Coated Free Sheet Paper From

China, Indonesia, and Korea

Investigation Nos. 701-TA-444-446 (Preliminary)

and 731-TA-1107-1109 (Preliminary)

Publication 3900 December 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

Shara L. Aranoff, Vice Chairman

Daniel R. Pearson, Chairman

Stephen Koplan

Deanna Tanner Okun

Charlotte R. Lane

Staff assigned

Debra Baker, Investigator

Alfred Forstall, Industry Analyst

Nancy Bryan, Economist

Justin Jee, Accountant/Auditor

Peter Sultan, Attorney

Lemuel Shields, Statistical Information Specialist

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

Washington, DC 20436

December 2006

www.usitc.gov

Publication 3900

Coated Free Sheet Paper From

China, Indonesia, and Korea

Investigation Nos. 701-TA-444-446 (Preliminary)

and 731-TA-1107-1109 (Preliminary)
 
i

CONTENTS

Page

Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

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

Dissenting views of Chairman Daniel R. Pearson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Separate and additional views of Commissioner Deanna Tanner Okun concerning Bratsk

Aluminum v. United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

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

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

Organization of the report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

The U.S. coated free sheet paper market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2

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

Previous and related investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

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

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

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

The domestic like product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6

General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6

Domestic like product issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10

Physical characteristics and uses, manufacturing facilities, and production employees . . . . . I-10

Interchangeability and customer and producer perceptions . . . . . . . . . . . . . . . . . . . . . . . . . . I-12

Channels of distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-13

Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-14

Data on product types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15

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

U.S. market segmentation and channels of distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1

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

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

U.S. demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-5

Substitute products ......................................................... II-5

Substitutability issues .......................................................... II-5

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

Other country comparisons ................................................... II-9

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

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

U.S. producers’ imports and purchases ............................................. III-4

U.S. producers’ capacity, production, and capacity utilization .......................... III-4

U.S. producers’ shipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-8

U.S. producers’ inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-10

U.S. producers’ employment, wages, and productivity ................................ III-10

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

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

Misclassification of subject merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1

U.S. imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-4

Cumulation considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-7

The question of negligible imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-8

Apparent U.S. consumption, U.S. market shares, and ratio of imports to U.S. production . . . . . IV-12

Continued.
ii

CONTENTS–Continued

Page

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

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

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

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

Exchange rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Pricing practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3

Pricing methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3

Sales terms and discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3

Price data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-4

Price trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-5

Price comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-8

Lost sales and lost revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-10

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

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

Operations on coated free sheet paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1

Capital expenditures and research and development expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-6

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

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

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

Subject manufacturers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1

Data gathered on the subject country industries ...................................... VII-3

The industry in China .......................................................... VII-3

The industry in Indonesia ....................................................... VII-5

The industry in Korea .......................................................... VII-6

Aggregated data on the industries in subject countries ................................. VII-10

Importers’ inventories of the subject product ........................................ VII-13

Appendices

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

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

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

D. Questionnaire responses regarding the domestic like product . . . . . . . . . . . . . . . . . . . . . . . . . . D-1

E. Additional tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1

F. Pricing data including sales of imported product reported by firms that are not the importer of

record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

G. Nonsubject import pricing data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1

H. Pricing data on a delivered basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-1

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

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

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

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

asterisks. 
 1

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

 2

 Chairman Daniel R. Pearson dissenting. Commissioner Jennifer A. Hillman did not participate in these

investigations.

1

UNITED STATES INTERNATIONAL TRADE COMMISSION

Investigation Nos. 701-TA-444-446 (Preliminary) and 731-TA-1107-1109 (Preliminary) 

COATED FREE SHEET PAPER FROM CHINA, INDONESIA, AND KOREA

DETERMINATIONS

On the basis of the record1

 developed in the subject investigations, the United States International

Trade Commission (Commission) determines, pursuant to sections 703(a) and 733(a) of the Tariff Act of

1930 (19 U.S.C. § 1671b(a) and 1673b(a)) (the Act), that there is a reasonable indication that an industry

in the United States is materially injured by reason of imports from China, Indonesia, or Korea of coated

free sheet paper,2

 provided for in subheadings 4810.13.19, 4810.13.20, 4810.13.50, 4810.13.70,

4810.14.19, 4810.14.20, 4810.14.50, 4810.14.70, 4810.19.19, and 4810.19.20 of the Harmonized Tariff

Schedule of the United States, that are alleged to be subsidized or sold in the United States at less than

fair value (LTFV).

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

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

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

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

preliminary determinations in the investigations under sections 703(b) and 733(b) of the Act, or, if the

preliminary determinations are negative, upon notice of affirmative final determinations in those

investigations under sections 705(a) and 735(a) of the Act. Parties that filed entries of appearance in the

preliminary phase of the investigations need not enter a separate appearance for the final phase of the

investigations. Industrial users, and, if the merchandise under investigation is sold at the retail level,

representative consumer organizations have the right to appear as parties in Commission antidumping and

countervailing duty investigations. The Secretary will prepare a public service list containing the names

and addresses of all persons, or their representatives, who are parties to the investigations.

BACKGROUND

On October 31, 2006, a petition was filed with the Commission and Commerce by New Page

Corp., Dayton, OH, alleging that an industry in the United States is materially injured or threatened with

material injury by reason of subsidized and LTFV imports of coated free sheet paper from China,

Indonesia, and Korea. Accordingly, effective October 31, 2006, the Commission instituted countervailing

duty investigations Nos. 701-TA-444-446 (Preliminary) and antidumping duty investigations Nos.

731-TA-1107-1109 (Preliminary). 

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

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

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

of November 6, 2006 (71 FR 64983). The conference was held in Washington, DC, on November 21,

2006, and all persons who requested the opportunity were permitted to appear in person or by counsel.
 
 1

 Chairman Pearson dissents from these determinations but joins in Sections I through VI.A. of these views. 

Commissioner Hillman did not participate in these determinations.

 2

 19 U.S.C. §§ 1671b(a), 1673b(a) (2000); see also Am. Lamb Co. v. United States, 785 F.2d 994, 1001-04 (Fed.

Cir. 1986); Aristech Chem. Corp. v. United States, 20 CIT 353, 354-55 (1996). No party argued that the

establishment of an industry is materially retarded by reason of the allegedly unfairly traded imports.

 3

 Am. Lamb Co., 785 F.2d at 1001; see also Tex. Crushed Stone Co. v. United States, 35 F.3d 1535, 1543 (Fed.

Cir. 1994).

 4

 Transcript of Staff Conference (“Transcript”) at 19-21 (Tyrone, New Page).

 5

 Confidential Report (“CR”) at I-10 and I-14 n.37, Public Report (“PR”) at I-8 and I-10 n.37.

 6

 CR at I-11, PR at I-8-9.

 7

 CR at I-17 and II-1, PR at I-12 and II-1.

 8

 CR at II-1, PR at II-12.

 9

 In addition to New Page, the domestic industry consists of nine other producers of CFSP that operate plants in

ten states. CR/PR at Table III-1

3

VIEWS OF THE COMMISSION

Based on the record in the preliminary phase of these investigations, we find that there is a

reasonable indication that an industry in the United States is materially injured by reason of coated free

sheet paper (“CFSP”) imported from China, Indonesia, and Korea that is allegedly subsidized and sold in

the United States at less than fair value (“LTFV”).1

I. THE LEGAL STANDARD FOR PRELIMINARY DETERMINATIONS

The legal standard for preliminary antidumping and countervailing duty determinations requires

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

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

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

of the allegedly unfairly traded imports.2

 In applying this standard, the Commission weighs the evidence

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

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

arise in a final investigation.”3

II. BACKGROUND

CFSP is a type of graphic paper (i.e., paper or paperboard intended for writing, printing, or other

graphic purposes). CFSP contains no more than 10 percent by weight mechanical pulp; that is, it is made

from a minimum of 90 percent chemical pulp.4

 (Chemical pulp is produced by cooking wood chips in a

chemical solution, while mechanical pulp is obtained through mechanical means, by grinding wood).5

The coating on CFSP usually consists of kaolin, although a variety of other substances may also be used.6

CFSP typically is used to print materials with high-gloss pages, for example, annual reports, high-end

catalogues and magazines, high-impact direct mail, posters, signage, playing cards, and packaging.7

CFSP is sold in two principal forms: web rolls and sheets (the latter encompasses sheeter rolls).8

The petition in these investigations was filed on October 31, 2006, by New Page Corporation of

Dayton, Ohio (“Petitioner” or “New Page”), a domestic producer of CFSP.9

 The following respondents

participated in the staff conference and filed briefs in the preliminary phase of these investigations: (1) a
 10 Korean Respondents are the Korea Paper Manufacturers’ Association and its members EN Paper; Hankuk

Paper Mfg. Co., Ltd.; Hansol Paper Co., Ltd.; Hongwon Paper Mfg. Co., Ltd.; Kyesung Paper Co., Ltd.; Moorim

Paper Co., Ltd.; and Namhan Paper Co., Ltd.

 11 Indonesian Respondents are PT. Pindo Deli Pulp and Paper Mills, and PT. Pabrik Kertas Tjimi Kimia Tbk.

 12 Chinese Respondents are Gold East Paper (Jiangsu) Co., Ltd.; Gold Huasheng Paper (Suzhou Industry Park)

Co., Ltd.; Shandong Chenming Paper Holdings Ltd.; and Shandong Sun Paper Industry Joint Stock Co.

 13 19 U.S.C. § 1677(4)(A).

 14 Id.

 15 19 U.S.C. § 1677(10).

 16 See, e.g., NEC Corp. v. Dep’t 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) consumer

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

employees; and where appropriate, (6) price. See Nippon Steel Corp., 19 CIT at 455 n.4; Timken Co. v. United

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

 17 See, e.g., S. Rep. No. 249, 96th Cong., 1st Sess., at 90-91 (1979).

 18 Nippon Steel Corp., 19 CIT at 455; Torrington Co., 747 F. Supp. at 748-49; see also S. Rep. No. 249 at 90-91

(Congress has indicated that the domestic like product standard should not be interpreted in “such a narrow fashion

as to permit minor differences in physical characteristics or uses to lead to the conclusion that the product and article

are not ‘like’ each other, nor should the definition of ‘like product’ be interpreted in such a fashion as to prevent

(continued...)

4

group of producers and exporters of subject merchandise from Korea (“Korean Respondents”);10 (2) two

producers and exporters of subject merchandise from Indonesia (“Indonesian Respondents”);11 and (3) a

group of producers and exporters of subject merchandise from China, and an importer, Unisource

Worldwide, Inc. (“Chinese Respondents”).12 In addition, the trade association Printing Industries of

America, Inc. (“PIA”) and an importer, Ekman & Co., Inc. (“Ekman”) filed postconference submissions,

but did not participate in the staff conference. 

III. DOMESTIC LIKE PRODUCT

A. In General

To determine whether there is a reasonable indication that 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.”13 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.”14 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.”15

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.16 No single factor is dispositive, and the Commission

may consider other factors it deems relevant based on the facts of a particular investigation.17 The

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

variations.18 Although the Commission must accept the determination of the U.S. Department of
 18 (...continued)

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

 19 Hosiden Corp. v. Advanced Display Mfrs., 85 F.3d 1561, 1568 (Fed. Cir. 1996) (Commission may find a single

domestic like product corresponding to several different classes or kinds defined by Commerce); Torrington Co.,

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

Commerce found five classes or kinds).

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

Steel Corp. v. United States, 19 CIT at 455; Asociacion Colombiana de Exportadores de Flores v. United States, 693

F. Supp. 1165, 1169 n.5 (Ct. Int’l Trade 1988) (particularly addressing like product determination); Citrosuco

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

 21 71 Fed. Reg. 68537, 68538 (Nov. 27, 2006) (initiation of antidumping duty investigations); 71 Fed. Reg. 68546

(Nov. 27, 2006) (initiation of countervailing duty investigations).

 22 Subject product was also apparently imported from China under the HTSUS subheadings 4811.59.2000 and

4811.90.8000.

5

Commerce (“Commerce”) as to the scope of the imported merchandise allegedly subsidized or sold at less

than fair value, the Commission determines what domestic product is like the imported articles Commerce

has identified.19 The Commission must base its domestic like product determination on the record in

these investigations. The Commission is not bound by prior determinations, even those pertaining to the

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

issues.20

B. Product Description

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

investigations as:

coated free sheet paper and paperboard of a kind used for writing, printing or other

graphic purposes. Coated free sheet paper is produced from not-more-than 10 percent

by weight mechanical or combined chemical/mechanical fibers. Coated free sheet paper

is coated with kaolin (China clay) or other inorganic substances, with or without a

binder, and with no other coating. Coated free sheet paper may be surface-colored,

surface-decorated, printed (except as described below), embossed, or perforated. The

subject merchandise includes single- and double-side-coated free sheet paper; coated

free sheet paper in both sheet or roll form; and is inclusive of all weights, brightness

levels, and finishes. The terms “wood free” or “art” paper may also be used to describe

the imported product.

Excluded from the scope are: (1) coated free sheet paper that is imported printed with

final content printed text or graphics; (2) base paper to be sensitized for use in

photography; and (3) paper containing by weight 25 percent or more cotton fiber.

Commerce stated that subject merchandise is imported under subheadings 4810.13.1900,

4810.13.2010, 4810.13.2090, 4810.13.5000, 4810.13.7040, 4810.14.1900, 4810.14.2010, 4810.14.2090,

4810.14.5000, 4810.14.7040, 4810.19.1900, 4810.19.2010, and 4810.19.2090 of the Harmonized Tariff

Schedule of the United States (“HTSUS”).21 22
 23 Petitioner’s Postconference Brief at 6.

 24 CR at I-8, PR at I-6-7.

 25 CR at I-14, PR at I-10.

 26 CR at I-16, PR at I-11.

 27 CR at I-11, PR at I-8-9.

 28 CR at I-17, PR at I-12.

 29 CR at II-10, PR at II-6.

 30 CR at I-13, PR at I-9.

 31 E.g., Transcript at 103 (Anderson, Paperlinx North America) (price difference between domestic web rolls and

domestic sheets can be as high as 20 percent).

 32 CR at I-17, PR at I-12.

 33 CR at I-14, PR at I-10.

6

C. Domestic Like Product

Petitioner advocates defining the domestic like product as coextensive with the scope of these

investigations,23 and no respondent has argued that it should be defined differently. We define the

domestic like product as coextensive with the scope of these investigations, for the following reasons.

Physical Characteristics and Uses. There are five basic forms of graphic paper. These are (in

descending order of quality): (i) CFSP, (ii) uncoated freesheet paper, (iii) coated groundwood paper, (iv)

uncoated groundwood paper, and (v) newsprint.24 The key physical characteristics of CFSP, as compared

to other forms of graphic paper, are, first, the limitation on the amount of mechanical pulp used to make

the paper, and, second, the coating of the paper. The mechanical pulp content in CFSP is limited because

significant mechanical pulp content causes paper to discolor with age.25 The coating on CFSP gives it a

better printing surface – in terms of brightness, smoothness, and gloss – than uncoated paper.26 The

coating on CFSP generally consists of kaolin clay, but may also include other substances.27 CFSP is used

principally in the printing of corporate annual reports, high-end catalogues, and magazines and in other

“prestige” applications.28

CFSP is sold in two basic forms: in web rolls that are used in web-fed presses, and in sheets or

sheeter rolls (referred to collectively as “sheet”) that are used in sheet-fed presses. Web-fed presses tend

to be used for larger commercial printing runs, while sheet-fed presses tend to be used for smaller, higherquality printing jobs.29 There appear to be some differences in physical characteristics between CFSP in

web rolls and sheets, in that web rolls have a higher moisture content and different coating formulations

to withstand the heat-set web printing process.30 CFSP in sheet form commands a price premium over the

web-roll form of the product.31

Interchangeability. Because of their unique printing characteristics, the various types of graphic

paper, including CFSP, are reportedly rarely substituted for each other.32 CFSP is rarely used in

traditional coated groundwood paper applications where weight (and therefore postage cost) is important,

because it is heavier than groundwood paper; and CFSP is preferred in some applications because

groundwood paper yellows relatively quickly.33 

Channels of Distribution. CFSP and other types of graphic paper are all sold in two channels of

distribution, to distributors and to end users. However, the relative importance of each channel may differ
 34 CR at I-20, PR at I-13.

 35 CR at I-15-16, PR at I-11.

 36 CR at I-16, PR at I-11.

 37 CR at I-17-19, PR at I-12-13.

 38 CR at I-21, PR at I-14.

 39 19 U.S.C. § 1677(4)(A).

 40 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).

7

according to the type of graphic paper. For example, coated groundwood paper is more likely than CFSP

to be sold directly to end users.34

Common Manufacturing Facilities, Production Processes, and Production Employees. Although

the same paper machine can be used to make either CFSP or coated groundwood paper, few producers

reported the capacity to produce both products.35 Machines used to make CFSP are occasionally used to

make uncoated freesheet paper.36 The production processes for CFSP and coated groundwood paper are

similar, but different types of pulp are used.

Customer and Producer Perceptions. Customers and producers generally view CFSP as distinct

from other graphic paper products. For example, customers regard CFSP as more suited than coated

groundwood paper to prestige applications, such as annual reports and high-end catalogues.37

Price. CFSP is generally more expensive than other types of graphic papers. The price of CFSP

is reported to be approximately 10 percent higher than that of coated groundwood paper, and 20-40

percent higher than the price of uncoated free sheet paper.38

Conclusion. No party in these preliminary phase investigations has advocated defining the

domestic like product other than as a single like product coextensive with the scope. There appear to be

clear dividing lines – primarily in terms of physical characteristics and uses, interchangeability, customer

and producer perceptions, and price – that distinguish CFSP as a domestic like product separate from

other forms of graphic papers. Accordingly, we find that there is a single domestic like product

coextensive with the scope of these investigations.

IV. DOMESTIC INDUSTRY

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

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

total domestic production of the product.”39 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.40 Based on our finding that

the domestic like product is CFSP, for purposes of these preliminary determinations, we find that the

domestic industry consists of all known domestic producers of this product. 

We must determine whether any producer of the domestic like product should be excluded from

the domestic industry pursuant to 19 U.S.C. § 1677(4)(B), which allows the Commission, if appropriate

circumstances exist, to exclude from the domestic industry producers that are related to an exporter or

importer of subject merchandise or which are themselves importers. Exclusion of such a producer is

within the Commission’s discretion based upon the facts presented in each investigation. 
 41 CR/PR at Table III-2.

 42 CR/PR at Table III-1.

 43 CR/PR at Table III-2.

 44 Id.

 45 CR/PR at Note to Table III-2.

 46 CR/PR at Table III-1.

 47 *** financial performance was ***. See CR at Table VI-2.

 48 CR/PR at Table III-1.

 49 CR/PR at Table III-2.

 50 Id.

 51 Id.

 52 CR at VI-1 n. 3, PR at VI-1 n.3.

 53 CR/PR at Note to Table III-2.

 54 CR/PR at Table III-1.

 55 In light of the ***, we intend to revisit the question of whether appropriate circumstances exist to exclude this

producer from the domestic industry as a related party in any final phase of these investigations.

 56 CR/PR at Table III-1.

 57 CR/PR at Note to Table III-2.

 58 CR/PR at Note to Table III-2.

 59 CR/PR at Table III-1.

 60 CR/PR at Table VI-2.

8

Three U.S. producers, ***, reported that they imported the subject merchandise during the period

of investigation (“POI”).41 Thus, they qualify as “related parties” under 19 U.S.C. § 1677(4)(B).

 *** accounted for a relatively small share – *** percent – of domestic CFSP production in

2005.42 It imported subject merchandise from Korea throughout the POI.43 The ratio of these imports to

*** production ranged from *** percent in 2005 to *** percent in 2003.44 The reason that it gave for

importing this subject merchandise was that ***.45 *** the petition.46 We do not exclude *** from the

domestic industry as a related party because it is a relatively small producer, the ratio of its imports to its

production is relatively small, and there is no evidence that it derived a significant overall financial

benefit from these imports.47 

 *** accounted for a very small share – *** percent – of domestic CFSP production in 2005.48 It

imported subject merchandise from Korea throughout the POI.49 The ratio of these imports to ***

production ranged from *** percent in 2004 to *** percent during the January-September 2006 (“interim

2006") period.50 The jump in this ratio in interim 2006 occurred because of a sharp drop in the

company’s domestic production in interim 2006, and not because of an increase in imports.51 (***.)52

The reason that it gave for importing this subject merchandise was that ***.”53 *** the petition.54 We do

not exclude *** from the domestic industry as a related party as it is *** that does not appear to have

been shielded from any injury that might be caused by subject imports by virtue of its importing activity,

at least until ***, when ***. For most of the POI, *** imports were ***, and thus it is not likely that it

derived a significant overall financial benefit from these imports.55

 *** accounted for a very small share – *** percent – of domestic CFSP production in 2005.56 It

reported that it began to import CFSP from Korea in 2006, but it could not provide data on the value of

these imports.57 The reason that it gave for importing this subject merchandise was that ***.58 *** the

petition.59 Its financial results in interim 2006 were ***.60 We do not exclude *** from the domestic

industry because it accounts for a very small portion of U.S. production and we have no information as to
 61 In any final phase of these investigations we intend to consider whether the domestic producer Stora Enso

North America Corp. is a related party on account of its ownership by a third party that also controls a CFSP

producer in China, and, if so, whether appropriate circumstances exist to exclude Stora Enso from the domestic

industry.

 62 19 U.S.C. §§ 1671b(a), 1673b(a), 1677(24)(A)(I)(I). 

 63 19 U.S.C. § 1677(24)(A)(i)-(ii).

 64 19 U.S.C. § 1677(24)(B). 

 65 19 U.S.C. § 1677(36)(A). 

 66 15 C.F.R. § 2013.1 (2005).

 67 19 U.S.C. §§ 1671b(a)(1), 1673b(a)(1).

 68 19 U.S.C. § 1677(24)(C); see also The Uruguay Round Agreements Act, Statement of Administrative Action,

H.R. Doc. No. 103-316, Vol. 1 at 186 (1994) (“SAA”).

9

the magnitude of its imports of subject merchandise in interim 2006. However, we intend to seek this

information in any final phase of these investigations and to revisit this issue.

There are no other related party issues in these preliminary phase investigations. No party in

these preliminary phase investigations has argued for the exclusion of any related party from the domestic

industry. We find that it is not appropriate to exclude the three related parties from the domestic

industry,61 and we find that the domestic industry consists of all known domestic producers of CFSP.

V. NEGLIGIBLE IMPORTS

A. In General

Pursuant to Section 771(24) of the Act, imports from a subject country of merchandise

corresponding to a domestic like product that account for less than 3 percent of all such merchandise

imported into the United States during the most recent 12 months for which data are available preceding

the filing of the petition shall be deemed negligible.62 Imports that are individually negligible may not be

negligible if the aggregate volumes of imports from several countries with negligible imports exceeds 7

percent of all such merchandise imported into the United States in the statutory period for assessing

negligibility referenced above.63 In countervailing duty investigations involving developing countries, the

statute further provides that the negligibility thresholds are 4 percent and 9 percent, rather than 3 percent

and 7 percent.64 The statute defines “developing country” as any country so designated by the U.S. Trade

Representative (“USTR”).65 Of the three subject countries with allegedly subsidized imports, Indonesia

has been designated by the USTR as a developing country.66 

By operation of law, a finding of negligibility terminates the Commission’s investigation with

respect to such imports.67 The Commission is authorized to make “reasonable estimates on the basis of

available statistics” of pertinent import levels for purposes of deciding negligibility.68 

B. Negligibility for Purposes of the Three Antidumping Duty Investigations and the

Countervailing Duty Investigations Concerning Subject Imports From China and

Korea

Allegedly LTFV subject imports from China, Indonesia, and Korea are not negligible under 19

U.S.C. § 1677(24)(A)(i) because imports from each country accounted for more than 3 percent of the

volume of CFSP imported into the United States in the most recent 12-month period for which data are

available preceding the filing of the petition. In the period from October 1, 2005, through September 30,
 69 CR/PR at Table IV-4.

 70 CR/PR at Table IV-4.

 71 CR at IV-7, PR at IV-3. There are two other indications in the record that the official import statistics

undercount subject imports from Indonesia. First, it appears that some imports of subject merchandise from

Indonesia could have been misclassified and entered under tariff subheadings that are not among the ones listed in

Commerce’s initiation notices. CR at IV-5, PR at IV-2. If this is the case, the official import statistics might

undercount the relative percentage of imports from Indonesia. Second, we note that data from importer

questionnaires show import levels that are substantially higher than official import statistics in all parts of the POI

except interim 2006. CR at IV-7, PR at IV-3. We understand that the aggregate data from importer questionnaires

may include some double-counting. See CR/PR at Table IV-1 n.2. Nonetheless, in light of the discrepancy between

the Indonesian export data and the official import statistics, it appears to be unlikely that the discrepancy in the

aggregate importer questionnaire data can be solely attributed to double-counting. CR at IV-5, PR at IV-2.

 72 CR/PR at Table IV-4. We note that export data would show that subject merchandise from Indonesia

accounted for the same percentage of total imports, 4.1 percent, if the data were lagged by one month to account for

shipping time (i.e., for the period September 2005 through August 2006). CR/PR at Table IV-4 n.1.

 73 The Indonesian Respondents argue that Section 771(24)(A)(iv) does not apply to developing countries in CVD

investigations. That provision states that the Commission shall not treat imports as negligible if it determines that

there is a potential that imports will imminently account for more than 3 percent of the volume of all such

merchandise imported into the United States. The Indonesian Respondents base their argument on a textual analysis

of the negligibility provisions of the statute and on the legislative history of these provisions. We disagree with the

position of Indonesian Respondents. The focus of Indonesian Respondents’ argument is that Section 771(B) of the

Act sets out a separate and distinct test of negligibility for developing countries in countervailing duty investigations,

(continued...)

10

2006, subject imports as a percentage of total imports of CFSP by quantity were *** percent for China,

*** percent for Korea, and at least 3.2 percent (but probably more, as discussed below) for Indonesia.69

In the case of the countervailing duty investigations, it is clear that imports from China and Korea

are not negligible, because, as noted above, they exceed the applicable 3 percent threshold. We next

consider whether imports from Indonesia exceeded the 4 percent threshold that is applicable to the

countervailing duty investigation for subject imports from Indonesia.

C. Negligibility for Purposes of the Material Injury Analysis in the Countervailing

Duty Investigation Concerning Subject Imports From Indonesia

Because Indonesia is a developing country as defined by the USTR, the applicable negligibility

threshold for the countervailing duty investigation is 4 percent. Official import statistics show imports

from Indonesia in the applicable period as being 3.2 percent of the volume of total imports.70 However,

there are a number of indications in the record that the official import statistics undercount subject

imports from Indonesia. Most significantly, data on exports of the subject product from Indonesia to the

United States, reported to the Commission by Indonesian producers, show that these subject export

amounts were significantly higher than the amounts reflected in official import statistics for 2005, interim

2005, and (to a lesser extent) interim 2006.71 Accordingly, for purposes of these preliminary

determinations, we have determined that the most accurate way to measure Indonesian subject imports in

the applicable period is to use monthly export data provided to the Commission by counsel to the

Indonesian Respondents. These monthly export data show that subject merchandise from Indonesia

accounted for 4.1 percent of total U.S. imports of the product in the 12 months preceding the filing of the

petition.72 Accordingly, for purposes of these preliminary determinations we determine that subject

imports from Indonesia were not negligible for purposes of the material injury analysis in the

countervailing duty investigation concerning subject imports from Indonesia. We intend to further

examine this issue in any final investigation.73
 73 (...continued)

such that Section 771(24)(A)(iv) does not apply to such negligibility determinations at all. There is no evidence in

the statute or legislative history to support such an interpretation. On the contrary, Section 771(B) speaks of

applying subparagraph (A) to imports of subject merchandise from developing countries. If subparagraph (A) is

applied, then this would include clause (iv) of that subparagraph. As Petitioner notes, Section 771(24)(A)(iv)

incorporates the 4 percent threshold that is made applicable to Section 771(24)(A)(i) by Section 771(24)(B). The

legislative history also supports the conclusion that Congress did not intend to exempt developing countries from the

“potential to imminently exceed” analysis in threat investigations. See SAA at 856.

 74 19 U.S.C. § 1677(7)(G)(i).

 75 See Certain Cast-Iron Pipe Fittings from Brazil, the Republic of Korea, and Taiwan, Inv. Nos. 731-TA-278-280

(Final), USITC Pub. 1845 (May 1986), aff'd, Fundicao Tupy, S.A. v. United States, 678 F. Supp. 898 (Ct. Int'l

Trade), aff'd, 859 F.2d 915 (Fed. Cir. 1988).

 76 See, e.g., Wieland Werke, AG v. United States, 718 F. Supp. 50 (Ct. Int'l Trade 1989).

 77 The SAA (at 848) expressly states that “the new section will not affect current Commission practice under

which the statutory requirement is satisfied if there is a reasonable overlap of competition.” SAA at 848 (citing

Fundicao Tupy, S.A. v. United States, 678 F. Supp. 898, 902 (Ct. Int'l Trade 1988)), aff'd 859 F.2d 915 (Fed. Cir.

1988). See Goss Graphic Sys., Inc. v. United States, 33 F. Supp. 2d 1082,1087 (Ct. Int’l Trade 1998) (“cumulation

does not require two products to be highly fungible”); Wieland Werke, AG, 718 F. Supp. at 52 (“Completely

overlapping markets are not required.”).

11

VI. CUMULATION

A. In General

For purposes of evaluating the volume and price effects for a determination of material injury by

reason of the subject imports, section 771(7)(G)(i) of the Act requires the Commission to cumulate

subject imports from all countries as to which petitions were filed and/or investigations self-initiated by

Commerce on the same day, if such imports compete with each other and with domestic like products in

the U.S. market.74 In assessing whether subject imports compete with each other and with the domestic

like product, the Commission has generally considered four factors, including:

(1) the degree of fungibility between the subject imports from different countries and

between imports and the domestic like product, including consideration of specific

customer requirements and other quality related questions;

(2) the presence of sales or offers to sell in the same geographic markets of subject

imports from different countries and the domestic like product;

(3) the existence of common or similar channels of distribution for subject imports

from different countries and the domestic like product; and

(4) whether the subject imports are simultaneously present in the market.75

While no single factor is necessarily determinative, and the list of factors is not exclusive, these

factors are intended to provide the Commission with a framework for determining whether the subject

imports compete with each other and with the domestic like product.76 Only a “reasonable overlap” of

competition is required.77

B. Analysis

Petitioner argues that, under the facts in this record, the Commission is required to cumulate

imports from the three subject countries. No respondent has argued, that for purposes of our present

injury analysis, imports from the three subject countries should not be cumulated.
 78 See 19 U.S.C. § 1677(7)(G) (ii).

 79 CR at II-9, PR at II-6.

 80 CR/PR at Table I-3.

 81 Transcript at 67-68 (Tyrone, New Page). 

 82 See CR/PR at Table I-3.

 83 CR/PR at Table III-1.

 84 CR at II-2, PR at II-1.

 85 Id.

 86 Id.

 87 CR/PR at Table IV-3.

12

The threshold requirement for cumulation is satisfied because Petitioner filed a petition with

respect to each of the three subject countries on the same day. None of the statutory exceptions to

cumulation is applicable.78 We next examine the four factors that the Commission customarily considers

in determining whether there is a reasonable overlap of competition.

1. Fungibility 

Domestically produced CFSP and the subject imports in the same form (i.e., web rolls or sheets)

from all three countries are substitutable. Subject imports are generally used for the same purpose as the

domestic product, that is, for high-end printing applications. The majority of responding U.S. producers

reported that the subject imports and the domestic product are always comparable, and the majority of 

responding importers reported that the subject imports and the domestic product are always comparable.79

U.S. producers concentrate on the production of CFSP in web-roll form. Subject imports, on the

other hand, consist almost entirely of CFSP in sheet form.80 The two types of CFSP are used in different

kinds of printing presses, and the record generally shows that they are not interchangeable for a particular

kind of press.81 Despite the different focus of the subject imports and the domestic producers, we find

that the degree of overlap of competition (the approximately 25 percent of domestic production on a

volume basis, and somewhat more on a value basis, devoted to sheet82) is sufficient to support finding a

reasonable overlap of competition.

2. Same Geographical Markets 

U.S. producers of CFSP are mostly located to the east of the Rocky Mountains, although one

producer is in Oregon.83 While the respondents suggested that domestic producers are sometimes

reluctant to ship west of the Rocky Mountains,84 eight of the nine responding U.S. producers reported that

they sell nationally.85 Most of the responding importers (six of nine importers from China, four of seven

importers from Indonesia, and six of 12 importers from Korea) reported that they sold nationally.86

Although imports from each of the subject countries tended to be concentrated in the western region of

the United States, throughout the POI there were significant imports from each of these countries in each

of the other three regions of the United States.87 The foregoing data show that subject imports and the

domestic like product are sold in the same geographic markets.
 88 CR/PR at Table IV-2.

 89 CR at II-1, PR at II-1.

 90 19 U.S.C. §§ 1671b(a) and 1673b(a).

 91 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, e.g., Angus Chem. Co. v. United States, 140 F.3d 1478 (Fed. Cir. 1998).

 92 19 U.S.C. § 1677(7)(A).

 93 19 U.S.C. § 1677(7)(C)(iii).

 94 19 U.S.C. § 1677(7)(C)(iii).

13

3. Simultaneous Presence

Imports from each of the subject countries have been present in the U.S. market in each year of

the POI and during the interim 2006 period.88

4. Channels of Distribution 

The domestic like product and subject imports are sold through common channels of distribution,

that is, through distributors (known as “merchants”) and to end users. Both the domestic like product and

subject imports are sold predominantly through merchants. Approximately *** percent of sales of the

domestic like product, and an estimated *** percent of subject imports, are made through this channel.89

5. Conclusion

Based on our consideration of the four criteria discussed above, we find that there is a reasonable

overlap of competition among the subject imports and the domestic like product, and we cumulate subject

imports from China, Indonesia, and Korea for purposes of our present material injury analysis.

VI. REASONABLE INDICATION OF MATERIAL INJURY BY REASON OF ALLEGEDLY

SUBSIDIZED AND LESS THAN FAIR VALUE IMPORTS FROM CHINA, INDONESIA,

AND KOREA

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

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

injured by reason of the imports under investigation.90 In making this determination, the Commission

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

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

operations.91 The statute defines “material injury” as “harm which is not inconsequential, immaterial, or

unimportant.”92 In assessing whether there is a reasonable indication that the domestic industry is

materially injured by reason of subject imports, we consider all relevant economic factors that bear on the

state of the industry in the United States.93 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.”94

For the reasons stated below, we determine that there is a reasonable indication that the domestic

industry producing CFSP is materially injured by reason of subject imports from China, Indonesia, and

Korea.
 95 Apparent U.S. consumption rose from *** short tons in 2003 to *** short tons in 2004, and then declined

slightly to *** short tons in 2005. Apparent U.S. consumption was higher in interim 2006 (*** short tons) than in

interim 2005 (*** short tons). CR/PR at Table IV-5.

 96 CR at II-7, PR at II-5.

 97 CR at V-6, PR at V-5. We recognize that, because demand for CFSP is somewhat seasonal, full-year data may

merit greater weight than partial-year data. In any final phase of these investigations, we intend to consider the

extent to which seasonality affects the reliability of partial-year import and consumption data.

 98 CR at V-3, PR at V-3.

 99 CR at III-1, PR at III-1.

 100 Id.

 101 CR/PR at Table IV-5.

 102 Id.

 103 The domestic industry’s capacity was 4.741 million short tons in 2003, 4.855 million short tons in 2004, and

4.834 million short tons in 2005. It was 3.627 million short tons in interim 2005, and 3.897 million short tons in

interim 2006. CR/PR at Table III-3. 

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

14

A. Conditions of Competition and the Business Cycle

The following conditions of competition inform our analysis of whether there is a reasonable

indication of material injury by reason of the subject imports.

1. Demand Conditions

Apparent U.S. consumption of CFSP increased over the POI, rising by *** percent from 2003 to

2005.95 Demand for CFSP is cyclical and follows general economic conditions.96 Demand for the

product also is somewhat seasonal, with increased demand in the third and possibly in the fourth calendar

quarters, as CFSP users anticipate printing books and catalogues for the end-of-year holidays.97 Shortterm contracts or spot sales are the predominant basis on which the subject imports and the domestic like

product are sold.98

2. Supply Conditions

In 2005, 10 U.S. firms accounted for virtually all U.S. production of CFSP.99 Of these, two

producers, New Page and Sappi Fine Paper NA accounted for *** percent of domestic

production.100 Domestic producers were the principal suppliers of CFSP in the U.S. market throughout

the POI, with a market share on a quantity basis that ranged from *** percent to *** percent in the 2003-

2005 period.101 The next largest share of the U.S. market was supplied by producers in nonsubject

countries, and the remaining share of the U.S. market was supplied by subject imports.102 The domestic

industry’s capacity to produce CFSP rose slightly in the 2003-2005 period, and also was higher in the

interim 2006 period than in the interim 2005 period.103

The domestic industry saw a number of changes to its organization and production operations

during the POI, including the shutdown of several paper machines (the equivalent of closing one

production line in a multiline plant) and the closure of one plant.104
 105 Compare CR at III-16, PR at III-10 with Transcript at 117 (Hunley, Global Paper Solutions) and 200-201

(Morgan).

 106 CR/PR at II-1.

 107 CR at I-22, PR at I-15.

 108 CFSP in web-roll form is estimated to account for 70-75 percent of domestic CFSP consumption on a volume

basis, and somewhat less on a value basis. CR/PR at Table I-3.

 109 Chinese Respondents’ Postconference Brief at 3-12; Korean Respondents’ Postconference Brief at 8-11;

Ekman Postconference Brief at 6-8.

 110 Chinese Respondents’ Postconference Brief at 10-12.

 111 CR at II-12-13, PR at II-7.

15

3. Other Considerations

Domestically produced CFSP and the subject imports tended to be sold on a different basis; while

most domestically produced product is sold from the mill or a nearby warehouse on a just-in-time basis,

most of the subject imports were produced to order.105

As noted above, CFSP is sold in two principal forms: web rolls and sheets (including sheeter

rolls).106 Virtually all subject imports during the POI consisted of CFSP in sheet form,107 while most

domestically produced CFSP is in web-roll form.108

Chinese Respondents, Korean Respondents, and Ekman argue that because almost all subject

imports are in sheet form (including sheeter rolls), the domestic industry does not face competition from

subject imports in the substantial segment of the CFSP market that is devoted to CFSP in web-roll form. 

They argue that there are substantial differences in physical characteristics and end uses between the two

forms of CFSP, and that the two products are not interchangeable because the printing presses for each

type of CFSP cannot use the other type. Chinese Respondents and Korean Respondents also argue that

the producers in the subject countries are not competitive with U.S. producers in the web-roll segment of

the market, that they are unlikely to become so, and that it is uneconomical to transport web rolls to the

United States.109

Chinese Respondents identify several other factors that, they claim, serve to attenuate competition

between subject imports and the domestic like product. These are: shorter lead times for domestic

producers; the greater stiffness of the domestic product, which makes it more efficient to use; the ability

of domestic producers to offer a full range of CFSP products; and the ability of domestic producers to

provide better technical support to customers.110 Respondents also allege that product branding serves to

attenuate competition somewhat between subject imports and the domestic product.111

Petitioner contests Respondents’ argument that competition between subject imports and the

domestic like product is attenuated. First, it argues that even if subject imports are concentrated solely in

the sheet part of the market, subject imports (with a 14 percent market share in interim 2006) control

almost 50 percent of this portion of the market. Petitioner also notes that, because sheet is a higher-priced

product than web rolls, sales of sheet account for a larger part of the overall CFSP market on a value basis

(*** percent) than on a volume basis (***). Petitioner takes issue with Respondents’ assertion that there

is market segmentation between sheet and web-roll product. Petitioner maintains that there are no

significant differences in the physical characteristics and applications of the two products. It notes that

while some U.S. printers have only sheet-fed or web-fed presses, other printers have both types of presses

in their operations. Petitioner contends that Respondents produce web-roll CFSP and that they could

participate in the web-roll part of the U.S. market if they wished to do so. Petitioner speculates that the

reason that Respondents do not ship significant amounts of web rolls is that respondents have first

targeted the higher end of the CFSP market (the market for sheet product). Finally, Petitioner points to
 112 Petitioner’s Postconference Brief at 37-41 and Responses to Questions at the Commission’s Staff Conference

at 21-37.

 113 19 U.S.C. § 1677(7)(C)(i).

 114 CR/PR at Table IV-2.

16

testimony from one of its witnesses at the staff conference that the price effects of subject imports of sheet

are also felt in the web-roll sector of the market.112 

We intend to more fully examine the question of attentuated competition between the subject

imports and the domestic like product in any final phase of these investigations.

B. Volume of Subject Imports

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

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

production or consumption in the United States, is significant.”113

The absolute volume of cumulated subject imports rose throughout the POI. The largest singleyear increase was between 2003 and 2004, when the volume of subject imports rose from *** short tons

to *** short tons. Volume rose again to *** tons in 2005. In interim 2006, the volume of cumulated

subject imports reached *** short tons, which was higher than the volume in either interim or full-year

2005.114

During the POI, cumulated subject imports also rose relative to production and consumption in

the United States. Subject imports’ share of U.S. apparent consumption rose from *** percent in 2003 to

*** percent in 2005, and was *** percent in interim 2006, compared with *** percent in interim
 115 CR/PR at Table IV-5. In any final phase investigations, we will seek information on the role of nonsubject

imports of CFSP in the U.S. market. We invite parties to comment in any final phase investigations on whether the

recent decision by the U.S. Court of Appeals for the Federal Circuit, Bratsk Aluminum Smelter v. United States, 444

F.3d 1369 (Fed. Cir. 2006), is applicable to the facts of these investigations. The Commission also invites parties to

comment on what additional information the Commission should collect to address the issues raised by the Court and

how that information should be collected, and to identify which of the various non-subject sources should be the

focus of additional information gathering by the Commission in any final phase investigations.

 116 Commissioner Okun does not join the preceding footnote. The U.S. Court of Appeals for the Federal Circuit

did not address the application of its mandate in Bratsk Aluminum Smelter v. United States, 444 F.3d 1369 (Fed. 

Cir. 2006), to preliminary investigations. In that case the Court indicated that, in cases involving commodity

products in which imports from non-subject countries are price-competitive and are a significant factor in the U.S.

market, in order to establish a causal link between subject imports and material injury the Commission must evaluate

whether the non-subject imports would replace subject imports and thereby eliminate the benefit to the domestic

industry of an antidumping or countervailing duty order.

The legal standard for preliminary antidumping and countervailing duty determinations requires the

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

whether there is a reasonable indication that a domestic industry is materially injured or threatened with material

injury by reason of the allegedly unfairly traded imports. 19 U.S.C. §§ 1671b(a), 1673b(a) (2000). Thus, she

concludes that she must conduct a Bratsk analysis as she would any other type of causation analysis in a preliminary

investigation. Based on the information available in these preliminary investigations, Commissioner Okun finds that

non-subject imports would not replace subject imports from China, Indonesia and Korea and eliminate the benefit to

the domestic industry of an antidumping duty or countervailing duty order on imports from the subject producers. 

See Separate and Additional Views of Commissioner Deanna Tanner Okun Concerning Bratsk Aluminum v. United

States. Commissioner Okun intends to explore this further in any final phase investigations, and invites parties to

comment on what additional information the Commission should collect to address the issues raised by the Court and

how that information should be collected, and to identify which of the various nonsubject sources should be the

focus of additional information gathering by the Commission.

 117 CR/PR at Table IV-5.

 118 CR/PR at Table IV-5. We recognize that, because demand for CFSP is somewhat seasonal, full-year data may

merit greater weight than partial-year data. In any final phase of these investigations, we intend to consider the

extent to which seasonality affects the reliability of partial-year import and consumption data.

 119 The ratio of subject imports to domestic production increased from *** percent in 2003, to *** percent in

2004, and remained at *** percent in 2005. It was *** percent of domestic production in interim 2005, and ***

percent in interim 2006. CR/PR at Table IV-6.

17

2005.115 116 During the 2003-2005 period, subject imports’ gain in market share came largely at the

expense of non-subject imports, the market share of which declined from *** percent in 2003 to ***

percent in 2005.117 In interim 2006, however, subject imports’ continued gain in market share was

directly at the expense of the domestic industry, the market share of which was *** percent in interim

2006 compared with *** percent in interim 2005, while non-subject imports’ market share declined only

slightly.118 In addition, the ratio of subject imports to domestic CFSP production rose over the POI.119

For the foregoing reasons, we find, for purposes of the preliminary phase of these investigations,

that the volume of subject imports is significant, both in absolute terms and relative to consumption and

production in the United States. 

C. Price Effects of the Subject Imports

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

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

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

United States, and (II) the effect of imports of such merchandise otherwise depresses
 120 19 U.S.C. § 1677(7)(C)(ii).

 121 CR/PR at Table II-1. 

 122 The Commission notes that it is possible that these product descriptions were overly broad and that individual

descriptions captured CFSP products of varying quality. The Commission will revisit the pricing product

descriptions in any final phase investigations, and will request that the parties provide input in their written

comments on the draft questionnaires pursuant to 19 C.F.R. §207.20(b).

 123 CR at V-5-6, PR at V-4-5. 

 124 CR at V-6-7, PR at V-5.

 125 CR/PR at Table V-9.

 126 CR/PR at V-7.

 127 CR/PR at Table V-9.

 128 CR at V-8, PR at V-6.

18

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

to a significant degree.120

As explained in the discussions of cumulation, domestically produced CFSP and the subject

imports in the same form (i.e., web rolls or sheets) are substitutable.121 We find that there were significant

underselling and significant price depressing effects by the subject imports, for purposes of these

preliminary determinations.

In these investigations, the Commission sought quarterly pricing data for three types of CFSP: (i)

two-side coated sheets, text weight,70-100 pounds basis weight, brightness levels 87 and above (Product

1); (ii) two-side coated rolls, text weight,70-100 pounds basis weight, brightness levels 87 and above

(Product 2); and (iii) one-side coated sheets, text weight,70-100 pounds basis weight, brightness levels 83

and above (Product 3).122 The Commission sought separate quarterly pricing data for these products for

sales to merchants and for sales to end users.

The Commission received usable pricing data from eight U.S. producers and 20 importers. This

reported pricing data accounted for *** percent of U.S. producers’ U.S. shipments of CFSP, *** percent

of U.S. shipments of subject imports from China, *** percent of U.S. shipments of subject imports from

Indonesia, and *** percent of U.S. shipments of subject imports from Korea from January 2002 to June

2005.123 

The prices for U.S.-produced Product 1 declined over the POI. For sales to merchants, these

prices fell by *** percent from the first quarter of 2003 to the ***, and for sales to end users, they fell by

*** percent over the entire period.124 For sales of Product 1 in both channels of distribution, the subject

imports undersold the domestic product in 54 out of 57 price comparisons at margins ranging from 2.1

percent to 37.2 percent.125

The prices for U.S.-produced Product 2 increased over the POI. For sales to merchants, these

prices rose by *** percent from the first quarter of 2003 to the third quarter of 2006, and for sales to end

users, they rose by *** percent over the same period.126 For sales of Product 2 in both channels of

distribution, the subject imports undersold the domestic product in seven out of 45 price comparisons at

margins ranging from 1.0 percent to 4.9 percent.127

The prices for U.S.-produced Product 3 increased for sales to merchants, but fell for sales to end

users, over the POI. For sales to merchants, these prices rose by *** percent from the first quarter of

2003 to the third quarter of 2006, with most of this increase occurring in one quarter, from the first

quarter of 2003 to the second quarter of that year; for sales to end users, they fell by *** percent from the

second quarter of 2003 to the third quarter of 2006.128 For sales of Product 3 to merchants (there were no
 129 CR/PR at Table V-9.

 130 Compare CR/PR at Tables V-1 and V-2 with Tables V-3 through V-5.

 131 ***. CR/PR at Table V-3 notes 2 and 3. We do not have specific information on whether sales of

domestically produced Product 2 consisted of sheeter rolls or web rolls, but given the concentration of domestic

production in web rolls, it is reasonable to assume that at least a significant portion of the data for domestically

produced Product 2 consisted of web rolls.

 132 Compare CR/PR at Tables V-1 and V2 with Table V-5.

 133 In its notice of initiation of the antidumping duty investigations, Commerce estimated the following dumping

margins for imports from the three subject countries: 99.65 percent for China; from 99.14 percent for Indonesia; and

71.81 percent for Korea. 71 Fed. Reg. 68537, 68541 (Nov. 27, 2006).

 134 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.”) SAA at 885.

 135 19 U.S.C. § 1677(7)(C)(iii); see also SAA at 851, 885; Live Cattle from Canada and Mexico, Inv. Nos. 701-

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

 136 We recognize that, because demand for CFSP is somewhat seasonal, full-year financial data may merit greater

weight than partial-year data. In any final phase of these investigations, we intend to consider the extent to which

seasonality affects the reliability of partial-year financial data.

19

sales of imports of this product to end users), the subject imports undersold the domestic product in 29 out

of 30 price comparisons at margins ranging from 1.9 percent to 29.3 percent.129

On the basis of these data, we find significant price underselling by the subject imports and find

that these imports have depressed prices to a significant degree. In reaching this conclusion, we are

relying principally on the data for Product 1, because the bulk of the pricing data for subject imports were

for this product.130 We recognize that the data for Product 2 show mostly overselling by subject imports,

and rising domestic prices. However, we deem the pricing data for Product 2 to be less reliable because it

appears that it may involve a comparison of imported sheeter rolls with sales of domestically produced

web rolls.131 As noted above, CFSP in sheeter-roll form generally commands a premium over CFSP in

web-roll form. We also give less weight to the price comparison data for Product 3, which, as explained

above, shows widespread underselling by subject imports but also rising prices for the domestically

produced product because of the relatively small quantities of subject imports involved.132

In sum, we find for purposes of the preliminary phase of these investigations that the subject

imports have had significant adverse price effects on the price of the domestic like product.

D. Impact of the Subject Imports133

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

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

the state of the industry.”134 These factors include output, sales, inventories, capacity utilization, market

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

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

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

that are distinctive to the affected industry.”135

We have examined performance indicators in trade and financial data for the domestic industry. 

The trade data are somewhat mixed, but are generally positive over the POI. The industry’s financial

data, however, show a marked decline in the 2003-2004 period, and continued weakness into 2005.136
 137 Production increased from 4.272 million short tons in 2003 to 4.360 million short tons in 2004 and to 4.598

million short tons in 2005. Production was higher in interim 2006 (3.503 million short tons) than in interim 2005

(3.416 million short tons). CR/PR at Table C-1.

 138 U.S. shipments increased from 3.925 million short tons in 2003 to 4.171 million short tons in 2004, and to

4.265 million short tons in 2005. U.S. shipments were higher (3.319 million short tons) in interim 2006 than in

interim 2005 (3.159 million short tons). CR/PR at Table C-1.

 139 Domestic production capacity increased from 4.742 million short tons in 2003 to 4.855 million short tons in

2004, and declined to 4.834 million short tons in 2005. Capacity was higher (3.897 million short tons) in interim

2006 than in interim 2005 (3.416 million short tons). CR/PR at Table C-1.

 140 Capacity utilization fell from 90.1 percent in 2003 to 89.8 percent in 2004, and then rose to 95.1 percent in

2005. Capacity utilization was lower in interim 2006 (89.9 percent) than in interim 2005 (94.2 percent). CR/PR at

Table C-1.

 141 The average number of production workers decreased from 7,390 in 2003 to 7,112 in 2004, and rose to 7,464

in 2005. The average number of workers was lower in interim 2006 (7,095) than in interim 2005 (7,382). Hours

worked decreased from 16.3 million in 2003 to 15.9 million in 2004, and increased to 16.7 million in 2005. Hours

worked were lower in interim 2006 (12.3 million) than in interim 2005 (12.7 million). CR/PR at Table C-1.

 142 Wages paid were $428.4 million in 2003, $425.5 million in 2004, $423.7 million in 2005. Wages paid during

the interim periods were $323.3 million in interim 2005 and $315.8 million in interim 2006. CR/PR at Table C-1.

 143 Productivity increased from 261.4 tons/1,000 hours in 2003 to 272.2 tons/1,000 hours in 2004, and to 273.7

tons/1,000 hours in 2004. Productivity was higher in interim 2006 (268.8 tons/1,000 hours worked) than in interim

2005 (284.3 tons/1,000 hours worked). CR/PR at Table C-1. 

End-of-period inventories declined from 676,439 short tons in 2003, to 600,337 short tons in 2004, and rose

to 656,751 short tons in 2005. End-of-period inventories were 661,641 short tons in interim 2005 and 621,468 short

tons in interim 2006. CR/PR at Table C-1.

 144 Operating income decreased from $19.3 million in 2003 to a loss of $127.2 million in 2004, then rose to $2.8

million in 2005. Operating income was higher in interim 2006 (124.0 million) than in interim 2005 (a loss of

$920,000). CR/PR at Table C-1.

 145 Operating margins declined from 0.5 percent in 2003 to a negative 3.5 percent in 2004, and then rose to 0.1

percent in 2005. In interim 2006, operating margins were 3.9 percent, as compared with 0.0 percent in interim 2005.

CR/PR at Table C-1.

 146 COGS was 91.7 percent of sales in 2003, 96.6 percent of sales in 2004, and 93.6 percent of sales in 2005. The

ratio of COGS to sales was lower in interim 2006 (89.6 percent) than in interim 2005 (93.6 percent). CR/PR at Table

C-1.

20

U.S. producers’ production and shipments of CFSP increased in each year of the POI, and were

higher in interim 2006 as compared with interim 2005.137 138 Overall industry capacity rose from 2003 to

2004, and then declined slightly in 2005 but remained higher than in 2003. Capacity was higher in

interim 2006 than in interim 2005.139 Capacity utilization fell slightly from 2003 to 2004, and then rose in

2005. Capacity utilization was lower in interim 2006 than in interim 2005.140 The average number of

production-related workers and hours worked fell from 2003 to 2004, rose in 2005, and was lower in

interim 2006 than in interim 2005.141 Wages paid declined from 2003 to 2005, and were lower in interim

2006 than in interim 2005.142 Productivity increased throughout the POI.143 

Operating income fell sharply from 2003 to 2004, and then recovered somewhat in 2005, and also

was higher in interim 2006 as compared with interim 2005.144 The domestic industry’s ratio of operating

income to sales followed a similar pattern.145 Cost of goods sold (“COGS”) as a ratio to sales increased

from 2003 to 2004, and declined in 2005, and also was lower in interim 2006 than in interim 2005.146
 147 Capital expenditures were $209.3 million in 2003, $263.7 million in 2004, $172.8 million in 2005, $118.9

million in interim 2005, and $129.3 million in interim 2006. Research and development expenditures were $14.1

million in 2003, $14.2 million in 2005, and $18.7 million in 2005, and were $14.0 million in interim 2005, and $14.3

million in interim 2006. CR/PR at Table VI-5.

21

Capital expenditures rose from 2003 to 2004, and then fell in 2005, but were higher in interim

2006 than in interim 2005. Research and development expenditures increased from 2003 to 2005, and

were higher in interim 2006 than in interim 2005.147

The sharp decline in the domestic industry’s financial performance from 2003 to 2004, and the

declining employment indicators in that period, coincide with the largest annual increase in the volume

and market share of subject imports over the POI. At the same time, there was significant underselling by

subject imports, often by large margins, and a decline in domestic prices. Although the domestic

industry’s financial performance recovered somewhat in 2005, it continued to be poor in that year, as

subject imports further increased their presence in the U.S. market. Accordingly, for purposes of these

preliminary determinations, we conclude that subject imports had an adverse impact on the condition of

the domestic industry during the POI.

CONCLUSION

For the reasons stated above, we determine that there is a reasonable indication that an industry in

the United States is materially injured by reason of subject imports of CFSP from China, Indonesia, and

Korea that are allegedly subsidized and sold in the United States at less than fair value.
 
 1

 19 U.S.C. § 1673b(a); see also American Lamb Co. v. United States, 785 F.2d 994, 1001-04 (Fed Cir. 1986);

Ranchers-Cattlemen Action Legal Foundation v. United States, 74 F.Supp.2d 1353, 1368-69 (CIT 1999); Aristech

Chemical Corp. v. United States, 20 CIT 353, 354-55 (1996).

 2

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

(Fed. Cir. 1994).

 3

 I adopt as my own the discussion of domestic like product, domestic industry, related parties, negligibility,

cumulation, and conditions of competition as laid out in sections I–VI.A of the Views of the majority. 19 U.S.C. §

1677(24)(A)(I)(I). 

 4

 19 U.S.C. §§ 1671b(a) and 1673b(a).

 5

 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).

 6

 19 U.S.C. § 1677(7)(A).

 7

 19 U.S.C. § 1677(7)(C)(iii).

23

DISSENTING VIEWS OF CHAIRMAN DANIEL R. PEARSON

Based on the record in these preliminary investigations, I find that there is no reasonable

indication that an industry in the United States is materially injured or threatened with material injury by

reason of imports of coated free sheet paper (“CFSP”) from China, Indonesia, and Korea that are

allegedly subsidized and sold in the United States at less than fair value (“LTFV”).

I. THE LEGAL STANDARD FOR PRELIMINARY DETERMINATIONS

The legal standard for preliminary antidumping and countervailing duty determinations requires

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

determinations, whether there is a reasonable indication that a domestic industry is materially injured by

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

reason of the allegedly unfairly traded imports.1

 In applying this standard, the Commission weighs the

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

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

evidence will arise in a final investigation.”2

II. NO REASONABLE INDICATION OF MATERIAL INJURY BY REASON OF THE

SUBJECT IMPORTS3

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

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

injured by reason of the imports under investigation.4

 In making this determination, the Commission

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

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

operations.5

 The statute defines “material injury” as “harm which is not inconsequential, immaterial, or

unimportant.”6

 In assessing whether there is a reasonable indication that the domestic industry is

materially injured by reason of subject imports, we consider all relevant economic factors that bear on the

state of the industry in the United States.7

 No single factor is dispositive, and all relevant factors are
 8

 19 U.S.C. § 1677(7)(C)(iii).

 9

 19 U.S.C. § 1677(7)(C)(i).

 10 CR/PR at Table C-1.

 11 CR/PR at Table C-1.

 12 CR at I-24 and Table I-3, PR at I-15 and Table I-3. 

 13 CR/PR at Tables I-3 and IV-2. 

 14 CR/PR at Tables VII-5, VII-8, and VII-11.

 15 CR/PR at Table I-3.

24

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

the affected industry.”8

For the reasons discussed below, I find that there is not a reasonable indication that the domestic

industry producing CFSP is materially injured by reason of subject imports from China, Indonesia, and

Korea.

A. Volume of Subject Imports

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

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

production or consumption in the United States, is significant.”9

The volume of cumulated subject imports increased by *** percent between 2003 and 2005, well

above the growth rate in apparent U.S. consumption, which increased by *** percent between 2003 and

2005. The volume of subject imports increased from *** short tons in 2003 to *** short tons in 2005. 

Subject import volume in interim 2006 was *** percent higher than in interim 2005, while overall

apparent U.S. consumption rose by only *** percent.10

In relative terms, however, the increases in the volume of subject imports were more modest. In

2003, subject imports accounted for *** percent of apparent U.S. consumption. In 2005, subject imports

accounted for *** percent of apparent U.S. consumption, an increase of less than *** percentage points. 

Furthermore, that modest increase came at the expense of other imports. Nonsubject imports accounted

for *** percent of apparent U.S. consumption in 2005, down from *** percent in 2003. The market share

of the domestic like product was, in 2005, essentially unchanged from 2003, *** percent to *** percent. 

In interim 2006, subject imports were *** percent, up from *** percent in interim 2005. But shipments

of the domestic product in interim 2006 still accounted for *** percent of the market, while nonsubject

imports accounted for *** percent.11 

The volume data alone present a mixed picture, with absolute increases but rather modest shifts in

market share. In addition, the record indicates a notable attenuation of competition between subject

imports and the domestic like product. As noted, web rolls account for a significant majority of apparent

U.S. consumption. Similarly, domestic production is heavily concentrated on the web roll sector.12

Subject imports, however, are heavily concentrated in sheets and, to a lesser extent, sheeter rolls. Of the

nearly *** short tons of subject CFSP imported between 2003 and 2005, less than *** short tons were

web rolls.13 The record does not provide an indication why web rolls did not account for a more

significant share of subject imports, as web rolls are produced in each of the subject countries.14

Respondents claim that shipping difficulties make web rolls an unprofitable and difficult item to ship, but

the record indicates that respondents did ship modest volumes of sheeter rolls, which suggests that the

shipping of rolls can be done profitably.15 Whatever the reason, subject imports were essentially absent
 16 Both petitioner and counsel for Korean respondents concurred that about 70 percent of the U.S. market is web

roll CFSP. Tr. at 89 (Mr. Tyrone) and 13 (Mr. Cameron). According to Korean respondents, subject imports of

CFSP have been in the U.S. market for approximately 20 years without ever gaining a foothold in the web roll

market. Tr. at 107 (Mr. Cho). 

 17 19 U.S.C. § 1677(7)(C)(ii).

 18 CR at V-5-V-6, PR at V-4.

 19 CR/PR at Table V-1.

 20 CR at V-25 and Table V-11, PR at V-11 and Table V-11.

 21 CR/PR at Table V-2.

25

from the product segment that accounts for approximately 70 percent of apparent U.S. consumption, and

this absence was consistent over the POI.16

Web rolls are designed for use in rotary web presses and are intended for high-volume printing

through high-speed presses at high temperatures. Sheet CFSP, on the other hand, is intended to be used in

sheet-fed presses, for shorter runs, with higher-grade finishes. The record provides no indication that

these products are interchangeable in the market.

Thus, the record indicates that subject imports increased modestly relative to overall apparent

domestic consumption. The market share of subject imports increased between 2003 and 2005, but that

increase came at the expense of nonsubject imports rather than the domestic industry, and only in interim

2006 did the market share of the domestic industry decline modestly. The record indicates that subject

imports were absent from a significant segment of the domestic market. For these reasons, I find that the

volume of subject imports is not significant.

C. Price Effects of the Subject Imports

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

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

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

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

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

occurred, to a significant degree.17

Product-specific pricing data were gathered on three CFSP products, and pricing data were

segmented by sales to paper merchants and sales to end users. This product-specific data covered a

significant portion of both domestic shipments and shipments of subject imports.18 

For product 1 sales to paper merchants, subject imports consistently undersold the domestic like

product and typically by double-digit margins. The volume of domestic sales rose over the POI and was

significantly higher in each of the three quarters of 2006 than in the corresponding quarters of 2003. But

the prices received by the domestic industry were lower in 2006 than in 2003.19 Commission staff were

also able to verify some *** made by petitioner.20

But sales of product 1 to paper merchants was the only product/channel combination suggesting

that subject imports influenced prices for the domestic like product. Sales of subject imported product 1

to end users were modest in volume, and despite fairly consistent underselling by subject imports, prices

received for the domestic like product rose in both 2005 and 2006.21 The volume of reported sales of

subject imported product 3 to paper merchants rose over the POI. But sales of the domestic like product
 22 CR/PR at Table V-5. 

 23 Subject import pricing data for product 2 ***. CR/PR at Table V-3. For that reason I have not relied on the

apparent overselling by subject imports, as ***. However, I find the trends for sales and pricing of the domestic

product reported in tables V-3 and V-4 to be reasonable indicators for domestic web rolls. 

 24 CR/PR at Table V-3.

 25 CR/PR at Table V-4.

 26 CR/PR at Tables V-5 and V-6.

 27 In its notice of initiation, Commerce estimated the following dumping margins: China, 99.95 percent;

Indonesia, 99.14 percent; and Korea, 71.81 percent. 71 Fed. Reg. 68537 (November 27, 2006).

 28 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.”) SAA at 885.

26

also increased significantly, and prices received for the domestic like product rose over the POI, despite

the presence of underselling subject imports.22

Pricing data gathered for CFSP roll products suggest that subject imports did not influence the

price received for domestic web roll products. Sales of domestically produced product 2 to paper

merchants rose significantly throughout the POI.23 Sales in the third quarter of 2006 were at the highest

level recorded in the POI, up *** percent from the third quarter of 2003. Prices received for the

domestically produced web product also peaked in the third quarter of 2006, nearly *** percent higher

than prices received in the third quarter of 2003.24 Trends for sales volume and prices for product 2 sales

to end users followed similar trends, rising through the POI and peaking in the third quarter of 2006.25

The record suggests that subject imports of some sheet products consistently undersold the

domestic like product over the POI and may have contributed to suppressing or depressing the prices

received for those products. However, these effects were not noticeable in all sales of sheet products;

domestic sales and prices received for product 3 sales to paper merchants rose over the POI, despite

underselling by subject imports; no sales of subject imported product 3 to end users were noted, yet prices

received for the domestic product stagnated.26 These data suggest that the pricing effects of subject

imported sheet products were limited to specific channel/product combinations. Furthermore, subject

imports themselves were limited to a minority segment of the market. The pricing data gathered in this

investigation do not suggest that subject imports of sheet products had any influence on the prices

received for domestic web products. Rather, the web roll pricing data suggest that volume and pricing

increased at very similar levels over the POI. In light of these findings and the attenuation of

competition, I do not find underselling to be significant, and I do not find that subject imports

significantly suppressed or depressed prices received for the domestic like product.

D. Impact of the Subject Imports27

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

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

the state of the industry.”28 These factors include output, sales, inventories, capacity utilization, market

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

research and development, and factors affecting domestic prices. No single factor is dispositive and all
 29 19 U.S.C. § 1677(7)(C)(iii); see also SAA at 851, 885; Live Cattle from Canada and Mexico, Inv. Nos. 701-

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

 30 CR/PR at Table C-1.

 31 CR/PR at Table C-1.

 32 CR/PR at Table VI-2.

 33 Korean respondents’ postconference brief at 15 and 17 n.75; Tr. at 105 (Mr. Anderson).

 34 CR/PR at Table VI-5.

27

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

that are distinctive to the affected industry.”29

Production criteria suggest that the industry performed well over the POI. Capacity was

marginally higher in 2005 than in 2003, and capacity was 7.4 percent higher in interim 2006 than in

interim 2005. Capacity utilization was around 90 percent or higher throughout the POI. Production rose

by 7.6 percent between 2003 and 2005, and production in interim 2006 was 2.6 percent higher than in

interim 2005. Domestic shipments were 8.6 percent higher in 2005 than in 2003 and 5.0 percent higher in

interim 2006 than in interim 2005. The value of domestic shipments rose by 11.8 percent between 2003

and 2005 and by 7.5 percent between interim 2005 and interim 2006. Export shipments rose by 27.4

percent between 2003 and 2005, and the value of those export shipments rose by 34.6 percent. As noted

earlier, the domestic industry’s market share in terms of quantity was 72.9 percent in 2005, virtually

unchanged from the 2003 level of 72.5 percent; the industry’s market share was modestly lower in interim

2006 than in interim 2005. The net value of the industry’s sales was 12.1 percent higher in 2005 than in

2003, and the net value of sales in interim 2006 was 7.7 percent higher than in interim 2005.30 

Despite these many positive indicators, the industry’s financial performance was, at best, anemic

between 2003 and 2005. Operating income as a percentage of sales was 0.5 percent in 2003; the industry

recorded a loss in 2004, and operating income was 0.1 percent of sales in 2005. The industry recorded its

best performance in interim 2006. Despite a slight decline in its market share, the domestic industry’s 

production and shipments increased, as did prices, while interim 2006 costs declined compared to interim

2005. Operating income in interim 2006 was 3.9 percent of sales.31

It is difficult to conclude that the industry’s middling performance in 2003-2005 was related to

the presence of subject imports. The industry’s market share in 2005 was essentially the same as in 2003,

with higher production, shipments, and prices, yet operating income was 85 percent lower. Conversely,

in interim 2006, the domestic industry’s market share dropped to *** percent, but production was higher,

shipments were higher, prices were higher, and operating income was significantly higher compared to

interim 2005. 

As noted above, subject imports had little effect on the domestic industry’s market share during

most of the POI. Nor does this record indicate that subject imports had significant effects on the prices

received for the domestic like product. The record also suggests no reasonable connection between the

presence, volume, or pricing of subject imports and the domestic industry’s financial performance. The

industry did register operating losses in 2004, and several domestic producers recorded significant losses

throughout much of the POI.32 But the record suggests these losses were prompted not by competition

with subject imports but primarily by producers closing older production capacity and rationalizing

overall production. Evidence on the record suggests this was a worldwide, industry-wide phenomenon,

with similar closures occurring in Europe and in Canada as well in the U.S. market.33 Despite these

recorded losses, the industry was able to make significant capital expenditures over the POI and its R&D

expenditures increased over the POI.34 And in interim 2006, with subject import volume at the highest

recorded levels overall, the industry recorded lower costs and its first solid profit of the POI. 

Therefore, I find no reasonable indication that subject imports had a significant impact on the

domestic industry.
 35 CR/PR at Tables VII-3, VII-6, and VII-9

 36 CR/PR at Table C-1.

 37 CR/PR at Table VII-13.

28

III. NO REASONABLE INDICATION OF THREAT OF MATERIAL INJURY BY REASON

OF THE SUBJECT IMPORTS

A. Cumulation

The record suggests some significant differences between the industries in China, Indonesia, and

Korea. The industry in Indonesia is significantly smaller than those in China or Korea. The industry in

China is less dependent on exports than are the industries in Indonesia and Korea.35 Subject imports from

Korea entered the U.S. market in significantly greater volumes, but remained relatively stable over the

POI, while subject import volumes from China and Indonesia were both significantly higher in 2005 than

in 2003.36 Given these circumstances, it would be reasonable to not cumulate the effects of subject

imports. However, for purposes of these preliminary determinations, I exercise my discretion and

consider the cumulative effects of subject imports.

B. Statutory factors

Combined production capacity in China, Indonesia, and Korea is slated to increase in both 2006

and 2007. However, industries in all three countries operated at very high rates of capacity utilization

during the POI and are projected to do so in the near future as well. Inventories on hand with foreign

producers are modest relative to overall shipments.37 The record indicates that, despite some underselling,

subject imports did not have a significant effect on domestic prices, and nothing in the record indicates

this is likely to change in the near future. Most importantly, nothing in the record indicates that subject

imports will not continue to be concentrated in sheet products. Nothing in the record indicates that

demand in the U.S. market will not continue to be concentrated in web products. Therefore the record

does not indicate that subject imports will be able to influence volume or prices in most of the U.S.

market, which has been and likely will be dominated by the domestic industry. I therefore determine

there is no reasonable indication that the domestic industry is threatened with material injury by reason of

subject imports.

IV. CONCLUSION

For the reasons stated above, I do not find a reasonable indication that the domestic industry

producing CFSP is materially injured or threatened with material injury by reason of subject imports from

China, Indonesia, and Korea. 
 1

 No. 05-1213 (Fed. Cir. Apr. 10, 2006), Slip Op. at 6, quoting Gerald Metals, Inc. v. United States, 132 F.3d 716,

722 (Fed. Cir. 1997). The Commission filed a petition for rehearing en banc, which the Court denied on July 24,

2006. The Court’s mandate was issued on August 7, 2006.

 2

 Commissioner Okun did not participate in the underlying investigation nor the subsequent litigation.

 3

 Slip Op. at 2, 9-11. 

 4

 H.R. Doc. No. 103-316, Vol. I (1994) at 851-52 (“SAA”); Taiwan Semiconductor Industry Ass’n v. United

States, 266 F.3d at 1339, 1345 (Fed. Cir. 2001).

 5

 Slip op. at 9, 12.

29

SEPARATE AND ADDITIONAL VIEWS OF COMMISSIONER DEANNA

TANNER OKUN CONCERNING BRATSK ALUMINUM V. UNITED STATES

I. Legal Issues Concerning Bratsk Aluminum Smelter v. United States

In the recent case of Bratsk Aluminum Smelter et al. v. United States, 444 F.3d 1369 (Fed. Cir.

2006) (“Bratsk”), the Court of Appeals for the Federal Circuit reaffirmed that the requisite causal link to

subject imports is not demonstrated if such imports contributed only “‘minimally or tangentially to the

material harm.’”1 2

 Applying that standard to an investigation involving a commodity product, i.e.,

silicon metal, and the significant presence of non-subject imports, the Court held that the Commission had

not sufficiently explained whether non-subject imports simply would have replaced subject imports

during the period of investigation had an antidumping order been in place and continued to cause injury

to the domestic industry.3

As a threshold matter, it is not immediately clear how the Commission should interpret the Bratsk

opinion in terms of its effect on our analysis of causation in Title VII investigations. At a minimum, I can

discern at least two possible interpretations which differ substantially: (1) that Bratsk mandates

application of an additional test apparently not contemplated by the statute (the so-called

“replacement/benefit test”), and (2) that Bratsk is a further development of the causation approach

prescribed by Gerald Metals. 

A. Separate Causation Analysis – Replacement/Benefit Test

The statute sets forth specific factors for the Commission to consider in analyzing the volume,

price effects and impact of subject imports. 19 U.S.C. § 1677(7). The Uruguay Round Agreements Act

Statement of Administrative Action (“SAA”) explains further that in analyzing causation the Commission

must examine factors other than subject imports to ensure that it is not attributing injury from these

sources to the subject imports, but is not required to isolate the injury caused by other factors from injury

caused by unfair imports.4

 Beyond this, the statute does not provide any further limitations on how the

Commission’s causation analysis shall be conducted.

The Court’s decision, however, states that the Commission must perform an additional “specific”

causation analysis in the form of a replacement/benefit test. Using somewhat varying phrasing, the Court

stated that the Commission must determine “whether non-subject imports would have replaced subject

imports without any beneficial effect on domestic producers,” must “explain why the elimination of

subject imports would benefit the domestic industry instead of resulting in the non-subject imports’

replacement of the subject imports’ market share without any beneficial impact on domestic producers,”

and must explain “why the non-subject imports would not replace the subject imports and continue to

cause injury to the domestic industry.”5
 6

 SAA at 851-52, 885, 889-90. The Commission has indicated that the possibility that an order might not be

effective does not preclude a finding of present material injury. The Commission also has concluded that the statute

does not provide for the Commission to perform an additional injury test to predict the future effectiveness of import

relief:

{W}e note that nothing in the statute or case law requires (or allows) us to consider the likely

effectiveness of a dumping order in making our injury determination. The possibility that nonsubject imports will increase in the future after an antidumping order is imposed is . . . not relevant

to our analysis of whether subject imports are currently materially injuring the industry.

Wooden Bedroom Furniture From China, Inv. No. 731-TA-1058 (Final), USITC Pub. 3743, n.222 (Dec. 2004). 

 7

 Huaiyin Foreign Trade Corp. v. United States, 322 F.3d 1369, 1380 (Fed. Cir. 2003).

 8

 The Commission set out in detail its objections to the Court’s decision in its petition for rehearing to the Federal

Circuit. See Petition for Rehearing en Banc (May 25, 2006), Bratsk Aluminum Smelter et al. v. United States, 444

F.3d 1369 (Fed. Cir. 2006)(No. 05-1213) (petition denied July 24, 2006). As noted above, I did not participate in

that proceeding.

 9

 While it is not an issue in these investigations, it is unclear whether the Court intended its approach to apply to

analyses of threat of material injury, or only to analyses of present material injury. Given that one of the Court’s

formulations of the standard is framed in terms of likely future events, I have interpreted the Court’s decision as

applying both to the context of present injury and threat of injury.

 10 Gerald Metals, 132 F.3d at 722.

 11 Slip op. at 5.

30

Such a “replacement/benefit” test is not among the statutory factors Congress has required the

Commission to consider. The statutory scheme contemplates that subject imports may remain in the U.S.

market after an order is imposed and even that the industry afterward may continue to suffer material

injury.6

 Thus, the decision in Bratsk misconstrues the purpose of the antidumping and countervailing

duty laws, which is not to bar subject imports from the U.S. market or award subject import market share

to U.S. producers, but instead to “level[] competitive conditions” by imposing a duty on subject imports

at a level to offset the amount of dumping or subsidization and thus enabling the industry to compete

against fairly traded imports.7

 It is not uncommon for subject imports to remain in the U.S. market in

significant quantities even after the issuance of an antidumping or countervailing duty order, as shown by

the hundreds of millions of dollars in antidumping and countervailing duties collected every year. 

Bratsk, therefore, appears to require that the Commission apply an extra-statutory causation test

with respect to non-subject imports and to determine that the domestic industry will benefit from the

antidumping duty or countervailing duty order. I respectfully disagree with the Court that such a

causation analysis is legally required.8

 However, given that the Federal Circuit’s mandate has now been

issued and the decision has become binding precedent, I discuss infra my interpretation of the Bratsk

standard and perform the analysis based on the record in these preliminary investigations.9

B. Gerald Metals Causation Analysis

Alternatively, I also find support for interpreting the Bratsk decision to be reminding the

Commission of its obligation under Gerald Metals that the Commission may not satisfy the “by reason of”

causation requirement by showing that subject imports contributed only “minimally or tangentially to the

material harm.”10

This may be a reasonable interpretation of the Bratsk decision as the Court noted that the “sole

point of contention in this appeal is whether the Commission established that the injury to the domestic

industry was ‘by reason of’ the subject imports.”11 In explaining its conclusion, the Court emphasized
 12 Slip op. at 5.

 13 Slip op. at 6-9.

 14 Slip op. at 9.

 15 Slip op. at 10.

 16 Slip op. at 9.

 17 19 U.S.C. § 1673d(b).

 18 S. Rep. No. 249, 96th Cong., 1st Sess. 46-47 (1979). 

 19 S. Rep. No. 249, 96th Cong., 1st Sess. 74 (1979); H.R. Rep. No. 317, 96th Cong., 1st Sess. 46-47.

31

that the Commission had “dismissed” Gerald Metals as being factually distinguishable,12 extensively

explained its holdings in Gerald Metals and Taiwan Semiconductor,

13 and noted that the underlying

investigation in Bratsk “revealed the same conditions that triggered the additional causation inquiry in

Gerald Metals and Taiwan Semiconductor.”14 Further, the Court noted that

Gerald Metals thus requires the Commission to explain why – notwithstanding the

presence and significance of the non-subject imports – it concluded that the subject

imports caused material injury to the domestic industry. While there may be support for

the Commission’s ultimate determination of material injury in the record here, we find

that the Commission did not sufficiently explain its decision in this regard.15

Therefore, the Court may not have been creating a new extra-statutory causation test, but rather

was simply reminding the Commission of its existing obligation under Federal Circuit precedent. In other

words, the Bratsk Court’s relatively short discussion of the underlying determination may not have

established a new and rigid replacement/benefit test. Rather, the Court may have discussed the triggering

factors (i.e., commodity product and price-competitive non-subject imports) and the replacement/benefit

factors (i.e., whether non-subject imports would have replaced the subject imports without any beneficial

effect on domestic producers)16 as a reminder that the Commission, before it makes an affirmative

determination, must satisfy itself that it has not attributed material injury to factors other than subject

imports.

The statute requires the Commission to determine whether the domestic industry is “materially

injured by reason of” the unfairly traded imports.17 Thus, the Commission must evaluate the effects of the

unfairly traded imports on the domestic industry in order to determine if those imports are causing

material injury. In most investigations, there are other economic factors that also may be causing injury

to the domestic industry. The statute’s legislative history states that the Commission “will consider

information which indicates that harm is caused by factors other than less-than-fair-value imports.”18

While the statute is clear that the Commission is not to weigh or prioritize the factors that are

independently causing material injury,19 the Commission cannot assign the cause of material injury to

factors other than subject imports. Under this interpretation, the reference in Bratsk to “whether nonsubject imports would have replaced subject imports without any beneficial effect on domestic producers”

could be asking the Commission to interpret “benefit” to mean that if the subject imports are indeed

causing harm, then the removal of the unfairly traded imports should “benefit” the domestic industry, but

if the removal of the unfairly traded imports would not benefit the domestic industry, the injury must be

attributable to other factors. Thus, the Commission must analyze the effects of the unfairly traded imports

in a way that enables the Commission to conclude that it has not attributed the effects of other factors to

the subject imports. 

If this interpretation of Bratsk is correct, then I concur with the Federal Circuit that the

Commission is required to identify and assess the competitive effects of subject imports to ensure that

they contribute more than “minimally or tangentially to the material harm” of the domestic industry. To
 20 Slip op. at 9.

 21 Slip op. at 12. 

32

the extent that we had the relevant information, this analysis was included in the Commission’s causation

analysis. I will re-examine this in any final phase of these investigations once the Commission has

collected further relevant information (e.g., information about the market from purchasers).

II. Under the Bratsk Replacement/Benefit Test, Non-subject Imports Likely Would Not Negate

the Beneficial Effect of an Order on Subject Imports from China

Having found that there is a reasonable basis to determine that an industry in the United States is

materially injured by reason of subject imports from China, Indonesia, and Korea I now must assess

whether the facts of these investigations trigger a Bratsk analysis under the “replacement/benefit test”

interpretation of Bratsk. Based on the record, I conclude that Bratsk is triggered, but that non-subject

imports likely would not negate the beneficial effect of the orders on subject imports from China, Korea,

and Indonesia.

A. Bratsk Replacement/Benefit Test

The exact formulation of the Bratsk Court’s test is not clear. According to one part of the

opinion:

{U}nder Gerald Metals, the Commission is required to make a specific causation

determination and in that connection to directly address whether non-subject imports

would have replaced the subject imports without any beneficial effect on domestic

producers.20

Stated this way, the test would require the Commission to analyze replacement/benefit during the period

of investigation, i.e., backward looking. The Court also has stated a different formulation that would

require the Commission to analyze replacement/benefit in the future, i.e., forward looking:

{T}he Commission has to explain, in a meaningful way, why the non-subject imports

would not replace the subject imports and continue to cause injury to the domestic

industry.21

It therefore is unclear whether the Court intended to state the same test in different ways, or whether it

contemplated that it was establishing two separate criteria. 

Based upon my reading of Bratsk, I conclude that I now must assess the likely effectiveness of

any import relief vis-a-vis non-subject imports to determine whether non-subject imports would eliminate

the beneficial effect of the order on subject imports, in this case orders on China, Indonesia, and Korea.

1. Triggering Factors

Bratsk requires a two-step analysis. First, the Commission must determine whether Bratsk is

triggered based on the facts of the investigation. Second, if it is triggered, then the Commission must

consider whether the non-subject imports would have replaced the subject imports and continue to cause

injury to the domestic industry.

The Bratsk Court states that “{T}he obligation under Gerald Metals is triggered whenever the

antidumping investigation is centered on a commodity product, and price competitive non-subject imports
 22 Slip op. at 11.

 23 Slip op. at 2. 

 24 Slip op. at 7.

 25 Slip op. at 12.

 26 Petitioners’ postconference brief, exhibit 1 at 8.

 27 Korean respondents’ postconference brief, exhibit A at 8, and Chinese respondents postconference brief

responses to questions from Commission staff at 3.

 28 CR/PR at Table II-1.

33

are a significant factor in the market.”22 Thus, the Bratsk test purportedly is not required in every case,

only in cases involving a “commodity product” and where “price competitive non-subject imports are a

significant factor in the market.” 

The Bratsk Court refers to a “commodity product” as “meaning that it is generally

interchangeable regardless of its source.”23 Thus, the Court’s definition of “commodity product” is broad. 

The second trigger for the Bratsk replacement/benefit test is that price competitive non-subject imports

are a significant factor in the U.S. market. On the issue of whether the non-subject imports are “price

competitive,” the Bratsk Court refers to the fact that in Gerald Metals the non-subject imports had

undersold the domestic product just as the subject imports had.24

2. Replacement/Benefit Factors

If the Commission determines that Bratsk is triggered, the second step in the analysis, assessment

of replacement of subject imports by non-subject imports that negates the benefit to the domestic industry,

also has two components. First, the non-subject imports must be able to replace the subject imports. In

assessing replacement, the Commission should consider not only interchangeability, but the non-subject

producers’ capacity to fill any void left by subject imports and whether there exists an incentive to do so. 

The second step requires that the non-subject imports must negate the benefit of the order to the

domestic industry. In assessing benefit, the Court indicated that the price of non-subject imports would

be an important consideration in this analysis as non-subject imports may not be priced low enough to

negate the benefit to the domestic industry (i.e., “the price of the non-subject imports may be sufficiently

above the subject imports such that the elimination of the subject imports would have benefitted the

domestic industry”).25 The Court’s decision does not specify how complete the replacement of subject

imports by non-subject imports must be, or how much of the benefit to the domestic industry must be

negated, to require a negative determination.

B. Analysis

1. Triggering Factors

The petitioner asserts that CFSP is a commodity product for purposes of Bratsk analysis.26 While

respondents assert that CFSP may not be a commodity, subject imports, non-subject imports, and the

domestic like product are broadly interchangeable within each product type, e.g. sheets.27 Further,

questionnaire responses from both producers and importers indicate that the domestic like product,

subject imports, and non-subject imports are always or frequently interchangeable.28 Thus, based on the

information available in these preliminary investigations, I find that the domestic like product, subject

imports, and non-subject imports of CFSP are generally commodity products.

With respect to the second factor, whether price competitive non-subject imports are a significant

factor in the U.S. market, the record in these preliminary investigations indicates that non-subject imports
 29 CR/PR at Table IV-2.

 30 CR/PR at Table IV-2.

 31 Compare Appendix Table G-1 to Table V-1.

 32 Consistent with the Commission’s analysis of the price effects of subject imports, I place more weight on the

price data for Product 1 sold to merchants/distributors because this product/channel combination accounts for the

largest share of domestic and subject import shipments. 

 33 Compare Appendix Table G-1 to Table V-1.

 34 CR/PR at Table IV-2

 35 Compare CR/PR at Table III-5 to Table IV-2.

 36 Imports from Finland accounted for *** percent of total imports and imports from Canada accounted for ***

percent of total imports in 2005. CR/PR at Table IV-2 and CR/PR at Table III-5.

 37 CR/PR at Table IV-5.

 38 CR/PR at Table IV-5.

34

were present throughout the period of investigation. Non-subject import volume was 989,659 short tons

in 2003, 1,076,558 short tons in 2004, and 944,088 short tons in 2005.29 Non-subject imports accounted

for *** percent of total imports in 2003, *** percent in 2004, and *** percent in 2005.30 Thus, the

volume of non-subject imports exceeded the volume of subject imports in each year of the period

examined. Thus, for purposes of these preliminary determinations, I find that non-subject imports of

CFSP are at significant levels and are a “significant factor” in the U.S. market. 

As to whether non-subject imports are price competitive, the Commission requested productspecific price data from non-subject countries in its importers’ questionnaires. The Commission received

a limited amount of price data for non-subject imports from Germany and Japan. Based on these data the

prices for Product 1, sold to merchants/distributors, of non-subject imports from Germany were generally

higher than the prices for subject imports but below the prices for the domestic like product.31 32 These

data for non-subject imports from Japan show that prices for Product 1, sold to merchants/distributors,

were much higher than the comparable prices for subject imports and were generally higher than the

prices for the domestic like product. 33 The average unit value of non-subject imports exceeded the

average unit value of subject imports in each year of the period of investigation.34 The average unit value

of all non-subject imports were somewhat higher than the average unit value of U.S. shipments.35

However, the average unit value of non-subject imports from Finland and Canada, the two largest nonsubject import sources, were generally lower than, or comparable too, the average unit value of U.S.

shipments. The average unit value of non-subject imports from Canada were higher than the average unit

value of subject imports, while the average unit value of non-subject imports from Finland were lower

than the average unit value of subject imports.36 Thus, for purposes of these preliminary determinations, I

determinate that non-subject imports of CFSP are price-competitive. 

2. Replacement/Benefit Factors

Having determined that the Bratsk test is triggered, I now analyze whether non-subject imports

are likely to replace subject imports and continue to cause injury to the domestic industry. The record in 

these preliminary investigations indicates that subject imports took market share from non-subject

imports. Subject import market share increased from *** percent in 2003 to *** percent in 2005.37 Nonsubject import market share declined from *** percent to *** percent over the same period.38 However,

the data available in these preliminary investigations indicates that the product mix of non-subject imports

may differ from that of subject imports. Between 42.6 and 48.4 percent of non-subject imports were

classified as sheets from 2003 to 2005. By comparison, between 79.4 and 81.4 percent of subject imports
 39 CR/PR at Appendix Table E-6 and Appendix Table E-7.

 40 Transcript at 85 (Mr. Tyrone).

 41 Transcript at 84-85 (Mr. Tyrone); 105 (Mr. Anderson); 132 (Mr. Klett) and 151 (Mr. Dragone). 

 42 Petitioners’ response to Department of Commerce’s Nov. 3, 2005 request for clarification submitted on Nov.

14, 2006, exhibit 1.

 43 Petitioners’ response to Department of Commerce’s Nov. 3, 2005 request for clarification submitted on Nov.

14, 2006, exhibit 1.

35

were classified as sheets over the same period.39 The petitioner has reported that the most significant

competition from imports is in the market for sheets.40

Both the petitioner and respondents agree that production capacity in non-subject countries has

declined, particularly in Canada, the largest source of non-subject imports.41 The data available in these

preliminary investigations on production capacity in Canada shows that capacity declined from ***

metric tons in 2003 to *** metric tons in 2004 and then increased to *** in 2005.42 These same data

show that production capacity in Western Europe increased steadily from *** metric tons in 2003 to ***

metric tons in 2005.43 However, the exact methodology by which these capacity figures are calculated is

unclear. Therefore, based on the data available in these preliminary investigations, I determine that nonsubject imports do not have sufficient capacity to replace subject imports if the orders were to be

imposed. 

In light of the fact that the prices and average unit values of non-subject imports were generally

higher than those of subject imports and because I determine that non-subject imports lack the capacity to

replace subject imports sufficiently, for purposes of these preliminary determinations I determine that

non-subject imports would not negate the benefit fo the orders on subject imports. 
 
 1

 New Page began operating as an independent company on May 2, 2005. Its operations consist of the former

Printing and Writing Papers Business of MeadWestvaco Corp. Petition, p. 2, n. 1.

 2

 A complete description of the imported products subject to these investigations is presented in the Subject

Product section of this part of the report.

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

I-1

PART I: INTRODUCTION

BACKGROUND

These investigations result from a petition filed by New Page Corp. (“New Page”), Dayton, OH,1

on October 31, 2006, alleging that an industry in the United States is materially injured and threatened

with material injury by reason of subsidized and less-than-fair-value (“LTFV”) imports of coated free

sheet (“CFS”) paper2

 from China, Indonesia, and Korea. Information relating to the background of the

investigations is provided below.3

Effective date Action

October 31, 2006 Petition filed with Commerce and the Commission; institution of Commission

investigations (71 FR 64983, November 6, 2006)

November 21, 2006 Commission’s conference

November 27, 2006 Commerce’s notices of initiation of the countervailing duty and antidumping

investigations (71 FR 68546 and 71 FR 68537, respectively)

December 15, 2006 Commission’s vote and determinations transmitted to Commerce

December 22, 2006 Commission’s views transmitted to Commerce

1

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

ORGANIZATION OF THE REPORT

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

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

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

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

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

merchandise on domestic producers of domestic like products, but only

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

may consider such other economic factors as are relevant to the

determination regarding whether there is material injury by reason of

imports.

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

In evaluating the volume of imports of merchandise, the Commission shall consider whether the volume

of imports of the merchandise, or any
I-2

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 declines 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, alleged margins of dumping and subsidies, 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.

THE U.S. COATED FREE SHEET PAPER MARKET

Petitioner NewPage is one of several producers of CFS paper in the United States. CFS paper

represents *** percent of NewPage’s annual sales in the facilities where it manufactures CFS paper. The

subject merchandise is imported by a number of mill agents, independent brokers, and paper merchants. 

Some of the importers (mill agents, in particular) are related to subject manufacturers of CFS paper. 

Approximately *** producers manufacture CFS in China, although the majority do not export

subject merchandise to the United States. The Indonesian industry, in comparison, is much smaller,

consisting of only two producers of substantial size. Several companies manufacture CFS paper in Korea;

*** reported exporting subject merchandise to the United States during the period examined.

Most sales of both domestically produced and imported CFS paper are made to paper merchants. 

Paper merchants, in turn, typically sell directly to end users, a substantial portion of which are

commercial printers. Other leading markets are direct mail, catalogues, books, magazines, and labels and

wraps.
 4

 The product subject to investigation was defined by Commerce as “paper coated on both sides with kaolin

(China clay) or other inorganic substances (e.g., calcium carbonate), of which more than ten percent by weight of the

total fiber content consists of fibers obtained by mechanical process, regardless of (1) basis weight (e.g., pounds per

ream or grams per one square meter sheet); (2) GE brightness; or (3) the form in which it is sold (e.g., reels, sheets,

or other forms).” Paperboard was excluded from the scope of investigation. See, e.g., Notice of Final Determination

of Sales at Less Than Fair Value: Coated Groundwood Paper from Germany, 56 FR 56385, November 4, 1991.

 5 Coated Groundwood Paper from Austria, Belgium, Finland, France, Germany, Italy, the Netherlands, Sweden,

and the United Kingdom (Inv. Nos. 731-TA-486-494 (Preliminary)), USITC Publication 2359, February 1991, p. 3;

and Coated Groundwood Paper from Belgium, Finland, France, Germany, and the United Kingdom (Inv. Nos. 731-

TA-487-490 and 494 (Final)), USITC Publication 2467, December 1991, p. 3.

 6 Initiation of Antidumping Duty Investigations: Coated Free Sheet Paper from Indonesia, the People’s Republic

of China, and the Republic of Korea , 71 FR 68537, November 27, 2006. The notice provides a description of

Commerce’s adjustments that resulted in the alleged margins. 

 7 See Notice of Initiation of Countervailing Duty Investigations: Coated Free Sheet Paper from the People’s

Republic of China, Indonesia, and the Republic of Korea 71 FR 68546, November 27, 2006, for an itemization of the

(continued...)

I-3

SUMMARY DATA

A summary of data collected in these investigations for the U.S. CFS paper market is presented in

appendix C. The period of investigation is January 2003 through September 2006. U.S. industry data are

based on questionnaire responses of 10 firms that accounted for over 95 percent of U.S. production of

CFS paper during 2005.

PREVIOUS AND RELATED INVESTIGATIONS

The Commission has not previously conducted an import injury investigation concerning CFS

paper. During 1991, the Commission conducted antidumping duty investigations on coated groundwood

paper4

 from Austria, Belgium, Finland, France, Germany, Italy, the Netherlands, Sweden, and the United

Kingdom (Inv. Nos. 731-TA-486-494). The Commission determined that the subject imports did not

injure the domestic coated groundwood paper industry.5

NATURE AND EXTENT OF ALLEGED SUBSIDIES AND SALES AT LTFV

Commerce has initiated antidumping duty investigations based on petitioner’s allegations of

LTFV sales of CFS paper from China, Indonesia, and Korea. The dumping margins (in percent ad

valorem) as alleged by petitioner and revised by Commerce, range from 71.81 percent to 99.65 percent.6

Country

Initiated antidumping margins

(percent ad valorem)

China 99.65

Indonesia 99.14

Korea 71.81

Commerce has initiated countervailing duty investigations to determine whether manufacturers,

producers, or exporters of CFS paper from China, Indonesia, and Korea receive subsidies from their

respective governments as follows: China–14 programs; Indonesia–4 programs; and Korea–17

programs.7
 7

 (...continued)

programs that Commerce is including in its investigations and a list of the programs that Commerce is not including

in its investigations.

 8 Initiation of Antidumping Duty Investigations: Coated Free Sheet Paper from Indonesia, the People’s Republic

of China, and the Republic of Korea , 71 FR 68537, November 27, 2006; and Notice of Initiation of Countervailing

Duty Investigations: Coated Free Sheet Paper from the People’s Republic of China, Indonesia, and the Republic of

Korea 71 FR 68546, November 27, 2006.

 9

 The term, wood free, which is used in other countries such as Canada, is synonymous with free sheet and

denotes a paper that has been made principally from chemical pulp.

 10 In this context, art paper is a highly finished coated paper designed to be printed with halftones. Halftones are

photo-engraved printing plates that typically are reproductions of photographs or other objects having a gradation of

tones. The Dictionary of Paper, 4th ed. s.vv. “art paper,” “halftone.”

 11 Although the Harmonized Tariff Schedule of the United States (“HTS”) subheadings are provided for

convenience and customs purposes, the written description of the scope of these investigations is dispositive.

I-4

THE SUBJECT PRODUCT

Commerce has defined the imported merchandise subject to investigation as:8

The merchandise covered by each of these investigations includes coated free

sheet paper and paperboard of a kind used for writing, printing or other graphic

purposes. Coated free sheet paper is produced from not-more-than 10 percent

by weight mechanical or combined chemical/mechanical fibers. Coated free

sheet paper is coated with kaolin (China clay) or other inorganic substances,

with or without a binder, and with no other coating. Coated free sheet paper

may be surface-colored, surface-decorated, printed (except as described below),

embossed, or perforated. The subject merchandise includes single- and

double-side-coated free sheet paper; coated free sheet paper in both sheet or roll

form; and is inclusive of all weights, brightness levels, and finishes. The terms

"wood free"9

 or "art"10 paper may also be used to describe the imported product.

Excluded from the scope are: (1) coated free sheet paper that is imported

printed with final content printed text or graphics; (2) base paper to be sensitized

for use in photography; and (3) paper containing by weight 25 percent or more

cotton fiber.

U.S. Tariff Treatment

CFS paper is generally imported under the Harmonized Tariff Schedule of the United States

(“HTS”) statistical reporting numbers 4810.13.1900, 4810.13.2010, 4810.13.2090, 4810.13.5000,

4810.13.7040, 4810.14.1900, 4810.14.2010, 4810.14.2090, 4810.14.5000, 4810.14.7040, 4810.19.1900,

4810.19.2010, and 4810.19.2090, and is free of duty under the general duty rate.11 Table I-1 shows how

CFS paper is classified in the HTS. These categories require that the merchandise be “paper and

paperboard of a kind used for writing, printing or other graphic purposes.” Because such end use 
I-5

Table I-1

Coated free sheet paper: Tariff rates, 2006

General1 Special Column2

HTS provision Article description Rates (percent ad valorem)

4810

4810.13

. . . .

4810.13.19.00

4810.13.20

4810.13.20.10

4810.13.20.90

4810.13.50.00

. . . .

4810.13.70

. . . .

4810.13.70.40

4810.14 

. . . .

4810.14.19.00

4810.14.20

4810.14.20.10

4810.14.20.90

4810.14.50.00

. . . .

4810.14.70

. . . .

4810.14.70.40

Paper and paperboard, coated on one or both sides

with kaolin (China clay) or other inorganic substances,

with or without a binder, and with no other coating,

whether or not surface-colored, surface-decorated or

printed, in rolls or rectangular (including square)

sheets, of any size: Paper and paperboard of a kind used for writing,

printing or other graphic purposes, not containing

fibers obtained by a mechanical or chemimechanical process or of which not more than 10

percent by weight of the total fiber content

consists of such fibers:

In rolls:

Of a width exceeding 15 cm: Weighing not more than 150 g/m2

:

Other

Weighing more than 150 g/m2

Coated on one side only

Other

Other:

Printed, embossed or perforated

Other

Other

In sheets with one side not exceeding 435

mm and the other side not exceeding 297

mm in the unfolded state:

With one side exceeding 360 mm and

the other side exceeding 150 mm in the

unfolded state:

Weighing not more than 150 g/m2

Other 

Weighing more than 150 g/m2

Coated on one side only

Other

Other

Printed, embossed or perforated

Other

Other

Other 

Free

Free

Free

Free

Free

Free

Free

Free

37%

42%

30%

30%

37%

42%

30%

30%

4810.19

. . . .

4810.19.19.00

4810.19.20

4810.19.20.10

4810.19.20.90

Other:

Weighing not more than 150 g/m2

:

Other

Weighing more than 150 g/m2

Coated on one side only

Other

Free

Free

37%

42%

1

 Normal trade relations, formerly known as the most-favored-nation duty rate. 2

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

Source: Harmonized Tariff Schedule of the United States (2006).
 12 The National Import Specialist (“NIS”) for paper products at U.S. Customs and Border Protection (”Customs”)

in New York, noted that even when there were duties in chapter 48, the distinction between papers for “writing,

printing or graphic purposes” and for other purposes was always "nebulous." Staff telephone interview with ***,

Paper NIS, Customs, October, 25, 2006.

 13 Petitioner’s postconference brief, p. 6.

 14 Conference transcript, pp. 185-186 (Morgan and Cameron).

 15 Coated Groundwood Paper from Belgium, Finland, France, Germany, and the United Kingdom, Inv. Nos. 731-

TA-487-490 (Final), USITC Publication 2467, December 1991, p. A-4.

 16 Coated Groundwood Paper from Belgium, Finland, France, Germany, and the United Kingdom, Inv. Nos. 731-

TA-487-490 (Final), USITC Publication 2467, December 1991, p. A-4.

I-6

descriptions may cause confusion for some users, some subject imports may be entered under other HTS

subheadings (e.g., 4810.31, 4810.32).12

THE DOMESTIC LIKE PRODUCT

The Commission’s determination regarding the appropriate domestic product that is “like” the

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

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

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

Petitioner contends that the domestic like product is co-extensive with the scope of the subject

merchandise as defined by Commerce, which includes both single-side coated (or C1S) and double-sidecoated (or C2S) CFS in “both sheet and roll form” regardless of the weight, brightness level, and/or

finish.13 Respondents stated at the Commission’s conference that they do not contest the definition of the

domestic like product for the purpose of the Commission’s preliminary investigations.14 

General

Earlier investigations by the Commission found paper to be a “highly ubiquitous commodity with

many applications and nearly as many varieties.”15 As noted in the scope, the specific import subject to

these investigations is paper or paperboard of a kind intended for writing, printing, or other graphic

purposes. According to the report of the earlier investigations, graphic papers are differentiated by the

surface characteristics of the paper and the processes by which their wood fibers are obtained, and the

industry segments graphic papers based on these characteristics.16 This fundamental hierarchy for graphic

papers, which is shown below, remains unchanged.

Coated freesheet– clay coated paper predominately composed of chemically obtained fibers (90

percent or more by weight), used primarily for permanent and higher priced publications such as

premium magazines, gift books, and art reproductions.

Uncoated freesheet– similar in composition to coated freesheet but without coating and used

primarily for xerographic paper, printing, drawing, and writing paper (e.g., letterhead, stationary).

Coated groundwood– clay coated paper made with substantial proportions of mechanically

derived pulp, generally used for multi-colored publications that remain in use from several days

to a month – primarily magazines, merchandising catalogues, and better quality newspaper

inserts.
 17 Coated Groundwood Paper from Belgium, Finland, France, Germany, and the United Kingdom, Inv. Nos. 731-

TA-487-490 (Final), USITC Publication 2467, December 1991, p. A-6.

 18 ***.

 19 Basis weight is a traditional measure of the weight of paper, expressed as the weight in pounds of a ream of

paper (traditionally 500 sheets) of a given size (the basis). ***. Metric paper weights are always expressed in terms

of grams per square meter. ***.

 20 ***.

 21 ***.

 22 ***.

I-7

Uncoated groundwood– similar in composition to coated groundwood but without the coating,

used primarily for directory stock, lesser quality drawing and writing paper, black and white

publications, and relatively short-lived color publications, such as newspaper inserts.

Newsprint– a low quality uncoated groundwood paper designed exclusively for newspapers and

similar publications commonly disposed of within a day.17

CFS paper is still the highest quality segment of the five major types of graphic paper. All coated

paper, whether groundwood or free sheet, is used for printing purposes as the clay coating provides an

exceptionally smooth, bright surface for printing. Smoothness, opacity, brightness, printability, and

finish18 are important performance specifications for CFS paper. End-use products/markets for CFS paper

reportedly include the following:

End use Shares (percent)

Commercial printing ***

Catalogues ***

Books ***

Magazines ***

Labels and wraps ***

Other1 ***

1

 Includes annual and other financial reports; color copy paper; base stock

for gift wrap and greeting cards; other advertising materials (inserts, flyers,

coupons); other business products; and some comic books.

Source: ***, as presented in petitioner’s postconference brief, exh. 1, p. 20.

CFS paper is manufactured in basis weights ranging from *** (25" x 38" 500 sheets) or ***

grams per square meter.19 Reportedly, the minimum basis weight for CFS paper is about 45 pounds

because below that weight CFS paper would lack the necessary opacity.20 The weight of the coating adds

at least 6.5 pounds per side and typically 8 to 9 pounds per side to a sheet of CFS paper, and the total

coating weight can be as much as 30 to 40 pounds for premium C2S products.21

The principle upstream product of CFS paper is wood pulp. Hardwood pulp is the predominant

component of CFS paper22 as the shorter hardwood fibers are necessary for adequate smoothness. 
 23 Industry & Trade Summary – Wood Pulp and Waste Paper, USITC Publication 3490, 2002, p. 4.

 24 ***.

 25 The term, “kraft,” denotes the chemical process by which the wood fiber is pulped in a solution of caustic soda

and sodium sulfide. Because the kraft (a.k.a. sulfate) process produces a very strong pulp, it is the most important

chemical pulping process. It is noted for its high quality and strength and is a primary component of many grades of

paper.

 26 Named for the French man who helped popularize the design, all Fourdriniers have a continuous loop of bronze

mesh screen, the “wire.” Typically, the wire is oriented horizontally and looped around rollers at both ends. As the

wire revolves, a diluted solution of pulp is spread across the surface of the wire at one end. Water drains through the

wire as it advances, thereby forming the sheet. In this fashion, a continuous sheet of paper can be formed.

 27 The head box extends across the wire and delivers the pulp to the wire through many small openings, orifices,

or nozzles.

 28 Conventional dryers consist of a number of steam-heated cylinders (30 to 60 inches in diameter) arranged in

two or more tiers. The wet paper typically passes over and under successive cylinders.

 29 A calender is a set or “stack” of hardened rolls typically resting one on the other in a vertical stack. Paper is

passed between some or all of the rolls to increase the smoothness and gloss of its surface. The Dictionary of Paper,

4th ed. s.v. “calender.”

 30 Actual coating formulations may be closely guarded proprietary trade secrets. ***, *** response to the

producers’ questionnaire, p. 7, and *** response, p. 6.

I-8

However, some softwood fiber, which is generally longer than hardwood fiber, is necessary to maintain

the strength of the sheet during production.23 

In a typical operation, pulpwood, once debarked, enters a chipper which chips it into uniformly

sized chips.24 Next, digesters cook the wood chips in a chemical solution, which separates the cellulose

fibers from lignin and other non-cellulosic substances.25 The resulting wood pulp is then washed,

bleached, and refined in preparation for papermaking operations.

CFS paper is typically made on conventional fourdrinier paper machines.26 A highly diluted

solution of wood pulp is pumped through the machine’s headbox27 and onto the wire. Water drains by

gravity through the wire and/or by suction from the top as the wire advances, forming a web or sheet on

the wire. At the end of the wire, the web is picked off the wire by revolving nylon felts, which deliver it

to the press section. The press section consists of as many as four sets of closely spaced steel rollers

which press water out of the web as it passes through the nip between each set of rollers. Upon exiting

the press, the web of paper, which is now able to support itself, enters the dryer section.28 The steamheated cylinders of the dryer remove the remaining moisture from the paper as it laps over and under

successive cylinders.

At this stage, the paper is ready to be coated and, if necessary, calendered.29 Coating equipment

may be installed in line with the paper machine (i.e., on-machine) or completely separate from the paper

machine (i.e., off-machine). If on-machine equipment is used, the paper enters the coating equipment as

it exits the dryer section. If not, the paper is wound onto large reels as it comes out of the dryers on the

paper machine and is subsequently delivered to off-machine coaters. In either case, the essential elements

of the coating and calendering processes are the same. The principle component of the coating is often

kaolin clay, but other elements such as different clays, calcium carbonate, titanium dioxide, latex,

starches, dyes, lubricants, thickners, plastic pigments, cast release agents, rheological control agents, pH

control agents, optical brightners, and biocides may be included.30 Coatings are mixed in coating

preparation equipment in a mill’s coating “kitchen” and pumped directly to the appropriate paper machine

or off-machine coater.
 31 ***; *** response to the producers’ questionnaire, p. 7; and The Dictionary of Paper, 4th ed. s.v.v. “cast

coating, “reverse roll coating.”

 32 ***.

 33 ***.

 34 ***.

 35 Conference transcript, p.13 (Cameron), and Staff trip report, November 17, 2006. 

 36 Conference transcript, pp. 102 (Anderson) and 167 (Hunley).

I-9

Next, as the web of paper advances through the coater, a thin even coat is applied to one side,31

after which the web continues through a large gas-fired convection dryer to dry the coating. If a C2S

product is being made, the sheet continues looping is such a manner as to position the other side of the

paper for coating in a second coater in all respects to the first. For C1S products, the web of paper is

simply routed to bypass the second coater. Exiting the coater, the paper is rewound on large reels.

Once coated, CFS paper may be calendered with the amount of calendering used dependent on

the requirements of the product being made. Gloss grades are calendered the most, satin grades are

calendered some, and matte grades are not calendered at all. The calenders, which are stacked, alternating

hard (steel) and soft (plastic) rollers are used to increase the density, smoothness, and gloss of the paper. 

The combination of coating formulation and calendering regimen control the finish of the final sheet of

paper.32

After coating and calendering, the reels of CFS paper are hoisted by large, overhead cranes to a

rewinder which unwinds each reel, slits the web to the appropriate widths, and rewinds the resulting

narrow webs onto paperboard cores. Rolls are produced in a wide range of widths depending on the

width of the presses for which the paper is intended.33 In the U.S. market, CFS paper is sold both in sheet

form and roll form, because commercial printers use both sheet-fed and web-fed offset lithographic

presses.34 If the CFS paper is to be sold in roll form, the rolls are delivered from the rewinder to the roll

finishing area where they are wrapped and labeled for transport.

If the CFS paper is to be sold in sheet form, production entails one additional step. CFS rolls

from the rewinder are delivered to a sheeter, which converts the paper from rolls to sheets. A CFS roll is

mounted on a roll stand at the upstream end of the sheeter. As the roll advances through the sheeter,

rotary knives cut the roll at regular intervals perpendicular to the direction of travel, thereby creating

sheets. Large (i.e., wide) sheeters may also slit the roll longitudinally in addition to the perpendicular cuts

being made by the rotary knives. The output from a sheeter is automatically stacked and counted in ream

quantities on pallets. It is estimated that approximately 25 to 30 percent of the U.S. CFS market is for

sheet-fed presses.35 CFS paper intended for sale to commercial printers using web-fed presses is

reportedly somewhat different than that intended for sheet-fed presses. 

Rolls for the web offset market have higher moisture content and different coating formulations

in order to withstand the heat-set web printing process typically used for high-speed, web-fed presses.36
 37 Traditionally, to produce groundwood (i.e., mechanical) pulp, bolts of wood were ground against large

grindstones to separate the fibers. Modern groundwood pulp mills grind wood chips between large steel plates

sometimes with various amounts of heat, pressure, and/or chemicals added.

 38 ***.

 39 Technically speaking, lignin is the noncarbohydrate portion of the cell wall of plant materials, which generally

speaking is the stuff that holds the cellulose fibers together in wood. The Dictionary of Paper, 4th ed. s.v. “lignin.”

 40 Coated groundwood paper has moved toward lighter basis weights to offset postal rate increases and the

correspondingly higher cost of publication distribution. Coated Groundwood Paper from Belgium, Finland, France,

Germany, and the United Kingdom, Inv. Nos. 731-TA-487-490 and 494 (Final), USITC Publication 2467, December

1991, p. A-7.

 41 *** producers’ questionnaire response, p. 8; *** response, p. 10.

 42 *** producers’ questionnaire response, p. 10.

 43 *** producers’ questionnaire response, att. II-3f.

I-10

DOMESTIC LIKE PRODUCT ISSUES

No like product arguments with respect to CFS paper have been advanced by the parties to these

investigations, but data were nonetheless gathered on other potentially similar products and are

summarized below. Two of the products for which information was gathered, coated groundwood and

uncoated free sheet, are categories within the hierarchy of graphics papers identified above that are in

certain respects similar to CFS. Information was also elicited from producers regarding coated kraft

paper and paperboard, which are not considered graphics paper but which are somewhat similar. Finally,

information was sought concerning the potential differences between C2S and C1S products, both of

which are included in the scope of these investigations. Table I-2 presents recent U.S. production

statistics for various grades of coated and uncoated paper. 

Table I-2

Paper and paperboard: U.S. production of various grades, 2003-06

* * * * * * *

Of the other products for which information was sought, uncoated free sheet was the most likely

to be produced by U.S. CFS producers. Among the ten U.S. CFS producers that submitted

questionnaires, six reported that they also made uncoated free sheet paper. 

Physical Characteristics and Uses, Manufacturing Facilities, and Production Employees

The most significant physical difference between CFS and coated groundwood37 paper is the

presence of significant amounts of mechanical pulp in the coated groundwood paper.38 The advantages of

mechanical pulp are that it is high yield relative to chemical pulp and that it is high in opacity. A major

disadvantage is that mechanical pulp retains the lignin that was in the original wood.39 Because lignin

discolors (i.e., yellows) with age, groundwood paper is used where permanence is not necessary. Coated

groundwood is used principally for weekly publications (e.g., Time, Newsweek) and low-end mail order

catalogs where permanence is not a necessary feature but where weight and, therefore, postal costs are

important.40

Coated groundwood paper is generally lighter in basis weight, less bright, and has lower physical

specifications (i.e., rougher surface) than CFS paper.41 CFS paper has superior tear and fold strength, is

inherently brighter, and is less likely to yellow.42 However, because of the opacity of groundwood fiber,43
 44 ***.

 45 *** producers’ questionnaire response, p. 8.

 46 *** producers’ questionnaire response, p. 9; *** producers’ questionnaire response, p. 4.

 47 *** producers’ questionnaire response, p. 8.

 48 *** producers’ questionnaire response, p. 7.

 49 *** producers’ questionnaire response, p. 7; *** response, p. 8, and ***

 50 *** producers’ questionnaire response, p. 12.

 51 *** producers’ questionnaire response, p. 9.

 52 ***.

 53 *** producers’ questionnaire response, p. 13.

 54 *** producers’ questionnaire response, p. 10.

 55 *** producers’ questionnaire response, Att. II-3h; *** response, p. att II-3; and *** response, p. 11.

 56 *** producers’ questionnaire response, p. 6.

I-11

coated groundwood paper can be manufactured in basis weights ranging from 26 to 60 pounds (25" x 38"

500 sheets).44

Provided that a paper mill has the capacity to supply both chemical and mechanical pulp, the

same paper machines can be used to make either coated groundwood or CFS paper as economic/market

conditions dictate. However, only three producers of CFS paper reported having the capacity to produce

both coated groundwood and CFS paper. One U.S. producer reported that coated groundwood paper is

more apt to be manufactured on paper machines with on-machine coaters .45

Uncoated free sheet and CFS paper are similar in that they have a common uncoated free sheet

base stock, but the manufacture of CFS paper requires additional equipment and raw materials to

complete the manufacture of CFS paper.46 For a given basis weight, uncoated freesheet is bulkier than

CFS paper,47 consumes more ink, and has inferior printing surfaces (i.e., brightness, smoothness, and

gloss). In comparison, CFS paper has higher print performance and fidelity due to superior ink retention

(i.e., hold out).48 Several U.S. producers reported that uncoated free sheet was sometimes made on coated

paper machines but that this was typically done to fill paper making capacity that would otherwise be

idle.49

In contrast to CFS paper, which is primarily made from hardwood pulp, coated kraft paper is

typically made mostly from softwood pulp. It is distinct from CFS paper in that it is often heavyweight

paper ranging in caliper (thickness) from a low of 9 or 10 points to a high of 22 points and primarily

serves packaging and other converting end uses.50 At basis weights under 50 pounds, C1S kraft paper is

reported to be stronger than CFS paper for bag products.51 According to petitioner, there are physical

differences between CFS paper and coated kraft paper (e.g., smoothness, bulk, and coating) resulting in

part from the use of rotary flexographic or rotogravure presses typically used in converting operations.52

Essentially C1S and C2S papers are identical except for the absence of coating on one side. Tear

strength and stiffness might be somewhat different for sheets of the same basis weight.53 The customers’

applications determine whether a C1S or C2S sheet is needed.54 Therefore, C1S serves applications (e.g.,

labels, covers, folders, laminated products, gift wrap, box wraps, signage, posters, bags, and envelopes)

where printing is required on only one side.55 Generally, U.S. CFS producers can manufacture either C1S

or C2S grades although one U.S. producer reported that its paper machines were limited by their

configuration to production of C1S grades.56 
 57 Coated Groundwood Paper from Belgium, Finland, France, Germany, and the United Kingdom, Inv. Nos. 731-

TA-487-490 (Final), USITC Publication 2467, December 1991, p. A-9.

 58 *** producers’ questionnaire response, p. 11.

 59 *** producers’ questionnaire response, p. 8.

 60 ***.

 61 *** producers’ questionnaire response, att. II-3f.

 62 *** producers’ questionnaire response, p. 8.

 63 *** producers’ questionnaire response, p. 7, Stora Enso response, p. 7, NewPage response p. 9.

 64 *** producers’ questionnaire response, p. 8.

 65 *** producers’ questionnaire response, p. 7

 66 *** producers’ questionnaire response, p. 7.

 67 *** producers’ questionnaire response, p. 7.

 68 *** producers’ questionnaire response, p. 8.

I-12

Interchangeability and Customer and Producer Perceptions

In the previous investigations pertaining to coated groundwood paper, it was noted that because

printing characteristics are unique to each type of graphic paper, they were rarely substituted. The

Commission’s report continued, “most buyers decide upon the printing effect, both visual and tangible,

they wish to achieve and select a paper accordingly. Switching may occur, if another type of paper better

suits their needs or constraints, but most publishers – particularly those of recurring products like

magazines and catalogues – are neither indifferent nor capricious as to their choice of paper.”57 

With respect to the interchangeability of CFS and coated groundwood, the available information

in these investigations generally supports the earlier assertion. Customers reportedly view CFS as more

suited to prestigious applications such as annual reports, high-end catalogues and magazines, and high

impact direct mail.58 Interchangeability is inherently restricted because CFS is generally not available in

basis weights less than 45 pounds and there are only three common basis weights (45, 50, and 60

pound).59 Technical improvements made to the groundwood pulping process since 1991 have not altered

the basic distinction between groundwood and freesheet paper or increased the substitutability of one for

the other.60 

One U.S. CFS producer asserted that high brightness, coated groundwood grades have attempted

to substitute for CFS with moderate success but that a more typical occurrence was the catalog or

magazine publisher who switched from CFS to coated groundwood as circulation increased to save postal

costs.61 In the market for gift wrap base stock, where CFS and coated groundwood do compete, coated

groundwood is used more for holiday gift wrap than for everyday gift wrap. CFS is preferred for

everyday gift wrap because it will not yellow if held by the consumer for an extended period of time.62

With respect to uncoated free sheet, the general perception is that CFS is a superior product

because it prints better than uncoated free sheet.63 The petitioner asserts that CFS and uncoated free sheet

are not interchangeable in the market place expressly because of the difference in image quality of the

printed sheets.64 Other U.S. producers tend to support this assertion noting that customer applications

often require either CFS paper or uncoated free sheet65 and that for certain uncoated free sheet end uses

(e.g., carbonless and thermal base stock), CFS paper is simply not suited.66 Another producer stated that

CFS paper and uncoated free sheet were technically interchangeable albeit with significant differences in

the print quality, surface feel, and appearance of the finished products.67 One producer’s sales staff

emphasizes the sale of coated products over uncoated products due to higher margins and less

competition.68
 69 *** producers’ questionnaire response, p. 9, ***.

 70 *** producers’ questionnaire response, p. 11.

 71 *** producers’ questionnaire response, p. 13.

 72 *** producers’ questionnaire response, p. 10.

 73 *** producers’ questionnaire response, p. 11.

 74 According to one producer’s definition, brokers differ from paper merchants in that they never take possession

of the paper. *** producers’ questionnaire response, p. 9, and *** response, p. 8.

 75 *** producers’ questionnaire response, p. 7

 76 *** producers’ questionnaire response, p. 8, and *** response, p. 11.

 77 *** producers’ questionnaire response, p. 7, and *** response, p. 9

 78 *** producers’ questionnaire response, p. 6; *** response, p. 12.

 79 *** producers’ questionnaire response, p. 13.

I-13

Although there is some interchangeability between coated kraft paper and CFS paper in certain

end uses (e.g., cover, bags), it is generally limited to markets where CFS paper is sold to converters.69 For

heavy weight grades of coated kraft paper (e.g., bristols, solid bleached sulfate), the stiffness of the sheet

is an important performance specification, and unlike CFS paper cover grades that are typically sold by

weight, bristols are generally sold on the basis of caliper. End uses for bristols, many of which require

C1S, include clothing tags, lottery tickets, playing cards, table-top tents, hotel "do not disturb" signs,

greeting cards, calendars, post cards, as well as paperback book covers. 

Customer perceptions for C2S and C1S are generally similar, although C1S is reportedly more

apt to be sold to converters than is C2S. Producers perceive C1S to be more technically challenging

because of the requirements of downstream converting processes.70 The necessity for C1S to run well in

customers’ converting equipment makes a formal supplier qualification process for C1S more likely than

for C2S.71 C2S can substitute for C1S as long as the customer doesn’t mind the side-to-side surface

difference.72 However, C1S cannot substitute for C2S because C2S applications require the same surface

characteristics on both sides of the paper.73

Channels of Distribution

Generally, channels of distribution are the same for CFS paper and other types of graphics papers

in that they are either sold directly to large users or to distributors (i.e., paper merchants and/or brokers).74

However, the relative importance of one segment or the other may vary. Reportedly, the majority of CFS

is sold through merchants.75 Coated groundwood, on the other hand, is more likely to be sold direct

because the end uses for coated groundwood (e.g., weekly magazines) are more heavily weighted to

applications that lend themselves to direct sales to large users.76 The types of customers to which direct

sales are made may also differ. CFS paper is sold directly to users such as magazine, catalogue, and book

publishers, whereas direct sales of uncoated free sheet often go to envelope and forms converters and

office supply stores in addition to book publishers.77 Reportedly, coated kraft paper is sold mostly to

converters, particularly for flexible packaging (e.g., bags, candy over-wrap sleeves).78 C1S is more apt

than C2S to be sold direct than to distributors. Large customers for C1S include various converters such

as litho laminators, pressure sensitive label OEMs, and metallizer OEMs.79
 80 *** producers’ questionnaire response, p. 11.

 81 *** producers’ questionnaire response, p. 8.

 82 *** producers’ questionnaire response, p. 8.

 83 *** producers’ questionnaire response, p. 9.

 84 *** producers’ questionnaire response, p. 7, and *** response, p. 7.

 85 *** producers’ questionnaire response, p. 7, and *** response, p. 7.

 86 *** producers’ questionnaire response, p. 13; *** response, p. 11; and *** response, p. 10.

 87 *** producers’ questionnaire response, p. 10.

 88 *** producers’ questionnaire response, p. 11.

 89 Chinese manufacturers and Unisource’s postconference brief, pp. 4-10; and Korean manufacturers’

postconference brief, pp. 8-11 and app. A (pp. 2-5). Chinese manufacturers and Unisource further assert that there

are additional factors that differentiate subject imports from domestically produced CFS paper. Chinese

manufacturers and Unisource's postconference brief, pp. 10-13. 

 90 Petitioners’ postconference brief, pp. 7, 37-41, and exh. 1 (pp. 21-37).

 91 Petitioner’s postconference brief includes a declaration (exh. 14) from ***.

I-14

Price

CFS paper typically has a higher price than other types of graphics papers. The price of coated

groundwood is traditionally less than that for CFS paper.80 Competition with coated groundwood is

limited because CFS paper is not available in basis weights below 45 pounds; a producer active in gift

wrap and converting segments noted that CFS paper rarely competed against coated groundwood.81 For

products with similar characteristics (e.g., 45 pound, 86 brightness), CFS paper prices were reported to be

approximately 10 percent higher than those for coated groundwood.82 The price for CFS paper is

traditionally higher than that for uncoated free sheet83 by as much as 20 to 40 percent according to U.S.

CFS paper producers.84 The higher prices were attributed to the more complex manufacturing process for

CFS paper which leads to higher production costs and less efficiency.85 U.S. CFS paper producers

reported that the price of C2S is generally similar to or at a slight premium above C1S,86 with the

estimated price differential being 10 to 15 percent.87 In was noted that price trends generally run parallel

for both C1S and C2S.88

DATA ON PRODUCT TYPES

Respondents have raised the issue as to whether competition between U.S.-produced CFS paper

and imports of subject merchandise is attenuated. See, for example, Chinese manufacturers and

Unisource’s postconference brief where they assert that web rolls constitute a “distinct market segment”

and Korean manufacturers’ postconference brief where they argue that the domestic industry does not

face what they label as “significant competition” from subject imports within the web roll “segment” of

the U.S. market.89 Petitioner emphasizes that CFS paper is a commodity product and that respondents

“offer no evidence” that “they are actually blocked from competing for sales of web rolls.”90

As shown in table I-3, the “domestic industry” (which as shown in the notes include data for a

relatively small volume of Canadian production) consists primarily of rolls (*** percent in 2003, ***

percent in 2004, and *** percent in 2005). *** web rolls were imported from the subject countries91 and

only a relatively small portion of total subject imports were in the form of sheeter rolls (*** percent in

2003, *** percent in 2004, and *** percent in 2005). Most subject merchandise was imported in sheet-
 92 Sales of U.S. imports of CFS web from China were *** short tons in January-September 2006 and were

projected at *** short tons for full year 2006. See part VII of this report for additional information.

I-15

form. The subject web sales that were reported occurred in the last full year of the period examined

(2005)92 and were *** larger than the smaller volume shown for 2003.

Table I-3

Coated free sheet paper: U.S. consumption by source and by product type, 2003-05

* * * * * * *

The following tabulation provides data on NewPage’s domestic production of CFS paper, by type

of product, that were provided by the firm in response to a request for supplemental information:

* * * * * * *

Data on CFS paper types gathered in Commission questionnaires and derived from official Commerce

statistics are presented in appendix E. 
 
 1

 Conference transcript, p. 92 (Tyrone).

 2

 Petitioner’s postconference brief, exh. 1, p. 4. 

 3

 Petitioner reported that it may sell directly to larger printers and publishers. Conference transcript, p. 74

(Tyrone).

 4

 Respondents also state that long lead times on imports necessitate the purchaser to hold inventories, which

mostly precludes producers from subject countries from selling directly to end users who are unable to maintain

large inventories. Chinese respondents’ postconference brief, p. 18. 

 5

 Conference transcript, p. 144 (Dragone).

 6

 *** of the *** responding importers of record listed distributors among their customers.

 7

 Conference transcript, p. 48 (Jones).

 8

 Conference transcript, p. 100 (Anderson).

II-1

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

U.S. MARKET SEGMENTS/CHANNELS OF DISTRIBUTION

CFS paper is sold in three forms: web rolls, sheeter rolls, and sheets. The product is sold to be

used in printed materials requiring high-gloss pages, including books, catalogues, magazines, posters,

signage, playing cards, and packaging. Petitioner reported that approximately *** percent of its business

is accounted for by commercial printing, which includes annual reports and direct mail.1 Petitioner

reported that approximately *** percent of U.S. producers’ sales of CFS paper are made through

distributors, typically referred to as paper merchants.2 The remainder of sales are directly to printers and

other end users.3 Respondent importers estimate that *** percent of subject imports are sold to

merchants.4 Respondent importers reported that there may also be a paper broker that arranges for a

direct sale from a foreign manufacturer to an end user or from a manufacturer to a paper merchant.5

Therefore, while some importers serve as distributors, others serve as brokers and sell to other

distributors.6

Petitioner reported that both the domestic product and the subject imports are sold to distributors

and end users for the same types of applications.7

 There is some overlap of customers of U.S. producers

and subject importers. ***. Among importers from the subject countries, *** were all listed as

customers. There was a wide variety of smaller printers also listed as customers by importers from each

of the subject countries, but there was no clear overlap of these customers.

When firms were asked to list market areas in the United States where they sell CFS paper, the

responses showed that the market areas tended to be nationwide. Eight of nine responding U.S. producers

reported that they sell nationally. Respondents have reported that U.S. producers are sometimes reluctant

to ship west of the Rocky Mountains because of higher transportation costs.8

Among responding importers of CFS paper from China, six of nine importers reported that they

sold nationally. The others listed specific geographic regions, including the Northeast, the Mid-Atlantic,

the Southeast, the Rocky Mountains, the Midwest, the west coast, and southern New England. Four of

seven responding importers of CFS paper from Indonesia reported that they sold nationally. The others

listed the Northeast, the Mid-Atlantic, the Southeast, the Midwest, the Rocky Mountains, the west coast,

the Northeast, and Hawaii. Six of 12 responding importers of CFS paper from Korea reported that they

sold nationally. The others listed the west coast, the Southeast, and the Midwest. 

Official Commerce import statistics, by subject source and customs district, indicate that imports

of CFS paper from China are most heavily concentrated on the west coast, accounting for 66.3 percent of

total U.S. imports from China during 2005, followed by imports to the east coast, accounting for 22.4
 9

 See table IV-3.

 10 Petitioner’s postconference brief, exh. 1, p. 11.

 11 Conference transcript, pp. 103-104 (Anderson), 120 (Dragone), and 167 (Hunley). Korean respondents’

postconference brief, p. 10. Chinese respondents’ postconference brief, p. 7.

 12 Conference transcript, pp. 106, 140 (Anderson) and p. 109 (Cho).

 13 Conference transcript, pp. 112-113 (Dragone).

II-2

percent.9 U.S. imports of CFS paper from Indonesia are also concentrated on the west coast, accounting

for 52.8 percent of total U.S. imports from Indonesia during 2005, followed by imports to the Great Lakes

region, accounting for 26.9 percent of imports from Indonesia, and imports to the east coast, accounting

for 17.0 percent of imports. U.S. imports of CFS from Korea are also concentrated on the west coast,

accounting for 63.3 percent of total imports from Korea during 2005, followed by imports to the east

coast, accounting for 25.5 percent of imports of CFS paper from Korea.

U.S. inland shipping distances for U.S.-processed CFS paper were compared with those for

imports from China, Indonesia, and Korea. 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

China, *** 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. For imports from Indonesia , ***

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

1,000 miles, and *** were over 1,000 miles. For imports from Korea , *** 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.

Petitioner also reported that shipping coated free sheet in web-roll form is more efficient than

shipping sheets because web rolls are easier to stack.10 Respondent importers, on the other hand, reported

that shipping web rolls is less efficient than shipping sheets because they cannot be containerized,

resulting in more unused space in the shipping vessel, and that transportation costs per ton are higher for

web rolls.11

Five of nine responding U.S. producers reported that the majority of their sales are made from

inventory, with the remainder reporting that the majority of sales are produced to order. Lead times for

delivery of CFS paper for U.S. producers ranged from to one day to four weeks on sales from inventory

and ranged from 10 days to 30 days on sales produced to order. For importers, seven of nine responding

importers reported that the majority of their sales are made from inventory. Lead times for

delivery of CFS paper for importers ranged from one day to three days on sales from inventory and

ranged from three weeks to 120 days on sales produced to order. Respondent importers reported that due

to the longer lead times associated with imported product, merchants buying imports must hold them in

inventory and thus face additional handling costs.12 

SUPPLY AND DEMAND CONSIDERATIONS

U.S. Supply

Allegations of Allocation

One importer, ***, reported that it was placed on “soft allocation”, or a reservation system, by

U.S. producers in 2004 for web rolls, sometimes of a certain basis weight.13 This importer also reported

that it and other customers, including ***, were put on “soft allocation” in January 2006, citing a letter
 14 Chinese respondents’ postconference brief, p. 16, exh. 1 and exh. 3. ***.

 15 Petitioner’s postconference brief, exh 1, p. 39.

 16 Petitioner’s postconference brief, exh. 1, pp. 38-39.

II-3

from ***.14 Petitioner reports that ***.15 Petitioner also reported that sometimes a mere perception that

supplies are tightening will induce customers to place orders in excess of what they actually require and

suppliers may respond by using a reservation system to avoid disruptions in the supply chain.16 

Domestic Production

The supply response of CFS paper producers to changes in price depends on such factors as the

level of excess capacity, the availability of alternate markets for U.S.-produced coated free 

sheet paper, 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 relatively inelastic, due primarily to the high levels of

capacity utilization and lack of alternative markets. 

Industry capacity

U.S. producers’ capacity utilization increased from 90.1 percent in 2003 to 95.1 percent in 2005. 

This level of capacity utilization indicates that U.S. producers have little, if any, unused capacity with

which they could increase production of CFS paper in the event of a price change. 

Alternative markets

Exports by U.S. producers, as a share of total shipments, increased from 5.5 percent in 2003 to

6.3 percent in 2005. These data indicate that U.S. producers have a limited ability to divert shipments to

or from alternative markets in response to changes in the price of CFS paper. 

Inventory levels

The ratio of end-of-period inventories to U.S. shipments decreased from 17.2 percent in 2003 to

15.4 percent in 2005. These data indicate that U.S. producers have some inventories they could use as a

means of increasing shipments of CFS paper to the U.S. market.

Production alternatives

Five of seven responding U.S. producers reported using the actual machinery and equipment used

to make CFS paper in the production of other products.

Subject Imports

The responsiveness of supply of imports from China, Indonesia, and Korea to changes in price in

the U.S. market is affected by such factors as capacity utilization rates and the existence of home markets

and other export markets. Based on available information, producers in China, Indonesia, and Korea are

likely to respond to changes in demand with slight changes in the quantity of shipments of CFS paper to

the U.S. market. The main contributing factors to this degree of responsiveness of supply are the high

levels of capacity utilization and relatively small inventories. 
II-4

Industry capacity

During the period of investigation, the capacity utilization rate for Chinese producers of CFS

paper slightly increased from *** percent in 2003 to *** percent in 2005; it is projected to reach ***

percent in 2006. The capacity utilization rate for producers in Indonesia increased from *** percent in

2003 to *** percent in 2005; it is projected to reach *** percent in 2006. The capacity utilization rate for

producers in Korea increased from 91.3 percent in 2003 to 95.9 percent in 2005; it is projected to be 94.8

percent in 2006. These levels of capacity utilization indicate that subject producers have very little, if

any, unused capacity with which they could increase production of CFS paper in the event of a price

change. 

Alternative markets

Available data indicate that producers in China, Indonesia, and Korea do have the ability to divert

shipments to or from alternative markets in response to changes in the price of CFS paper. Shipments of

CFS paper from China to the United States increased from approximately *** percent of total shipments

in 2003 to *** percent in 2005. The share of shipments from China to export markets other than the

United States increased from about *** percent in 2003 to *** percent in 2005 with the remainder going

to its home market, including internal consumption. Shipments of CFS paper from Indonesia to the

United States increased from approximately *** percent of total shipments in 2003 to *** percent in

2005. The share of shipments from Indonesia to export markets other than the United States decreased

from *** percent in 2003 to *** percent in 2005, with the remainder going to its home market, including

internal consumption. Shipments of CFS paper from Korea to the United States decreased from

approximately 19.4 percent of total shipments in 2003 to 18.9 percent in 2005. The share of shipments

from Korea to export markets other than the United States increased from 35.2 percent in 2003 to 36.0

percent in 2005, with the remainder going to its home market, including internal consumption. 

Inventory levels

Inventories of subject producers in China, as a share of total shipments, increased from ***

percent in 2003 to *** percent in 2004, before decreasing to *** percent in 2005. Inventories of subject

producers in Indonesia, as a share of total shipments, increased from *** percent in 2003 to*** percent in

2005. Inventories of subject producers in Korea, as a share of total shipments, increased from 4.9 percent

in 2003 to 5.3 percent in 2005. These data indicate that foreign producers have a very limited ability to

use inventories as a means of increasing shipments of CFS paper to the U.S. market.

Nonsubject Imports

Based on official Commerce data, U.S. imports of CFS paper from nonsubject sources accounted

for 59.5 percent of the quantity of total U.S. imports in 2005. The major sources of nonsubject imports of

CFS paper include Canada, Finland, and Germany.
 17 Eleven responding importers reported that demand was unchanged and two reported that it has decreased. 

The importers reporting that demand was unchanged most commonly cited the growth of the internet and electronic

media.

 18 Conference transcript, p. 162 (Dragone).

 19 Conference transcript, p. 164 (Dragone).

II-5

U.S. Demand

Demand Characteristics

The evidence discussed below indicates that the demand for this product is likely to be relatively

price inelastic. U.S. apparent consumption increased by *** percent from 2003 to 2005. When asked

how overall demand for CFS paper has changed since January 2003, all nine responding U.S. producers

and 18 of 31 responding importers stated that demand has increased.17 The increase in demand was most

commonly attributed to economic growth and its effect on advertising and the publication of corporate

financial reports. Two U.S. producers reported that the restrictions placed on telemarketing have

increased the demand for direct mail advertising. One importer also indicated that demand may be

shifting more towards coated free sheet in web-roll form, as roll production becomes more efficient.18

Substitute Products

When asked whether there are substitutes for CFS paper, all but one responding U.S. producer

and most responding importers cited one or more alternatives. Coated groundwood paper and uncoated

free sheet paper were named most often; other possible substitutes named included high-yield board,

super-calendared papers, plastic, coated bristols, electronic media, fine art paper, and film for packaging. 

However, two producers reported that substitutability is limited. In particular, two producers reported

that higher-end publications typically do not substitute away from CFS paper in order to retain their

image and standard of quality. Moreover, petitioner noted that once a recurring publication has launched,

it is slow to switch the paper it uses. One importer reported that substitutability between coated free sheet

and coated groundwood is limited because coated groundwood is not readily available in sheet form.19

Another importer reported that substitution would be more likely in lower-end applications. Five U.S.

producers reported that the price of substitutes can affect prices of CFS paper, citing time lags of three to

four months. In particular, three producers reported that price increases of substitutes will have the

strongest impact on lower weights of CFS paper. One producer reported that the price of uncoated free

sheet paper has been increasing, which is increasing demand for CFS paper. This producer also reported

that increases in the price of plastic have increased demand for CFS paper as well. Seven of 12

responding importers reported that the prices of substitutes do not affect the price of CFS paper. The five

importers that reported that prices of substitutes do affect the price of CFS paper cited time lags of four to

12 weeks. One importer reported that price changes across all segments of the printing paper market tend

to move in unison.

SUBSTITUTABILITY ISSUES

The extent of substitutability between domestic products and subject and nonsubject imports and

between subject and nonsubject imports is examined in this section. The discussion is based upon the

results of questionnaire responses from producers and importers.
 20 Petitioner’s postconference brief, p. 7.

 21 Korean respondents’ postconference brief, p. 9.

II-6

Comparison of Domestic Product and Subject Imports

In order to determine whether U.S.-produced CFS paper can generally be used in the same

applications as imports from China, Indonesia, and Korea, producers and importers were asked whether

the products can “always,” “frequently,” “sometimes,” or “never” be used interchangeably. The majority

of U.S. producers that compared CFS paper from China, Indonesia, Korea, and nonsubject countries with

the product from the United States reported that they are always comparable, as shown in table II-1. The

majority of importers reported that U.S. product is always comparable with coated free sheet from the

subject countries and that the products from each of the subject countries are always comparable with

each other. When comparing the U.S.-produced product and the product from the subject countries with

product from nonsubject sources, the majority of responding importers reported that they are frequently

comparable.

Table II-1

Coated free sheet paper: Perceived degree of interchangeability of product produced in the United

States and in other countries

Country comparison

U.S. producers U.S. importers

AF SNA F SN

 U.S. vs. China 5 3 0 0 14 11 3 0

 U.S. vs. Indonesia 5 2 0 0 13 10 2 0

 U.S. vs. Korea 5 3 0 0 17 11 3 0

 U.S. vs. Nonsubject 5 2 0 0 8 13 0 0

 China vs. Indonesia 4 0 0 0 14 9 1 0

 China vs. Korea 4 1 0 0 13 12 1 0

 China vs. Nonsubject 4 1 0 0 7 12 1 0

 Indonesia vs. Korea 4 0 0 0 12 12 1 0

 Indonesia vs. Nonsubject 4 0 0 0 7 12 1 0

 Korea vs. Nonsubject 4 1 0 0 8 12 1 0

Note: “A” = Always, “F” = Frequently, “S” = Sometimes, and “N” = Never.

Source: Compiled from data submitted in response to Commission questionnaires.

Both petitioner and respondent importers characterize CFS paper as a commodity product.20 Four

importers reported that coated free sheet rolls are not interchangeable with coated free sheet in sheet form

and that U.S. producers concentrate on web roll production while subject import suppliers concentrate on

sheet production. Respondent importers reported that CFS paper in sheet form is often used for smallvolume, high-end applications, whereas web rolls are used in high-volume applications.21 Petitioner and

respondent importers both reported that end users typically have either a printer for web rolls or a sheet-
 22 Conference transcript, p, 91 (Tyrone). Chinese respondents’ postconference brief, p. 8. 

 23 Petitioner’s postconference brief, p. 38.

 24 Petitioner named *** customers that have both sheet-fed presses and web roll printers and *** customers that

are capable of converting a web roll into sheet. Petitioner’s postconference brief, exh. 1, pp. 18-19 and attach. C.

 25 Petitioner’s postconference brief, exh 1, p. 19.

 26 Conference transcript, p. 77 (Tyrone).

 27 Conference transcript, p. 76 (Tyrone).

 28 Petitioner’s postconference brief, exh. 1, p. 4.

 29 Conference transcript, p. 158 (Anderson).

 30 Conference transcript, p. 106 (Anderson).

 31 Conference transcript, pp. 115-116 and 154-157 (Dragone).

II-7

fed press, but not both.22 However, petitioner reports that there is no significant difference in physical

characteristics or applications between web rolls, sheeter rolls, and sheet, stating that it produces some

CFS paper that is certified for use in both sheet-fed presses and web-roll printers.23 Petitioner also

identified several customers that have both kinds of presses, as well as customers that are capable of

converting a roll product into a sheet product.24 Petitioner also reported that it is not very costly for

customers to establish converting operations.25

As indicated in table II-2, the majority of U.S. producers that compared the United States with

China, Indonesia, and Korea said that differences other than price are frequently or sometimes significant. 

The majority of U.S. producers that compared imports from one subject country with another subject

country said that differences other than price are sometimes significant. The majority of

responding importers reported that differences other than price between CFS paper processed in the

United States compared to CFS paper processed in the subject countries are sometimes significant;

however, many others reported that the differences are frequently or always significant.

One U.S. producer reported that custom sizing is only available from U.S. sources. Petitioner

noted that customers may request custom sizes in an attempt to save money by not paying for excess

paper; yet subject imports that are not custom ordered are still less expensive than what U.S. producers

can offer, according to petitioner.26 Three U.S. producers reported that the technical support and

customer service provided by U.S. producers is superior to those provided by the subject import suppliers,

in part due to their geographic proximity to customers which allows speedier delivery and response time. 

Two producers reported that the availability and product range offered by U.S. producers is superior to

those offered by subject import suppliers. One U.S. producer reported that the quality of CFS paper from

Asian countries is inferior to that of domestically produced CFS paper. One U.S. producer reported that it

is among the few sources that produce environmentally friendly CFS paper.

Petitioner also reported that branding plays a role in purchasers’ decisions to buy CFS paper.27

However, petitioner also stated that producing private label brands for merchants is not necessarily a good

option for producers because the private label brand competes with the manufacturer’s own brand, and

often at a lower price.28 Two importers reported that the opportunity for brand development is an

important factor. One importer reported that many customers only use one brand of CFS paper.29 This

importer also indicated that U.S. producers provide superior marketing support.30 However, another

importer reported that U.S. producers were unwilling to work together in developing a private brand and

that it then turned to the subject producers to source this product.31 
 32 Conference transcript, p. 140 (Anderson).

 33 Conference transcript, p. 146 (Dragone).

II-8

Table II-2

Coated free sheet paper: Differences other than price between products from different sources1

Country comparison

U.S. producers U.S. importers

AFSNAFSN

 U.S. vs. China 0 3 4 1 6 8 9 4

 U.S. vs. Indonesia 0 2 3 1 4 6 10 3

 U.S. vs. Korea 0 2 4 1 5 9 10 4

 U.S. vs. Nonsubject 0 1 3 1 3 5 10 2

 China vs. Indonesia 0 0 1 2 4 3 10 6

 China vs. Korea 0 0 3 1 5 4 12 3

 China vs. Nonsubject 0 0 2 1 4 3 10 2

 Indonesia vs. Korea 0 0 2 1 5 4 10 3

 Indonesia vs. Nonsubject 00113293

 Korea vs. Nonsubject 0 0 2 1 3 3 9 3

 1

 Producers and importers were asked if differences other than price between CFS paper produced in the United

States and in other countries are a significant factor in their firms’ sales of CFS paper.

Note: “A” = Always, “F” = Frequently, “S” = Sometimes, and “N” = Never.

Source: Compiled from data submitted in response to Commission questionnaires.

Several importers reported that U.S. producers have shorter delivery times than subject import

suppliers. One importer indicated that longer lead times from subject countries imposes higher costs on

importers that must make a greater investment in maintaining inventories. One importer cited these

higher inventory costs as the reason why subject import suppliers do not offer coated free sheet in web

roll form in the U.S. market; namely, because the inventory costs can be offset by the higher profit 

margins realized on CFS paper in sheet form, but not on CFS in web-roll form, which is lower priced than

sheets and bears lower profit margins.32

Three importers reported that the quality of CFS paper from subject countries is superior than that

of domestically produced CFS paper, with one importer specifically citing higher brightness, shade, and

gloss. One importer reported that U.S.-produced CFS paper is more stiff, allowing it to run faster through

printing presses. Higher stiffness also allows for substitution to lower basis weights in some applications.

One importer reported that Chinese producers do not offer CFS paper with a matte, or “natural” finish and

have not been approved for use in digital printing. One importer also reported that Asian suppliers

generally do not produce lightweight coated product.33 Three importers reported that availability is

sometimes a significant difference, but it was unclear whether U.S. product or subject imports were

superior in these comparisons. 

Three importers reported that availability is sometimes a significant difference, but it was unclear

whether U.S. product or product from the subject countries was superior in these comparisons. 
 34 Conference transcript, pp. 121-122 (Hunley).

 35 Conference transcript, pp. 99-100 (Anderson), 112 (Dragone), and 118 (Hunley). Chinese respondents’

postconference brief, p. 19.

 36 Conference transcript, p. 108 (Cho).

 37 Conference transcript, p. 146 (Dragone).

 38 This importer sources web roll product from Germany and sheet product from Italy. Conference transcript, pp.

150 and 182 (Dragone).

 39 Conference transcript, p. 184 (Anderson).

II-9

Two importers reported that they do not have access to domestically produced CFS paper, one

citing unavailability in certain geographic markets. One importer reported that U.S. producers take

advantage of the fact that subject imports do not offer web rolls in the United States by requiring

customers to buy the U.S. producers’ full product line rather than just buying web rolls.34 Two importers

also reported that the technical support and customer service offered by U.S. producers is superior to that

of import suppliers. Three importers reported that paper merchants prefer to offer their customers a wider

range of quality and prices and therefore carry U.S.-produced CFS paper as well as subject imports and

possibly European product as well.35

Other Country Comparisons

In addition to comparisons between the U.S. product and imports from the subject countries, U.S.

producer and importer comparisons between the United States and imports from nonsubject countries and

between subject imports and nonsubject imports are also shown in tables II-1 and II-2. The majority of

responding U.S. producers and importers reported that nonsubject imports are “always” or “frequently”

interchangeable with domestic product and with subject imports. The majority of responding U.S.

producers and importers reported that differences other than price between nonsubject imports and

domestic product and between nonsubject imports and subject imports are sometimes significant.

One importer reported that imports from European countries are competitive in the web-roll

segment.36 Another importer reported that CFS paper has different brightness levels and basis weights. 

Another importer reported that European countries make coated paper which is less stiff than domestic

product or subject-produced coated free sheet, due to the different fibers and coating formulations they

use. This importer also noted that CFS paper from Europe tends to require more care in handling. 

Another importer reported that European suppliers, like domestic producers, offer lower basis weights.37

This importer also reported that the European CFS paper has the best surface quality, consisting of very

fine fiber which is more receptive to coatings.38 Another importer reported that imports from Europe are

mostly sold on the east coast.39
 
 1

 Petition, exh. I-1. The Commission sent an additional 11 questionnaires to other paper manufacturers; with the

exception of Fraser Papers Ltd. (Fraser), none of the firms that responded (Boise White Paper, Dunn Paper,

FiberMark North America, Hollingsworth & Vose, and Little Rapids) reported producing CFS paper. Fraser

indicated that CFS paper accounted for about *** to *** percent of its total paper production and that the firm could

not derive accurate allocations for its CFS production. Fraser produced about *** tons in 2005. Staff telephone

interview with ***, Fraser, November 9, 2006. ***.

 2

 ***.

 3 See Wausau’s negative response to producer questionnaire and staff telephone interview with ***, Wausau,

November 8, 2006. According to its website, the firm manufactures uncoated printing and writing papers, technical

specialty papers, and towel and tissue products. It also manufactures specialty release liners that are coated. See

www.wausaumosinee.com and www.wpcoatedproducts.com, retrieved November 16, 2006.

III-1

PART III: U.S. PRODUCERS’ PRODUCTION, SHIPMENTS, AND

EMPLOYMENT

The Commission analyzes a number of factors in making injury determinations (see 19 U.S.C. §§

1677(7)(B) and 1677(7)(C)). Information on the “alleged”margins of dumping was presented earlier in

this report and information on the volume and pricing of imports of the subject merchandise is presented

in Parts IV and V. Information on the other factors specified is presented in this section and/or Part VI

and (except as noted) is based on the questionnaire responses of 10 firms that accounted for over 95

percent of U.S. production of CFS paper during 2005.1

 The petitioner also identified Bowater, Inc.

(Greenville, SC) and Wausau Paper Corp. (Mosinee, WI) as manufacturers of CFS paper. ***.2

 Wausau

Paper Corp. (Wausau) responded that it does not produce the subject merchandise.3

 

U.S. PRODUCERS

The U.S. industry primarily consists of the following firms, each of which provided a response to

the Commission’s producer questionnaire: Appleton Coated LLC (Appleton), Kimberly, WI; P.H.

Glatfelter Co. (Glatfelter), York, PA; International Paper Co. (International Paper), Memphis, TN;

Mohawk Fine Papers, Inc. (Mohawk), Cohoes, NY; NewPage Corp. (NewPage), Dayton, OH; S.D.

Warren Co., d/b/a Sappi Fine Paper NA (Sappi), Boston, MA; Smart Papers LLC (Smart Paper),

Hamilton, OH; Stora Enso North America Corp. (Stora Enso), Wisconsin Rapids, WI; Verso Paper

Holdings LLC (Verso), Memphis, TN; and West Linn Paper Co. (West Linn), West Linn, OR. 

Responding firms’ positions on the petition, plant locations, and their production and shares of CFS paper

production in 2005 are shown in table III-1. The petitioner, NewPage, accounted for *** of U.S.

production of CFS paper in 2005. Sappi accounted for ***. Manufacturing plants primarily are located

in the north central part of the United States and in Maine, although there is also CFS production in the

south (in Alabama) with a relatively small volume produced on the West Coast (in Oregon). Several U.S.

producers are owned by holding companies (NewPage, Smart Paper, Verso, and West Linn) or by

offshore manufacturers (Appleton, Sappi, and Stora Enso). International Paper and Mohawk are not

owned by other entities, whereas Glatfelter’s stock is traded on the New York stock exchange. 
III-2

Table III-1

Coated free sheet paper: U.S. producers, positions on the petition, plant location(s), production, and

shares of U.S. production in 2005

Firm Position on

the petition

Plant location(s) Production

(short tons) 

Share of

production

(percent)

Appleton Coated LLC1 *** Combined Locks, WI *** ***

P.H. Glatfelter Co.2 *** Spring Grove, PA; Chillicothe,

OH

*** ***

IP/Verso:

 International Paper Co.3 *** Courtland, AL *** ***

 Verso Paper Holdings LLC4 *** Courtland, AL; Jay, ME *** ***

Mohawk Fine Papers, Inc.5 *** Cohoes, NY; Waterford, NY

Hamilton, OH (2005-06 only)

*** ***

NewPage Corp.6 Petitioner Escanaba, MI; Luke, MD;

Rumford, ME; Wickliffe, KY

*** ***

S.D. Warren Co., d/b/a

 Sappi Fine Paper NA7

*** Cloquet, MN; Muskegon, MI;

Skouhegan (Somerset), ME;

Westbrook, ME

*** ***

Smart Papers LLC8 Support Hamilton, OH *** ***

Stora EnsoNorth America Corp.9 *** Kimberly, WI; Wisconsin

Rapids, WI

*** ***

Belgravia Investments, Inc.,

d/b/a/ West Linn Paper Co.10

*** West Linn, OR *** ***

 Total -- -- 4,597,794 100.0

 1 Appleton is ***-percent owned by Arjo Wiggins S.A.S. (France), a manufacturer of CFS paper. ***.

 2

 Glatfelter’s common stock is traded on the New York stock exchange.

 3

 International Paper is not owned by any other firm. ***. 

 4

 Verso is ***-percent owned by ***.

 5

 Mohawk is not owned by any other firm. Mohawk acquired its Hamilton, OH facility from International Paper in 2005-06. 

Staff telephone interview with ***, Mohawk, December 13, 2006. 

 6

 NewPage is ***-percent owned by ***.

 7

 Sappi is ***-percent owned by Sappi Ltd. (South Africa). A division of Sappi Ltd. manufactures CFS paper in Belgium (Sappi

Fine Paper Europe). NewPage states that ***. Petitioner’s postconference brief, p. 36, n. 86.

 8

 Smart Paper is owned by ***, which is in turn ***-percent owed by *** and ***-percent owned by ***.

 9

 Stora Enso is ***-percent owned by Stora Enso Oyi (Finland), a manufacturer of CFS paper. Subsidiaries of Stora Enso Oyi

also manufacture CFS paper in China (Stora Enso Suzhou Paper Co., Ltd) and Germany (Stora Enso Uetersen GmbH & Co.

KG). Stora Enso stated in its questionnaire response that ***. 

 10 West Linn is ***-percent owned by ***.

Note.–Does not include data for Pasadena (with a capacity rating of *** tons) that closed in October 2005. Also does not include

data for Fraser. Fraser produced *** tons of CFS paper in 2003, *** tons in 2004, and *** tons in 2005. 

Source: Compiled from data submitted in response to Commission questionnaires, except as noted.
 4

 Petitioner states that entire paper machines need to be installed to increase capacity and, conversely, shutdown

to decrease it. They add that the need to run machines continuously makes it difficult to adjust capacity on an

incremental basis. Petitioner’s postconference brief, pp. 9-10. (As will be discussed later in this section, firms did

report being able to boost capacity by coating off-line. Coating off-line is, however, less cost effective than coating

on a paper machine.) Petitioner further states that “once a machine has been shut down for several months it

becomes very expensive to reactivate it. Thus, capacity that is shut down tends to stay shut down.” Ibid.

 5

 Commission staff left a voice mail message on November 3, 2006.

 6

 Petitioner’s postconference brief, exh. 12.

 7

 Paperloop.com (dated September 30, 2005 and October 10, 2005); and Associated Press (dated October 7,

2005).

 8

 NewPage’s producer questionnaire response, question II-2. 

 9

 ***.

 10 Sappi’s producer questionnaire response, question II-2.

 11 West Linn’s producer questionnaire response, question II-2.

 12 In support of its position, NewPage cites the “numerous successful” petitions for Trade Adjustment Assistance. 

Petitioner’s postconference brief, p. 6 and exh. 2.

 13 Chinese respondents and Unisource's postconference brief, p. 29. Unisource testified at the conference that the

industry consolidations and rationalizations were to take “antiquated production offline in order to increase the

operating rates for their more cost-effective equipment and increase their overall profitability.” Conference

(continued...)

III-3

There have been a number of changes to organizational and production operations of firms since

2003. Capacity changes4

 are shown in the following tabulation:

* * * * * * *

As shown above, Pasadena Paper Co. (Pasadena), which was an independent company owned by the

Canadian-based Belgravia Paper Co., shut down operations in 2005; representatives of the firm did not

respond to a request to contact the Commission.5

 Pasadena produced both one-sided CFS for use in labels

and privately branded two-sided web and sheets. Both the petitioner and respondents attached to their

postconference briefs press reports describing what was initially thought to be a temporary shutdown

prior to the landfall of Hurricane Rita in September 2005. Petitioner included in its postconference brief a

press report from The Citizen (for Pasadena), dated October 10, 2005, that quotes a letter sent to the 315

employees that were terminated. The letter reportedly attributes the closing to “the continued increase in

the prices of electricity and natural gas which have been exacerbated by the recent hurricanes, as well as

the loss of business to foreign competitors” (quotes refer directly to the employee letter).6

 Chinese

respondents and Unisource attach additional articles to their postconference brief (exhibit 22) that refer to

the high energy costs but make no mention of import competition.7

 The plant was not damaged by the

hurricane.

With reference to the Luke shutdown, NewPage announced the permanent closure of the no. 7

paper machine at the plant on November 2, 2005. It reported the sales value of the production volume on

the machine to be approximately $***. Employment associated with this system is approximately ***. 

NewPage included in its producer questionnaire ***.8

 ***.9 The Sappi closure of a paper machine (and

pulp mill) at its Muskegon mill was reported to have impacted approximately *** employees.10 West

Linn stated that due to “***” it ***.11

Parties differ in their assessment of the capacity shutdowns, with petitioner attributing the

closures to foreign competition12 while Chinese respondents and Unisource label them as an overdue but

positive move for the industry.13 Korean respondents state that “these capacity closures are in fact
 13 (...continued)

transcript, p. 114 (Dragone)

 14 Korea respondents’ postconference brief, pp. 2, 15.

 15 NewPage did not report producing CFS paper in Chillicothe, OH during the period examined (table III-1). 

Glatfelter indicated that ***. Staff telephone interview with ***, Glatfelter, November 27, 2006.

 16 Data for this operation were reported to the Commission by Verso Paper Holdings LLC (or Verso).

 17 Both International Paper and Verso are shown in table III-1 as currently manufacturing CFS paper in the

Courtland, AL mill. ***. International Paper’s producer questionnaire response and e-mails from ***, International

Paper, November 28, 2006 and November 29, 2006.

 18 Most firms reported that they calculated their subject capacity on the basis of either production or sales.

 19 ***. E-mails from ***, ***, November 29, 2006.

III-4

entirely consistent with similar elimination of less efficient capacity taking place world-wide and in other

paper segments (e.g., uncoated free sheet), and are actually a sign of the domestic industry’s improved

competitive position.”14

Organizational changes within the industry include Glatfelter’s acquisition of the Chillicothe, OH

paper mill from NewPage on April 3, 2006.15 The Chillicothe operation consists of a *** ton-per-year

paper making facility in Chillicothe, OH, and ***. International Paper sold its coated and

supercalendered papers business to ***, in a transaction that closed on ***.16 17

U.S. PRODUCERS’ IMPORTS AND PURCHASES

Imports and purchases by producing firms are shown in table III-2.

Table III-2

Coated free sheet paper: U.S. producers’ U.S. production, imports, and purchases, by firm, 2003-

05, January-September 2005, and January-September 2006

* * * * * * *

U.S. PRODUCERS’ CAPACITY, PRODUCTION, AND CAPACITY UTILIZATION

CFS paper is produced on mills that are also utilized to produce other paper products that include

uncoated free sheet and coated groundwood.18 The following tabulation lists the share (in percent) of

each firm's total production in 2005 of products produced on machinery and equipment where there is at

least some overlap with CFS paper.

* * * * * * *

Another issue encountered in developing capacity estimates is that free sheet paper is coated both

on the paper machine line and off-line. *** commented that any measure of capacity is “not as simple” as

separately calculating a coating capacity and uncoated capacity figure for firms that maintain separate

coating capacity and can coat off-line. In addition to coating off-line, it is possible to move a coating

drum to one of the uncoated machines on a temporary basis.19

Data concerning U.S. producers’ CFS paper capacity, production, and capacity utilization are

shown in table III-3. Capacity to produce the subject product in the United States remained relatively

stable at 4.7 million to 4.9 million short tons during 2003-05 and is depicted as rising slightly during the

January-September 2005 to January-September 2006 interim periods. The increase is due both to a

reported capacity increase by *** and to what may be a reporting artifice resulting from the International
 20 ***. See the notes to table III-3.

 21 NewPage states that, due to their high operating costs, a paper mill “requires very high capacity utilization to

achieve profitability and an adequate return on investment. Petitioner’s postconference brief, p. 9.

 22 Chinese respondents and Unisource’s postconference brief, p. 13. 

 23 Petitioner’s postconference brief, exh. 1, p. 16. They add that NewPage “could shift production from coated

groundwood paper to coated free sheet at its Escanaba, MI and Rumford, ME plants if market conditions improved.” 

Ibid.

 24 Conference transcript, pp. 112 and 146-147 (Dragone).

 25 Petitioner’s postconference brief, p. 39.

 26 Chinese respondents and Unisource's postconference brief, pp. 15-17. ***.

III-5

Paper/Verso division.20 Production of CFS paper rose on an overall basis by 7.6 percent from 2003 to

2005 and by 2.6 percent from January-September 2005 to January-September 2006. U.S. producers’

capacity utilization was 90 percent in 2003 and 2004 and then rose to 95 percent in 2005. Interim

capacity utilization in interim 2006 was, however, 4 percentage points lower than that reported during the

interim 2005 period.21

The Chinese respondents and Unisource argue in their postconference brief that the U.S. industry

does not have sufficient capacity to meet demand.22 Petitioner asserts that lost capacity could be brought

back on line “if adequate relief were imposed as a result of these investigations.”23 Allocations or

“reservations” have been imposed within the CFS industry during the period examined, although parties

disagree as to their extent and impact. Unisource testified at the Commission’s conference that it was

were placed on allocation by “a number” of its CFS suppliers. In its case, the actual allocations depended

upon the mill and product (i.e., web, web within a range of specific basis weights and/or sheets).24

Petitioner stated in its postconference brief that it “***.”25 Attached as exhibits 1 and 3 to Chinese

respondents and Unisource's postconference brief are ***.26

As shown in table III-4, capacity utilization on the same machinery and equipment used in the

production of CFS paper is within the general range for that reported for subject CFS paper alone.
III-6

Table III-3

Coated free sheet paper: Capacity, production, and capacity utilization, by firm, 2003-05,

January-September 2005, and January-September 2006

Firm

Calendar year January-September

2003 2004 2005 2005 2006

Capacity (short tons)

Appleton *** *** *** *** ***

International Paper (1) (1) *** *** ***2

Glatfelter *** *** *** *** ***

Mohawk3 *** *** *** *** ***

NewPage *** *** *** *** ***

Sappi *** *** *** *** ***

Smart Paper *** *** *** *** ***

Stora Enso *** *** *** *** ***

Verso *** *** *** ***4 ***

West Linn *** *** *** *** ***

 Total 4,741,656 4,855,056 4,834,098 3,627,401 3,897,321

Production (short tons)

Appleton *** *** *** *** ***

International Paper (1) (1) *** *** ***

Glatfelter *** *** *** *** ***

Mohawk *** *** *** *** ***

NewPage *** *** *** *** ***

Sappi *** *** *** *** ***

Smart Paper *** *** *** *** ***

Stora Enso *** *** *** *** ***

Verso *** *** *** *** ***

West Linn *** *** *** *** ***

 Total 4,272,195 4,359,562 4,597,794 3,416,090 3,503,202

Table continued on next page.
Table III-3

Coated free sheet paper: Capacity, production, and capacity utilization, by firm, 2003-05,

January-September 2005, and January-September 2006

Firm

Calendar year January-September

2003 2004 2005 2005 2006

III-7

Capacity utilization (percent)

Appleton *** *** *** *** ***

International Paper (1) (1) *** *** ***

Glatfelter *** *** *** *** ***

Mohawk *** *** *** *** ***

NewPage *** *** *** *** ***

Sappi *** *** *** *** ***

Smart Paper *** *** *** *** ***

Stora Enso *** *** *** *** ***

Verso *** *** *** *** ***

West Linn *** *** *** *** ***

 Average 90.1 89.8 95.1 94.2 89.9

 1 ***. Staff telephone interview with ***, Verso, November 30, 2006.

 2

 ***. See e-mail from ***, International Paper, November 28, 2006, and staff telephone interview with ***, Verso,

November 30, 2006. Finally, the data may include ***.

 3

 Capacity data for Mohawk are derived from ***.

 4

 ***.

Note 1.--Glatfelter acquired the Chillicothe, OH paper mill from NewPage in April 2006. ***. Staff telephone

interview with ***, Glatfelter, November 27, 2006.

Note 2.–Korean respondents note that some of the smaller U.S. producers report very low capacity utilization, which

they assert may reflect incorrect allocations of overall capacity to the subject product. Korean respondents’

postconference brief, p. 14.

Source: Compiled from data submitted in response to Commission questionnaires.
III-8

Table III-4

Coated free sheet paper: Products produced by domestic manufacturers on the same

machinery and equipment used in the production of CFS paper, 2003-05

Item 

Calendar years

2003 2004 2005

Quantity (short tons)

Annual capacity for all products 5,214,731 5,479,737 5,421,532

Production of: 

Subject product1 3,615,681 3,851,306 3,885,965

Uncoated free sheet paper1 *** *** ***

Coated groundwood paper *** *** ***

 Kraft paper *** *** ***

Other *** *** ***

All products 4,735,102 4,941,538 4,926,394

Capacity utilization (percent)

All products 90.8 90.2 90.9

 1 Overlap recorded if the only substantial difference between the two products (in equipment utilized) is that

uncoated paper is not subject to the application of kaolin or a similar coating. 

Note.–Does not include data for a small amount of coated groundwood produced by ***. Also does not include

data for *** or *** or data for ***. *** answered on the basis of the specific equipment used in the production of

CFS and nonsubject papers.

Source: Compiled from data submitted in response to Commission questionnaires.

U.S. PRODUCERS' SHIPMENTS

U.S. producers’ shipments and inventories of CFS paper are presented in table III-5. As shown,

the quantity of U.S. producers’ commercial shipments followed a trend comparable to that shown in table

III-3 for production. There was minimal captive consumption of the product. Export shipments

accounted for 5 to 6 percent of total shipments throughout the period examined. The unit values of

commercial shipments fluctuated within a $33 per short ton range from 2003 and 2005 and were $21 per

short ton higher in January-September 2006 than in January-September 2005.
III-9

Table III-5

Coated free sheet paper: U.S. producers’ shipments, by types, 2003-05, January-September

2005, and January-September 2006

Item Calendar year January-September

2003 2004 2005 2005 2006

Quantity (short tons)

Commercial shipments *** *** *** *** ***

Internal consumption1 *** *** *** *** ***

Transfers to related firms *** *** *** *** ***

Total U.S. shipments 3,925,471 4,171,009 4,264,514 3,159,277 3,318,788

Export shipments 226,847 256,176 289,055 213,320 215,081

Total shipments 4,152,318 4,427,185 4,553,569 3,372,597 3,533,869

Value (1,000 dollars)

Commercial shipments *** *** *** *** ***

Internal consumption1 *** *** *** *** ***

Transfers to related firms *** *** *** *** ***

Total U.S. shipments 3,309,111 3,480,184 3,698,083 2,767,416 2,976,205

Export shipments 172,706 197,355 232,409 169,942 182,539

Total shipments 3,481,817 3,677,539 3,930,492 2,937,358 3,158,744

Unit value (per short ton)

Commercial shipments *** *** *** *** ***

Internal consumption1 *** *** *** *** ***

Transfers to related firms *** *** *** *** ***

Total U.S. shipments $843 $834 $867 $876 $897

Export shipments 761 770 804 797 849

Total shipments 839 831 863 871 894

Shares of quantity (percent)

Commercial shipments *** *** *** *** ***

Internal consumption1 *** *** *** *** ***

Transfers to related firms *** *** *** *** ***

Total U.S. shipments 94.5 94.2 93.7 93.7 93.9

Export shipments 5.5 5.8 6.3 6.3 6.1

Total shipments 100.0 100.0 100.0 100.0 100

 1 Excludes *** tons of CFS paper that is used internally each year by *** as a base paper to produce paper with

more advanced coatings that doesn’t meeting the definition of the subject merchandise.

Source: Compiled from data submitted in response to Commission questionnaires.
 27 ***.

III-10

U.S. PRODUCERS' INVENTORIES

Inventories are reported in table III-6. U.S. mills typically maintain inventories of finished

products at the mill, or in nearby warehouses, and provide just-in-time delivery to their customers.27 

Table III-6

Coated free sheet paper: U.S. end-of-period inventories, 2003-05, January-September 2005, and

January-September 2006

Item

Calendar year January-September

2003 2004 2005 2005 2006

Inventories (short tons) 676,439 600,337 656,751 661,641 621,468

Ratio to production (percent) 15.8 13.8 14.3 14.5 13.3

Ratio to U.S. shipments (percent) 17.2 14.4 15.4 15.7 14.0

Ratio to total shipments (percent) 16.3 13.6 14.4 14.7 13.2

Note.–Does not include EOP inventories of *** short tons of C1S CFS in 2003 and *** short tons in 2004 reported by

***.

Source: Compiled from data submitted in response to Commission questionnaires.

U.S. PRODUCERS’ EMPLOYMENT, WAGES, AND PRODUCTIVITY

The average number of PRWs producing CFS paper rose irregularly from 7,390 workers in 2003

to 7,464 workers in 2005, or by 1.0 percent (table III-7). The number of hours worked dipped slightly

from 2003 to 2004 and then rose in 2005 for an overall increase of 2.8 percent. The hourly wage rate

decreased from $26.30 per hour in 2003 to $25.30 per hour in 2005. Each employment indice, except for

productivity, fell from January-September 2005 to January-September 2006. Productivity increased on

an overall basis from 2003 to 2005 and then rose by more than 15 tons per 1,000 hours from JanuarySeptember 2005 to January-September 2006 to a period high. Unit labor coss fell consistently throughout

the period examined.
 28 Petitioner’s postconference brief, p. 3.

 29 Petitioner’s postconference brief, exh. 2. One of the mills listed in the exhibit (Wausau Paper Corp.) is not

believed to produce paper that meets the definition of the subject merchandise.

 30 Conference transcript, pp. 33-34 (Hart).

III-11

Table III-7

Coated free sheet paper: Employment-related indicators, 2003-05, January-September 2005, and

January-September 2006

Item

Calendar year January-September

2003 2004 2005 2005 2006

Production and related workers

(PRWs) 7,390 7,112 7,464 7,382 7,095

Hours worked by PRWs (1,000 hours) 16,287 15,924 16,749 12,670 12,276

Wages paid to PRWs (1,000 dollars) 428,406 425,539 423,757 323,343 315,827

Hourly wages $26.30 $26.72 $25.30 $25.52 $25.73

Productivity (short tons produced per

1,000 hours) 261.4 272.7 273.7 268.8 284.3

Unit labor costs (per short ton) $100.62 $98.00 $92.43 $94.92 $90.49

Note.–Does not include employment data for *** or for ***. Data for *** and *** are based, in part, on Commission

staff estimates.

Source: Compiled from data submitted in response to Commission questionnaires.

NewPage notes that plant closures have resulted in the layoffs of over 1,000 workers and that

many of them have met the certification requirements for Trade Adjustment Assistance benefits.28 

Workers were certified at 16 CFS paper mills since January 1, 2003.29 The United Steel, Paper and

Forestry, Rubber, Manufacturing, Energy, Allied Industrial, and Service Workers International Union,

AFL-CIO-CLC (or USW) filed a letter, dated October 27, 2006, in support of the petition. The USW

represents the following mills: Appleton (Combined Locks, WI); NewPage (Escanaba, MI; Luke, MD;

Rumford, ME; and Wickliffe, KY), SAPPI (Cloquet, MN; Hinckley, ME; Muskegon, MI; and

Westbrook, ME); Stora Enso (Kimberly, WI, and Wisconsin Rapids, WI); and Verso (Jay, ME). The

Acting Legislative Director for the USW testified at the Commission’s conference that 95 percent of the

CFS capacity in the United States is in unionized mills and that the USW represents over 90 percent of

the workers.30
 
 1

 ***, for example, stated in its importer questionnaire response (question I-7) that it was “not able to determine

whether its purchasers were the consignee {in Customs documents} on some or all of the transactions during the

period in question.”

 2

 Customs documents were available only through July 2006.

 3

 A number of firms were shown in both Customs documents and in the petition as operating at multiple

addresses. In order to ensure that the questionnaire would actually be received by the branch best able to provide a

response, Commission staff in most instances mailed to each address shown. Therefore, any comparison of the

number of responses received to the questionnaires mailed out does not necessarily provide a good measure of the

response rate or the responsiveness of the industry.

 4

 ***. 

 5

 ***.

 6

 According to the petition, almost all CFS paper is “currently” entered under these HTS items and, further, the

items do not include more than very minor volumes of nonsubject merchandise. Petition, p. 4.

IV-1

PART IV: U.S. IMPORTS, APPARENT CONSUMPTION, AND

MARKET SHARES

U.S. IMPORTERS

The subject product is imported by a variety of mill agents, independent brokers, and paper

merchants. In some instances, trading companies sell subject paper to paper merchants that are

themselves importers, resulting in the potential for the double-counting of reported imports.1

 Importer

questionnaires were sent to 74 firms identified in Customs documents under the HTS reporting numbers

identified in the petition (and subsequently in Commerce’s initiation notices) as having imported CFS

paper from any source from January 2003 through July 2006.2

 An additional 46 questionnaires were sent

to firms only identified in the petition as importing the subject merchandise as well as to all U.S.

producers. Of these firms, 42 returned questionnaires3

 while about 20 firms (primarily those listed only in

the petition) indicated that they did not, in fact, import CFS paper, although they may have purchased it.

As shown both in Customs documents and in table IV-1, a relatively small number of importers

accounted for the majority of U.S. imports of CFS paper from the subject sources. The most substantial

U.S. importers of subject merchandise from China during January 2003 to July 2006 in order of the value

of their U.S. imports recorded in Customs documents were: ***. ***4

 accounted for the bulk of U.S.

subject imports from Indonesia during the period examined. As discussed in the notes to table IV-1, most

subject merchandise from Indonesia was imported by ***5

 until ***; from *** onward subject

merchandise was almost entirely sold in the U.S. market through ***. The most substantial U.S.

importers of subject merchandise from Korea during 2003-05 in terms of volume were: ***.

Table IV-1

Coated free sheet paper: U.S. importers’ reported subject U.S. imports in 2005, shares of the value

of reported subject U.S. imports, parent firm(s), and identified foreign manufacturer(s)

* * * * * * *

MISCLASSIFICATION OF THE SUBJECT MERCHANDISE

A comparison of the quantity and value of U.S. imports compiled from questionnaire data to

official Commerce statistics for the HTS reporting numbers listed in the petition (and which were used to

compile the Customs documents used for the mailing lists)6

 shows that questionnaire data substantially
 7

 Commission staff attempted to identify and minimize double-counting by, as shown in the notes to table IV-1,

not including data provided by certain firms in the import totals. However, it was not possible in the time available

to edit questionnaire data submitted by firms that, while they were shown in Customs documents as the bonafide

importer (“consignee”), appeared to overstate their U.S. imports (most probably by not being able to separate their

direct imports from their purchase of imports). These firms are listed in table IV-1 (see footnote 2). Note, however,

that (as an additional complication) the edits shown in table IV-1 are based on value. Using value eliminates the

need to convert the kilograms reported in Customs documents into the short tons requested in the questionnaire data

but may not be the best point of comparison.

 8

 Such exports are addressed in detail along with the operations of the subject manufacturers in part VII of this

report.

 9

 Value data were not gathered in the foreign producer questionnaire.

 10 A review of monthly export data provided by the Indonesian industry indicates that the discrepancies in the

later periods between official Commerce statistics and export data provided in response to the foreign producer’s

questionnaire, are not associated with end-of-period shipment lags. E-mail from Adams Lee, White & Case,

December 7, 2006. 

 11 NewPage stated in its petition that CFS from China previously had been misclassified under HTSUS

subheading 4811.90 (in particular, under reporting numbers 4811.90.8000 and 4811.90.9000 which were basket

categories in existence during 2003-05). NewPage further notes that reporting number. 4811.90.9000 was

eliminated effective July 1, 2005 and replaced by 4811.90.9090. Petitioner also indicated that it understood that the

misclassification was “not a continuing problem.” Petition, pp. 4-5 and n. 3.

 12 E-mail from counsel to the Chinese manufacturers, November 29, 2006. 

IV-2

exceed Commerce statistics for China and Indonesia.7

 A portion of the apparent over-count is almost

certainly due to the double-counting described above. That said, the bulk of the subject merchandise is

imported by a relatively small number of firms and questionnaire coverage was high.

Exports of subject merchandise to the United States is, of course, the corresponding measure to

U.S. imports.8

 Exports of Chinese-produced CFS paper, in terms of quantity,9 reported in response to the

Commission’s foreign producer questionnaire also substantially exceed U.S. imports reported in official

Commerce statistics for the HTS reporting numbers listed in the petition. This suggests that the

discrepancy in import data discussed above cannot be solely attributed to double-counting. By way of

contrast, there is a very close correlation between Korean-reported export data and U.S. imports of subject

merchandise from Korea. While there is a close correlation between Indonesian-reported export data and

official Commerce statistics for 2003 and 2004, there is a significant discrepancy for 2005 and, to a lesser

extent, for January-September 2006 where foreign exports of the subject merchandise again exceed U.S.

imports compiled from official Commerce statistics.10

In response to a request for assistance in resolving the seeming discrepancy with respect to

shipments of the subject merchandise from China, counsel for the Chinese manufacturers indicated that

U.S. imports of CFS paper from China are believed to be entering under two HTS statistical reporting

numbers (4811.59.2000 and 4811.90.8000) in addition to those identified in Commerce’s initiation

notices.11 Counsel further stated that “this appears to be an issue that is unique to China, with only a

small volume of imports from Indonesia and Korea having been reported under those headings. We have

no reason to believe that the small quantity of imports from Indonesia or Korea that entered under HTS

headings 4811.59.2000 and 4811.90.8000 is subject merchandise.”12

The following tabulation presents data measuring the flow of CFS paper from the subject sources

as reported in Commerce statistics and in response to Commission questionnaires (in short tons): 
 13 With respect to data for Indonesia, quantities are compiled from responses to the foreign producer’s

questionnaire, and values were estimated using the average unit value of U.S. imports from Indonesia derived from

(continued...)

IV-3

Data source 2003 2004 2005

Jan.-Sept. Oct.

2005-

Sept.

2006 2005 2006

China

Commerce statistics for HTS numbers

listed in Commerce’s initiation notices 54,649 32,277 109,328 76,381 219,416 252,363

Above Commerce statistics plus HTS

reporting numbers 4811.59.2000 and

4811.90.8000 96,440 145,112 175,548 139,411 236,698 272,835

U.S. imports reported in importer

questionnaires 105,352 161,228 184,329 138,198 238,618 (1

)

Exports to the United States reported in

the foreign producer questionnaires *** *** *** *** *** (1

)

Indonesia 

Commerce statistics for HTS numbers

listed in Commerce’s initiation notices 31,996 33,319 29,418 19,470 47,240 57,188

Above Commerce statistics plus HTS

reporting numbers 4811.59.2000 and

4811.90.8000 32,926 36,128 32,461 21,537 52,045 62,969

U.S. imports reported in importer

questionnaires *** *** *** *** *** (1

)

Exports to the United States reported in

the foreign producer questionnaires *** *** *** *** *** ***

Korea 

Commerce statistics for HTS numbers

listed in Commerce’s initiation notices 378,212 430,444 417,113 323,261 366,772 460,623

Above Commerce statistics plus HTS

reporting numbers 4811.59.2000 and

4811.90.8000 386,639 432,101 417,656 323,782 368,229 462,103

U.S. imports reported in importer

questionnaires 426,775 466,637 408,408 319,919 335,406 (1

)

Exports to the United States reported in

the foreign producer questionnaires 386,950 462,590 417,085 315,387 361,926 (1

)

1

 Not available.

For the purposes of this report, U.S. import data for Korea (and nonsubject countries) are compiled from

official Commerce statistics based only on the HTS numbers listed in Commerce’s initiation notices; data

for China also include U.S. imports entered under 4811.59.2000 and 4811.90.8000; data for U.S. imports

from Indonesia are based on responses to the Commission’s foreign producer questionnaire.13
 13 (...continued)

official Commerce statistics. 

 14 Petitioner’s postconference brief, p. 17. It provided a tabulation showing the percent change in imports of CFS

into China from Indonesia for January-August 2005 to January-August 2006. Ibid.

 15 Indonesian manufacturers’ postconference brief, pp. 15-16.

 16 Petitioner’s postconference brief, p. 42.

 17 NewPage stated in its postconference brief that U.S. imports from Canada are falling as large Canadian CFS

plants close. It provided ***. Petitioner further argued that the capacity closures in Canada indicate that “the

subordinate role of non-subject imports in the market is likely to be a long-term phenomenon.” NewPage’s

postconference brief, p. 10.

 18 ***’s importer questionnaire response, attach. C.

IV-4

U.S. IMPORTS

U.S. imports of CFS paper from China, Indonesia, and Korea combined increased, in terms of

quantity, by *** percent from 2003 to 2005 and by *** percent from January-September 2005 to JanuarySeptember 2006 (table IV-2). During 2003 to 2005, U.S. imports from China increased by 82.0 percent,

Indonesian imports increased by *** percent, and Korean imports rose from 2003 to 2004 and then fell in

2005 for a net increase of 10.3 percent, during the 2003-05 period. With respect to the interim periods,

U.S. imports increased from each subject country. NewPage attributes what they label as the “surge” of

U.S. imports of Indonesian-produced CFS to a “displacement” of Indonesia’s exports to China as the

Chinese expanded their domestic production capability.14 Indonesian respondents argue that its

“allegation” should be rejected since petitioner’s figures are based on aggregating data into both China

and Hong Kong.15 NewPage also claims that “the temporary leveling off of U.S. imports from Korea in

2005 was widely understood to be the result of competition from China.”16

The majority of the CFS paper imported into the United States is sourced from countries other

than China, Indonesia, and Korea. Subject countries only accounted for around one-third of total U.S.

imports during the annual periods although their share rose towards the end of the period examined and

was *** percent in January-September 2006. Finland and Canada are the most significant sources of

product from nonsubject countries.17 A portion of the nonsubject imports are acquired by U.S. producers

(see the section of this report entitled “U.S. Producers’ Imports and Purchases”). ***. ***.18
IV-5

Table IV-2

Coated free sheet paper: U.S. imports, by sources, 2003-05, January-September 2005, and JanuarySeptember 2006

Source

Calendar year January-September

2003 2004 2005 2005 2006

Quantity (short tons)

China 96,440 145,112 175,548 139,411 236,698

Indonesia *** *** *** *** ***

Korea 378,212 430,444 417,113 323,261 366,772

Subtotal subject *** *** *** *** ***

Finland 183,619 218,296 185,486 122,696 175,359

Canada 265,123 295,016 299,302 225,692 128,761

Germany 91,897 160,034 108,414 71,836 105,214

Japan 97,661 98,538 101,801 79,586 69,169

Italy 85,366 78,743 83,053 61,314 71,283

Austria 70,658 56,219 40,204 24,522 45,792

Spain 16,484 28,881 39,749 28,001 41,296

All other sources 178,850 140,830 86,079 65,627 72,212

Subtotal nonsubject 989,659 1,076,558 944,088 679,274 709,087

Total *** *** *** *** ***

Value (1,000 dollars)

1

China 80,579 128,326 165,399 129,494 223,231

Indonesia *** *** *** *** ***

Korea 322,695 364,866 366,553 285,609 322,475

Subtotal subject *** *** *** *** ***

Finland 144,427 171,936 150,171 98,849 141,955

Canada 244,892 259,462 273,042 207,040 114,505

Germany 84,638 147,829 110,904 72,434 105,907

Japan 128,394 128,745 144,615 110,817 91,312

Italy 77,878 75,952 87,379 63,556 75,899

Austria 67,956 49,200 41,307 23,508 47,695

Spain 18,162 29,715 37,378 26,928 36,237

All other sources 172,585 141,403 112,933 83,062 94,276

Subtotal nonsubject 938,932 1,004,241 957,728 686,193 707,787

Total *** *** *** *** ***

Table continued on next page.
Table IV-2

Coated free sheet paper: U.S. imports, by sources, 2003-05, January-September 2005, and JanuarySeptember 2006

Source

Calendar year January-September

2003 2004 2005 2005 2006

IV-6

Unit value (per short ton)

1

China $836 $884 $942 $929 $943

Indonesia *** *** *** *** ***

Korea 853 848 879 884 879

Average subject *** *** *** *** ***

Finland 787 788 810 806 810

Canada 924 879 912 917 889

Germany 921 924 1,023 1,008 1,007

Japan 1,315 1,307 1,421 1,392 1,320

Italy 912 965 1,052 1,037 1,065

Austria 962 875 1,027 959 1,042

Spain 1,102 1,029 940 962 877

All other sources 965 1,004 1,312 1,266 1,306

Average nonsubject 949 933 1,014 1,010 998

Average *** *** *** *** ***

Share of quantity (percent)

China *** *** *** *** ***

Indonesia *** *** *** *** ***

Korea *** *** *** *** ***

Subtotal subject *** *** *** *** ***

Finland *** *** *** *** ***

Canada *** *** *** *** ***

Germany *** *** *** *** ***

Japan *** *** *** *** ***

Italy *** *** *** *** ***

Austria *** *** *** *** ***

Spain *** *** *** *** ***

All other sources *** *** *** *** ***

Subtotal nonsubject *** *** *** *** ***

Total 100.0 100.0 100.0 100.0 100.0

Table continued on next page.
Table IV-2

Coated free sheet paper: U.S. imports, by sources, 2003-05, January-September 2005, and JanuarySeptember 2006

Source

Calendar year January-September

2003 2004 2005 2005 2006

IV-7

 Share of value (percent)

China *** *** *** *** ***

Indonesia *** *** *** *** ***

Korea *** *** *** *** ***

Subtotal subject *** *** *** *** ***

Finland *** *** *** *** ***

Canada *** *** *** *** ***

Germany *** *** *** *** ***

Japan *** *** *** *** ***

Italy *** *** *** *** ***

Austria *** *** *** *** ***

Spain *** *** *** *** ***

All other sources *** *** *** *** ***

Subtotal nonsubject *** *** *** *** ***

Total 100.0 100 100.0 100.0 100.0

1

 Landed, duty-paid.

Source: Compiled from official Commerce statistics (China, Korea, and nonsubject). The following statistical categories of the

HTS were used: 4810.13.1900; 4810.13.2010; 4810.13.2090; 4810.13.5000; 4810.13.7040; 4810.14.1900; 4810.14.2010;

4810.14.2090; 4810.14.5000; 4810.14.7040; 4810.19.1900; 4810.19.2010; 4810.19.2090; and, for China only, 4811.59.2000 and

4811.90.8000. For Indonesia, quantity data are compiled from responses to the foreign producer’s questionnaire, and values were

estimated using the average unit value of U.S. imports from Indonesia derived from official Commerce statistics. 

CUMULATION CONSIDERATIONS

In assessing whether imports compete with each other and with the domestic like product, the

Commission has generally considered four factors: (1) fungibility, (2) presence of sales or offers to sell

in the same geographical market, (3) common or similar channels of distribution, and (4) simultaneous

presence in the market. Issues concerning fungibility are addressed in Part II of this report and channels

of distribution are discussed in Parts I and II. Geographical markets and presence in the market are

discussed below.

A review of monthly official Commerce statistics that have been placed on the record indicates

that imports of CFS paper from each of the subject countries entered into the United States during every

month of the January 2002-September 2006 period of investigation. 

The petitioner claims that U.S. producers of CFS supply the entire geographical U.S. market,

including the West Coast. and states that its operations have “significant sales” in the western portion of
 19 Petitioner’s postconference brief, pp. 49-50.

 20 Conference transcript, p. 99 (Anderson) and pp. 115-116 (Dragone), as cited in the Chinese respondents and

Unisource's postconference brief, pp. 14-15. 

 21 While official Commerce statistics for Indonesia are understated, the available data indicate that relatively

small quantities of CFS paper from Indonesia were imported into the Gulf coast ports. The volume of such imports

have, however, increased steadily throughout the period examined after an initial drop-off from 2003 to 2004.

 22 Also, section 771(24)(A)(iv) of the Act provides that the Commission shall not treat imports as negligible if it

determines that there is a potential that imports found to be negligible will imminently account for more than 3(4)

percent of total subject imports.

 23 15 CFR § 2013.1.

 24 Petitioner points out that Asia Pulp & Paper maintains CFS plants in both Indonesia and China and argues that

any termination of the subsidy investigation involving Indonesia “would likely divert production for its U.S.

customers from its Chinese mills to its Indonesian mills.” Petition, p. 19. See exh. I-15 of the petition for ***. Asia

Pulp and Paper is identified in that exhibit as ***.

 25 Because of the apparent under reporting of U.S. imports from Indonesia in official Commerce statistics, table

IV-4 presents data for export shipments to the United States as submitted by the Indonesian industry in response to a

staff request. E-mail from Adams Lee, White & Case, December 7, 2006. If official Commerce statistics are used

for Indonesia, such imports accounted for 3.2 percent of total U.S. imports for the 12-month period.

IV-8

the United States. It also notes that West Linn manufactures CFS in its West Linn, OR plant.19 Paper

merchants appearing at the Commission’s conference (specifically PaperlinX and Unisource) testified that

many domestic mills are “unable” to or not “interested” in providing nationwide distribution rights or

extending lines to them outside of their current trading areas.20 With reference to the issue of

transportation costs, Korean respondents include freight rates tables as exhibit 2 to their postconference

brief.

Table IV-3 provides U.S. imports for CFS paper aggregated by district of entry into the United

States for 2003-05, January-September 2005, and January-September 2006. As shown, the bulk of

merchandise from each subject source is entering into the western portion of the United States, although 

there are import entries of CFS paper from each subject country within each U.S. geographical area.21

THE QUESTION OF NEGLIGIBLE IMPORTS

The statute (section 771(24)(A)(i) of the Act) provides that imports from a subject country

corresponding to the domestic like product are negligible if such imports account for less than 3 percent

of the volume of all such merchandise imported into the United States in the most recent 12-month period

for which data are available that precedes the filing of the petition - in this case October 2005 through

September 2006.22 The statute (section 771(24)(B) of the Act) further provides that in an investigation

under section 701, imports of subject merchandise from developing countries are negligible if such

imports account for less than 4 percent of the volume of all such merchandise imported into the United

States in the specified 12-month period. In accordance with section 771(B) of the Act, the United States

Trade Representative has designated Indonesia as a developing country under the countervailing duty

law.23 24

Table IV-4 presents official Commerce statistics for the 12-month period October 2005 through

September 2006. As indicated in the table, imports of coated free sheet paper from China accounted for

*** percent of total U.S. imports, imports from Indonesia accounted for 4.1 percent, and imports from

Korea accounted for *** percent of total U.S. imports. The data for China and Korea are compiled from

official Commerce statistics, and those for Indonesia were submitted by counsel for the Indonesian

industry.25
IV-9

Table IV-3

Coated free sheet paper: U.S. imports, by sources and customs districts, 2003-05,

January-September 2005, and January-September 2006

Source Calendar year January-September

2003 2004 2005 2005 2006

Quantity (short tons)

China:

 East region 12,289 35,967 39,284 30,535 49,336

 Gulf Coast region 5,384 14,340 14,232 11,006 25,588

 Great Lakes region 14,564 9,723 5,727 5,595 12,503

 West region 64,204 85,082 116,304 92,265 149,271

 Total 96,440 145,112 175,548 139,411 236,698

Indonesia:

 East region 7,564 3,963 4,995 3,571 2,817

 Gulf Coast region 2,677 611 967 862 1,136

 Great Lakes region 7,479 9,157 7,909 4,942 7,103

 West region 14,275 19,588 15,547 10,096 36,184

 Total 31,996 33,319 29,418 19,470 47,240

Korea:

 East region 109,496 113,794 106,286 84,387 88,141

 Gulf Coast region 29,058 40,351 30,655 20,041 19,148

 Great Lakes region 36,968 23,744 16,240 12,904 11,174

 West region 202,689 252,555 263,932 205,929 248,309

 Total 378,212 430,444 417,113 323,261 366,772

Subject sources:

 East region 129,349 153,724 150,565 118,496 140,294

 Gulf Coast region 37,119 55,303 45,854 31,909 45,872

 Great Lakes region 59,011 42,624 29,876 23,441 30,780

 West region 281,168 357,225 395,783 308,290 433,764

 Total 506,647 608,875 622,079 482,142 650,709

Table continued on next page.
IV-10

Table IV-3--Continued

Coated free sheet paper: U.S. imports, by sources and customs districts, 2003-05,

January-September 2005, and January-September 20061

Source Calendar year January-September

2003 2004 2005 2005 2006

Share (percent)

China:

 East region 12.8 24.8 22.4 21.9 20.9

 Gulf Coast region 5.6 9.9 8.1 7.9 10.8

 Great Lakes region 15.0 6.7 3.3 4.0 5.3

 West region 66.6 58.6 66.3 66.2 63.1

 Total 100.0 100.0 100.0 100.0 100.0

Indonesia:

 East region 23.6 11.9 17.0 18.3 6.0

 Gulf Coast region 8.4 1.8 3.3 4.4 2.4

 Great Lakes region 23.4 27.5 26.9 25.4 15.0

 West region 44.6 58.8 52.8 51.9 76.6

 Total 100.0 100.0 100.0 100.0 100.0

Korea:

 East region 29.0 26.4 25.5 26.1 24.0

 Gulf Coast region 7.7 9.4 7.3 6.2 5.2

 Great Lakes region 9.8 5.5 3.9 4.0 3.0

 West region 53.6 58.7 63.3 63.7 67.7

 Total 100.0 100.0 100.0 100.0 100.0

Subject sources:

 East region 25.5 25.2 24.2 24.6 21.6

 Gulf Coast region 7.3 9.1 7.4 6.6 7.0

 Great Lakes region 11.6 7.0 4.8 4.9 4.7

 West region 55.5 58.7 63.6 63.9 66.7

 Total 100.0 100.0 100.0 100.0 100.0

Note.--The "East region" consists of the following customs districts: Baltimore, MD; Boston, MA;

Charleston, SC; Charlotte, NC; New York, NY; Norfolk, VA; Philadelphia, PA; Portland, ME; Providence, RI; St.

Albans, VT; Wilmington, NC; Savannah, GA; and Washington, DC. The "Great Lakes region" consists of the

following customs districts: Buffalo, NY; Chicago, IL; Cleveland, OH; Detroit, MI; Duluth, MN; Milwaukee, WI;

Minneapolis, MN; Ogdensburg, NY; Pembina, ND; and St. Louis, MO. The "Gulf Coast region" consists of the

following customs districts: Dallas/Ft. Worth, TX; Houston/Galveston, TX; Laredo, TX; Miami, FL; Mobile, AL; New

Orleans, LA; Port Arthur, TX; San Juan, PR; Tampa, FL; and Virgin Islands of the United States. The "West region"

consists of the following customs districts: Anchorage, AK; Columbia/Snake, OR; El Paso, TX; Great Falls, MT; Los

Angeles, CA; San Diego, CA; San Francisco, CA; Seattle, WA; Honolulu, HI; and Nogales, AZ.

Source: Compiled from official Commerce statistics. The following statistical categories of the HTS were used: 

4810.13.1900; 4810.13.2010; 4810.13.2090; 4810.13.5000; 4810.13.7040; 4810.14.1900; 4810.14.2010;

4810.14.2090; 4810.14.5000; 4810.14.7040; 4810.19.1900; 4810.19.2010; 4810.19.2090; and, for China only,

4811.59.2000 and 4811.90.8000.
IV-11

Table IV-4

Coated free sheet paper: Monthly U.S. imports, by sources, October 2005-September 2006

Period China Indonesia1 Korea All other Total

Quantity in 1,000 short tons, except as noted

2005:

October 9,301 *** 27,624 91,623 ***

November 13,653 *** 30,394 87,615 ***

December 13,183 *** 35,834 85,576 ***

2006:

January 22,386 *** 40,377 81,121 ***

February 15,030 *** 36,161 68,128 ***

March 26,118 *** 38,618 93,267 ***

April 29,675 *** 41,317 89,344 ***

May 26,432 *** 43,793 84,296 ***

June 34,187 *** 40,448 75,785 ***

July 24,506 *** 45,074 73,891 ***

August 30,211 *** 44,185 71,220 ***

September 28,152 *** 36,801 72,035 ***

Total 272,835 *** 460,623 973,900 ***

Shares (percent) *** 4.1 *** *** 100.0

1

 Because of the apparent under reporting of U.S. imports from Indonesia in official Commerce statistics, the

data for Indonesia are exports to the United States as reported by the Indonesian industry. E-mail from

Adams Lee, White & Case, December 7, 2006. If the monthly export data were lagged by one month to account

for shipping (i.e., September 2005-August 2006), CFS paper from Indonesia would total *** short tons and account

for 4.1 percent of total “imports”. If official Commerce statistics are used for Indonesia, such imports accounted for

3.2 percent of total U.S. imports for the 12-month period.

Note.–As noted earlier, the question has arisen concerning possible misclassification of subject imports both for 

China and, potentially, for other sources. Counsel for Pindo Deli and Tjiwi Kimia indicated in an e-mail to the

Commission (November 29, 2006) that:

“It does appear that a small quantity of imports from Indonesia entered under HTS headings 4811.59.2000 and

4811.90.8000 during the period. It is not clear that imports from Indonesia that enter under those HTS headings is

subject merchandise. . . Should the case proceed to a final, the Indonesian respondents reserve the right to

examine whether subject merchandise from other countries is entering under HTS headings beyond those listed in

the petition and the definitions, and thus, is properly included in the denominator of the negligibility calculation.”

Source: Compiled from official Commerce statistics (China, Korea, and nonsubject). The following statistical

categories of the HTS were used: 4810.13.1900; 4810.13.2010; 4810.13.2090; 4810.13.5000; 4810.13.7040;

4810.14.1900; 4810.14.2010; 4810.14.2090; 4810.14.5000; 4810.14.7040; 4810.19.1900; 4810.19.2010; and

4810.19.2090; and, for China only, 4811.59.2000 and 4811.90.8000. Data for Indonesia were submitted by

counsel for Pindo Deli and Tjiwi Kimia. 
IV-12

APPARENT U.S. CONSUMPTION, U.S. MARKET SHARES,

AND RATIO OF IMPORTS TO U.S. PRODUCTION

Table IV-5 presents the apparent U.S. consumption and market shares of CSF paper for the

period examined (i.e., 2003-05, January-September 2005, and January-September 2006) while table IV-6

presents the ratio of U.S. imports to production. The quantity of U.S. consumption increased steadily,

rising by *** percent from 2003 to 2005 and by *** percent from January-September 2005 to JanuarySeptember 2006 (table IV-5). From 2003 to 2005, U.S. producers’ market shares in terms of quantity

were relatively stable gaining *** percentage points. Imports of CFS paper from the subject countries

gained *** percentage points of market share, which was offset by a corresponding decrease in the share

of nonsubject countries. With respect to the interim periods, the domestic industry’s market share fell by

*** percentage points while the share of subject imports rose by *** points and the share of nonsubject

imports fell by ***. 
IV-13

Table IV-5

Coated free sheet paper: U.S. consumption and market shares, by sources, 2003-05, JanuarySeptember 2005, and January-September 2006

Item

Calendar year January-September

2003 2004 2005 2005 2006

Quantity (short tons)

U.S. producers’ U.S. shipments 3,925,471 4,171,009 4,264,514 3,159,277 3,318,788

Total U.S. imports *** *** *** *** ***

U.S. consumption *** *** *** *** ***

Value (1,000 dollars)

U.S. producers’ U.S. shipments 3,309,111 3,480,184 3,698,083 2,767,416 2,976,205

Total U.S. imports *** *** *** *** ***

U.S. consumption *** *** *** *** ***

Share of quantity (percent)

U.S. producers’ U.S. shipments *** *** *** *** ***

U.S. imports from--

China *** *** *** *** ***

Indonesia *** *** *** *** ***

Korea *** *** *** *** ***

Subtotal subject *** *** *** *** ***

Finland *** *** *** *** ***

Canada *** *** *** *** ***

Germany *** *** *** *** ***

Japan *** *** *** *** ***

Italy *** *** *** *** ***

Austria *** *** *** *** ***

Spain *** *** *** *** ***

All other sources *** *** *** *** ***

Subtotal nonsubject *** *** *** *** ***

Total *** *** *** *** ***

Table continued on next page.
Table IV-5

Coated free sheet paper: U.S. consumption and market shares, by sources, 2003-05, JanuarySeptember 2005, and January-September 2006

Item

Calendar year January-September

2003 2004 2005 2005 2006

IV-14

Share of value (percent)

U.S. producers’ U.S. shipments *** *** *** *** ***

U.S. imports from--

China *** *** *** *** ***

Indonesia *** *** *** *** ***

Korea *** *** *** *** ***

Subtotal subject *** *** *** *** ***

Finland *** *** *** *** ***

Canada *** *** *** *** ***

Germany *** *** *** *** ***

Japan *** *** *** *** ***

Italy *** *** *** *** ***

Austria *** *** *** *** ***

Spain *** *** *** *** ***

All other sources *** *** *** *** ***

Subtotal nonsubject *** *** *** *** ***

Total *** *** *** *** ***

Source: Compiled from data submitted in response to Commission questionnaires and from official Commerce

statistics except for Indonesia where quantity data are compiled from responses to the foreign producer's

questionnaire, and values were estimated using the average unit value of U.S. imports from Indonesia derived from

official Commerce statistics.
IV-15

Table IV-6

Coated free sheet paper: Subject production, imports, and ratios of imports to U.S. production, 2003-05,

January-September 2005, and January-September 2006

Item Calendar year January-September

2003 2004 2005 2005 2006

Quantity (short tons)

U.S. production 4,272,195 4,359,562 4,597,794 3,416,090 3,503,202

Subject U.S. imports from--

China 96,440 145,112 175,548 139,411 236,698

Indonesia *** *** *** *** ***

Korea 378,212 430,444 417,113 323,261 366,772

Subtotal subject *** *** *** *** ***

Finland 183,619 218,296 185,486 122,696 175,359

Canada 265,123 295,016 299,302 225,692 128,761

Germany 91,897 160,034 108,414 71,836 105,214

Japan 97,661 98,538 101,801 79,586 69,169

Italy 85,366 78,743 83,053 61,314 71,283

Austria 70,658 56,219 40,204 24,522 45,792

Spain 16,484 28,881 39,749 28,001 41,296

All other sources 178,850 140,830 86,079 65,627 72,212

Subtotal nonsubject 989,659 1,076,558 944,088 679,274 709,087

Total *** *** *** *** ***

Ratio to production (percent)

Subject U.S. imports from--

China 2.3 3.3 3.8 4.1 6.8

Indonesia *** *** *** *** ***

Korea 8.9 9.9 9.1 9.5 10.5

Subtotal subject *** *** *** *** ***

Finland 4.3 5.0 4.0 3.6 5.0

Canada 6.2 6.8 6.5 6.6 3.7

Germany 2.2 3.7 2.4 2.1 3.0

Japan 2.3 2.3 2.2 2.3 2.0

Italy 2.0 1.8 1.8 1.8 2.0

Austria 1.7 1.3 0.9 0.7 1.3

Spain 0.4 0.7 0.9 0.8 1.2

All other sources 4.2 3.2 1.9 1.9 2.1

Subtotal nonsubject 23.2 24.7 20.5 19.9 20.2

Total *** *** *** *** ***

Source: Compiled from data submitted in response to Commission questionnaires and from official Commerce statistics.
 
 1

 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 on HTS statistical subheadings 4810.13,

4810.14, and 4810.19.

 2

 Three importers reported that their purchasers pay for U.S. inland transportation costs. 

 3

 Real exchange rates are calculated by adjusting the nominal rates for movements in producer prices in the

United States and each of the subject countries.

V-1

PART V: PRICING AND RELATED INFORMATION

FACTORS AFFECTING PRICES

Transportation Costs to the U.S. Market

Transportation costs for CFS paper shipped from China to the United States averaged 16.7

percent of the customs value during 2005. Transportation costs for CFS paper shipped from Indonesia to

the United States averaged 19.8 percent of the customs value during 2005. Transportation costs for CFS

paper shipped from Korea to the United States averaged 16.2 percent of the customs value during 2005. 

These estimates are derived from official Commerce statistics.1

U.S. Inland Transportation Costs

Transportation costs on U.S. inland shipments of CFS paper generally account for a small to

moderate share of the delivered price of these products. For U.S. producers, reported costs ranged from 3

percent to 10 percent of the delivered price. For importers from China, Indonesia, and Korea, the costs

ranged from 1 percent to 10 percent of the delivered price.2

Exchange Rates

Nominal and real exchange rate data for Indonesia and Korea are presented on a quarterly basis in

figure V-1.3

 The nominal exchange rate for the Chinese yuan relative to the U.S. dollar remained stable

during most of this period, with some appreciation (3.3 percent) of the Chinese yuan against the U.S.

dollar starting in the last half of 2005 as the Chinese government altered its exchange rate policy. The

data show that the nominal exchange rate of the Indonesian rupiah remained relatively stable relative to

the U.S. dollar, while the real exchange rate of the rupiah appreciated moderately over the period. The

data show that the nominal exchange and real exchange rates of the Korean won appreciated relative to

the U.S. dollar over the period, with the nominal value appreciating by 25.9 percent and the real value

appreciating by 17.1 percent.
V-2

Figure V-1

Exchange rates: Indices of the nominal and real exchange rates of the Indonesian and Korean

currencies relative to the U.S. dollar, by quarters, January 2003-September 2006

Source: International Monetary Fund, International Financial Statistics, November 30, 2006.
 1

 Four U.S. producers reported quoting on an f.o.b. basis and four reported quoting on a delivered basis.

 2

 Petitioner contends that the predominance of short-term contracts, as opposed to long-term contracts, allows

customers to switch suppliers fairly easily. Petitioner’s postconference brief, p. 8.

 3

 Conference transcript, pp. 106 (Anderson) and 109 (Cho). Korean respondents’ postconference brief, p. 30.

V-3

PRICING PRACTICES

Pricing Methods

When U.S. producers were asked how they determined the prices that they charge for CFS paper,

responses were varied. Transaction-by-transaction negotiations and set price lists were cited most often. 

Most responding importers reported the use of transaction-by-transaction negotiations, price lists, or

prices that reflect market conditions.

U.S. producers reported that they quote prices of CFS paper both on an f.o.b. basis and on a

delivered basis.1

 Virtually all responding importers reported that they quote on a delivered basis.

Sales Terms and Discounts

U.S. producers and importers of CFS paper from China, Indonesia, and Korea were asked what

shares 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) in 2005. Most responding

producers and importers reported the use of short-term contracts or spot sales.2

 Among producers, five

reported that at least half of their sales are on a short-term contract basis, three reported that the sell nearly

exclusively on a spot sales basis, and one reported that it sells mostly on a long-term contract basis. 

Among responding importers, 14 reported that they sell nearly exclusively on a spot sales basis, four

reported that they sell exclusively on a short-term contract basis, and two reported that they sell mostly on

a long-term contract basis.

For U.S. producers selling on a contract basis, provisions varied from company to company. 

Short-term contracts are typically for periods of one month to up to one year, while long-term contracts

are for periods of one to three years. For both long- and short-term contracts, quantity, but not typically

price, is fixed during the contract period. These producer contracts usually do not have a meet-or-release

provision. In the case of importers, short-term contracts are typically for periods of three months to up to

one year. Most importers reported that price can usually be renegotiated during the contract period. 

These importer contracts typically do not contain meet-or-release provisions.

Discount policies on sales of CFS paper vary widely. Six responding U.S. producers reported the

use of volume discounts. Two producers reported offering discounts to compete with imports. Most

importers did not report the use of discounts, although five importers reported the use of discounts while

another two reported offering discounts for early payment. Moreover, respondent importers contend that

importers’ sales to merchants must incorporate a discount to offset the additional costs of handling

imports and the capital expenditures needed to maintain large inventories typically associated with import

shipments.3
 4

 Some firms that submitted pricing data on the importers’ questionnaires are not the importer of record;

therefore, their reported sales are not at the same level of trade and their sales prices are excluded here and rather

presented in app. F. These other firms include: ***. If their sales prices had been included, they would have had a

minimal impact on the pricing trends presented here. The underselling analysis for merchant sales prices would have

also remained virtually the same, with only the average margins changing slightly. For direct pricing, there are more

quarterly pricing comparisons, and there are more instances of overselling relative to underselling. The Commission

also requested sales data from importers that import from nonsubject sources. The Commission received pricing

data on sales of product imported from ***. These data are presented in app. G.

 5

 The Commission also requested quarterly data for delivered sales values. These data are presented in app. H. 

Delivered sales prices followed relatively the same trends as the f.o.b. sales prices, but the delivered merchant sales

show slightly more underselling relative to overselling than the data presented here, whereas the delivered direct

sales show slightly more overselling relative to underselling than the data presented here.

 6

 Petitioner states that the merchant sales prices carry more weight, as they account for *** percent of domestic

producers’ shipments and *** percent of subject import shipments.

 7

 U.S. producer *** only provided pricing data on a delivered basis and is therefore not represented here. Its data

are included in app. H.

 8

 Importer *** only provided pricing data on a delivered basis and is therefore not represented here. Its data are

included in app. H.

 9

 Importers *** and *** only provided pricing data on a delivered basis and are therefore not represented here. 

Importer *** could not identify whether its sales values were on an f.o.b. basis or on a delivered basis and is

therefore not represented here. Its data are included in app. H. 

 10 Importers *** and *** only provided pricing data on a delivered basis and are therefore not represented here. 

Pricing data as reported by *** were excluded here as it reported values on a delivered basis. *** could not identify

whether its sales values were on an f.o.b. basis or a delivered basis. Its data accounted for a relatively small share of

the total data on imports from Korea. Pricing data as reported by these excluded firms are presented in app. H.

V-4

PRICE DATA

The Commission requested U.S. producers and importers4

 of CFS paper to provide quarterly data

for the total quantity and f.o.b.5

 value of selected products that were shipped to merchants and directly to

end users in the U.S. market.6

 Data were requested for the period January 2003-September 2006. The

products for which pricing data were requested are as follows:

Product 1.–Coated free sheet, two-side coated sheets, text weight, 70-100 pounds basis

weights, brightness levels 87 and above.

Product 2.–Coated free sheet, two-side coated rolls, text weight, 70-100 pounds basis

weights, brightness levels 87 and above.

Product 3.–Coated free sheet, one-side coated sheets, text weight, 70-100 pounds basis

weights, brightness levels 83 and above. 

The Commission received usable pricing data for sales of the requested products from eight U.S.

producers (***)7

, nine importers of CFS paper from China (***)8, three importers of product from

Indonesia (***)9

, and eight importers of product from Korea (***)10, although not all firms reported

pricing for all products for all quarters. Merchant sales and direct sales pricing data reported by these

firms accounted for *** percent of U.S. producers’ U.S. shipments of CFS paper during January 2003-
 11 Direct sales pricing data alone accounted for *** of U.S. producers’ U.S. shipments and *** percent of U.S.

imports from China and *** percent of U.S. imports from Korea. ***.

 12 Petitioner’s postconference brief, p. 8.

 13 Korean respondents contend that merchant sales prices of imports are lower than direct sales prices of imports

because importers must offer merchants a discounted price to offset the additional costs of storing large inventories

of imports that cannot be shipped just-in-time because of long lead times. Korean respondents’ postconference brief,

p. 30. 

 14 This slight upturn in prices may reflect the seasonality of the CFS paper market, as discussed supra.

 15 One sales value reported by U.S. producer *** was excluded as it was deemed to be an outlier.

V-5

September 2006 and *** percent of U.S. imports from China, *** percent of U.S. imports from

Indonesia, and *** percent of U.S. imports from Korea over the same period.11

Price Trends

Weighted-average prices of CFS paper reported for U.S. producers and importers are presented in

tables V-1 through V-6 and in figures V-2 through V-7 on a quarterly basis during January 2003-

September 2006. 

The CFS paper market exhibits seasonality, as prices increase in the third, and possibly fourth,

quarters in anticipation of increased demand for books and catalogs associated with holiday shopping.12

In terms of comparing merchant sales prices with direct sales prices, for U.S.-produced products 1

and 3, merchant sales prices were, on average, *** to *** percent higher than direct sales prices. For

U.S.-produced product 2, on the other hand, direct sales prices were slightly higher. For products 1 and 2

imported from China and Korea, merchant sales prices were, on average, *** to *** percent lower than

direct sales prices.13 There were no reported direct sales of product 3, and there were no reported direct

sales on an f.o.b. basis of any product imported from Indonesia.

The weighted-average sales price of U.S.-produced product 1 sold to merchants *** decreased by

*** percent from the first quarter of 2003 to the ***; the *** show a slight upturn.14 The weightedaverage sales price of U.S.-produced product 1 sold directly to end users decreased by *** over the entire

period.15 Most of this decrease occurred from *** during which domestic prices decreased by ***

percent, then rebounded, experienced another decrease ***, which was followed by a slight rebound to

levels that were still below their 2003 levels. The weighted-average sales price of product 1 imported

from China and sold to merchants fluctuated slightly over the period, increasing by *** percent from the

first quarter of 2003 to the third quarter of 2006. There were no reported direct sales of product 1

imported from China. The weighted-average sales price of product 1 imported from Indonesia and sold to

merchants fluctuated over the period, decreasing by *** percent from the third quarter of 2003 to the third

quarter of 2006. There were no reported direct sales on an f.o.b. basis of product 1 imported from

Indonesia. The weighted-average sales price of product 1 imported from Korea and sold to merchants

increased by *** percent from the first quarter of 2003 to the third quarter of 2006. The weightedaverage sales price of product 1 imported from Korea and sold directly to end users increased by ***

percent from the second quarter of 2003 to the third quarter of 2006.

The weighted-average sales price of U.S.-produced product 2 sold to merchants increased by ***

percent from the first quarter of 2003 to the third quarter of 2006. The weighted-average sales price of

U.S.-produced product 2 sold directly to end users increased by *** percent over the same period. The

weighted-average sales price of product 2 imported from China and sold to merchants increased by ***

percent from the first quarter of 2003 to the third quarter of 2006. There was *** direct sales price of

product 2 imported from China reported ***. The weighted-average sales price of product 2 imported

from Indonesia and sold to merchants increased by *** percent from the third quarter of 2004 to the third

quarter of 2006. There were no reported direct sales on an f.o.b. basis of product 2 imported from
 16 *** sales value associated with relatively small volumes as reported by U.S. producer *** were excluded as

they were deemed to be outliers.

V-6

Indonesia. The weighted-average sales price of product 2 imported from Korea and sold to merchants

increased by *** percent over the entire period, remaining virtually unchanged from the first quarter of

2003 to the third quarter of 2004 and then increasing through the rest of the period. There were no

reported direct sales of product 2 imported from Korea.

The weighted-average sales price of U.S.-produced product 3 sold to merchants increased by ***

percent from the first quarter of 2003 to the third quarter of 2006.16 However, most of the increase

occurred from the first quarter of 2003 to the second quarter of 2003 and is nearly entirely attributable to

***. The sales price increased by *** percent from the second quarter of 2003 to the end of the period. 

The weighted-average sales price of U.S.-produced product 3 sold directly to end users fluctuated during

the first half of the period, through the ***, and decreased thereafter. The sales price decreased by ***

percent from the second quarter of 2003 to the third quarter of 2006. The weighted-average sales price of

product 3 imported from China and sold to merchants slightly increased by *** percent from the first

quarter of 2003 to the third quarter of 2006. There were no reported direct sales of product 3 imported

from China. There were no reported sales on an f.o.b. basis of product 3 imported from Indonesia. The

weighted-average sales price of product 3 imported from Korea and sold to merchants increased by ***

percent from the first quarter of 2003 to the third quarter of 2006. There were no reported direct sales of

product 3 imported from Korea.

Table V-1

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and imported

product 1 sold to merchants/distributors and margins of underselling/(overselling), by quarters,

January 2003-September 2006

* * * * * * *

Table V-2

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and imported

product 1 sold directly to end users and margins of underselling/(overselling), by quarters, January

2003-September 2006

* * * * * * *

Table V-3

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and imported

product 2 sold to merchants/distributors and margins of underselling/(overselling), by quarters,

January 2003-September 2006

* * * * * * *

Table V-4

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and imported

product 2 sold directly to end users and margins of underselling/(overselling), by quarters, January

2003-September 2006

* * * * * * *
V-7

Table V-5

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and imported

product 3 sold to merchants/distributors and margins of underselling/(overselling), by quarters,

January 2003-September 2006

* * * * * * *

Table V-6

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and imported

product 3 sold directly to end users and margins of underselling/(overselling), by quarters, January

2003-September 2006

* * * * * * *

Figure V-2

Coated free sheet paper: Weighted-average f.o.b prices and quantities of domestic and imported

product 1 sold to merchants/distributors, by quarters, January 2003-September 2006

* * * * * * *

Figure V-3

Coated free sheet paper: Weighted-average f.o.b prices and quantities of domestic and imported

product 1 sold directly to end users, by quarters, January 2003-September 2006

* * * * * * *

Figure V-4

Coated free sheet paper: Weighted-average f.o.b prices and quantities of domestic and imported

product 2 sold to merchants/distributors, by quarters, January 2003-September 2006

* * * * * * *

Figure V-5

Coated free sheet paper: Weighted-average f.o.b prices and quantities of domestic and imported

product 2 sold directly to end users, by quarters, January 2003-September 2006

* * * * * * *

Figure V-6

Coated free sheet paper: Weighted-average f.o.b prices and quantities of domestic and imported

product 3 sold to merchants/distributors, by quarters, January 2003-September 2006

* * * * * * *

Figure V-7

Coated free sheet paper: Weighted-average f.o.b prices and quantities of domestic and imported

product 3 sold directly to end users, by quarters, January 2003-September 2006

* * * * * * *
 17 As noted previously, the underselling analysis is slightly different for delivered prices than for the f.o.b. prices

presented here. There were slightly more instances of underselling relative to overselling for delivered merchant

sales than in the data presented here, occurring in *** out of *** quarterly comparisons, or *** percent of the time,

as opposed to *** percent of the time with the f.o.b. merchant sales. For the delivered direct sales prices, overselling

was more predominant, occurring in *** out of *** quarterly comparisons, or *** percent of the time, as opposed to

underselling occurring *** percent of the time with the f.o.b. direct sales prices presented here. Pricing data on a

delivered basis are presented in app. H. 

 18 Korean respondents contend that merchant sales exhibit underselling by subject imports because importers

must offer merchants a discounted price to offset the additional costs of storing large inventories of imports that

cannot be shipped just-in-time because of long lead times. Korean respondents’ postconference brief, p. 30.

V-8

Table V-7

Coated free sheet paper: Margins of underselling/(overselling) by product and by country, on

quarterly merchant sales, January 2003-September 2006

* * * * * * *

Table V-8

Coated free sheet paper: Margins of underselling/(overselling) by product and by country, on

quarterly direct sales, January 2003-September 2006

* * * * * * *

Price Comparisons

Margins of underselling and overselling for the period are presented in table V-9 below.17

Merchant sales prices of imports from the subject countries were lower than U.S. producer prices in 77

out of 117 quarterly comparisons of products 1-3, by margins of 1.0 percent to 40.4 percent. In the

remaining 40 instances, the imported product was priced above the comparable domestic product;

margins of overselling ranged from 0.7 percent to 56.7 percent. Merchant sales prices of imports from

China were lower than U.S. producer prices in 36 out of 51 quarterly comparisons of products 1, 2, and 3,

by margins of 1.0 percent to 37.2 percent. In the remaining 15 instances, the imported product from

China was priced above the comparable domestic product; margins of overselling ranged from 2.6 percent

to 56.7 percent. Merchant sales prices of imports from Indonesia were lower than U.S. producer prices in

12 out of 21 quarterly comparisons of products 1 and 2, by margins of 7.4 percent to 20.6 percent. In the

remaining nine instances, the imported product from Indonesia was priced above the comparable

domestic product; margins of overselling ranged from 5.0 percent to 32.8 percent. Merchant sales prices

of imports from Korea were lower than U.S. producer prices in 29 out of 45 quarterly comparisons of

products 1, 2, and 3, by margins of 9.2 percent to 26.5 percent. In the remaining 16 instances, the

imported product from Korea was priced above the comparable domestic product; margins of overselling

ranged from 0.5 percent to 24.8 percent.18 

Direct sales prices of imports from China were lower than U.S. producer direct sales prices in one

quarterly comparison of product 2, by a margin of 2.9 percent. Direct sales prices on imports from 

Korea were lower than U.S. producer direct sales prices in 12 out of 14 quarterly comparisons of product

1, by margins of 2.1 percent to 35.4 percent. In the remaining two instances, the imported product from

Korea was priced above the comparable domestic product; margins of overselling ranged from 1.0 percent

to 5.2 percent.
V-9

Table V-9

Coated free sheet paper: Instances of underselling/overselling and the range and average of

margins for products 1-3, January 2003-September 2006

Underselling Overselling

Number of

instances

Range

(percent)

Average

margin

(percent)

Number of

instances

Range

(percent)

Average

margin

(percent)

Merchant Sales

By product:

 Product 1 42 7.4 to 37.2 20.0 1 8.9 8.9

 Product 2 6 1.0 to 4.9 3.6 38 0.7 to 56.7 18.7

 Product 3 29 1.9 to 29.3 21.2 1 0.5 0.5

By country:

 China 36 1.0 to 37.2 21.0 15 2.6 to 56.7 36.2

 Indonesia 12 7.4 to 20.6 14.3 9 5.0 to 32.8 9.7

 Korea 29 9.2 to 26.5 18.9 16 0.5 to 24.8 5.6

Total1 77 1.0 to 37.2 19.2 40 0.5 to 56.7 18.0

Cumulated 30 1.8 to 27.8 21.0 15 0.01 to 21.0 5.1

Direct Sales

By product:

 Product 1 12 2.1 to 35.4 18.0 2 1.0 to 5.2 3.1

 Product 2 1 2.9 2.9 0 0 0

By country:

 China 1 2.9 2.9 0 0 0

 Korea 12 2.1 to 35.4 18.0 2 1.0 to 5.2 3.1

Total1 13 2.1 to 35.4 16.8 2 1.0 to 5.2 3.1

Cumulated 13 2.1 to 35.4 16.8 2 1.0 to 5.2 3.1

 1

 Total number of instances for all cited products, range of margins for all cited products, and average margin for

all cited products. 

Source: Compiled from data submitted in response to Commission questionnaires.
V-10

LOST SALES AND LOST REVENUES

The Commission requested U.S. producers of CFS paper to report any instances of lost sales or

revenues they experienced due to competition from imports of CFS paper from China, Indonesia, and

Korea from January 2003 to September 2006. Five of nine responding U.S. producers reported that they

had lost sales or revenues due to subject imports. One of these U.S. producers, however, reported that it

could not document individual transactions. Another U.S. producer reported that subject imports are

highly competitive, but did not cite specific lost sales or lost revenues. U.S. producers provided *** lost

sales allegations and *** lost revenue allegations. The *** lost sales allegations totaled $*** and the ***

lost revenue allegations totaled $***. Staff contacted the *** purchasers cited in the allegations; ***

responded. The results are summarized in tables V-10 and V-11 and are discussed below. 

Table V-10

Coated free sheet paper: U.S. producers’ lost sales allegations

* * * * * * *

Table V-11

Coated free sheet paper: U.S. producers’ lost revenue allegations

* * * * * * *

 *** was named in a lost sales allegation valued at $*** allegedly occurring in ***. *** did not

respond to the allegations.

*** was named in a lost sales allegation valued at $*** allegedly occurring in ***. *** did not

respond to the allegation.

*** was named in a lost sale allegation valued at $*** allegedly occurring in 2003. It did not

respond to the allegation.

*** was named in a lost sale allegation valued at $*** allegedly occurring in 2004. It did not

respond to the allegation.

*** was named in a lost sales allegation valued at $*** allegedly occurring in 2004. It could not

respond to the specific allegation cited; however, it reported that it bases its purchasing decisions on a

combination of price and availability and purchases both domestic product and subject imports.

*** was named in a lost sales allegation valued at $*** allegedly occurring in 2004. It did not

respond to the allegation.

*** was named in a lost sales allegation valued at $*** allegedly occurring in 2003. It did not

respond to the allegation. 

*** was named in a lost sales allegation valued at $*** allegedly occurring in 2006. While ***

could not respond to the specific transaction cited, it reported that it has not switched purchases away

from domestic product to subject imports, but rather has switched purchases away from Korean product to

Chinese product and that its overall import purchases have been flat since 2003. 

*** was named in a lost revenue allegation valued at $*** allegedly occurring in 2006. It agreed

with the allegation, stating that the price of the product from China was *** percent less than the

comparable domestic product, and that the price of the product from Korea was *** percent less.

*** was named in *** valued at $*** allegedly occurring in 2005. It agreed with the allegations,

stating that any printer that orders standard sheet sizes and is shopping for the best price will purchase

from the subject countries. Furthermore, it stated that *** has made it clear that it plans to grow its

business worldwide. 

*** was named in ***, some focused on lost volume and some on price reductions, valued at

$*** allegedly occurring in 2006 and including CFS paper in both sheet form and web-rolls. *** could

not verify the specific transactions cited. However, it disagreed with at least the portion of the allegations
V-11

allegedly occurring at ***, stating that those divisions do not purchase CFS paper in web-rolls from Asia. 

The portion of the lost revenues allegations attributed to those *** are valued at $***. *** also reported

that it has worked with U.S. producers *** to develop lower-priced brands to be more competitive with

subject imports. It also maintained that it has not switched purchases away from domestic product to

subject imports, but rather has switched purchases away from Korean product to Chinese product and that

its overall import purchases have been flat since 2003. 
 
 1

 The producers with a fiscal year ending other than December 31 are ***.

 2

 ***.

 3

 ***.

VI-1

PART VI: FINANCIAL CONDITION OF U.S. PRODUCERS

BACKGROUND

Ten producers1

 provided financial results for their operations on CFS paper. The responding

producers are believed to represent the substantial majority of U.S. production.2

 ***. 

OPERATIONS ON COATED FREE SHEET PAPER 

Results of operations of the U.S. producers on their CFS paper operations are presented in table

VI-1 which includes data on a per-short ton basis as well as operating income (loss) to net sales ratios.3

The financial results of the producers fluctuated from 2003 to 2005. While the quantity and value

sold increased continuously between 2003 and 2005 and the two interim periods, operating income turned

into an operating loss from 2003 to 2004, due to the decrease in per-unit sale values and increased perunit total costs/expenses. The operating loss became a profit in 2005 as per-unit sales values increased

measurably while per-unit total cost only increased slightly during this period. Sales quantity and value

both increased somewhat from interim 2005 to interim 2006 and operating income increased between the

two interim periods, as average unit sales values again increased (from $865 to $889 per short ton) while

average unit total cost decreased (from $866 to $854). While the operating income margin increased

from 2004 to 2005, the operating income margin for 2005 (0.1 percent) was below the 0.5 percent margin

in 2003. The operating income margin for January-September 2006 was approximately 3.9 percent, an

improvement from the negative 0.03 percent operating loss for January-September 2005.
VI-2

Table VI-1

Coated free sheet paper: Results of operations of U.S. producers, fiscal years 2003-05, JanuarySeptember 2005, and January-September 2006

Item

Fiscal year January-September

2003 2004 2005 2005 2006

Net sales: Quantity (short tons)

 Commercial sales *** *** *** *** ***

 Internal consumption *** *** *** *** ***

 Transfers to related firms *** *** *** *** ***

 Total net sales 4,204,339 4,410,525 4,581,891 3,386,014 3,552,716

Net sales: Value ($1,000)

 Commercial sales *** *** *** *** ***

 Internal consumption *** *** *** *** ***

 Transfers to related firms *** *** *** *** ***

 Total net sales 3,507,971 3,637,023 3,932,692 2,930,489 3,156,664

COGS 3,217,458 3,515,029 3,679,581 2,743,559 2,827,631

Gross profit 290,513 121,994 253,111 186,930 329,033

SG&A expenses 271,260 249,202 250,270 187,850 205,059

Operating income (loss) 19,253 (127,208) 2,841 (920) 123,974

Interest expense 78,728 76,616 158,089 114,366 133,473

Other expense 38,740 161,895 213,557 205,461 7,332

Other income 6,077 5,010 570 6,922 17,420

Net income (loss) (92,138) (360,709) (368,235) (313,825) 589

Depreciation/amortization 363,528 385,979 353,706 263,822 242,831

Cash flow 271,390 25,270 (14,529) (50,003) 243,420

Table continued on next page.
 4

 ***.

 5

 ***.

VI-3

Table VI-1--Continued

Coated free sheet paper: Results of operations of U.S. producers, fiscal years 2003-05, JanuarySeptember 2005, and January-September 2006

Item Fiscal year January-September

2003 2004 2005 2005 2006

Unit value (per short ton)

Net sales $834 $825 $858 $865 $889

COGS 765 797 803 810 796

Gross profit 69 28 55 55 93

SG&A expenses 65 57 55 55 58

Operating income (loss) 5 (29) 1 0 35

Ratio to net sales (percent) 

COGS 91.7 96.6 93.6 93.6 89.6

Gross profit 8.3 3.4 6.4 6.4 10.4

SG&A expenses 7.7 6.9 6.4 6.4 6.5

Operating income (loss) 0.5 (3.5) 0.1 0.0 3.9

Number of firms reporting

Operating losses 5 4 6 5 2

Data 9 9 10 10 10

Source: Compiled from data submitted in response to Commission questionnaires.

Selected financial data, by firm, are presented in table VI-2. Between 2003 and 2005, the

operating results of the *** turned from profits to losses, largely because of increased unit costs. During

the same period, the operating results of *** all improved measurably, *** largely because of reduced

unit costs, and *** largely because of increased unit revenues. When comparing interim 2006 results to

interim 2005 results, *** of the ten producers reported improved profitability (in terms of both operating

income and margin ratio), while the remaining four producers reported deteriorating operations results

between the two interim periods.4 5

 Most notable improvements were reported by ***, all of which

reported increased unit sales prices and decreased unit costs. Average operating income margins

decreased from 2003 to 2004 and increased from 2004 to 2005, and also increased from interim 2005 to

interim 2006. 

Table VI-2

Coated free sheet paper: Results of operations of U.S. producers, by firm, fiscal years 2003-05,

January-September 2005, and January-September 2006

* * * * * * *
 6

 ***.

VI-4

Selected aggregate per-short ton cost data of the producers on their operations, i.e., cost of goods

sold (“COGS”) and selling, general, and administrative (“SG&A”) expenses, are presented in table VI-3. 

Overall per-short ton COGS6

 and total cost (which includes SG&A expenses) increased continuously

from 2003 to 2005, and decreased somewhat from interim 2005 to interim 2006. 

Table VI-3

Coated free sheet paper: Average unit costs of U.S. producers, fiscal years 2003-05, JanuarySeptember 2005, and January-September 2006

Item

Fiscal year January-September

2003 2004 2005 2005 2006

COGS: Value (per short ton)

Raw materials:1 2

 WF/KP internally sourced $0 $0 $0 $0 $0

 WF sourced from affiliates 16 20 20 19 27

 WF from unrelated parties 127 135 139 141 137

 KP sourced from affiliates 00000

 KP from unrelated parties 00000

 Other raw materials 183 192 219 219 219

 Total raw materials 326 347 378 380 383

 Direct labor 84 80 78 79 76

 Factory overhead 356 370 348 351 337

 Total COGS 765 797 803 810 796

 SG&A expenses 65 57 55 55 58

 Total cost 830 853 858 866 854

 1 Wood fiber (WF).

 2

 Kraft paper (KP). 

Source: Compiled from data submitted in response to Commission questionnaires. 

A variance analysis showing the effects of prices and volume on the producers’ sales of CFS

paper, and of costs and volume on their total cost, is shown in table VI-4. The analysis is summarized at

the bottom of the table. The analysis indicates that the decrease in operating income ($16.4 million)

between 2003 and 2005 was attributable mainly to the negative effect of increased costs/expenses ($127.8

million) which was offset by the positive effects of increased price ($109.7 million) and increased sales

volume ($1.7 million). However, between the two interim periods, it indicates that an increased operating

income of $124.9 million resulted from the positive effects of both increased price and decreased

cost/expenses.
VI-5

Table VI-4

Coated free sheet paper: Variance analysis of operations of U.S. producers, fiscal years 2003-05,

January-September 2005, and January-September 2006

Item

Between fiscal years

JanuarySeptember

2003-05 2003-04 2004-05 2005-06

Value ($1,000)

Net sales:

 Price variance 109,703 (42,983) 154,357 81,900

 Volume variance 315,018 172,035 141,312 144,275

 Total net sales variance 424,721 129,052 295,669 226,175

Cost of sales:

 Cost variance (173,193) (139,783) (27,979) 51,000

 Volume variance (288,930) (157,788) (136,573) (135,072)

 Total cost variance (462,123) (297,571) (164,552) (84,072)

Gross profit variance (37,402) (168,519) 131,117 142,103

SG&A expenses:

 Expense variance 45,349 35,361 8,614 (7,961)

 Volume variance (24,359) (13,303) (9,682) (9,248)

 Total SG&A variance 20,990 22,058 (1,068) (17,209)

Operating income variance (16,412) (146,461) 130,049 124,894

Summarized as:

 Price variance 109,703 (42,983) 154,357 81,900

 Net cost/expense variance (127,844) (104,422) (19,365) 43,040

 Net volume variance 1,729 944 (4,943) (45)

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.
 7

 ***.

 8

 ***.

 9

 ***.

 10 ***.

 11 ***.

VI-6

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-5. All producers reported capital expenditures during the

period, and ***7

 ***8 ***9 ***10 spent substantial amounts on capital expenditures. All *** producers,

***, reported R&D expenses. Capital expenditures, by firm, are presented in table VI-6. Capital

expenditures increased from 2003 to 2004 and then decreased substantially from 2004 to 2005, then

increased again from interim 2005 to interim 2006. Overall, total R&D expenses remained at relatively

the same level except for the period between 2004 and 2005.

Table VI-5

Coated free sheet paper: Capital expenditures and R&D expenses by U.S. producers, fiscal years

2003-05, January-September 2005, and January-September 2006

Item

Fiscal year January-September

2003 2004 2005 2005 2006

Value ($1,000)

 Capital expenditures1 209,396 263,708 172,777 118,916 129,466

 R&D expenses2

 14,054 14,194 18,667 13,995 14,334

 1 All companies reported capital expenditures. 

 2

 All producers except *** reported R&D expenses.

 

Source: Compiled from data submitted in response to Commission questionnaires.

Table VI-6

Coated free sheet paper: Capital expenditures by U.S. producers, by firms, fiscal years 2003-05,

January-September 2005, and January-September 2006

* * * * * * *

ASSETS AND RETURN ON INVESTMENT

U.S. producers were requested to provide data on their assets used in the production and sales of

CFS paper 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 CFS paper. Data on the U.S.

producers’ total assets and their ROI are presented in table VI-7.11 
VI-7

The value of total assets, especially for the original cost and net book value of property, plant,

and equipment (“PPE”) decreased substantially from 2004 to 2005, due primarily to ***. The return on

investment decreased from 2003 to 2004, then increased somewhat from 2004 to 2005 to become slightly

positive (a small operating income margin). The trend of ROI over the period was the same as the trend

of the operating income margin shown in table VI-1.

Table VI-7

Coated free sheet paper: Value of assets and return on investment of U.S. producers, fiscal years

2003-05

Item

Fiscal year

2003 2004 2005

Value of assets Value ($1,000)

1. Current assets:

 A. Cash and equivalents 47,889 25,660 32,407

 B. Trade receivables (net) 356,796 437,347 505,348

 C. Inventories 828,271 729,735 829,638

 D. All other current 47,968 79,093 84,761

 Total current 1,280,924 1,271,835 1,452,154

2. Non-current assets:

 A. Productive facilities1 6,388,297 6,652,575 5,930,724

 B. Productive facilities 3,818,697 3,727,535 3,362,816

 C. Other non-current 716,772 623,880 702,448

 Total non-current 4,535,469 4,351,415 4,065,264

 Total assets 5,816,393 5,623,250 5,517,418

 Value ($1,000)

Operating income 19,253 (127,208) 2,841

Ratio of operating income to total assets (percent)

Return on investment 0.3 (2.3) 0.1

 1 Original cost of property, plant, and equipment (PPE).

 2

 Net book value of PPE (original cost less accumulated depreciation). 

Source: Compiled from data submitted in response to Commission questionnaires.

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 CFS paper from China, Indonesia, and

Korea. The producers’ comments are presented in appendix I.
 
 1

 Chinese firms that were identified in the petition as CFS producers but which did not provide a response to the

foreign producer questionnaire include: Dandong Kaite Yalujiang Paper Commerce, Inc.; Jiangnan Papermaking

Plant; Mudanjiang Daewoo Paper Co., Ltd.; Ningxia Meili Paper Industry Co., Ltd.; Shandong Huatai Paper Co.,

Ltd.; Shandong Kaili Paper Co.; Shandong Taishan Paper Mill; Shandong Tralin Paper Co. (Shandong Quanlin

Paper Industry Co., Ltd.); Shandong Wanhao Paper Group Co. Ltd.; and UPM-Kymmene (Suzhou) Paper Industry

Co. Ltd. Petition, exh. I-5. Both of the Indonesian firms identified as subject producers in the petition provided

responses as did each of the identified Korean manufacturers. Petition, exh. I-6 and exh. I-7.

 2

 Korean manufacturers also anticipate a decrease in their exports to the United States but addressed the issue in

their postconference brief and not in their foreign producer questionnaire responses. See the section of this report

titled “The Industry in Korea” for further information.

VII-1

PART VII: THREAT CONSIDERATIONS

The Commission analyzes a number of factors in making threat determinations (see 19 U.S.C. §

1677(7)(F)(i)). Information on the nature of the alleged subsidies was presented earlier in this report (if

relevant); information on the volume and pricing of imports of the subject merchandise is presented in

Parts IV and V; and information on the effects of imports of the subject merchandise on U.S. producers’

existing development and production efforts is 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.

SUBJECT MANUFACTURERS

The Commission sent, or arranged for parties to transmit, foreign producer questionnaires to

companies in China (56 firms), Indonesia (4 firms), and Korea (11 firms) that were identified in the

petition, Customs documents, and/or public sources as possibly producing CFS paper. Reporting subject

manufacturers are listed in table VII-1 along with each firm’s reported capacity, production, total exports,

and exports to the United States in 2005.1

 Table VII-2 provides information on the structure of the

foreign producer’ operations and projected changes to those operations that were identified in their

responses to the Commission’s foreign producer questionnaire. CFS paper constituted a substantial share

of the total sales of most of the companies. The majority also produced other products, most often

uncoated free sheet, on the machinery and equipment used to produce the subject merchandise. ***

reported any plans to add, expand, curtail, or shut down CFS paper capacity or production. The most 

frequently cited anticipated change to the operations of the Chinese and Indonesian manufacturers was a

drop in their export volume.2

* * * * * * *
VII-2

Table VII-1

Coated free sheet paper: Subject foreign producers' capacity, production, total exports, and exports to

the United States in 2005, by firm

Firm Capacity Production Total

exports

Exports to

the United

States

Capacity

utilization

Share of

total

shipments

to the

United

States

Quantity (short tons) Percent

Subject manufacturers in China

Chenming1 *** *** *** *** *** ***

Gold East2 *** *** *** *** *** ***

Gold Huasheng3 *** *** *** *** *** ***

Sun Paper4 *** *** *** *** *** ***

 Total *** *** *** 176,538 *** ***

Subject manufacturers in Indonesia

Pindo Deli and

 Tjiwi Kimia5 *** *** *** *** *** ***

Subject manufacturers in Korea

HanKuk6 *** *** *** *** *** ***

Hansol7 *** *** *** *** *** ***

Hongwon8 *** *** *** *** *** ***

Kyesung9 *** *** *** *** *** ***

Moorim10 *** *** *** *** *** ***

Nanhan11 *** *** *** *** *** ***

Shinho12 *** *** *** *** *** ***

Shnmoorim13 *** *** *** *** *** ***

 Total 2,309,445 2,214,079 1,210,016 417,085 95.9 18.9

Notes on next page.
 3 See Part I of this report for a full discussion. 

 4

 Referring to the Asian market as whole, Korean manufacturers state: “Web offset printing is less common in

Asia and other world markets than in the United States, causing producers in the subject countries to concentrate on

sheet production.” Korean respondents’ postconference brief, p. 10.

VII-3

Continuation.

 1

 Shandong Chenming Paper Holdings, Ltd., in Shandong province. 

 2

 Gold East Paper (Jiangsu) Co., Ltd. in Jiangsu province. ***.

 3

 Gold Huasheng Paper (Suzhou Industry Park) in Jiangsu province. ***. ***. E-mail from counsel for the

Chinese manufacturers, November 30, 2006.

 4

 Shandong Sun Paper Industry Joint Stock Co., Ltd., in Shandong province. The firm began operating in 2005;

data was provided for 2005 are for August to December. ***. 

 5

 PT. Pindo Deli Pulp & Paper Mills (Pindo Deli) and PT. Pabrik Kertas Tjiwi Kimia, Tbk (Tjiwi Kimia).

 6

 HanKuk Paper Mfg. Co., Ltd. 

 7

 Hansol Paper Co., Ltd. ***.

 8

 Hongwon Paper Mfg. Co., Ltd. 

 9

 Kyesung Paper Co., Ltd.

 10 Moorim Paper Mfg. Co., Ltd. (name changed to Moorim SP Co., as of August 1, 2006). ***.

 11 Namhan Paper Co., Ltd.

 12 Shinho Paper (name changed to EN Paper). ***. 

 13 Shnmoorim Paper Mfg. Co. (name changed to Moorim Paper Co., Ltd., as of August 1, 2006). ***. 

Source: Compiled from data submitted in response to Commission questionnaires.

DATA GATHERED ON THE SUBJECT COUNTRY INDUSTRIES

The following sections provide data on subject manufacturers’ capacity, production, shipments,

and inventories of CFS paper for 2003-05, January-September 2005, January-September 2006, projected

2006, and projected 2007. As noted above, firms produced both subject and nonsubject merchandise on

common production lines. Accordingly, to address the possibility of product shifting the Commission

gathered overall capacity and itemized production data for products manufactured on the same equipment

and machinery used in the production of CFS paper from each subject manufacturer. These data are

presented within each section covering the industries in China, Indonesia, and Korea. Finally, the issue of

whether competition between subject imports and domestic production is attenuated was raised at the

Commission’s conference.3

 Following the conference, the Commission gathered additional information

from foreign manufacturers on their production and exports to the United States of CFS paper in web roll,

sheeter roll, and sheet form. These data are also provided separately by country within each of the

following industry sections.4

THE INDUSTRY IN CHINA

Responding firms consisted *** of Chinese manufacturers that currently export CFS paper to the

United States. There are, however, other non-exporting (at least to the United States) Chinese producers. 

NewPage included an excerpt from the *** in its petition that lists *** producers of CFS paper in China.
 5

 Petition, exh. 15.

 6 Chinese respondents and Unisource’s postconference brief, exh. 20. ***. Ibid.

 7

 Counsel for the Chinese manufacturers and Unisource states that “coating capacity sets a firm and immovable

upward limit on a CFS producer’s capacity to manufacture additional CFS.” Further, the firms responding to the

Commission’s foreign producer questionnaire based their capacity data on the “upward limits of that capacity.”

Chinese manufacturers and Unisource’s postconference brief, p. 38.

 8

 Global Paper Solutions argued in a declaration attached as exh. 18 to the Chinese respondents and Unisource's

postconference brief that to his knowledge ***. This means that ***. As shown in table VII-3, the projected

capacity figure for 2006 is over *** tons greater than that reported as installed in 2005. ***.

 9

 Chinese respondents state that there is “no dispute that China is the fastest growing market for CFS in the

world” and tie the growing demand to the rapidly expanding Chinese GDP and, more specifically, to the 2008

Summer Olympics and the 2010 World Fair to be held in China. Chinese manufacturers and Unisource’s

postconference brief, pp. 33-34. 

 10 They state: “Effective November 2006, exports of CFS paper are no longer eligible to receive a VAT rebate. 

Removal of the VAT rebate will increase the cost of Chinese CFS exports by approximately 13%. The slight

relative increase in the ratio of Chinese exports to the U.S. in the interim comparison is largely, if not entirely,

attributable to the fact that revocation of the VAT rebate had a transition period.” Chinese respondents and

Unisource's postconference brief, pp. 31-33.

 11 ***’s importer questionnaire response, question I-4.

VII-4

Reported capacity for these firms increased from *** metric tons in 2003 to *** metric tons in 2005 with

continued expansion to *** metric tons in 2006 and to *** metric tons in 2007.5

 Respondents provided

***. According to that data source, ***.6

Table VII-3 provides data on the operations of the reporting firms. Capacity to produce subject

merchandise in China rose continuously during 2003-05 period and in interim 2006 compared to interim

2005. Capacity is projected to increase further in 2006 to a level almost *** than that reported in 2003.7

 

Reporting firms did not, however, project a *** rise in 2007 over that reported for 2006.8

 CFS production

kept pace with the expansion of capacity, with capacity utilization ratios remaining above *** percent

throughout the period examined (including projected 2006 and 2007).9

 There is a *** home market for

CFS paper in China; the home market was, in fact, the *** destination of CFS paper from Chinese mills

throughout the period examined. Exports, however, rose continuously from about *** of total shipments

in 2003 and 2004 to well over *** of total shipments in both January-September 2006 and full-year

(projected) 2006 but are projected to decline as a share of total shipments in 2007. Exports of CFS paper

to the United States as a share of total shipments almost *** from *** percent in 2003 to *** percent in

January-September 2006 and are projected to fall back in 2007 to a share *** to that reported for 2003. 

In absolute terms, the quantity of exports to the United States in 2007 are projected to decline by about

*** tons–an amount *** than the total volume exported in 2003. Chinese respondents argued that the

volume of exports to the United States was temporarily stimulated by the phase-out period for a VAT

rebate.10

Table VII-3

Coated free sheet paper: Chinese production capacity, production, shipments, and inventories,

2003-05, January-September 2005-06, and projected 2006-07

* * * * * * *

As noted in table IV-1, a substantial portion of the CFS paper imported from China is marketed

by U.S. importers related to the Chinese manufacturers. Specifically, *** sells CFS paper through ***11
 12 ***’s foreign producer questionnaire response, question I-5.

 13 Chinese respondents and Unisource's postconference brief, pp. 37-38. 

 14 Chinese manufacturers’ foreign producer questionnaire responses, question II-6. 

 15 Petition, exh. 15 (***). ***. 

VII-5

and *** distributes subject merchandise in the United States through its affiliate, ***.12 *** is related to

***. With respect to manufacturers’ inventories, Chinese respondents state that inventories held at the

mills are “unlikely” to be exported to the United States since product sold to the U.S. market is made-toorder.13

CFS paper exported by the Chinese manufacturers was reported not to be subject to antidumping

findings or remedies in any WTO-member countries.14 Table VII-4 lists overall capacity and production

data for products manufactured on the same equipment and machinery used in the production of the

subject merchandise, and table VII-5 provides data on Chinese production and exports to the United

States by type of product. As shown, most CFS paper production in China is in the form of sheets (and

sheeter rolls). The production of CFS web rolls, however, rose from 2003 to 2005, with the increase

paired with the start (at least during the period examined) of web exports to the United States. 

Table VII-4

Coated free sheet paper: Products produced by subject Chinese manufacturers on the same

equipment and machinery used in the production of coated free sheet paper, 2003-05

* * * * * * *

Table VII-5

Coated free sheet paper: Chinese production and exports of subject merchandise to the United

States from China, by web rolls, sheeter rolls, and sheets, 2003-05, January-September 2006, and

projected 2006-07

* * * * * * *

THE INDUSTRY IN INDONESIA

Pindo Deli and Tjiwi Kimia account for virtually all the capacity to produce CFS paper in

Indonesia. Both mills are owned by Asia Pulp and Paper and, as shown in table VII-1, responded to the

foreign producer questionnaire.15 Data for their operations are presented in table VII-6. Capacity

increased by about *** short tons from 2003 and 2004 and has since remained level with *** projected

increases either in the fourth quarter of 2006 or in 2007. Production rose steadily throughout the period

examined, resulting in an increase in capacity utilization from almost *** percent in 2003 and 2004 to

*** percent in 2005 and to *** percent in January-September 2006. Capacity utilization ratios of ***
 16 Pindo Deli and Tjiwi Kimia’s foreign producer questionnaire response, question II-6. 

 17 Document is attached as exh. 18 to the petition. According to the “***,” there were *** tons of Korean CFS

paper capacity in 2005 with production of *** tons. 

VII-6

percent are projected for both full-year 2006 and 2007. The home market consistently consumed about a

*** of total CFS paper production with internal consumption/transfers accounting for about *** percent. 

Exports as a share of total shipments accounted for *** percent of total shipments from 2003 through

September 2006. The export share of total shipments is projected to decrease in 2007 compared to fullyear 2006 by *** percentage points to *** percent as home market shipments rise by *** percentage

points (with a *** percentage point decline in internal consumption/transfers). Although slight, the

reported decline in the export share is accounted for entirely by the share of exports to the United States;

the share of total shipments accounted for by other markets rises slightly. Indonesian manufacturers

anticipate shipping to the United States, in absolute terms, about *** short tons less CFS paper in 2007

than will be shipped in full-year 2006. Projected 2007 exports to the United States will *** the 2005

level, which was approaching *** that shipped in 2003. 

Table VII-6

Coated free sheet paper: Indonesian production capacity, production, shipments, and inventories,

2003-05, January-September 2005-06, and projected 2006-07

* * * * * * *

CFS paper exported by the Indonesian manufacturers was reported not to be subject to

antidumping findings or remedies in any WTO-member countries.16 Table VII-7 lists overall capacity

and production data for products manufactured on the same equipment and machinery used in the

production of the subject merchandise and table VII-8 provides data on Indonesian production and

exports to the United States by type of product. As shown, *** portion of the CFS paper produced in

Indonesia is in web form with *** web roll exports to the United States during the period examined. 

Table VII-7

Coated free sheet paper: Products produced by subject Indonesian manufacturers on the same

equipment and machinery used in the production of coated free sheet paper, 2003-05

* * * * * * *

Table VII-8

Coated free sheet paper: Indonesian production and exports of subject merchandise to the United

States, by web rolls, sheeter rolls, and sheets, 2003-05, January-September 2006, and projected

2006-07

* * * * * * *

THE INDUSTRY IN KOREA

Eight Korean manufacturers of CFS paper provided data in response to the foreign producer

questionnaire (table VII-1). The firms reported aggregate capacity of 2.3 million tons in 2005 with

production of 2.2 millions tons. Since these figures actually exceed those reported in the ***,17

questionnaire data as reported are believed to account for virtually the entire Korean industry. Korean
 18 Korean respondents’ postconference brief, p. 35.

VII-7

Table VII-9

Coated free sheet paper: Korean production capacity, production, shipments, and inventories, 2003-05,

January-September 2005-06, and projected 2006-07

Item

Actual experience Projections

2003 2004 2005

Jan.-Sept.

2006 2007

2005 2006

Quantity (short tons)

Capacity 2,180,481 2,267,501 2,309,445 1,713,220 1,748,801 2,328,338 2,338,338

Production 1,991,631 2,168,023 2,214,079 1,653,386 1,658,098 2,206,942 2,234,245

End of period inventories 97,379 104,575 116,188 140,080 128,207 124,973 118,458

Shipments:

Internal consumption 6,778 3,638 3,631 2,528 4,334 5,411 3,499

Home market 896,204 940,299 988,820 704,886 758,775 1,043,980 1,100,602

Exports to--

The United States 386,950 462,590 417,085 315,387 361,926 481,632 433,306

All other markets 700,159 754,299 792,930 595,081 521,042 667,134 703,352

Total exports 1,087,109 1,216,889 1,210,015 910,468 882,968 1,148,766 1,136,658

Total shipments 1,990,091 2,160,826 2,202,466 1,617,882 1,646,077 2,198,157 2,240,759

Ratios and shares (percent)

Capacity utilization 91.3 95.6 95.9 96.5 94.8 94.8 95.5

Inventories to production 4.9 4.8 5.2 6.4 5.8 5.7 5.3

Inventories to total shipments 4.9 4.8 5.3 6.5 5.8 5.7 5.3

Share of total shipments:

Internal consumption 0.3 0.2 0.2 0.2 0.3 0.2 0.2

Home market 45.0 43.5 44.9 43.6 46.1 47.5 49.1

Exports to--

The United States 19.4 21.4 18.9 19.5 22.0 21.9 19.3

All other markets 35.2 34.9 36.0 36.8 31.7 30.3 31.4

Total exports 54.6 56.3 54.9 56.3 53.6 52.3 50.7

Note.–See exhibit 18 of the petition for ***.

Source: Compiled from data submitted in response to Commission questionnaires.

respondents characterize their involvement in the U.S. market as “long-term” and state that they are not

new market participants.18

Data on the Korean industry are presented in table VII-9. With one exception, each of the indices

presented in table VII-9 have followed a pattern of steady, albeit relatively slow, growth throughout the
 19 The only annual decline for any index in 2003-05 was the fall in exports to the United States from 2004 to

2005.

 20 Korean respondents’ postconference brief, p. 40.

 21 Korean respondents’ postconference brief, pp. 40-41.

 22 ***’s foreign producer questionnaire response, question I-4.

 23 ***’s foreign producer questionnaire responses, question I-5.

 24 ***’s foreign producer questionnaire response, question I-5.

 25 Korean manufacturers’ foreign producer questionnaire responses, question II-6. 

 26 Petitioner’s postconference brief, p. 47.

 27 Korean respondents’ postconference brief, p. 42.

VII-8

2003-05 period. Capacity steadily increased by 5.9 percent over 2003-05 while production rose by 11.2

percent. Home market shipments increased each year for an overall rise of 10.3 percent and exports to the

United States19 and to all other markets rose by 7.8 percent and 13.2 percent, respectively. Capacity,

production, and home market shipments again increased during the interim periods (and are projected to

continue to grow at a generally slow pace in 2007 compared to 2006). In contrast, total export shipments

fell from January-September 2005 to January-September 2006 although exports to the U.S. market rose

(by 14.8 percent). Total exports are projected to again decline in 2007 compared to full year 2006 with

exports to the United States falling (by 10.0 percent) while exports to all other markets rise (by 5.4

percent). While slightly below the projected 2006 level, the volume of total exports that are projected in

2007 remains slightly below the 2005 figure.

The Korean respondents state in their postconference brief that a decrease in exports to the United

States in 2007 should offset rising home market demand from the on-coming Presidential election in

2007.20 Analysts reportedly project strong growth estimates for the Korean home market derived from

“growing populations with disposable income, increasing demand for high quality magazines, high basis

CFS displacing certain cartonboards, increased four color and digital printing, increased direct marketing

and advertising, and some substitution of CFS for uncoated magazines.”21

As noted in table IV-1, a *** portion of the CFS paper imported from Korea is marketed by U.S.

importers related to the Korean manufacturers. Specifically, *** sells CFS paper through ***,22 ***

distribute subject merchandise in the United States through their affiliate ***,23 and *** sells through its

U.S. branch ***. 24

CFS paper exported by the Korean manufacturers as of August 2003 is subject to an antidumping

order in China.25 Korean respondents list the antidumping margins for three manufacturers in their

postconference brief (p. 42, n. 168). Petitioner argues that the imposition of the antidumping duty order

has resulted in the diversion to the United States of Korean product that otherwise would have been

shipped to China.26

Table VII-10 lists overall capacity and production data for products manufactured in Korea on the

same equipment and machinery used in the production of the subject merchandise. Korean manufacturers

argue that there is “little risk” of product shifting since the production lines where the subject

merchandise is produced are “primarily dedicated” to CFS paper. Any shift of paper machines from

uncoated to coated free sheet production would require “substantial sums” to add coating machines,

rewinders, and supercalendars. Approximately two months to install and four months to adjust the

additional machinery would be required to produce high quality merchandise.27 
 28 Korean respondents’ postconference brief, exh. A, p. 6.

 29 The Korean manufacturers state that the 2003 shipments were on a “trial basis” ... “which did not succeed” and

that “future efforts were abandoned.” Korean manufacturers’ postconference brief, exh. A, p. 5.

VII-9

Table VII-10

Coated free sheet paper: Products produced by subject Korean manufacturers on the same

equipment and machinery used in the production of coated free sheet paper, 2003-05

Item 

Calendar years

2003 2004 2005

Quantity (short tons)

Annual capacity for all products 3,213,412 3,415,027 3,449,825

Production of: 

Subject product1 1,991,631 2,168,023 2,214,079

Uncoated free sheet paper1 *** *** ***

Coated groundwood paper *** *** ***

 Kraft paper *** *** ***

Other *** *** ***

All products 3,005,973 3,228,687 3,365,229

Capacity utilization (percent)

All products 93.5 94.5 97.5

 1 Overlap recorded if the only substantial difference between the two products (in equipment utilized) is that

uncoated paper is not subject to the application of kaolin or a similar coating. 

Source: Compiled from data submitted in response to Commission questionnaires.

Data on Korean production and exports to the United States by type of product are presented in

table VII-11. According to respondents’ brief, {t}he Korean market does not consume many web rolls

because there are few large end-users with production runs large enough to support the use of web rolls

and most end-users operate on a small production scale using sheets.” Those not consumed domestically

are primarily shipped to ***.28 *** short tons of web were exported to the United States in 200329 with

no subsequent web exports and none projected throughout 2006 or in 2007. 
VII-10

Table VII-11

Coated free sheet paper: Korean production and exports of subject merchandise to the United

States from China, by web rolls, sheeter rolls, and sheets, 2003-05, January-September 2006, and

projected 2006-07

Item

Actual experience Projections

2003 2004 2005 Jan.-Sept.

2006 2006 2007

Quantity (short tons)

Production of product in:

Web rolls1 *** *** *** *** *** ***

Sheeter rolls *** *** *** *** *** ***

Sheets *** *** *** *** *** ***

Total 1,991,631 2,168,024 2,214,078 1,658,096 2,206,942 2,234,247

Exports to the United States of production:

Web rolls1 *** *** *** *** *** ***

Sheeter rolls *** *** *** *** *** ***

Sheets *** *** *** *** *** ***

Total 386,950 462,590 417,084 361,926 481,631 433,305

 1 Web roll production is sold to the following markets: ***. 

Note.–The Korean industry provided data on the aggregate capacity in place for products produced on the same

equipment as subject merchandise (and did not attempt to identify the capacity represented by the specific

machines that might be dual-operating for multiple products at certain time periods).

Source: Compiled from supplemental information provided by the Korean manufacturers.

AGGREGATED DATA ON THE INDUSTRIES IN SUBJECT COUNTRIES

Table VII-12 presents CFS paper capacity, production, total exports, and exports to the United

States for each subject source in 2005. As shown, the Chinese and Korean CFS paper industries are

comparable in size although the Korean industry is more export oriented and, in 2005, shipped more than

*** the tonnage to the United States as did China. The Indonesian industry is about *** the size of the

other subject countries. Capacity utilization was uniformly high for all sources. Table VII-13 presents

data on the combined industries for 2003-05, January-September 2005, January-September 2006,

projected 2006, and projected 2007.
VII-11

Table VII-12

Coated free sheet paper: Subject foreign producers' capacity, production, total exports, and

exports to the United States in 2005, by source

Source Capacity Production Total exports

Exports to

the United

States

Capacity

utilization

Quantity (short tons) (percent)

China *** (1)

*** *** ***

Indonesia *** *** *** *** ***

Korea 2,309,445 2,214,079 1,210,015 417,085 95.9

 Total 4,955,743 4,844,797 2,234,509 644,577 96.5

 1 ***.

Source: Compiled from data submitted in response to Commission questionnaires.
VII-12

Table VII-13

Coated free sheet paper: Aggregated data for reporting producers in China, Indonesia, and Korea, 2003-05,

January-September 2005-06, and projected 2006-07

Item

Actual experience Projections

2003 2004 2005

Jan.-Sept.

2006 2007

2005 2006

Quantity (short tons)

Capacity 4,134,454 4,555,485 4,955,743 3,665,865 4,410,464 5,787,939 5,847,816

Production 3,855,064 4,430,066 4,844,797 3,532,631 4,223,072 5,629,483 5,703,826

End of period inventories 221,736 319,056 301,756 340,543 359,254 306,713 286,062

Shipments:

Internal consumption 32,339 27,595 25,339 18,107 31,603 34,802 25,545

Home market 2,185,122 2,358,067 2,602,249 1,803,791 2,165,428 2,973,731 3,400,697

Exports to--

The United States 511,802 646,389 644,577 480,210 659,909 859,180 686,132

All other markets 1,240,307 1,300,694 1,589,932 1,209,037 1,308,632 1,758,352 1,611,921

Total exports 1,752,109 1,947,083 2,234,509 1,689,247 1,968,541 2,617,532 2,298,053

Total shipments 3,969,570 4,332,745 4,862,097 3,511,145 4,165,572 5,626,065 5,724,295

Ratios and shares (percent)

Capacity utilization 93.2 97.2 96.5 95.8 95.8 97.3 97.5

Inventories to production 5.8 7.2 6.2 7.2 6.4 5.4 5.0

Inventories to total ship. 5.6 7.4 6.2 7.3 6.5 5.5 5.0

Share of total shipments:

Internal consumption 0.8 0.6 0.5 0.5 0.8 0.6 0.4

Home market 55.0 54.4 53.5 51.4 52.0 52.9 59.4

Exports to--

The United States 12.9 14.9 13.3 13.7 15.8 15.3 12.0

All other markets 31.2 30.0 32.7 34.4 31.4 31.3 28.2

Total exports 44.1 44.9 46.0 48.1 47.3 46.5 40.1

Note.–The calculation of capacity utilization for 2005 excludes ***. 

Source: Compiled from data submitted in response to Commission questionnaires.
 30 One reason for the relatively large inventories reported for Korea is that they include data for ***. 

Consequently, the inclusion of ***s data in this table is not believed to result in the double-counting of inventories

even though the firm is not shown in table IV-1 (where listing its imports would result in the double-counting of

imports). Similarly, all of the inventories reported for China in table IV-14 are by ***. *** also reported

inventorying a substantial volume of Korean-manufactured CFS paper.

 31 Several large U.S. importers (including ***) reported either maintaining no or minimal inventories in their

importer questionnaire responses. (Each of these firms either reported “0" or minimal inventories in their importer

questionnaire responses which suggests that they were in fact not holding inventories at their level of distribution

rather than not being able to provide the requested data.) Other importers reported substantial inventories. 

 32 According to a letter submitted by ***, November 14, 2006, “most” offshore suppliers cannot compete in

providing “just-in-time” delivery and often average 60 to 120 day lead times. Further, distributors are required to

“make a very large financial inventory investment in order to buy large quantities, stock and resell an offshore CFS

product. Without large inventories on hand, the distributor could not meet the demands of large printers who might

require a large quantity of a particular size and substance of paper.” 

 33 Conference transcript, pp. 141-146 (Anderson, Dragone, and Cameron). 

VII-13

IMPORTERS’ U.S. INVENTORIES OF SUBJECT PRODUCT

Reported inventories held by U.S. importers of subject merchandise from China, Indonesia, and

Korea and inventories from all other sources are shown in table VII-14. The ratio of combined subject

inventories to both imports and U.S. shipments of imports combined remained within 8 to 9 percent

throughout the period examined. The actual quantity of product held in inventory, however, increased by

about 13,000 short tons as of September 30, 2006 compared to September 30, 2005. Most of the subject

inventories reported in Commission questionnaires consisted of merchandise imported from Korea.30 

Petitioner characterized the reported inventory levels as a “***” buildup and, further, asserted

that even these *** levels are underreported in that several importers did not report holding inventories.31

32 Testimony at the conference indicated that inventories were most likely to be maintained by the “paper

merchant” who has established warehouses where it maintains an inventory level. Both mill agents

(which may be independent of or function as the local sales offices of offshore manufacturers) and/or

paper brokers usually arrange for sales by the manufacturers to either paper merchants or end users. Mill

agents or paper brokers do not, however, typically take possession of the product in the United States or

maintain inventories.33 As discussed earlier, importer questionnaires were sent to and completed (see

table IV-1) by firms that were listed as consignees on Customs documents. These firms consisted of a

mix of mill agents, paper brokers, and paper merchants.
VII-14

Table VII-14

Coated free sheet paper: U.S. importers’ end-of-period inventories of imports, by sources,

2003-05, January-September 2005, and January-September 2006

Source

Calendar year January-September

2003 2004 2005 2005 2006

Imports from China:

Inventories (short tons) *** *** *** *** ***

Ratio to imports (percent) *** *** *** *** ***

Ratio to U.S. shipments of imports (percent) *** *** *** *** ***

Imports from Indonesia:

Inventories (short tons) *** *** *** *** ***

Ratio to imports (percent) *** *** *** *** ***

Ratio to U.S. shipments of imports (percent) *** *** *** *** ***

Imports from Korea:

Inventories (short tons) 46,649 50,032 46,858 50,212 54,982

Ratio to imports (percent) 10.1 9.9 10.4 10.6 11.1

Ratio to U.S. shipments of imports (percent) 10.3 10.0 10.4 10.6 11.3

Imports from all subject sources:

Inventories (short tons) 54,882 61,819 58,097 61,621 74,793

Ratio to imports (percent) *** *** *** *** ***

Ratio to U.S. shipments of imports (percent) 9.1 8.5 8.5 8.9 9.0

Nonsubject imports from all other sources:

Inventories (short tons) 63,325 70,890 69,411 70,494 74,940

Ratio to imports (percent) 17.6 13.6 14.8 17.4 19.0

Ratio to U.S. shipments of imports (percent) 18.2 15.1 16.3 19.5 19.2

Total imports:

Inventories (short tons) 118,207 132,709 127,508 132,115 149,733

Ratio to imports (percent) *** *** *** *** ***

Ratio to U.S. shipments of imports (percent) 12.4 11.1 11.5 12.6 12.2

Note.–Does not include inventories from Korea reported by ***. 

Source: Compiled from data submitted in response to Commission questionnaires.
APPENDIX A

FEDERAL REGISTER NOTICES

Federal Register / Vol. 71, No. 214 / Monday, November 6, 2006 / Notices 64983 

written notice must be provided to 

Dennis Kubly, Bureau of Reclamation, 

Upper Colorado Regional Office, 125 

South State Street, Room 6107, Salt 

Lake City, Utah 84138; telephone (801) 

524–3715; faxogram (801) 524–3858; email at dkubly@uc.usbr.gov at least five 

(5) days prior to the meeting. Any 

written comments received will be 

provided to the AMWG members. 

Public Disclosure 

It is our practice to make comments, 

including names, home addresses, home 

telephone numbers, and e-mail 

addresses of respondents, available for 

public review. Individual respondents 

may request that we withhold their 

names and/or home addresses, etc., but 

if you wish us to consider withholding 

this information you must state this 

prominently at the beginning of your 

comments. In addition, you must 

present a rationale for withholding this 

information. This rationale must 

demonstrate that disclosure would 

constitute a clearly unwarranted 

invasion of privacy. Unsupported 

assertions will not meet this burden. In 

the absence of exceptional, 

documentable circumstances, this 

information will be released. We will 

always make submissions from 

organizations or businesses, and from 

individuals identifying themselves as 

representatives or officials of 

organizations or businesses, available 

for public inspection in their entirety. 

Dated: October 24, 2006. 

Darryl Beckmann, 

Deputy Regional Director—UC Region, 

Bureau of Reclamation. 

[FR Doc. E6–18575 Filed 11–3–06; 8:45 am] 

BILLING CODE 4310–MN–P 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation Nos. 701–TA–444–446 and 

731–TA–1107–1109 (Preliminary)] 

Coated Free Sheet Paper From China, 

Indonesia, and Korea 

AGENCY: United States International 

Trade Commission. 

ACTION: Institution of countervailing 

duty and antidumping investigations 

and scheduling of preliminary phase 

investigations. 

SUMMARY: The Commission hereby gives 

notice of the institution of investigations 

and commencement of preliminary 

phase countervailing duty investigation 

Nos. 701–TA–444–446 (Preliminary) 

and preliminary phase antidumping 

investigation Nos. 731–TA–1107–1109 

(Preliminary) under sections 703(a) and 

733(a) of the Tariff Act of 1930 (19 

U.S.C. 1671b(a) and 1673b(a)) (the Act) 

to determine whether there is a 

reasonable indication that an industry 

in the United States is materially 

injured or threatened with material 

injury, or the establishment of an 

industry in the United States is 

materially retarded, by reason of 

imports from China, Indonesia, and 

Korea of coated free sheet paper, 

provided for in subheadings 4810.13.19, 

4810.13.20, 4810.13.50, 4810.13.70, 

4810.14.19, 4810.14.20, 4810.14.50, 

4810.14.70, 4810.19.19, and 4810.19.20 

of the Harmonized Tariff Schedule of 

the United States, that are alleged to be 

subsidized by the Governments of 

China, Indonesia, and Korea and that 

are alleged to be sold in the United 

States at less than fair value. Unless the 

Department of Commerce extends the 

time for initiation pursuant to sections 

702(c)(1)(B) and 732(c)(1)(B) of the Act 

(19 U.S.C. 1671a(c)(1)(B) and 

1673a(c)(1)(B)), the Commission must 

reach preliminary determinations in 

countervailing duty and antidumping 

investigations in 45 days, or in this case 

by December 15, 2006. The 

Commission’s views are due at 

Commerce within five business days 

thereafter, or by December 22, 2006. 

For further information concerning 

the conduct of these investigations and 

rules of general application, consult the 

Commission’s Rules of Practice and 

Procedure, part 201, subparts A through 

E (19 CFR part 201), and part 207, 

subparts A and B (19 CFR part 207). 

DATES: Effective Date: October 31, 2006. 

FOR FURTHER INFORMATION CONTACT: 

Debra Baker (202–205–3180), 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 

these investigations may be viewed on 

the Commission’s electronic docket 

(EDIS) at http://edis.usitc.gov. 

SUPPLEMENTARY INFORMATION: 

Background.—These investigations 

are being instituted in response to a 

petition filed on October 31, 2006, by 

NewPage Corporation, Dayton, OH. 

Participation in the investigations and 

public service list.—Persons (other than 

petitioners) wishing to participate in the 

investigations as parties must file an 

entry of appearance with the Secretary 

to the Commission, as provided in 

sections 201.11 and 207.10 of the 

Commission’s rules, not later than seven 

days after publication of this notice in 

the Federal Register. Industrial users 

and (if the merchandise under 

investigation is sold at the retail level) 

representative consumer organizations 

have the right to appear as parties in 

Commission antidumping and 

countervailing duty investigations. The 

Secretary will prepare a public service 

list containing the names and addresses 

of all persons, or their representatives, 

who are parties to these investigations 

upon the expiration of the period for 

filing entries of appearance. 

Limited disclosure of business 

proprietary information (BPI) under an 

administrative protective order (APO) 

and BPI service list.—Pursuant to 

section 207.7(a) of the Commission’s 

rules, the Secretary will make BPI 

gathered in these investigations 

available to authorized applicants 

representing interested parties (as 

defined in 19 U.S.C. 1677(9)) who are 

parties to the investigations under the 

APO issued in the investigations, 

provided that the application is made 

not later than seven days after the 

publication of this notice in the Federal 

Register. A separate service list will be 

maintained by the Secretary for those 

parties authorized to receive BPI under 

the APO. 

Conference.—The Commission’s 

Director of Operations has scheduled a 

conference in connection with these 

investigations for 9:30 a.m. on 

November 21, 2006, at the U.S. 

International Trade Commission 

Building, 500 E Street, SW., 

Washington, DC. Parties wishing to 

participate in the conference should 

contact Debra Baker (202–205–3180) not 

later than November 16, 2006, to arrange 

for their appearance. Parties in support 

of the imposition of countervailing and 

antidumping duties in these 

investigations and parties in opposition 

to the imposition of such duties will 

each be collectively allocated one hour 

within which to make an oral 

presentation at the conference. A 

nonparty who has testimony that may 

aid the Commission’s deliberations may 

request permission to present a short 

statement at the conference. 

Written submissions.—As provided in 

sections 201.8 and 207.15 of the 

Commission’s rules, any person may 

submit to the Commission on or before 

November 27, 2006, a written brief 


rwilkins on PROD1PC63 with NOTICES
64984 Federal Register / Vol. 71, No. 214 / Monday, November 6, 2006 / Notices 

containing information and arguments 

pertinent to the subject matter of the 

investigations. Parties may file written 

testimony in connection with their 

presentation at the conference no later 

than three days before the conference. If 

briefs or written testimony contain BPI, 

they must conform with the 

requirements of sections 201.6, 207.3, 

and 207.7 of the Commission’s rules. 

The Commission’s rules do not 

authorize filing of submissions with the 

Secretary by facsimile or electronic 

means, except to the extent permitted by 

section 201.8 of the Commission’s rules, 

as amended, 67 FR 68036 (November 8, 

2002). 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). 

In accordance with sections 201.16(c) 

and 207.3 of the rules, each document 

filed by a party to the investigations 

must be served on all other parties to 

the investigations (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: These investigations are being 

conducted under authority of title VII of the 

Tariff Act of 1930; this notice is published 

pursuant to section 207.12 of the 

Commission’s rules. 

Issued: November 1, 2006. 

By order of the Commission. 

Marilyn R. Abbott, 

Secretary to the Commission. 

[FR Doc. E6–18654 Filed 11–3–06; 8:45 am] 

BILLING CODE 7020–02–P 

DEPARTMENT OF JUSTICE 

Notice of Lodging of Consent Decree 

Under the Comprehensive 

Environmental Response, 

Compensation, and Liability Act and 

the Delaware Hazardous Substances 

Cleanup Act 

Notice is hereby given that on 

September 29, 2006, a proposed Consent 

Decree in United States and the State of 

Delaware v. E.I. Dupont De Nemours & 

Company, Inc., and CIBA Specialty 

Chemicals Corporation, Civil Action No. 

06–612 was lodged with the United 

States District Court for the District of 

Delaware. 

In this action the United States and 

the State of Delaware sought claims for 

natural resource damages brought 

pursuant to the Comprehensive 

Environmental Response, 

Compensation, and Liability Act 

(‘‘CERCLA’’), as amended, 42 U.S.C. 

9601 et seq. and the Delaware 

Hazardous Substance Cleanup Act 

(‘‘HSCA’’), 7 Del. C. Chapter 91 with 

respect to the release of hazardous 

substances from DuPont-Newport 

chemical facility, located in Newport, 

Delaware. Under the proposed Consent 

Decree, the defendants will fund 

restoration projects on the ‘‘Pike 

Property’’ as set forth in the Damage 

Assessment and Restoration Plan 

(‘‘DARP’’, attached to the Consent 

Decree), and the State of Delaware will 

hold an environmental covenant for the 

Pike Property to protect it in perpetuity. 

Defendants will reimburse each Trustee 

for its Damage Assessment Costs, and 

make a payment to Delaware for 

groundwater injuries. The total value of 

the settlement as set forth in the 

Consent Decree is $1.6 million. 

The Department of Justice will receive 

for a period of fifteen (15) days from the 

date of this publication comments 

relating to the Consent Decree. 

Comments should be addressed to the 

Assistant Attorney General, 

Environment and Natural Resources 

Division, P.O. Box 7611, U.S. 

Department of Justice, Washington, D.C. 

20044–7611, and should refer to United 

States and the State of Delaware v. E.I. 

Du Pont De Nemours & Company, Inc., 

and CIBA Specialty Chemicals 

Corporation, D.J. Ref. 90–11–2–883/2. 

The Consent Decree may be examined 

at the Office of the United States 

Attorney, for the District of Delaware, 

1007 Orange Street, Suite 700, 

Wilmington, Delaware. During the 

public comment period, the Consent 

Decree, may also be examined on the 

following Department of Justice Web 

site, http://www.usdoj.gov/enrd/ 

Consent_Decrees.html. A copy of the 

Consent Decree may also be obtained by 

mail from the Consent Decree Library, 

P.O. Box 7611, U.S. Department of 

Justice, Washington, DC 20044–7611 or 

by faxing or e-mailing a request to Tonia 

Fleetwood (tonia.fleetwood@usdoj.gov), 

fax no. (202) 514–0097, phone 

confirmation number (202) 514–1547. In 

requesting a copy from the Consent 

Decree Library, please enclose a check 

in the amount of $6.00 (25 cents per 

page reproduction cost) payable to the 

U.S. Treasury. 

A copy of the Consent Decree may 

also be obtained at the offices of the 

Delaware Department of Natural 

Resources and Environmental Control, 

Division of Air and Waste Management, 

Site Investigation and Restoration 

Branch, 391 Lukens Drive, New Castle, 

Delaware 19720, Main phone number: 

302–395–2600, Site Name: DuPont 

Newport NRDA DE–X009. Contacts: 

Jane Biggs Sanger, Elizabeth LaSorte, or 

Robert Newsome. An electronic version 

of the Consent Decree and the DARP can 

be viewed at http:// 

apps.dnrec.state.de.us/intraviewer/ 

session/frmmain.cfm. 

Robert Brook, 

Assistant Chief, Environmental Enforcement 

Section, Environment and Natural Resources 

Division. 

[FR Doc. 06–9104 Filed 11–3–06; 8:45 am] 

BILLING CODE 4410–15–M 

DEPARTMENT OF JUSTICE 

Antitrust Division 

United States v. Dairy Farmers of 

America, Inc.; Proposed Final 

Judgement and Competitive Impact 

Statement 

Notice is hereby given pursuant to the 

Antitrust Procedures and Penalties Act, 

15 U.S.C. 16(b) through (h), that a 

proposed Final Judgement, Stipulation, 

and Competitive Impact Statement have 

been filed with the United States 

District Court for the Eastern District of 

Kentucky in United States of America 

and Commonwealth of Kentucky v. 

Dairy Farmers of America, Inc. and 

Southern Belle Dairy Co., LLC, No. 6:03–

cv–206. On April 24, 2003, the United 

States and Commonwealth of Kentucky 

filed a Complaint alleging that the 

acquisition by DFA of an ownership 

interest in Southern Belle Dairy Co., 

LLC (‘‘Southern Belle’’), violated 

Section 7 of the Clayton Act, 15 U.S.C. 

18. An Amended Complaint was filed 

on May 6, 2004. The proposed Final 

Judgment, filed on October 2, 2006, 

requires DFA to divest its interest in 

Southern Belle and use its best efforts to 

cause its partner, the Allen Family 

Limited Partnership, to divest its 

interest in Southern Belle as well. 

Copies of the Amended Complaint, 

proposed Final Judgment, and 

Competitive Impact Statement are 

available for inspection at the 

Department of Justice in Washington, 

DC in Room 215, 325 Seventh Street, 

NW., and at the Office of the Clerk of 

the United States District Court for the 

Eastern District of Kentucky, London, 

Kentucky. 

Public comment is invited within 60 

days of the date of this notice. Such 

comments, and responses thereto, will 

be published in the Federal Register 

and filed with the Court. Comments 

should be directed to Mark J. Botti, 

Chief, Litigation I Section, Antitrust 

Division, U.S. Department of Justice, 


rwilkins on PROD1PC63 with NOTICES
Federal Register / Vol. 71, No. 227 / Monday, November 27, 2006 / Notices 68537 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[A–201–805] 

Circular Welded Non-Alloy Steel Pipe 

and Tube From Mexico: Extension of 

Time Limit for the Preliminary Results 

of the Antidumping Duty New Shipper 

Review 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

Effective Date: November 27, 2006. 

FOR FURTHER INFORMATION CONTACT: John 

Drury or Patrick Edwards, 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) 482–0195 or (202) 482–

8029, respectively. 

SUPPLEMENTARY INFORMATION:

Background 

The U.S. Department of Commerce 

(‘‘the Department’’) is conducting an 

antidumping new shipper review of 

circular welded non-alloy steel pipe and 

tube (‘‘pipe and tube’’) from Mexico in 

response to a request by Conduit S.A. de 

C.V. (‘‘Conduit’’). This review covers 

shipments to the United States for the 

period November 1, 2005, through April 

30, 2006, by Conduit. The Department 

received a timely request from Conduit 

in accordance with 19 CFR 351.214(c) 

for a new shipper review of the 

antidumping duty order on pipe and 

tube from Mexico. On July 10, 2006, the 

Department found that Conduit’s 

request for review met all regulatory 

requirements set forth in 19 CFR 

351.214(b) and initiated this new 

shipper review covering the period 

November 1, 2005, through April 30, 

2006. See Circular Welded Non-Alloy 

Steel Pipe and Tube from Mexico: 

Initiation of New Shipper Antidumping 

Duty Review, 71 FR 38851 (July 10, 

2006) (‘‘Initiation Notice’’). The 

preliminary results for this new shipper 

review are currently due no later than 

December 27, 2006. 

Extension of Time Limits for 

Preliminary Results 

Section 751(a)(2)(B)(iv) of the Tariff 

Act of 1930, as amended (‘‘the Act’’), 

and 19 CFR 351.214(i)(1) require the 

Department to issue the preliminary 

results of a new shipper review within 

180 days after the date on which the 

new shipper review was initiated. The 

Department may, however, extend the 

deadline for completion of the 

preliminary results of a new shipper 

review from 180 days to 300 days if it 

determines that the case is 

extraordinarily complicated. See section 

751(a)(2)(B)(iv) of the Act and 19 CFR 

351.214(i)(2). The Department has 

determined that this new shipper 

review is extraordinarily complicated 

and that it is not practicable to complete 

the preliminary results within the 

current time limits. 

As stated at initiation, the Department 

had concerns as to ‘‘whether Conduit’s 

subject sale in this new shipper review 

constituted its first shipment of subject 

merchandise made to an unaffiliated 

customer in the United States* * *’’

See Memorandum to the File from The 

Team through Richard Weible, Office 7 

Director, regarding Initiation of AD New 

Shipper Review: Circular Welded NonAlloy Steel Pipe and Tube from Mexico, 

dated June 30, 2006, (‘‘Initiation 

Checklist’’) at 6. Accordingly, the 

Department requested entry documents 

from U.S. Customs and Border 

Protection (‘‘CBP’’) to further analyze 

this issue. The Department only recently 

received the requested documents from 

CBP relating to the entries of subject 

merchandise in question and it was 

necessary for the Department to gather 

additional information from CBP 

officials. Additionally, there are 

supplemental questionnaires still 

pending in this new shipper review. 

Based on the timing of this case and the 

additional information that must be 

gathered and carefully analyzed, the 

preliminary results of this new shipper 

review cannot be completed within the 

statutory time limit of 180 days. 

Accordingly, the Department is 

extending the time limit for the 

completion of the preliminary results of 

the new shipper review of Conduit by 

120 days until no later than April 26, 

2007, which is 300 days from the date 

on which this new shipper review was 

initiated. The deadline for the final 

results of this new shipper review 

continues to be 90 days after the 

publication of the preliminary results, 

unless extended. 

This notice is published pursuant to 

sections 751(a)(2)(B)(iv) and 777(i)(1) of 

the Act. 

Dated: November 20, 2006. 

Stephen J. Claeys, 

Deputy Assistant Secretary for Import 

Administration. 

[FR Doc. E6–20021 Filed 11–24–06; 8:45 am] 

BILLING CODE 3510–DS–P 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[A–560–820, A–570–906, A–580–856] 

Initiation of Antidumping Duty 

Investigations: Coated Free Sheet 

Paper from Indonesia, the People’s 

Republic of China, and the Republic of 

Korea 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

EFFECTIVE DATE: November 27, 2006. 

FOR FURTHER INFORMATION CONTACT: Irina 

Itkin (Indonesia), Magd Zalok (People’s 

Republic of China) or Joy Zhang 

(Republic of Korea), AD/CVD 

Operations, Office 2, Office 4, and 

Office 3, Import Administration, 

International Trade Administration, 

U.S. Department of Commerce, 14th 

Street and Constitution Avenue, NW, 

Washington, DC 20230; telephone: (202) 

482–0656, (202) 482–4162, or (202) 482–

1168, respectively. 

SUPPLEMENTARY INFORMATION: 

The Petitions 

On October 31, 2006, the Department 

of Commerce (the Department) received 

petitions concerning imports of coated 

free sheet paper (CFS) from Indonesia 

(Indonesian petition), the Republic of 

Korea (Korea) (Korean petition), and the 

People’s Republic of China (PRC) (PRC 

petition) filed in proper form by 

NewPage Corporation (the petitioner). 

See the Petitions for the Imposition of 

Antidumping and Countervailing Duties 

Against Coated Free Sheet Paper From 

China, Indonesia, and Korea filed on 

October 31, 2006. On November 3, 13, 

and 16, 2006, the Department issued 

requests for additional information and 

clarification of certain areas of the 

petitions. Based on the Department’s 

requests, the petitioner filed 

supplements to the petitions on 

November 9, 15, and 17, 2006. The 

period of investigation (POI) for 

Indonesia and Korea is October 1, 2005, 

through September 30, 2006. The POI 

for the PRC is April 1, 2006, through 

September 30, 2006. 

In accordance with section 732(b) of 

the Tariff Act of 1930, as amended (the 

Act), the petitioner alleges that imports 

of CFS from Indonesia, Korea, and the 

PRC are being, or are likely to be, sold 

in the United States at less than fair 

value, within the meaning of section 

731 of the Act, and that such imports 

are materially injuring, or threatening 

material injury to, an industry in the 

United States. 

The Department finds that the 

petitioner filed these petitions on behalf 


sroberts on PROD1PC70 with NOTICES
68538 Federal Register / Vol. 71, No. 227 / Monday, November 27, 2006 / Notices 

1See USEC, Inc. v. United States, 132 F. Supp. 

2d 1, 8 (CIT 2001), citing Algoma Steel Corp. Ltd. 

v. United States, 688 F. Supp. 639, 644 (1988), aff’d 

865 F.2d 240 (Fed Cir. 1989) cert. denied 492 U.S. 

919 (1989). 

of the domestic industry because the 

petitioner is an interested party as 

defined in section 771(9)(C) of the Act, 

and has demonstrated sufficient 

industry support with respect to the 

antidumping investigations that the 

petitioner is requesting that the 

Department initiate (see ‘‘Determination 

of Industry Support for the Petition’’

below). 

Scope of Investigations 

The merchandise covered by each of 

these investigations includes coated free 

sheet paper and paperboard of a kind 

used for writing, printing or other 

graphic purposes. Coated free sheet 

paper is produced from not-more-than 

10 percent by weight mechanical or 

combined chemical/mechanical fibers. 

Coated free sheet paper is coated with 

kaolin (China clay) or other inorganic 

substances, with or without a binder, 

and with no other coating. Coated free 

sheet paper may be surface-colored, 

surface-decorated, printed (except as 

described below), embossed, or 

perforated. The subject merchandise 

includes single- and double-side-coated 

free sheet paper; coated free sheet paper 

in both sheet or roll form; and is 

inclusive of all weights, brightness 

levels, and finishes. The terms ‘‘wood 

free’’ or ‘‘art’’ paper may also be used to 

describe the imported product. 

Excluded from the scope are: (1) 

Coated free sheet paper that is imported 

printed with final content printed text 

or graphics; (2) base paper to be 

sensitized for use in photography; and 

(3) paper containing by weight 25 

percent or more cotton fiber. 

Coated free sheet paper is classifiable 

under subheadings 4810.13.1900, 

4810.13.2010, 4810.13.2090, 

4810.13.5000, 4810.13.7040, 

4810.14.1900, 4810.14.2010, 

4810.14.2090, 4810.14.5000, 

4810.14.7040, 4810.19.1900, 

4810.19.2010, and 4810.19.2090 of the 

Harmonized Tariff Schedule of the 

United States (HTSUS). While HTSUS 

subheadings are provided for 

convenience and customs purposes, our 

written description of the scope of these 

investigations is dispositive. 

Comments on Scope of Investigations 

During our review of the petitions, we 

discussed the scope with the petitioner 

to ensure that it is an accurate reflection 

of the products for which the domestic 

industry is seeking relief. Moreover, as 

discussed in the preamble to the 

regulations (Antidumping Duties; 

Countervailing Duties; Final Rule, 62 FR 

27296, 27323 (May 19, 1997)), we are 

setting aside a period for interested 

parties to raise issues regarding product 

coverage. The Department encourages 

all interested parties to submit such 

comments within 20 calendar days of 

the publication of this notice. 

Comments should be addressed to 

Import Administration’s Central 

Records Unit (CRU), Room 1870, U.S. 

Department of Commerce, 14th Street 

and Constitution Avenue, NW, 

Washington, DC 20230. The period of 

scope consultations is intended to 

provide the Department with ample 

opportunity to consider all comments 

and to consult with parties prior to the 

issuance of the preliminary 

determinations. 

Determination of Industry Support for 

the Petitions 

Section 732(b)(1) of the Act requires 

that a petition be filed on behalf of the 

domestic industry. Section 732(c)(4)(A) 

of the Act provides that a petition meets 

this requirement if the domestic 

producers or workers who support the 

petition account for (1) at least 25 

percent of the total production of the 

domestic like product and (2) more than 

50 percent of the production of the 

domestic like product produced by that 

portion of the industry expressing 

support for or opposition to the petition. 

Moreover, section 732(c)(4)(D) of the 

Act provides that, if the petition does 

not establish support of domestic 

producers or workers accounting for 

more than 50 percent of the total 

production of the domestic like product, 

the Department shall: (i) Poll the 

industry or rely on other information in 

order to determine if there is support for 

the petition, as required by 

subparagraph (A), or (ii) determine 

industry support using a statistically 

valid sampling method. 

Section 771(4)(A) of the Act defines 

the ‘‘industry’’ as the producers as a 

whole of a domestic like product. Thus, 

to determine whether the petitions have 

the requisite industry support, the 

statute directs the Department to look to 

producers and workers who produce the 

domestic like product. The International 

Trade Commission (ITC) is responsible 

for determining whether ‘‘the domestic 

industry’’ has been injured and must 

also determine what constitutes a 

domestic like product in order to define 

the industry. While the Department and 

the ITC must apply the same statutory 

definition regarding the domestic like 

product, they do so for different 

purposes and pursuant to separate and 

distinct authority. See section 771(10) of 

the Act. In addition, the Department’s 

determination is subject to limitations of 

time and information. Although this 

may result in different definitions of the 

domestic like product, such differences 

do not render the decision of either 

agency contrary to law.1

Section 771(10) of the Act defines the 

domestic like product as ‘‘a product 

which is like, or in the absence of like, 

most similar in characteristics and uses 

with, the article subject to an 

investigation under this subtitle.’’ Thus, 

the reference point from which the 

domestic like product analysis begins is 

‘‘the article subject to an investigation,’’

i.e., the class or kind of merchandise to 

be investigated, which normally will be 

the scope as defined in the petition. 

With regard to domestic like product, 

the petitioner does not offer a definition 

of domestic like product distinct from 

the scope of the investigations. Based on 

our analysis of the information 

presented by the petitioner, we have 

determined that there is a single 

domestic like product, coated free sheet 

paper, which is defined in the ‘‘Scope 

of Investigations’’ section above, and we 

have analyzed industry support in terms 

of the domestic like product. 

On November 15 and 16, 2006, we 

received submissions on behalf of 

Chinese and Indonesian producers of 

CFS questioning the industry support 

calculation. See ‘‘Office of AD/CVD 

Operations Initiation Checklist for the 

Antidumping Duty Petition on Coated 

Free Sheet Paper from Indonesia,’’ at 

Attachment II (Nov. 20, 2006) 

(Indonesia Initiation Checklist), ‘‘Office 

of AD/CVD Operations Initiation 

Checklist for the Antidumping Duty 

Petition on Coated Free Sheet Paper 

from the Republic of Korea,’’ at 

Attachment II (Nov. 20, 2006) (Korea 

Initiation Checklist), and ‘‘Office of AD/ 

CVD Operations Initiation Checklist for 

the Antidumping Duty Petition on 

Coated Free Sheet Paper from the 

People’s Republic of China,’’ at 

Attachment II (Nov. 20, 2006) (PRC 

Initiation Checklist), on file in the CRU. 

Our review of the data provided in the 

petition, supplemental submissions, and 

other information readily available to 

the Department indicates that 

Petitioners have established industry 

support representing at least 25 percent 

of the total production of the domestic 

like product; and more than 50 percent 

of the production of the domestic like 

product produced by that portion of the 

industry expressing support for or 

opposition to the petition, requiring no 

further action by the Department 

pursuant to section 732(c)(4)(D) of the 

Act. Therefore, the domestic producers 

(or workers) who support the petition 


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2The petitioner based the AUV on customs data 

for the period October 1, 2005, through August 30, 

2006, the most recently available data for the POI 

at the time of the petition filing. 

account for at least 25 percent of the 

total production of the domestic like 

product, and the requirements of section 

732(c)(4)(A)(i) of the Act are met. 

Furthermore, the domestic producers 

who support the petition account for 

more than 50 percent of the production 

of the domestic like product produced 

by that portion of the industry 

expressing support for, or opposition to, 

the petition. Thus, the requirements of 

section 732(c)(4)(A)(ii) of the Act also 

are met. Accordingly, the Department 

determines that the petition was filed on 

behalf of the domestic industry within 

the meaning of section 732(b)(1) of the 

Act. See Indonesia Initiation Checklist 

at Attachment II, Korea Initiation 

Checklist at Attachment II, and PRC 

Initiation Checklist at Attachment II. 

Allegations and Evidence of Material 

Injury and Causation 

With regard to Indonesia, Korea, and 

the PRC, the petitioner alleges that the 

U.S. industry producing the domestic 

like product is being materially injured 

and is threatened with material injury 

by reason of the individual and 

cumulated imports of the subject 

merchandise sold at less than fair value. 

The petitioner contends that the 

industry’s injury is evidenced by 

reduced market share, increased 

inventories, reduced shipments, lost 

sales, reduced production, lower 

capacity and capacity utilization rates, 

decline in prices, lost revenue, reduced 

employment, and a decline in financial 

performance. 

These allegations are supported by 

relevant evidence including import 

data, evidence of lost sales, and pricing 

information. We assessed the allegations 

and supporting evidence regarding 

material injury, threat of material injury, 

and causation, and have determined 

that these allegations are supported by 

accurate and adequate evidence and 

meet the statutory requirements for 

initiation. See Indonesia Initiation 

Checklist at Attachment III, Korea 

Initiation Checklist at Attachment III, 

and PRC Initiation Checklist Attachment 

III. 

Allegations of Sales at Less Than Fair 

Value 

The following is a description of the 

allegations of sales at less than fair value 

upon which the Department based its 

decision to initiate these investigations 

on imports of CFS from Indonesia, 

Korea, and the PRC. The sources of data 

for the deductions and adjustments 

relating to the U.S. price, constructed 

value (CV) (for Indonesia and Korea), 

and the factors of production (for the 

PRC only) are also discussed in the 

country-specific initiation checklists. 

See Indonesia Initiation Checklist, 

Korea Initiation Checklist, and PRC 

Initiation Checklist. Should the need 

arise to use any of this information as 

facts available under section 776 of the 

Act in our preliminary or final 

determinations, we will reexamine the 

information and revise the margin 

calculations, if appropriate. 

Indonesia and Korea 

Export Price (EP) 

The petitioner calculated a single EP 

using the average unit values (AUVs) for 

import data collected by the U.S. Census 

Bureau for both Indonesia and Korea. 

The petitioner used a weighted average 

of two HTSUS numbers under which 

CFS is imported into the United States 

and that fall within the scope of the 

investigations. These HTSUS numbers 

contain imports of products which were 

most similar to the product on which 

the petitioner based normal value (NV) 

in the Indonesian and Korean petitions: 

4810.14.19.00 and 4810.19.19.00.2 In 

addition, these HTSUS numbers 

account for 48 percent of the volume of 

imports from Indonesia and 45 percent 

of the volume of imports from Korea. To 

be conservative, the petitioner did not 

make any adjustments to U.S. price. 

Use of a Third Country Market and 

Sales Below Cost Allegation 

With respect to NV, the petitioner 

stated that home market prices in 

Indonesia and Korea were not 

reasonably available. According to the 

petitioner, market intelligence in these 

countries is very difficult to obtain and 

sources of this information were either 

unable or unwilling to provide such 

data. The petitioner stated that it 

queried all available sources to identify 

Indonesian and Korean home market 

pricing data but was unsuccessful in its 

attempts. See e.g., page 2 of the October 

31, 2006, Indonesian petition and pages 

1 and 2 of the November 9, 2006, 

supplement to the Indonesian petition; 

and page 2 of the October 31, 2006, 

Korean petition and page 1 of the 

November 9, 2006, supplement to the 

Korean petition. 

Consequently, for Indonesia and 

Korea, the petitioner used statistics on 

Indonesia’s and Korea’s third-country 

exports based on official Indonesian and 

Korean export data for determining NV. 

In selecting the third-country market, 

the petitioner chose Malaysia for 

Indonesia, and Australia and 

Bangladesh for Korea because: (1) These 

countries represent the largest thirdcountry markets (for Indonesia and 

Korea, respectively) for scope 

merchandise during the POI; (2) the 

aggregate quantity of scope merchandise 

sold by Indonesian exporters to 

Malaysia, and Korean exporters to 

Australia and Bangladesh, accounted for 

more than five percent of the aggregate 

quantity of the scope merchandise sold 

in the United States; and (3) the product 

sold to the Malaysian market (for 

Indonesia) and to the Australian and 

Bangladeshi markets (for Korea) is 

comparable to the product that served as 

the basis for EP. After examining this 

evidence, we found the selection of 

Malaysia for Indonesia, and Australia 

and Bangladesh for Korea, as the 

comparison market to be reasonable. 

The petitioner calculated thirdcountry price for Indonesia and Korea 

using quantities and FOB values from 

official Indonesian and Korean export 

statistics. 

The petitioner has provided 

information demonstrating reasonable 

grounds to believe or suspect that sales 

of CFS in the comparison markets (i.e., 

Malaysia for Indonesia, and Australia 

and Bangladesh for Korea) were made at 

prices below the fully absorbed cost of 

production (COP), within the meaning 

of section 773(b) of the Act, and 

requested that the Department conduct 

country-wide sales-below-cost 

investigations. The Statement of 

Administrative Action (SAA), submitted 

to the Congress in connection with the 

interpretation and application of the 

URAA, states that an allegation of sales 

below COP need not be specific to 

individual exporters or producers. See 

SAA, H.R. Doc. No. 103–316 at 833 

(1994). The SAA, at 833, states that 

‘‘Commerce will consider allegations of 

below-cost sales in the aggregate for a 

foreign country, just as Commerce 

currently considers allegations of sales 

at less than fair value on a country-wide 

basis for purposes of initiating an 

antidumping investigation.’’

Further, the SAA provides that 

section 773(b)(2)(A) of the Act retains 

the requirement that the Department 

have ‘‘reasonable grounds to believe or 

suspect’’ that below-cost sales have 

occurred before initiating such an 

investigation. Reasonable grounds exist 

when an interested party provides 

specific factual information on costs and 

prices, observed or constructed, 

indicating that sales in the foreign 

market in question are at below-cost 

prices. Id. 


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3The petitioner based the AUV on customs data 

for the period April 1, 2006, through August 30, 

2006, the most recently available data for the POI 

at the time of the petition filing. 

Cost of Production 

Indonesia 

Pursuant to section 773(b)(3) of the 

Act, COP consists of the cost of 

manufacturing (COM); selling, general 

and administrative (SG&A) expenses; 

financial expenses; and packing 

expenses. The petitioner calculated the 

quantity of each of the inputs into COM 

(except factory overhead) and packing 

based on the input quantities of a U.S. 

CFS producer during the POI, 

multiplied by the value of inputs used 

to manufacture CFS in Indonesia using 

publicly available data adjusted for 

inflation. To calculate average factory 

overhead, SG&A and the financial 

expense rate, the petitioner relied on the 

most current financial statements of two 

Indonesian producers of CFS. 

Korea 

Pursuant to section 773(b)(3) of the 

Act, COP consists of the COM; SG&A 

expenses; financial expenses; and 

packing expenses. The petitioner 

calculated COM (except for pulp and 

factory overhead) and packing expenses 

using input quantities based on the 

production experience of a U.S. CFS 

producer during the POI, multiplied by 

the value of inputs used to manufacture 

CFS in Korea using publicly available 

data. For pulp, the petitioner used input 

quantities from an independent study, 

multiplied by the costs incurred to 

manufacture CFS in Korea using 

publicly available data. To calculate 

average factory overhead, SG&A and the 

financial expense rates, the petitioner 

relied on the most current financial 

statements of six Korean producers of 

CFS. 

Indonesia and Korea 

Based on a comparison of the 

Malaysian market prices of CFS for 

Indonesia, and the Australian and 

Bangladeshi market prices of CFS for 

Korea, to the COP calculated for 

Indonesia and Korea, respectively, in 

the petitions, we find reasonable 

grounds to believe or suspect that sales 

of the foreign like products in Malaysia 

(for Indonesia) and Australia and 

Bangladesh (for Korea) were made at 

prices below COP within the meaning of 

section 773(b)(2)(A)(i) of the Act. 

Accordingly, the Department is 

initiating country-wide cost 

investigations relating to third-country 

sales to Malaysia (for Indonesia) and to 

Australia and Bangladesh (for Korea). 

We note, however, that if we determine 

that the home markets (i.e., Indonesia 

and Korea) are viable, our initiation of 

country-wide cost investigations with 

respect to sales to the third country 

markets will be rendered moot. See 

Indonesia Initiation Checklist and Korea 

Initiation Checklist. 

Normal Value Based on CV 

Because it alleged sales below cost, 

pursuant to sections 773(a)(4), 773(b) 

and 773(e) of the Act, the petitioner 

calculated NV based on CV for 

Indonesia and Korea. The petitioner 

calculated CV using the same average 

COM, SG&A, financial and packing 

figures used to compute the COP. The 

petitioner then added the average profit 

rate based on the most recent financial 

statements of two Indonesian producers 

of CFS for Indonesia and three Korean 

producers of CFS for Korea. See 

Indonesia Initiation Checklist and Korea 

Initiation Checklist. 

PRC 

EP 

The petitioner calculated a single EP 

using the AUVs for import data 

collected by the U.S. Census Bureau. 

The petitioner used a weighted average 

of two HTSUS numbers under which 

CFS is imported into the United States 

and that fall within the scope of the 

investigation. These HTSUS numbers 

containing imports of products which 

were most similar to the product on 

which the petitioner based NV in the 

PRC petition: 4810.14.19.00 and 

4810.19.19.00.3 In addition, the HTSUS 

numbers account for over 87 percent of 

the imports of CFS from China, by 

volume. To calculate EP, the petitioner 

deducted foreign brokerage charges from 

the AUV (the petitioner did not deduct 

foreign inland freight charges from the 

AUV because it was unable to establish 

the distances between the Chinese mills 

and the ports closest to them). See PRC 

Initiation Checklist. 

Normal Value 

The petitioner stated that the PRC was 

a non-market economy (NME) and no 

determination to the contrary has been 

made by the Department. In previous 

investigations, the Department has 

determined that the PRC is an NME. See 

Notice of Final Determination of Sales 

at Less Than Fair Value: Chlorinated 

Isocyanurates From the People’s 

Republic of China, 70 FR 24502 (May 

10, 2005), Notice of Final Determination 

of Sales at Less Than Fair Value and 

Affirmative Critical Circumstances: 

Magnesium Metal from the People’s 

Republic of China, 70 FR 9037 (Feb. 24, 

2005) and Notice of Final Determination 

of Sales at Less Than Fair Value: 

Certain Tissue Paper Products from the 

People’s Republic of China, 70 FR 7475 

(Feb.14, 2005). In accordance with 

section 771(18)(C)(i) of the Act, the 

presumption of NME status remains in 

effect until revoked by the Department. 

The presumption of NME status for the 

PRC has not been revoked by the 

Department and remains in effect for 

purposes of the initiation of this 

investigation. Accordingly, because 

available information does not permit 

the NV of the merchandise to be 

determined under section 773(a) of the 

Act, the NV of the product is 

appropriately based on factors of 

production valued in a surrogate market 

economy country in accordance with 

section 773(c) of the Act. In the course 

of this investigation, all parties will 

have the opportunity to provide relevant 

information related to the issues of the 

PRC’s NME status and the granting of 

separate rates to individual exporters. 

The petitioner identified India as the 

surrogate country, arguing that India is 

an appropriate surrogate, pursuant to 

section 773(c)(4) of the Act, because it 

is a market economy country that is at 

a level of economic development 

comparable to that of the PRC and is a 

significant producer and exporter of 

CFS. See Volume II of the PRC petition 

at pages 2–3. Based on the information 

provided by the petitioner, we believe 

that its use of India as a surrogate 

country is appropriate for purposes of 

initiating this investigation. After the 

initiation of the investigation, the 

Department will solicit comments 

regarding surrogate country selection. 

Also, pursuant to 19 CFR 

351.301(c)(3)(i), interested parties will 

be provided an opportunity to submit 

publicly available information to value 

factors of production within 40 days 

after the date of publication of the 

preliminary determination. 

The petitioner explained that the 

production process for CFS begins with 

the manufacture of groundwood free 

pulp, which involves the use of wood 

fiber as the primary raw material. The 

wood is then placed into digester 

cooking vessels and mixed with various 

chemicals to produce pulp which is 

then washed and bleached. The 

chemical pulp is then placed in a paper 

machine which spreads the pulp into a 

uniform flat surface and removes water 

from the pulp through both mechanical 

and thermal means. The last section of 

the paper machine consists of several 

calendaring rolls with a reel device for 

winding the paper into a roll, which is 

then sent through a coating process. See 

Volume II of the PRC petition at pages 

3 through 6, and Exhibit I–5. The 


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4Source: International Financial Statistics, IMF, 

October 2006. 

petitioner stated that, to the best of its 

knowledge, Chinese producers 

manufacturing CFS use the same 

processes and machinery as U.S. 

producers, and many Chinese mills use 

Western technology and mills built by 

Western companies. According to the 

petitioner, many of the CFS mills in the 

PRC are fully integrated. See Volume II 

of the PRC petition at page 5. 

The petitioner provided a dumping 

margin calculation using the 

Department’s NME methodology as 

required by 19 CFR 351.202(b)(7)(i)(C). 

See Volume II of the PRC petition at 

Exhibits II–5 and 14, as revised in 

Exhibits 3 and 4, respectively, of the 

November 9, 2006, supplement to the 

petition. According to the petitioner, the 

cost model provided in Exhibit II–5 of 

the PRC petition, as revised in Exhibit 

2 of the November 17, 2006 supplement 

to the petition, reflects the cost of 

producing the type of paper (i.e., 70 lb. 

(104g/m3) basis weight, grade 2, doublesided CFS) that can be imported under 

either of the tariff categories used to 

derive U.S. price, categories which 

comprise the majority of subject 

merchandise imports from the PRC 

during the POI. See PRC Initiation 

Checklist. 

To determine the quantities of inputs 

for each raw material used by the PRC 

producers to produce CFS, the 

petitioner relied on its own production 

experience because it claimed that it is 

not aware of any publicly available 

information regarding the factor inputs 

and factor consumption rates pertaining 

to Chinese producers of CFS. In 

accordance with section 773(c)(4) of the 

Act, the petitioner valued factors of 

production, where possible, using 

reasonably available, public surrogate 

country data. To value certain factors of 

production, the petitioner used Monthly 

Statistics of the Foreign Trade of India, 

as published by the Directorate General 

of Commercial Intelligence and 

Statistics of the Ministry of Commerce 

and Industry, Government of India, and 

compiled by World Trade Data Atlas 

(WTA). Since there were no Indian 

imports of one minor input, the 

petitioner used import data for 

Indonesia from the WTA to value this 

input. See PRC Initiation Checklist. 

Since Indian and Indonesian import 

values are expressed in a foreign 

currency, the petitioner converted these 

values into U.S. dollars using the 

exchange rates on Import 

Administration’s Web site, 

ia.ita.doc.gov/exchange/india.txt, for 

the period during which the imports 

were made. The petitioner then inflated 

the resulting amounts to a POI value 

using the Indian and, where applicable, 

Indonesian, Wholesale Price Index 

(WPI) for ‘‘All Commodities.’’ 4

See PRC Initiation Checklist 

The Department calculates and 

publishes the surrogate values for labor 

to be used in NME cases on its Web site. 

Therefore, to value labor, the petitioner 

used a labor rate of $0.97 per hour, 

published on the Department Web site, 

in accordance with the Department’s 

regulations. See 19 CFR 351.408(c)(3) 

and the PRC Initiation Checklist. 

The petitioner valued the various 

forms of energy used in the production 

of CFS based on the following sources: 

(1) the Indian electricity rate as reported 

by the U.S. Department of Energy for the 

year 2000, inflated to a POI value using 

the WPI for power, fuel, and 

lubrications published by the Reserve 

Bank of India (see Volume II of the PRC 

petition at page 9 and Exhibit II–9); (2) 

Indian natural gas prices charged to 

industrial users during a period 

overlapping the POI, as reported by 

CRISIL Research India (see Volume II of 

the PRC petition at page 9 and Exhibit 

II–10); (3) prices for hydrocarbon 

products (to value fuel oil) quoted by 

Bharat Petroleum Corporation, Ltd., 

which is, according to the petitioner, a 

major supplier of oil and other fuel 

products throughout India (see Volume 

II of the PRC petition at pages 9–10 and 

Exhibit II–11); and (4) the price of coal 

from the TERI Energy Data Directory & 

Yearbook 2003/04, inflated using the 

Indian WPI for power, fuel and 

lubricants, and converted from Rupees 

per metric ton to U.S. dollars per 

million British thermal units (see 

Volume II of the PRC petition at page 10 

and Exhibit II–12). The Department 

revised the petitioner’s value for natural 

gas to reflect the price in effect during 

the POI only. See PRC Initiation 

Checklist for further details. 

The petitioner calculated surrogate 

financial ratios (overhead, SG&A, and 

profit) from the annual reports of two 

Indian producers of CFS: The 2004–

2005 Annual Reports of Ballapur 

Industries, Ltd. (Ballapur) and the 2005–

2006 Annual Report of Seshasayee 

Paper and Boards, Ltd. (Seshasayee). 

See Volume II of the PRC petition at 

page 10 and Exhibit I–13. The 

Department revised the petitioner’s 

financial ratio calculations by including 

in the calculations certain financial 

statement line items that were omitted 

from the calculations and by 

reclassifying certain expenses used in 

the calculations. See PRC Initiation 

Checklist. 

Fair Value Comparisons 

Based on the data provided by the 

petitioner, there is reason to believe that 

imports of CFS from Indonesia, Korea, 

and the PRC are being, or are likely to 

be, sold in the United States at less than 

fair value. Based on comparisons of EP 

to CV, calculated in accordance with 

section 773(a)(4) of the Act, the 

weighted-average dumping margin for 

CFS is 99.14 percent for Indonesia, and 

71.81 percent for Korea. Based on 

comparisons of EP to NV, calculated in 

accordance with section 773(c) of the 

Act and adjusted as noted above, the 

weighted-average dumping margin for 

CFS from the PRC is 99.65 percent. 

Initiation of Antidumping 

Investigations 

Based upon the examination of the 

petitions on CFS from Indonesia, Korea, 

and the PRC, the Department finds that 

the petitions meet the requirements of 

section 732 of the Act. Therefore, we are 

initiating antidumping duty 

investigations to determine whether 

imports of CFS from Indonesia, Korea, 

and the PRC are being, or are likely to 

be, sold in the United States at less than 

fair value. In accordance with section 

733(b)(1)(A) of the Act, unless 

postponed, we will make our 

preliminary determinations no later 

than 140 days after the date of this 

initiation. 

Separate Rates and Quantity and Value 

Questionnaire 

The Department recently modified the 

process by which exporters and 

producers may obtain separate-rate 

status in NME investigations. See Policy 

Bulletin 05.1: Separate-Rates Practice 

and Application of Combination Rates 

in Antidumping Investigations 

involving Non-Market Economy 

Countries (Separate Rates and 

Combination Rates Bulletin), (Apr. 5, 

2005), available on the Department’s 

Web site at http://ia.ita.doc.gov/policy/ 

bull05–1.pdf. The process requires the 

submission of a separate-rate status 

application. Based on our experience in 

processing the separate-rate applications 

in the following antidumping duty 

investigations, we have modified the 

application for this investigation to 

make it more administrable and easier 

for applicants to complete: Initiation of 

Antidumping Duty Investigations: 

Certain Lined Paper Products from 

India, Indonesia, and the People’s 

Republic of China, 70 FR 58374, 58379 

(Oct. 6, 2005), Initiation of Antidumping 

Duty Investigation: Certain Artist 

Canvas From the People’s Republic of 

China,70 FR 21996, 21999 (Apr. 28, 


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68542 Federal Register / Vol. 71, No. 227 / Monday, November 27, 2006 / Notices 

2005) (Artist Canvas from the PRC) and 

Initiation of Antidumping Duty 

Investigations: Diamond Sawblades and 

Parts Thereof from the People’s 

Republic of China and the Republic of 

Korea, 70 FR 35625, 35629 (June 21, 

2005) (Sawblades from the PRC and 

Korea). The specific requirements for 

submitting the separate-rate application 

in this investigation are outlined in 

detail in the application itself, which 

will be available on the Department’s 

Web site at http://ia.ita.doc.gov/iahighlights-and-news.html on the date of 

publication of this initiation notice in 

the Federal Register. The separate-rate 

application is due no later than January 

26, 2007. 

NME Respondent Selection and 

Quantity and Value Questionnaire 

For NME investigations, it is the 

Department’s practice to request 

quantity and value information from all 

known exporters identified in the 

petition. In addition, the Department 

typically requests the assistance of the 

NME government in transmitting the 

Department’s quantity and value 

questionnaire to all companies that 

manufacture and export subject 

merchandise to the United States, as 

well as to manufacturers that produce 

the subject merchandise for companies 

that were engaged in exporting subject 

merchandise to the United States during 

the POI. The quantity and value data 

received from NME exporters is used as 

the basis to select the mandatory 

respondents. Although many NME 

exporters respond to the quantity and 

value information request, at times some 

exporters may not have received the 

quantity and value questionnaire or may 

not have received it in time to respond 

by the specified deadline. 

The Department requires that the 

respondents submit a response to both 

the quantity and value questionnaire 

and the separate-rate application by the 

respective deadlines in order to receive 

consideration for separate-rate status. 

This procedure will be applied to this 

and all future NME investigations. See 

Artist Canvas from the PRC, 70 FR at 

21999, Sawblades from the PRC and 

Korea, 70 FR at 35629, and Initiation of 

Antidumping Duty Investigation: 

Certain Activated Carbon from the 

People’s Republic of China, 71 FR 

16757, 16760 (Apr. 4, 2006). Appendix 

I of this notice contains the quantity and 

value questionnaire that must be 

submitted by all NME exporters no later 

than December 27, 2006. In addition, 

the Department will post the quantity 

and value questionnaire along with the 

filing instructions on the IA Web site: 

http://ia.ita.doc.gov/ia-highlights-andnews.html. The Department will send 

the quantity and value questionnaire to 

those companies identified in Exhibit I–

5 of Volume I of the PRC petition and 

the NME government. 

Use of Combination Rates in an NME 

Investigation 

The Department will calculate 

combination rates for certain 

respondents that are eligible for a 

separate rate in this investigation. The 

Separate Rates and Combination Rates 

Bulletin, states: 

[W]hile continuing the practice of 

assigning separate rates only to exporters, all 

separate rates that the Department will now 

assign in its NME investigations will be 

specific to those producers that supplied the 

exporter during the period of investigation. 

Note, however, that one rate is calculated for 

the exporter and all of the producers which 

supplied subject merchandise to it during the 

period of investigation. This practice applies 

both to mandatory respondents receiving an 

individually calculated separate rate as well 

as the pool of non-investigated firms 

receiving the weighted-average of the 

individually calculated rates. This practice is 

referred to as the application of ‘‘combination 

rates’’ because such rates apply to specific 

combinations of exporters and one or more 

producers. The cash-deposit rate assigned to 

an exporter will apply only to merchandise 

both exported by the firm in question and 

produced by a firm that supplied the exporter 

during the period of investigation. 

Separate Rates and Combination 

Rates Bulletin, at page 6. 

Distribution of Copies of the Petitions 

In accordance with section 

732(b)(3)(A) of the Act, copies of the 

public versions of the petitions have 

been provided to the representatives of 

the Governments of Indonesia, Korea, 

and the PRC. We will attempt to provide 

a copy of the public version of the 

petitions to the foreign producers/ 

exporters named in the petitions. 

International Trade Commission 

Notification 

We have notified the ITC of our 

initiations, as required by section 732(d) 

of the Act. 

Preliminary Determinations by the 

International Trade Commission 

The ITC will preliminarily determine, 

no later than December 15, 2006, 

whether there is a reasonable indication 

that imports of CFS from Indonesia, 

Korea, and the PRC are materially 

injuring, or threatening material injury 

to, a U.S. industry. A negative ITC 

determination with respect to any of the 

investigations will result in those 

investigations being terminated; 

otherwise, these investigations will 

proceed according to statutory and 

regulatory time limits. 

This notice is issued and published 

pursuant to section 777(i) of the Act. 

Dated: November 20, 2006. 

David M. Spooner, 

Assistant Secretary for Import 

Administration. 

APPENDIX I 

Where it is not practicable to examine all 

known producers/exporters of subject 

merchandise, section 777A(c)(2) of the Tariff 

Act of 1930 (as amended) permits us to 

investigate 1) a sample of exporters, 

producers, or types of products that is 

statistically valid based on the information 

available at the time of selection, or 2) 

exporters and producers accounting for the 

largest volume and value of the subject 

merchandise that can reasonably be 

examined. In the chart below, please provide 

the total quantity and total value of all your 

sales of merchandise covered by the scope of 

this investigation (see scope section of this 

notice), produced in the PRC, and exported/ 

shipped to the United States during the 

period April 1, 2006, through September 30, 

2006. 

Market 

Total Quantity Terms of Sale Total Value 

United States 

1. Export Price Sales ................................................................................................................... ........................ ........................ ........................

2. .............................................................................................................................................. ........................ ........................ ........................

a. Exporter name .................................................................................................................. ........................ ........................ ........................

b. Address ............................................................................................................................ ........................ ........................ ........................

c. Contact ............................................................................................................................. ........................ ........................ ........................

d. Phone No ......................................................................................................................... ........................ ........................ ........................

e. Fax No .............................................................................................................................. ........................ ........................ ........................

3. Constructed Export Price Sales .............................................................................................. ........................ ........................ ........................

4. Further Manufactured .............................................................................................................. ........................ ........................ ........................


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Total Sales ................................................................................................................................... ........................ ........................ ........................

Total Quantity: 

• Please report quantity on a metric ton 

basis. If any conversions were used, please 

provide the conversion formula and source. 

Terms of Sales: 

• Please report all sales on the same terms 

(e.g., free on board). 

Total Value: 

• All sales values should be reported in 

U.S. dollars. Please indicate any exchange 

rates used and their respective dates and 

sources. 

Export Price Sales: 

• Generally, a U.S. sale is classified as an 

export price sale when the first sale to an 

unaffiliated person occurs before importation 

into the United States. 

• Please include any sales exported by 

your company directly to the United States; 

• Please include any sales exported by 

your company to a third-country market 

economy reseller where you had knowledge 

that the merchandise was destined to be 

resold to the United States. 

• If you are a producer of subject 

merchandise, please include any sales 

manufactured by your company that were 

subsequently exported by an affiliated 

exporter to the United States. 

• Please do not include any sales of 

merchandise manufactured in Hong Kong in 

your figures. 

Constructed Export Price Sales: 

• Generally, a U.S. sale is classified as a 

constructed export price sale when the first 

sale to an unaffiliated person occurs after 

importation. However, if the first sale to the 

unaffiliated person is made by a person in 

the United States affiliated with the foreign 

exporter, constructed export price applies 

even if the sale occurs prior to importation. 

• Please include any sales exported by 

your company directly to the United States; 

• Please include any sales exported by 

your company to a third-country market 

economy reseller where you had knowledge 

that the merchandise was destined to be 

resold to the United States. 

• If you are a producer of subject 

merchandise, please include any sales 

manufactured by your company that were 

subsequently exported by an affiliated 

exporter to the United States. 

• Please do not include any sales of 

merchandise manufactured in Hong Kong in 

your figures. 

Further Manufactured: 

• Further manufacture or assembly costs 

include amounts incurred for direct 

materials, labor and overhead, plus amounts 

for general and administrative expense, 

interest expense, and additional packing 

expense incurred in the country of further 

manufacture, as well as all costs involved in 

moving the product from the U.S. port of 

entry to the further manufacturer. 

[FR Doc. E6–20020 Filed 11–24–06; 8:45 am] 

BILLING CODE 3510–P 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[A–823–809] 

Steel Concrete Reinforcing Bars From 

Ukraine; Preliminary Results of the 

Sunset Review of Antidumping Duty 

Order 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

SUMMARY: On August 1, 2006, the 

Department of Commerce (‘‘the 

Department’’) initiated a sunset review 

of the antidumping duty order on steel 

concrete reinforcing bars from Ukraine. 

On the basis of the notice of intent to 

participate, and complete substantive 

responses filed on behalf of the 

domestic and respondent interested 

parties, the Department is conducting a 

full sunset review of the antidumping 

duty order pursuant to section 751(c) of 

the Tariff Act of 1930, as amended (‘‘the 

Act’’) and 19 CFR 351.218(e)(2)(i). As a 

result of this sunset review, the 

Department preliminarily finds that 

revocation of the antidumping duty 

order would likely lead to continuation 

or recurrence of dumping at the level 

listed below in the section entitled 

‘‘Preliminary Results of Review.’’

EFFECTIVE DATE: November 27, 2006. 

FOR FURTHER INFORMATION CONTACT: 

Audrey R. Twyman, Damian Felton, or 

Brandon Farlander, AD/CVD 

Operations, Office 1, Import 

Administration, International Trade 

Administration, U.S. Department of 

Commerce, 14th Street & Constitution 

Avenue, NW, Washington, DC 20230; 

telephone: 202–482–3534, 202–482–

0133, and 202–482–0182, respectively. 

SUPPLEMENTARY INFORMATION:

Background 

On August 1, 2006, the Department 

published its notice of initiation of the 

sunset review of the antidumping duty 

order on steel concrete reinforcing bars 

from Ukraine, in accordance with 

section 751(c) of the Act. See Initiation 

of Five-Year (‘‘Sunset’’) Reviews, 71 FR 

43443 (August 1, 2006) (‘‘Notice of 

Initiation’’). 

The Department received a notice of 

intent to participate from the following 

domestic parties: The Rebar Trade 

Action Coalition and its individual 

producer members, Nucor Corporation, 

CMC Steel Group, and Gerdau 

Ameristeel, as well as domestic 

producers TAMCO Steel and Schnitzer 

Steel Industries, Inc. (‘‘Schnitzer’’) 

(‘‘domestic interested parties’’), within 

the deadline specified in 19 CFR 

351.218(d)(1)(i). These companies 

claimed interested party status under 

section 771(9)(C) of the Act, as 

manufacturers of a domestic-like 

product in the United States. 

The Department received a complete 

substantive response to the notice of 

initiation from the domestic interested 

parties within the 30-day deadline 

specified in 19 CFR 351.218(d)(3)(i). In 

this response, Cascade Steel Rolling 

Mills, Inc. (‘‘Cascade’’) was substituted 

for Schnitzer as a domestic interested 

party. Cascade is a wholly owned 

subsidiary of Schnitzer. Also, Steel 

Dynamics, Inc. (‘‘SDI’’) was added as a 

domestic producer. Because SDI did not 

file a notice of intent to participate in 

this review, it is not eligible to file a 

substantive response. See 19 CFR 

351.218(d)(iii)(A). Therefore, the 

domestic interested parties are now the 

Rebar Trade Action Coalition and its 

individual producer members Nucor 

Corporation, CMC Steel Group, and 

Gerdau Ameristeel, as well as TAMCO 

Steel, and Cascade. The Department 

received a complete substantive 

response from respondent interested 

party, Open Joint Stock Company 

‘‘Mittal Steel Kryviy Rih’’ 1 (‘‘Mittal 

Steel’’ or the ‘‘respondent interested 

party’’), within the deadline specified in 

19 CFR 351.218(d)(3)(i). On September 

5, 2006, the Department received a 

rebuttal to Mittal Steel’s substantive 

response from the domestic interested 

parties. 

19 CFR 351.218(e)(1)(ii)(A) provides 

that the Secretary normally will 

conclude that respondent interested 


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68546 Federal Register / Vol. 71, No. 227 / Monday, November 27, 2006 / Notices 

Department will issue a notice of final 

results of this sunset review, which will 

include the results of its analysis of 

issues raised in any such briefs, no later 

than March 29, 2007. 

This five-year (‘‘sunset’’) review and 

notice are in accordance with sections 

751(c), 752, and 777(i)(1) of the Act. 

Dated: November 20, 2006. 

David M. Spooner, 

Assistant Secretary for Import 

Administration. 

[FR Doc. E6–20012 Filed 11–24–06; 8:45 am] 

BILLING CODE 3510–DS–P 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[C–570–907, C–560–821, C–580–857] 

Notice of Initiation of Countervailing 

Duty Investigations: Coated Free Sheet 

Paper From the People’s Republic of 

China, Indonesia, and the Republic of 

Korea 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce 

DATES: Effective Date: November 27, 

2006. 

FOR FURTHER INFORMATION CONTACT: 

David Layton or David Neubacher (the 

PRC), Dana Mermelstein or Sean Carey 

(Indonesia), and Eric Greynolds or Darla 

Brown (Korea), AD/CVD Operations, 

Import Administration, International 

Trade Administration, U.S. Department 

of Commerce, 14th Street and 

Constitution Avenue, NW., Washington, 

DC 20230; telephone: (202) 482–0371 

and (202) 482–5823, (202) 482–1391 and 

(202) 482–3964, and (202) 482–6071 and 

(202) 482–2849, respectively. 

Initiation of Investigations: 

SUPPLEMENTARY INFORMATION: 

The Petitions 

On October 31, 2006, the Department 

of Commerce (the Department) received 

petitions filed in proper form by 

NewPage Corporation (petitioner). The 

Department received from petitioner 

information supplementing the petitions 

throughout the 20-day initiation period. 

In accordance with section 702(b)(1) 

of the Tariff Act of 1930, as amended 

(‘‘the Act’’), petitioner alleges that 

manufacturers, producers, or exporters 

of coated free sheet paper (CFS) in the 

People’s Republic of China ( the PRC), 

Indonesia, and the Republic of Korea 

(Korea) received countervailable 

subsidies within the meaning of section 

701 of the Act and that such imports are 

materially injuring, or threatening 

material injury to, an industry in the 

United States. 

The Department finds that petitioner 

filed these petitions on behalf of the 

domestic industry because it is an 

interested party as defined in sections 

771(9)(C) of the Act and petitioner has 

demonstrated sufficient industry 

support with respect to each of the 

countervailing duty investigations that 

it is requesting the Department to 

initiate (see ‘‘Determination of Industry 

Support for the Petitions’’ section 

below). 

Scope of Investigations 

The merchandise covered by each of 

these investigations includes coated free 

sheet paper and paperboard of a kind 

used for writing, printing or other 

graphic purposes. Coated free sheet 

paper is produced from not-more-than 

10 percent by weight mechanical or 

combined chemical/mechanical fibers. 

Coated free sheet paper is coated with 

kaolin (China clay) or other inorganic 

substances, with or without a binder, 

and with no other coating. Coated free 

sheet paper may be surface-colored, 

surface-decorated, printed (except as 

described below), embossed, or 

perforated. The subject merchandise 

includes single- and double-side-coated 

free sheet paper; coated free sheet paper 

in both sheet or roll form; and is 

inclusive of all weights, brightness 

levels, and finishes. The terms ‘‘wood 

free’’ or ‘‘art’’ paper may also be used to 

describe the imported product. 

Excluded from the scope are: (1) 

Coated free sheet paper that is imported 

printed with final content printed text 

or graphics; (2) base paper to be 

sensitized for use in photography; and 

(3) paper containing by weight 25 

percent or more cotton fiber. 

Coated free sheet paper is classifiable 

under subheadings 4810.13.1900, 

4810.13.2010, 4810.13.2090, 

4810.13.5000, 4810.13.7040, 

4810.14.1900, 4810.14.2010, 

4810.14.2090, 4810.14.5000, 

4810.14.7040, 4810.19.1900, 

4810.19.2010, and 4810.19.2090 of the 

Harmonized Tariff Schedule of the 

United States (HTSUS). While HTSUS 

subheadings are provided for 

convenience and customs purposes, our 

written description of the scope of these 

investigations is dispositive. 

Comments on Scope of Investigations 

During our review of the petitions, we 

discussed the scope with petitioner to 

ensure that it is an accurate reflection of 

the products for which the domestic 

industry is seeking relief. Moreover, as 

discussed in the preamble to the 

regulations (Antidumping Duties; 

Countervailing Duties; Final Rule, 62 FR 

27296, 27323 (May 19, 1997)), we are 

setting aside a period for interested 

parties to raise issues regarding product 

coverage. The Department encourages 

all interested parties to submit such 

comments within 20 calendar days of 

the publication of this notice. 

Comments should be addressed to 

Import Administration’s Central 

Records Unit (CRU), Room 1870, U.S. 

Department of Commerce, 14th Street 

and Constitution Avenue, NW., 

Washington, DC 20230. The period of 

scope consultations is intended to 

provide the Department with ample 

opportunity to consider all comments 

and to consult with parties prior to the 

issuance of the preliminary 

determinations. 

Consultations 

Pursuant to section 702(b)(4)(A)(ii) of 

the Act, the Department invited 

representatives of the relevant foreign 

governments for consultations with 

respect to the countervailing duty 

petitions. The Department held 

consultations with representatives of the 

government of the PRC on November 9 

and November 20, 2006. See the 

November 9 and November 20, 2006, 

memoranda to the file regarding the 

consultations with officials from the 

PRC (public documents on file in the 

CRU of the Department of Commerce, 

Room B–099). The Department held 

consultations with representatives of the 

governments of Indonesia and Korea on 

November 16, 2006. See the November 

16, 2006, memoranda to the file 

regarding the consultations with 

officials from Indonesia and Korea 

(public documents on file in the CRU). 

On November 20, 2006, the Government 

of Indonesia (GOI) filed a letter 

reiterating their concerns regarding one 

of the issues the GOI raised at 

consultations. 

Determination of Industry Support for 

the Petitions 

Section 702(b)(1) of the Act requires 

that a petition be filed on behalf of the 

domestic industry. Section 702(c)(4)(A) 

of the Act provides that a petition meets 

this requirement if the domestic 

producers or workers who support the 

petition account for (1) At least 25 

percent of the total production of the 

domestic like product and (2) more than 

50 percent of the production of the 

domestic like product produced by that 

portion of the industry expressing 

support for or opposition to the petition. 

Moreover, section 702(c)(4)(D) of the 

Act provides that, if the petition does 

not establish support of domestic 

producers or workers accounting for 


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1See USEC, Inc. v. United States, 25 CIT 49, 55–

56, 132 F. Supp. 2d 1, 7–8 (Jan. 24, 2001) (citing 

Algoma Steel Corp. v. United States, 12 CIT 518, 

523, 688 F. Supp. 639, 642–44 (June 8, 1988)). 

more than 50 percent of the total 

production of the domestic like product, 

the Department shall: (i) Poll the 

industry or rely on other information in 

order to determine if there is support for 

the petition, as required by 

subparagraph (A), or (ii) determine 

industry support using a statistically 

valid sampling method. 

Section 771(4)(A) of the Act defines 

the ‘‘industry’’ as the producers as a 

whole of a domestic like product. Thus, 

to determine whether the petition has 

the requisite industry support, the 

statute directs the Department to look to 

producers and workers who produce the 

domestic like product. The International 

Trade Commission (ITC) is responsible 

for determining whether ‘‘the domestic 

industry’’ has been injured and must 

also determine what constitutes a 

domestic like product in order to define 

the industry. While the Department and 

the ITC must apply the same statutory 

definition regarding the domestic like 

product, they do so for different 

purposes and pursuant to separate and 

distinct authority. See Section 771(10) 

of the Act. In addition, the Department’s 

determination is subject to limitations of 

time and information. Although this 

may result in different definitions of the 

domestic like product, such differences 

do not render the decision of either 

agency contrary to law.1

Section 771(10) of the Act defines the 

domestic like product as ‘‘a product 

which is like, or in the absence of like, 

most similar in characteristics and uses 

with, the article subject to an 

investigation under this subtitle.’’ Thus, 

the reference point from which the 

domestic like product analysis begins is 

‘‘the article subject to an investigation,’’

i.e., the class or kind of merchandise to 

be investigated, which normally will be 

the scope as defined in the petition. 

With regard to domestic like product, 

petitioner does not offer a definition of 

domestic like product distinct from the 

scope of the investigations. Based on 

our analysis of the information 

presented by petitioner, we have 

determined that there is a single 

domestic like product, coated free sheet 

paper, which is defined in the ‘‘Scope 

of Investigations’’ section above, and we 

have analyzed industry support in terms 

of the domestic like product. 

On November 15 and 16, 2006, we 

received submissions on behalf of 

Chinese and Indonesian producers of 

CFS questioning the industry support 

calculation. See ‘‘Office of AD/CVD 

Operations Initiation Checklist for the 

Countervailing Duty Petition on Coated 

Free Sheet Paper from Indonesia,’’ at 

Attachment II (Nov. 20, 2006) 

(Indonesia CVD Initiation Checklist), 

‘‘Office of AD/CVD Operations Initiation 

Checklist for the Countervailing Duty 

Petition on Coated Free Sheet Paper 

from the Republic of Korea,’’ at 

Attachment II (Nov. 20, 2006) (Korea 

CVD Initiation Checklist), and ‘‘Office of 

AD/CVD Operations Initiation Checklist 

for the Countervailing Duty Petition on 

Coated Free Sheet Paper from the 

People’s Republic of the PRC,’’ at 

Attachment II (Nov. 20, 2006) (PRC CVD 

Initiation Checklist), on file in the CRU. 

Our review of the data provided in the 

petition, supplemental submissions, and 

other information readily available to 

the Department indicate that petitioner 

has established industry support 

representing at least 25 percent of the 

total production of the domestic like 

product; and more than 50 percent of 

the production of the domestic like 

product produced by that portion of the 

industry expressing support for or 

opposition to the petition, requiring no 

further action by the Department 

pursuant to section 702(c)(4)(D) of the 

Act. Therefore, the domestic producers 

(or workers) who support the petition 

account for at least 25 percent of the 

total production of the domestic like 

product, and the requirements of section 

702(c)(4)(A)(i) of the Act are met. 

Furthermore, the domestic producers 

who support the petition account for 

more than 50 percent of the production 

of the domestic like product produced 

by that portion of the industry 

expressing support for, or opposition to, 

the petition. Thus, the requirements of 

section 702(c)(4)(A)(ii) of the Act also 

are met. Accordingly, the Department 

determines that the petition was filed on 

behalf of the domestic industry within 

the meaning of section 702(b)(1) of the 

Act. See Indonesia CVD Initiation 

Checklist at Attachment II, Korea CVD 

Initiation Checklist at Attachment II, 

and PRC CVD Initiation Checklist at 

Attachment II. 

Injury Test 

Because the PRC, Indonesia and Korea 

are each a ‘‘Subsidies Agreement 

Country’’ within the meaning of section 

701(b) of the Act, section 701(a)(2) of 

the Act applies to these investigations. 

Accordingly, the ITC must determine 

whether imports of the subject 

merchandise from the PRC, Indonesia 

and Korea materially injure, or threaten 

material injury to, a U.S. industry. 

Allegations and Evidence of Material 

Injury and Causation 

Petitioner alleges that the U.S. 

industry producing the domestic like 

product is being materially injured, or is 

threatened with material injury, by 

reason of the individual and cumulated 

allegedly subsidized imports of the 

subject merchandise from Indonesia, the 

PRC, and Korea. With regard to the PRC 

and Korea, the allegedly subsidized 

imports exceed the negligibility 

threshold provided for under section 

771(24)(A) of the Act. With respect to 

Indonesia, while the allegedly 

subsidized imports from Indonesia do 

not meet the statutory requirement of 

four percent over the most recent 12- 

month period for which import data are 

available, in its analysis for threat (see 

section 771(24)(B) of the Act), petitioner 

alleges and provides supporting 

evidence that these imports will 

imminently account for more than four 

percent of all CFS imports of the subject 

merchandise and, therefore, are not 

negligible. See section 771(24)(A)(iv) of 

the Act. 

Petitioner contends that the industry’s 

injury is evidenced by reduced market 

share, increased inventories, reduced 

shipments, lost sales, reduced 

production, lower capacity and capacity 

utilization rates, decline in prices, lost 

revenue, reduced employment, and a 

decline in financial performance. The 

allegations of injury and causation are 

supported by relevant evidence 

including U.S. Customs import data, 

lost sales, and pricing information. We 

have assessed the allegations and 

supporting evidence regarding material 

injury and causation and have 

determined that these allegations are 

properly supported by adequate 

evidence and meet the statutory 

requirements for initiation. See PRC 

CVD Initiation Checklist, Indonesia CVD 

Initiation Checklist, and Korea CVD 

Initiation Checklist. 

Initiation of Countervailing Duty 

Investigations 

Section 702(b) of the Act requires the 

Department to initiate a countervailing 

duty proceeding whenever an interested 

party files a petition on behalf of an 

industry that (1) alleges the elements 

necessary for an imposition of a duty 

under section 701(a) of the Act and (2) 

is accompanied by information 

reasonably available to petitioner 

supporting the allegations. The 

Department has examined the 

countervailing duty petitions on CFS 

from the PRC, Indonesia, and Korea and 

found that they comply with the 

requirements of section 702(b) of the 


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Act. Therefore, in accordance with 

section 702(b) of the Act, we are 

initiating countervailing duty 

investigations to determine whether 

manufacturers, producers, or exporters 

of CFS in the PRC, Indonesia, and Korea 

receive countervailable subsidies. For a 

discussion of evidence supporting our 

initiation determination, see PRC CVD 

Initiation Checklist, Indonesia CVD 

Initiation Checklist, and Korea CVD 

Initiation Checklist. 

We are including in our investigations 

the following programs alleged in the 

petitions to have provided 

countervailable subsidies to producers 

and exporters of the subject 

merchandise in the PRC, Indonesia, and 

Korea: 

I. The PRC 

A. Grant Programs 

B. Policy Loans 

Uncreditworthiness—Petitioner has 

provided a reasonable basis to believe or 

suspect that, in accordance with 

351.505(a)(6) of the Department’s 

regulations, that Shandong Chenming 

Paper Holdings Ltd. was uncreditworthy 

in 2004 and 2005 and Ningxia Meili 

Paper Industry Co., Ltd. was 

uncreditworthy from 2003 through 2005. 

See Memorandum from Susan Kuhbach, 

Director, to Stephen J. Claeys, Deputy 

Assistant Secretary regarding Initiation 

of Countervailing Duty Investigation: 

Coated Free Sheet Paper from the 

People’s Republic of China; Shandong 

Chenming and Ningxia Meili 

Uncreditworthiness Allegation 

(November 20, 2006). 

C. Preferential Tax Programs for 

Encouraged Industries Including the 

Paper Industry 

1. Tax Incentives for Foreign Investment 

Enterprises (FIEs) 

2. Tax & Tariff Incentives for Select 

Industries 

D. The ‘‘Two Free, Three Half’’ Program 

E. Income Tax Exemptions Program for 

FIEs Located in Certain Geographic 

Locations 

F. Local income tax exemption and 

reduction program for ‘‘productive’’ FIEs 

G. Income tax exemption program for 

export-oriented FIEs 

H. Corporate Income Tax Refund Program 

for Reinvestment of Fie Profits in Exportoriented Enterprises 

I. Debt-to-equity Infusion for APP China 

Equity Infusion/Debt-for-Equity SwapPetitioner has provided a reasonable 

basis to believe or suspect that, in 

accordance with section 351.507(a)(7) of 

the Department’s regulations, Asia Pulp 

and Paper’s (APP’s) subsidiary, APP 

China, was equityworthiness from March 

2001 through the year of the debt-toequity swap. See PRC CVD Initiation 

Checklist. 

J. Subsidies to Input Suppliers 

1. Preferential Tax Policies for FIEs 

Engaged in Forestry and Established in 

Remote Underdeveloped Areas 

2. Preferential Tax Policies for Enterprises 

Engaged in Forestry 

3. Special Fund for Projects for the 

Protection of Natural Forestry 

4. Compensation Fund for Forestry 

Ecological Benefits 

II. Indonesia 

A. Provision of Standing Timber For Less 

Than Adequate Remuneration 

B. Government Ban on Log Exports 

C. Subsidized Funding for Reforestation 

(Hutan Tanaman Industria or HTI 

Program) 

1. ‘‘Zero-Interest’’ Rate Loans 

2. ‘‘Commercial Rate’’ Loans—Petitioner 

has provided a reasonable basis to 

believe or suspect that, in accordance 

with 351.505(a)(6) of the Department’s 

regulations, that Asia Pulp & Paper 

(APP), a member of the Sinar Mas Group 

(SMG) and a cross-owned supplier of 

logs to PT. Pabrik Kertas Tjiwi Kimia 

Tbk. (TK) has been uncreditworthy since 

2001. See Indonesia CVD Initiation 

Checklist. 

III. Korea 

Industry-Wide Programs 

A. Preferential Lending by the KDB and 

Other GOK Authorities 

B. Export Industry Facility Loans (‘‘EIFLs’’) 

C. Reduction in Taxes for Operating in 

Regional and National Industrial 

Complexes 

D. Funding for Technology Development 

and Recycling Program 

E. Export and Import Credit Financing 

from the Export-Import Bank of Korea 

F. Sale of Pulp for less than Adequate 

Remuneration 

G. Sale of Pulp from Raw Material Reserve 

for less than Adequate Remuneration 

H. Duty Drawback on Non-physically 

Incorporated Items and Excess Loss 

Rates 

I. Direction of Credit 

J. Tax Programs under Restriction of 

Special Taxation Act (RSTA) 

1. RSTA Article 71 

2. RSTA Article 60 

3. RSTA Article 63–2 

Company-Specific Programs 

A. Shinho Paper (Shinho)-GOK-Led 

Bailouts in 1998, 2000, and 2002 

1. Equity Infusion—Petitioner has provided 

a reasonable basis to believe or suspect 

that, in accordance with 351.507(a)(7) of 

the Department’s regulations, that 

Shinho was unequityworthy in 1998, 

2000, and 2002, the years in which the 

government-provided equity infusions 

were provided. See Korea CVD Initiation 

Checklist. 

2. Extension of Debt Maturities and 

Reduction or Elimination of Interest 

Obligations 

3. Debt Forgiveness 

4. New Loans—Petitioner has provided a 

reasonable basis to believe or suspect 

that, in accordance with 351.505(a)(6) of 

the Department’s regulations, that 

Shinho was uncreditworthy from 1998 

through 2005. See Korea CVD Initiation 

Checklist. 

B. Kye Sung Paper (Kye Sung)-GOK-Led 

Bailout of Subsidiary in 2004 

Equity Infusion/Debt-for-Equity Swap—

Petitioner has provided a reasonable 

basis to believe or suspect that, in 

accordance with sections 351.505(a)(6) 

and 351.507(a)(7) of the Department’s 

regulations, Poongman Paper, Kye 

Sung’s CFS producing affiliate, was 

uncreditworthy and unequityworthy in 

2004, the year in which the debt-forequity swapped occurred. See Korea 

CVD Initiation Checklist. 

We are not including in our 

investigation the following programs 

alleged to benefit producers and 

exporters of the subject merchandise in 

the PRC, Indonesia, and Korea: 

I. The PRC 

Currency Manipulation 

Petitioner alleges that the GOCmaintained exchange rate effectively 

prevents the appreciation of the Chinese 

currency (RMB) against the U.S. dollar. 

Therefore, when producers in the PRC 

sell their dollars at official foreign 

exchange banks, as required by law, the 

producers receive more RMB than they 

otherwise would if the value of the RMB 

were set by market mechanisms. 

Petitioner has not sufficiently alleged 

the elements necessary for the 

imposition of a countervailing duty and 

did not support the allegation with 

reasonably available information. 

Therefore, we do not plan to investigate 

the currency manipulation program. 

II. Indonesia 

Accelerated Depreciation Program 

We are not including in our 

investigation the Accelerated 

Depreciation program alleged to benefit 

producers and exporters of the subject 

merchandise in Indonesia. Petitioner 

alleges that this program allows a few 

select industries with high fixed capital 

costs to significantly accelerate the 

depreciation of their capital assets, 

creating a tax advantage for capital 

intensive industries, such as the paper 

production industry. The Department, 

however, has recently determined that 

the Accelerated Depreciation program is 

not countervailable because it is nonspecific, in accordance with section 

771(5A) of the Act. See Final 

Affirmative Countervailing Duty 

Determination: Certain Lined Paper 

Products from Indonesia, 71 FR 47174 

(August 16, 2006), and accompanying 

Issues and Decision Memorandum at 10. 

Although petitioner argues that the 

Department should reconsider its 

determination of non-countervailability, 

no new information or evidence of 

changed circumstances was provided to 

warrant reconsideration of our finding 

of non-specificity. 


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Federal Register / Vol. 71, No. 227 / Monday, November 27, 2006 / Notices 68549 

III. Korea 

Infrastructure Expansions and 

Improvements for Operating in Regional 

and National Industrial Complexes 

Petitioner alleges that the GOK 

developed plans to establish an 

exclusive plant complex for the paper 

industry in the military equipment 

industrial complex in Gunjang, North 

Cholla province by 2001. Petitioner 

alleges that the complex, known as the 

Gunjang National Industrial Complex 

and established by the Ministry of 

Trade, Industry, and Economy, is 

undergoing large-scale infrastructure 

expansions and improvements, 

including upgrading access roads, 

railroad connections and expanding 

harbor facilities. 

Petitioner provided insufficient 

information regarding the existence of a 

benefit or specificity. In particular, we 

find that petitioner did not provide 

sufficient evidence that any CFS 

producers are operating in the Gunjang 

National Industrial Complex. 

Application of the Countervailing Duty 

Law to the PRC 

Petitioner contends that there is no 

statutory bar to applying countervailing 

duties to imports from the PRC or any 

other non-market economy country. 

Citing Georgetown Steel, petitioner 

asserts that the court deferred to the 

Department’s conclusion that it did not 

have the authority to conduct a CVD 

investigation, but did not affirm the 

notion that the statute prohibits the 

Department from applying 

countervailing duties to NME countries. 

See Petition, Part I, at 8 (citing 

Georgetown Steel Corp. v. United States, 

801 F.2d 1308 (Fed. Cir. 1986) 

(Georgetown Steel)). Petitioner further 

argues Georgetown Steel is not 

applicable as the countervailing duty 

law (section 303 of the Tariff Act of 

1930) involved in the court’s decision 

has since been repealed and the statute 

has been amended to provide an explicit 

definition of a subsidy. See section 

777(5) of the Act. In addition, petitioner 

argues that the Chinese economy is 

entirely different from the economies 

investigated in Georgetown Steel and 

the Department should not have any 

special difficulties in the identification 

and valuation of subsidies involving a 

non-market economy, such as the PRC, 

that would not arise in a market 

economy countervailing proceeding. 

Finally, petitioner contends that the 

PRC’s accession to the World Trade 

Organization (WTO) allows the 

Department to investigate 

countervailing duties in that country. 

Petitioner notes that the WTO Subsidies 

and Countervailing Measures 

Agreement (SCM Agreement), similar to 

U.S. law, permits the imposition of 

countervailing duties on subsidized 

imports on member countries and 

nowhere exempts non-market economy 

imports from being subject to the 

provisions of the SCM Agreement. As 

the PRC agreed to the SCM Agreement 

and other WTO provisions on the use of 

subsidies, petitioner argues the PRC 

should be subject to the same 

disciplines as all other WTO members. 

Petitioner has provided sufficient 

argument and subsidy allegations (see 

‘‘Initiation of Countervailing Duty 

Investigations’’) to meet the statutory 

criteria for initiating a countervailing 

duty investigation of CFS paper from 

the PRC. Given the complex legal and 

policy issues involved, and on the basis 

of the Department’s discretion as 

affirmed in Georgetown Steel, the 

Department intends during the course of 

this investigation to determine whether 

the countervailing duty law should now 

be applied to imports from the PRC. The 

Department will invite comments from 

parties on this issue. 

Distribution of Copies of the Petitions 

In accordance with section 

702(b)(4)(A)(i) of the Act, a copy of the 

public version of the petitions has been 

provided to the Governments of the 

PRC, Indonesia, and Korea. We will 

attempt to provide a copy of the public 

version of the petitions to each exporter 

named in the petitions, as provided for 

under 19 CFR 351.203(c)(2). 

ITC Notification 

We have notified the ITC of our 

initiations, as required by section 702(d) 

of the Act. 

Preliminary Determinations by the ITC 

The ITC will preliminarily determine, 

within 25 days after the date on which 

it receives notice of these initiations, 

whether there is a reasonable indication 

that imports of subsidized CFS from the 

PRC, Indonesia, and Korea are causing 

material injury, or threatening to cause 

material injury, to a U.S. industry. See 

section 703(a)(2) of the Act. A negative 

ITC determination will result in the 

investigations being terminated; 

otherwise, these investigations will 

proceed according to statutory and 

regulatory time limits. 

This notice is issued and published 

pursuant to section 777(i) of the Act. 

Dated: November 20, 2006. 

David M. Spooner, 

Assistant Secretary for Import 

Administration. 

[FR Doc. E6–20025 Filed 11–24–06; 8:45 am] 

BILLING CODE 3510–DS–P 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[C–427–810] 

Corrosion-Resistant Carbon Steel Flat 

Products From France: Final Results 

of Countervailing Duty Administrative 

Review 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

SUMMARY: On September 7, 2006, the 

Department of Commerce (‘‘the 

Department’’) published in the Federal 

Register its preliminary results of 

administrative review of the 

countervailing duty (‘‘CVD’’) order on 

corrosion-resistant carbon steel flat 

products (‘‘CORE’’) from France for the 

period January 1, 2004, through 

December 31, 2004 (see Preliminary 

Results of Countervailing Duty 

Administrative Review: CorrosionResistant Carbon Steel Flat Products 

from France, 71 FR 52770 (September 7, 

2006) (‘‘CORE Preliminary Results’’)). 

The Department preliminarily found 

that Duferco Coating S.A. and Sorral 

S.A. (collectively, ‘‘Duferco Sorral’’), the 

producer/exporter of subject 

merchandise covered by this review did 

not receive countervailable subsidies 

during the period of review (‘‘POR’’). 

We did not receive any comments on 

our preliminary results and have made 

no revisions to those results. 

DATES: Effective Date: November 27, 

2006. 

FOR FURTHER INFORMATION CONTACT: 

Kristen Johnson, AD/CVD Operations, 

Office 3, Import Administration, 

International Trade Administration, 

U.S. Department of Commerce, 14th 

Street and Constitution Avenue, NW., 

Washington, DC 20230; telephone: (202) 

482–4793. 

SUPPLEMENTARY INFORMATION: 

Background 

On August 17, 1993, the Department 

published in the Federal Register the 

CVD order on CORE from France. See 

Countervailing Duty Order and 

Amendment to Final Affirmative 

Countervailing Duty Determination: 

Certain Steel Products from France, 58 

FR 43759 (August 17, 1993). On 

September 7, 2006, the Department 


sroberts on PROD1PC70 with NOTICES
 
B-1

APPENDIX B

CONFERENCE WITNESSES

B-3

CALENDAR OF PUBLIC CONFERENCE

Those listed below appeared as witnesses at the United States International Trade

Commission’s conference:

Subject: Coated Free Sheet Paper from China, Indonesia, and Korea 

Inv. Nos.: 701-TA-444-446 (Preliminary) and 731-TA-1107-1109

(Preliminary) 

Date and Time: November 21, 2006 - 9:30 a.m.

The conference in connection with these investigations was held in the Main Hearing Room

(room 101), 500 E Street, SW, Washington, D.C.

OPENING REMARKS: Petitioner (Gilbert B. Kaplan, King & Spalding LLP)

Respondent (Donald B. Cameron, Kaye Scholer LLP)

In Support of the Imposition of Antidumping Duties:

King & Spalding LLP

Washington, D.C.

on behalf of

NewPage Corporation

James C. Tyrone, Senior Vice President, Sales and Marketing,

NewPage Corporation

Douglas K. Cooper, Vice President, General Counsel and Secretary

NewPage Corporation

Holly Hart, Legislative Director

United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied

Industrial, and Service Workers International Union (USW), AFL-CIO 

Tom Caldwell, President

United Steelworkers Local 00676-**, Luke, Maryland
B-4

In Support of the Imposition of Antidumping Duties (continued):

Harry Stafford, Chief Shop Steward

United Steelworkers Local 00676-**, Luke, Maryland

Kenneth R. Button, Ph.D., Senior Vice President

Economic Consulting Services, LLC

Rebecca L. Woodings, Consultant

King & Spalding LLP

Bonnie B. Byers, Consultant

King & Spalding LLP

Gilbert B. Kaplan, Esq. ) – OF COUNSEL

Stephen A. Jones, Esq. )

In Opposition to the Imposition of Antidumping Duties:

Kaye Scholer LLP

Washington, D.C.

on behalf of

Korea Paper Manufacturers' Association and its members Hankuk Paper Mfg., Co., Ltd.,

Hongwon Paper Mfg. Co., Ltd., Kyesung Paper Co., Ltd., Namhan Paper Co., Ltd.,

Shinho Paper Co., Ltd., and Shinmoorim Paper Mfg. Co., Ltd.

Taehyon ("Ted") Cho, Deputy Manager

Moorim USA

Rick Anderson, Vice President of Purchasing

PaperlinX North America (Spicers Paper and Kelly Paper)

Daniel Klett, Economist

Capital Trade, Inc.

Donald B. Cameron, Esq. ) – OF COUNSEL

Julie C. Mendoza, Esq. )
B-5

In Opposition to the Imposition of Antidumping Duties (continued):

White & Case LLP

Washington, D.C.

on behalf of

Unisource Worldwide, Inc., Gold East Paper (Jiangsu) Co., Ltd.,

Gold Hua Sheng Paper Co., Ltd., PT. Pindo Deli Pulp and Paper Mills,

and PT. Pabrik Kertas Tjiwi Kimia Tbk.

Allan R. Dragone, Chief Executive Officer

Unisource Worldwide, Inc.

Terry E. Hunley, External Advisor

Global Paper Solutions, Inc.

David E. Bond, Esq. )

Frank H. Morgan, Esq. ) –OF COUNSEL

Scott S. Lincicome, Esq. )

REBUTTAL/CLOSING REMARKS:

Petitioners (Gilbert B. Kaplan, King & Spalding LLP)

Respondent (Frank H. Morgan, White & Case LLP)
 
C-1

APPENDIX C

SUMMARY DATA

Table C-1

Coated free sheet paper: Summary data concerning the U.S. market, 2003-05, January-September 2005, and January-September 2006

(Quantity=short tons, value=1,000 dollars, unit values, unit labor costs, and unit expenses are per short ton; period changes=percent, except where noted)

Reported data Period changes

January-September Jan.-Sept.

Item 2003 2004 2005 2005 2006 2003-05 2003-04 2004-05 2005-06

U.S. consumption quantity:

 Amount . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Producers' share (1) . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Importers' share (1):

 China . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Indonesia . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Korea . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Subtotal . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 All other sources . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Total imports . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

U.S. consumption value:

 Amount . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Producers' share (1) . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Importers' share (1):

 China . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Indonesia . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Korea . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Subtotal . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 All other sources . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Total imports . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

U.S. imports from:

 China:

 Quantity . . . . . . . . . . . . . . . . . . . 96,440 145,112 175,548 139,411 236,698 82.0 50.5 21.0 69.8

 Value . . . . . . . . . . . . . . . . . . . . . 80,579 128,326 165,399 129,494 223,231 105.3 59.3 28.9 72.4

 Unit value . . . . . . . . . . . . . . . . . . 836 884 942 929 943 12.8 5.8 6.5 1.5

 Ending inventory quantity . . . . . . *** *** *** *** *** *** *** *** ***

 Indonesia:

 Quantity . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . . . *** *** *** *** *** *** *** *** ***

 Korea:

 Quantity . . . . . . . . . . . . . . . . . . . 378,212 430,444 417,113 323,261 366,772 10.3 13.8 -3.1 13.5

 Value . . . . . . . . . . . . . . . . . . . . . 322,695 364,866 366,553 285,609 322,475 13.6 13.1 0.5 12.9

 Unit value . . . . . . . . . . . . . . . . . . 853 848 879 884 879 3.0 -0.7 3.7 -0.5

 Ending inventory quantity . . . . . . 46,649 50,032 46,858 50,212 54,982 0.4 7.3 -6.3 9.5

 Subtotal (subject):

 Quantity . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . . . *** *** *** *** *** *** *** *** ***

 All nonsubject sources:

 Quantity . . . . . . . . . . . . . . . . . . . 989,659 1,076,558 944,088 679,274 709,087 -4.6 8.8 -12.3 4.4

 Value . . . . . . . . . . . . . . . . . . . . . 938,932 1,004,241 957,728 686,193 707,787 2.0 7.0 -4.6 3.1

 Unit value . . . . . . . . . . . . . . . . . . 949 933 1,014 1,010 998 6.9 -1.7 8.8 -1.2

 Ending inventory quantity . . . . . . 63,325 70,890 69,411 70,494 74,940 9.6 11.9 -2.1 6.3

 All sources:

 Quantity . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . . . *** *** *** *** *** *** *** *** ***

Table continued on next page.

C-3
Table C-1--Continued

Coated free sheet paper: Summary data concerning the U.S. market, 2003-05, January-September 2005, and January-September 2006

(Quantity=short tons, value=1,000 dollars, unit values, unit labor costs, and unit expenses are per short ton; period changes=percent, except where noted)

Reported data Period changes

January-September Jan.-Sept.

Item 2003 2004 2005 2005 2006 2003-05 2003-04 2004-05 2005-06

U.S. producers':

 Average capacity quantity . . . . . . 4,741,656 4,855,056 4,834,098 3,627,401 3,897,321 1.9 2.4 -0.4 7.4

 Production quantity . . . . . . . . . . . 4,272,195 4,359,562 4,597,794 3,416,090 3,503,202 7.6 2.0 5.5 2.6

 Capacity utilization (1) . . . . . . . . . 90.1 89.8 95.1 94.2 89.9 5.0 -0.3 5.3 -4.3

 U.S. shipments:

 Quantity . . . . . . . . . . . . . . . . . . . 3,925,471 4,171,009 4,264,514 3,159,277 3,318,788 8.6 6.3 2.2 5.0

 Value . . . . . . . . . . . . . . . . . . . . . 3,309,111 3,480,184 3,698,083 2,767,416 2,976,205 11.8 5.2 6.3 7.5

 Unit value . . . . . . . . . . . . . . . . . . $843 $834 $867 $876 $897 2.9 -1.0 3.9 2.4

 Export shipments:

 Quantity . . . . . . . . . . . . . . . . . . . 226,847 256,176 289,055 213,320 215,081 27.4 12.9 12.8 0.8

 Value . . . . . . . . . . . . . . . . . . . . . 172,706 197,355 232,409 169,942 182,539 34.6 14.3 17.8 7.4

 Unit value . . . . . . . . . . . . . . . . . . $761 $770 $804 $797 $849 5.6 1.2 4.4 6.5

 Ending inventory quantity . . . . . . . 676,439 600,337 656,751 661,641 621,468 -2.9 -11.3 9.4 -6.1

 Inventories/total shipments (1) . . . 16.3 13.6 14.4 14.7 13.2 -1.9 -2.7 0.9 -1.5

 Production workers . . . . . . . . . . . 7,390 7,112 7,464 7,382 7,095 1.0 -3.8 4.9 -3.9

 Hours worked (1,000s) . . . . . . . . . 16,287 15,924 16,749 12,670 12,276 2.8 -2.2 5.2 -3.1

 Wages paid ($1,000s) . . . . . . . . . 428,406 425,539 423,757 323,343 315,827 -1.1 -0.7 -0.4 -2.3

 Hourly wages . . . . . . . . . . . . . . . . $26.30 $26.72 $25.30 $25.52 $25.73 -3.8 1.6 -5.3 0.8

 Productivity (tons/1,000 hours) . . 261.4 272.7 273.7 268.8 284.3 4.7 4.3 0.4 5.8

 Unit labor costs . . . . . . . . . . . . . . $100.62 $98.00 $92.43 $94.92 $90.49 -8.1 -2.6 -5.7 -4.7

 Net sales:

 Quantity . . . . . . . . . . . . . . . . . . . 4,204,339 4,410,525 4,581,891 3,386,014 3,552,716 9.0 4.9 3.9 4.9

 Value . . . . . . . . . . . . . . . . . . . . . 3,507,971 3,637,023 3,932,692 2,930,489 3,156,664 12.1 3.7 8.1 7.7

 Unit value . . . . . . . . . . . . . . . . . . $834 $825 $858 $865 $889 2.9 -1.2 4.1 2.7

 Cost of goods sold (COGS) . . . . . 3,217,458 3,515,029 3,679,581 2,743,559 2,827,631 14.4 9.2 4.7 3.1

 Gross profit or (loss) . . . . . . . . . . 290,513 121,994 253,111 186,930 329,033 -12.9 -58.0 107.5 76.0

 SG&A expenses . . . . . . . . . . . . . . 271,260 249,202 250,270 187,850 205,059 -7.7 -8.1 0.4 9.2

 Operating income or (loss) . . . . . . 19,253 (127,208) 2,841 (920) 123,974 -85.2 -760.7 -102.2 -13570.3

 Capital expenditures . . . . . . . . . . 209,396 263,708 172,777 118,916 129,466 -17.5 25.9 -34.5 8.9

 Unit COGS . . . . . . . . . . . . . . . . . . $765 $797 $803 $810 $796 4.9 4.1 0.8 -1.8

 Unit SG&A expenses . . . . . . . . . . $65 $57 $55 $55 $58 -15.3 -12.4 -3.3 4.0

 Unit operating income or (loss) . . $5 ($29) $1 ($0) $35 -86.5 -729.8 -102.1 -12938.2

 COGS/sales (1) . . . . . . . . . . . . . . 91.7 96.6 93.6 93.6 89.6 1.8 4.9 -3.1 -4.0

 Operating income or (loss)/

 sales (1) . . . . . . . . . . . . . . . . . . . 0.5 (3.5) 0.1 (0.0) 3.9 -0.5 -4.0 3.6 4.0

 (1) "Reported data" are in percent and "period changes" are in percentage points.

 (2) Undefined.

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.

C-4
D-1

APPENDIX D

QUESTIONNAIRE RESPONSES REGARDING

THE DOMESTIC LIKE PRODUCT

D-3

The Commission's questionnaires in this preliminary phase investigation requested comments

regarding the differences and similarities between coated free sheet paper and uncoated free sheet paper in

terms of the Commission’s like product factors, including (1) characteristics and uses; (2)

interchangeability; (3) manufacturing processes; (4) channels of distribution; (5) customer and producer

perceptions; and (6) price. The following comments were received:

Coated Free Sheet Paper AND Uncoated Free Sheet Paper 

Characteristics and Uses

***

“CFS has coatings that enhance print performance and appearance. Regarding print performance,

less ink is required to achieve the desired effect on CFS versus uncoated free sheet. Regarding

appearance, the superior ink retention on CFS results in enhanced graphic reproduction relative to UFS,

particularly important in commercial and publication printing. For a given basis weight (grammage), the

uncoated free sheet will normally be bulkier than its CFS counterpart.

Uncoated free sheet is used in a great deal of printer and copy paper and other business products. 

This is a small market, e.g. color printer paper in the case of CFS. CFS, unlike uncoated free sheet, serves

primarily in the commercial printing market.”

***

“*** produces two general types of coated papers: cast-coated and matte coated.

In cast-coated papers, the Company produces coated-one-side and coated-two-side cover stock

and folding board and coated one-side label papers. In matte coated papers, the Company produces

coated-two-side papers in text and cover.

Cast-coated papers are premium triple coated papers and are well recognized for their very

smooth, glossy, ink receptive surface and are used for applications where the customer requires the very

best in print image reproduction and quality. End uses include corporate brochures, product brochures,

annual reports, folders, greeting cards, high quality folding boxes and premium product labeling.

Matte-coated papers are noted for their excellent printing quality with a non-glossy surface which

allows for less surface reflection of light for easier readability of print. Matte papers are less expensive

than cast-coated papers and are used for brochures, covers, flyers, mailers and cards.

These two products are primarily distinguished from uncoated papers of like weight and thickness

in that their coated surfaces allow for superior printed image production.”

***

“*** produced and sold the following types of uncoated product over the past three years:

carbonless and thermal basestock, workbook, and offset. In 2005, the only uncoated sold by *** was

carbonless and thermal basestock. These products are similar in physical properties to uncoated free sheet

that is then coated on *** off-machine coater.

The end use of carbonless is multi-part forms and the end-use of thermal is a variety of variable

printing applications including lottery, label, and receipts. The end use for workbook is elementary and

high school workbooks that accompany textbooks and the end use of offset can be any printing

application or envelopes.”
D-4

***

“Similarities: Same machinery, same base stock, same furnish.

Differences: Different optics and smoothness, no coating/coating.”

***

“The primary difference between coated and uncoated is the improved print characteristics that

coated paper provides. Customer applications requiring superior printability often require a coated

paper.”

***

“Most of products go to offset and digital process.”

***

“Producers of envelopes, copy paper, forms, school supplies, catalogues, brochures, and

magazines prefer to use uncoated papers in the production of their products. End uses for coated paper

include products that require high-end graphics. Print quality and aesthetics of the sheet are better in

coated free sheet. Bags, envelopes, and labels can be made from both.”

Interchangeability

***

“The two are interchangeable. Uncoated free sheet is the preferred paper for printing on laser or

ink-jet applications. Coated is used for higher graphic applications.”

***

“Uncoated free sheet and cast-coated and matt-coated papers are interchangeable in that they will

both print, convert, fold, glue, bind, collate, etc. however, there are significant differences in print

quality, surface feel and appearance and premium “use” of the final end-use product as a result of the

print performance and look of coated papers.”

***

“There is no interchangeability between the end use of coated free sheet and the end use of

carbonless and thermal basestock. At a basic level coated or uncoated product could be used for

workbook, however since workbooks are used for student practice and generally disposed of after one

class year, it is not typical to utilize coated free sheet in that application. Both coated free sheet and offset

can be used for commercial printing applications; however, coated is generally used for applications

where higher quality graphics are required such as annual reports, brochures, and catalogs. Offset is used

for envelopes, direct mail and catalogs.”
D-5

***

“Both can be printed but the coated paper will have much better ink holdout and print fidelity.”

***

“Somewhat interchangeable.”

***

“Most of our customer applications either require a coated paper or an uncoated paper. There is

seldom the opportunity for a customer to interchange these two grades.”

***

“The visual appearance of printing on CFS will look substantially different than the same images

printed on uncoated free sheet. The image quality on the coated paper is readily seen to be superior to the

uncoated version. These products are not used interchangeably in the market.”

Manufacturing Processes

***

“*** has *** paper machines and ***. Coated free sheet is produced (i) “in-line” on *** of its

paper machines (***) and also (ii) ***.

***..

With the exception of applying the clay coating (either “in line” or on the “off machine” coater)

to produce coated papers, the manufacturing process is essentially the same for producing coated and

uncoated products on these two paper machines. The same materials, labor, and equipment are used with

no significant modifications required. 

***. 

The off-machine coater uses blade coating technology to coat uncoated basestock.”

***

“Our coated products are first made on our paper machines as base stock. This base stock is then

run through an off-machine coater.”

***

“You need to make uncoated free sheet paper before making coated free sheet paper. This can be

done on the same paper machine with off-machine coating but it must be on different machines where

there is on-machine coating. Additional raw materials and equipment are required to manufacture coated

free sheet paper. Coating materials include clay, calcium carbonate, latex, starch, plastic pigment, optical

brighteners and various dyes. Equipment includes a coater (either on-machine or off-machine); a coating

make down facility which includes tanks, pumps, and mixers; and supercalenders which provide the final

smoothness and gloss characteristics to the coated surface.”
D-6

***

“Machinery and raw materials (see II-3c above).”

***

“The base paper for uncoated and coated free sheet is made on similar paper machines. Coated

paper goes through a coating and supercalendaring process.”

***

“The manufacturing processes for making uncoated free sheet papers and the basestock for coated

free sheet papers are similar and are often produced on the same paper making equipment. However, the

application of coating to the basestock and post coating finishing/calendering requires special coating

application equipment. This coating and surface calendering equipment is found both “in-line” on the

paper machine as well as “off-line” as individual stand-alone coating equipment.

Paper coating equipment must be supported with specialized coating preparation equipment

which holds, mixes and supplies coating material to the coating process. Coating preparation and coating

process equipment require labor specifically trained in operating this type of equipment.”

***

“Uncoated Process: Paper is made on the paper machine the{n} cut and wrapped.

Coated Process: Paper is coated after it is made on the paper machine, then it may be calendered. 

It is then cut and wrapped.”

Channels of Distribution

***

“Both products can be sold direct to printers and converters or through merchants and brokers.”

***

“The majority of coated free sheet paper (approx. 80%) is sold direct to customers with the

balance (20%) sold through distribution. By contrast, uncoated free sheet paper is sold primarily to two

customer segments: 1) Book publishers (10% direct; 90% distribution); 2) Envelope customers (100%

direct).”
D-7

***

“Both coated free sheet and uncoated free sheet use multiple channels of distribution. Coated free

sheet is sold both direct to large volume purchasers (magazine, catalog and book publishers, printers,

corporations, etc.) as well as through intermediaries (paper merchants and / or brokers). Approximately

70% of all coated free sheet volume is sold through distribution as reported by AF&PA. Uncoated free

sheet is also sold both direct and through distribution. In many cases the channels are similar to coated

but uncoated would also feature more volume going to channel partners that are more prominent or more

appropriate to uncoated (envelope converters, forms printers, superstores, etc.) than you would find with

coated free sheet.”

***

“Usually uncoated is sold to specific market customers and it is not inventoried. Coated paper is

stocked for sale. The majority of coated papers are sold through merchants.”

***

“*** sells all of its coated free sheet products through distributors. Workbook and offset are also

sold through distributors. Carbonless and thermal basestock are sold directly to the carbonless and

thermal manufacturer.”

***

“No difference (primarily merchants).”

Customer and Producer Perceptions

***

“Our coated products are marketed into the commercial print, magazine and catalog segments. 

The uncoated free sheet is just used to fill machine capacity.”

***

“Coated paper has more hold-out and is glossier. Uncoated is more stiff.”

***

“Customer and producer perceptions regarding CFS and UFS are dependent on intended end use. 

The common general perception is that CFS is a superior product that commands a price premium

because it prints better than UFS products in all product grades.”

***

“Uncoated carbonless and thermal basestock are sold under an annual contract to one customer. 

Uncoated workbook or offset are less profitable products that are produced to “fill capacity” that

otherwise would be idle.”
D-8

***

“In general the majority of "customers" (either direct purchasing customers in the case of printers

and publishers or influencers of purchase decisions such as corporations or advertising agencies) view

coated free sheet to be a higher quality and superior product category. Coated free sheet by nature is used

for more prestigious applications (annual reports, corporate collateral, high end catalogs and magazines,

high impact direct mail) whereas uncoated free sheet is more often found in lower quality applications

where color reproduction is not as critical. Large volume simple direct mail applications, xerographic

reproduction, directories, envelopes, flyers, books (non coffee table), financial printing, newsletters,

business forms and lower end catalogs and magazines are examples of uncoated free sheet in use.

Additionally, any printed communication requiring substantial four color reproduction would

generally be viewed as most appropriate for coated free sheet. Uncoated applications lend themselves to

black and white reproduction as the product is not capable of the ink holdout found in coated free sheets.”

***

“Coated free sheet is used for superior printing graphics. Uncoated free sheet is typically used for

‘personalized’ pieces and in manufacturing processes that are more productive on uncoated products.”

Price

***

“In 2005, uncoated free sheet rolls sold for around $700/ton. During that same time period, twosided coated free sheet sold for around $840/ton. One-sided coated free sheet sold for around $820/ton.”

***

“Pricing for the uncoated carbonless and thermal basestock, which is the vast majority of

uncoated sales tonnage for *** is based on annual or multi-year contracts and has remained fairly stable

or declined slightly over the period 2003 to 2006. Pricing for other uncoated grades *** sells is lower, or

in the case of workbook and offset sold in 2003 and 2004, significantly lower ($200/ton) than coated

pricing. *** is not in the ongoing business of selling offset, but some is sold on a spot basis through our

distributors when demand for our coated free sheet products are soft and its pricing reflects that. By way

of illustration, market pricing for 20-lb. offset is lower than market pricing for coated free sheet products

by a range of 2%-15%.”

***

“In general, pricing of our coated free sheet products is higher than our uncoated free sheet

products because of higher production costs and higher-end, end-use applications.”
D-9

***

“While market vagaries and short term supply and demand imbalance can temporarily impact

pricing levels, coated free sheet historically demands a higher price than uncoated free sheet. As an

example, according to RISI, average price on a No. 3 60lb. coated free sheet web product for the third

quarter 2006 was $925/ton. Also according to RISI, average price on a No.3 50lb. uncoated free sheet

web product was $847/ton in the third quarter 2006. The historical price premium for coated free sheet

paper has eroded as a result of pressure of imports from Asia.”

***

“Coated paper is priced less than uncoated (potentially 30-35% less).”

***

“Uncoated free sheet is sold for approximately $750. Coated free sheet is sold for approximately

$950 per ton.”
D-10

The Commission's questionnaires in this preliminary phase investigation requested comments

regarding the differences and similarities between coated free sheet paper and coated groundwood 

paper in terms of the Commission’s like product factors, including (1) characteristics and uses; (2)

interchangeability; (3) manufacturing processes; (4) channels of distribution; (5) customer and producer

perceptions; and (6) price. The following comments were received:

Coated Free Sheet Paper AND Coated Groundwood Paper 

Characteristics and Uses

***

“Differences: Basis weights, lignin content, reversion, smoothness.

Similarities: Both used for catalogs and magazines.”

***

“Coated free: generally brighter, smoother, better print quality, stronger physical specifications. 

Coated groundwood: generally lower brightness, lower basis weight, lower physical specifications,

tendency to yellow prematurely.”

***

“CFS is manufactured from pulp that may not contain more than 10 percent, by weight,

groundwood content. This "chemical" pulp (also known as kraft pulp because it is produced using the

kraft process) is produced using chemical agents to break down cellulose content. The raw material for

CGW is groundwood pulp. This pulp is produced using mechanical means (physical grinding) to break

down cellulose content.

As a result of these different raw material inputs, a key difference between CGW and CFS paper,

at the same basis weight, is superior strength (tear, fold) for CFS. Regardless of basis weight, CFS paper

is more permanent, being less likely to yellow upon exposure to light, heat, and environmental pollutants,

a property necessary for archivability. Finally, CFS paper is inherently brighter than CGW, a desirable

property for high quality graphic reproduction.

Differences in production processes also result in differences in physical attributes of the product. 

Coated groundwood products tend to be of lighter basis weights and possessing of a rougher printing

surface when compared to coated free sheet. This results in poorer dot definition and ink holdout yielding

an inferior printed image and overall net impact.

Thus, CFS serves in more durable applications (books, annual reports), and prestige multi-color

publications (e.g., fashion and photography magazines, high-end catalogues, high-impact advertising).”

***

“Coated freesheet (CFS) is considered to be higher quality than Coated Groundwood (CGW) in

several ways. First, the absence of groundwood fiber in CFS allows for a smoother printed surface,

leading to better reproductive fidelity of photographic images. Second, the lack of groundwood fiber

allows for a whiter, bluer shade, and generally a higher brightness. However, CFS basis weights are

generally limited to the higher basis weight ranges (38#/3300 sq ft to 100#/3300 sq ft). Because of the

opacity of the groundwood fiber, CGW is generally available in much lighter basis weights (down to

26#/3300 sq ft). Thus, the end uses of the two papers are somewhat mutually exclusive. For catalogs,
D-11

***–continued

for instance, the high volume catalogers generally use CGW for the body of their books, so ad to take

advantage of the lower basis weights available which dramatically reduce postal costs. For low volume

catalogs, and for catalogs that feature very high priced merchandise (jewelry, for instance), and for

catalogs that require very high reproductive fidelity, will generally use CFS. For magazines, the same

type of delineation applies. For instance, the mass market newsweeklies (Time, Newsweek, etc.) 

typically use CGW in order to save on postal costs. The high-end magazines, especially those that rely on

photographic excellence, typically use CFS (Architectural Digest, National Geographic, etc.). many of

the magazines that use CGW for the body of the book use CFS for the covers. General commercial print,

which includes short run magazines and catalogs, brochures, annual reports, and other short run projects,

typically uses CFS, with very little CGW utilized in this sector.”

Interchangeability

***

“The products are not interchangeable unless the user is willing to sacrifice the properties cited

above - strength, permanence and brightness (appearance). Such might be the case for short-lived

publications such as weekly magazines, but is not the case for the bulk of the CFS market.”

***

(Response not legible)

***

“Little interchangeability. Similar basis weights are only 45, 50, 60 lb. The high end

groundwoods are used in catalogs and magazines similar to lightweight free sheet.”

***

“There are high brightness CGW grades that have attempted to substitute directly for CFS (No. 4

CGW, Hybrid CGW). These grades have been moderat3ely successful. More typical is a cataloger or

magazine that progresses through a product life cycle, where the initial publications are typically short

run, on heavy weight CFS. As the catalog or magazine becomes more successful, and then more mature,

it typically reduces basis weight and at some point switches to CGW.”

Manufacturing Processes

***

“Bleached kraft pulp principally used in free sheet coated paper. Groundwood pulps principally

found in groundwood coated paper.”
D-12

***

“The major difference is in the production of the fiber for the two grades. Both grades use Kraft

fiber, but CGW grades also incorporate >10% groundwood or Thermo-Mechanical Pulp fiber. This fiber

is mechanically prepared, with much of the lignin remaining in the fiber. This leads to higher opacity at

lower basis weights, but interferes with brightness, whiteness and smoothness of the finished product. 

Groundwood equipment is much like it sounds: logs are ground against grindstones to separate the fibers. 

TMP is similar, but chips are used and they are treated with steam to enhance the efficiency of the

grinding process. Kraft paper is chemically prepared, with essentially all lignin being removed, and then

burned in a recovery process that allows for 95% + recovery of cooking chemicals.”

***

“The pulp-making process for groundwood and free sheet is very different, involving different

facilities, different processes, and some different materials (both use wood fiber, but CFS also requires

chemicals). Coated groundwood paper and coated free sheet paper can be manufactured on the same

paper machines, for example by ***. There is some transition time resulting from changes in fiber supply

and styling (brightness, shade, etc).

The *** mills do not have the capability of producing groundwood fiber and do not make

groundwood paper. As noted above, these mills do not have groundwood pulp capability and there is no

commercial market for groundwood pulp.”

***

“Coated groundwood is made in one process with in-machine coating. Coated freesheet is coated

offline. Only one of our machines, ***, a small machine, can make both.” 

Channels of Distribution

***

“Both CFS and CGW are distributed through the same four channels: direct to customer, direct

to printer, sold to broker, sold to merchant. The difference between broker and merchant is that the

broker never takes physical possession of the product. CGW is sold more often direct and through

brokers. CFS is sold more often through merchants.”

***

“Coated groundwood is primarily sold direct to customers/endusers/or publishers. Coated free

sheet is sold predominantly through merchant distribution.”

***

“Both coated free sheet and coated groundwood use multiple channels of distribution. In some

cases product is sold direct to large volume purchasers (printers, publishers, corporate end users, office

superstores, etc.) while substantial volume is also managed through intermediaries (i.e., Paper merchants

and/or brokers). Coated groundwood would evidence a higher percentage sold direct as the product

applications are more heavily weighted to applications that lend themselves to a direct sales channel but
D-13

***–continued

substantial volume also flows through distribution. AF&PA data for 2005 would show 58% of coated

groundwood sold direct versus only 30% of coated free sheet sold direct.”

***

“Same.”

Customer and Producer Perceptions

***

“Coated groundwood is more yellow, rougher surface, lighter weight, and weaker. Coated free

sheet is stronger, archival quality, and has a smoother surface.”

***

“The marketplace views coated free sheet to be a higher quality product than coated groundwood

and more suitable for more prestigious applications. Customers view coated free sheet as the preferred

substrate for applications such as annual reports, corporate collateral, high end catalogs and magazines,

and high impact direct mail. Coated groundwood carries a lower price point and is generally found in

larger volume less prestigious applications where appearance and reproduction quality are of lesser

importance than coated free sheet applications. Lower end, large volume catalogs and magazines,

newspaper inserts, and lower impact direct mail would be examples of end use applications for coated

groundwood. As such customers and producer perceptions would view coated groundwood products as

of lower quality than coated free sheet.

The differences in production process required to manufacture the two products also results in

difference in physical attributes of the product that reinforces the above perceptions. (As noted above,

coated groundwood products tend to be of lighter basis weight and possessing of a rougher printing

surface when compared to coated free sheet, which results in poorer dot definition and ink holdout

yielding an inferior printed image and overall net impact.)”

***

“Customer and producer perceptions are similar to those discussed in a).

***

“Free sheet coated is perceived as better quality than groundwood coated.”

Price

***

“Coated groundwood is generally priced below coated free sheet products in the marketplace. As

an example, in August 2006, RISI reports that prices for coated free sheet products ranged from $950/ton

to over $1,500/ton, with prices for coated groundwood products ranging from $825 to $940/ton. There
D-14

***–continued

are major product differences between coated groundwood and coated free sheet, and they are not

considered comparable.”

***

“Typical pricing differentials for equivalent basis weights are as follows (note that many key

basis weights for CFS and NOT offered in CGW, and vice versa):

a. CFS No. 3 > CGW No. 4 by $100/ton

b. CGW No. 4 > CGW No. 5 by $100/ton”

***

“Groundwood coated is less expensive than free-sheet coated.”

***

“Price is weight dependent but on similar products (45 lb 86 bright), coated free sheet is typically

10% more than coated groundwood.”
D-15

The Commission's questionnaires in this preliminary phase investigation requested comments

regarding the differences and similarities between coated free sheet paper and kraft paper in terms of the

Commission’s like product factors, including (1) characteristics and uses; (2) interchangeability; (3)

manufacturing processes; (4) channels of distribution; (5) customer and producer perceptions; and (6)

price. The following comments were received:

Coated Free Sheet Paper AND Kraft Paper 

Characteristics and Uses

***

“None of the *** mills manufacture kraft paper. We consider kraft paper to be rough,

heavy-weight paper serving primarily in packaging applications.”

***

“Kraft paper is used in the bag end-use market. It can be coated, uncoated, bleached, or

unbleached (all kraft paper produced at *** mill is bleached). Coated free sheet is used primarily for

catalogs, magazines and general commercial printing.”

Interchangeability

***

“Kraft paper and coated free sheet paper are generally not interchanged. Kraft typically does not

print as well as coated free sheet. Coated free sheet generally isn’t strong enough for bag applications.”

***

“None of the *** mills manufacture kraft paper. We do not view kraft paper to be at all

interchangeable with CFS.”

Manufacturing Processes

***

“Kraft paper is made on the same equipment, although kraft paper is produced from pulp

containing much greater amounts of softwood (primarily pine).”

***

“None of the *** mills manufacture kraft paper. Pulp for kraft paper does involve a chemical

process, but the underlying raw material is primarily softwood fiber. On the other hand, pulp for CFS is

produced using primarily hardwood fiber, which provides for a smoother paper surface as is required for

CFS. We cannot further describe kraft paper manufacturing.”
D-16

Channels of Distribution

***

“Kraft paper is typically sold directly to bag converters. Coated free sheet is sold directly to

printers and converters and through brokers and merchants.”

***

“Kraft paper does not compete with coated free sheet and as such operates in part through

different supply chain participants. Kraft paper would typically be sold direct to converters with

distribution playing a much smaller role than one would find in the coated free sheet distribution channel. 

Coated free sheet employs a direct sales channel as well as product sold through distribution with

substantial volumes in both.”

Customer and Producer Perceptions

***

“There is virtually no comparability between these two product categories as the end use

applications have little or no crossover. As such customers of Kraft papers would rarely if ever purchase

coated free sheet papers and as such would have limited information upon which to base perceptions. 

Kraft papers and board is used primarily in containerboard and/or packaging applications. As noted

above coated free sheet does not service these applications.”

***

“Kraft paper doesn’t print as well, but it is stronger and doesn’t tear easily.”

Price

***

“*** does not sell kraft paper. These products differ substantially as described above.”

***

“Coated kraft has sold between $760 and $900 per ton on average between 2003 and 2006. 

Coated free sheet has sold between $700 and $850 per ton during that same time.”
D-17

The Commission's questionnaires in this preliminary phase investigation requested comments

regarding the differences and similarities between one-sided coated free sheet paper AND two-sided

coated free sheet in terms of the Commission’s like product factors, including (1) characteristics and

uses; (2) interchangeability; (3) manufacturing processes; (4) channels of distribution; (5) customer and

producer perceptions; and (6) price. The following comments were received:

One-sided Coated Free Sheet Paper AND Two-sided Coated Free Sheet Paper 

Characteristics and Uses

***

“Differences: Exclusively used for labels (C1S), packaging

Similarities: Same commercial printing applications, same distribution, same components.”

***

“Coated one-side and coated two-side products have the same physical characteristics except that

coated one-side has coating on only one side. Coated one-side is typically used in applications requiring

high quality printing on one-side and gluing on the other. Applications include cut and stack labels,

in-mold labels, packaging, posters, and signage. Coated two-side products are generally used for

commercial printing applications, books, annual reports, brochures, catalogs, direct mail, and ad inserts.”

***

“Primary difference between coated 1-side and 2-side is the application of the coating. 

Customer’s application determines whether they need a coated 1-side or coated 2-side.”

***

“By most measures these papers are identical except for the fact one side of the C1S paper has no

coating. This will impact the mechanical properties of the paper; tear and stiffness, for example, will

differ for C1S and C2S papers of the same basis weight. The coated side of a C1S paper may have the

identical coating present on its surface as its C2S counterpart, thus giving the same optical characteristics

and same print characteristics. The uncoated side however, will have the same limitations cited

previously when comparing CFS versus uncoated free sheet.”

***

“Pretty similar.”

***

“Coated one-sided free sheet paper has coating applied to one side of the sheet and is generally

used in specific applications where printing is applied to the one coated side for applications such as

product labels, covers, folders, posters and product packaging.

Coated two-sided free sheet paper has coating applied to both sides of the sheet and is generally

used in specific applications where both sides of the sheet are printed for applications such as magazines,

brochures and annual reports.”
D-18

***

“One-sided coated free sheet is used for applications such as labels, box wraps, posters, bags, and

envelopes. Two-sided is used primarily in printing catalogs, brochures, and magazines.”

Interchangeability

***

“There is generally limited interchangeability between the two products due to the lesser

printability of the uncoated side of C1S. As a label for example, the uncoated side, cable of absorbing an

adhesive, is affixed to a container. Or, the uncoated side of the C1S paper may be laminated to another

substrate, thus providing the superior printability of the coated side and the bonding of the uncoated side

to a new material, for example a piece of cardboard, giving a new product with superior bulk and stiffness

characteristics.”

***

“Generally, coated one-side sheets are specified in applications where the application only

requires one-sided printing and does not require the use of a coated two-side sheet.”

***

“One side is same; other side refer to coated vs. uncoated (see II-3e).”

***

“Coated one-side products are not interchangeable for most coated two-side commercial print

applications that require the same characteristics on both sides of the sheet for two-sided printing. Coated

two-side products can be interchangeable for some typical C1S uses such as labels, packaging, and

posters.”

***

“When only one side needs to be printed the two products are interchangeable as long as the

customer doesn’t mind the side to side surface difference.”

***

“They generally are not interchanged.”

***

“Coated 1-side and coated 2-side are typically not interchangeable due to the

requirements/specifications for the customer’s end-use application.”
D-19

Manufacturing Processes

***

“C1S: Off machine coated, one side only has a light wash coating.

C2S: Both sides coated.”

***

“Same machinery.”

***

“The manufacturing process for coated 1-side and 2-side is the same.”

***

“A coater can be used to manufacture either C1S or C2S product, although there may be some

transition time (1-2 hours).”

***

“The manufacturing process is similar, with coating equipment for one side of the sheet being

taken “off-line” and not operated when producing a coated one-side sheet.”

***

“Coated one-side and coated two-side product are produced on the same equipment with the same

labor and materials with no modification.”

***

“The manufacturing processes are similar. One-sided coated free sheet is not fully coated on the

backside. Two-sided coated is fully coated on all sides.”

Channels of Distribution

***

“Same (primarily merchants).”

***

“Both are sold direct or through merchant and broker channels.”

***

“Same distribution channels, label stock is usually direct.”

***
D-20

“Distribution channels are the same for coated one-side and coated two-side sheets.”

***

“*** sells both coated one-side and coated two-side products through distributors. Most

competitors sell coated one side direct to large label converters.”

***

“Both one sided coated free sheet and two sided coated free sheet use multiple channels of

distribution. Approximately 70% of all two sided coated free sheet volume is sold through distribution as

reported by AF&PA, while one sided coated free sheet is less dependent upon merchant distribution. The

majority of one sided coated free sheet is sold directly by the manufacturer to a variety of customers (litho

laminators, converters, commercial printers, pressure sensitive OEMs, metallizer OEMs). While less

common, a significant volume of product is also sold through distribution, predominantly to commercial

printers.”

***

“Both coated 1-side and coated 2-side are sold to companies that provide value-added converting. 

Example-U.S. Playing Card takes our coated 1-side and produces playing cards (ex. -Poker cards).”

Customer and Producer Perceptions

***

“In many cases, customers and producers would have similar perceptions of quality and product

attributes between these two products. Both are used extensively by the commercial printing community

and quality is measured by a combination of appearance and runnability attributes.

Coated one side products are also used by converters and label manufacturers and are often

specified into a production process. As such these products required "qualification" to a more formal

degree throughout the supply chain than what is typically associated with coated two side free sheet.”

***

“Customer requirements drive the type of product they purchase. For someone requiring a coated

1-side, their perception of coated 2-side would be that it is over engineered for their application.”

***

“There are specific application driven by whether graphics are required on one or both sides of

the sheet.”

***

“C1S is perceived to be technically more challenging because of the downstream converting

processes.”

***
D-21

“One-sided coated free sheet is used in packaging applications, e.g., pet food packaging. Twosided coated free sheet is generally used in printing and publishing applications.”

***

“Same.”

***

“C1S: Perceived as a cheaper product due to only one functional side.

C2S: Viewed as a full value product.”

Price

***

“Pricing for coated one-side rolls is similar or slightly below pricing for #3 coated two-side.

Pricing trends for these two product lines generally run parallel to each other.”

***

“Prices between coated 1-side and coated 2-side vary, however coated 2-side is a value added

grade that commands a premium over coated 1-side.”

***

“Coated one side generally sells for 10-15% less than coated two side.”

***

***.

***

“Very similar.”

***

“Between 2003 and 2005, one-sided coated free sheet sold between $725 and $840 per ton during

the same period.”

***

“Coated one side and coated two side products are priced similarly in the marketplace. The

average price for a No. 3 60lb. coated free sheet web grade for the third quarter was $***/ton. 

There is little industry data available for C1S specific pricing, but *** average pricing for the first

three quarters of 2006 is a good measurement given *** stronghold within the C1S marketplace

in North America. The average price for the first three quarters for *** 70lb. *** web product

was $***/ton; on the 70lb. *** C1S web product the average pricing was $***/ton, and on the

70lb. *** web product the average pricing was $***/ton.”
 
 1

 As discussed in part I of this report, the industry typically uses the term “roll” to refer to “web rolls” only while

“sheeter” rolls are included within the “sheet” category. The reporting categories of roll and sheet included in

Commission questionnaires did not, however, make a distinction between or clarify “web rolls” and “sheeter rolls.”

(For further information see Chinese respondents and Unisources' respondents' postconference brief, exh. 8, and

Korean respondents' postconference brief, exh. 5.) Some questionnaire respondents, therefore, may have included

sheeter rolls in the roll category while others reported them as sheets. To the extent that there is inconsistent

reporting, the data presented in tables E-2 through E-4 (and possibly E-1) are unreliable. Further, as discussed in

part IV of this report, there also is substantial double-counting of the data reported in responses to the importer

questionnaires.

Tables E-6 and E-7 present official Commerce statistics for both CFS paper rolls and sheets. Within the HTS,

however, sheeter rolls are placed in the HTS reporting numbers for “rolls.” Commerce data on rolls and sheets are

also presented in exh. 3 of Korean respondents’ postconference brief. These figures are comparable to those shown

in tables E-6 and E-7 except that the figures in respondents’ brief do not include a relatively small volume of imports

entered under several HTS reporting numbers which (although not clearly classified as either rolls or sheets in the

HTS) could, according to the Commission staff, be so divided (or assigned). Finally, as indicated in the table notes,

the data in tables E-6 and E-7 (and in Korean respondents brief) do not include data that are believed to be

misclassified for China under two additional HTS reporting numbers. See part IV of this report for a discussion of

misclassification.

E-1

APPENDIX E

ADDITIONAL TABLES1

E-3

Table E-1

Coated free sheet paper: U.S. producers’ shipments, by rolls, sheets, and sides coated, 2003-05,

January-September 2005, and January-September 2006

Item

Calendar year January-September

2003 2004 2005 2005 2006

Quantity (short tons)

Rolls coated on one side 164,937 161,764 209,576 148,288 205,461

Rolls coated on both sides 2,970,359 3,075,192 3,141,240 2,326,078 2,443,795

Subtotal rolls 3,135,296 3,236,956 3,350,816 2,474,366 2,649,256

Sheets coated on one side *** *** *** *** 59,770

Sheets coated on both sides *** *** *** *** 684,382

Subtotal sheets 981,578 1,053,204 1,007,458 752,145 744,152

All other CFS paper 00000

Total CFS paper 4,116,874 4,290,160 4,358,274 3,226,511 3,393,408

Value (1,000 dollars)

Rolls coated on one side 161,252 156,588 202,697 143,375 195,351

Rolls coated on both sides 2,278,690 2,360,032 2,545,857 1,911,406 2,069,824

Subtotal rolls 2,439,942 2,516,620 2,748,554 2,054,781 2,265,175

Sheets coated on one side *** *** *** *** 85,384

Sheets coated on both sides *** *** *** *** 721,036

Subtotal sheets 1,081,320 1,111,306 1,080,775 810,860 806,420

All other CFS paper 00000

Total CFS paper 3,521,262 3,627,926 3,829,329 2,865,641 3,071,595

Unit value (per short ton)

Rolls coated on one side $978 $968 $967 $967 $951

Rolls coated on both sides 767 767 810 822 847

Subtotal rolls 778 777 820 830 855

Sheets coated on one side *** *** *** *** 1,429

Sheets coated on both sides *** *** *** *** 1,054

Subtotal sheets 1,102 1,055 1,073 1,078 1,084

All other CFS paper -- -- -- -- --

Total CFS paper 855 846 879 888 905

Table continued on next page.
Table E-1

Coated free sheet paper: U.S. producers’ shipments, by rolls, sheets, and sides coated, 2003-05,

January-September 2005, and January-September 2006

Item

Calendar year January-September

2003 2004 2005 2005 2006

E-4

Share of quantity (percent)

Rolls coated on one side 4.0 3.8 4.8 4.6 6.1

Rolls coated on both sides 72.2 71.7 72.1 72.1 72.0

Subtotal rolls 76.2 75.5 76.9 76.7 78.1

Sheets coated on one side *** *** *** *** 1.8

Sheets coated on both sides *** *** *** *** 20.2

Subtotal sheets 23.8 24.5 23.1 23.3 21.9

All other CFS paper 0.0 0.0 0.0 0.0 0.0

Total CFS paper 100.0 100.0 100 100 100

Note.–Data for *** includes their purchases of CFS paper (see table III-2 for the volume of their *** merchandise)

and data for ***, and *** included their U.S. exports, which amounted to slightly over *** short tons annually for ***

and *** short tons for ***. ***. 

Source: Compiled from data submitted in response to Commission questionnaires.
E-5

Table E-2

Coated free sheet paper: U.S. importers’ shipments from China, by rolls, sheets, and sides coated,

2003-05, January-September 2005, and January-September 2006

* * * * * * *

Table E-3

Coated free sheet paper: U.S. importers’ shipments from Indonesia, by rolls, sheets, and sides

coated, 2003-05, January-September 2005, and January-September 2006

* * * * * * *
E-6

Table E-4

Coated free sheet paper: U.S. importers’ shipments from Korea, by rolls, sheets, and sides coated,

2003-05, January-September 2005, and January-September 2006

Item Calendar year January-September

2003 2004 2005 2005 2006

Quantity (short tons)

Rolls coated on one side *** *** *** *** ***

Rolls coated on both sides *** *** *** *** ***

Subtotal rolls 18,201 19,729 20,642 15,808 13,836

Sheets coated on one side 8,006 10,566 6,414 4,283 5,821

Sheets coated on both sides 426,595 471,317 425,016 333,866 343,519

Subtotal sheets 434,601 481,883 431,430 338,149 349,340

All other CFS paper 00000

Total CFS paper 452,802 501,612 452,072 353,957 363,176

Value (1,000 dollars)

Rolls coated on one side *** *** *** *** ***

Rolls coated on both sides *** *** *** *** ***

Subtotal rolls 13,756 15,046 16,802 12,702 11,558

Sheets coated on one side 7,557 9,829 6,396 4,307 5,820

Sheets coated on both sides 412,552 458,716 415,938 326,417 344,221

Subtotal sheets 420,109 468,545 422,334 330,724 350,041

All other CFS paper 00000

Total CFS paper 433,865 483,591 439,136 343,426 361,599

Unit value (per short ton)

Rolls coated on one side *** *** *** *** ***

Rolls coated on both sides *** *** *** *** ***

Subtotal rolls $756 $763 $814 $804 $835

Sheets coated on one side 944 930 997 1,006 1,000

Sheets coated on both sides 967 973 979 978 1,002

Subtotal sheets 967 972 979 978 1,002

All other CFS paper -- -- -- -- --

Total CFS paper 958 964 971 970 996

Share of quantity (percent)

Rolls coated on one side *** *** *** *** ***

Rolls coated on both sides *** *** *** *** ***

Subtotal rolls 4.0 3.9 4.6 4.5 3.8

Sheets coated on one side 1.8 2.1 1.4 1.2 1.6

Sheets coated on both sides 94.2 94.0 94.0 94.3 94.6

Subtotal sheets 96.0 96.1 95.4 95.5 96.2

All other CFS paper 0.0 0.0 0.0 0.0 0.0

Total CFS paper 100.0 100.0 100 100 100

Source: Compiled from data submitted in response to Commission questionnaires.
Table E-5

Coated free sheet paper: U.S. importers' U.S. shipments of imports from all other sources,

by product type, 2003-05 and January-September 2005-06

* * * * * * *

Table E-6

Coated free sheet paper (rolls): U.S. imports, by source, 2003-05 and Jan.-Sept. 2005-06

Source 2003 2004 2005 Jan-Sept 05 Jan-Sept 06

Quantity (short tons)

China 3,322 733 6,537 5,070 13,680

Indonesia 17,076 6,616 6,578 4,426 17,898

Korea 75,355 89,819 90,514 68,495 90,854

 Subtotal (sub) 95,753 97,168 103,629 77,992 122,431

Finland 146,710 175,447 150,838 98,298 144,930

Canada 165,512 200,605 210,353 157,275 96,997

Germany 27,097 96,433 43,906 38,195 15,326

Japan 3,297 2,994 4,166 3,592 2,450

Italy 83,672 75,267 72,699 57,801 47,991

Austria 7,779 14,363 4,403 4,265 1,234

Spain 13,446 1,623 8 8 41

All other 63,370 50,994 38,410 28,565 36,744

 Subtotal (n/s) 510,883 617,726 524,783 387,997 345,713

 Total 606,635 714,894 628,412 465,989 468,144

Total 606,635 714,894 628,412 465,989 468,144

LDP value ($1,000)

China 2,426 1,002 6,778 5,089 12,339

Indonesia 13,814 5,245 5,534 3,669 14,712

Korea 65,569 77,737 79,241 59,391 78,934

 Subtotal (sub) 81,809 83,985 91,553 68,149 105,985

Finland 110,386 133,845 118,028 76,424 114,474

Canada 131,777 156,993 175,848 132,263 79,937

Germany 26,650 84,700 43,179 37,203 17,424

Japan 16,708 11,974 14,606 11,375 11,103

Italy 75,061 70,000 72,716 57,334 47,604

Austria 7,015 13,543 4,247 4,145 1,468

Spain 14,333 1,835 20 20 80

All other 69,421 56,161 56,846 41,184 55,104

 Subtotal (n/s) 451,350 529,053 485,489 359,948 327,193

 Total 533,160 613,037 577,041 428,098 433,178

Total 533,160 613,037 577,041 428,098 433,178

LDP unit value ($/short ton)

China $730.32 $1,368.17 $1,036.83 $1,003.67 $902.00

Indonesia $809.01 $792.80 $841.26 $828.92 $822.01

Korea $870.13 $865.49 $875.45 $867.09 $868.80

 Average (sub) $854.38 $864.33 $883.46 $873.80 $865.67

Finland $752.41 $762.88 $782.48 $777.47 $789.86

Canada $796.18 $782.60 $835.97 $840.97 $824.12

Germany $983.52 $878.33 $983.44 $974.04 $1,136.96

Japan $5,067.54 $3,999.70 $3,505.84 $3,166.76 $4,531.48

Italy $897.08 $930.02 $1,000.23 $991.94 $991.93

Austria $901.75 $942.90 $964.57 $972.02 $1,188.97

Spain $1,065.98 $1,130.83 $2,439.92 $2,439.92 $1,955.85

All other $1,095.49 $1,101.32 $1,479.99 $1,441.77 $1,499.66

 Average (n/s) $883.47 $856.45 $925.12 $927.71 $946.43

 Average $878.88 $857.52 $918.25 $918.69 $925.31

Source: USDOC (HTS 4810.13.1900, 4810.13.2010, 4810.13.2090, 4810.13.5000,

and 4810.13.7040).

Note.--HTS 4811.59.2000 and 4811.90.8000 not classified as either rolls or sheet.

E-7
Table E-7

Coated free sheet paper (sheets): U.S. imports, by source, 2003-05 and Jan.-Sept. 2005-06

Source 2003 2004 2005 Jan-Sept 05 Jan-Sept 06

Quantity (short tons)

China 51,327 31,544 102,791 71,311 205,736

Indonesia 14,920 26,703 22,840 15,044 29,342

Korea 302,857 340,625 326,598 254,766 275,918

 Subtotal (sub) 369,103 398,873 452,229 341,120 510,996

Finland 36,909 42,850 34,648 24,398 30,429

Canada 99,611 94,411 88,949 68,418 31,764

Germany 64,800 63,601 64,508 33,641 89,889

Japan 94,364 95,544 97,635 75,994 66,719

Italy 1,694 3,475 10,354 3,514 23,292

Austria 62,879 41,856 35,801 20,257 44,558

Spain 3,039 27,258 39,741 27,993 41,255

All other 115,480 89,836 47,669 37,062 35,467

 Subtotal (n/s) 478,777 458,831 419,305 291,277 363,374

 Total 847,880 857,704 871,534 632,398 874,370

Total 847,880 857,704 871,534 632,398 874,370

LDP value ($1,000)

China 39,095 23,871 87,648 60,371 184,805

Indonesia 11,558 21,440 20,596 13,230 25,775

Korea 257,127 287,128 287,312 226,217 243,542

 Subtotal (sub) 307,780 332,439 395,556 299,818 454,122

Finland 34,042 38,091 32,143 22,425 27,481

Canada 113,115 102,469 97,194 74,777 34,568

Germany 57,988 63,129 67,725 35,231 88,483

Japan 111,686 116,770 130,010 99,442 80,209

Italy 2,817 5,952 14,663 6,222 28,296

Austria 60,941 35,657 37,060 19,363 46,228

Spain 3,829 27,879 37,359 26,909 36,158

All other 103,164 85,242 56,086 41,877 39,172

 Subtotal (n/s) 487,582 475,189 472,240 326,245 380,594

 Total 795,362 807,627 867,796 626,063 834,716

Total 795,362 807,627 867,796 626,063 834,716

LDP unit value ($/short ton)

China $761.70 $756.74 $852.68 $846.59 $898.26

Indonesia $774.70 $802.88 $901.76 $879.45 $878.44

Korea $849.00 $842.94 $879.71 $887.94 $882.66

 Average (sub) $833.86 $833.45 $874.68 $878.92 $888.70

Finland $922.31 $888.94 $927.70 $919.13 $903.12

Canada $1,135.56 $1,085.34 $1,092.70 $1,092.94 $1,088.26

Germany $894.88 $992.58 $1,049.87 $1,047.24 $984.36

Japan $1,183.56 $1,222.16 $1,331.59 $1,308.54 $1,202.19

Italy $1,662.69 $1,712.52 $1,416.19 $1,770.74 $1,214.82

Austria $969.18 $851.90 $1,035.15 $955.85 $1,037.47

Spain $1,260.21 $1,022.79 $940.05 $961.28 $876.43

All other $893.35 $948.86 $1,176.58 $1,129.93 $1,104.45

 Average (n/s) $1,018.39 $1,035.65 $1,126.24 $1,120.05 $1,047.39

 Average $938.06 $941.62 $995.71 $989.98 $954.65

Source: USDOC (HTS 4810.14.1900, 4810.14.2010, 4810.14.2090, 4810.14.5000, 

4810.14.7040, 4810.19.1900, 4810.19.2010, and 4810.19.2090).

Note.--HTS 4811.59.2000 and 4811.90.8000 not classified as either rolls or sheet.

E-8
F-1

APPENDIX F

PRICING DATA INCLUDING SALES OF IMPORTED PRODUCT REPORTED BY

FIRMS THAT ARE NOT THE IMPORTER OF RECORD

F-3

Table F-1

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and imported

product 1 sold to merchants/distributors, including firms that are not the importer of record, and

margins of underselling/(overselling), by quarters, January 2003-September 2006

* * * * * * *

Table F-2

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and imported

product 1 sold directly to end users, including firms that are not the importer of record, and

margins of underselling/(overselling), by quarters, January 2003-September 2006

* * * * * * *

Table F-3

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and imported

product 2 sold to merchants/distributors, including firms that are not the importer of record, and

margins of underselling/(overselling), by quarters, January 2003-September 2006

* * * * * * *

Table F-4

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and imported

product 2 sold directly to end users, including firms that are not the importer of record, and

margins of underselling/(overselling), by quarters, January 2003-September 2006

* * * * * * *

Table F-5

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and imported

product 31 sold to merchants/distributors, including firms that are not the importer of record,2

 and

margins of underselling/(overselling), by quarters, January 2003-September 2006

* * * * * * *

Table F-6

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and imported

product 31 sold directly to end users, including firms that are not the importer of record, and

margins of underselling/(overselling), by quarters, January 2003-September 2006

* * * * * * *

Table F-7

Coated free sheet paper: Instances of underselling/overselling and the range and average of

margins for products 1-3, including firms that are not the importer of record, January 2003-

September 2006

* * * * * * *
 
G-1

APPENDIX G

NONSUBJECT IMPORT PRICING DATA

G-3

Table G-1

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and

nonsubject imports of product 1 sold to merchants/distributors, and margins of

underselling/(overselling), by quarters, January 2003-September 2006

* * * * * * *

Table G-2

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and

nonsubject imports of product 1 sold directly to end users and margins of

underselling/(overselling), by quarters, January 2003-September 2006

* * * * * * *

Table G-3

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and

nonsubject imports of product 2 sold to merchants/distributors and margins of

underselling/(overselling), by quarters, January 2003-September 2006

* * * * * * *

Table G-4

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and

nonsubject imports of product 2 sold directly to end users and margins of

underselling/(overselling), by quarters, January 2003-September 2006

* * * * * * *

Table G-5

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and

nonsubject imports of product 3 sold to merchants/distributors and margins of

underselling/(overselling), by quarters, January 2003-September 2006

* * * * * * *

Table G-6

Coated free sheet paper: Weighted-average f.o.b. prices and quantities of domestic and

nonsubject imports of product 3 sold directly to end users and margins of

underselling/(overselling), by quarters, January 2003-September 2006

* * * * * * *
 
H-1

APPENDIX H

PRICING DATA ON A DELIVERED BASIS

H-3

Table H-1

Coated free sheet paper: Weighted-average delivered prices and quantities of domestic and

imported product 1 sold to merchants/distributors and margins of underselling/(overselling), by

quarters, January 2003-September 2006

* * * * * * *

Table H-2

Coated free sheet paper: Weighted-average delivered prices and quantities of domestic and

imported product 1 sold directly to end users and margins of underselling/(overselling), by

quarters, January 2003-September 2006

* * * * * * *

Table H-3

Coated free sheet paper: Weighted-average delivered prices and quantities of domestic and

imported product 2 sold to merchants/distributors and margins of underselling/(overselling), by

quarters, January 2003-September 2006

* * * * * * *

Table H-4

Coated free sheet paper: Weighted-average delivered prices and quantities of domestic and

imported product 2 sold directly to end users and margins of underselling/(overselling), by

quarters, January 2003-September 2006

* * * * * * *

Table H-5

Coated free sheet paper: Weighted-average delivered prices and quantities of domestic and

imported product 3 sold to merchants/distributors and margins of underselling/(overselling), by

quarters, January 2003-September 2006

* * * * * * *

Table H-6

Coated free sheet paper: Weighted-average delivered prices and quantities of domestic and

imported product 3 sold directly to end users and margins of underselling/(overselling), by

quarters, January 2003-September 2006

* * * * * * *

Table H-7

Coated free sheet paper: Instances of underselling/overselling and the range and average of

margins for products 1-3, on a delivered sales basis, January 2003-September 2006

* * * * * * *