Multilayered Wood Flooring From the People's Republic of China: Final Affirmative Countervailing Duty Determination

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce (“Department”) has determined that countervailable subsidies are being provided to producers and exporters of multilayered wood flooring (“wood flooring”) from the People's Republic of China (“PRC”). For information on the subsidy rates, see the “Suspension of Liquidation” section of this notice.

DATES:

Effective Date: October 18, 2011.

FOR FURTHER INFORMATION CONTACT:

Shane Subler or Joshua Morris, AD/CVD Operations, Office 1, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-0189 and (202) 482-1779, respectively.

SUPPLEMENTARY INFORMATION:

Period of Investigation

The period for which we are measuring subsidies, or period of investigation (“POI”), is January 1, 2009, through December 31, 2009.

Case History

The following events have occurred since our Preliminary Determination. See Multilayered Wood Flooring From the People's Republic of China: Preliminary Affirmative Countervailing Duty Determination, 76 FR 19034 (April 6, 2011) (“Preliminary Determination”).

From March 24, 2011, through April 15, 2011, the Department received ministerial error allegations regarding certain companies that received adverse-facts available (“AFA”) in the Preliminary Determination: (1) Guangzhou Pan Yu Kang Da Board Co., Ltd. and Kornbest Enterprises Ltd.; (2) Baroque Timber Industries (Zhongshan) Co., Ltd., Riverside Plywood Corporation, Samling Elegant Living Trading (Labuan) Ltd., Samling Global USA, Ind., Samling Riverside Co., Ltd., and Suzhou Times Flooring Co., Ltd. (collectively, the “Samling Group”); (3) Shanghai Eswell Timber Co., Ltd. (“Eswell Timber”); (4) UA Wood Floors, Inc.; and (5) Shenzhenshi Huanwei Woods Co., Ltd.

On April 21, 2011, the Department released a memorandum addressing these allegations. See Memorandum to Gary Taverman, “Ministerial Error Allegations Regarding the AFA Company List,” (April 21, 2011) (“Prelim Ministerial Error Memo”), available in the Department's Central Records Unit (“CRU”) in Room 7046 of the main Department building. In the Prelim Ministerial Error Memo, the Department stated that the allegations did not constitute ministerial errors under 19 CFR 351.224(f) and (g), but in order to confirm the claims of the interested parties, we would request additional information from the parties and address this information in the final determination.

On June 24, 2011, we issued questionnaires to the parties addressed in the Prelim Ministerial Error Memo. On June 30, 2011, and July 1, 2011, we received responses from these parties, with one party withdrawing its request to amend the Preliminary Determination. For a complete discussion of the parties' submissions and the Department's position, see Memorandum from Christian Marsh, “Issues and Decision Memorandum for the Final Determination in the Countervailing Duty Investigation of Multilayered Wood Flooring from the People's Republic of China” (October 11, 2011) (hereafter, “Issues and Decision Memorandum”), which is hereby adopted by this notice.

On March 28, 2011, the Government of the PRC (“GOC”) submitted a response to the supplemental questionnaire issued to it on March 14, 2011, shortly before the Preliminary Determination. On May 3, 2011, the GOC placed additional factual information on the record.

The Department issued supplemental questionnaires to Fine Furniture (Shanghai) Ltd., Great Wood (Tonghua) Ltd., and Fine Furniture Plantation (Shishou) Ltd. (collectively, “Fine Furniture”), Zhejiang Layo Wood Industry Co., Ltd. and Jiaxing Brilliant Import & Export Co., Ltd. (collectively, “Layo”), and Zhejiang Yuhua Timber Co., Ltd. (“Yuhua”) on May 4, 2011, and received responses on May 13, 2011. On May 4, 2011, the Department also issued a supplemental questionnaire to the GOC. On May 9, 2011, the Department issued a letter to the GOC regarding the May 4, 2011, supplemental questionnaire, to which the GOC declined to respond, as stated in the GOC's letter of May 20, 2011.

On May 9, 2011, the Department aligned the final determination in this countervailing duty (“CVD”) investigation of wood flooring from the PRC with the final determination in the companion antidumping duty (“AD”) investigation. See Multilayered Wood Flooring From the People's Republic of China: Alignment of Final Countervailing Duty Determination With Final Antidumping Duty Determination, 76 FR 26685 (May 9, 2011).

From June 3, 2011, through June 14, 2011, the Department conducted verifications of the questionnaire responses submitted by Fine Furniture, Layo, and Yuhua. See Memorandum to Susan H. Kuhbach, “Verification Report: Fine Furniture (Shanghai) Ltd. (“FF Shanghai”), Great Wood (Tonghua) Ltd. (“Great Wood”), and FF Plantation (Shishou) Limited (“FFPS”) (collectively, “Fine Furniture”),” (July 6, 2011); see also Memorandum to Susan H. Kuhbach, “Verification Report: Zhejiang Layo Wood Industry Co., Ltd. (“Layo Wood”) and Jiaxing Brilliant Import & Export Co., Ltd. (“Brilliant”) (collectively, “Layo”),” (July 6, 2011); and Memorandum to Susan H. Kuhbach, “Verification Report: Zhejiang Yuhua Timber Co., Ltd. (“Yuhua”),” (July 13, 2011), available in the CRU.

On July 27, 2011, the Department released its post-preliminary analyses for Fine Furniture, Layo, and Yuhua. See Memorandum to Ronald K. Lorentzen, “Countervailing Duty Investigation of Multilayered Wood Flooring from the People's Republic of China: Post-Preliminary Analysis Memorandum for Fine Furniture (Shanghai) Ltd., Great Wood (Tonghua) Ltd., and Fine Furniture Plantation (Shishou) Ltd. (collectively, “Fine Furniture”),” dated July 22, 2011; Memorandum to Ronald K. Lorentzen, Deputy Assistant Secretary for Import Administration, through Christian Marsh, Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations, from Susan H. Kuhbach, Office Director AD/CVD Operations, Office 1, “Countervailing Duty Investigation of Multilayered Wood Flooring from the People's Republic of China: Post-Preliminary Analysis Memorandum for Zhejiang Layo Wood Industry Co., Ltd. and Jiaxing Brilliant Import & Export Co., Ltd. (collectively, “Layo”),” (July 22, 2011); and Memorandum to Ronald K. Lorentzen, “Countervailing Duty Investigation of Multilayered Wood Flooring from the People's Republic of China: Post-Preliminary Analysis Memorandum for Zhejiang Yuhua Timber Co., Ltd. (“Yuhua”),” (July 22, 2011), available in the CRU.

We received case briefs from the GOC; Fine Furniture; Yuhua; Shanghai Lizhong Wood Products Co., Ltd./The Lizhong Wood Industry Limited Company of Shanghai; Chinafloors Timber (China) Co., Ltd. (“Chinafloors”); Samling Group; Eswell Timber and Vicwood Industry (Suzhou) Co., Ltd.; Style Limited; and the Coalition for American Hardwood Parity (“Petitioner”) on August 3, 2011. The GOC, Fine Furniture, Chinafloors, Style Limited, and Petitioner submitted rebuttal briefs on August 8, 2011.

We conducted a public hearing on September 8, 2011, at the request of the GOC, Fine Furniture, and Layo.

Scope of the Investigation

Multilayered wood flooring is composed of an assembly of two or more layers or plies of wood veneer(s) in combination with a core. The several layers, along with the core, are glued or otherwise bonded together to form a final assembled product. Multilayered wood flooring is often referred to by other terms, e.g., “engineered wood flooring” or “plywood flooring.” Regardless of the particular terminology, all products that meet the description set forth herein are intended for inclusion within the definition of subject merchandise.

All multilayered wood flooring is included within the definition of subject merchandise, without regard to: dimension (overall thickness, thickness of face ply, thickness of back ply, thickness of core, and thickness of inner plies; width; and length); wood species used for the face, back and inner veneers; core composition; and face grade. Multilayered wood flooring included within the definition of subject merchandise may be unfinished (i.e., without a finally finished surface to protect the face veneer from wear and tear) or “prefinished” (i.e., a coating applied to the face veneer, including, but not exclusively, oil or oil-modified or water-based polyurethanes, ultra-violet light cured polyurethanes, wax, epoxy-ester finishes, moisture-cured urethanes and acid-curing formaldehyde finishes.) The veneers may be also soaked in an acrylic-impregnated finish. All multilayered wood flooring is included within the definition of subject merchandise regardless of whether the face (or back) of the product is smooth, wire brushed, distressed by any method or multiple methods, or hand-scraped. In addition, all multilayered wood flooring is included within the definition of subject merchandise regardless of whether or not it is manufactured with any interlocking or connecting mechanism (for example, tongue-and-groove construction or locking joints). All multilayered wood flooring is included within the definition of the subject merchandise regardless of whether the product meets a particular industry or similar standard.

The core of multilayered wood flooring may be composed of a range of materials, including but not limited to hardwood or softwood veneer, particleboard, medium-density fiberboard, high-density fiberboard (“HDF”), stone and/or plastic composite, or strips of lumber placed edge-to-edge.

Multilayered wood flooring products generally, but not exclusively, may be in the form of a strip, plank, or other geometrical patterns (e.g., circular, hexagonal). All multilayered wood flooring products are included within this definition regardless of the actual or nominal dimensions or form of the product.

Specifically excluded from the scope are cork flooring and bamboo flooring, regardless of whether any of the sub-surface layers of either flooring are made from wood. Also excluded is laminate flooring. Laminate flooring consists of a top wear layer sheet not made of wood, a decorative paper layer, a core-layer of HDF, and a stabilizing bottom layer.

Imports of the subject merchandise are provided for under the following subheadings of the Harmonized Tariff Schedule of the United States (“HTSUS”): 4412.31.0520; 4412.31.0540; 4412.31.0560; 4412.31.2510; 4412.31.2520; 4412.31.4040; 4412.31.4050; 4412.31.4060; 4412.31.4070; 4412.31.5125; 4412.31.5135; 4412.31.5155; 4412.31.5165; 4412.31.3175; 4412.31.6000; 4412.31.9100; 4412.32.0520; 4412.32.0540; 4412.32.0560; 4412.32.2510; 4412.32.2520; 4412.32.3125; 4412.32.3135; 4412.32.3155; 4412.32.3165; 4412.32.3175; 4412.32.3185; 4412.32.5600; 4412.39.1000; 4412.39.3000; 4412.39.4011; 4412.39.4012; 4412.39.4019; 4412.39.4031; 4412.39.4032; 4412.39.4039; 4412.39.4051; 4412.39.4052; 4412.39.4059; 4412.39.4061; 4412.39.4062; 4412.39.4069; 4412.39.5010; 4412.39.5030; 4412.39.5050; 4412.94.1030; 4412.94.1050; 4412.94.3105; 4412.94.3111; 4412.94.3121; 4412.94.3131; 4412.94.3141; 4412.94.3160; 4412.94.3171; 4412.94.4100; 4412.94.5100; 4412.94.6000; 4412.94.7000; 4412.94.8000; 4412.94.9000; 4412.94.9500; 4412.99.0600; 4412.99.1020; 4412.99.1030; 4412.99.1040; 4412.99.3110; 4412.99.3120; 4412.99.3130; 4412.99.3140; 4412.99.3150; 4412.99.3160; 4412.99.3170; 4412.99.4100; 4412.99.5100; 4412.99.5710; 4412.99.6000; 4412.99.7000; 4412.99.8000; 4412.99.9000; 4412.99.9500; 4418.71.2000; 4418.71.9000; 4418.72.2000; and 4418.72.9500.

While HTSUS subheadings are provided for convenience and customs purposes, the written description of the subject merchandise is dispositive.

Scope Comments

Following the Preliminary Determination, on May 19, 2011, the Department issued a decision memorandum addressing multiple scope issues in this and the concurrent AD investigation of wood flooring from the PRC. See Memorandum to Christian Marsh, “Scope” (May 19, 2011) (“Scope Memo”); see also Multilayered Wood Flooring From the People's Republic of China: Preliminary Determination of Sales at Less Than Fair Value 76 FR 30656 (May 26, 2011). We sought comments on the scope in both the AD and CVD cases. See Letter to All Interested Parties from Nancy Decker, Program Manager, Office 1, AD/CVD Operations, Import Administration, “RE: Antidumping and Countervailing Duty Investigations: Multilayered Wood Flooring from the People's Republic of China,” (May 25, 2011).

In response, interested parties filed scope-related comments in submissions on June 6, 2011, June 14, 2011, and June 15, 2011, as well as in case briefs on August 3, 2011, and rebuttal briefs on August 8, 2011, and August 9, 2011. Additionally, a scope-related submission was received the same day the Scope Memo was released and, therefore, was not analyzed in the Scope Memo, but is addressed in this final determination. Based on our analysis of all the comments, we have changed the scope to eliminate references to certain HTSUS numbers. For a complete discussion of this change, as well as a summary of the parties' comments and the Department's positions, see the Issues and Decision Memorandum.

Injury Test

On December 17, 2010, the U.S. International Trade Commission (“ITC”) published its affirmative preliminary determination that there is a reasonable indication that an industry in the United States is materially injured by reason of allegedly subsidized imports of wood flooring from the PRC. See Multilayered Wood Flooring From China, 75 FR 79019 (December 17, 2010).

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to this investigation are addressed in the Issues and Decision Memorandum. A list of the issues raised is attached to this notice as Appendix I. The Issues and Decision Memorandum is a public document and is on file electronically via Import Administration's Antidumping and Countervailing Duty Centralized Electronic Service System (“IA ACCESS”). Access to IA ACCESS is available in the CRU. In addition, a complete version of the Issues and Decision Memorandum can be accessed directly on the internet at http://www.trade.gov/ia/. The signed Issues and Decision Memorandum and the electronic versions of the Issues and Decision Memorandum are identical in content.

Use of Adverse Facts Available

For purposes of this final determination, we have continued to rely on facts available and have continued to use adverse inferences in accordance with sections 776(a) and (b) of the Tariff Act of 1930, as amended (“Act”) with regard to 1) the GOC's provision of electricity for less than adequate remuneration, and 2) the countervailable subsidy rates for the non-cooperative companies that did not respond to the Department's quantity and value (“Q&V”) questionnaire. In a departure from the Preliminary Determination, we are now applying AFA to 124 companies instead of 127 companies. A full discussion of this change and our decision to apply AFA is presented in the Issues and Decision Memorandum under the section “Use of Facts Otherwise Available and Adverse Inferences.”

Suspension of Liquidation

In accordance with section 703(d)(1)(A)(i) of the Act, we have calculated a rate for each individually investigated producer/exporter of the subject merchandise. Section 705(c)(5)(A)(i) of the Act states that for companies not investigated, we will determine an “all-others” rate equal to the weighted average countervailable subsidy rates established for exporters and producers individually investigated, excluding any zero and de minimis countervailable subsidy rates, and any rates determined entirely under section 776 of the Act.

In this investigation, two of the individually examined companies received rates of de minimis. Fine Furniture received an above-de minimis rate. Therefore, we have assigned the rate calculated for Fine Furniture to “all-others.” Finally, for the non-cooperative companies that did not respond to our Q&V questionnaire, we have calculated rates based solely on facts available with an adverse inference, in accordance with sections 776(a) and (b) of the Act. See “Non-Cooperative Companies” section of the Issues and Decision Memorandum.

We determine the total net countervailable subsidy rates to be:

Also, in accordance with section 703(d) of the Act, we instructed U.S. Customs and Border Protection (“CBP”) to discontinue the suspension of liquidation for CVD purposes for subject merchandise entered on or after August 4, 2011, but to continue the suspension of liquidation as previously ordered for entries made from April 6, 2011, through August 3, 2011.

If the ITC issues a final affirmative injury determination we will issue a CVD order, and we will require a cash deposit of estimated countervailing duties for such entries of merchandise in the amounts indicated above. Because Layo and Yuhua were found to receive de minimis subsidies, they would be excluded from the CVD order. If the ITC determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated and all estimated deposits or securities posted as a result of the suspension of liquidation will be refunded or canceled.

ITC Notification

In accordance with section 705(d) of the Act, we will notify the ITC of our determination. In addition, we are making available to the ITC all non-privileged and non-proprietary information related to this investigation. We will allow the ITC access to all privileged and business proprietary information in our files, provided the ITC confirms that it will not disclose such information, either publicly or under an administrative protective order (“APO”), without the written consent of the Assistant Secretary for Import Administration.

Return or Destruction of Proprietary Information

In the event that the ITC issues a final negative injury determination, this notice will serve as the only reminder to parties subject to an APO of their responsibility concerning the destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.

This determination is issued pursuant to sections 705(d) and 777(i) of the Act.

Appendix I

List of Comments and in the Issues and Decision Memorandum

General Issues

Comment 1 Application of the CVD Law to the PRC and Double Counting

Comment 2 Whether Application of the CVD Law to NMEs Violates the APA

Comment 3 Requests for Information Regarding Other Programs

Comment 4 Provision of Electricity for Less Than Adequate Remuneration

Comment 5 Application of AFA to Non-Cooperative Respondents

Comment 6 Removal of Companies in the List of AFA Companies

Comment 7 “All-Others” Rate Calculation

Scope-Related Issues

Comment 8 Exclusion Requests for Plywood Panels or Veneer

Comment 9 Strand-Woven Lignocellulosic Flooring

Comment 10 Scope Language Regarding HTSUS Subheadings

Comment 11 Continued Requests for Certain Exclusions