the production activities of all but three firms, one a confirmed print converter, and two potential

converters (see table E-1).

III-1

PART III: U.S. PRODUCERS’ PRODUCTION, SHIPMENTS, AND

EMPLOYMENT

U.S. PRODUCERS

Two types of firms produce artists’ canvas subject to this investigation: “coaters”– firms that

produce bulk canvas, and “converters”– firms that produce finished canvas products. Converters can be

further divided between firms that produce assembled canvas products (such as stretched canvas, canvas

panels, and canvas pads) and those that produce canvas suitable for use with digital printers (“print

converters”). Three U.S. firms (***) have been identified in this investigation as integrated producers, or

firms that produce both bulk and finished canvas products. U.S. producer questionnaires in the final

phase of this investigation were sent to 43 firms: three firms believed to be integrated producers, four

firms believed to producers of bulk canvas, and 36 potential U.S. producers of finished canvas products,

including 26 potential print converters.1

 Responses were received from 33 firms, including all three

integrated producers, all four coaters, and 26 purported artists’ canvas converters, including 20 firms

thought to produce digital print canvas.2

 Twenty responding firms certified that they had not produced

subject artists’ canvas during the period examined in this phase of the investigation (January 1, 2002 to

December 31, 2005), and 10 of the 13 confirmed U.S. producers provided some production, shipments,

and employment data in their questionnaire response.3

Table III-1 identifies the U.S. firms that provided trade and financial data to the Commission

relating to their operations on artists’ canvas.4

 The firms in this table are believed to account for over 93

percent of total U.S. production of bulk artists’ canvas, and over 90 percent of U.S. production of finished

canvas products.5

 As indicated in table III-1, on the basis of data submitted in responses to the

Commission’s questionnaires, petitioner Tara is the largest U.S. producer of bulk artists’ canvas,

accounting for *** percent of reported U.S. production of this product in 2005, as well as *** percent of
 6

 ***.

 7

 In its response to the importers’ questionnaire in the Commission’s preliminary-phase investigation, ***

reported importing *** square meters of artists’ canvas from China in 2003, and *** square meters in 2004,

equivalent to *** and *** percent of its reported production in 2003 and 2004, respectively. The company did not

submit an importers’ questionnaire response in the final phase of this investigation.

 8

 Staff fieldwork report, February 24, 2006, p. 1.

III-2

Table III-1

Artists’ canvas: U.S. producers and shares of reported 2005 U.S. production

Firm Plant location(s)

Share of 2005 production

(percent) Position on

petition

Bulk Finished

Avondale Mills Monroe, GA *** *** ***

BF Inkjet Media Fayetteville, GA *** *** Supports

Duro Art Industries Chicago, IL *** *** Supports

Holliston Mills, Inc. Kingsport, TN *** *** Supports

IJ Technologies St. Louis, MO *** *** Supports

Intelicoat Technologies South Hadley, MA *** *** ***

MacDermid Colorspan Eden Prairie, MN *** *** ***

Masterpiece San Francisco, CA *** *** Takes no position

Signature Kansas City, MO *** *** Supports

Tara Materials, Inc. Lawrenceville, GA *** *** Petitioner

Source: Compiled from data submitted in response to Commission questionnaires.

reported production of finished canvas. *** is the second largest producer of bulk canvas, accounting for

*** percent of reported production of this product, and *** percent of reported production of finished

canvas products.

On the basis of reported production quantity, ***6

 is the largest U.S. producer of finished artists’

canvas, accounting for *** percent of reported production of these products in 2005. Taken together,

print converters account for *** percent of reported U.S. production of finished artists’ canvas in 2005,

with integrated producers accounting for *** percent, and *** accounting for the remaining *** percent.

No U.S. producers identified in this phase of the investigation reported any related firms, foreign

or domestic, engaged in the production, export, or importation of artists’ canvas from China, nor did any

U.S. producers ***.7

Tara’s Mexico Operations

Founded in 1966, Tara is a privately held company, jointly owned by its president and his uncle.8

In 1990, Tara purchased Hy-Jo Picture Frames, a California producer of wood-based frames, and its
 9

 Conference transcript, p. 34 (Benator).

 10 ***. Staff fieldwork report, January 31, 2006, p. 1.

 11 Staff fieldwork report, February 24, 2006, p. 1; staff telephone interview with M. Benator, Tara president,

March 2, 2006.

 12 Conference transcript, pp. 7 (Thompson), 12 (Delin), 36-37 (Benator), and 102-103 (Benator). See also

petitioner’s postconference brief, p. 18 and exh. 1-H (containing a Tara declaration on the reasons for, and timing of,

its movement of some production operations to Mexico); and petitioner’s posthearing brief, pp. 2-4.

 13 Staff fieldwork report, January 31, 2006, p. 2.

 14 ***.

 15 Staff fieldwork report, January 31, 2006, p. 2.

 16 ***.

 17 In an effort to avoid double-counting, capacity and production data for bulk and finished artists’ canvas have

not been aggregated.

 18 ***.

 19 ***.

 20 ***.

 21 As indicated in table III-3, ***, did not report its production capacity for finished canvas.

III-3

Mexican subsidiary, Decoracion Colonial.9

 In ***, Tara began production of *** artists’ canvas,10 a ***

product at Decoracion’s facility in Tijuana. Tara expanded production of artists’ canvas at its Mexican

facility in ***, beginning with the production of ***.11 Later in that year, as a result - according to

company officials - of competition from imports from China,12 Tara shifted a portion of the production of

its core stretched canvas products to Mexico and eliminated *** jobs, over the course of three years, at its

Georgia facility.

According to company officials, Tara’s two production facilities (in Georgia and Tijuana,

Mexico) function as ***.13 Bulk canvas is produced ***. Stretched canvas products ***. The bulk of

Tara’s core stretched canvas products are ***.14 Bulk rolls used in the production of stretched canvas

products ***. According to company officials, ***.15 A comparison of the capacity, production, and

shipments for finished canvas at Tara’s two production facilities is presented in table III-2.16

Table III-2

Finished artists’ canvas: Tara’s capacity, production, and shipments, 2002-05

* * * * * * *

U.S. PRODUCERS’ CAPACITY, PRODUCTION, AND CAPACITY UTILIZATION

U.S. producers’ data relating to capacity and production of bulk and finished artists’ canvas are

presented in table III-3.17 As indicated in this table, U.S. producers’ reported bulk canvas capacity

increased by *** percent during the period examined, from *** to *** square meters. This increase in

capacity is *** attributable to *** percent of U.S. producers’ total reported capacity to produce bulk

artists’ canvas in 2005.18 U.S. producers’ reported capacity to produce finished canvas exhibited a more

varied pattern, decreasing by *** percent between 2002 and 2004, then increasing by *** percent in

2005. The decrease in reported capacity between 2002 and 2004 was also *** attributable to ***,19 while

the increase in 2005 reflects the ***, as well as capacity increases by *** and ***.20 *** accounted for

*** percent of reported finished canvas production capacity in 2005; *** accounted for *** percent.21
 22 ***.

 23 In an effort to eliminate double counting, internally consumed shipments of bulk canvas have not been included

in the data for combined U.S. shipments of bulk and finished canvas (presented in table III-4). These data also

exclude commercial shipments of bulk canvas to firms that have reported separately to the Commission their

shipments of finished canvas products. See Staff Worksheet I: Double-Counting Adjustment.

III-4

Table III-3

Artists’ canvas: U.S. producers’ capacity, production, and capacity utilization, 2002-05

* * * * * * *

U.S. producers’ reported production of bulk artists’ canvas increased by *** percent during the

period examined, from *** to *** square meters. On the basis of these data, U.S. producers’ capacity

utilization for bulk canvas also increased throughout the period examined, from *** percent in 2002 to

*** percent in 2005. Reported U.S. production of finished canvas exhibited a more varied pattern,

decreasing a modest *** percent between 2002 and 2003, then increasing by *** percent between 2003

and 2005.22 Capacity utilization on finished artists’ canvas fluctuated during the period examined, and

was *** percentage points higher in 2005 than in 2002.

U.S. PRODUCERS’ SHIPMENTS

Table III-4 presents reported data on U.S. producers’ U.S. and export shipments of artists’

canvas. Based on these data, U.S. producers’ total shipments of artists’ canvas increased by 47 percent

between 2002 and 2005, from 8.6 million to 12.7 million square meters.23 The unit value of U.S.

producers’ U.S. shipments decreased throughout the period, and was consistently higher than the unit

value of reported export shipments.

 Separate U.S. producers’ shipments data for bulk and finished artists’ canvas are presented in

tables III-5 and III-6. As indicated in these tables, U.S. producers’ reported U.S. shipments of bulk

artists’ canvas increased by *** percent between 2002 and 2005, from *** to *** square meters. The

quantity of reported commercial U.S. shipments of bulk canvas increased throughout the period

examined, while that of internal consumption decreased. Reported U.S. shipments of finished artists’

canvas increased by *** percent between 2002 and 2005, from *** to *** million square meters, while

the unit value of these shipments decreased by *** percent. By contrast, the unit value of U.S. shipments

of bulk canvas exhibited a modest increase of *** percent.
III-5

Table III-4

Artists’ canvas: U.S. producers’ U.S. shipments and exports, 2002-051

Item

Calendar year

2002 2003 2004 2005

Quantity (1,000 square meters)

U.S. commercial shipments: 6,622 6,319 6,934 8,987

Export shipments 2,017 2,502 3,393 3,734

Total shipments 8,639 8,821 10,327 12,721

Value ($1,000)

U.S. commercial shipments: 35,969 32,214 32,613 37,947

Export shipments 5,938 7,960 9,719 10,590

Total shipments 41,907 40,174 42,332 48,537

Unit value (per square meter)

U.S. commercial shipments: $5.43 $5.10 $4.70 $4.22

Export shipments 2.94 3.18 2.86 2.84

Total shipments 4.85 4.55 4.10 3.82

Share of quantity (percent)

U.S. commercial shipments: 76.7 71.6 67.1 70.6

Export shipments 23.3 28.4 32.9 29.4

Total shipments 100.0 100.0 100.0 100.0

 1 In an effort to eliminate double counting, shipments of bulk canvas internally consumed in the production of

finished canvas products have not been included in the above combined data for bulk and finished canvas. Where

possible, U.S. coaters’ commercial shipments of bulk canvas have also been subtracted, based on the shipments

of finished products reported by their converter customers.

Source: Compiled from data submitted in response to Commission questionnaires.

Table III-5

Bulk artists’ canvas: U.S. producers’ U.S. shipments and exports, 2002-05

* * * * * * *

Table III-6

Finished artists’ canvas: U.S. producers’ U.S. shipments and exports, 2002-05

* * * * * * *
III-6

U.S. PRODUCERS’ INVENTORIES

Data relating to U.S. producers’ inventories of artists’ canvas are presented in table III-7. As

indicated in table III-7, U.S. producers’ reported inventories decreased between 2002 and 2005, relative

to production and shipments. In quantity terms, reported inventories of bulk artists’ canvas were lower at

the end of 2005 than at the end of 2002, while inventories of finished canvas products were higher.

Table III-7

Artists’ canvas: U.S. producers’ end-of-period inventories, 2002-05

* * * * * * *

U.S. PRODUCERS’ EMPLOYMENT, WAGES, AND PRODUCTIVITY

Data relating to U.S. producers’ production and related workers (“PRWs”) for artists’ canvas are

presented in table III-8. As indicated in the table, total reported U.S. employment of PRWs decreased in

every year of the period examined, as did hours worked and aggregate wages paid. The reported data for

bulk and finished canvas exhibited inverse trends, however: the number of PRWs, hours worked, and

wages paid to PRWs producing bulk canvas increased during the period examined, while the same indicia

for those producing finished canvas decreased.
III-7

Table III-8

Artists’ canvas: U.S. producers’ employment and related data, 2002-05

Item

Calendar year

2002 2003 2004 2005

Total (bulk and finished)

PRWs (number) 448 396 394 382

Hours worked (1,000) 916 817 803 752

Wages paid ($1,000) 11,065 10,087 9,788 9,484

Hourly wages $12.08 $12.35 $12.19 $12.61

Productivity (sq. meters per hour) (1

) (1) (1) (1)

Unit labor cost (per sq. meter) (1

) (1) (1) (1)

Bulk

PRWs (number) *** *** *** ***

Hours worked (1,000) *** *** *** ***

Wages paid ($1,000) *** *** *** ***

Hourly wages *** *** *** ***

Productivity (sq. meters per hour) *** *** *** ***

Unit labor cost (per sq. meter) *** *** *** ***

Finished

PRWs (number) *** *** *** ***

Hours worked (1,000) *** *** *** ***

Wages paid ($1,000) *** *** *** ***

Hourly wages *** *** *** ***

Productivity (sq. meters per hour) *** *** *** ***

Unit labor cost (per sq. meter) *** *** *** ***

 1 Not applicable. (These indices are calculated as ratios to production. In order to avoid double-counting,

production data for bulk and finished artists’ canvas have not been aggregated.)

Source: Compiled from data submitted in response to Commission questionnaires.

 1

 Petition, exh. 10.

 2

 Importers’ questionnaires were sent to firms identified as having imported more than $500,000 under HTS

subheadings 5901.90.20 and 5901.90.40, from any source, during January 2002 to August 2005.

 3 See fax from G. Thompson, counsel to petitioner, December 21, 2005.

 4

 Only *** and *** failed to submit a response to the importers’ questionnaire. A representative of the former

confirmed that the firm does not import subject canvas. Staff telephone notes, April 12, 2006.

 5

 ***.

 6

 ***.

 7

 Official Commerce statistics for ***, for instance, indicate that the company imported *** square meters of

artists’ canvas in 2005, whereas in its questionnaire response, *** reported importing only *** square meters. 

Commerce and questionnaire data for the value of ***’s 2005 imports were a 99-percent match. See also, Letter

from ***, U.S. Census Bureau, June 6, 2005 (noting mistakenly reported quantity data on HTS subheading

5901.90.40).

 8 As alluded to above, between 2002 and 2005, the value of ***.

IV-1

PART IV: U.S. IMPORTS, APPARENT CONSUMPTION, AND

MARKET SHARES

U.S. IMPORTERS

Commission importers’ questionnaires in this final-phase investigation were sent to all 13 firms

identified in the petition as importers of artists’ canvas.1

 Questionnaires were sent to a further 24 firms

identified in proprietary Customs data as substantial importers of merchandise under the HTS

subheadings covering artists’ canvas,2

 as well as to six additional firms identified as potential importers of

artists’ canvas by petitioner’s counsel.3

 Finally, importers’ questionnaires were also sent to recipients of

the Commission’s producers’ questionnaire. Importers’ questionnaire responses were received from 41

firms, including eight of the 10 U.S. producers of artists’ canvas identified in Part III (table III-1).4

Twenty-one firms certified that they had not imported artists’ canvas during the period examined in this

investigation; the remaining 20 firms, including petitioner Tara,5

 provided data relating to their imports.

On the basis of data received in response to the Commission’s questionnaires, respondent *** is

the largest U.S. importer of artists’ canvas, accounting for *** percent of reported subject imports, and

*** percent of total reported imports from all sources in 2005. *** is the second largest U.S. importer of

artists’ canvas on the basis of questionnaire data, accounting for *** percent of total reported U.S.

imports, and *** percent of reported nonsubject imports,6

 in 2005. *** was the third largest U.S.

importer of artists’ canvas in 2005, accounting for *** percent of total reported imports, and *** percent

of reported subject imports. Remaining firms each accounted for *** percent of total reported imports.

U.S. IMPORTS

Record evidence in this investigation suggests that the quantity of imports reported in official

Commerce statistics for the HTS subheadings covering artists’ canvas are significantly overstated.7

 Data

presented in this section relating to the quantity and value of U.S. imports are therefore based on a

combination of questionnaire data and official Commerce statistics. In light of petitioner’s foreign

conversion and import activities, data on U.S. imports of artists’ canvas from Mexico are presented

separately, and are based on questionnaire data ***.8

 Due to limited breadth of coverage of questionnaire
 9

 Reported questionnaire data for “all other” countries equaled only 58 percent of the value of official Commerce

statistics for imports of artists’ canvas from these countries in 2005; reported import value for China equaled 73

percent of the value in official statistics (the reduction in value of reported imports from China in this report,

compared to that presented in the prehearing report, result from a reporting revision by one *** importing firm (see

***)).

 10 Quantity data for China and “all other sources” have been derived by applying unit values calculated from

importers’ questionnaire data to import values contained in official Commerce statistics.

 11 Petitioner’s posthearing brief (responses to Commission questions), p. 31.

 12 ***’s response to the importers’ questionnaire. The unit value of this company’s reported imports of ***

canvas from India was $*** in 2002, $*** in 2003, $*** in 2004, and $*** in 2005. At the Commission’s hearing,

petitioner’s vice president of sales noted that Tara had competed with imports from India “quite fairly.” Hearing

transcript, p. 93 (Straquadine). 

 13 The unit value of total imports reported by *** was $*** in 2002, $*** in 2003, $*** in 2004, and $*** in

2005.

IV-2

data for imports form other nonsubject countries, as well as for imports from China,9

 data on the value of

U.S. imports for these sources are based on official Commerce statistics, while quantity data are derived

from questionnaire responses.10

U.S. import data, compiled on the bases described above, are presented in table IV-1. As

indicated in table IV-1, the quantity and value of U.S. imports of artists’ canvas from China increased in

every year of the period examined in this investigation. The rate of growth of imports from China (by

quantity) was highest between 2003 and 2004 (at 155 percent), and lowest between 2004 and 2005 (at 79

percent). Imports from China accounted for a growing share of total U.S. imports over this period, while

the share of nonsubject imports declined. The unit value of imports from China fluctuated during the

period examined, and was 15 percent lower in 2005 than in 2002. With the exception of 2002, the unit

value of imports from China was lower than that of total imports from nonsubject sources.

Table IV-1A presents official Commerce statistics for U.S. imports under the two HTS

subheadings covering artists’ canvas from the eight largest sources in 2005. On the basis of the data in

this table, imports from Mexico, India, and Switzerland together accounted for 81 percent of the value of

U.S. imports of artists’ canvas from nonsubject sources in 2005, and 36 percent of imports from all

sources. According to petitioner, *** is the “primary importer” of artists’ canvas from India.11 The

questionnaire response of this firm indicates that it imported *** canvas from India, and that the unit

value of its imports from India during the period examined were generally *** than that of U.S.

shipments of this product, and *** than that of imports from other sources.12 *** firms contacted in the

final phase of this investigation reported importing subject artists’ canvas from Switzerland during the

period examined. All *** firms, *** are distributors of *** canvas, and all *** firms identified the Swiss

company *** as the exporter of their imported canvas. The aggregate unit value of reported imports by

these firms was generally higher than that of imports from other sources.13
IV-3

Table IV-1

Artists’ canvas: U.S. imports, by principal sources, 2002-05

Source

Calendar year

2002 2003 2004 2005

Quantity (1,000 square meters)

China 202 500 1,276 2,286

Mexico *** *** *** ***

All other sources 353 322 499 872

Subtotal nonsubject *** *** *** ***

Total imports *** *** *** ***

Value ($1,000)

1

China 1,562 3,390 8,974 15,079

Mexico *** *** *** ***

All other sources 1,527 1,800 3,747 5,840

Subtotal nonsubject *** *** *** ***

Total imports *** *** *** ***

Unit value (per square meter)

China $7.75 $6.78 $7.03 $6.59

Mexico *** *** *** ***

All other sources 4.32 5.59 7.50 6.70

Subtotal nonsubject *** *** *** ***

Total imports *** *** *** ***

Table continued on next page.
IV-4

Table IV-1--Continued

Artists’ canvas: U.S. imports, by source, 2002-05

Source

Calendar year

2002 2003 2004 2005

Share of quantity (percent)

China 20.0 33.2 52.7 60.0

Mexico *** *** *** ***

All other sources 35.1 21.4 20.6 22.9

Subtotal nonsubject *** *** *** ***

Total imports 100.0 100.0 100.0 100.0

Share of value (percent)

China 21.3 30.6 49.8 56.2

Mexico *** *** *** ***

All other sources 20.8 16.3 20.8 21.8

Subtotal nonsubject *** *** *** ***

Total imports 100.0 100.0 100.0 100.0

Ratio to U.S. producers’ U.S. shipments (percent)

China 3.0 7.9 18.4 25.4

Mexico *** *** *** ***

All other sources 5.3 5.1 7.2 9.7

Subtotal nonsubject *** *** *** ***

Total imports *** *** *** ***

 1 Landed, duty-paid.

Source: Data for Mexico are compiled from data submitted by petitioner in response to Commission

questionnaires; data for China and all other sources are calculated from data submitted in response to

Commission questionnaires and official Commerce statistics.
IV-5

Table IV-1A

Artists’ canvas: U.S. imports, by source, 2002-05

Source

Calendar year

2002 2003 2004 2005

Value ($1,000)

1

China 1,562 3,390 8,974 15,079

Mexico 4,238 5,732 5,262 5,996

India 109 491 1,564 2,097

Switzerland 61 165 710 1,534

Czech Republic 0 1 0 622

Belgium 340 388 398 531

France 173 247 286 326

Canada 260 220 229 235

All other sources 587 290 560 496

Total nonsubject 5,768 7,534 9,009 11,837

All sources 7,327 10,922 17,983 26,915

Share of value (percent)

China 21.3 31.0 49.9 56.0

Mexico 57.8 52.5 29.3 22.3

India 1.5 4.5 8.7 7.8

Switzerland 0.8 1.5 3.9 5.7

Czech Republic 0.0 0.0 0.0 2.3

Belgium 4.6 3.6 2.2 2.0

France 2.4 2.3 1.6 1.2

Canada 3.5 2.0 1.3 0.9

All other sources 8.0 2.7 3.1 1.8

Total nonsubject 78.7 69.0 50.1 44.0

All sources 100.0 100.0 100.0 100.0

 1 Landed, duty-paid.

Source: Official Commerce statistics.
 14 Based on official Commerce statistics, imports from India accounted for the largest share of nonsubject

imports, after Mexico. Imports from these two countries accounted for two-thirds of nonsubject imports, by value, in

2005.

 15 In its final LTFV determination, Commerce determined that the country of origin for assembled artists’ canvas

exported by Hangzhou Foreign Economic Relations & Trade Service Co. produced using bulk canvas primed in

India, is India, and therefore not subject to this investigation. See Commerce’s final determination, (71 FR 16116,

March 30, 2006). Reported data for imports of artists’ canvas from China primed in India have therefore been

removed from calculations of unit value and quantity for imports from China in table IV-1 (above), and included in

the calculations for “all other sources.”

 16 Respondents’ prehearing brief, p. 30.

IV-6

APPARENT U.S. CONSUMPTION AND MARKET SHARES

Data relating to apparent U.S. consumption of artists’ canvas and the market shares of U.S.

producers, subject imports, and nonsubject imports, are presented in tables IV-2 and IV-3. On the basis

of these data, apparent U.S. consumption of artists’ canvas increased by *** percent during the period

examined, from *** square meters in 2002 to *** square meters in 2005 (the value of apparent U.S.

consumption increased by *** percent over the same period). U.S. producers’ shipments accounted for a

decreasing share of the U.S. artists’ canvas market throughout the period, accounting for *** percent of

apparent consumption in 2002, and *** percent in 2005. In value terms, the decrease in U.S. producers’

market share was more pronounced, going from *** percent in 2002, to *** percent in 2005. The market

share of imports from China increased from *** to *** percent between 2002 and 2005, while the share

of nonsubject imports increased from *** to *** percent.14 15

Respondents in this investigation have argued that a “large share” of U.S. production of artists’

canvas is of types that do not compete with subject imports.16 Reported data relating to U.S. producers’

and importers’ shipments of bulk and finished artists’ canvas, by product type, are presented in table

IV-4.
IV-7

Table IV-2

Artists’ canvas: Apparent U.S. consumption, 2002-05

Item

Calendar year

2002 2003 2004 2005

Quantity (1,000 square meters)

U.S. producers’ U.S. shipments *** *** *** ***

U.S. imports from:

China 202 500 1,276 2,286

Mexico *** *** *** ***

All other sources 353 322 499 872

Subtotal nonsubject *** *** *** ***

Total imports *** *** *** ***

Apparent U.S. consumption *** *** *** ***

Value ($1,000)

U.S. producers’ U.S. shipments *** *** *** ***

U.S. imports from:

China 1,562 3,390 8,974 15,079

Mexico *** *** *** ***

All other sources 1,527 1,800 3,747 5,840

Subtotal nonsubject *** *** *** ***

Total imports *** *** *** ***

Apparent U.S. consumption *** *** *** ***

Note.–Due to rounding, figures in the above table may not add to the totals shown.

Source: Compiled from data submitted in response to Commission questionnaires and from official Commerce

statistics.

Table IV-3

Artists’ canvas: Apparent U.S. consumption and market shares, 2002-05

* * * * * * *

Table IV-4

Artists’ canvas: U.S. producers’ and importers’ U.S. shipments, by product type, 2002-05

* * * * * * *
IV-8

RATIO OF SUBJECT IMPORTS TO U.S. PRODUCTION

The ratio of subject imports to U.S. production of artists’ canvas is presented in table IV-5. 

Subject imports from China were equivalent to *** percent of U.S. production during 2002 and this ratio

increased throughout the period of investigation, reaching *** percent in 2005.

Table IV-5

Artists’ canvas: Ratio of U.S. imports from China to U.S. production, 2002-05

* * * * * * *
 1

 Canvas may be made of cotton, linen, polyester, or a cotton and polyester blend. Lumber used by the petitioner

is typically eastern pine. 

 2

 Petitioner’s posthearing brief, responses to questions, p. 18

 3

 The estimated cost was obtained by subtracting the customs value from the c.i.f. value of the imports for 2005

and then dividing by the customs value. This calculation used import data for 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.

 4

 China’s currency was pegged to the U.S. dollar during most of the period for which data were collected, so it

neither appreciated nor depreciated nominally. On July 21, 2005, China re-evaluted its currency to allow narrow

fluctuations based on a basket of foreign currencies.

V-1

PART V: PRICING AND RELATED INFORMATION

FACTORS AFFECTING PRICES

Raw Material Costs

The two principal raw materials used in the production of artists’ canvas are raw canvas and

lumber.1

 Other raw materials may include staples; dyes and tannins; additives; shrink film or other

packaging materials; and labels. One domestic producer, ***, reported that its raw materials costs

increased by *** percent in 2005.2

 The two principal processing steps include coating and

sheeting/cutting, plus the additional steps of stretching and framing/trimming for assembled artists’

canvas. 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 26.9

percent of the customs value during 2005. This estimate is derived from official Commerce statistics.3

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 U.S. producers, reported costs were 10

percent of the delivered price. For importers from China, the costs ranged from 1 percent to as much as 7

percent of the delivered price. 

Exchange Rate

The nominal value of the Chinese yuan relative to the U.S. dollar has remained virtually

unchanged from January 2002 to December 2005.4

 A real value is unavailable.

PRICING PRACTICES

Pricing Methods

When questionnaire respondents were asked how they determined the prices that they charge for

artists’ canvas, five producers and five importers reported the use of price lists. Two importers also
 5

 Petitioner’s posthearing brief, responses to questions, p. 19.

 6

 Petitioner’s posthearing brief, responses to questions, pp. 1 and 21-22. Hearing transcript, p. 78 (Straquadine). 

MacPherson’s, an importer, estimated that the price for a “wrapped” canvas may be 15 to 20 percent higher than a

side-stapled canvas. Hearing transcript, p. 214 (Stapleton).

 7

 This freight program was introduced by *** in ***.

 8

 One producer, ***.

V-2

reported that prices are at least partly determined by customer-by-customer negotiations. One producer

reported that its price increases are based on raw material and labor costs.5

 

Prices may vary widely depending on the specific attributes of the artists’ canvas. Side-stapled

artists’ canvas, canvas pads, and canvas panels, which are marketed as entry-level products, tend to be

priced lower than artists’ canvas with special features such as back-stapling, splines, or irregular shapes.6

 

Prices of artists’ canvas are most commonly quoted on an f.o.b. basis rather than a delivered

basis. One 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 $***.7

 This

producer also offers faster delivery during retailers’ back-to-school promotional periods. One producer

offers free freight on orders over $***, while another offers free freight on shipments over $***. Nearly

all of the responding importers quote on an f.o.b. basis. Four of seven responding importers offer free

freight on minimum orders between $*** and $*** and the remaining three importers offer free freight on

minimum orders of $*** to $***. When asked what percentage of their sales qualified for free freight in

2005, importers reported a range of *** to *** percent.

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 2005. Among producers, three firms

reported that they sell entirely on a spot basis, one reported that it sells mostly on a long-term contract

basis, and one producer reported that it sells exclusively on a short-term contract basis.8

 Nearly all

responding importers reported that they sell exclusively on a spot basis. One importer reported that it

sells exclusively on a long-term contract basis. For the one U.S. producer selling on a long-term contract

basis, the contract duration is three years and neither price nor quantity are fixed during this period. For

the one U.S. producer selling on a short-term contract basis and the one importer selling on a long-term

contract basis, neither price nor quantity are fixed and there is no meet-or-release provision.

Discount policies on sales of artists’ canvas vary widely. Six of seven producers reported that

they offer discounts based on volumes or dollar values of the order and that they may vary by type of

customer (i.e., retailer or distributor). One of these producers reported that typically it offers discounts of

*** to *** percent, but recently these have increased to *** percent. One producer also reported the use

of more aggressive discounts in cases where it must compete head-to-head with Chinese imports. Four

importers reported the use of discounts based on volume or dollar values of the order. These discounts

mostly range from *** percent. One of these importers reported that its discounts are built into its set

price lists and two reported that they may offer additional discounts to larger customers.

One domestic producer reported that certain importers of artists’ canvas may list a suggested

retail price of the Chinese product at an inflated price of 10 to 25 percent higher than the retail price of 

domestic artists’ canvas. The importer may then reportedly offer an “every day” discount of 70 percent

off the Chinese imports and/or retailers can offer discounts of 40 to 50 percent off the Chinese artists’
 9

 The U.S. producer also stated that discounts can vary widely by retailer. Hearing transcript, pp. 26-27 

(Straquadine). 

 10 Hearing transcript, pp. 123-4 (Delin).

 11 Hearing transcript, p. 212 (Stapleton). 

 12 These sales prices are broken out by channel of distribution (i.e., converter, distributor, or retailer) in app. F. 

Purchase prices of direct imports from China and of domestic products are presented in app. G.

V-3

canvas in stores and still make a profit due to the low price of the imports.9

 This U.S. producer also

reported that domestic artists’ canvas is typically not discounted at retail more than 20 to 25 percent.10

One importer also reported that large discounts on artists’ canvas at the retail level serve to promote the

product and increase consumer demand.11

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.12 Data were requested for the period January 2002-December 2005 on the following

products:

Product 1.–8x10 stretched canvas, medium-weight, 100% unbleached cotton duck, doubleprimed acrylic, standard stretcher strips (1-5/8" x 11/16"), side-stapled.

Product 2.–16x20 stretched canvas, medium-weight, 100% unbleached cotton duck, doubleprimed acrylic, standard stretcher strips (1-5/8" x 11/16"), side-stapled.

Product 3.–16x20 stretched canvas, medium-weight, 100% unbleached cotton duck, doubleprimed acrylic, standard stretcher strips (1-5/8" x 11/16"), stapled on back.

Product 4.–16x20 stretched canvas, medium-weight, 100% unbleached cotton duck, doubleprimed acrylic, standard stretcher strips (1-5/8" x 11/16"), with spline.

Product 5.–12x12 stretched canvas, gallery (or deep) stretcher bars (1-7/16" x 1-7/16" or 1-

1/2" x 1-1/2 "), 100% unbleached cotton duck, double-primed acrylic, stapled on back.

Product 6.–8x10 canvas panel (non-archival) with chipboard core, polyester/cotton canvas.

Product 7.–Double-primed, medium-weight, 100% unbleached cotton duck, 73" x 6 yd. roll.

Product 8.–Inkjet printer canvas with top-coat for ink receptivity, polyester/cotton canvas,

36" x 40' roll.

Five U.S. producers and six 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 *** percent of the value of U.S. producers’ commercial

shipments of artists’ canvas during January 2002-December 2005 and *** percent of the value of U.S.

imports from China over the same period.
 13 Pricing data for sales prices of product 1 imported from China as reported by *** were only reported on an

annual basis. The annual data were converted into quarterly averages. 

 14 Pricing data for sales prices of product 2 imported from China as reported by *** were only reported on an

annual basis. The annual data were converted into quarterly averages. 

 15 U.S. producer Tara began producing this product in the first quarter of 2005 (when it switched its best-selling

canvas lines from side-stapled to back-stapled canvas). Petitioner’s posthearing brief, responses to questions, p. 24. 

Tara accounts for *** percent of the reported quantity of product 3 in 2005 and the decrease in the weighted-average

price of product 3 in 2005 is therefore mostly attributable to Tara’s entry into this product line. One value for sales

of U.S.-produced product 3 as reported by *** was excluded because it was deemed to be an outlier.

 16 Eight values for sales of product 3 imported form China as reported by *** were excluded because they were

deemed to be outliers.

 17 Sales of U.S.-produced product 4 originally reported by *** were excluded because *** misreported sales of

product 4 that were ***. 

 18 One value for sales of product 5 imported from China as reported by *** was excluded as it was deemed to be

an outlier. Pricing data for sales prices of product 5 imported from China as reported by *** were only reported on

an annual basis. The annual data were converted into quarterly averages.

V-4

Price Trends

Weighted-average prices reported for U.S. producers and importers are presented in tables V-1

through V-8 and in figures V-1 through V-8 on a quarterly basis during January 2002-December 2005.

The weighted-average sales price of U.S.-produced product 1 decreased by *** percent from the

first quarter of 2002 to the fourth quarter of 2005. The weighted-average sales price of product 1

imported from China decreased by *** percent over the same period.13

The weighted-average sales price of U.S.-produced product 2 decreased by *** percent from the

first quarter of 2002 to the fourth quarter of 2005. The weighted-average sales price of product 2

imported from China decreased by *** percent over the same period.14

The weighted-average sales price of U.S.-produced product 3 fluctuated over the period of

investigation, decreasing overall by *** percent from the first quarter of 2002 to the fourth quarter of

2005.15 The weighted-average sales price of product 3 imported from China increased by *** percent

from the first quarter of 2003 to the fourth quarter of 2005.16

The weighted-average sales price of U.S.-produced product 4 increased by *** percent from the

first quarter of 2002 to the fourth quarter of 2005.17 The weighted-average sales price of product 4

imported from China increased by *** percent from the first quarter of 2002 to the fourth quarter of 2005.

The weighted-average sales price of U.S.-produced product 5 fluctuated over the period of

investigation, but remained virtually unchanged from the first quarter of 2002 to the fourth quarter of

2005. The weighted-average sales price of product 5 imported from China decreased by *** percent from

the first quarter of 2003 to the fourth quarter of 2005.18

The weighted-average sales price of U.S.-produced product 6 decreased by *** percent from the

first quarter of 2002 to the fourth quarter of 2005. The weighted-average sales price of product 6

imported from China decreased by *** percent from the first quarter of 2003 to the fourth quarter of

2005.

The weighted-average sales price of U.S.-produced product 7 fluctuated over the period of

investigation, but remained virtually unchanged from the first quarter of 2002 to the fourth quarter of

2005. There were no sales reported of product 7 imported from China.
V-5

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-December 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-December 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-December 2005

* * * * * * *

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-December 2005

* * * * * * *

Table V-5

Artists’ canvas: Weighted-average f.o.b. prices and quantities of domestic and imported product 5

and margins of underselling/(overselling), by quarters, January 2002-December 2005

* * * * * * *

Table V-6

Artists’ canvas: Weighted-average f.o.b. prices and quantities of domestic and imported product 6 

and margins of underselling/(overselling), by quarters, January 2002-December 2005

* * * * * * *

Table V-7

Artists’ canvas: Weighted-average f.o.b. prices and quantities of domestic and imported product 7 

and margins of underselling/(overselling), by quarters, January 2002-December 2005

* * * * * * *

Table V-8

Artists’ canvas: Weighted-average f.o.b. prices and quantities of domestic and imported product 8

and margins of underselling/(overselling), by quarters, January 2002-December 2005

* * * * * * *
V-6

Figure V-1

Artists’ canvas: Weighted-average f.o.b prices and quantities of domestic and imported product 1,

by quarters, January 2002-December 2005

* * * * * * *

Figure V-2

Artists’ canvas: Weighted-average f.o.b prices and quantities of domestic and imported product 2,

by quarters, January 2002-December 2005

* * * * * * *

Figure V-3

Artists’ canvas: Weighted-average f.o.b prices and quantities of domestic and imported product 3,

by quarters, January 2002-December 2005

* * * * * * *

Figure V-4

Artists’ canvas: Weighted-average f.o.b prices and quantities of domestic and imported product 4,

by quarters, January 2002-December 2005

* * * * * * *

Figure V-5

Artists’ canvas: Weighted-average f.o.b prices and quantities of domestic and imported product 5,

by quarters, January 2002-December 2005

* * * * * * *

Figure V-6

Artists’ canvas: Weighted-average f.o.b prices and quantities of domestic and imported product 6,

by quarters, January 2002-December 2005

* * * * * * *

Figure V-7

Artists’ canvas: Weighted-average f.o.b prices and quantities of domestic product 7, by quarters,

January 2002-December 2005

* * * * * * *

Figure V-8

Artists’ canvas: Weighted-average f.o.b prices and quantities of domestic product 8, by quarters, 

January 2002-December 2005

* * * * * * *
 19 Sales of U.S.-produced product 8 as reported by *** consist of artists’ canvas that is produced under a toll

agreement and sold by ***. 

V-7

The weighted-average sales price of U.S.-produced product 8 decreased by *** percent from the

first quarter of 2002 to the fourth quarter of 2005.19 There were no sales reported of product 8 imported

from China.

Price Comparisons

Margins of underselling and overselling for the period are presented by product category in tables

V-9 and V-10 below. Prices of imports from China were lower than the U.S. producer prices in 78 out of

83 quarterly comparisons, by margins ranging from 0.7 percent to 72.1 percent. For products 1-5, the

prices of imports from China were lower than the U.S. producer prices in all 71 quarterly comparisons. In

seven of 12 comparisons related to product 6, the imported product was priced lower than the U.S.

producer prices. In the remaining five instances, the imported product was priced above the comparable

domestic product; margins of overselling ranged from 1.2 to 16.6 percent.

Table V-9

Artists’ canvas: Margins of underselling/(overselling) by product, quarterly, January 2002-

December 2005

* * * * * * *

Table V-10

Artists’ canvas: Instances of underselling/overselling and the range and average of margins for

products 1-8, January 2002-December 2005

* * * * * * *

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 December 2005. The results are summarized in tables V-11 and V-12 and are discussed below.

*** 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 ***. These *** lost sales allegations

totaled at least $*** and the *** lost revenue *** totaled $***. Staff contacted the *** purchasers cited

in the allegations; *** responded.

Table V-11

Artists’ canvas: U.S. producers’ lost sales allegations

* * * * * * *

Table V-12

Artists’ canvas: U.S. producers’ lost revenue allegations

* * * * * * *
 20 Hearing transcript, p. 177 (Kanter). Aaron Bros. also reported that it switched to Chinese imports in part

because there was no other domestic supply of splined artists’ canvas in 2003. Hearing transcript, p. 179 (Kanter). 

Staff notes, however, that domestic producer *** reported sales of splined canvas in *** in the pricing data it

submitted in response to Commission questionnaires.

 21 Respondents’ posthearing brief, exh. 1, at question 4, p. 2. *** reported that *** percent of its sales to ***

were domestically produced. Petitioner’s posthearing brief, responses to questions, p. 15.

 22 Hearing transcript, p. 179 (Kanter).

 23 Hearing transcript, pp. 172-174 (Marek).

V-8

One U.S. producer, ***, made additional allegations that it had lost sales valued at $*** with ***

and $*** with ***, but it did not provide adequate information in order for staff to verify the allegations. 

One U.S. producer reported that it has not been able to increase prices in the last three years, but it was

uncertain as to whether it was due to imports from China or not.

Another U.S. producer, ***, reported that while it has lost sales with some retailers (including

***), it has experienced increased sales with at least one retailer, ***, that purchases both Chinese

imports and domestic product. Moreover, *** reported that it had planned a price increase to take effect

in ***, which was effectively offset when it implemented a *** in response to a *** offered by its main

domestic competitor, ***.

Aaron Bros. was named in a lost sale allegation involving artists’ canvas valued at $*** allegedly

occurring in ***. Aaron Bros. reported that it had quality problems with splined artists’ canvas as

supplied by domestic producer *** and that *** did not support Aaron Bros.’ marketing strategy.20

Moreover, Aaron Bros. contends that it did not displace U.S. sales when it switched to Chinese imports

because its previous purchases from domestic producer *** were comprised of over *** percent splined

artists’ canvas, which was produced at ***.21 Aaron Bros. also reported that Chinese suppliers met their

requirements in terms of product offerings, price, and quality.22

*** 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 imports. It

stated, however, that it also continues to buy 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.

*** was cited in a lost sales allegation allegedly occurring in *** and it agreed. However, it

reported that it increased its purchases of Chinese imports in order to expand its product offerings beyond

that which its domestic source carried. Moreover, *** reported that its domestic supplier was often late in

delivering orders and that the Chinese imports served as a back-up in those instances.

*** 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 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 its imports from China were a

“wrapped” canvas that was not offered by its U.S. supplier at the time.

Michael’s was named in *** lost sale allegations involving artists’ canvas valued at $***. 

Michael’s reported that while it did switch some purchases to Chinese imports, its major source of artists’

canvas continues to be domestic producer ***. Michael’s also contends that sales of its artists’ canvas

imported from China complement sales of domestic product.23
 24 Respondents’ posthearing brief, exh. 1, at question 4, p. 4.

 25 Hearing transcript, pp. 22-23.

 26 Hearing transcript, p. 120 (Straquadine).

 27 Hearing transcript, pp.160-162, 165. (Stapleton).

V-9

*** 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.

Utrecht 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 Tara to both a different domestic source, ***, a Chinese source, as well as

nonsubject sources in Belgium and India. Utrecht also reported that its new domestic source had limited

capacity and was unable to replace all of the artists’ canvas Utrecht had previously purchased from Tara.24

Utrecht stated that price was only one of many factors that resulted in its decision. Utrecht reported that it

had experienced many quality problems with Tara over a long period of time, that Tara had ***, that Tara

did not upgrade its quality or offer innovative styles, and that Tara did not have a proactive marketing

strategy. Tara reported that it made efforts to address the quality concerns. Moreover, Tara contends that

Utrecht’s quality complaints were mostly limited to linen artists’ canvas, but that Utrecht replaced the

entire product line with Chinese imports.25

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.26 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

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.27 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 producers with fiscal years ending other than December 31 are ***.

 2

 ***, has not provided response in the final phase of the investigation, even though it submitted response in the

preliminary phase of the investigation and went out of business recently. ***. 

 3

 ***.

VI-1

PART VI: FINANCIAL CONDITION OF U.S. PRODUCERS

BACKGROUND

Eight producers1

 provided financial results for their operations on artists’ canvas.2 *** were three

producers which reported on operations for both bulk and finished canvas. *** reported transfers of bulk

to related firms and its transfers accounted for approximately *** percent of the combined sales value of

2005.

The questionnaire data of Tara were verified with company records at its corporate facilities. The

verification adjustments were incorporated into this report. The financial data of Tara were changed to

reflect the ***. However, the combined COGS remain the same. The adjustments for Tara resulted in

***. 

OPERATIONS ON ARTISTS’ CANVAS

Results of operations of the U.S. producers on their artists’ canvas operations (both bulk and

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. For financial data of both bulk and finished combined, net sales

quantities, net sales values, and COGS were adjusted for bulk canvas purchased from domestic producers

by converters, whenever possible, in order to eliminate possible double counting. These eliminations

were *** percent or less of total sales values every period. Aggregate income-and-loss data for 

producers on their bulk canvas operations are presented in table VI-2, while those data on finished canvas

are separately shown in table VI-3.

The financial results of the producers on their artists’ canvas operations fluctuated from 2002 to

2005. While the quantity sold increased continuously between 2002 and 2005, net sales value decreased

from 2002 to 2003 and increased between 2003 and 2005. Operating income increased from 2002 to

2003, due mainly to the decrease of total costs/expenses, and decreased substantially from 2003 to 2004,

largely the result of a substantial decrease in the average unit selling price (from $4.72 to $4.30 per square

meter). Sales value and operating income increased from 2004 to 2005, due primarily to a decrease in the

average unit total cost (from $4.15 to $3.80) and higher sales volume, in spite of a decrease in the average

unit sales value (from $4.30 to $3.95 per square meter).

The financial results and trends of bulk sales were different from those for finished canvas sales. 

*** reported sales of both bulk and finished canvas. Average unit sales values and total costs between

bulk and finished canvas were quite different, for instance, $*** vs. $*** for sales values3

 and $*** vs.

$*** for total costs, respectively, in 2005. While the average unit selling prices and total costs for

finished canvas were naturally consistently higher compared to those for bulk canvas for all periods,

average unit operating income for finished canvas decreased to a much greater degree than was the case

for bulk canvas in 2004 and 2005 compared to 2003. Therefore, separate unit sales value data for each

producer for the combined products and each product group are also presented in table VI-4.
VI-2

Table VI-1

Artists’ canvas: Results of operations of U.S. producers, fiscal years 2002-05

Item Fiscal year

2002 2003 2004 2005

Quantity (1,000 square meters)

Net sales 7,996 8,335 9,273 10,992

Value ($1,000)

Net sales1 40,833 39,322 39,853 43,427

COGS 32,019 30,358 30,745 33,858

Gross profit 8,814 8,964 9,108 9,569

SG&A expenses 6,946 6,333 7,706 7,868

Operating income 1,868 2,631 1,402 1,701

Interest expense 130 150 149 199

Other expense 9 57 61 141

Other income 144 230 198 64

Net income 1,873 2,654 1,390 1,425

Depreciation/amortization 1,472 1,197 920 944

Cash flow 3,345 3,851 2,310 2,369

Value (per square meter)

Net sales $5.11 $4.72 $4.30 $3.95

COGS 4.00 3.64 3.32 3.08

Gross profit 1.10 1.08 0.98 0.87

SG&A expenses 0.87 0.76 0.83 0.72

Operating income 0.23 0.32 0.15 0.15

Ratio to net sales (percent)

COGS 78.4 77.2 77.1 78.0

Gross profit 21.6 22.8 22.9 22.0

SG&A expenses 17.0 16.1 19.3 18.1

Operating income 4.6 6.7 3.5 3.9

Number of firms reporting

Operating losses *** *** *** ***

Data 7 7 8 8

Note.-Data in tables VI-2 and VI-3 do not add to the combined data in this table due to the elimination of bulk

purchased from a domestic producer by converters. The value of these eliminations were *** percent or less every

period.

 1

 Transfers are approximately *** percent of the combined companies’ net sales value in 2005 and are not

shown separately. 

Source: Compiled from data submitted in response to Commission questionnaires.
 4

 ***.

VI-3

Table VI-2

Bulk artists’ canvas: Results of operations of U.S. producers, fiscal years 2002-05

* * * * * * *

Table VI-3

Finished artists’ canvas: Results of operations of U.S. producers, fiscal years 2002-05

* * * * * * *

Table VI-4

Artists’ canvas: Results of operations of U.S. producers, by firm, fiscal years 2002-05

* * * * * * *

Selected financial data, by firm, are presented in table VI-4. While ***4

 showed an improved

profitability in terms of operating income margin over the period, the remaining producers showed mixed

results. The converters of digital print canvas experienced relatively sound operating income and margin

and were profitable over the period, compared to the producers of both bulk and finished canvas. 

Average operating income margins increased from 2002 to 2003 and decreased in 2004, but increased

slightly from 2004 to 2005.

Selected aggregate per-square meter cost data of the producers on their operations, i.e., COGS

and selling, general, and administrative (“SG&A”) expenses, are presented in table VI-5. Overall persquare meter COGS and total cost (which includes SG&A expenses) decreased continuously from 2002 to

2005. However, due to the two different types of product, bulk and finished canvas, product mix may

have a significant impact on the average unit sales values and costs. Unit COGS, by firm, are also

presented in table VI-6.

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-7. The analysis is summarized at

the bottom of the table. The analysis indicates that the decrease in operating income ($0.2 million)

between 2002 and 2005 was attributable mainly to the negative effect of decreased price ($12.7 million)

which was partially offset by the positive effects of decreased costs/expenses ($11.8 million) and

increased sales volume ($0.7 million). 
VI-4

Table VI-5

Artists’ canvas: Average unit costs of U.S. producers, fiscal years 2002-05

Item

Fiscal year

2002 2003 2004 2005

COGS: Value (per square meter)

 Raw materials $2.12 $2.06 $1.86 $1.89

 Direct labor 0.87 0.70 0.58 0.51

 Factory overhead 1.01 0.88 0.87 0.68

 Total COGS 4.00 3.64 3.32 3.08

SG&A expenses:

 Selling expenses 0.28 0.24 0.25 0.23

 G&A expenses 0.59 0.52 0.58 0.49

 Total SG&A expenses 0.87 0.76 0.83 0.72

 Total cost 4.87 4.40 4.15 3.80

Source: Compiled from data submitted in response to Commission questionnaires. 

Table VI-6

Artists’ canvas: Unit COGS of U.S. producers, by firm, fiscal years 2002-05

* * * * * * *

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-8. *** that reported substantial amounts of capital

expenditures during the period examined. In addition, four other producers, ***, reported small amounts

of capital expenditures. Four producers, ***, reported R&D expenses, and the amounts reported by ***. 

Capital expenditures, by firm, are presented in table VI-9. Capital expenditures increased steadily during

2002-05.
VI-5

Table VI-7

Artists’ canvas: Variance analysis of operations of U.S. producers, fiscal years 2002-05

Item

Between fiscal years

2002-05 2002-03 2003-04 2004-05

Value ($1,000)

Net sales:

 Price variance (12,706) (3,242) (3,894) (3,814)

 Volume variance 15,300 1,731 4,425 7,388

 Total net sales variance 2,594 (1,511) 531 3,574

Cost of sales:

 Cost variance 10,158 3,018 3,029 2,586

 Volume variance (11,997) (1,357) (3,416) (5,699)

 Total cost variance (1,839) 1,661 (387) (3,113)

Gross profit variance 755 150 144 461

SG&A expenses:

 Expense variance 1,681 907 (660) 1,267

 Volume variance (2,603) (294) (713) (1,429)

 Total SG&A variance (922) 613 (1,373) (162)

Operating income variance (167) 763 (1,229) 299

Summarized as:

 Price variance (12,706) (3,242) (3,894) (3,814)

 Net cost/expense variance 11,839 3,926 2,369 3,853

 Net volume variance 700 79 296 260

Note.--Unfavorable variances are shown in parentheses; all others are favorable. The data are comparable to

changes in operating income as presented in table VI-1.

Source: Compiled from data submitted in response to Commission questionnaires.

Table VI-8

Artists’ canvas: Capital expenditures and R&D expenses by U.S. producers, fiscal years 2002-05

* * * * * * *

Table VI-9

Artists’ canvas: Capital expenditures by U.S. producers, by firms, fiscal years 2002-05

* * * * * * *
VI-6

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-10. 

The value of total assets steadily increased over the period while the return on investment

fluctuated during the same period. The trend of ROI over the period was similar to the trend of the

operating income margin shown in table VI-1.

Table VI-10

Artists’ canvas: Value of assets and return on investment of U.S. producers, fiscal years 2002-05

Item Fiscal year

2002 2003 2004 2005

Value of assets Value ($1,000)

1. Current assets:

 A. Cash and equivalents 769 1,279 986 710

 B. Trade receivables (net) 4,369 4,475 5,473 6,640

 C. Inventories 6,594 9,215 9,386 10,318

 D. All other current1 5,705 6,507 9,922 16,479

 Total current1 17,437 21,476 25,767 34,147

2. Non-current assets:

 A. Fixed assets (cost) 22,889 22,343 23,189 24,707

 B. Fixed assets (net) 7,410 6,658 6,349 6,854

 C. Other non-current 5,719 4,036 3,677 3,563

 Total non-current1 13,129 10,694 10,026 10,417

 Total assets 30,566 32,170 35,793 44,564

 Value ($1,000)

Operating income 1,868 2,631 1,402 1,701

Ratio of operating income to total assets (percent)

Return on investment 6.1 8.2 3.9 3.8

 1 MacDermid provided only total current and non-current assets without further details. 

Source: Compiled from data submitted in response to Commission questionnaires.
VI-7

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 H.

 1

 Section 771(7)(F)(ii) of the Act (19 U.S.C. § 1677(7)(F)(ii)) provides that “The Commission shall consider

[these factors] . . . as a whole in making a determination of whether further dumped or subsidized imports are

imminent and whether material injury by reason of imports would occur unless an order is issued or a suspension

agreement is accepted under this title. The presence or absence of any factor which the Commission is required to

consider . . . shall not necessarily give decisive guidance with respect to the determination. Such a determination

may not be made on the basis of mere conjecture or supposition.”

VII-1

PART VII: THREAT CONSIDERATIONS

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

In determining whether an industry in the United States is threatened

with material injury by reason of imports (or sales for importation) of the

subject merchandise, the Commission shall consider, among other

relevant economic factors1

--

(I) if a countervailable subsidy is involved, such information as may be

presented to it by the administering authority as to the nature of the

subsidy (particularly as to whether the countervailable subsidy is a

subsidy described in Article 3 or 6.1 of the Subsidies Agreement), and

whether imports of the subject merchandise are likely to increase,

(II) any existing unused production capacity or imminent, substantial

increase in production capacity in the exporting country indicating the

likelihood of substantially increased imports of the subject merchandise

into the United States, taking into account the availability of other export

markets to absorb any additional exports,

(III) a significant rate of increase of the volume or market penetration of

imports of the subject merchandise indicating the likelihood of

substantially increased imports,

(IV) whether imports of the subject merchandise are entering at prices

that are likely to have a significant depressing or suppressing effect on

domestic prices, and are likely to increase demand for further imports,

(V) inventories of the subject merchandise,

(VI) the potential for product-shifting if production facilities in the

foreign country, which can be used to produce the subject merchandise,

are currently being used to produce other products,

(VII) in any investigation under this title which involves imports of both

a raw agricultural product (within the meaning of paragraph (4)(E)(iv))

and any product processed from such raw agricultural product, the

likelihood that there will be increased imports, by reason of product

shifting, if there is an affirmative determination by the Commission 
 2

 Section 771(7)(F)(iii) of the Act (19 U.S.C. § 1677(7)(F)(iii)) further provides that, in antidumping

investigations, “. . . the Commission shall consider whether dumping in the markets of foreign countries (as

evidenced by dumping findings or antidumping remedies in other WTO member markets against the same class or

kind of merchandise manufactured or exported by the same party as under investigation) suggests a threat of material

injury to the domestic industry.”

 3

 Petition, exh. 8.

 4

 Fax from G. Thompson, counsel to petitioner, December 21, 2005.

 5

 Hangzhou reportedly only produces and exports assembled canvas using bulk canvas primed in India. The

Department of Commerce has determined that the country of origin for such exports is India, and are therefore not

subject to the instant investigation (see Commerce’s final determination, 71 FR 16116, March 30, 2006). See also,

fn. 9, below.

 6

 Petitioner notes that, as a result of questionnaire responses not received from potential producers of subject

merchandise, the Commission’s record regarding the Chinese industry “appears to be incomplete.” Petitioner’s

prehearing brief, p. 42. According to respondents, the Chinese firm ***, for which data were received, is the

“dominant exporter” of subject merchandise from China. Respondents’ posthearing brief, p. 14. (*** accounted for

two-thirds of 2005 reported exports to the United States.)

VII-2

under section 705(b)(1) or 735(b)(1) with respect to either the raw

agricultural product or the processed agricultural product (but not both),

(VIII) the 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

(IX) any other demonstrable adverse trends that indicate the probability

that there is likely to be material injury by reason of imports (or sale for

importation) of the subject merchandise (whether or not it is actually

being imported at the time).2

Information on the volume and pricing of imports of the subject merchandise was presented in

Parts IV and V, respectively, of this report; information on the effects of imports of the subject

merchandise on U.S. producers’ existing development and production efforts was presented in Part VI. 

Information on inventories of the subject merchandise; foreign producers’ operations, including the

potential for “product-shifting;” any other threat indicators, if applicable; and any dumping in

third-country markets, follows.

THE INDUSTRY IN CHINA

The petition for this investigation identified five “known” producers of artists’ canvas in China.3

Commission questionnaires in this final-phase investigation were sent to these five firms, to four

additional firms identified by U.S. importers in the preliminary phase of this investigation, and to three

firms identified by petitioner’s counsel as potential producers of subject merchandise.4

 Responses were

received from four firms: Hangzhou Haili Electronic Equipment Co., Ltd. (“Hangzhou”);5

 Ningbo Conda

Import & Export Co., Ltd. (“Ningbo Conda”); Wuxi Phoenix Artist Material Co., Ltd. (“Wuxi”); and

Yiwu Kaibo Painting Materials Co., Ltd. (“Yiwu Kaibo”). *** is solely an exporter of subject

merchandise; the remaining three firms both produce and export artists’ canvas. Three of these firms,

Hangzhou, Ningbo Conda, and Wuxi, are parties to this investigation.6
 7

 Only one of the three responding Chinese producers was able to estimate its share of bulk artists’ canvas

production in 2005: *** estimated that it accounted for *** percent of total production of bulk artists’ canvas in

China in 2005, suggesting total production in China of *** square meters.

 8

 This calculation is based on a total Chinese production of *** square meters in 2005. As noted in table VII-1,

one Chinese firm did not report its projected production data for 2006 and 2007. This firm, ***, reported *** square

meters of bulk canvas production in 2005. This quantity has been subtracted from Chinese producers’ total reported

2005 production in the calculation of the projected increase in production above.

 9

 Capacity and production data presented in table VII-2 are *** lower than those reported in the same table in the

prehearing report, owing to the removal of data reported by Hangzhou (see fn. 5, above). Prior to its removal,

Hangzhou accounted for *** percent of reported Chinese production capacity for finished canvas in 2005, ***

percent of production, and *** percent of exports to the United States.

VII-3

Chinese Producers’ Capacity, Production, and Shipments

Bulk

Data on Chinese producers’ capacity, production, and shipments of bulk canvas, based on the

questionnaire responses of the four firms identified above, are presented in table VII-1. On the basis of

these data, Chinese producers’ capacity to produce bulk canvas increased in every year of the period

examined, and was *** times higher in 2005 than in 2002. Chinese’ producers’ bulk canvas capacity is

projected to increase by a further *** percent between 2005 and 2007, from *** to *** square meters.7

Table VII-1

Bulk artists’ canvas: Chinese producers’ capacity, production, and shipments, 2002-05, and 2006-

07 projections

* * * * * * *

Chinese producers’ reported production of bulk canvas increased annually by an average ***

percent between 2002 and 2005, and was over *** times higher in 2005 than in 2002. Chinese producers’

production of bulk canvas is projected to increase by *** square meters, or by *** percent, between 2005

and 2007.8

 Based on these data, Chinese producers’ capacity utilization increased in every year of the

period examined, and is projected to approach *** percent in 2006 and 2007.

Over *** percent of Chinese producers’ reported shipments of bulk artists’ canvas during 2002-

05 were accounted for by internal consumption.

Finished

Reported data on Chinese producers’ capacity, production, and shipments of finished artists’

canvas are presented in table VII-2. As indicated in this table, Chinese producers’ reported capacity

increased by a factor of *** during the period examined, while production increased by a factor of ***. 

Chinese producers’ capacity utilization increased in every year of the period examined, and is projected to

reach *** in 2006.9

Table VII-2

Finished artists’ canvas: Chinese producers’ capacity, production, and shipments, 2002-05, and

2006-07 projections

* * * * * * *
 10 Shipments data in tables VII-1-VII-3 do not reconcile with production data owing to the inclusion in the data of

***, an exporter of subject merchandise that does not produce artists’ canvas. Total shipments data reported in table

VII-3 are lower than data reported in the same table of the prehearing report, owing to adjustments made to eliminate

double counting (see fn. 2 in table VII-3).

 11 Two of the four responding Chinese firms reported that they anticipated growth in the Chinese market, and/or

third-country markets, for their artists’ canvas shipments in 2006 and 2007. Foreign producers’/exporters’

questionnaire responses of *** and ***, p. 5.

 12 Chinese firms most often identified countries in *** (specifically, ***) as their principle non-U.S. export

market. *** were also identified. See responses to the Foreign Producers’/Exporters’ questionnaire, pp. 6-7.

VII-4

Exports accounted for an increasing share of Chinese producers’ shipments during the period

examined, from *** percent of total shipments in 2002 to *** percent in 2005. Exports to the United

States accounted for *** percent of total reported shipments of finished canvas in 2005, compared to ***

percent in 2002. Exports to the United States, as a share of Chinese producers’ total reported shipments,

are projected to decrease by *** percentage points between 2005 and 2007.

No Chinese producers reported maintaining any inventories of finished artists’ canvas at the end

of 2005.

Total

Data relating to Chinese firms’ reported shipments of all artists’ canvas (bulk and finished) are

presented in table VII-3. On the basis of these data, Chinese firms’ total shipments of artists’ canvas

increased *** during the period examined, from *** square meters in 2002 to *** million square meters

in 2005.10 Home market sales accounted for a declining share of total shipments during this period, while

the share of shipments accounted for by exports increased. Exports to the United States accounted for

*** percent of total reported shipments in 2005, compared to *** percent in 2002. This share is projected

to decline to *** percent by 2007.11 The share of shipments accounted for by exports to third-country

markets is projected to increase in 2006 and 2007.12

Table VII-3

Artists’ canvas (bulk and finished): Chinese producers’ shipments, 2002-05, and 2006-07

projections

* * * * * * *

Product Shifting and Dumping in Third-Country Markets

None of the three Chinese producers of artists’ canvas that responded to the Commission’s

questionnaires reported producing products other than artists’ canvas on the equipment and machinery

used in the production of artists’ canvas. None of the four responding Chinese exporters of artists’ canvas

reported that subject merchandise exported by their firm is subject to antidumping findings or remedies in

any WTO member-country.

U.S. IMPORTERS’ INVENTORIES AND IMPORTS AFTER 2005

U.S. importers’ reported inventories of artists’ canvas from China are presented in table VII-4. 

Reported inventories of subject imports increased in quantity terms during the period examined in this

investigation, but decreased relative to the quantity of imports from China.
 13 Two of the *** U.S. importers that reported having imported or arranged to import artists’ canvas from China

after December 31, 2005 did not specify the quantities involved.

 14 The ATC superseded the Multifiber Arrangement (“MFA”), an arrangement negotiated under the auspices of

the General Agreement on Tariffs and Trade (“GATT” 1947) that governed world trade in textiles and apparel and

permitted importing countries to establish quotas on such goods outside normal GATT rules during 1974-94. The

United States continues to maintain quotas on non-WTO countries.

 15 To administer the U.S. textile and apparel quota program, articles are grouped under 3-digit category numbers,

which cover many 10-digit statistical reporting numbers under which goods are classified in the HTS. The category

system was designed to simplify monitoring of textile and apparel imports by aggregating several thousand statistical

reporting numbers into larger, more manageable categories.

 16 Category 229 covers special purpose fabrics classified in 65 separate 10-digit statistical reporting numbers in

the HTS. Only two of these statistical reporting numbers, 5901.90.2000 and 5901.90.4000, cover imports of artists’

canvas (as well as tracing cloth and stiffened textile fabrics used for hat foundations). In 2005, U.S. imports from

China of goods classified under HTS statistical reporting numbers 5901.90.2000 and 5901.90.4000 accounted for 6.6

percent of the total value and 12.5 percent of the total quantity of U.S. imports from China of all special purpose

fabrics under category 229.

 17 The safeguard provision covers all products subject to the ATC as of January 1, 1995.

VII-5

Table VII-4

Artists’ canvas from China: U.S. importers’ end-of-period inventories, 2002-05

* * * * * * *

*** U.S. importers reported that they had imported or arranged to import subject artists’ canvas

after the end of the period examined in this investigation (i.e., December 31, 2005). These importers

reported importing (or arranging to import) *** square meters of artists’ canvas and *** “pieces” of

finished artists’ canvas between January and May 2006.13

U.S.-China Textile Agreement

On January 1, 2005, the United States eliminated quotas on imports of textiles and apparel from

World Trade Organization (“WTO”) countries, as obligated under the WTO Agreement on Textiles and

Clothing (“ATC”). The ATC, which came into effect with the WTO Uruguay Round Agreements in

1995, required that WTO countries eliminate quantitative restrictions on textile and apparel articles in

four stages over 10 years.14 Category 229,15 covering special purpose fabrics including artists’ canvas,16

was liberalized in stage two of the integration, effective January 1, 1998. China became eligible for quota

liberalization for all categories integrated in phases one and two of the integration, as well as items

scheduled for future integration, upon its accession to the WTO in 2001. Under the provisions of China’s

accession agreement, the United States and other WTO countries may invoke temporary “safeguards” (or

quotas) on imports of Chinese textiles and apparel that are, owing to market disruption, threatening to

impede the orderly development of trade in such goods.17 The China textile safeguard provision is

available until December 31, 2008. While the United States has initiated a number of safeguard cases

against imports of textile and apparel products from China, a case has never been initiated nor requested

for goods under category 229. 

Following a number of safeguard cases initiated and implemented against various other Chinese

textile and apparel items during 2003-05, the United States and China began negotiations for a broad

agreement on trade in textiles and apparel. On November 8, 2005, the United States and China signed a

memorandum of understanding (“MOU”) that limits U.S. imports of selected textile and apparel products

from China through December 2008, at which time the right to invoke the WTO textile-specific safeguard

expires. The U.S.-China MOU reestablished quantitative limits on Chinese-origin products in 34
 18 See “Memorandum of Understanding Between the Governments of the United States of America and the

People’s Republic of China Concerning Trade in Textile and Apparel Products,” November 8, 2005, at

http://www.ustr.gov/assets/World_Regions/North_Asia/China/asset_upload_file91_8344.pdf.

 19 Official statistics available at http://otexa.ita.doc.gov, updated April 12, 2006.

 20 According to data obtained from the USITC’s Dataweb on April 4, 2006.

 21 February 2006 is the latest month for which official import statistics are presently available.

 22 The bilateral agreement with China reestablished an electronic visa information system, which aids in the

monitoring and maintenance of quota limits. The electronic visa information system (“ELVIS”), developed by CBP,

was used under the ATC to prevent shipments of textile goods over the quota limits. A visa acts as an approval or

endorsement by the Chinese government authorizing the export of textile and apparel goods to the United States. 

The visa describes the shipment, certifies the country of origin, and authorizes the United States to charge the

shipment against the quotas established in the agreement. CBP will not allow shipments to enter the United States

without an ELVIS transmission.

 23 CBP official, e-mail correspondence to USITC staff, March 29, 2006. See also respondents’ posthearing brief,

exh. 1 (attachments in response to question 10), CBP, Telex VBT-89-64, May 26, 1989. 

 24 People’s Daily Online, “Intense Bidding for U.S. Export Quotas,” December 7, 2005, found at

http://english.people.com.cn/200512/07/eng20051207_226253.html (retrieved March 29, 2006); Sandler, Travis &

Rosenberg, P.A., ST&R News Release, “ST&R-TAP Publishes China Textile Quota Prices,” January 24, 2006,

found at http://www.strtrade.com/advisory.asp?id=248 (retrieved March 29, 2006); and China Internet Information

Center, “Textile Firms Bid for U.S. Export Quotas,” December 8, 2006, found at

http://www.china.org.cn/english/2005/Dec/151120.htm (retrieved April 5, 2006). 

VII-6

different categories, including all items classified under category 229, effective January 1, 2006. The

bilateral agreement specifies the annual import levels for covered goods from China, with the specific

limits for category 229 as follows: total imports of 33,162,019 kilograms allowed in 2006 (representing

12.6 percent growth over 2005 imports); total imports of 38,467,942 kilograms allowed in 2007

(representing 16 percent growth over the 2006 limit); and total imports of 45,007,492 kilograms allowed

in 2008 (representing 17 percent growth over the 2007 limit).18 In 2004, total imports from China of

goods in category 229 totaled 19,085,044 kilograms, while imports in 2005 totaled 28,693,311 kilograms;

preliminary data for 2006 show imports of 3,750,663 kilograms for January through March.19 In 2005,

U.S. imports from China of goods classified under HTS statistical reporting numbers 5901.90.2000 and

5901.90.4000, which cover artists’ canvas, accounted for 6.6 percent of the total value and 12.5 percent of

the total quantity in kilograms of U.S. imports from China of all special purpose fabrics under category

229.20 Monthly official Commerce statistics for imports from China under these HTS numbers (on a

weight basis) for January 2002 through February 200621 are presented in table VII-5 and figure VII-1.

In administering quantitative limits on imports of textile and apparel goods, the United States

Customs and Border Protection (“CBP”) charges the weight of imported items under category 229 against

the quota amounts listed above.22 For artists’ canvas, the weight of the product is the weight of the article

as it is used; that is, the total weight of the packaged, finished canvas, including stretcher strips and

staples. According to CBP officials, the practice of measuring the weight of artists’ canvas in this fashion

is a longstanding practice that has not been changed or amended during the period of investigation.23

Although the United States administers the overall quota levels specified in the bilateral agreement, China

determines how to allocate each category’s quota across the specific products in the category and among

individual Chinese producers. According to publicly available information, 70 percent of the 2006 quota

levels are to be allocated to firms based on export performance in 2005, with the remaining 30 percent

offered for public bidding.24 
VII-7

Table VII-5

Artists’ canvas: U.S. monthly imports from China, 2002-05

Month Quantity

(1,000 kilograms) Month Quantity

(1,000 kilograms)

2002:

January 32

2004:

January 155

February 0 February 187

March 5 March 266

April 6 April 210

May 10 May 236

June 101 June 409

July 76 July 358

August 52 August 248

September 99 September 227

October 103 October 180

November 9 November 250

December 1 December 196

Total 494 Total 2,922

2003:

January 50

2005:

January 348

February 9 February 211

March 45 March 228

April 113 April 256

May 98 May 420

June 121 June 424

July 101 July 368

August 144 August 369

September 55 September 325

October 172 October 317

November 105 November 176

December 163 December 179

Total 1,176 Total 3,621

2006

January 126

2006

February 11

Source: Official Commerce statistics.
 25 Respondents’ posthearing brief, exh. 1, response to question 10. See also, respondents’ submission of April 5,

2006 (pertaining to Wuxi’s quota allocation).

 26 Petitioner’s posthearing brief, p. 29.

 27 Petitioner’s posthearing brief, p. 30.

VII-8

Figure VII-1

Artists’ canvas: U.S. monthly imports from China, 2002-05

Source: Table VII-5.

Respondents state that ***.25 Petitioner asserts that sublimits for products covered under the

restricted categories are not in the text of the MOU; therefore, even if the Chinese government has

allocated a specific amount of the quantitative limit for category 229 to artists’ canvas producers for 2006,

a long-term impediment to U.S. imports cannot be established, given that the Chinese government may

alter such limits at any time.26 Further, petitioner argues that since only 4.2 percent of the annual quota

for category 229 was used in first quarter 2006, it is likely that significant excess quota will be available

for purchase during the year.27

0

50

100

150

200

250

300

350

400

450

Jan-02

Mar-02

May-02

Jul-02

Sep-02

Nov-02

Jan-03

Mar-03

May-03

Jul-03

Sep-03

Nov-03

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Month

(1,000 kilograms )

Subject imports
A-1

APPENDIX A

FEDERAL REGISTER NOTICES

67412 Federal Register / Vol. 70, No. 214 / Monday, November 7, 2005 / Notices 

frustrate implementation of a proposed 

agency action. (5 U.S.C. 552b.(c)(9)(B)) 

In addition, part of the discussion will 

relate solely to the internal personnel 

and organizational issues of the BBG or 

the International Broadcasting Bureau. 

(5 U.S.C. 552b.(c)(2) and (6)). 

CONTACT PERSON FOR MORE INFORMATION: 

Persons interested in obtaining more 

information should contact either 

Brenda Hardnett or Carol Booker at 

(202) 203–4545. 

Dated: November 1, 2005. 

Carol Booker, 

Legal Counsel. 

[FR Doc. 05–22236 Filed 11–3–05; 12:39 pm] 

BILLING CODE 8230–01–M 

DEPARTMENT OF COMMERCE 

International Trade Administration 

A–570–899 

Preliminary Determination of Sales at 

Less Than Fair Value: Certain Artist 

Canvas from the People’s Republic of 

China 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

EFFECTIVE DATE: November 7, 2005. 

SUMMARY: We preliminarily determine 

that artist canvas from the People’s 

Republic of China (‘‘PRC’’) is being, or 

is likely to be, sold in the United States 

at less than fair value (‘‘LTFV’’), as 

provided in section 733 of the Tariff Act 

of 1930, as amended (‘‘the Act’’). The 

estimated margins of sales at LTFV are 

shown in the ‘‘Preliminary 

Determination’’ section of this notice. 

FOR FURTHER INFORMATION CONTACT: Jon 

Freed or Michael Holton, AD/CVD 

Operations, Office 8, Import 

Administration, International Trade 

Administration, U.S. Department of 

Commerce, 14th Street and Constitution 

Avenue, NW, Washington, DC, 20230; 

telephone: (202) 482–3818 or 482–1324, 

respectively. 

SUPPLEMENTARY INFORMATION: 

Case History 

On March 31, 2005, the Department of 

Commerce (‘‘Department’’) received a 

Petition on imports of certain artist 

canvas from the 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. This 

investigation was initiated on April 28, 

2005. See Initiation of Antidumping 

Duty Investigation: Certain Artist 

Canvas from the People’s Republic of 

China, 70 FR 21996 (April 28, 2005) 

(‘‘Notice of Initiation’’). Additionally, in 

the Notice of Initiation, the Department 

applied the modified process by which 

exporters and producers may obtain 

separate–rate status in NME 

investigations. The new process requires 

exporters and producers to submit a 

separate–rate status application. See 

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/policy/bull05–

1.pdf. However, 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. 

On April 28, 2005, the Department 

requested quantity and value (‘‘Q&V’’) 

information from a total of six producers 

of artist canvas in the PRC which were 

identified in the petition and for which 

the Department was able to locate 

contact information. On April 28, 2005, 

the Department also sent the 

Government of the PRC a letter 

requesting assistance in locating all 

known Chinese producers/exporters of 

artist canvas who exported artist canvas 

to the United States during the POI, July 

1, 2004, through December 31, 2004. In 

addition, on May 11, 2005, in response 

to a request from ColArt Americas Inc. 

(‘‘ColArt’’), the Department requested 

Q&V information from ColArt. 

On May 16, 2005, the Department 

received Q&V responses from four 

Chinese producers/exporters of artist 

canvas: Hangzhou Haili Electronic 

Equipment Co., Ltd. (‘‘Haili’’); ColArt; 

Ningbo Conda Import & Export Co., Ltd. 

(‘‘Ningbo Conda’’); and Wuxi Phoenix 

Artist Materials Co., Ltd. (‘‘Phoenix 

Materials’’). On May 16, 2005, the 

Department also received a Q&V 

response from Textus Industries stating 

that it is a U.S. importer and it is not 

a producer or exporter of subject 

merchandise. The Government of the 

PRC did not respond to the 

Department’s April 28, 2005, letter 

requesting assistance in identifying 

producers and exporters of the subject 

merchandise in the PRC. On June 2, 

2005, the Department requested 

clarifying Q&V information from Haili, 

ColArt, Ningbo Conda and Phoenix 

Materials. On June 6, 2005, we received 

responses from Haili, ColArt, Ningbo 

Conda and Phoenix Materials clarifying 

their Q&V information. 

On May 13, 2005, the Department 

requested comments from all interested 

parties on proposed control numbers 

(‘‘CONNUMs’’) to be assigned the 

subject merchandise. On May 23, 2005, 

we received comments from: Michaels 

Stores, Inc., Aaron Brothers, 

Macpherson’s ColArt Americas Inc., 

Crafts, Etc!, Ltd./Hobby Lobby Stores, 

Inc., and Jerry’s Artarama, Inc. 

(collectively, ‘‘Importers’’); Petitioner; 

and Phoenix Materials. 

On May 24, 2005, the United States 

International Trade Commission (‘‘ITC’’) 

issued its affirmative preliminary 

determination that there is a reasonable 

indication that an industry in the 

United States is materially injured by 

reason of imports from the PRC of 

certain artist canvas. The ITC’s 

determination was published in the 

Federal Register on May 24, 2005. See 

Investigation Nos. 731–TA–1091 

(Preliminary), Artists’ Canvas from 

China, 70 FR 29781 (May 24, 2005). 

On May 25, 2005, the Department 

determined that India, Indonesia, Sri 

Lanka, the Philippines, and Egypt are 

countries comparable to the PRC in 

terms of economic development. See 

Memorandum from Ron Lorentzen, 

Acting Director, Office of Policy to 

Robert Bolling, Program Manager, 

China/NME Group, Office 8: 

Antidumping Duty Investigation of 

Certain Artist Canvas from the People’s 

Republic of China (PRC): Request for a 

List of Surrogate Countries, dated May 

25, 2005 (‘‘Office of Policy Surrogate 

Countries Memorandum’’). 

On May 27, 2005, the Department 

requested that the parties submit 

comments on surrogate country 

selection. On June 24, 2005, we received 

comments regarding the selection of a 

surrogate country from the Petitioner 

and from the Importers. Both the 

Petitioner and Importers argued that 

India is the appropriate surrogate 

country. 

On May 27, 2005, we received 

separate rate applications from 

Hangzhou Foreign Relation & Trade 

Service Co. Ltd. (‘‘HFERTS’’) and 

Jiangsu Animal By–products Import & 

Export Group Corp. (‘‘Jiangsu By–

products’’). On June 16, 2005, we 

Federal Register / Vol. 70, No. 214 / Monday, November 7, 2005 / Notices 67413 

requested additional information from 

HFERTS regarding its separate rate 

application. 

On June 9, 2005, the Department 

issued its respondent–selection 

memorandum, selecting the following 

two companies as mandatory 

respondents in this investigation: 

Ningbo Conda and Phoenix Materials. 

See Memorandum from Wendy J. 

Frankel, Director, AD/CVD 

Enforcement, Office 8, to Edward Yang, 

Senior Enforcement Coordinator, China/ 

NME Group, Selection of Respondents 

for the Antidumping Duty Investigation 

of Artist Canvas from the People’s 

Republic of China (‘‘Respondent 

Selection Memo’’), dated June 9, 2005. 

On June 13, 2005, the Department 

issued its Sections A, C, D, and E, 

questionnaire to Ningbo Conda and 

Phoenix Materials. On June 13, 2005, we 

also issued a Sections A, C, D, and E 

questionnaire to the Chinese 

Government (i.e., Ministry of 

Commerce). 

On June 27, 2005, Phoenix Materials 

requested that it be excused from 

submitting the factors of production 

spreadsheet contained in Appendix VI 

to the Department’s original 

questionnaire. On July 14, 2005, we 

informed Ningbo Conda and Phoenix 

Materials that we had revised the factors 

of production spreadsheet, and created 

a spreadsheet for this investigation that 

both respondents are required to 

complete. 

On July 1, 2005, we provided a oneweek extension until July 11, 2005, to 

Ningbo Conda for its response to our 

Section A questionnaire. Additionally, 

on July 5, 2005, we provided a two–

business day extension until July 7, 

2005, to Phoenix Materials for its 

response to our Section A questionnaire. 

Further, on July 13, 2005, we provided 

an extension until July 25, 2005, to all 

mandatory respondents to respond to 

Sections C, D, and E of the 

questionnaire. For a detailed discussion 

on specific mandatory respondent 

extensions, please see the company–

specific section for each mandatory 

respondent below. 

On July 29, 2005, the Department 

determined that India was the 

appropriate surrogate country to use in 

this investigation. See Memorandum to 

Wendy J. Frankel, Director, AD/CVD 

Enforecement, Office 8, from Michael 

Holton, Case Analyst, through Robert 

Bolling, Program Manager: 

Antidumping Duty Investigation on 

Certain Artist Canvas from the People’s 

Republic of China (‘‘Surrogate–Country 

Memorandum’’), dated July 29, 2005. 

We received comments from interested 

parties regarding our selection of India 

as the surrogate country. For a detailed 

discussion of the comments regarding 

the surrogate country, please see the 

‘‘Surrogate Country’’ section below. 

Additionally, on July 13, 2005, we 

extended the time period for interested 

parties to provide surrogate values for 

the factors of production until August 1, 

2005. On July 29, 2005, we received a 

request from the Importers to further 

extend the deadline for supplying 

surrogate–value information. On August 

1, 2005, we informed all interested 

parties that we were again extending the 

time period to provide surrogate–value 

information until August 5, 2005. 

On August 5, 2005, Petitioner, Ningbo 

Conda, and Phoenix Materials 

submitted surrogate–value information. 

On September 2, 2005, Petitioner 

submitted comments on respondents’

surrogate–value information. 

On August 11, 2005, Petitioner made 

a timely request pursuant to 19 CFR 

§351.205(e) for a twenty–nine day 

postponement of the preliminary 

determination, until October 7, 2005. 

On August 19, 2005, the Department 

published a postponement of the 

preliminary antidumping duty 

determination on artist canvas from the 

PRC. See Notice of Postponement of the 

Preliminary Determination of Certain 

Artist Canvas from the People’s 

Republic of China Antidumping Duty 

Investigation, 70 FR 48667 (August 19, 

2005). Additionally, on September 29, 

2005, Petitioner made another timely 

request pursuant to 19 CFR §351.205(e) 

for an additional twenty–one day 

postponement of the preliminary 

determination, until October 28, 2005. 

On October 13, 2005, the Department 

published a postponement of the 

preliminary antidumping duty 

determination on artist canvas from the 

PRC. See Notice of Postponement of the 

Preliminary Determination of Certain 

Artist Canvas from the People’s 

Republic of China Antidumping Duty 

Investigation, 70 FR 59718 (October 13, 

2005). 

Company–Specific Chronology 

As described above, the Department 

staggered its issuance of sections of the 

antidumping questionnaire to the 

mandatory respondents. Upon receipt of 

the various responses, the Petitioners 

provided comments and the Department 

issued supplemental questionnaires. 

The chronology of this stage of the 

investigation varies by respondent. 

Therefore, the Department has separated 

by company the following discussion of 

its information–gathering process after 

issuance of the questionnaire. 

Ningbo Conda 

On May 27, 2005, Ningbo Conda 

submitted a separate rate application. 

On July 11, 2005, Ningbo Conda 

submitted its response to Section A of 

the questionnaire. On July 25, 2005, 

Ningbo Conda submitted its response to 

Sections C and D of the questionnaire. 

On August 3, 2005, the Department 

issued a Supplemental Section A 

questionnaire covering Ningbo Conda’s 

July 11, 2005, Section A response. On 

July 28, 2005, Petitioners submitted 

deficiency comments on the Section A 

response of Ningbo Conda. On August 

19, 2005, Ningbo Conda submitted its 

response to the Supplemental Section A 

questionnaire. On August 15, 2005, 

Petitioners submitted deficiency 

comments on the Sections C and D 

responses of Ningbo Conda. On August 

18, 2005, the Department issued a 

Supplemental Sections C and D 

questionnaire covering Ningbo Conda’s 

July 25, 2005, Sections C and D 

response. On September 9, 2005, Ningbo 

Conda submitted its response to the 

Department’s August 18, 2005, 

Supplemental Sections C and D 

questionnaire. On September 14, 2005, 

the Department issued a Supplemental 

Sections A and C questionnaire 

requesting financial information and a 

new U.S. sales database. On September 

21, 2005, Ningbo Conda submitted its 

response to the Department’s September 

14, 2005, Supplemental Sections A and 

C questionnaire. On September 21, 

2005, the Department issued a 

Supplemental Sections A, C, and D 

questionnaire covering Ningbo Conda’s 

responses. On September 28, 2005, 

Ningbo Conda submitted its response to 

the Department’s Supplemental 

Sections A, C, and D questionnaire. On 

October 3, 2005, Petitioners submitted 

comments regarding Ningbo Conda’s 

September 28, 2005, response. On 

October 3, 2005, the Department issued 

a Supplemental Sections A, C, and D 

questionnaire covering Ningbo Conda’s 

responses. On October 7, 2005, the 

Department issued a Supplemental 

Sections C questionnaire covering 

Ningbo Conda’s responses. On October 

4, 2005, Ningbo Conda’s U.S. affiliate 

submitted a response to the 

Department’s September 21, 2005, 

Supplemental Sections A, C, and D 

questionnaire. On October 19, 2005, 

Ningbo Conda submitted a response to 

the Department’s October 3, 2005, 

Supplemental Sections A, C, and D 

questionnaire. On October 19, 2005, 

Ningbo Conda submitted a response to 

the Department’s Supplemental 

Sections C questionnaire. 

67414 Federal Register / Vol. 70, No. 214 / Monday, November 7, 2005 / Notices 

1Artist canvases with a non-copyrighted 

preprinted outline, pattern, or design are included 

in the scope, whether or not included in a painting 

set or kit. 

Phoenix Materials 

On July 7, 2005, Phoenix Materials 

submitted its response to Section A of 

the questionnaire. On July 25, 2005, 

Phoenix Materials submitted its 

response to Sections C and D of the 

questionnaire. On July 25, 2005, the 

Department issued a Supplemental 

Section A questionnaire covering 

Phoenix Materials’ July 7, 2005, Section 

A response. On July 28, 2005, 

Petitioners submitted deficiency 

comments on the Section A responses of 

Phoenix Materials. On August 10, 2005, 

Phoenix Materials submitted its 

response to the Supplemental Section A 

questionnaire. On August 15, 2005, 

Petitioners submitted deficiency 

comments on the Sections C and D 

responses of Phoenix Materials. On 

August 19, 2005, the Department issued 

a Supplemental Section A–D 

questionnaire covering Phoenix 

Materials’ July 28, 2005, Sections C and 

D response and its August 10, 2005, 

response to the Supplemental Section A 

questionnaire. On September 9, 2005, 

Phoenix Materials submitted its 

response to the Supplemental Sections 

A–D questionnaire issued on August 19, 

2005. On September 20, 2005, the 

Department issued a Second 

Supplemental A–D questionnaire to 

Phoenix Materials. On September 30, 

2005, Phoenix Materials submitted its 

response to the Second Supplemental 

A–D questionnaire. 

Postponement of Final Determination 

Section 735(a) of the Act provides that 

a final determination may be postponed 

until no later than 135 days after the 

date of the publication of the 

preliminary determination if, in the 

event of an affirmative preliminary 

determination, a request for such 

postponement is made by exporters who 

account for a significant proportion of 

exports of the subject merchandise or, in 

the event of a negative preliminary 

determination, a request for such 

postponement is made by the 

Petitioners. The Department’s 

regulations at 19 CFR 351.210(e)(2) 

require that requests by respondents for 

postponement of a final determination 

be accompanied by a request for an 

extension of the provisional measures 

from a four-month period to not more 

than six months. 

On October 5, 2005, Ningbo Conda 

requested that, in the event of an 

affirmative preliminary determination 

in this investigation, the Department 

postpone its final determination by 60 

days until 135 days after the publication 

of the preliminary determination. As 

well, on October 26, 2005, Phoenix 

Materials requested that, in the event of 

an affirmative preliminary 

determination, the Department postpone 

its final determination by 60 days until 

135 days after the publication of the 

preliminary determination. 

Additionally, Ningbo Conda and 

Phoenix Materials requested that the 

Department extend the provisional 

measures under Section 733(d) of the 

Act. Accordingly, because we have 

made an affirmative preliminary 

determination and the requesting parties 

account for a significant proportion of 

the exports of the subject merchandise, 

pursuant to 735(a)(2) of the Act, we 

have postponed the final determination 

until no later than 135 days after the 

date of publication of the preliminary 

determination and are extending the 

provisional measures accordingly. 

Period of Investigation 

The POI is July 1, 2004 through 

December 31, 2004. This period 

corresponds to the two most recent 

fiscal quarters prior to the month of the 

filing of the petition (March 31, 2005). 

See 19 CFR 351.204(b)(1). 

Scope of Investigation 

The products covered by this 

investigation are artist canvases 

regardless of dimension and/or size, 

whether assembled or unassembled, 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. Artist 

canvas and stretcher strips (whether or 

not made of wood and whether or not 

assembled) included within a kit or set 

are covered by this proceeding. 

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, 

‘‘paint–by-number’’ or ‘‘paint–ityourself’’ artist canvases with a 

copyrighted preprinted outline, pattern, 

or design, whether or not included in a 

painting set or kit.1 Also excluded are 

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 or set. 

While HTSUS subheadings are provided 

for convenience and customs purposes, 

our written description of the scope of 

this proceeding is dispositive. 

Scope Comments 

In accordance with the preamble to 

our regulations (see Antidumping 

Duties; Countervailing Duties, 62 FR 

27296, 27323 (May 19, 1997)), we set 

aside a period of time for parties to raise 

issues regarding product coverage and 

encouraged all parties to submit 

comments within 20 calendar days of 

publication of the Notice of Initiation 

(see 70 FR at 21996). 

The Department received numerous 

scope comments from a variety of 

interested parties. On May 18, 2005, the 

Importers provided scope comments 

concerning three product categories that 

they believe should be excluded from 

the scope of the investigation: (1) kits; 

(2) bleached canvas; and (3) splined 

canvas. Additionally, on May 18, 2005, 

Phoenix Materials requested 

confirmation that two products were 

outside the scope of the investigation: 

(1) artist canvas panels that are pre–

printed with copyrighted ‘‘paint–bynumber’’ outlines; and (2) artist canvas 

panels that are pre–printed with 

copyrighted ‘‘paint–by-number’’

outlines that are sold within a boxed 

‘‘painting set.’’

On May 26, 2005, Petitioner 

responded to the above–mentioned 

comments stating that the Department 

should reject the exclusion requests of 

the Importers and Phoenix Materials. 

Additionally, on May 18, 2005, Design 

Ideas, Ltd. (‘‘Design Ideas’’) (a U.S. 

Importer) provided scope comments 

arguing that the artist canvas it imports 

from the PRC produced by Hangzhou 

Haili is outside the scope of the 

investigation because India, not the PRC 

is the country of origin of the product. 

On June 2, 2005, Petitioner provided a 

rebuttal to Design Ideas’ May 18th 

submission wherein Petitioner stated 

that the Department should deny Design 

Ideas’ exclusion request for artist canvas 

produced by Hangzhou Haili. On July 1, 

2005, Design Ideas responded to 

Petitioners’ June 2nd submission, 

stating that it is clear from the record 

that India is the country of origin of its 

imported artist canvas. On July 25, 

Federal Register / Vol. 70, No. 214 / Monday, November 7, 2005 / Notices 67415 

2005, Petitioner responded to Design 

Ideas’ July 1st submission stating that 

this submission provided no support or 

citation for granting Design Ideas’

exclusion request and Petitioner stated 

that the Department should deny 

Hangzhou Haili’s exclusion request. On 

August 10, 2005, Design Ideas 

responded to Petitioners’ July 25th 

submission, stating that it is clear from 

the record that the artist canvases 

produced by Hangzhou Haili in the PRC 

using gesso primed canvas from India 

and imported into the United States are 

not within the scope of the 

investigation. On August 17, 2005, the 

Importers responded to both Design 

Ideas and Petitioner comments stating 

that it supports Design Ideas’ request 

that artist canvases produced by 

Hangzhou Haili from gesso primed 

canvas produced in India should be 

excluded from the scope of the 

investigation. On September 2, 2005, 

Petitioner responded to both the August 

10th and 17th submissions, wherein 

Petitioner stated that it continues to 

believe there is no basis to grant Design 

Ideas’ request. 

Further, as part of this process, the 

Department has fully summarized and 

addresses all of the comments received 

to date in a memorandum to the file. See 

Memorandum to the File from Michael 

Holton, Case Analyst, to Wendy Frankel, 

Office Director, Antidumping Duty 

Investigation of Certain Artist Canvas 

from the People’s Republic of China: 

Summary on Comments to the Scope, 

dated October 28, 2005 (‘‘Scope 

Memorandum’’). 

For this preliminary determination, 

the Department has made 

determinations with respect to artist 

canvas kits, paint–by-number artist 

canvas, bleached canvas, and splined 

canvas in the Scope Memorandum. 

However, the Department has not yet 

determined whether artist canvas 

primed in India but processed and 

exported from the PRC is within the 

scope of this investigation. Nonetheless, 

the Department intends to issue a 

preliminary finding on whether artist 

canvas primed in India but processed 

and exported from the PRC is within the 

scope of this investigation. We will 

afford interested parties an opportunity 

to provide comments on our 

preliminary finding on this issue in 

their pre–hearing briefs. 

Selection of Respondents 

Section 777A(c)(1) of the Act directs 

the Department to calculate individual 

weighted–average dumping margins for 

each known exporter and producer of 

the subject merchandise. Section 

777A(c)(2) of the Act gives the 

Department discretion, when faced with 

a large number of exporters/producers, 

to limit its examination to a reasonable 

number of such companies if it is not 

practicable to examine all companies. 

Where it is not practicable to examine 

all known producers/exporters of 

subject merchandise, this provision 

permits the Department to investigate 

either (1) a sample of exporters, 

producers, or types of products that is 

statistically valid based on the 

information available to the Department 

at the time of selection or (2) exporters/ 

producers accounting for the largest 

volume of the merchandise under 

investigation that can reasonably be 

examined. After consideration of the 

complexities expected to arise in this 

proceeding and the resources available 

to it, the Department determined that it 

was not practicable in this investigation 

to examine all known producers/ 

exporters of subject merchandise. 

Instead, we limited our examination to 

the two exporters and producers 

accounting for the largest volume of the 

subject merchandise pursuant to section 

777A(c)(2)(B) of the Act. Ningbo Conda 

and Phoenix Materials, the exporters 

accounting for the largest volume of 

exports to the United States, account for 

a significant percentage of all exports of 

the subject merchandise from the PRC 

during the POI and were selected as 

mandatory respondents. See 

Respondent Selection Memo at 4. 

Non–Market-Economy Country 

For purposes of initiation, the 

Petitioners submitted LTFV analyses for 

the PRC as a non–market economy. See 

Notice of Initiation 70 FR at 21997. In 

every case conducted by the Department 

involving the PRC, the PRC has been 

treated as an Non–Market Economy 

(‘‘NME’’) country. In accordance with 

section 771(18)(C)(i) of the Act, any 

determination that a foreign country is 

an NME country shall remain in effect 

until revoked by the administering 

authority. See also Tapered Roller 

Bearings and Parts Thereof, Finished 

and Unfinished, (‘‘TRBs’’) From the 

People’s Republic of China: Preliminary 

Results 2001–2002 Administrative 

Review and Partial Rescission of 

Review, 68 FR 7500 (February 14, 2003), 

unchanged in Final Results of 2001–

2002 Administrative Review: TRBs from 

the People’s Republic of China, 68 FR 

70488 (December 18, 2003). Therefore, 

we have treated the PRC as an NME 

country for purposes of this preliminary 

determination. 

Surrogate Country 

When the Department is investigating 

imports from an NME, section 773(c)(1) 

of the Act directs it to base normal 

value, in most circumstances, on the 

NME producer’s factors of production 

valued in a surrogate market–economy 

country or countries considered to be 

appropriate by the Department. In 

accordance with section 773(c)(4) of the 

Act, in valuing the factors of 

production, the Department shall 

utilize, to the extent possible, the prices 

or costs of factors of production in one 

or more market–economy countries that 

are at a level of economic development 

comparable to that of the NME country 

and are significant producers of 

comparable merchandise. The sources 

of the surrogate values we have used in 

this investigation are discussed under 

the normal value section below. 

The Department determined that 

India, Indonesia, Sri Lanka, the 

Philippines, and Egypt are countries 

comparable to the PRC in terms of 

economic development. See Office of 

Policy Surrogate Countries 

Memorandum. Once the countries that 

are economically comparable to the PRC 

have been identified, we select an 

appropriate surrogate country by 

determining whether an economically 

comparable country is a significant 

producer of subject merchandise and 

whether the data for valuing factors of 

production is both available and 

reliable. 

On June 24, 2005, the Department 

received arguments from interested 

parties on the surrogate country. 

Petitioner argues that India is the 

appropriate surrogate country for this 

investigation because India is at a 

comparable level of economic 

development with the PRC based on the 

Department’s repeated use of India as a 

surrogate. Petitioner argues that India is 

a significant producer of identical and 

comparable merchandise. Additionally, 

Petitioner contends that India provides 

publicly available information on which 

to base surrogate values. 

Also, on June 24, 2005, the Importers 

argue that India is the only country that 

appears to meet the Department’s 

criteria for a surrogate country based on 

economic comparability, significant 

production of comparable merchandise, 

and the availability of factor data. See 

the Selection of a Surrogate Country 

Memorandum dated August 3, 2004, for 

a complete description of the interested 

parties surrogate country arguments. 

Consequently, we have made the 

following determination about the use 

of India as a surrogate country: (1) it is 

a significant producer of comparable 

merchandise; (2) it is at a similar level 

of economic development pursuant to 

733(c)(4) of the Act; and (3) we have 

reliable data from India that we can use 

67416 Federal Register / Vol. 70, No. 214 / Monday, November 7, 2005 / Notices 

to value the factors of production. See 

Selection of a Surrogate Country 

Memorandum. Thus, we have 

calculated normal value using Indian 

prices when available and appropriate 

to value the factors of production of the 

artist canvas producers. We have 

obtained and relied upon publicly 

available information wherever 

possible. See Memorandum to the File 

from Jon Freed, Case Analyst, through 

Robert Bolling, Program Manager, and 

Wendy Frankel, Office Director: Certain 

Artist Canvas from the People’s 

Republic of China: Factors Valuation 

Memorandum for the Preliminary 

Determination, dated October 7, 2005 

(‘‘Factor–Valuation Memorandum’’). 

In accordance with 19 CFR 

351.301(c)(3)(i), for the final 

determination in an antidumping 

investigation, interested parties may 

submit publicly available information to 

value the factors of production within 

40 days after the date of publication of 

the preliminary determination. 

Affiliation 

Section 771(33) of the Act states that 

the Department considers the following 

entities to be affiliated: (A) Members of 

a family, including brothers and sisters 

(whether by whole or half blood), 

spouse, ancestors, and lineal 

descendants; (B) Any officer or director 

of an organization and such 

organization; (C) Partners; (D) Employer 

and employee; (E) Any person directly 

or indirectly owning, controlling, or 

holding with power to vote, 5 percent or 

more of the outstanding voting stock or 

shares of any organization and such 

organization; (F) Two or more persons 

directly or indirectly controlling, 

controlled by, or under common control 

with, any person; and (G) Any person 

who controls any other person and such 

other person. 

For purposes of affiliation, section 

771(33) of the Act states that a person 

shall be considered to control another 

person if the person is legally or 

operationally in a position to exercise 

restraint or direction over the other 

person. In order to find affiliation 

between companies, the Department 

must find that at least one of the criteria 

listed above is applicable to the 

respondents. 

The Statement of Administrative 

Action accompanying the Uruguay 

Round Agreements Act (‘‘SAA’’), H.R. 

Doc. 103–316 (1994), indicates that 

stock ownership is not the only 

evidentiary factor that the Department 

may consider to determine whether a 

person is in a position to exercise 

restraint or direction over another 

person, e.g., control may be established 

through corporate or family groupings, 

or joint ventures and other means as 

well. See SAA at 838. See also Certain 

Fresh Cut Flowers from Colombia; Final 

Results of Antidumping Duty 

Administrative Review, 61 FR 42833, 

42853 (August 19, 1996); and Certain 

Welded Carbon Steel Pipes and Tubes 

from Thailand: Final Results of 

Antidumping Duty Administrative 

Review, 62 FR 53808, 53810 (October 

16, 1997). 

To the extent that the affiliation 

provisions in section 771(33) of the Act 

do not conflict with the Department’s 

application of separate rates and the 

statutory NME provisions in section 

773(c) of the Act, the Department will 

determine that exporters and/or 

producers are affiliated if the facts of the 

case support such a finding. See Certain 

Preserved Mushrooms From the People’s 

Republic of China: Preliminary Results 

of Sixth New Shipper Review and 

Preliminary Results and Partial 

Rescission of Fourth Antidumping Duty 

Administrative Review, 69 FR 10410, 

10413 (March 5, 2004) (‘‘Mushrooms’’), 

unchanged in Final Results and Final 

Rescission, in Part, of Antidumping 

Duty Administrative Review: Certain 

Preserved Mushrooms From the People’s 

Republic of China, 70 FR 54361 

(September 14, 2005). 

Ningbo Conda 

Following these guidelines, we 

preliminarily determine that members 

of the Ningbo Conda Group (i.e., Ningbo 

Conda and Conda (Ningbo) Painting 

Material Mfg. (‘‘Conda Painting’’)) are 

affiliated pursuant to Section 771(33) of 

the Act. We also preliminarily 

determine that the Ningbo Conda Group 

should be treated as a single entity for 

the purposes of the antidumping 

investigation of certain artist canvas 

from the PRC. 

Further, based on our examination of 

the evidence presented in Ningbo 

Conda’s questionnaire responses, we 

preliminarily find that Jinhua Universal 

Canvas Manufacturing Co., Ltd. (‘‘Jinhua 

Universal’’) is affiliated with the Ningbo 

Conda Group pursuant to sections 

771(33)(B), (E), (F) and (G) of the Act 

and should be treated as a single entity 

with the Ningbo Conda Group for 

purposes of calculating a dumping 

margin in this investigation. See 

Mushrooms, 69 FR 10410, 10413 (March 

5, 2004), see also, Hontex Enterprises, 

Inc. v. United States, 248 F. Supp. 2d 

1323, 1339–1345 (CIT 2003). We made 

this determination based on record 

evidence from Ningbo Conda’s 

questionnaire responses that stated that 

Ningbo Conda, Conda Painting, and 

Jinhua Universal share the same director 

and the same director directly or 

indirectly owns and controls more than 

five percent of outstanding stock of each 

of these companies. 

Further, evidence presented in 

Ningbo Conda’s questionnaire responses 

indicates that during the POI the Ningbo 

Conda Group sold subject merchandise 

to a U.S. reseller. The Department 

preliminary determines that under 

sections (711)(33)(E), (F), and (G) of the 

Act, this reseller is affiliated with 

several other entities all owned and 

controlled by the parent corporation. 

These entities are referred to as Group 

A in the affiliation memorandum. For 

the purposes of this analysis, we have 

treated Group A as a single entity. 

Additionally, we have determined 

that Group A and Jinhua Universal are 

affiliated parties, consistent with record 

evidence, the Department’s practice and 

sections 771(33)(E) and (F) of the Act. 

We made this determination based on 

record evidence from Ningbo Conda’s 

questionnaire responses that stated that 

Group A’s parent corporation directly or 

indirectly owns and controls more than 

five percent of outstanding stock of 

Jinhua Universal. 

Furthermore, we have determined 

that the Ningbo Conda Group and Group 

A are affiliated under sections 

771(33)(F) of the Act. We made this 

determination based on record evidence 

from Ningbo Conda’s questionnaire 

responses that stated that Ningbo 

Conda’s and Group A’s ownership of 

Jinhua Universal result in Ningbo 

Conda’s and Group A’s direct or indirect 

control of Jinhua Universal. 

Accordingly, we are using Group A’s 

U.S. downstream sales to the first U.S. 

unaffiliated customer in our margin 

calculation. See Memorandum to Wendy 

Frankel, Director, Office 8, NME/China 

Group, through Robert Bolling, Program 

Manager, From Michael Holton, Case 

Analyst, Antidumping Duty 

Investigation of Certain Artist Canvas 

from the People’s Republic of China: 

Affiliation of Ningbo Conda, dated 

October 28, 2005 (‘‘Affiliation 

Memorandum’’). 

Phoenix Materials 

Following these guidelines, we 

preliminarily determine that Phoenix 

Materials, Wuxi Phoenix Stationary Co. 

Ltd (‘‘Phoenix Stationary’’), and 

Shuyang Phoenix Artist Materials Co. 

Ltd. (‘‘Shuyang Phoenix’’), collectively, 

(‘‘Phoenix Group’’) are affiliated 

pursuant to sections 771(33)(E) and (G) 

of the Act and that these companies 

should be treated as a single entity for 

the purposes of the antidumping 

investigation of artist canvas from the 

PRC. Based on our examination of the 

Federal Register / Vol. 70, No. 214 / Monday, November 7, 2005 / Notices 67417 

evidence presented in Phoenix 

Materials’ questionnaire responses, we 

have determined that: (1) Phoenix 

Materials controls a majority of Phoenix 

Stationary based on stock–ownership, 

and Phoenix Materials controls Shuyang 

Phoenix; (2) Phoenix Materials, Phoenix 

Stationary, and Shuyang Phoenix have 

overlapping managers and directors; 

and (3) Phoenix Materials and Phoenix 

Stationary share production facilities 

and production records. See 

Memorandum to Wendy Frankel, 

Director, Office 8, NME/China Group, 

through Robert Bolling, Program 

Manager, From Jon Freed, Case Analyst, 

Antidumping Duty Investigation of 

Certain Artist Canvas from the People’s 

Republic of China: Phoenix Affiliation 

and Treatment as a Single Entity of 

Phoenix Materials and its Members, 

dated October 28, 2005 (‘‘Affiliation/ 

Single Entity Treatment 

Memorandum’’). 

Separate Rates 

In proceedings involving NME 

countries, the Department begins with a 

rebuttable presumption that all 

companies within the country are 

subject to government control and, thus, 

should be assigned a single 

antidumping duty deposit rate. It is the 

Department’s policy to assign all 

exporters of merchandise subject to 

investigation in an NME country this 

single rate unless an exporter can 

demonstrate that it is sufficiently 

independent so as to be entitled to a 

separate rate. The two mandatory 

respondents and the two Separate Rate 

Applicants have provided company–

specific information and each has stated 

that it meets the standards for the 

assignment of a separate rate. 

We have considered whether each of 

the four companies referenced above is 

eligible for a separate rate. The 

Department’s separate–rate test to 

determine whether the exporters are 

independent from government control 

does not consider, in general, 

macroeconomic/border–type controls, 

e.g., export licenses, quotas, and 

minimum export prices, particularly if 

these controls are imposed to prevent 

dumping. The test focuses, rather, on 

controls over the investment, pricing, 

and output decision–making process at 

the individual firm level. See Certain 

Cut–to-Length Carbon Steel Plate from 

Ukraine: Final Determination of Sales at 

Less than Fair Value, 62 FR 61754, 

61758 (November 19, 1997); and 

Tapered Roller Bearings and Parts 

Thereof, Finished and Unfinished, from 

the People’s Republic of China: Final 

Results of Antidumping Duty 

Administrative Review, 62 FR 61276, 

61279 (November 17, 1997). 

To establish whether a firm is 

sufficiently independent from 

government control of its export 

activities to be entitled to a separate 

rate, the Department analyzes each 

entity exporting the subject 

merchandise under a test arising from 

the Final Determination of Sales at Less 

Than Fair Value: Sparklers from the 

People’s Republic of China, 56 FR 20588 

(May 6, 1991) (‘‘Sparklers’’), as 

amplified by Final Determination of 

Sales at Less Than Fair Value: Silicon 

Carbide from the People’s Republic of 

China, 59 FR 22585 (May 2,1994) 

(‘‘Silicon Carbide’’). In accordance with 

the separate–rates criteria, the 

Department assigns separate rates in 

NME cases only if respondents can 

demonstrate the absence of both de jure 

and de facto governmental control over 

export activities. 

1. Absence of De Jure Control 

The Department considers the 

following de jure criteria in determining 

whether an individual company may be 

granted a separate rate: (1) an absence of 

restrictive stipulations associated with 

an individual exporter’s business and 

export licenses; (2) any legislative 

enactments decentralizing control of 

companies; and (3) other formal 

measures by the government 

decentralizing control of companies. See 

Sparklers, 56 FR at 20589. 

Our analysis shows that the evidence 

on the record supports a preliminary 

finding of the absence of de jure 

governmental control for Ningbo Conda 

Group (Ningbo Conda and its affiliated 

exporters, Conda Painting and Jinhua 

Universal), Phoenix Materials (and its 

affiliated exporter Phoenix Stationary), 

HFERTS, and Jiangsu By–products 

based on the criteria listed above. See 

Memorandum to Wendy Frankel, Office 

Director, China/NME Group, through 

Robert Bolling, Program Manager, from 

Jon Freed and Michael Holton, Case 

Analysts, Certain Artist Canvas from the 

People’s Republic of China: Separate 

Rates Memorandum (‘‘Separate–Rates 

Memorandum’’), dated October 7, 2005. 

2. Absence of De Facto Control 

Typically the Department considers 

the following four factors in evaluating 

whether each respondent is subject to 

de facto governmental control of its 

export functions: (1) whether the export 

prices are set by or are subject to the 

approval of a governmental agency; (2) 

whether the respondent has authority to 

negotiate and sign contracts and other 

agreements; (3) whether the respondent 

has autonomy from the government in 

making decisions regarding the 

selection of management; and (4) 

whether the respondent retains the 

proceeds of its export sales and makes 

independent decisions regarding 

disposition of profits or financing of 

losses. See Silicon Carbide, 59 FR at 

22586–87; see also Final Determination 

of Sales at Less Than Fair Value: 

Furfuryl Alcohol From the People’s 

Republic of China, 60 FR 22544, 22545 

(May 8, 1995). The Department has 

determined that an analysis of de facto 

control is critical in determining 

whether respondents are, in fact, subject 

to a degree of governmental control 

which would preclude the Department 

from assigning separate rates. 

We preliminarily determine that, for 

Ningbo Conda (and its affiliated 

exporters, Conda Painting and Jinhua 

Univeral), Phoenix Materials (and its 

affiliated exporter Phoenix Stationary), 

HFERTS, and Jiangsu By–products, the 

evidence on the record supports a 

preliminary finding of de facto absence 

of governmental control based on record 

statements and supporting 

documentation showing the following: 

(1) each exporter sets its own export 

prices independent of the government 

and without the approval of a 

government authority; (2) each exporter 

retains the proceeds from its sales and 

makes independent decisions regarding 

disposition of profits or financing of 

losses; (3) each exporter has the 

authority to negotiate and sign contracts 

and other agreements; and (4) each 

exporter has autonomy from the 

government regarding the selection of 

management. 

Therefore, the evidence placed on the 

record of this investigation by Ningbo 

Conda (and its affiliated exporters, 

Conda Painting and Jinhua Univeral), 

Phoenix Materials (and its affiliated 

exporter Phoenix Stationary), HFERTS, 

and Jiangsu By–products demonstrates 

an absence of government control, both 

in law and in fact, with respect to each 

of the exporter’s exports of the 

merchandise under investigation in 

accordance with the criteria identified 

in Sparklers and Silicon Carbide. 

However, although HFERTS has 

demonstrated an absence of government 

control, both in law and in fact, with 

respect to its exports of artist canvas, the 

Department has not determined the 

country of origin of the merchandise 

exported by HFERTS. Until the 

Department determines that HFERTS 

had exports of subject merchandise, 

HFERTS is not entitled to a separate 

rate. As a result, for the purposes of this 

preliminary determination, we have 

granted separate, company–specific 

rates to the mandatory respondents and 

their affiliates and to one of the separate 

rate applicants (Jiangsu By–products) 

67418 Federal Register / Vol. 70, No. 214 / Monday, November 7, 2005 / Notices 

which shipped subject artist canvas to 

the United States during the POI. For a 

full discussion of this issue, please see 

the Separate–Rates Memorandum. If the 

Department determines that the 

merchandise exported by HFERTS is 

artist canvas from the PRC, the 

Department intends to assign HFERTS a 

separate rate. 

PRC–Wide Rate 

The Department has data that indicate 

there were more exporters of artist 

canvas from the PRC during the POI 

than those which responded to the Q&V 

questionnaire. See Respondent Selection 

Memorandum at 1. Although we issued 

the Q&V questionnaire to six known 

Chinese exporters of the subject 

merchandise, from these six we received 

four Q&V questionnaire responses, and 

one unsolicited Q&V questionnaire. 

Also, on June 13, 2005, we issued our 

complete questionnaire to the Chinese 

Government (i.e., Ministry of 

Commerce). Although all exporters were 

given an opportunity to provide 

information showing they qualify for 

separate rates, not all of these other 

exporters provided a response to either 

the Department’s Q&V questionnaire or 

its separate rate application. Therefore, 

the Department determines 

preliminarily that there were exports of 

the merchandise under investigation 

from PRC producers/exporters that did 

not respond to the Department’s 

questionnaire. We treated these PRC 

producers/exporters as part of the 

countrywide entity. Further, the 

Government of the PRC did not respond 

to the Department’s questionnaire. 

Section 776(a)(2) of the Act provides 

that, if an interested party (A) withholds 

information that has been requested by 

the Department, (B) fails to provide such 

information in a timely manner or in the 

form or manner requested, subject to 

subsections 782(c)(1) and (e) of the Act, 

(C) significantly impedes a proceeding 

under the antidumping statute, or (D) 

provides such information but the 

information cannot be verified, the 

Department shall, subject to subsection 

782(d) of the Act, use facts otherwise 

available in reaching the applicable 

determination. 

Pursuant to section 782(e) of the Act, 

the Department shall not decline to 

consider submitted information if all of 

the following requirements are met: (1) 

the information is submitted by the 

established deadline; (2) the information 

can be verified; (3) the information is 

not so incomplete that it cannot serve as 

a reliable basis for reaching the 

applicable determination; (4) the 

interested party has demonstrated that it 

acted to the best of its ability; and (5) 

the information can be used without 

undue difficulties. 

Information on the record of this 

investigation indicates that there are 

numerous producers/exporters of artist 

canvas in the PRC. As described above, 

all exporters were given the opportunity 

to respond to the Department’s 

questionnaire. Based upon our 

knowledge of the volume of imports of 

subject merchandise from the PRC and 

the fact that information indicates that 

the responding companies did not 

account for all imports into the United 

States from the PRC, we preliminarily 

determine that certain PRC exporters of 

artist canvas failed to respond to our 

questionnaires. Additionally, in this 

case, the Government of the PRC did not 

respond to the Department’s 

questionnaire. As a result, use of facts 

available pursuant to section 

776(a)(2)(A) of the Act is appropriate. 

See Preliminary Determination of Sales 

at Less Than Fair Value, Affirmative 

Preliminary Determination of Critical 

Circumstances and Postponement of 

Final Determination: Certain Frozen 

Fish Fillets from the Socialist Republic 

of Vietnam, 68 FR 4986 (January 31, 

2003), unchanged in Final 

Determination of Sales at Less Than 

Fair Value and Affirmative Critical 

Circumstances: Certain Frozen Fish 

Fillets from the Socialist Republic of 

Vietnam, 68 FR 37116 (June 23, 2003). 

Section 776(b) of the Act provides 

that if an interested party fails to 

cooperate by not acting to the best of its 

ability to comply with requests for 

information, the Department may 

employ adverse inferences. See Final 

Determination of Sales at Less Than 

Fair Value: Certain Cold–Rolled Flat–

Rolled Carbon–Quality Steel Products 

from the Russian Federation, 65 FR 

5510, 5518 (February 4, 2000). See also 

SAA at 870. We find that, because the 

PRC–wide entity did not respond to our 

request for information, it has failed to 

cooperate to the best of its ability. 

Therefore, the Department preliminarily 

finds that, in selecting from among the 

facts available, an adverse inference is 

appropriate. 

In selecting from among the facts 

available, Section 776(b) of the Act 

authorizes the Department to use 

adverse–facts-available (‘‘AFA’’) 

information derived from the petition, 

the final determination from the LTFV 

investigation, a previous administrative 

review, or any other information placed 

on the record. As AFA, we have 

assigned to the PRC–wide entity a 

margin based on information in the 

petition, because the margins derived 

from the petition are higher than the 

calculated margins for the selected 

respondents. In this case, we have 

applied a rate of 264.09 percent. 

Section 776(c) of the Act provides 

that, when the Department relies on 

secondary information rather than on 

information obtained in the course of an 

investigation as facts available, it must, 

to the extent practicable, corroborate 

that information from independent 

sources reasonably at its disposal. 

Secondary information is described in 

the SAA as ‘‘information derived from 

the petition that gave rise to the 

investigation or review, the final 

determination concerning subject 

merchandise, or any previous review 

under section 751 concerning the 

subject merchandise.’’ See SAA at 870. 

The SAA provides that to ‘‘corroborate’’

means simply that the Department will 

satisfy itself that the secondary 

information to be used has probative 

value. See id. The SAA also states that 

independent sources used to corroborate 

may include, for example, published 

price lists, official import statistics and 

customs data, and information obtained 

from interested parties during the 

particular investigation. See id. As 

explained in Tapered Roller Bearings 

and Parts Thereof, Finished and 

Unfinished, from Japan, and Tapered 

Roller Bearings, Four Inches or Less in 

Outside Diameter, and Components 

Thereof, from Japan; Preliminary 

Results of Antidumping Duty 

Administrative Reviews and Partial 

Termination of Administrative Reviews, 

61 FR 57391, 57392 (November 6, 1996), 

unchanged in Final Results of 

Antidumping Duty Administrative 

Reviews and Termination in Part: 

Tapered Roller Bearings and Parts 

Thereof, Finished and Unfinished, From 

Japan, and Tapered Roller Bearings, 

Four Inches or Less in Outside 

Diameter, and Components Thereof, 

From Japan, 62 FR11825 (March 13, 

2005), to corroborate secondary 

information, the Department will, to the 

extent practicable, examine the 

reliability and relevance of the 

information used. 

The Petitioners’ methodology for 

calculating the export price and normal 

value in the petition is discussed in the 

initiation notice. See Notice of 

Initiation, 70 FR at 21996–21997. To 

corroborate the AFA margin we have 

selected, we compared that margin to 

the margins we found for the 

respondents. 

As discussed in the Memorandum to 

the File regarding the corroboration of 

the AFA rate, dated October 28, 2005, 

we found that the margin of 264.09 

percent has probative value. See 

Memorandum to The File Through 

Robert Bolling, Program Manager, 

Federal Register / Vol. 70, No. 214 / Monday, November 7, 2005 / Notices 67419 

China/NME Group, Corroboration for 

the Preliminary Determination of 

Certain Artist Canvas from the People’s 

Republic of China, dated October 28, 

2005, (‘‘Corroboration Memo’’). 

Accordingly, we find that the rate of 

264.09 percent is corroborated within 

the meaning of section 776(c) of the Act. 

Consequently, we are applying a 

single antidumping rate the PRC–wide 

rate to producers/exporters that failed to 

respond to the Q&V questionnaire or the 

separate rate application. This rate will 

also apply to exporters which did not 

demonstrate entitlement to a separate 

rate. See, e.g., Final Determination of 

Sales at Less Than Fair Value: Synthetic 

Indigo from the People’s Republic of 

China, 65 FR 25706, 25707 (May 3, 

2000). The PRC–wide rate applies to all 

entries of the merchandise under 

investigation except for entries from the 

two mandatory respondents and one of 

the separate rate applicants. In addition, 

for the preliminary determination, the 

PRC–wide rate does not apply to artist 

canvas that is produced from bulk roll 

canvas coated in a third country and 

exported from the PRC. 

The Department will consider all 

margins on the record at the time of the 

final determination for the purpose of 

determining the most appropriate AFA 

rate for the PRC–wide entity. See 

Preliminary Determination of Sales at 

Less Than Fair Value: Saccharin from 

the People’s Republic of China, 67 FR 

79049, 79054 (December 27, 2002), 

unchanged in Final Determination of 

Sales at Less Than Fair Value: 

Saccharin From the People’s Republic of 

China, 68 FR 27530 (May 20, 2003). 

Margin for the Separate Rate 

Applicants 

HFERTS and Jiangsu By–products, 

both exporters of artist canvas from the 

PRC, were not selected as mandatory 

respondents in this investigation but 

have applied for a separate rate and 

provided information to the Department 

for this purpose. However, as stated 

above, the Department has not yet 

determined whether HFERTS had 

exports of subject merchandise and, 

therefore, we are not assigning HFERTS 

a separate rate. We have established a 

weighted–average margin for Jiangsu 

By–products based on the rates we 

calculated for the two mandatory 

respondents, excluding any rates that 

are zero, de minimis, or based entirely 

on adverse facts available. That rate is 

70.28 percent. Jiangsu By–products is 

identified by name in the ‘‘Preliminary 

Determination’’ section of this notice. 

Date of Sale 

Section 351.401(i) of the Department’s 

regulations state that, ‘‘in identifying the 

date of sale of the subject merchandise 

or foreign like product, the Secretary 

normally will use the date of invoice, as 

recorded in the exporter or producer’s 

records kept in the normal course of 

business.’’ However, the Secretary may 

use a date other than the date of invoice 

if the Secretary is satisfied that a 

different date better reflects the date on 

which the exporter or producer 

establishes the material terms of sale.’’

19 CFR 351.401(i); See also Allied Tube 

and Conduit Corp. v. United States, 132 

F. Supp. 2d 1087, 1090–1093 (CIT 

2001). 

After examining the questionnaire 

responses and the sales documentation 

that Ningbo Conda and the Phoenix 

Group placed on the record, we 

preliminarily determine that invoice 

date is the most appropriate date of sale 

for Ningbo Conda and the Phoenix 

Group. We made this determination 

based on record evidence which 

demonstrates that Ningbo Conda and 

the Phoenix Group invoices establish 

the material terms of sale to the extent 

required by our regulations. Thus, the 

record evidence does not rebut the 

presumption that invoice date is the 

proper date of sale. See Preliminary 

Determination of Sales at Less Than 

Fair Value: Saccharin From the People’s 

Republic of China, 67 FR 79054 

(December 27, 2002). 

Fair Value Comparisons 

To determine whether sales of artist 

canvas to the United States by the two 

mandatory respondents were made at 

less than fair value, we compared export 

price (‘‘EP’’) or constructed export price 

(‘‘CEP’’) to normal value (‘‘NV’’), as 

described in the ‘‘U.S. Price,’’ and 

‘‘Normal Value’’ sections of this notice. 

U.S. Price 

In accordance with section 772(a) of 

the Act, we used EP for both Ningbo 

Conda and the Phoenix Group, as 

appropriate, because the subject 

merchandise was first sold (or agreed to 

be sold) before the date of importation 

by the producer or exporter of the 

subject merchandise outside the United 

States to an unaffiliated purchaser in the 

United States or to an unaffiliated 

purchaser for exportation to the United 

States and because the use of CEP was 

not otherwise indicated. In accordance 

with section 772(b) of the Act, we used 

CEP for certain of Ningbo Conda’s sales 

because the subject merchandise was 

sold in the United States after the date 

of importation by a U.S. reseller 

affiliated with the Ningbo Conda Group 

and Jinhua Universal. 

We calculated EP and CEP based on 

the packed F.O.B., C.I.F., or delivered 

price to unaffiliated purchasers in, or for 

exportation to, the United States. We 

made deductions, as appropriate, for 

any movement expenses (e.g., foreign 

inland freight from the plant to the port 

of exportation, domestic brokerage, 

ocean freight, marine insurance, U.S. 

brokerage, and inland freight from 

warehouse to unaffiliated U.S. 

customer) in accordance with section 

772(c)(2)(A) of the Act. For a detailed 

description of all adjustments, see 

Memorandum to The File Through 

Robert Bolling, Program Manager, 

China/NME Group, from Michael 

Holton, Case Analyst, Analysis for the 

Preliminary Determination of Certain 

Artist Canvas from the People’s 

Republic of China: ColArt, Ningbo 

Conda Import & Export Co., Ltd., dated 

October 28, 2005, and Memorandum to 

the File Through Robert Bolling, 

Program Manager, China/NME Group, 

From Jon Freed, Case Analyst, Analysis 

for the Preliminary Determination of 

Certain Artist Canvas from the People’s 

Republic of China: Wuxi Phoenix Artist 

Materials Co., Ltd., dated October 28, 

2005. 

In accordance with section 772(d)(1) 

of the Act and 19 CFR 351.402(b), we 

calculated the CEP by deducting selling 

expenses associated with economic 

activities occurring in the United States 

for Ningbo Conda. 

We compared NV to weighted–

average EPs and CEPs in accordance 

with section 777A(d)(1) of the Act. 

Where appropriate, for Ningbo Conda, 

in accordance with sections 772(d)(3) 

and 772(f) of the Act, we deducted CEP 

profit. For a detailed description of all 

adjustments, see the Company–Specific 

Analysis Memoranda dated October 28, 

2005. 

Normal Value 

Section 773(c)(1) of the Act provides 

that the Department shall determine the 

NV using a factors–of-production 

methodology if the merchandise is 

exported from an NME and the 

information does not permit the 

calculation of NV using home–market 

prices, third–country prices, or 

constructed value under section 773(a) 

of the Act. The Department bases NV on 

the factors of production because the 

presence of government controls on 

various aspects of these economies 

renders price comparisons and the 

calculation of production costs invalid 

under its normal methodologies. 

The Department’s questionnaire 

requires that the respondent provide 

67420 Federal Register / Vol. 70, No. 214 / Monday, November 7, 2005 / Notices 

information regarding the weighted–

average factors of production across all 

of the company’s plants that produce 

the subject merchandise, not just the 

factors of production from a single 

plant. This methodology ensures that 

the Department’s calculations are as 

accurate as possible. See e.g., Final 

Determination of Sales at Less Than 

Fair Value and Critical Circumstances: 

Certain Malleable Iron Pipe Fittings 

From the People’s Republic of China, 68 

FR 61395 (Oct. 28, 2003); Issues and 

Decision Memorandum, Comment 19 

(Oct. 20, 2003). Therefore, for the 

Phoenix Group, the Department 

calculated the factors of production 

using the weighted–average factor 

values for all of the facilities involved 

in producing the subject merchandise. 

For Ningbo Conda, the Department 

calculated normal values for each 

CONNUM based on the factors of 

production reported from each of 

Ningbo Conda’s suppliers and then 

averaged the supplier–specific normal 

values together weighted by production 

quantity to derive a single, weighted–

average normal value for each 

CONNUM exported by Ningbo Conda. 

Factor Valuations 

In accordance with section 773(c) of 

the Act, we calculated NV based on 

factors of production reported by 

respondents for the POI. To calculate 

NV, we multiplied the reported per–unit 

factor–consumption rates by publicly 

available Indian surrogate values. In 

selecting the surrogate values, we 

considered the quality, specificity, and 

contemporaneity of the data. As 

appropriate, we adjusted input prices by 

including freight costs to make them 

delivered prices. Specifically, we added 

to Indian import surrogate values a 

surrogate freight cost using the shorter 

of the reported distance from the 

domestic supplier to the factory or the 

distance from the nearest seaport to the 

factory where appropriate. This 

adjustment is in accordance with the 

Court of Appeals for the Federal 

Circuit’s decision in Sigma Corp. v. 

United States, 117 F. 3d 1401, 1407–

1408 (Fed. Cir. 1997). 

For this preliminary determination, in 

accordance with past practice, we used 

data from the Indian Import Statistics or 

Chemical Weekly in order to calculate 

surrogate values for the mandatory 

respondents’ material inputs. In 

selecting the best available information 

for valuing factors of production in 

accordance with section 773(c)(1) of the 

Act, the Department’s practice is to 

select, to the extent practicable, 

surrogate values which are non–export 

average values, most contemporaneous 

with the POI, product–specific, and tax–

exclusive. See e.g., Notice of 

Preliminary Determination of Sales at 

Less Than Fair Value, Negative 

Preliminary Determination of Critical 

Circumstances and Postponement of 

Final Determination: Certain Frozen 

and Canned Warmwater Shrimp From 

the Socialist Republic of Vietnam, 69 FR 

42672, 42682 (July 16, 2004), unchanged 

in Final Determination of Sales at Less 

Than Fair Value: Certain Frozen and 

Canned Warmwater Shrimp from the 

Socialist Republic of Vietnam, 69 FR 

71005 (December 8, 2004). The record 

shows that data in the Indian Import 

Statistics and Chemical Weekly 

represents import data that is, 

contemporaneous with the POI, 

product–specific, and tax–exclusive. 

Where we could not obtain publicly 

available information contemporaneous 

to the POI with which to value factors, 

we adjusted the surrogate values using, 

where appropriate, the Indian 

Wholesale Price Index as published in 

the International Financial Statistics of 

the International Monetary Fund. 

Furthermore, with regard to the 

Indian import–based surrogate values, 

we have disregarded import prices that 

we have reason to believe or suspect 

may be subsidized. We have reason to 

believe or suspect that prices of inputs 

from Indonesia, South Korea, and 

Thailand may have been subsidized. We 

have found in other proceedings that 

these countries maintain broadly 

available, non–industry-specific export 

subsidies and, therefore, it is reasonable 

to infer that all exports to all markets 

from these countries are subsidized. See 

Amended Final Determination of Sales 

at Less than Fair Value: Automotive 

Replacement Glass Windshields from 

the People’s Republic of China, 67 FR 

11670 (March 15, 2002), see also Notice 

of Final Determination of Sales at Less 

Than Fair Value and Negative Final 

Determination of Critical 

Circumstances: Certain Color Television 

Receivers From the People’s Republic of 

China, 69 FR 20594 (April 16, 2004) 

(‘‘CTVs from the PRC’’). We are also 

directed by the legislative history not to 

conduct a formal investigation to ensure 

that such prices are not subsidized. See 

H.R. Rep. 100–576 at 590 (1988). Rather, 

Congress directed the Department to 

base its decision on information that is 

available to it at the time it makes its 

determination. Therefore, we have not 

used prices from these countries in 

calculating the Indian import–based 

surrogate values. In instances where a 

market–economy input was obtained 

solely from suppliers located in these 

countries, we used Indian import–based 

surrogate values to value the input. See 

Final Determination of Sales at Less 

Than Fair Value: Certain Automotive 

Replacement Glass Windshields From 

The People’s Republic of China, 67 FR 

6482 (February 12, 2002), and 

accompanying Issues and Decision 

Memorandum at Comment 1. 

The Department used the Indian 

Import Statistics to value the following 

raw material inputs, energy, and 

packing materials that Ningbo Conda 

and the Phoenix Group used to produce 

the subject merchandise during the POI: 

Linen Canvas, Cotton Canvas 

(bleached), Cotton Canvas (unbleached), 

Paulownia, Pine, Beech, Foam board, 

Three–ply board, Carton Roll, 

Fiberboard, Paint, Glue, Staple, Nail, 

Plastic, Paper, Sand Paper, Acrylic 

Polymer Resin, Amine PH Adjuster, 

Cellulose, Cinnamene (monomer of 

polystyrene), Lithopone, Octyl Phenol 

emulsifynig agent, Paraffin, Polyvinyl 

Alcohol, Polyvinyl chloride (PVC), 

Talcum Powder, Thickening Agent, 

Tributyl phosphate (TBP), VAE Latex 

(Vinyl acetate ethylene), Zinc Sulfide, 

Paper Label, Plastic sheet (shrink wrap), 

Wooden Peg, Plastic Peg, Labor, 

Electricity, Coal, Water, Box, Cardboard, 

Plastic Strap, Rubber band, and Tape. 

For a detailed description of all 

surrogate values used for respondents, 

see Factor–Valuation Memorandum. 

The Department used Chemical 

Weekly to value the following material 

inputs used by Ningbo Conda and the 

Phoenix Group: Calcium Carbonate, 

Crylic acid, Dispersant, Isobutyl 

Methacrylate, Methacryl acid methyl, 

Polyethylene Resin, Propylene Glycol, 

Sodium Benzoate, Sodium Hydroxide/ 

Caustic Soda, Stearic Acid, and 

Titanium Dioxide/Titanium Pigment, 

see Factor–Valuation Memorandum. 

For direct, indirect, and packing 

labor, consistent with 19 CFR 

351.408(c)(3), we used the PRC 

regression–based wage rate as reported 

on Import Administration’s home page, 

Import Library, Expected Wages of 

Selected NME Countries, revised in 

August 2005, http://ia.ita.doc.gov/ 

wages/index.html. The source of these 

wage–rate data on the Import 

Administration’s web site is the 

Yearbook of Labour Statistics 2002, ILO 

(Geneva: 2002), Chapter 5B: Wages in 

Manufacturing. Because this regression–

based wage rate does not separate the 

labor rates into different skill levels or 

types of labor, we have applied the same 

wage rate to all skill levels and types of 

labor reported by the respondent. See 

Factor–Valuation Memorandum 

To value electricity, we used data 

from the International Energy Agency 

Key World Energy Statistics (2003 

Federal Register / Vol. 70, No. 214 / Monday, November 7, 2005 / Notices 67421 

edition). Because the value was not 

contemporaneous with the POI, we 

adjusted the rate for inflation. See 

Factor–Valuation Memorandum. 

The Department valued water using 

data from the Maharastra Industrial 

Development Corporation 

(www.midcindia.org) since it includes a 

wide range of industrial water tariffs. 

This source provides 386 industrial 

water rates within the Maharashtra 

province from June 2003: 193 for the 

‘‘inside industrial areas’’ usage category 

and 193 for the ‘‘outside industrial 

areas’’ usage category. Because the value 

was not contemporaneous with the POI, 

we adjusted the rate for inflation. See 

Factor–Valuation Memorandum. 

The Department valued steam coal 

using the 2003/2004 Tata Energy 

Research Institute’s Energy Data 

Directory & Yearbook (‘‘TERI Data’’). 

The Department was able to determine, 

through its examination of the 2003/ 

2004 TERI Data, that a) the annual TERI 

Data publication is complete and 

comprehensive because it covers all 

sales of all types of coal made by Coal 

India Limited and its subsidiaries, and 

b) the annual TERI Data publication 

prices are exclusive of duties and taxes. 

Because the value was not 

contemporaneous with the POI, we 

adjusted the rate for inflation. See 

Factor–Valuation Memorandum. 

We used Indian transport information 

in order to value the freight–in cost of 

the raw materials. The Department 

determined the best available 

information for valuing truck freight to 

be from www.infreight.com. This source 

provides daily rates from six major 

points of origin to five destinations in 

India during the POI. The Department 

obtained a price quote on the first day 

of each month of the POI from each 

point of origin to each destination and 

averaged the data accordingly. See 

Factor–Valuation Memorandum 

The Department used two sources to 

calculate a surrogate value for domestic 

brokerage expenses. The Department 

averaged December 2003–November 

2004 data contained in Essar Steel’s 

February 28, 2005, public version 

response submitted in the AD 

administrative review of Hot–Rolled 

Carbon Steel Flat Products from India 

with October 2002–September 2003 data 

contained in Pidilite Industries’ March 

9, 2004, public version response 

submitted in the AD investigation of 

Carbazole Violet Pigment 23 from India. 

The brokerage expense data reported by 

Essar Steel and Pidilite Industries in 

their public versions is ranged data. The 

Department first derived an average 

per–unit amount from each source. 

Then the Department adjusted each 

average rate for inflation, Finally, the 

Department averaged the two per–unit 

amounts to derive an overall average 

rate for the POI. See Factor–Valuation 

Memorandum. 

To value marine insurance, the 

Department obtained a price quote from 

http://www.rjgconsultants.com/ 

insurance.html, a market–economy 

provider of marine insurance. See 

Factor–Valuation Memorandum. 

To value international freight, the 

Department obtained price quotes from 

http://www.maersksealand.com/ 

HomePage/appmanager/, a market–

economy provider of international 

freight services. See Factor–Valuation 

Memorandum. 

To value factory overhead, selling, 

general, and administrative expenses, 

and profit, we used the audited 

financial statements for the fiscal year 

ending March 31, 2005, from Camlin 

Ltd., an Indian producer of artist canvas 

from India. See Factor–Valuation 

Memorandum for a full discussion of 

the calculation of the ratios from this 

financial statement. 

Currency Conversion 

We made currency conversions into 

U.S. dollars, in accordance with section 

773A(a) of the Act, based on the 

exchange rates in effect on the dates of 

the U.S. sales as certified by the Federal 

Reserve Bank. 

Verification 

As provided in section 782(i)(1) of the 

Act, we intend to verify the information 

upon which we will rely in making our 

final determination. 

Combination Rates 

In the Notice of Initiation, the 

Department stated that it would 

calculate combination rates for certain 

respondents that are eligible for a 

separate rate in this investigation. See 

Notice of Initiation, 70 FR 21996, 21999. 

This change in practice 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/. The Policy 

Bulletin 05.1, 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.’’

Policy Bulletin 05.1, at page 6. 

Preliminary Determination 

The weighted–average dumping 

margins are as follows: 

ARTIST CANVAS FROM THE PRC - WEIGHTED–AVERAGE DUMPING MARGINS

Exporter Producer Weighted–Average Deposit Rate 

NingboConda ............................................................. Jinhua Universal 55.78 

Ningbo Conda ............................................................ Wuxi Silver Eagle Cultural Goods Co. Ltd. 55.78 

Conda Painting .......................................................... Wuxi Pegasus Cultural Goods Co. Ltd. 55.78 

Jinhua Universal ........................................................ Jinhua Universal 55.78 

Phoenix Materials ...................................................... Phoenix Materials 73.66 

Phoenix Materials ...................................................... Phoenix Stationary 73.66 

Phoenix Materials ...................................................... Shuyang Phoenix 73.66 

Pheonix Stationary ..................................................... Phoenix Materials 73.66 

Pheonix Stationary ..................................................... Phoenix Stationary 73.66 

Pheonix Stationary ..................................................... Shuyang Phoenix 73.66 

67422 Federal Register / Vol. 70, No. 214 / Monday, November 7, 2005 / Notices 

1The petitioners are ISG Georgetown (formerly 

Georgetown Steel Company), Gerdau Ameristeel 

U.S., Inc., (formely Co-Steel Raritan), Keystone 

Consolidated Industries, Inc., and North Star Steel 

Texas, Inc. 

ARTIST CANVAS FROM THE PRC - WEIGHTED–AVERAGE DUMPING MARGINS—Continued 

Exporter Producer Weighted–Average Deposit Rate 

Jiangsu By–products ................................................. Jiangsu By–products 70.28 

China–Wide Rate ....................................................... ............................................................................ 264.09 

Disclosure 

We will disclose the calculations 

performed within five days of the date 

of publication of this notice to parties in 

this proceeding in accordance with 19 

CFR 351.224(b). 

Suspension of Liquidation 

In accordance with section 733(d) of 

the Act, we will instruct U.S. Customs 

and Border Protection (‘‘CBP’’) to 

suspend liquidation of all entries of 

subject merchandise, entered, or 

withdrawn from warehouse, for 

consumption on or after the date of 

publication of this notice in the Federal 

Register. We will instruct CBP to 

require a cash deposit or the posting of 

a bond equal to the weighted–average 

amount by which the normal value 

exceeds U.S. price, as indicated above. 

The suspension of liquidation will 

remain in effect until further notice. 

International Trade Commission 

Notification 

In accordance with section 733(f) of 

the Act, we have notified the ITC of our 

preliminary affirmative determination of 

sales at less than fair value. Because we 

have postponed the deadline for our 

final determination to 135 days from the 

date of publication of this preliminary 

determination, section 735(b)(2) of the 

Act requires the ITC to make its final 

determination as to whether the 

domestic industry in the United States 

is materially injured, or threatened with 

material injury, by reason of imports of 

artist canvas, or sales (or the likelihood 

of sales) for importation, of the subject 

merchandise within 45 days of our final 

determination. 

Public Comment 

Case briefs or other written comments 

may be submitted to the Assistant 

Secretary for Import Administration no 

later than seven days after the date of 

the final verification report is issued in 

this proceeding and rebuttal briefs 

limited to issues raised in case briefs no 

later than five days after the deadline 

date for case briefs. A list of authorities 

used and an executive summary of 

issues should accompany any briefs 

submitted to the Department. This 

summary should be limited to five pages 

total, including footnotes. 

In accordance with section 774 of the 

Act, we will hold a public hearing, if 

requested, to afford interested parties an 

opportunity to comment on arguments 

raised in case or rebuttal briefs. If a 

request for a hearing is made, we intend 

to hold the hearing three days after the 

deadline of submission of rebuttal briefs 

at the U.S. Department of Commerce, 

14th Street and Constitution Ave, NW, 

Washington, DC 20230, at a time and 

location to be determined. Parties 

should confirm by telephone the date, 

time, and location of the hearing two 

days before the scheduled date. 

Interested parties who wish to request 

a hearing, or to participate if one is 

requested, must submit a written 

request to the Assistant Secretary for 

Import Administration, U.S. Department 

of Commerce, Room 1870, within 30 

days after the date of publication of this 

notice. See 19 CFR 351.310(c). Requests 

should contain the party’s name, 

address, and telephone number, the 

number of participants, and a list of the 

issues to be discussed. At the hearing, 

each party may make an affirmative 

presentation only on issues raised in 

that party’s case brief and may make 

rebuttal presentations only on 

arguments included in that party’s 

rebuttal brief. 

We will make our final determination 

no later than 135 days after the date of 

publication of this preliminary 

determination, pursuant to section 

735(a)(2) of the Act. 

This determination is issued and 

published in accordance with sections 

733(f) and 777(i)(1) of the Act. 

Dated: October 28, 2005. 

Joseph A. Spetrini, 

Acting Assistant Secretary for Import 

Administration. 

[FR Doc. 05–22149 Filed 11–4–05; 8:45 am] 

BILLING CODE 3510–DS–S 

DEPARTMENT OF COMMERCE 

International Trade Administration 

A–201–830 

Preliminary Results of Antidumping 

Duty Administrative Review: Carbon 

and Alloy Steel Wire Rod from Mexico 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

SUMMARY: In response to requests by 

interested parties, the Department of 

Commerce (‘‘the Department’’) is 

conducting an administrative review of 

the antidumping duty order on carbon 

and alloy steel wire rod (‘‘wire rod’’) 

from Mexico for the period of review 

(‘‘POR’’) October 1, 2003, through 

September 30, 2004. 

We preliminarily determine that 

during the POR, Hylsa Puebla, S.A. de 

C.V. (‘‘Hylsa Puebla’’) and Siderurgica 

Lazaro Cardenas Las Truchas S.A. de 

C.V., and its affiliate, CCC Steel GmbH, 

collectively (‘‘SICARTSA’’) sold subject 

merchandise at less than normal value 

(‘‘NV’’). If these preliminary results are 

adopted in the final results of this 

administrative review, we will instruct 

U.S. Customs and Border Protection 

(‘‘CBP’’) to assess antidumping duties 

equal to the difference between the 

export price (‘‘EP’’) and NV. 

EFFECTIVE DATE: November 7, 2005. 

FOR FURTHER INFORMATION CONTACT: 

Tipten Troidl or Jolanta Lawska at (202) 

482–1767 or (202) 482–8362, 

respectively, AD/CVD Operations, 

Office 3, Import Administration, Room 

1870, International Trade 

Administration, U.S. Department of 

Commerce, 14th Street and Constitution 

Avenue, NW, Washington, DC 20230. 

SUPPLEMENTARY INFORMATION: 

Background 

On October 29, 2002, the Department 

published in the Federal Register the 

antidumping duty order on wire rod 

from Mexico; see Notice of 

Antidumping Duty Orders: Carbon and 

Certain Alloy Steel Wire Rod from 

Brazil, Indonesia, Mexico, Moldova, 

Trinidad and Tobago, and Ukraine, 67 

FR 65945 (October 29,2002). On October 

1, 2004, we published in the Federal 

Register the notice of Antidumping or 

Countervailing Duty Order, Finding, or 

Suspended Investigation: Opportunity 

To Request Administrative Review, 69 

FR 58889 (October 1, 2004). 

On October 18, 2004, we received a 

request for review from SICARTSA: On 

October 27, 2004, we received a request 

for review from petitioners,1 with 

respect to Hylsa Puebla and Sicartsa: On 

October 29, 2004, Hylsa Puebla and its 

Federal Register / Vol. 70, No. 221 / Thursday, November 17, 2005 / Notices 69781 

1For purposes of this investigation, the 

Department of Commerce has defined the subject 

merchandise as ‘‘artist canvases regardless of 

dimension and/or size, whether assembled or 

unassembled, 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.’’ 70 FR 67412, November 7, 2005. 

for the title described below has been 

forwarded to the Office of Management 

and Budget (OMB) for review and 

comment. The information collection 

request describes the nature of the 

information collection and its expected 

burden and cost. 

DATES: OMB has up to 60 days to 

approve or disapprove the information 

collections but may respond after 30 

days. Therefore, public comments 

should be submitted to OMB by 

December 19, 2005 in order to be 

assured of consideration. 

ADDRESSES: Comments may be 

submitted to the Office of Information 

and Regulatory Affairs, Office of 

Management and Budget, Department of 

the Interior Desk Officer, via e-mail at 

OIRA_Docket@omb.eop.gov, or by 

facsimile to (202) 395–6566. Also, 

please send a copy of your comments to 

John A. Trelease, Office of Surface 

Mining Reclamation and Enforcement, 

1951 Constitution Ave, NW., Room 202–

SIB, Washington, DC 20240, or 

electronically to jtrelease@osmre.gov. 

Please reference 1029–0063 in your 

correspondence. 

FOR FURTHER INFORMATION CONTACT: To 

request a copy of either information 

collection request, explanatory 

information and related form, contact 

John A. Trelease at (202) 208–2783. You 

may also contact Mr. Trelease at 

jtreleas@osmre.gov. 

SUPPLEMENTARY INFORMATION: The Office 

of Management and Budget (OMB) 

regulations at 5 CFR 1320, which 

implement provisions of the Paperwork 

Reduction Act of 1995 (Pub. L. 104–13), 

require that interested members of the 

public and affected agencies have an 

opportunity to comment on information 

collection and recordkeeping activities 

[see 5 CFR 1320.8(d)]. OSM has 

submitted a request to OMB to renew its 

approval for the collection of 

information found at 30 CFR part 870, 

Abandoned Mine Reclamation Fund—

Fee Collection and Coal Production 

Reporting and the form it implements, 

the OSM–1, Coal Reclamation Fee 

Report. This request consolidates these 

requirements with the excess moisture 

deduction provisions found in section 

870.18, approved separately by OMB 

under control number 1029–0090. OSM 

is requesting a 3-year term of approval 

for these information collection 

activities. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a currently valid OMB 

control number. The OMB control 

number for this collection of 

information is 1029–0063 for part 870 

and the OSM–1 form. 

As required under 5 CFR 1320.8(d), a 

Federal Register notice soliciting 

comments on this collection of 

information was published on August 

30, 2005 (70 FR 51364). No comments 

were received. This notice provides the 

public with an additional 30 days in 

which to comment on the following 

information collection activities: 

Title: Abandoned Mine Reclamation 

Fund—Fee Collection and Coal 

Production Reporting, 30 CFR 870. 

OMB Control Number: 1029–0063. 

Summary: The information is used to 

maintain a record of coal produced for 

sale, transfer, or use nationwide each 

calendar quarter, the method of coal 

removal and the type of coal, and the 

basis for coal tonnage reporting in 

compliance with 30 CFR 870 and 

section 401 of Public Law 95–87. 

Individual reclamation fee payment 

liability is based on this information. 

Without the collection of information 

OSM could not implement its regulatory 

responsibilities and collect the fee. 

Bureau Form Number: OSM–1. 

Frequency of Collection: Quarterly. 

Description of Respondents: Coal 

mine permittees. 

Total Annual Responses: 11,192. 

Total Annual Burden Hours: 2,462. 

Send comments on the need for the 

collection of information for the 

performance of the functions of the 

agency; the accuracy of the agency’s 

burden estimates; ways to enhance the 

quality, utility and clarity of the 

information collection; and ways to 

minimize the information collection 

burden on respondents, such as use of 

automated means of collection of the 

information, to the following address. 

Please refer to the appropriate OMB 

control number in all correspondence. 

Dated: November 2, 2005. 

Dennis G. Rice, 

Acting Chief, Division of Regulatory Support 

[FR Doc. 05–22794 Filed 11–16–05; 8:45 am] 

BILLING CODE 4310–05–M 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation No. 731–TA–1091 (Final)] 

Artists’ Canvas from China 

AGENCY: International Trade 

Commission. 

ACTION: Scheduling of the final phase of 

an antidumping investigation. 

SUMMARY: The Commission hereby gives 

notice of the scheduling of the final 

phase of antidumping investigation No. 

731–TA–1091 (Final) under section 

735(b) of the Tariff Act of 1930 (19 

U.S.C. 1673d(b)) (the Act) to determine 

whether 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 less-than-fair-value imports 

from China of artists’ canvas, provided 

for in subheadings 5901.90.20.00 and 

5901.90.40.00 of the Harmonized Tariff 

Schedule of the United States.1

For further information concerning 

the conduct of this phase of the 

investigation, hearing procedures, 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 C (19 CFR part 207). 

EFFECTIVE DATE: November 7, 2005. 

FOR FURTHER INFORMATION CONTACT: Jai 

Motwane (202–205–3176), 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. The final phase of this 

investigation is being scheduled as a 

result of an affirmative preliminary 

determination by the Department of 

Commerce that imports of artists’ canvas 

from China are being sold in the United 

States at less than fair value within the 

meaning of section 733 of the Act (19 

U.S.C. 1673b). The investigation was 

requested in a petition filed on April 1, 

2005, by Tara Materials, Inc., 

Lawrenceville, GA. 

Participation in the investigation and 

public service list. Persons, including 

industrial users of the subject 

merchandise and, if the merchandise is 

sold at the retail level, representative 

69782 Federal Register / Vol. 70, No. 221 / Thursday, November 17, 2005 / Notices 

consumer organizations, wishing to 

participate in the final phase of this 

investigation as parties must file an 

entry of appearance with the Secretary 

to the Commission, as provided in 

section 201.11 of the Commission’s 

rules, no later than 21 days prior to the 

hearing date specified in this notice. A 

party that filed a notice of appearance 

during the preliminary phase of the 

investigation need not file an additional 

notice of appearance during this final 

phase. The Secretary will maintain a 

public service list containing the names 

and addresses of all persons, or their 

representatives, who are parties to the 

investigation. 

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 the 

final phase of this investigation 

available to authorized applicants under 

the APO issued in the investigation, 

provided that the application is made 

no later than 21 days prior to the 

hearing date specified in this notice. 

Authorized applicants must represent 

interested parties, as defined by 19 

U.S.C. 1677(9), who are parties to the 

investigation. A party granted access to 

BPI in the preliminary phase of the 

investigation need not reapply for such 

access. A separate service list will be 

maintained by the Secretary for those 

parties authorized to receive BPI under 

the APO. 

Staff report. The prehearing staff 

report in the final phase of this 

investigation will be placed in the 

nonpublic record on March 14, 2006, 

and a public version will be issued 

thereafter, pursuant to section 207.22 of 

the Commission’s rules. 

Hearing. The Commission will hold a 

hearing in connection with the final 

phase of this investigation beginning at 

9:30 a.m. on March 28, 2006, at the U.S. 

International Trade Commission 

Building. Requests to appear at the 

hearing should be filed in writing with 

the Secretary to the Commission on or 

before March 23, 2006. A nonparty who 

has testimony that may aid the 

Commission’s deliberations may request 

permission to present a short statement 

at the hearing. All parties and 

nonparties desiring to appear at the 

hearing and make oral presentations 

may be required to attend a prehearing 

conference to be held at 9:30 a.m. on 

March 22, 2006, at the U.S. International 

Trade Commission Building. Oral 

testimony and written materials to be 

submitted at the public hearing are 

governed by sections 201.6(b)(2), 

201.13(f), and 207.24 of the 

Commission’s rules. Parties must submit 

any request to present a portion of their 

hearing testimony in camera no later 

than 7 business days prior to the date of 

the hearing. 

Written submissions. Each party who 

is an interested party shall submit a 

prehearing brief to the Commission. 

Prehearing briefs must conform with the 

provisions of section 207.23 of the 

Commission’s rules; the deadline for 

filing is March 21, 2006. Parties may 

also file written testimony in connection 

with their presentation at the hearing, as 

provided in section 207.24 of the 

Commission’s rules, and posthearing 

briefs, which must conform with the 

provisions of section 207.25 of the 

Commission’s rules. The deadline for 

filing posthearing briefs is April 4, 2006; 

witness testimony must be filed no later 

than three days before the hearing. In 

addition, any person who has not 

entered an appearance as a party to the 

investigation may submit a written 

statement of information pertinent to 

the subject of the investigation, 

including statements of support or 

opposition to the petition, on or before 

April 4, 2006. On April 19, 2006, the 

Commission will make available to 

parties all information on which they 

have not had an opportunity to 

comment. Parties may submit final 

comments on this information on or 

before April 21, 2006, but such final 

comments must not contain new factual 

information and must otherwise comply 

with section 207.30 of the Commission’s 

rules. All written submissions must 

conform with the provisions of section 

201.8 of the Commission’s rules; any 

submissions that contain BPI must also 

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). Even 

where electronic filing of a document is 

permitted, certain documents must also 

be filed in paper form, as specified in 

II(C) of the Commission’s Handbook on 

Electronic Filing Procedures, 67 FR 

68168, 68173 (November 8, 2002). 

Additional written submissions to the 

Commission, including requests 

pursuant to section 201.12 of the 

Commission’s rules, shall not be 

accepted unless good cause is shown for 

accepting such submissions, or unless 

the submission is pursuant to a specific 

request by a Commissioner or 

Commission staff. 

In accordance with sections 201.16(c) 

and 207.3 of the Commission’s 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 207.21 of the 

Commission’s rules. 

Issued: November 14, 2005. 

By order of the Commission. 

Marilyn R. Abbott, 

Secretary to the Commission. 

[FR Doc. 05–22800 Filed 11–16–05; 8:45 am] 

BILLING CODE 7020–02–P 

INTERNATIONAL TRADE 

COMMISSION 

[USITC SE–05–041] 

Sunshine Act Meeting 

AGENCY HOLDING THE MEETING: 

International Trade Commission. 

TIME AND DATE: November 30, 2005 at 11 

a.m. 

PLACE: Room 101, 500 E Street, SW., 

Washington, DC 20436, Telephone: 

(202) 205–2000. 

STATUS: Open to the public. 

MATTERS TO BE CONSIDERED: 

1. Agenda for future meetings: None. 

2. Minutes. 

3. Ratification List. 

4. Inv. Nos. 731–TA–385 and 386 

(Second Review) (Granular 

Polytetrafluoroethylene (PTFE) Resin 

from Italy and Japan)—briefing and 

vote. (The Commission is currently 

scheduled to transmit its 

determination and Commissioners’

opinions to the Secretary of 

Commerce on or before December 13, 

2005.) 

5. Outstanding action jackets: None. 

In accordance with Commission 

policy, subject matter listed above, not 

disposed of at the scheduled meeting, 

may be carried over to the agenda of the 

following meeting. 

By order of the Commission. 

Issued: November 14, 2005. 

Marilyn R. Abbott, 

Secretary to the Commission. 

[FR Doc. 05–22899 Filed 11–15–05; 4:05 pm] 

BILLING CODE 7020–02–P 

Federal Register / Vol. 70, No. 240 / Thursday, December 15, 2005 / Notices 74291 

1Artist canvases with a non-copyrighted 

preprinted outline, pattern, or design are included 

in the scope, whether or not included in a painting 

set or kit. 

DEPARTMENT OF COMMERCE 

Foreign–Trade Zones Board 

(Docket 60–2005) 

Foreign–Trade Zone 185 -- Culpepper 

County, Virginia, Expansion of 

Facilities -- Subzone 185C, Merck & 

Company, Inc., (Pharmaceutical 

Products), Elkton, Virginia 

An application has been submitted to 

the Foreign–Trade Zones Board (the 

Board) by the Culpepper County 

Chamber of Commerce, grantee of FTZ 

185, requesting to expand the subzone 

(Subzone 185C) at the Merck & 

Company Inc. (Merck), facility in 

Elkton, Virginia. The application was 

submitted pursuant to the Foreign–

Trade Zones Act, as amended (19 U.S.C. 

81a–81u), and the regulations of the 

Board. It was formally filed on 

December 7, 2005. 

Subzone 185C was approved by the 

Board on November 14, 1994 at a single 

site (82 bldgs./624,221 sq. ft. on 1,333 

acres) located on Route 340S, in Elkton 

(Rockingham County), Virginia, with 

authority granted for the manufacture of 

finished pharmaceuticals (Board Order 

710, 59 FR 60603, 11/25/94), and 

expanded on 04/05/01 (Board Order 

1156, 66 FR 19919, 04/18/01). Merck is 

now proposing to expand production 

capacity under FTZ procedures by 

adding acreage and 2 additional 

buildings totaling 137,047 sq. ft. The 

expanded subzone would then include 

99 buildings consisting of 1,903,718 sq. 

ft. on 1,433 acres. 

In accordance with the Board’s 

regulations, a member of the FTZ staff 

has been designated examiner to 

investigate the application and report to 

the Board. 

Public comment on the application is 

invited from interested parties. 

Submissions (original and 3 copies) 

shall be addressed to the Board’s 

Executive Secretary at one of the 

following addresses: 

1. Submissions via Express/Package 

Delivery Services: Foreign–Trade 

Zones Board, U.S. Department of 

Commerce, Franklin Court 

Building–Suite 4100W, 1099 14th 

Street, NW, Washington, DC 20005; 

or, 

2. Submissions via the U.S. Postal 

Service: Foreign–Trade Zones 

Board, U.S. Department of 

Commerce, FCB–Suite 4100W, 1401 

Constitution Avenue, NW, 

Washington, DC 20230. 

The closing period for their receipt is 

February 13, 2006. Rebuttal comments 

in response to material submitted 

during the foregoing period may be 

submitted during the subsequent 15-day 

period (to February 28, 2006). 

A copy of the application and 

accompanying exhibits will be available 

during this time for public inspection at 

address Number 1 listed above, and at 

the Culpepper County Chamber of 

Commerce, 133 West Davis Drive, 

Culpepper, Virginia 22701. 

Dated: December 8, 2005. 

Dennis Puccinelli, 

Executive Secretary. 

[FR Doc. 05–24085 Filed 12–14–05; 8:45 am] 

BILLING CODE 3510–DS–S 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[A–570–899] 

Notice of Amended Preliminary 

Determination of Sales at Less Than 

Fair Value: Certain Artist Canvas from 

the People’s Republic of China 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

EFFECTIVE DATE: December 15, 2005. 

FOR FURTHER INFORMATION CONTACT: Jon 

Freed or Michael Holton, AD/CVD 

Operations, Office 8, Import 

Administration, International Trade 

Administration, U.S. Department of 

Commerce, 14th Street and Constitution 

Avenue, NW., Washington, DC, 20230; 

telephone: (202) 482–3818 or 482–1324, 

respectively. 

SUMMARY: On November 7, 2005, the 

Department of Commerce (‘‘the 

Department’’) published its affirmative 

preliminary determination in this 

proceeding. See Notice of Preliminary 

Determination of Sales at Less Than 

Fair Value: Certain Artist Canvas from 

the People’s Republic of China, 70 FR 

67412 (November 7, 2005) (‘‘Preliminary 

Determination’’). While the Department 

did not receive any allegations of 

ministerial errors in the Preliminary 

Determination, the Department 

inadvertently stated an inaccurate 

manufacturer/producer name in the 

provided combination rate, and 

inadvertently failed to include one 

combination rate. 

In the Preliminary Determination, the 

Department stated it would calculate 

combination rates for certain 

respondents that are eligible for a 

separate rate in this investigation. Thus, 

we granted Jiangsu Animal By–products 

Import & Export Group Corp. (‘‘Jiangsu 

By–products’’) (i.e., a separate rate 

applicant) a separate rate and calculated 

a combination rate for Jiangsu By–

products. However, in our Weighted–

Average Dumping Margins section, the 

Department inadvertently stated an 

inaccurate manufacturer/producer name 

in the provided combination rate for 

Jiangsu By–products, and inadvertently 

failed to include one combination rate 

for Jiangsu By–products. Therefore, we 

are correcting the Weighted–Average 

Dumping Margins section to include the 

additional combination rate and to 

correct the manufacturer/producer 

name. 

SUPPLEMENTARY INFORMATION: 

Scope 

The products covered by this 

investigation are artist canvases 

regardless of dimension and/or size, 

whether assembled or unassembled, 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. Artist 

canvas and stretcher strips (whether or 

not made of wood and whether or not 

assembled) included within a kit or set 

are covered by this proceeding. 

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, ‘‘paint–by-number’’ or 

‘‘paint–it-yourself’’ artist canvases with 

a copyrighted preprinted outline, 

pattern, or design, whether or not 

included in a painting set or kit.1 Also 

excluded are 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 or set. 

While HTSUS subheadings are provided 

for convenience and customs purposes, 

our written description of the scope of 

this proceeding is dispositive. 

Amended Preliminary Determination 

As a result of our correction to the 

Preliminary Determination, we have 

determined that the following 

74292 Federal Register / Vol. 70, No. 240 / Thursday, December 15, 2005 / Notices 

weighted–average percentage dumping 

margins apply to imports of certain 

artist canvas from the PRC exported by 

Jiangsu By–products. 

ARTIST CANVAS FROM THE PRC - WEIGHTED–AVERAGE DUMPING MARGINS

Exporter Producer Weighted–Average 

Deposit Rate 

Jiangsu Animal By–products Import & Export Group Corp. .. Wuxi Yinying Stationery and Sports Products Co. Ltd. Corp. 70.28 

Jiangsu Animal By–products Import & Export Group Corp. .. Su Yang Yinying Stationery and Sports Products Co., Ltd. 

Corp..

70.28 

China–Wide Rate ................................................................... ................................................................................................. 264.09 

The collection of bonds or cash deposits 

and suspension of liquidation will be 

revised accordingly in accordance with 

section 733(d) of the Tariff Act of 1930, 

as amended (‘‘the Act’’). For all other 

imports of certain artist canvas from the 

PRC, the cash deposit rates remain as 

listed in the Preliminary Determination. 

International Trade Commission 

Notification 

In accordance with section 733(f) of 

the Act, we have notified the 

International Trade Commission (‘‘ITC’’) 

of our amended preliminary 

determination. If our final 

determination is affirmative, the ITC 

will determine before the later of 120 

days after the date of the original 

preliminary determination or 45 days 

after our final determination whether 

the domestic industry in the United 

States is materially injured, or 

threatened with material injury, by 

reason of imports, or sales (or the 

likelihood of sales) for importation, of 

the subject merchandise. 

This determination is issued and 

published in accordance with sections 

733(f) and 777(i)(1) of the Act and 19 

CFR 351.224(e). 

Dated: December 9, 2005. 

Joseph A. Spetrini, 

Acting Assistant Secretaryfor Import 

Administration. 

[FR Doc. E5–7400 Filed 12–14–05; 8:45 am] 

BILLING CODE 3510–DS–S 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[A–357–809] 

Small Diameter Seamless Carbon and 

Alloy Steel Standard, Line and 

Pressure Pipe from Argentina: Notice 

of Rescission of Antidumping Duty 

Administrative Review 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

SUMMARY: On September 28, 2005, the 

U.S. Department of Commerce (‘‘the 

Department’’) published a notice of 

initiation of an administrative review of 

the antidumping duty order on small 

diameter seamless carbon and alloy 

steel standard, line and pressure pipe 

(‘‘seamless line and pressure pipe’’) 

from Argentina. The review covers one 

manufacturer/exporter, Siderca S.A.I.C. 

The period of review (‘‘POR’’) is August 

1, 2004, through July 31, 2005. 

Following the receipt of a certification 

of no shipments by Siderca S.A.I.C., we 

notified interested parties of the 

Department’s intent to rescind this 

review and provided an opportunity for 

parties to comment on the rescission. 

We received no comments. Therefore, 

we are rescinding this administrative 

review. 

EFFECTIVE DATE: December 15, 2005. 

FOR FURTHER INFORMATION CONTACT: 

Patrick Edwards or Abdelali Elouaradia; 

AD/CVD Operations, Office 7, Import 

Administration, International Trade 

Administration, U.S. Department of 

Commerce, 14th Street and Constitution 

Avenue, NW., Washington, DC 20230; 

telephone: (202) 482–8029 and (202) 

482–1374, respectively. 

SUPPLEMENTARY INFORMATION: 

Background 

On August 1, 2005, the Department 

published a notice of opportunity to 

request an administrative review of the 

antidumping duty order on seamless 

line and pressure pipe from Argentina 

for the period August 1, 2004, through 

July 31, 2005. See Notice of Opportunity 

to Request Administrative Review of 

Antidumping or Countervailing Duty 

Order, Finding or Suspended 

Investigation, 70 FR 44085 (August 1, 

2005). On August 31, 2005, United 

States Steel Corporation (‘‘U.S. Steel’’), 

a domestic producer of the subject 

merchandise, made a timely request that 

the Department conduct an 

administrative review of Siderca 

S.A.I.C. (‘‘Siderca’’). On September 28, 

2005, in accordance with section 751(a) 

of the Tariff Act of 1930, as amended 

(‘‘the Act’’), the Department published 

in the Federal Register a notice of 

initiation of this antidumping duty 

administrative review. See Notice of 

Initiation of Antidumping Duty and 

Countervailing Duty Administrative 

Reviews and Request for Revocation in 

Part, 70 FR 56631 (September 28, 2005). 

On October 13, 2005, the Department 

issued its antidumping duty 

questionnaire to Siderca. On November 

7, 2005, Siderca submitted a letter to the 

Department, certifying that the company 

made no shipments or entries for 

consumption in the United States of the 

subject merchandise during the POR. 

Additionally, Siderca also provided 

certification to the Department that the 

company’s U.S. affiliate, Tenaris Global 

Services U.S.A. Corporation (‘‘Tenaris’’), 

also did not sell, enter, or import subject 

merchandise for consumption into the 

United States during the POR. 

Scope of the Order 

The antidumping duty order on 

imports from Argentina, covers small 

diameter seamless carbon and alloy 

standard, line, and pressure pipes 

(‘‘seamless pipes’’) produced to the 

American Standard for Testing and 

Materials (‘‘ASTM’’) standards A–335, 

A–106, A–53, and American Petroleum 

Institute (‘‘API’’) standard API 5L 

specifications and meeting the physical 

parameters described below, regardless 

of application. The scope of this order 

also includes all products used in 

standard, line, or pressure pipe 

applications and meeting the physical 

parameters described below, regardless 

of specification. For purposes of this 

order, seamless pipes are seamless 

carbon and alloy (other than stainless) 

steel pipes, of circular cross-section, not 

more than 114.3 mm (4.5 inches) in 

outside diameter, regardless of wall 

thickness, manufacturing process (hot–

finished or cold–drawn), end finish 

(plain end, beveled end, upset end, 

threaded, or threaded and coupled), or 

surface finish. These pipes are 

commonly known as standard pipe, line 

pipe, or pressure pipe, depending upon 

the application. They may also be used 

in structural applications. Pipes 

produced in non–standard wall 

thicknesses are commonly referred to as 

16116 Federal Register / Vol. 71, No. 61 / Thursday, March 30, 2006 / Notices 

TA–311–314, 317 and 379 (Second 

Review)). 

Determination 

As a result of the determination by the 

ITC that revocation of these orders is not 

likely to lead to the continuation or 

recurrence of material injury to an 

industry in the United States, the 

Department, pursuant to section 751(d) 

of the Act, is revoking the AD orders on 

brass sheet and strip from Brazil and 

Canada and the CVD order on brass 

sheet and strip from Brazil. Pursuant to 

section 751(d)(2) of the Act and 19 CFR 

351.222(i)(2)(i), the effective date of 

revocation is May 1, 2005 (i.e., the fifth 

anniversary of the date of publication in 

the Federal Register of the notices of 

continuation of these AD and CVD 

orders). The Department will notify U.S. 

Customs and Border Protection to 

discontinue suspension of liquidation 

and collection of cash deposits on 

entries of the subject merchandise 

entered or withdrawn from warehouse 

on or after May 1, 2005, the effective 

date of revocation of the AD orders and 

the CVD order. The Department will 

complete any pending administrative 

reviews of these orders and will conduct 

administrative reviews of subject 

merchandise entered prior to the 

effective date of revocation in response 

to appropriately filed requests for 

review. 

These five-year sunset reviews and 

notice are in accordance with section 

751(d)(2) and published pursuant to 

section 777(i)(1) of the Act. 

Dated: March 23, 2006. 

Stephen J. Claeys, 

Acting Assistant Secretary for Import 

Administration. 

[FR Doc. E6–4660 Filed 3–29–06; 8:45 am] 

BILLING CODE 3510–DS–S 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[A–570–899] 

Final Determination of Sales at Less 

Than Fair Value: Certain Artist Canvas 

from the People’s Republic of China 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

SUMMARY: On November 7, 2005, the 

Department of Commerce (‘‘the 

Department’’) published its preliminary 

determination of sales at less than fair 

value (‘‘LTFV’’) in the antidumping 

investigation of artist canvas from the 

People’s Republic of China (‘‘PRC’’). 

The period of investigation (‘‘POI’’) is 

July 1, 2004, through December 31, 

2004. The investigation covers two 

manufacturers/exporters which are 

mandatory respondents and two 

separate–rate status applicants. On 

February 17, 2006, we issued a 

preliminary scope ruling with regard to 

cut and stretched artist canvas made in 

the PRC from bulk roll canvas woven 

and primed in India. We invited 

interested parties to comment on our 

preliminary determination of sales at 

LTFV and our preliminary scope ruling. 

Based on our analysis of the comments 

we received, we have made changes to 

our calculations for the mandatory 

respondents. The final dumping 

margins for this investigation are listed 

in the ‘‘Final Determination Margins’’

section below. 

EFFECTIVE DATE: March 30, 2006. 

FOR FURTHER INFORMATION CONTACT: 

Michael Holton or Robert Bolling, 

Import Administration, International 

Trade Administration, U.S. Department 

of Commerce, 14th Street and 

Constitution Avenue N.W., Washington, 

DC 20230; telephone: (202) 482–1324 

and (202) 482–3434, respectively. 

SUPPLEMENTARY INFORMATION: 

FINAL DETERMINATION 

We determine that artist canvas from 

the PRC is being, or is likely to be, sold 

in the United States at LTFV as 

provided in section 735 of Tariff Act of 

1930, as amended (‘‘the Act’’). The 

estimated margins of sales at LTFV are 

shown in the ‘‘Final Determination 

Margins’’ section of this notice. 

Case History 

The Department published its 

preliminary determination of sales at 

LTFV on November 7, 2005. See Notice 

of Preliminary Determination of Sales at 

Less Than Fair Value: Certain Artist 

Canvas from the People’s Republic of 

China, 70 FR 67412 (November 7, 2005) 

(‘‘Preliminary Determination’’). The 

Department conducted verification of 

both mandatory respondents in both the 

PRC and the United States (where 

applicable), and one separate–rate status 

applicant. See the ‘‘Verification’’ section 

below for additional information. On 

February 9, 2006, the Department 

solicited comments from all interested 

parties regarding changes to its 

calculation of financial ratios and the 

expected wage rate (i.e., $0.97) for the 

PRC which are based on 2003 income 

data. On February 17, 2006, the 

Department issued a memorandum 

finding that primed bulk rolls of artist 

canvas produced, coated, and shipped 

from India to the PRC and stretched and 

framed in the PRC are not substantially 

transformed in the PRC and, therefore, 

not covered by the scope of this 

investigation. See Preliminary Decision 

Regarding the Country of Origin of 

Artist Canvas Exported by Hangzhou 

Foreign Economic Relations & Trade 

Service Co., Ltd., - Certain Artist Canvas 

from the People’s Republic of China 

from Jon Freed to Wendy Frankel, dated 

February 17, 2006 (‘‘Scope 

Memorandum’’). 

We invited parties to comment on the 

Preliminary Determination and Scope 

Memorandum. We received comments 

from the Petitioner, the mandatory 

respondents, the separate–rate status 

applicant, and other interested parties to 

this investigation. 

On February 27, 2006, parties 

submitted case briefs. On March 1, 

2006, parties submitted rebuttal briefs. 

On December 7, 2005, Wuxi Phoenix 

Artist Materials Co., Ltd. (‘‘Phoenix 

Materials’’) requested the Department 

hold a public hearing in this 

proceeding. On March 1, 2006, Phoenix 

Materials withdrew its request for a 

public hearing. 

Analysis of Comments Received 

All issues raised in the case and 

rebuttal briefs by parties to this 

investigation are addressed in the Issues 

and Decision Memorandum, dated 

March 22, 2006, which is hereby 

adopted by this notice (‘‘Issues and 

Decision Memorandum’’). A list of the 

issues which parties raised and to 

which we respond in the Issues and 

Decision Memorandum is attached to 

this notice as an Appendix. The 

Decision Memorandum is a public 

document and is on file in the Central 

Records Unit (‘‘CRU’’), Main Commerce 

Building, Room B–099, and is accessible 

on the Web at http://ia.ita.doc.gov. The 

paper copy and electronic version of the 

memorandum are identical in content. 

Changes Since the Preliminary Results 

Based on our analysis of comments 

received, we have made changes in the 

margin calculation for Phoenix 

Materials. See Issues and Decision 

Memorandum at Comments 3, 4, and 6. 

Phoenix Materials 

• In the Preliminary Determination, the 

Department used facts available for 

the distance from Phoenix 

Material’s factory to two of its coal 

suppliers. As facts available, the 

Department used the distance to the 

nearest port as the distance from the 

factory to the coal suppliers. 

However, based on information 

found at verification, for the final 

determination, we have used the 

actual distances between the 

producer and its two coal suppliers. 


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1Artist canvases with a non-copyrighted 

preprinted outline, pattern, or design are included 

in the scope, whether or not included in a painting 

set or kit. 

See Issues and Decision 

Memorandum at Comment 6 for a 

thorough discussion of this issue 

and ‘‘Analysis Memorandum for the 

Final Determination in the 

Investigation of Artist Canvas from 

the People’s Republic of China: 

Wuxi Phoenix Artist Materials Co., 

Ltd.’’ from Michael Holton, Case 

Analyst through Robert Bolling, 

Program Manager, to the File, dated 

March 22, 2006 (‘‘Phoenix Materials 

Final Analysis Memorandum’’). 

• For the final determination, the 

Department has updated the 

surrogate value for labor and made 

changes to the surrogate financial 

ratio calculation. See Phoenix 

Materials Final Analysis 

Memorandum. 

• One of Phoenix Material’s affiliated 

suppliers (i.e.,Shuyang Phoenix 

Artist Materials Co. Ltd. (‘‘Shuyang 

Phoenix’’)) presented minor 

corrections to its reported labor 

consumption at verification. For the 

final determination, the Department 

has incorporated this change into 

the margin calculation program. See 

Phoenix Materials Final Analysis 

Memorandum. 

• Due to the change in labor 

consumption, a resulting change in 

the allocation of electricity was also 

required for Shuyang Phoenix. See 

Phoenix Materials Final Analysis 

Memorandum. 

• At verification, Phoenix Materials 

presented a minor correction to its 

reported coal consumption. For the 

final determination, the Department 

has incorporated this change into 

its margin calculation program. See 

Phoenix Materials Final Analysis 

Memorandum. 

• At verification, the Department found 

that Phoenix Materials had not 

reported all of its indirect labor 

hours (i.e., supervisors, office 

cleaners, security guards, and 

doormen). For the final 

determination, the Department has 

incorporated all of Phoenix 

Material’s indirect labor hours into 

its margin calculation program. See 

Phoenix Materials Final Analysis 

Memorandum. 

• At verification, the Department found 

that Phoenix Materials did not 

report diesel as a factor of 

production. For the final 

determination, the Department has 

applied the diesel consumption 

factor in the margin calculation 

program. See Phoenix Materials 

Final Analysis Memorandum. 

Scope of Investigation 

The products covered by this 

investigation are artist canvases 

regardless of dimension and/or size, 

whether assembled or unassembled, 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. Artist 

canvas and stretcher strips (whether or 

not made of wood and whether or not 

assembled) included within a kit or set 

are covered by this proceeding. 

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, ‘‘paint–by-number’’ or 

‘‘paint–it-yourself’’ artist canvases with 

a copyrighted preprinted outline, 

pattern, or design, whether or not 

included in a painting set or kit.1 Also 

excluded are 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 or set. 

While the HTSUS subheadings are 

provided for convenience and customs 

purposes, our written description of the 

scope of this proceeding is dispositive. 

Additionally, we have determined 

that canvas woven and primed in India 

but cut and stretched in the PRC and 

exported from the PRC is not subject to 

the investigation covering artist canvas 

from the PRC. 

Verification 

As provided in section 782(i) of the 

Act, we verified the information 

submitted by the mandatory 

respondents and one separate–rate 

status applicant for use in our final 

determination. See the Department’s 

verification reports on the record of this 

investigation in the CRU with respect to 

Ningbo Conda Import & Export Co., Ltd. 

(‘‘Ningbo Conda’’), Jinhua Universal 

Canvas Manufacturing Co., Ltd. (‘‘Jinhua 

Universal’’), Wuxi Silver Eagle Cultural 

Goods Co. Ltd., Wuxi Pegasus Cultural 

Goods Co. Ltd., ColArt Americas Inc. 

(‘‘ColArt US’’), Hangzhou Foreign 

Relation & Trade Service Co. Ltd. 

(‘‘HFERTS’’), and Phoenix Materials. 

For all verified companies, we used 

standard verification procedures, 

including examination of relevant 

accounting and production records, as 

well as original source documents 

provided by respondents. 

Surrogate Country 

In the Preliminary Determination, we 

stated that we had selected India as the 

appropriate surrogate country to use in 

this investigation for the following 

reasons: (1) It is a significant producer 

of comparable merchandise; (2) it is at 

a similar level of economic development 

pursuant to 773(c)(4) of the Act; and (3) 

we have reliable data from India that we 

can use to value the factors of 

production. See Preliminary 

Determination, 70 FR at 67415–16. For 

the final determination, we made no 

changes to our findings with respect to 

the selection of a surrogate country. 

Separate Rates 

In proceedings involving non–marketeconomy (‘‘NME’’) countries, the 

Department begins with a rebuttable 

presumption that all companies within 

the country are subject to government 

control and, thus, should be assigned a 

single antidumping duty deposit rate. It 

is the Department’s policy to assign all 

exporters of merchandise subject to 

investigation in an NME country this 

single rate unless an exporter can 

demonstrate that it is sufficiently 

independent so as to be entitled to a 

separate rate. 

In the Preliminary Determination, we 

found that Ningbo Conda and its 

affiliated exporters, Conda (Ningbo) 

Painting Material Mfg. (‘‘Conda 

Painting’’) and Jinhua Universal; 

Phoenix Materials and its affiliated 

exporter Wuxi Phoenix Stationary Co. 

Ltd (‘‘Phoenix Stationary’’); and Jiangsu 

Animal By–products Import & Export 

Group Corp. (‘‘Jiangsu By–products’’) 

demonstrated their eligibility for 

separate–rate status. For the final 

determination, we continue to find that 

the evidence placed on the record of 

this investigation by Ningbo Conda and 

its affiliated exporters, Phoenix 

Materials and its affiliated exporter, and 

Jiangsu By–products demonstrate an 

absence of government control, both in 

law and in fact, with respect to their 

respective exports of the merchandise 

under investigation, and, thus are 

eligible for separate rate status. 


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Additionally, in the Preliminary 

Determination, because the Department 

found that Jiangsu By–products 

demonstrated its eligibility for a rate 

separate from the PRC–wide rate, but 

was not a mandatory respondent, the 

margin we established in the 

Preliminary Determination for Jiangsu 

By–products was based on a weighted–

average of the margins calculated for the 

two mandatory respondents. Because 

we are applying facts available to one of 

the selected mandatory respondents for 

the final determination, we have 

recalculated the rate applicable to 

Jiangsu By–products based on the rate 

calculated for the remaining mandatory 

respondent. 

Further, in the Preliminary 

Determination, although we determined 

that HFERTS demonstrated an absence 

of government control, both in law and 

in fact, with respect to its exports of 

artist canvas, we had not yet determined 

the country of origin of the merchandise 

exported by HFERTS, and thus had not 

made a determination with respect to 

whether HFERTS was eligible to apply 

for a separate rate. For the final 

determination, we have determined that 

the merchandise that HFERTS exported 

to the United States is not of Chinese 

origin. Thus, HFERTS did not export 

subject merchandise and, therefore, is 

not eligible for a separate rate. 

Adverse Facts Available 

Sections 776(a)(1) and (2) of the Act 

provide that the Department shall apply 

‘‘facts otherwise available’’ if necessary 

information is not on the record or an 

interested party or any other person (A) 

withholds information that has been 

requested, (B) fails to provide 

information within the deadlines 

established, or in the form and manner 

requested by the Department, subject to 

subsections (c)(1) and (e) of section 782, 

(C) significantly impedes a proceeding, 

or (D) provides information that cannot 

be verified as provided by section 782(i) 

of the Act. 

Where the Department determines 

that a response to a request for 

information does not comply with the 

request, section 782(d) of the Act 

provides that the Department will so 

inform the party submitting the 

response and will, to the extent 

practicable, provide that party the 

opportunity to remedy or explain the 

deficiency. If the party fails to remedy 

the deficiency within the applicable 

time limits and subject to section 782(e) 

of the Act, the Department may 

disregard all or part of the original and 

subsequent responses, as appropriate. 

Section 782(e) of the Act provides that 

the Department ‘‘shall not decline to 

consider information that is submitted 

by an interested party and is necessary 

to the determination but does not meet 

all applicable requirements established 

by the administering authority’’ if the 

information is timely, can be verified, is 

not so incomplete that it cannot be used, 

and if the interested party acted to the 

best of its ability in providing the 

information. Where all of these 

conditions are met, the statute requires 

the Department to use the information if 

it can do so without undue difficulties. 

Section 776(b) of the Act further 

provides that the Department may use 

an adverse inference in applying the 

facts otherwise available when a party 

has failed to cooperate by not acting to 

the best of its ability to comply with a 

request for information. Section 776(b) 

of the Act also authorizes the 

Department to use as adverse facts 

available (‘‘AFA’’), information derived 

from the petition, the final 

determination, a previous 

administrative review, or other 

information placed on the record. 

Section 776(c) of the Act provides 

that, when the Department relies on 

secondary information rather than on 

information obtained in the course of an 

investigation or review, it shall, to the 

extent practicable, corroborate that 

information from independent sources 

that are reasonably at its disposal. 

Secondary information is defined as 

‘‘[i]nformation derived from the petition 

that gave rise to the investigation or 

review, the final determination 

concerning the subject merchandise, or 

any previous review under section 751 

concerning the subject merchandise.’’

See Statement of Administrative Action 

(‘‘SAA’’) accompanying the Uruguay 

Round Agreements Act, H. Doc. No. 

316, 103d Cong., 2d Sess. Vol.1 at 870 

(1994). Corroborate means that the 

Department will satisfy itself that the 

secondary information to be used has 

probative value. See SAA at 870. To 

corroborate secondary information, the 

Department will, to the extent 

practicable, examine the reliability and 

relevance of the information to be used. 

The SAA emphasizes, however, that the 

Department need not prove that the 

selected facts available are the best 

alternative information. See SAA at 869. 

The Department finds that the 

information necessary to calculate an 

accurate and otherwise reliable margin 

is not available on the record with 

respect to Ningbo Conda. As the 

Department finds that Ningbo Conda 

failed to act to the best of its ability, 

withheld information, failed to provide 

information requested by the 

Department in a timely manner and in 

the form required, and significantly 

impeded the proceeding, (e.g., provided 

unverifiable information, failed to 

reported certain U.S. sales and certain 

factors of production, and failed to 

substantiate an unaffiliated supplier’s 

reported factor consumption rates, etc.). 

Therefore, pursuant to sections 

776(a)(2)(A), (B), (C) and (D) of the Act, 

the Department is resorting to facts 

otherwise available. In addition, in 

accordance with section 776(b) of the 

Act, the Department is applying an 

adverse inference in selecting the facts 

available rate as it has determined that 

Ningbo Conda did not act to the best of 

its ability to cooperate with the 

Department in this investigation. 

Corroboration 

At the Preliminary Determination, in 

accordance with section 776(c) of the 

Act, we corroborated our AFA margin 

using information submitted by both 

mandatory respondents. See 

Memorandum to The File Through 

Robert Bolling, Program Manager, 

China/NME Group, Corroboration for 

the Preliminary Determination of 

Certain Artist Canvas from the People’s 

Republic of China, dated October 28, 

2005, (‘‘Corroboration Memo’’). For the 

final determination, we are no longer 

using the information submitted by 

Ningbo Conda (see ‘‘Adverse Facts 

Available’’ section above). 

To assess the probative value of the 

total AFA rate it has chosen for Ningbo 

Conda and the PRC–wide entity, the 

Department compared the final margin 

calculations of Phoenix Materials in this 

investigation with the rate of 264.09 

percent from the petition. We find that 

the rate is within the range of the 

highest margins we have determined in 

this investigation. See Final 

Determination in the Investigation of 

Artist Canvas from the People’s 

Republic of China, Corroboration 

Memorandum from Michael Holton, 

Analyst, through Robert Bolling, 

Program Manager, (‘‘Final 

Corroboration Memo’’), dated March 22, 

2006. Since the record of this 

investigation contains margins within 

the range of the petition margin, we 

determine that the rate from the petition 

continues to be relevant for use in this 

investigation. As discussed therein, we 

found that the margin of 264.09 percent 

has probative value. See Final 

Corroboration Memo. Accordingly, we 

find that the rate of 264.09 percent is 

corroborated within the meaning of 

section 776(c) of the Act. 

The PRC–Wide Rate 

Because we begin with the 

presumption that all companies within 

a NME country are subject to 


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government control and because only 

the companies listed under the ‘‘Final 

Determination Margins’’ section below 

have overcome that presumption, we are 

applying a single antidumping rate - the 

PRC–wide rate - to all other exporters of 

subject merchandise from the PRC. Such 

companies did not demonstrate 

entitlement to a separate rate. See, e.g., 

Final Determination of Sales at Less 

Than Fair Value: Synthetic Indigo from 

the People’s Republic of China, 65 FR 

25706 (May 3, 2000). The PRC–wide 

rate applies to all entries of subject 

merchandise except for entries from the 

respondents which are listed in the 

‘‘Final Determination Margins’’ section 

below (except as noted). 

Combination Rates 

In the Notice of Initiation, the 

Department stated that it would 

calculate combination rates for certain 

respondents that are eligible for a 

separate rate in this investigation. See 

Notice of Initiation, 70 FR 21996, 21999. 

This change in practice 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/. The Policy 

Bulletin 05.1, 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.’’

Policy Bulletin 05.1, at page 6. 

Therefore, for the final determination, 

we have assigned a combination rate to 

respondents that are eligible for a 

separate rate. See Final Determination 

Margins, below. 

Final Determination Margins 

We determine that the following 

percentage weighted–average margins 

exist for the POI: 

ARTIST CANVAS FROM THE PRC - WEIGHTED–AVERAGE DUMPING MARGINS

Exporter Producer Weighted–Average Deposit 

Rate 

Ningbo Conda .................................................................................. Jinhua Universal 264.09 

Ningbo Conda .................................................................................. Wuxi Silver Eagle Cultural Goods Co. Ltd. 264.09 

Conda Painting ................................................................................ Wuxi Pegasus Cultural Goods Co. Ltd. 264.09 

Jinhua Universal .............................................................................. Jinhua Universal 264.09 

Phoenix Materials ............................................................................ Phoenix Materials 77.90 

Phoenix Materials ............................................................................ Phoenix Stationary 77.90 

Phoenix Materials ............................................................................ Shuyang Phoenix 77.90 

Phoenix Stationary ........................................................................... Phoenix Materials 77.90 

Phoenix Stationary ........................................................................... Phoenix Stationary 77.90 

Phoenix Stationary ........................................................................... Shuyang Phoenix 77.90 

Jiangsu By–products ....................................................................... Wuxi Yinying Stationery and Sports 

Products Co. Ltd. Corp. 

77.90 

Jiangsu By–products Su Yang ........................................................ Yinying Stationery and Sports Products Co. 

Ltd. Corp. 

77.90 

China–Wide Rate ............................................................................. ...................................................................... 264.09 

Continuation of Suspension of 

Liquidation 

Pursuant to section 735(c)(1)(B) of the 

Act, we will instruct U.S. Customs and 

Border Protection (‘‘CBP’’) to continue 

to suspend liquidation of all entries of 

subject merchandise from the PRC 

entered, or withdrawn from warehouse, 

for consumption on or after November 

7, 2005, the date of publication of the 

Preliminary Determination. CBP shall 

continue to require a cash deposit or the 

posting of a bond equal to the estimated 

amount by which the normal value 

exceeds the U.S. price as shown above. 

These instructions suspending 

liquidation will remain in effect until 

further notice. 

Disclosure 

We will disclose the calculations 

performed within five days of the date 

of publication of this notice to parties in 

this proceeding in accordance with 19 

CFR 351.224(b). 

ITC Notification 

In accordance with section 735(d) of 

the Act, we have notified the ITC of our 

final determination of sales at LTFV. As 

our final determination is affirmative, in 

accordance with section 735(b)(2) of the 

Act, within 45 days the ITC will 

determine whether the domestic 

industry in the United States is 

materially injured, or threatened with 

material injury, by reason of imports or 

sales (or the likelihood of sales) for 

importation of the subject merchandise. 

If the ITC determines that material 

injury or threat of material injury does 

not exist, the proceeding will be 

terminated and all securities posted will 

be refunded or canceled. If the ITC 

determines that such injury does exist, 

the Department will issue an 

antidumping duty order directing CBP 

to assess antidumping duties on all 

imports of the subject merchandise 

entered, or withdrawn from warehouse, 

for consumption on or after the effective 

date of the suspension of liquidation 

(i.e., November 7, 2005). 

Notification Regarding APO 

This notice also serves as a reminder 

to parties subject to administrative 

protective order (‘‘APO’’) of their 

responsibility concerning the 

disposition of proprietary information 

disclosed under APO in accordance 


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with 19 CFR 351.305. Timely 

notification of return or destruction of 

APO materials or conversion to judicial 

protective order is hereby requested. 

Failure to comply with the regulations 

and the terms of an APO is a 

sanctionable violation. 

This determination and notice are 

issued and published in accordance 

with sections 735(d) and 777(i)(1) of the 

Act. 

Dated: March 22, 2006. 

Stephen J. Claeys, 

Acting Assistant Secretary for Import 

Administration. 

[FR Doc. E6–4657 Filed 3–29–06; 8:45 am] 

BILLING CODE: 3510–DS–S 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[A–570–504] 

Petroleum Wax Candles from the 

People’s Republic of China: Extension 

of Time Limit for Preliminary Results of 

the Antidumping Duty Administrative 

Review 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

SUMMARY: The Department of Commerce 

(‘‘the Department’’) is extending the 

time limit for the preliminary results of 

the review of petroleum wax candles 

(‘‘candles’’) from the People’s Republic 

of China (‘‘PRC’’). This review covers 

the period August 1, 2004, through July 

31, 2005. 

EFFECTIVE DATE: March 30, 2006. 

FOR FURTHER INFORMATION CONTACT: 

Cindy Lai Robinson, AD/CVD 

Operations, Office 9, Import 

Administration, International Trade 

Administration, U.S. Department of 

Commerce, 14th Street and Constitution 

Avenue, NW., Washington, DC 20230; 

telephone: (202) 482–3797. 

SUPPLEMENTARY INFORMATION: 

Statutory Time Limits 

Section 751(a)(3)(A) of the Tariff Act 

of 1930, as amended (‘‘the Act’’), 

requires the Department to make a 

preliminary determination within 245 

days after the last day of the anniversary 

month of an order for which a review 

is requested and a final determination 

within 120 days after the date on which 

the preliminary determination is 

published. However, if it is not 

practicable to complete the review 

within these time periods, section 

751(a)(3)(A) of the Act allows the 

Department to extend the time limit for 

the preliminary determination to a 

maximum of 365 days after the last day 

of the anniversary month. 

Background 

On September 28, 2005, the 

Department published a notice of 

initiation of a review of candles from 

the PRC covering the period August 1, 

2004, through July 31, 2005. See 

Initiation of Antidumping and 

Countervailing Duty Administrative 

Reviews and Requests for Revocation in 

Part, 70 FR 56631 (September 28, 2005). 

Extension of Time Limit of Preliminary 

Results 

The Department determines that this 

review is extraordinarily complicated 

and that completion of the preliminary 

results of this review within the 245-day 

period is not practicable. Specifically, 

the Department requires additional time 

to examine whether the respondent, 

Qingdao Youngson Industrial Co., Ltd. 

(‘‘Youngson’’), is affiliated with other 

PRC producers and to conduct 

verification of Youngson’s questionnaire 

responses. 

Therefore, in accordance with section 

751(a)(3)(A) of the Act, the Department 

is extending the time limit for the 

completion of the preliminary results of 

the review by 45 days to June 17, 2006. 

However, June 17, 2006, falls on 

Saturday, and it is the Department’s 

long–standing practice to issue a 

determination the next business day 

when the statutory deadline falls on a 

weekend, federal holiday, or any other 

day when the Department is closed. See 

Notice of Clarification: Application of 

‘‘Next Business Day’’ Rule for 

Administrative Determination Deadlines 

Pursuant to the Tariff Act of 1930, As 

Amended, 70 FR 24533 (May 10, 2005). 

Accordingly, the deadline for 

completion of the preliminary results is 

June 19, 2006. The final results continue 

to be due 120 days after the publication 

of the preliminary results. 

We are issuing and publishing this 

notice in accordance with sections 

751(a)(2) and 777(i)(1) of the Act. 

Dated: March 23, 2006. 

Stephen J. Claeys, 

Deputy Assistant Secretary for Import 

Administration. 

[FR Doc. E6–4658 Filed 3–29–03; 8:45 am] 

BILLING CODE 3510–DS–S 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[A–122–838] 

Certain Softwood Lumber Products 

from Canada: Notice of Rescission of 

Antidumping Duty Changed 

Circumstances Review 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

EFFECTIVE DATE: March 30, 2006. 

SUMMARY: On January 19, 2006, the 

Department of Commerce (the 

Department) published in the Federal 

Register a notice announcing the 

initiation of a changed circumstances 

review of the antidumping duty order 

on certain softwood lumber products 

from Canada. See Initiation of 

Antidumping Duty Changed 

Circumstances Review: Certain 

Softwood Lumber Products from 

Canada 71 FR 4350 (January 19, 2006) 

(Initiation Notice). The review was 

requested by Weyerhaeuser Company 

Limited and Weyerhaeuser 

Saskatchewan Limited (collectively, 

Weyerhaeuser). We are now rescinding 

this review as a result of Weyerhaeuser’s 

withdrawal of its request for a changed 

circumstances review. 

FOR FURTHER INFORMATION CONTACT: 

Salim Bhabhrawala or Constance 

Handley at (202) 482–1784 or (202) 482–

0631, respectively, AD/CVD Operations, 

Office 1, Import Administration, 

International Trade Administration, 

U.S. Department of Commerce, 14th 

Street & Constitution Avenue, NW, 

Washington, DC 20230. 

SUPPLEMENTARY INFORMATION: 

Background 

In accordance with 19 CFR 

351.216(b), Weyerhaeuser, a Canadian 

producer of softwood lumber products, 

filed a request for a changed 

circumstances review of the 

antidumping duty order on certain 

softwood lumber products from Canada. 

On January 19, 2006, in accordance with 

19 CFR 351.221(c)(3), we published the 

initiation of a changed circumstances 

review of this order. See Initiation 

Notice. On March 6, 2006, 

Weyerhaeuser withdrew its request for a 

changed circumstances review. 

Rescission of Changed Circumstances 

Review 

The Department’s regulations provide 

that the Department will rescind an 

administrative review if the party that 

requested the review withdraws the 

request within ninety days of the date 


cprice-sewell on PROD1PC66 with NOTICES
B-1

APPENDIX B

HEARING WITNESSES

B-3

CALENDAR OF PUBLIC HEARING

Those listed below appeared as witnesses at the United States International Trade

Commission’s hearing:

Subject: Artists’ Canvas from China

Inv. No.: 731-TA-1091 (Final)

Date and Time: March 28, 2006 - 9:30 a.m.

Sessions were held in connection with this investigation in the Main Hearing Room (room

101), 500 E Street, S.W., Washington, D.C.

OPENING REMARKS:

Petitioners (George W. Thompson, Neville Peterson LLP)

Respondents (Philip S. Gallas, Sonnenschein Nath & Rosenthal LLP)

In Support of the Imposition of

 Antidumping Duties:

Neville Peterson LLP

Washington, D.C.

on behalf of 

Tara Materials, Inc. (“Tara”)

I. Michael Benator, President and Chief

Executive Officer, Tara

John Benator, Chairman, Tara

Pete Delin, Vice President, Marketing, Tara

Paul Straquadine, Vice President, Sales, Tara

Ron Freeman, Vice President, Manufacturing,

Tara
B-4

In Support of the Imposition of

 Antidumping Duties (continued):

David Twite, Executive Vice President, Tara

Kurt Rathslag, Co-President, Duro Art

Industries, Inc.

Bill Cicherski, President, Axzel Art Supply, Inc.

George W. Thompson )

) – OF COUNSEL

Laura Martino )

In Opposition to the Imposition of

 Antidumping Duties:

Sonnenschein Nath & Rosenthal LLP

Washington, D.C.

on behalf of

Michaels Stores, Inc.

Aaron Brothers, Inc.

MacPhersons

ColArt Americas, Inc.

Dick Blick Art Materials

Sbars, Inc.

Hobby Lobby Stores, Inc.

A.C. Moore

Jerry’s Artarama

Jo-Ann’s Stores, Inc.

Wuxi Phoenix Artist Materials Co., Ltd.

Ningbo Conda Import & Export Co., Ltd.

Frank Stapleton, President, MacPhersons

Alan Marek, Director of Importing, Michael Stores, Inc.

Harvey Kanter, President, Aaron Brothers
B-5

In Opposition to the Imposition of

 Antidumping Duties (continued):

John Dowers, Former President and Chief Executive

Officer, and Current Board Member, Utrecht Art

Supplies

Daniel W. Klett, Principal, Capital Trade, Inc.

Philip S. Gallas )

) – OF COUNSEL

Mark R. Ludwikowski )

CLOSING REMARKS:

Petitioners (George W. Thompson, Neville Peterson LLP; I. Michael

Benator, Tara; David Twite, Tara; and Paul Straquadine, Tara)

Respondents (Philip S. Gallas, Sonnenschein Nath & Rosenthal LLP)

C-1

APPENDIX C

SUMMARY DATA

Contains Business Proprietary Information

Table C-1

Artists' canvas: Summary data concerning the U.S. market, 2002-05

(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

Item 2002 2003 2004 2005 2002-05 2002-03 2003-04 2004-05

U.S. consumption quantity:

 Amount . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** ***

 Producers' share (1) . . . . . . . . . . . *** *** *** *** *** *** *** ***

 Importers' share (1):

 China. . . . . . . . . . . . . . . *** *** *** *** *** *** *** ***

 All other sources . . . . . . . . . . . . . *** *** *** *** *** *** *** ***

 Total imports . . . . . . . . . . . . . . . *** *** *** *** *** *** *** ***

U.S. consumption value:

 Amount . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** ***

 Producers' share (1) . . . . . . . . . . . *** *** *** *** *** *** *** ***

 Importers' share (1):

 China. . . . . . . . . . . . . . . *** *** *** *** *** *** *** ***

 All other sources . . . . . . . . . . . . . *** *** *** *** *** *** *** ***

 Total imports . . . . . . . . . . . . . . . *** *** *** *** *** *** *** ***

U.S. imports from:

 China:

 Quantity . . . . . . . . . . . . . . . . . . . . 202 500 1,276 2,286 1031.7 147.5 155.2 79.2

 Value . . . . . . . . . . . . . . . . . . . . . . 1,562 3,390 8,974 15,079 865.4 117.0 164.7 68.0

 Unit value . . . . . . . . . . . . . . . . . . $7.75 $6.78 $7.03 $6.59 -15.0 -12.5 3.7 -6.3

 Ending inventory quantity . . . . . . *** *** *** *** *** *** *** ***

 All other sources:

 Quantity . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . . . *** *** *** *** *** *** *** ***

 All sources:

 Quantity . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . . . *** *** *** *** *** *** *** ***

U.S. producers':

 Average capacity quantity . . . . . . (2) (2) (2) (2) (2) (2) (2) (2)

 Production quantity . . . . . . . . . . . . (2) (2) (2) (2) (2) (2) (2) (2)

 Capacity utilization (1) . . . . . . . . . (2) (2) (2) (2) (2) (2) (2) (2)

 U.S. shipments:

 Quantity . . . . . . . . . . . . . . . . . . . . 6,622 6,319 6,934 8,987 35.7 -4.6 9.7 29.6

 Value . . . . . . . . . . . . . . . . . . . . . . 35,969 32,214 32,613 37,947 5.5 -10.4 1.2 16.4

 Unit value . . . . . . . . . . . . . . . . . . $5.43 $5.10 $4.70 $4.22 -22.3 -6.1 -7.7 -10.2

 Export shipments:

 Quantity . . . . . . . . . . . . . . . . . . . . 2,017 2,502 3,393 3,734 85.1 24.0 35.6 10.1

 Value . . . . . . . . . . . . . . . . . . . . . . 5,938 7,960 9,719 10,590 78.3 34.1 22.1 9.0

 Unit value . . . . . . . . . . . . . . . . . . $2.94 $3.18 $2.86 $2.84 -3.7 8.1 -10.0 -1.0

 Ending inventory quantity . . . . . . . *** *** *** *** *** *** *** ***

 Inventories/total shipments (1) . . . *** *** *** *** *** *** *** ***

 Production workers . . . . . . . . . . . . 448 396 394 382 -14.7 -11.6 -0.5 -3.0

 Hours worked (1,000s) . . . . . . . . . 916 817 803 752 -17.9 -10.8 -1.7 -6.4

 Wages paid ($1,000s) . . . . . . . . . 11,065 10,087 9,788 9,484 -14.3 -8.8 -3.0 -3.1

 Hourly wages . . . . . . . . . . . . . . . . $12.08 $12.35 $12.19 $12.61 4.4 2.2 -1.3 3.5

 Productivity (sq meters per hour) . (2) (2) (2) (2) (2) (2) (2) (2)

 Unit labor costs . . . . . . . . . . . . . . . (2) (2) (2) (2) (2) (2) (2) (2)

 Net commercial sales:

 Quantity . . . . . . . . . . . . . . . . . . . . 7,996 8,335 9,273 10,992 37.5 4.2 11.3 18.5

 Value . . . . . . . . . . . . . . . . . . . . . . 40,833 39,322 39,853 43,427 6.4 -3.7 1.4 9.0

 Unit value . . . . . . . . . . . . . . . . . . $5.11 $4.72 $4.30 $3.95 -22.6 -7.6 -8.9 -8.1

 Cost of goods sold (COGS) . . . . . 32,019 30,358 30,745 33,858 5.7 -5.2 1.3 10.1

 Gross profit or (loss) . . . . . . . . . . . 8,814 8,964 9,108 9,569 8.6 1.7 1.6 5.1

 SG&A expenses . . . . . . . . . . . . . . 6,946 6,333 7,706 7,868 13.3 -8.8 21.7 2.1

 Operating income or (loss) . . . . . . 1,868 2,631 1,402 1,701 -8.9 40.8 -46.7 21.3

 Capital expenditures . . . . . . . . . . . 350 438 775 1,645 370.0 25.1 76.9 112.3

 Unit COGS . . . . . . . . . . . . . . . . . . $4.00 $3.64 $3.32 $3.08 -23.1 -9.0 -9.0 -7.1

 Unit SG&A expenses . . . . . . . . . . $0.87 $0.76 $0.83 $0.72 -17.6 -12.5 9.4 -13.9

 Unit operating income or (loss) . . $0.23 $0.32 $0.15 $0.15 -33.8 35.1 -52.1 2.4

 COGS/sales (1) . . . . . . . . . . . . . . 78.4 77.2 77.1 78.0 -0.4 -1.2 -0.1 0.8

 Operating income or (loss)/

 sales (1) . . . . . . . . . . . . . . . . . . . 4.6 6.7 3.5 3.9 -0.7 2.1 -3.2 0.4

 (1) "Reported data" are in percent and "period changes" are in percentage points.

 (2) Not applicable. Production and capacity data, as well as all related calculations, are presented separately for bulk and finished canvas (see tables C-2 and C-3)

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 official Commerce statistics.

C-3
C-4

Table C-2

Bulk artists’ canvas: Summary data concerning the U.S. market, 2002-05

* * * * * * *

Table C-3

Finished artists’ canvas: Summary data concerning the U.S. market, 2002-05

* * * * * * *

Table C-4

Artists’ canvas: Summary data concerning the U.S. market (excluding print converters), 2002-05

* * * * * * *

Table C-5

Finished artists’ canvas: Summary data concerning the U.S. market (excluding print converters),

2002-05

* * * * * * *

Table C-6

Finished artists’ canvas: Summary data concerning the U.S. market (excluding non-print

converters), 2002-05

* * * * * * *
D-1

APPENDIX D

RESPONSES TO COMMISSION LIKE PRODUCT FACTORS

D-3

Recipients of the Commission’s questionnaires were requested to describe the similarities and differences

between bulk and finished artists’ canvas with respect to their: (1) characteristics and uses, (2)

interchangeability, (3) manufacturing processes, (4) channels of distribution, (5) customer and producer

perceptions, and (6) price. Responses to this question are presented below.

Characteristics and Uses

U.S. producers

***

“Bulk rolled canvas is used in the manufacture of finished art canvas and is used by other solvent coaters

for the digital printing business.”

***

“Our product is sold in bulk rolled goods. Our customer coats and breaks it down to a specific smaller

sized roll used in art reproduction.”

***

“To me bulk rolled canvas can be in one of three forms: 1) bulk rolled canvas cloth with no treatment.

Product in this form is not used by inkjet printers (our end users); 2) bulk rolled canvas cloth coated with

a gesso or primer coat. Product in this form is not used by inkjet printers (our end users); 3) bulk rolled

canvas cloth coated with a primer coat and an inkjet receiving coat. Product in this form would not be

used by *** customers until it is slit to the proper width and cut to the proper length to fit on and in the

inkjet printing machines. The process of slitting and cutting is called converting.

*** is in the business of applying its proprietary inkjet receiving layer on bulk roll canvas with a primer

coat for the purpose of creating digital canvas. After the bulk roll receives the inkjet coating it is

converted into smaller rolls for sale to distributors who in turn supply the art publishers who use inkjet

printers.”

***

No response.

***

“Rolled canvas comes on a roll; assembled/finished is stretched over a frame, used by artists.”

***

“Rolled canvas is typically sold to artists who cut the canvas to the desired size and stretch on stretcher

bars themselves. The pre-stretched version is stretched ***. The end use is basically the same. But, in

the rolled format, the artist does his own stretching and in the pre-stretched version, *** does the

stretching.”
D-4

U.S. importers

***

“Bulk canvas needs to be sized and stretched prior to being used for painting. Assembled canvas is ready

to use for painting.”

***

“Canvas, whether rolled or assembled (stretched), usually comes primed with gesso. We import only

stretched canvas, primed, for our customers to use as a substrate for painting with acrylics and oils.”

***

“Fabric composition is the same. End use of both is as a painting surface/artist medium.”

***

No response.

***

No response.

***

“***/rolled: utilized in ***. *** assembled/finished: utilized in *** for the same uses as bulk/roll. Both

types have similar physical characteristics. Assembled/finished canvas comes in *** format.”

***

No response.

***

“Bulk: canvas is gessoed and rolled. Customer must stretch canvas on some surface before painting. 

Can be made into different and larger sizes than some assembled/finished canvas available. Finished: 

canvas is gessoed and stretched, ready for the customer to use. Same surface to be painted on.”

***

“Bulk: for stretching onto wood frames. Assembled: already stretched.”
D-5

***

“Bulk: primary surface for mural painting, used in conjunction with stretcher bars and staples/tacks to

create custom finished canvas by the end user; wider selection of surface choices. Finished: primary

surface for painting; pre-set canvas and stretcher bars at predetermined combinations commonly used

sizes.”

***

“Differences: bulk canvas could be used for such end uses as rugs and floor coverings, while assembled

canvas could not be so used. Similarity: painting is end use.”

***

No response.

***

No response.

***

“Roll canvas is not for the novice. Roll canvas is for students and professionals who want a very specific

canvas weight or size that would not be suitable in ready-made, pre-assembled canvas.”

***

“Bulk: needs stretching and sizing prior to use. Assembled: stretched, ready to paint.”

***

“Customer can trim to make whatever size they want. Can be stretched or not stretched. End use is the

same: to be painted on.”

***

No response.

***

“Similarities: cloth surface for painting. Differences: bulk is not considered finished, it needs to be

stretched and affixed to stretchers forming a frame support.”
D-6

Purchasers

***

“We have no experience with selling bulk canvas. Finished canvas now appeals to non-artists thanks to

media such as Trading Spaces and lower price points, to use canvas for a surface for fabrics, prints, and

other non-traditional uses.”

***

“The only difference is whether the artist wants to spend the time and energy to stretch their own canvas.”

***

“Bulk: artists mount canvas on boards or stretcher bars and, if not coated, they prime it with gesso and

begin to paint. Finished: canvases are primed, stretched, or mounted and ready to paint.”

***

“Bulk is sold by the yard and may not be primed. The customer stretches it. Finished is stretched and

primed.”

***

“Differences: one is stretched, one is bulk. Similarities: they are both canvas and can be painted on.”

***

No response.

***

No response.

***

“Both are used as artists surfaces. Finished is ready to go. Bulk requires more on artist’s part to get

ready, but allows artist to perform all factors - size, etc.”

Interchangeability

U.S. producers

***

“Bulk canvas is a part of finished canvas and it is a stand-alone product also.”
D-7

***

“There is no interchangeability; *** rolled product is shipped to *** customer, who adds value with

additional coating.”

***

“***.”

***

No response.

***

“Rolled canvas is used in production of *** pre-stretched canvas. They are fully interchangeable.”

***

“The end product is the same (a pre-stretched canvas). The biggest difference has to do with who

stretches it... the artists or ***.”

U.S. importers

***

“Not interchangeable as is; bulk/rolled canvas requires cutting and stretching.”

***

“Rolled canvas at some point needs to be assembled (stretched) to provide a taut surface for an artist’s

brush. Rolled is not interchangeable with the addition of the stretcher strips (wood frame).”

***

“Bulk/rolled can be cut to same finished size as assembled/finished if desired. Assembled/finished is a

fixed size and cannot be adjusted.”

***

No response.
D-8

***

No response.

***

“Both formats are utilized for the same end-use: fine art and photographic reproduction. Both formats

can be ***.”

***

No response.

***

“Bulk must be stretched before painting. End result is different and larger sizes plus regular sizes. 

Finished is a finished surface for painting with acrylic and oil; only select sizes.”

***

“They are not interchangeable.”

***

“Bulk is generally used as a major component to create finished canvas. It can be used as a stand-alone

product in mural (large) paintings, but generally cannot be used interchangeably with finished canvas. 

Finished canvas can occasionally be used for small mural painting. Finished canvas cannot be used

interchangeably with bulk canvas.”

***

“The end use for bulk and assembled canvas is painting.”

***

No response.
D-9

***

No response.

***

“The key value for consumers of assembled/finished canvas is that it is ready to paint on and requires no

assembly. To the degree that the finished weight and size are the same they are interchangeable. Rarely

is this the case.”

***

“Not interchangeable in current form; requires assembly for bulk use.”

***

No response.

***

No response.

***

“Not interchangeable since the bulk requires a process, plus additional supplies and tools.”

Purchasers

***

“Only in a very narrow market with knowledgeable fine artists and professionals - markets ***.”

***

“Quality needs to be similar.”

***

“In both bulk and finished, artists use canvas as a substrate on which they create artwork.”

***

“Very little. Customers either want one or the other, depending on their interest in doing the work

themselves. My observation is the people who stretch it themselves are more experimental artists with

higher expectations.”
D-10

***

“They can both be painted on.”

***

No response.

***

No response.

***

“Bulk can replace finished when different sizes are needed. Finished can replace bulk when timeliness is

important.”

Manufacturing Processes

U.S. producers

***

“Bulk canvas is made ***. Finished canvas is made ***. Bulk and finished canvas are made ***.”

***

“Our process is to ***.”

***

“I feel the greater value is in the coating processes Bulk #2 and Bulk #3. To buy inkjet coating equipment

requires large capital expenditure as well as, in our case, a substantial investment in R&D. They key

machinery and investment used in inkjet coating bulk rolls is different from the equipment used to

convert {sic}. Coating canvas in bulk rolls requires skilled labor such as chemists, engineers, quality

assurance personnel, etc., in addition to some skilled personnel. To create a finished packaged roll from a

bulk roll is less expenditure in terms of equipment and uses unskilled labor only in ***.”

***

No response.

***

“We cut the rolled canvas to size, hand stretch over wood frame. Labor is very skilled to stretch a high

quality product.”
D-11

***

“When sold in bulk, the canvas is sold coated or uncoated to the retailer in a roll format of different sizes

and lengths (***). When we refer to the assembled/finished version, we ***. Therefore, in either case

(bulk/rolled or assemble/finished), we ***. Therefore, in terms of the manufacturing process, we ***.”

U.S. importers

***

“Canvas manufacturing process is identical. Stretching requires additional manufacturing process, labor,

and materials (stretcher bars, staples, spline, etc.)”

***

“The canvas itself is manufactured prior to assembly, so the difference is in the rolling process versus the

stretching and framing process. Rolled canvas is more likely to be offered in more weights and textures

than finished canvas.”

***

“Fabric for both is made through the same process. Assembled/finished is then cut to size and stretched

over a wooden frames.”

***

No response.

***

No response.

***

“Both formats are manufactured in a similar process: ***. Equipment used for both formats include: 

***. Similar skilled labor is needed for manufacturing process of both format types.”
D-12

***

No response.

***

“Bulk: raw canvas is gessoed then rolled and sold by the roll. Finished: raw canvas is gessoed and cut to

size, and wood stretcher strips are assembled to create the correct frame size. Canvas is stretched and

stapled to the wood frame.”

***

“Bulk is a component of assembled product. All that is required is hand labor to stretch.”

***

“Don’t know.”

***

“We have no information. We are ***.”

***

No response.

***

No response.

***

“The components required (raw canvas, priming, wood stretcher bars, nails/staples, etc.) are the same for

assembled/finished canvas as they are to convert bulk/rolled canvas into a finished product.”

***

“Manufacturing process is identical until product is stretched. Stretching requires more skilled workers

and machinery, plus raw materials.”

***

“We are not a manufacturer.”

***

No response.
D-13

***

“Same process up until canvas has to be stretched as a finished good.”

Purchasers

***

“I don’t have knowledge on this.”

***

“We do not stretch canvas. We sell either finished (pre-stretched) or the components for the artists to do

it themselves (bulk canvas, stretcher bars).”

***

“I do not have enough expertise to comment.”

***

“No experience with either.”

***

“They can both be painted on.”

***

No response.

***

No response.

***

“Bulk and finished have the same issues regarding the canvas itself. Finished is involved with stretching

and stapling in the manufacturing process.”

Channels of Distribution

U.S. producers

***

“Finished canvas is sold through retailers and distributors. Bulk canvas is sold to other manufacturers.”
D-14

***

“Our product is sold to the customer who applies a specific coating to sell in their market.”

***

“One of the channels of distribution for bulk rolls with primer are manufacturing companies such as ***

who would add a coating which makes the canvas receptive to digital printing. I’m sure there are other

markets for bulk primed canvas which are better explained by someone in that business. We sell our

digital canvas to distributors who may sell on the internet or to fine art publishers.”

***

No response.

***

“We sell to retail stores that sell to artists and hobby painters.”

***

“Some of our bulk rolled canvas is sold to what we would call converters who take the bulk rolls and

make pre-stretched canvas out of it. But, the vast majority of the canvas is sold to the following channels:

•Distributors - wholesalers who resell to retailers (e.g., ***).

•Mega Retailers - national chains (e.g., ***).

•Mail/Internet - companies such as *** that sell via catalogues and over the Internet. Typically,

these companies also have retail stores.”

U.S. importers

***

“We sell canvas *** primarily for painting purposes.”

***

“The channels of distribution are the same between rolled and finished canvas.”

***

“Same.”

***

No response.
D-15

***

No response.

***

“*** bulk/rolled: typically sold through a network of resellers and distributors specializing in the sale

and support of *** products, service, and support. *** assembled/finished: typically sold through

network of retail/consumer-focused businesses that carry ***.”

***

No response.

***

“Bulk: canvas must have a good gesso cover. Is sold in different widths and lengths. Must be stretched

after purchase. Finished: canvas must have a good gesso cover and be stretched correctly. Canvas is

sold in many sizes and in single packs and multiple packs.”

***

“The channels are the same - retail art supply stores.”

***

“Bulk: end user is looking for custom surface and/or size and/or thickness of stretcher bar. Greater

requirement of time and energy to get bulk canvas converted into custom finished canvas. Sold both in

retail and mail order. Finished: end user is looking for a painting surface that is ready to be used; looking

for ease of use over customization; sold both retail and mail order.”

***

“We sell both types of art canvas through one channel of distribution: ***.”

***

No response.

***

No response.

***

“For the most part, rolled/bulk and assembled/finished canvas are sold through distribution to retail art

material outlets and cataloguers. Rolled/bulk canvas tends to be sold in much smaller volumes.”
D-16

***

“Sold to consumers at *** stores.”

***

“Rolls typically require end user to assemble to desired size using additional tools and supplies. 

Assembled canvas has more mass appeal due to its finished “ready-to-go” nature.”

***

No response.

***

“Same.”

Purchasers

***

“Bulk has a relatively small market, in total end users. Finished is available in almost every channel.”

***

“Our sales channels are the same for both.”

***

“Bulk and finished goods are sold through the same channels.”

***

“Very similar.”

***

“N/A.”

***

No response.

***

“Bulk and finished goods are sold through the same channels.”
D-17

***

“Our customer would purchase these products in the same way.”

Customer and Producer Perceptions

U.S. producers

***

“The customer for finished canvas is in the art and craft business. Bulk canvas customers are

manufacturers.”

***

“Our product is sold to another manufacturer who adds value to sell in the digital art reproduction

market.”

***

“The bulk rolls could go to coaters or to converters. In *** case, finished rolls or sheets go to distributors

or end users with inkjet printers. End users cover a wide range from other businesses such as art

publishers or ad agencies to individuals who want to put a digital photo on canvas.”

***

No response.

***

“Rolled canvas in bulk is perceived to be the same quality, and pre-stretched assembled quality levels

differ with grade of canvas.”

***

“Most of the larger bulk rolls are used to convert to cut sheets to make stretched canvas, panels or pads.

The smaller rolls (3yd. and 6yd.) are purchased by artists who make their own stretched canvas. The

assembled/finished canvas is purchased by artists who prefer to buy the canvas already stretched.”

U.S. importers

***

“Bulk canvas is purchased by customers willing to stretch their own canvas or need a special, custom

size.”
D-18

***

“Rolled canvas could be conceived as a product for the more experienced or serious artist. There is a

technique to stretching canvas that the causal artist would need to learn.”

***

“Customer has the option with bulk/rolled to choose the final size of the finished canvas and the

framing/stretching method.”

***

No response.

***

No response.

***

“*** bulk/rolled: marketed and sold to *** market segment. *** assembled/finished: marketed and sold

to same market as bulk/rolled and additionally to the *** market segment.”

***

No response.

***

“Bulk: (customer) it is more labor intensive before able to start painting; (producer) less labor intensive

for producer. Finished: customer can buy right off the shelf and start painting. It is much more labor

intensive for the producer.”

***

“Same.”

***

“Bulk: sold primarily to professional painter due to added difficulty of use. Increased investment of upfront cost of materials; however, the general cost per yard is lower so end user can save money over

longer period; savings in money, however, is offset by cost of time and energy by end user. Finished: 

sold primarily to general consumer due to ease of use; nominal up-front cost of time and energy needed to

prepare finished canvas for painting. Limited sizes, surfaces, and stretcher bar thickness.”

***

“We market all canvas in the same manner.”
D-19

***

No response.

***

No response.

***

“Art supply stores offer bulk/rolled canvas for customers with special quality and size needs. 

Assembled/finished canvas appeals to a broader market segment that would include students, hobbyists

and first time painters.”

***

“Rolled canvas allows the consumer additional freedom to create since it can be any size the artist

wishes.”

***

“Perceived: bulk rolls don’t require as much attention because they are such a small percentage of the

business. Rolls are typically for those with specific size needs or who simply enjoy stretching their own

canvas.”

***

No response.

***

“Customer views as different products: personal preference as well as ability required to “finish” bulk

roll as a finished canvas.”

Purchasers

***

“Customers in our market don’t see bulk canvas as a viable option for most projects due to the time, skill,

equipment (tools) needed, as well as higher perceived cost.”

***

“Customers have personal preferences about stretched versus bulk.”

***

“Customers choose finished goods because they represent significant time savings; finished goods are

ready to paint - no priming, stretching or mounting required.”
D-20

***

“I don’t think consumers see the two as competing products. People who want bulk canvas seem to have

a specific reason that they need: an odd size or want to stretch it themselves.”

***

“Bulk can be stretched into sizes not produced by manufacturers of stretched canvas.”

***

No response.

***

No response.

***

“Bulk canvas is perceived as a product for professionals or serious avocation artists working with very

definite specifications. Finished is more for beginners.”

Price

U.S. producers

***

“Bulk canvas is less expensive because there is less converting involved.”

***

“Our product is sold at competitive pricing into a high quality expectation market.”

***

“This is a major consideration among both distributors and end users. Naturally, we see an increase in

cost/value of bulk canvas as it progresses from woven goods to primed canvas to inkjet digital canvas.

The cost of coating bulk rolls is very volume-dependent. The bulk of the manufacturing costs are more or

less constant whether we work one shift or three. However, the need for skilled and unskilled personnel

does increase with each additional shift.

The converting and packaging process can represent as little as *** percent of the total cost of the

finished product, but is a necessary step. *** U.S. canvas inkjet coaters have the capability of converting

bulk rolls to smaller rolls or sheets which can be used by the end user.”

***

No response.
D-21

***

“Pre-stretched canvas is added value, therefore it is about four times the cost of rolled bulk canvas.”

***

“Pricing is based on our cost to produce with *** to determine selling price and list. A ‘discussion’ of the

different prices is difficult as the two subproducts (bulk/rolled and assembled/finished) come in so many

different sizes, lengths, weight configurations, materials, quality, etc. For example, a *** stretched

canvas can list for $*** or $*** and a *** yd. roll can sell for $*** or as much as $*** and there are

literally hundreds of other scenarios depending on the weight, configuration, material, and size. Stretched

canvas prices will reflect the cost of stretcher strips and the stretching process.”

U.S. importers

***

“Bulk canvas is less expensive than assembled. For example, a yard of ***-inch wide primed bulk

canvas costs $***, which represents $*** per square inch. An assembled ***-inch canvas costs $***,

which equals to $*** per square inch.”

***

“Pricing for stretched canvas has to take into account the cost of stretcher strips and time and labor of

assembly.”

***

“We do not deal in bulk/rolled, therefore we do not have accurate information on pricing.”

***

No response.

***

No response.

***

“Cost per square foot is typically lower for bulk/rolled than assembled/finished. This pricing practice is

common across general categories.”

***

No response.
D-22

***

“***.”

***

“Typically there is a discount per square inch for rolled because no labor has been added to stretch.”

***

No response.

***

“The bulk rolls are more expensive. Each roll is 7.25 square meters. An un-primed roll costs *** $***

and a primed roll costs $***. By contrast, for the top ten selling finished canvas items that we sell, the

per-unit cost ranges from a low of $*** (size ***) to a high of $*** (***).”

***

No response.

***

No response.

***

“As with making any manufactured item from its raw components, very little money is saved by doing it

yourself.”

***

“Bulk/rolled canvas has much more canvas included; it can provide many individual items. Rolled

canvas is therefore higher cost than individual stretched canvas.”

***

“Price per square inch of bulk is typically one half the price of pre-stretched. This savings is passed to

consumer but consumer still needs additional supplies to achieve finished product.”

***

No response.

***

“Large variation in pricing since our company sells only *** rolls.”
D-23

Purchasers

***

“N/A.”

***

“Bulk is less expensive for the artist but requires their time and skill to stretch the canvas.”

***

“***.”

***

“Mass-produced finished is less expensive than buying the components, but also lower quality.”

***

“N/A.”

***

No response.

***

No response.

***

“Price of bulk is by yard; only one factor of overall price. Finished goods have a wider price range for

greater customer level ranges.”

E-1

APPENDIX E

RESPONSES TO THE PRODUCERS’ QUESTIONNAIRE

E-3

Table E-1

Artists’ canvas: Responses to the Commission’s U.S. producers’ questionnaire

F-1

APPENDIX F

PURCHASE PRICES OF DIRECT IMPORTS AND OF DOMESTIC

PRODUCTS

F-3

Table F-1

Artists’ canvas: Weighted-average delivered purchase prices and quantities of domestic,

imported, and directly imported product 1, by quarters, January 2002-December 2005

* * * * * * *

Table F-2

Artists’ canvas: Weighted-average delivered purchase prices and quantities of domestic,

imported, and directly imported product 2, by quarters, January 2002-December 2005

* * * * * * *

Table F-3

Artists’ canvas: Weighted-average delivered purchase prices and quantities of domestic,

imported, and directly imported product 3, by quarters, January 2002-December 2005

* * * * * * *

Table F-4

Artists’ canvas: Weighted-average delivered purchase prices and quantities of domestic,

imported, and directly imported product 4, by quarters, January 2002-December 2005

* * * * * * *

Table F-5

Artists’ canvas: Weighted-average delivered purchase prices and quantities of domestic,

imported, and directly imported product 5, by quarters, January 2002-December 2005

* * * * * * *

Table F-6

Artists’ canvas: Weighted-average delivered purchase prices and quantities of domestic,

imported, and directly imported product 6, by quarters, January 2002-December 2005

* * * * * * *

Table F-7

Artists’ canvas: Weighted-average delivered purchase prices and quantities of domestic and

directly imported product 7, by quarters, January 2002-December 2005

* * * * * * *

Table F-8

Artists’ canvas: Weighted-average delivered purchase prices and quantities of domestic product

8, January 2002-December 2005

* * * * * * *

G-1

APPENDIX G

PURCHASE PRICES OF DIRECT IMPORTS AND OF DOMESTIC

PRODUCTS

G-3

Table G-1

Artists’ canvas: Weighted-average delivered purchase prices and quantities of domestic,

imported, and directly imported product 1, by quarters, January 2002-December 2005

* * * * * * *

Table G-2

Artists’ canvas: Weighted-average delivered purchase prices and quantities of domestic,

imported, and directly imported product 2, by quarters, January 2002-December 2005

* * * * * * *

Table G-3

Artists’ canvas: Weighted-average delivered purchase prices and quantities of domestic,

imported, and directly imported product 3, by quarters, January 2002-December 2005

* * * * * * *

Table G-4

Artists’ canvas: Weighted-average delivered purchase prices and quantities of domestic,

imported, and directly imported product 4, by quarters, January 2002-December 2005

* * * * * * *

Table G-5

Artists’ canvas: Weighted-average delivered purchase prices and quantities of domestic,

imported, and directly imported product 5, by quarters, January 2002-December 2005

* * * * * * *

Table G-6

Artists’ canvas: Weighted-average delivered purchase prices and quantities of domestic,

imported, and directly imported product 6, by quarters, January 2002-December 2005

* * * * * * *

Table G-7

Artists’ canvas: Weighted-average delivered purchase prices and quantities of domestic and

directly imported product 7, by quarters, January 2002-December 2005

* * * * * * *

Table G-8

Artists’ canvas: Weighted-average delivered purchase prices and quantities of domestic product

8, January 2002-December 2005

* * * * * * *

H-1

APPENDIX H

ALLEGED EFFECTS OF SUBJECT IMPORTS ON U.S. PRODUCERS’

EXISTING DEVELOPMENT AND PRODUCTION EFFORTS,

 GROWTH, INVESTMENT, AND ABILITY TO RAISE CAPITAL
H-2
H-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:

For bulk/rolled:

Duro ***

Holliston ***

Signature ***

Tara ***

For assembled/finished:

Duro ***

IJ Tech. ***

Masterpiece ***

Signature ***

Tara ***

2. Does your firm anticipate any negative impact of imports of artists’ canvas from China?

Responses of the producers are:

For bulk/rolled:

Duro ***

Holliston ***

 

Signature *** 

Tara ***
H-4

For assembled/finished:

Duro ***

IJ Tech. ***

 

Masterpiece ***

Signature *** 

Tara ***