Notice of Final Determination of Sales at Less Than Fair Value: Polyethylene Retail Carrier Bags From Thailand

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

June 18, 2004.

SUMMARY:

On January 26, 2003, the Department of Commerce published its preliminary determination of sales at less than fair value of the investigation on polyethylene retail carrier bags from Thailand. The period of investigation is April 1, 2002, through March 31, 2003. The investigation covers five manufacturers/exporters.

We invited interested parties to comment on our preliminary determination of sales at less than fair value. Based on our analysis of the comments received, we have made changes to our calculations. The final dumping margins for this investigation are listed in the “Final Determination Margins” section below.

FOR FURTHER INFORMATION CONTACT:

Lyn Johnson (TPBG) or Fred Aziz (Universal), Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-4733.

Final Determination

The Department of Commerce (the Department) has conducted this antidumping investigation in accordance with section 735 of the Tariff Act of 1930, as amended (the Act). We have determined that polyethylene retail carrier bags (PRCBs) from Thailand are being sold, or are likely to be sold, in the United States at less than fair value (LTFV), as provided in section 735 of the Act. The estimated margins of sales at LTFV are shown in the “Final Determination Margins” section of this notice.

Case History

The preliminary determination of sales at LTFV in this investigation was issued on January 21, 2004. See Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Polyethylene Retail Carrier Bags from Thailand, 69 FR 3552 (January 26, 2004) (Preliminary Determination).

Since the Preliminary Determination the following events have occurred. In February 2004, we conducted verifications of the questionnaire responses of the respondents, Thai Plastic Bags Industries Co., Ltd. (TPBI), Winner's Pack Co., Ltd., and APEC Film Ltd (APEC) (collectively the Thai Plastic Bags Industries Group (TPBG)), and Advance Polybag Inc., Alpine Plastics Inc., API Enterprises Inc., and Universal Polybag Co., Ltd. (collectively Universal). We gave interested parties an opportunity to comment on the Preliminary Determination. We received case briefs on April 30, 2004, from the respondents and May 3, 2004, from the Polyetheylene Retail Carrier Bag Committee and its individual members, PCL Packing, Inc., Hilex Poly Co., LLC, Superbag Corp., Vanguard Plastics Inc., and Inteplast Group, Ltd. (collectively, the petitioners). We received rebuttal briefs on May 6, 2004, from both the respondents and the petitioners. The Department held a public hearing on May 14, 2004, at the request of the petitioners.

Period of Investigation

The period of investigation (POI) corresponds to the four most recent fiscal quarters prior to the filing of the petition, April 1, 2002, through March 31, 2003.

Scope of Investigation

The merchandise subject to this investigation is PRCBs, which also may be referred to as t-shirt sacks, merchandise bags, grocery bags, or checkout bags. The subject merchandise is defined as non-sealable sacks and bags with handles (including drawstrings), without zippers or integral extruded closures, with or without gussets, with or without printing, of polyethylene film having a thickness no greater than .035 inch (0.889 mm) and no less than .00035 inch (0.00889 mm), and with no length or width shorter than 6 inches (15.24 cm) or longer than 40 inches (101.6 cm). The depth of the bag may be shorter than 6 inches but not longer than 40 inches (101.6 cm).

PRCBs are typically provided without any consumer packaging and free of charge by retail establishments (e.g., grocery, drug, convenience, department, specialty retail, discount stores and restaurants) to their customers to package and carry their purchased products. The scope of the petition excludes (1) PRCBs that are not printed with logos or store names and that are closeable with drawstrings made of polyethylene film and (2) PRCBs that are packed in consumer packaging with printing that refers to specific end-uses other than packaging and carrying merchandise from retail establishments (e.g., garbage bags, lawn bags, trash-can liners).

Imports of the subject merchandise are currently classifiable under statistical category 3923.21.0090 of the Harmonized Tariff Schedule of the United States. This subheading also covers products that are outside the scope of this investigation. Furthermore, although the HTSUS subheading is provided for convenience and customs purposes, our written description of the scope of this investigation is dispositive.

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to this antidumping investigation are addressed in the “Issues and Decision Memorandum” (Decision Memorandum) from Jeffrey May, Deputy Assistant Secretary, Import Administration, to James J. Jochum, Assistant Secretary for Import Administration, dated June 9, 2004, which is hereby adopted by this notice. A list of the issues which parties have raised and to which we have responded, all of which are in the Decision Memorandum, is attached to this notice as an appendix. Parties can find a complete discussion of all issues raised in this investigation and the corresponding recommendations in this public memorandum which is on file in the Central Records Unit, room B-099 of the main Department of Commerce building. In addition, a complete version of the Decision Memorandum can be accessed directly on the Web at http://ia.ita.doc.gov/. The paper copy and electronic version of the Decision Memorandum are identical in content.

Use of Facts Otherwise Available

Section 776(a)(2) of the Act provides that, if an interested party withholds information that has been requested by the Department, fails to provide such information in a timely manner or in the form or manner requested, significantly impedes a proceeding under the antidumping statute, or provides such information but the information cannot be verified, the Department shall, subject to sections 782(d) and (e) of the Act, use facts otherwise available in reaching the applicable determination.

Specifically, section 776(a)(2)(B) of the Act requires the Department to use facts available when a party does not provide the Department with information by the established deadline or in the form and manner requested by the Department. In addition, section 776(b) of the Act provides that, if the Department finds that an interested party “has failed to cooperate by not acting to the best of its ability to comply with a request for information,” the Department may use information that is adverse to the interests of that party as facts otherwise available.

As explained in the Preliminary Determination, Champion Paper Polybags Ltd., TRC Polypack, and Zip-Pac Co., Ltd., failed to respond to our July 14, 2003, request for information. See Preliminary Determination at 69 FR 3552. Consistent with our decision in the Preliminary Determination and pursuant to section 776(a) of the Act, in reaching our final determination we have used total facts available for all three of these companies. These firms did not provide the data we needed to decide whether they should be selected as mandatory respondents. Also, because these companies failed to respond to our requests for information, we have found that they failed to cooperate to the best of their ability. Therefore, pursuant to section 776(b) of the Act, we have used an adverse inference in selecting from the facts available for the margins for these companies. Accordingly, we find that the highest margin based on petition information, as we adjusted for the initiation of this investigation, 122.88 percent, is corroborated within the meaning of section 776(c) of the Act. See Initiation of Antidumping Duty Investigations: Polyethylene Retail Carrier Bags from The People's Republic of China, Malaysia, and Thailand, 68 FR 42002 (July 16, 2003).

Section 776(c) of the Act provides that the Department shall, to the extent practicable, corroborate secondary information used for facts available by reviewing independent sources reasonably at its disposal. Information from the petitioners constitutes secondary information. The Statement of Administrative Action accompanying the Uruguay Round Agreements Act, H.R. Doc. 103-316, at 870 (1994) (SAA), provides that the word “corroborate” means that the Department will satisfy itself that the secondary information used has probative value.

As discussed in the memorandum to the file entitled “Corroboration of Facts Available”, dated January 16, 2004, we found that the export-price (EP) and normal-value information in the petition were reasonable and, therefore, determined that the petition information has probative value. Furthermore, there is no information on the record that demonstrates that the rate we have selected is an inappropriate total adverse facts-available rate for the companies in question. On the contrary, our existing record supports the use of this rate as the dumping margin for these firms. Therefore, we consider the selected rate to have probative value with respect to the firms in question and to reflect the appropriate adverse inference. Accordingly, for the final determination, the margin for Champion Paper Polybags Ltd., TRC Polypack, and Zip-Pac Co., Ltd., is 122.88 percent.

Currency Conversion

We made currency conversions into U.S. dollars in accordance with section 773A(a) of the Act based on the exchange rates in effect on the dates of the U.S. sales as certified by the Federal Reserve Bank.

Cost of Production

As explained in our “Request to Initiate a Cost Investigation” dated November 21, 2003, we conducted a COP investigation of sales by TPBG in the home market pursuant to section 773(b)(1) of the Act.

In accordance with section 773(b)(3) of the Act, we calculated the cost of production (COP) based on the sum of the costs of materials and fabrication employed in producing the foreign like product, the selling, general and administrative (SG&A) expenses, and all costs and expenses incidental to packing the merchandise. In our COP analysis, we used the home-market sales and COP information provided in TPBG's questionnaire responses.

After calculating the COP, in accordance with section 773(b)(1) of the Act, we tested whether home-market sales of the foreign like product were made at prices below the COP within an extended period of time in substantial quantities and whether such prices permitted the recovery of all costs within a reasonable period of time. We compared model-specific COPs to the reported home-market prices less any applicable movement charges.

Pursuant to section 773(b)(2)(C) of the Act, when less than 20 percent of TPBG's sales of a given product were at prices less than the COP, we did not disregard any below-cost sales of that product because the below-cost sales were not made in substantial quantities within an extended period of time. When 20 percent or more of a respondent's sales of a given product during the POI were at prices less than the COP, we disregarded the below-cost sales because they were made in substantial quantities within an extended period of time pursuant to sections 773(b)(2)(B) and (C) of the Act and because, based on comparisons of prices to weighted-average COPs for the POI, we determined that these sales were at prices which would not permit recovery of all costs within a reasonable period of time in accordance with section 773(b)(2)(D) of the Act. Based on this test, in the Preliminary Determination and for this final determination, we disregarded below-cost sales with respect to TPBG.

Verification

As provided in section 782(i) of the Act, we verified the information submitted by the respondents for use in our final determination. We used standard verification procedures, including examination of relevant accounting and production records, as well as original source documents provided by respondents.

Changes Since the Preliminary Determination

Since the Preliminary Determination, we have made the following changes to our margin calculations:

TPBG

1. We incorporated pre-verification changes by using the revised U.S., home-market, and cost-of-production sales listings provided in TPBG's February 2, 2004, filing.

2. We adjusted TPBG's reported U.S., home-market, and cost sales listings for corrections presented on the first day of the cost verification (see the cost verification report for TPBG dated March 31, 2004) and the first day of the sales verification (see the sales verification report dated April 15, 2004).

3. We adjusted TPBG's reported cost of inputs obtained from affiliates to reflect the higher of transfer price or market price in accordance with section 773(f)(2) of the Act. See Comment 5 of the Decision Memorandum.

4. We adjusted APEC's reported costs for an unreconciled difference between the total costs from the financial accounting system and the total costs from the cost of production (COP) and constructed value (CV) file. See Comment 14 of the Decision Memorandum.

5. We adjusted TPBI's reported costs for an unreconciled difference between the total costs from the financial accounting system and the total costs from the COP and CV file. See Comment 10 of the Decision Memorandum.

6. We adjusted TPBI's reported costs for a difference in the production quantities from the production system and those used to calculate the per-unit costs. See Comment 10 of the Decision Memorandum.

7. We adjusted TPBI's general and administrative (G&A) rate for a mathematical error. We also adjusted Winner's Pack's financial expense rate for a mathematical error. See Comment 14 of the Decision Memorandum.

8. We adjusted APEC's financial expense rate to disallow interest income offsets not related to short-term assets. See Comment 13 of the Decision Memorandum.

9. We made adjustments to U.S. price to account for two of the three types of duty drawback claims reported. See Comment 8 of the Decision Memorandum.

10. We revised the amount for indirect selling expenses (ISEs) incurred in Thailand as a result of verification. We also revised the home-market ISEs as a result of verification and calculation errors asserted by the petitioners. See Comment 15 of the Decision Memorandum.

See “Final Determination Analysis Memorandum for Thai Plastic Bags Group,” memorandum to the file dated June 9, 2004, and “Constructed Value Calculation Adjustments for Thai Plastic Bags Group for the Final Determination,” Memorandum to the File from the Office of Accounting, dated June 9, 2004, for more details concerning the above changes.

Universal

1. We imputed interest expense for a certain loan. For the final determination, we applied the interest rate in Thailand, as published by the International Monetary Fund, to the average daily loan balance of the loan, based on the actual number of days that the principal amount of the loan was outstanding, to calculate the imputed interest expense. See Comment 7 of the Decision Memorandum.

2. We increased the total cost of manufacture to value affiliated-party inputs of masterbatch (color concentrate) at the higher of transfer price or market price. See Comment 5 of the Decision Memorandum.

3. We adjusted the reported costs to include unreconciled differences and other adjustments, found at verification, in the reconciliations of the financial statements to the financial accounting system and of the financial accounting system to the reported costs for the POI. See Memorandum from Nancy Decker through Theresa Caherty to Neal Halper, “Universal Polybag Co., Ltd. Constructed Value Calculation Adjustments for the Final Determination” dated June 9, 2004 (Universal Final Cost Memorandum).

4. We adjusted general and administrative (G&A) and financial expenses ratios to remove packing from the denominator of the calculation of these ratios. We then applied G&A and financial expenses to the total packing-exclusive cost of manufacturing.

5. We have recalculated the rates used for CV selling expenses and CV profit. See Comment 4 of the Decision Memorandum.

See the “Final Determination Analysis Memorandum for Universal Polybag,” Memorandum to the File, dated June 9, 2004, and “Constructed Value Calculation Adjustments for Universal Polybag Co., Ltd. for the Final Determination,” Memorandum to the File from the Office of Accounting dated June 9, 2004, for more details concerning the above changes.

Continuation of Suspension of Liquidation

Pursuant to 735(c)(1)(B) of the Act, we will instruct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all entries of subject merchandise from Thailand, except for subject merchandise produced and exported by TPBG (which has a de minimis weighted-average margin) entered, or withdrawn from warehouse, for consumption on or after January 26, 2004, the date of the publication of our preliminary determination. CBP shall continue to require a cash deposit or the posting of a bond equal to the estimated amount by which the normal value exceeds the U.S. price as shown below. These instructions suspending liquidation will remain in effect until further notice.

Final Determination Margins

The weighted-average dumping margins are as follows:

Pursuant to section 735(c)(5)(A) of the Act, we have excluded from the calculation of the all-others rate margins which are zero or de mimimis or determined entirely on facts available. See “Antidumping Duty Investigation on Polyethylene Retail Carrier Bags from Thailand—Analysis Memo for All-Others Rate,” dated June 9, 2004. The Department will disclose calculations performed within five days of publication of this notice to parties in this proceeding in accordance with 19 CFR 351.224(b).

International Trade Commission Notification

In accordance with section 735(d) of the Act, we have notified the International Trade Commission (ITC) of our determination of sales at LTFV. As our final determination is affirmative and in accordance with section 735(b) of the Act the ITC will determine, within 45 days, whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports, or sales (or the likelihood of sales) for importation, of the subject merchandise. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated and all securities posted will be refunded or canceled. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing CBP to assess antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation.

Notification Regarding APO

This notice also serves as a reminder to parties subject to administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305. Timely notification of return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

This determination is issued and published in accordance with sections 735(d) and 777(i)(1) of the Act.

Issues Appendix

1. Foreign and Domestic Production

2. Allocation of Indirect Selling Expenses

3. Date of Sale

4. Surrogate-Value Information

5. Affiliated-Party Inputs

6. Inputed Interest on Long-Term Loans

7. Duty Drawback

8. Affiliations

9. Miscellaneous Cost Issues

10. Pre-Verification and Verification Corrections