[Federal Register Volume 72, Number 67 (Monday, April 9, 2007)]
[Notices]
[Pages 17498-17507]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-6499]
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DEPARTMENT OF COMMERCE
International Trade Administration
C-560-821
Coated Free Sheet Paper from Indonesia: Notice of Preliminary
Affirmative Countervailing Duty Determination
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) preliminarily
determines that countervailable subsidies are being provided to
producers and exporters of coated free sheet paper (CFS) in Indonesia.
For information on the subsidy rates, see the ``Suspension of
Liquidation'' section of this notice.
EFFECTIVE DATE: April 9, 2007.
FOR FURTHER INFORMATION CONTACT: Sean Carey, Jacqueline Arrowsmith, or
Gene Calvert, AD/CVD Operations, Office 6, Import Administration,
International Trade Administration, U.S. Department of Commerce, Room
7866, 14th Street and Constitution Avenue, NW, Washington, DC 20230;
telephone: (202) 482-3964, (202) 482-5255, or (202) 482-3586,
respectively.
SUPPLEMENTARY INFORMATION:
Background
On November 20, 2006, the Department initiated a countervailing
duty (CVD) investigation of CFS from Indonesia. 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) (Initiation Notice) (CFS
Investigations). In the Initiation Notice, the Department set aside a
period for all interested parties to raise issues regarding product
coverage. The comments we received are discussed in the ``Scope
Comments'' section below. On November 30, 2006, the Department issued a
CVD questionnaire to the Government of Indonesia (GOI). The
questionnaire informed the GOI that it was responsible for forwarding
the questionnaire to producers/exporters of CFS. The Department also
provided courtesy copies of the questionnaire to PT. Pabrik Kertas
Tjiwi Kimia Tbk. (TK) and to PT. Pindo Deli Pulp and Paper Mills (PD),
who the GOI identified as the sole producers/exporters of CFS from
Indonesia.
On December 29, 2006, the Department postponed the preliminary
determination until March 30, 2007. See Coated Free Sheet Paper from
Indonesia, the People's Republic of China and the Republic of Korea:
Notice of Postponement of Preliminary Determinations in the
Countervailing Duty Investigations, 71 FR 78403 (December 29, 2006). On
January 25, 2007, TK and PD (collectively, respondents), and the GOI
submitted their questionnaire responses. On February 2 and February 12,
2007, the Department received comments from the petitioner regarding
these questionnaire responses. On February 16, 2007, the Department
issued supplemental questionnaires to the GOI and to the respondents.
The GOI and the respondents submitted their
[[Page 17499]]
supplemental responses on March 6, 2007.
On December 15, 2006, New Page Corporation, the petitioner,
submitted two new subsidy allegations. The GOI and the respondents
filed comments concerning these new allegations on December 26, 2006.
On January 30, 2007, the petitioner submitted additional information
regarding the December 15, 2006 new subsidy allegations. On February 7,
2007, the Department received additional comments from the respondents
regarding the petitioner's January 30, 2007 submission.
On March 15, 2007, the Department determined that the requirements
of section 702 of the Tariff Act of 1930, as amended (the Act) were
met, and initiated an investigation of the following new subsidy
allegations: (1) debt forgiveness through the GOI's acceptance of
allegedly worthless shares in the Sinar Mas Group/Asia Pulp & Paper
Company's (SMG/APP) affiliated bank as debt repayment; and, (2) debt
forgiveness through the GOI allowing SMG/APP to repurchase its own debt
at a steep discount through an affiliated company. For a complete
discussion on the Department's decision to initiate on these programs,
see the Memorandum to Barbara E. Tillman, Director, Office of AD/CVD
Enforcement VI, Countervailing Duty Investigation: Coated Free Sheet
Paper from Indonesia; New Subsidy Allegations, dated March 15, 2007,
which is on file in the Import Administration Central Records Unit
(CRU), Room B-099 of the Commerce Department Building.
The Department has not had sufficient time to gather the
information necessary to analyze the countervailability of these two
programs for purposes of this preliminary determination. However, after
the Department has gathered and analyzed information from the GOI and
respondents, we intend to issue an interim analysis describing our
preliminary findings with respect to these programs before the final
determination so that parties may have the opportunity to comment on
our findings before the final determination.
On March 9, 2007, the United Steel, Paper and Forestry, Rubber
Manufacturing, Energy, Allied and Industrial Service Workers
International Union, AFL-CIO-CLC (``USW'') and the Sierra Club filed an
additional new subsidy allegation, contending that illegal logging in
Indonesia results in additional countervailable subsidies to Indonesian
producers/exporters of CFS.\1\ In the submission, the USW acknowledges
that the allegation is untimely in accordance with section
351.301(d)(4)(i)(A) of the Department's regulations. However, the USW
cites section 351.311 of the Department's regulations, which addresses
instances in which the Department discovers a practice that appears to
provide a countervailable subsidy during a countervailing duty
investigation. As noted by the USW, under section 351.311(b) of the
Department's regulations, the Department may include such a subsidy
program in its investigation as long as sufficient time remains before
the scheduled final determination. On March 21, 2007, respondents
submitted comments regarding the USW allegation, arguing that it should
be rejected as untimely filed.
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\1\ The Sierra Club does not have standing to file a subsidy
allegation in accordance with sections 702(b) and 771(9) of the Act;
however the USW is an interested party in this proceeding pursuant
to section 771(9)(D) of the Act and may submit subsidy allegations.
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With respect to the USW allegation, although it is untimely, we
note that we are already investigating the provision of standing timber
for less than adequate remuneration. If, during the course of our
investigation, we find that cross-owned companies in the CFS production
chain harvested pulp logs for which no stumpage or reforestation fees
were paid, or less than the required fees were paid, we would include
any such subsidy benefits in the calculation of any subsidy rate for
these pulp logs in accordance with our stumpage subsidy calculation
methodologies.
On March 19, 2007, the petitioner submitted comments for the
Department to consider for purposes of the preliminary determination.
On March 23, 2007, petitioner filed a few additional pre-preliminary
determination comments. At the request of the Department, the
petitioner refiled this submission on March 26, 2007. On March 26,
2007, petitioner requested that the final determination of this
countervailing duty investigation be aligned with the final
determination in the companion antidumping duty investigations in
accordance with section 705(a)(1) of the Act. We will address this
request in a separate Federal Register notice.
On March 26, 2007, respondents filed pre-preliminary determination
comments. With respect to these comments, they were filed too late to
be fully considered for purposes of this preliminary determination, but
we note that they identify a number of issues we are already addressing
in the ``Subsidies Valuation'' and ``Analysis of Programs'' sections
below. Respondents also filed rebuttal comments to petitioner's
additional pre-preliminary determination comments on March 27 and 28,
2007. In addition, on March 28, 2007, the USW submitted additional
comments concerning its March 9, 2007 new subsidy allegation and
respondents' March 21, 2007 comments on its new subsidy allegation. We
did not have sufficient time to review these submissions for purposes
of this preliminary determination.
Scope of the Investigation
The merchandise covered by this investigation 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-coated,
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 this investigation is dispositive.
Scope Comments
In accordance with the preamble to the Department's regulations
(see Antidumping Duties; Countervailing Duties, 62 FR 27296, 27323 (May
19, 1997) (Preamble)), in our Initiation Notice we set aside a period
of time for parties to raise issues regarding product
[[Page 17500]]
coverage, and encouraged all parties to submit comments within 20
calendar days of publication of the Initiation Notice.
On December 18, 2006, the respondents submitted timely scope
comments in the antidumping duty investigation of CFS from Indonesia.
On January 12, 2007, the Department requested that the respondents file
these comments on the administrative record of the CFS Investigations.
See Memorandum from Alice Gibbons to The File, dated January 12, 2007.
On January 12, 2007, the respondents re-filed these comments on the
administrative record of the CFS Investigations. On January 19, 2007,
the petitioner filed a response to these comments.
The respondents requested that the Department exclude from its
investigations cast-coated free sheet paper. The Department analyzed
this request, together with the comments from the petitioner, and
determined that it is not appropriate to exclude cast-coated free sheet
paper from the scope of these investigations. See the Memorandum to
Stephen J. Claeys, Deputy Assistant Secretary for Import
Administration, Request to Exclude Cast-Coated Free Sheet Paper from
the Antidumping Duty and Countervailing Duty Investigations on Coated
Free Sheet Paper, dated March 22, 2007, on file in the CRU.
Injury Test
Because Indonesia is a ``Subsidies Agreement Country'' within the
meaning of section 701(b) of the Act, the International Trade
Commission (ITC) is required to determine whether imports of the
subject merchandise from Indonesia materially injure, or threaten
material injury to a United States industry. On December 15, 2006, the
ITC transmitted its preliminary determination to the Department. See
Coated Free Sheet Paper from China, Indonesia, and Korea: Investigation
Nos. 701-TA-444-446 (Preliminary) and 731-TA-1107-1109 (Preliminary),
USITC Publication 3900 (December 2006). On December 29, 2006, the ITC
published its preliminary determination that there is a reasonable
indication that an industry in the United States is materially injured
by reason of allegedly subsidized imports from China, Indonesia, and
Korea of subject merchandise. See Coated Free Sheet Paper China,
Indonesia, and Korea, 71 FR 78464.
Period of Investigation
The period of investigation (POI) for which we are measuring
subsidies is January 1, 2005 through December 31, 2005, which
corresponds to the most recently completed fiscal year for the
respondents. See section 351.204(b)(2) of the Department's regulations.
Subsidies Valuation
Cross-Ownership
Information on the record indicates the name SMG/APP is commonly
used to refer to a group of forestry/logging companies, pulp producers,
and paper producers linked by varying degrees of common ownership
involving the Widjaja family. The respondents in this investigation, TK
and PD, have reported affiliations with each other through a parent
holding company Purinusa Ekapersada (Purinusa); with two pulp producers
(PT. Lontar Papyrus Pulp and Paper Industry (Lontar) and PT. Indah Kiat
Pulp and Paper Tbk. (IK)); and with five forestry/logging companies
(Arara Abadi (AA), Wira Karya Sakti (WKS), PT. Satria Perkasa Agung
(SPA), PT. Riau Abadi Lestrari (RAL), and PT. Finnantara Intiga (FI)).
The Department's regulations at section 351.525(b)(6)(vi) state
that cross-ownership exists between two or more corporations where one
corporation can use or direct the individual assets of the other
corporation(s) in essentially the same ways it can use its own assets.
This section of the Department's regulations states that this standard
will normally be met where there is a majority voting ownership
interest between two corporations or through common ownership of two
(or more) corporations. The Preamble to the Department's regulations
further clarifies the Department's cross-ownership standard. See
Countervailing Duties 63 FR 65347, 65401 (CVD Preamble).
According to the CVD Preamble, relationships captured by the cross-
ownership definition include those where the interests of two
corporations have merged to such a degree that one corporation can use
or direct the individual assets (including subsidy benefits) of the
other corporation in essentially the same way it can use its own assets
(including subsidy benefits). The cross-ownership standard does not
require one corporation to own 100 percent of the other corporation.
Normally, cross-ownership will exist where there is a majority voting
ownership interest between two corporations or through common ownership
of two (or more) corporations. In certain circumstances, a large
minority voting interest (for example, 40 percent) or a ``golden
share'' may also result in cross-ownership. See CVD Preamble at 63 FR
65401.
As such, the Department's regulations make it clear that we must
examine the facts presented in each case in order to determine whether
cross-ownership exists. If we find that cross-ownership exists between
TK and PD, the producers/exporters under investigation, and among and
across the companies within the input supply chain, we will treat all
companies as one company, and calculate a single rate for any
countervailable subsidies that we identify and measure, in accordance
with section 351.525(b)(6) of the Department's regulations.
Further, in accordance with section 351.525(b)(6)(iv) of the
Department's regulations, if the Department determines that the
suppliers of inputs primarily dedicated to the production of paper
products are cross-owned with the producers/exporters under
investigation, then the Department treats subsidies provided to the
input producers as subsidies conferred on the production of the
finished product.
In this investigation, we are examining whether the two producers/
exporters of the subject merchandise, TK and PD, are cross-owned with
one another, and with their input suppliers as outlined in section
351.352(b)(6)(iv) of the Department's regulations. The alleged
subsidies we are investigating are conferred on the forestry/logging
companies which harvest and sell pulp logs, which in turn are sold to
the pulp producers that supply the paper producers/exporters.
Therefore, we must examine whether cross-ownership exists among and
across the suppliers of pulp logs, the pulp producers, and the CFS
producers/exporters.
Based on information on the record, we preliminarily determine that
cross-ownership exists, in accordance with section 351.525(b)(6)(vi) of
the Department's regulations, among and across the following companies
involved in the production and sale of the subject merchandise: the
respondent paper producers/exporters, TK and PD; pulp producers, Lontar
and IK; and the forestry and logging companies, AA, WKS, RAL, SPA, and
FI. Since much of our analysis supporting this conclusion involves
business proprietary information, a full discussion of the bases for
our preliminary determination is set forth in the Memorandum to Barbara
E. Tillman, Director, AD/CVD Operations, Office 6, Cross-Ownership,
dated March 29, 2007 (Cross-Ownership Memo), a public version of which
is on file in the CRU.
[[Page 17501]]
In addition to the five cross-owned forestry/logging companies
identified above, we are also preliminarily finding that certain
additional timber suppliers from which pulp logs were purchased during
the POI are cross-owned. In the questionnaire responses, respondents
reported that some of the five cross-owned forestry/logging companies
identified above also purchased pulp logs from unaffiliated timber
suppliers. The Department examined the information provided in the
questionnaire responses about these reportedly unaffiliated timber
suppliers, and conducted additional independent research concerning
these timber suppliers. See Cross-Ownership Memo for a full discussion
of the Department's analysis and research. In addition, the Department
examined information about these reportedly unaffiliated timber
suppliers, and supporting documentation, provided by petitioner. After
analyzing all of this information and documentation, we find that the
information and documentation supports a preliminary finding that
certain of these timber suppliers are cross-owned with the SMG/APP
Group. Since the names of these suppliers are business proprietary, a
complete discussion of the bases for our preliminary finding that these
additional timber suppliers are also cross-owned with the other
companies in the production chain is provided in the Cross-Ownership
Memo.
Attribution of Subsidies Provided to Cross-Owned Input Suppliers
As discussed above, the Department's regulations at section
351.525(b)(6)(iv) state that if there is cross-ownership between an
input supplier and a downstream producer, and production of the input
product is primarily dedicated to production of the downstream product,
the Secretary will attribute subsidies received by the input producer
to the combined sales of the input and downstream products produced by
both corporations (excluding the sales between the two corporations).
The respondents, TK and PD, have argued that they do not have to
respond for AA, WKS, RAL, SPA, and FI because the input products in
question, logs, are not ``primarily dedicated to the production of
CFS'' and therefore, do not meet the standard in accordance with
section 351.525(b)(6)(iv) of the Department's regulations. See
respondents' March 2, 2007 response at page 3. The respondents state
that they believe the Department should conduct its ``primarily
dedicated analysis'' with respect to the Indonesian economy as a whole,
and that its analysis should determine whether facts on the record
support the conclusion that timber and other resources under the
Forestry Program are primarily dedicated to the production of CFS.
Additionally, the respondents state that the Department should give
``proper weight and consideration to the word primarily,'' arguing that
the word is defined as ``chiefly'' or ``in the first place.'' See
respondents' March 6, 2007 response at page 28.
The respondents claim that they, and their affiliated companies,
produce a variety of products such as pulp, photocopier paper, and
tissue, as well as CFS, and that timber accounts for roughly 25 percent
of all Indonesian industry groupings, ranging from paper to furniture
to chemical products. Therefore, the respondents conclude, the
primarily dedicated test would not be met even if the Department were
to perform its analysis specifically for the group of companies to
which the respondents belong. Id.
The Department has previously addressed the issue regarding pulp
logs as input products in the production of pulp and paper products in
the Notice of Preliminary Affirmative Countervailing Duty
Determination: Certain Lined Paper Products from Indonesia, 71 FR 7524,
7527-28 (February 13, 2006) (Lined Paper Prelim). In Lined Paper
Prelim, the Department determined that harvested pulp logs, and the
pulp they are used to produce, are input products primarily dedicated
to the downstream product within the meaning of section
351.525(b)(6)(iv) of the Department's regulations. In Lined Paper
Prelim, the Department determined that ``the issue is not whether the
potentially subsidized inputs are used exclusively or nearly
exclusively for the production of the subject merchandise. Rather, it
is a question of whether the inputs are primarily dedicated to the
production of the downstream product.''
In Final Affirmative Countervailing Duty Determination and Final
Negative Critical Circumstances Determination: Certain Lined Paper
Products from Indonesia, 71 FR 47174 (August 16, 2006) (Lined Paper
Final), and accompanying Issues and Decision Memorandum at Comment 3,
the Department remained consistent with its preliminary determination,
and determined that the logs harvested by the logging companies and
sold to the pulp producers are primarily dedicated to the production of
pulp and, thus, to the production of the downstream product, paper,
which included certain lined paper products, the subject merchandise in
that case.
In the instant case, pulp logs harvested by the cross-owned
forestry/logging companies are processed into pulp by pulp producers
Lontar and IK. This pulp is consumed by the respondents, TK and PD, to
make paper and paper products including the subject merchandise, CFS.
Because the pulp logs are primarily dedicated to the production of pulp
and, ultimately, to the production of paper products, it is reasonable
to conclude that a subsidy to pulp logs also benefits pulp and paper
production where all of the companies involved are cross-owned.
Based on the information on the record, we preliminarily determine
that the production of pulp logs are an input product that is primarily
dedicated to the production of pulp and paper products, including CFS.
See Cross-Ownership Memo. In accordance with section 351.525(b)(6)(iv)
of the Department's regulations, any subsidies found will be attributed
to the appropriate combined sales of the products produced by the
cross-owned companies, excluding any inter-company sales.
Loan Benchmarks
In measuring the benefit from loan programs, section 351.505(a)(1)
of the Department's regulations provides that a ``benefit exists to the
extent that the amount the firm pays on the government-provided loan is
less than the amount the firm would pay on a comparable commercial
loan(s) that the firm could actually obtain on the market.'' In section
351.505(a)(2)(ii), the Department's regulations address the selection
of a commercial loan as the appropriate basis for comparison, stating
``the Secretary normally will use a loan taken out by the firm from a
commercial lending institution or a debt instrument issued by the firm
in a commercial market.'' TK and PD have not provided sufficient
information regarding actual financing they (or the other cross-owned
companies) obtained at the same time that the loans under examination
were obtained and thus we are unable to rely on the companies' own
financing experience as the basis for our loan interest rate benchmark.
Therefore, we are guided by section 351.505(a)(3)(ii) of the
Department's regulations, which states, ``{i{time} f the firm did not
take out any comparable commercial loans during the period . . . the
Secretary may use a national average interest rate for comparable
commercial loans.'' Accordingly, to measure the loan benefits, we have
used as our benchmark the rate charged by
[[Page 17502]]
private national banks for ``Investment'' (long-term loans) as shown in
the Bank of Indonesia Interest Rates Table 39 ``Commerical Bank Credits
In Ruppiah by Group of Commercial Banks,'' in Exhibit 19 of the GOI's
January 24, 2007 response and in Exhibit 8 of the respondents' January
24, 2007 response, for the years in which the loans were approved.
The petitioner alleged that the Indonesian companies were
uncreditworthy beginning in 2001 and thereafter. The Department
initiated on this allegation. See Initiation Checklist: Coated Free
Sheet Paper from Indonesia, dated November 20, 2006 (Initiation
Checklist), a public version of which is on file in the CRU. Because
the loans under investigation were all approved prior to 2001 (the
earliest year for which the Department initiated an uncreditworthiness
investigation), we have not analyzed the creditworthiness of the
respondents and their cross-owned suppliers and, consequently, we have
not added a risk premium to the benchmark for long-term loans as
provided for in section 351.505(a)(3)(iii) of the Department's
regulations.
Analysis of Programs
I. Programs Preliminarily Determined To Be Countervailable
A. GOI Provision of Standing Timber for Less than Adequate Remuneration
According to the GOI, it controls and administers over 57 million
hectares of public harvestable forest land, which accounts for
virtually all the harvestable forest land in Indonesia. See GOI's
January 25, 2007 response at pages 4 and 13. Record information shows
that timber can be harvested from the GOI land under two main types of
licenses: licenses to harvest timber in the natural forest, known as
``HPH'' licenses, and licenses to establish, and harvest from,
plantations, which are known as ``HTI'' licenses. See the GOI's January
25, 2007 response at page 5. Respondents and the GOI reported that AA,
WKS, SPA, RAL and FI are affiliated forestry/logging companies which
harvested pulp logs during the POI from plantations under HTI licenses.
Id. at page 11; see also respondents' January 25, 2007 response at
pages 19-20. As discussed above in the ``Cross-Ownership'' section, the
Department has preliminarily determined that these forestry/logging
companies are cross-owned with pulp producers IK and Lontar, and with
CFS producers/exporters TK and PD. In addition, as discussed above in
the ``Cross-Ownership'' section, we have found, for purposes of this
preliminary determination, certain forestry/logging companies from whom
AA and WKS purchased pulp logs during the POI to be cross-owned with
the companies in the production chain. As such, the Department is
including all of these cross-owned forestry/logging companies in our
analysis of whether the GOI has provided standing timber for less than
adequate remuneration.
The GOI provided the laws that outline the types of fees and
royalties assessed for the harvest of standing public timber in
Indonesia. Id. at Exhibit 7. Specifically, the GOI stated that HTI
license holders pay an initial license fee at the granting of each
concession. In addition, these HTI license holders pay ``cash stumpage
fees'' known as PSDH royalty fees which are paid per unit of timber
harvested (usually a per ton or per cubic meter unit of measure). The
PSDH rate in effect during the POI for acacia harvested from
plantations was five percent in accordance with Regulation 59/1998. Id.
at Exhibit 7. Regulation 74/1999 increased the PSDH rate for all timber
harvested from the natural forest from six percent to ten percent, the
rate in effect during the POI. Id.; see also GOI's March 6, 2007
response at page 5. These percentage rates are multiplied by the
reference prices set by the GOI for each type of wood harvested to
determine the PSDH fee a company should pay per unit of timber
harvested. See the GOI's January 25, 2007 response at page 15. There
were two sets of reference prices in effect during the POI. The first
was in effect until February 3, 2005; the second published set of
reference prices was put into effect on February 4, 2005. Id. at
Exhibit 7 under Regulations 436/MPP/Kep/7/2004 and 18/M/Kep/2005,
respectively. According to the GOI, the reference prices reflect the
market prices for each type of log sold in Indonesia. Id. at page 15.
In addition to the PSDH fee, a per unit Rehabilitation Fee (dana
reboisasi or DR) is paid for timber harvested from the natural forest
and remained the same throughout the POI. Id. at page 13; see also the
GOI's January 25, 2007 response at Exhibit 7 for the fee paid during
the POI under Regulation 92/1999. The GOI stated that HTI license
holders are not subject to the DR when ``the wood harvested comes from
their own plantation assets.'' Id. at page 6. However, respondents
reported that for pre-existing timber that is cleared within the
plantation boundaries to allow new planting on the plantations, they
``pay PSDH and DR fees on timber that is harvested during clearing
exercises.'' See respondents' March 6, 2007 response at page 14. As
stated above, all five of the forestry/logging companies reported in
the questionnaire response as being affiliated with respondents,
harvested from their own plantations. They harvested acacia, mixed
tropical hardwood (MTH) chipwood, and smaller volumes of MTH pulp logs.
The GOI initially reported that numerous products, both timber and
non-timber, are harvested from public land owned by the GOI. See GOI's
January 25, 2007 response at page 4; however, the GOI did not report
the number of industries that had rights to harvest standing timber. In
our supplemental questionnaire, we requested that the GOI identify for
the years 2002 through 2005, every company, and the industry in which
it was classified, that applied for and was approved or rejected for
either an HPH or HTI license. See the Department's February 16, 2007
Supplemental Questionnaire at 2. The GOI did provide a list of company
names but did not identify the company's industry classification. We
also requested that the GOI identify the Indonesian industrial
classifications for companies that harvest timber and consume timber as
a primary input. Id. at 2. In response, the GOI stated that the
following five industries used standing timber either through
consumption of timber as a primary input or through products that are
produced with timber: the wood and wood products, paper and paper
products, publishing and printing, chemical, and furniture industries.
See GOI's March 6, 2006 response at page 6 and Exhibit Supp-5.
Although we are concerned that in its supplemental questionnaire
response the GOI broadened the scope of our question by adding in
industries that do not harvest timber or consume timber as a primary
input, we are relying on the GOI's statement that five industries are
provided standing timber by the GOI for purposes of this preliminary
determination. We also asked the GOI to identify the total number of
industries in Indonesia at the same level of industrial classification
in which the GOI placed the industries that harvest or consume timber.
See the Department's February 16, 2007 Supplemental Questionnaire at 2.
In response, the information provided by the GOI identifies a total of
23 industries at the level of large and medium manufacturing
activities. See the GOI's March 6, 2006, response at page 6 and Exhibit
Supp-5. Therefore, even relying on the GOI's statement that five
industries use this program, these five industries constitute a limited
group of industries within the universe of 23
[[Page 17503]]
industries identified by the GOI. Accordingly, we preliminarily
determine that provision of standing timber by the GOI is de facto
specific in accordance with section 771(5A)(D)(iii) of the Act.
We also preliminarily determine that the provision of standing
timber provides a financial contribution as described in section
771(5)(D)(iii) of the Act (provision of goods or services other than
general infrastructure). Pursuant to section 771(5)(E)(iv) of the Act,
a benefit is conferred when the government provides a good or service
for less than adequate remuneration. Section 771(5)(E) of the Act
further states that ``the adequacy of remuneration shall be determined
in relation to prevailing market conditions for the good or service
being provided . . . in the country which is subject to the
investigation or review. Prevailing market conditions include price,
quality, availability, marketability, transportation, and other
conditions of . . . sale.''
Section 351.511(a)(2) of the Department's regulations sets forth
the basis for identifying comparative benchmarks for determining
whether a government good or service is provided for less than adequate
remuneration. These potential benchmarks are listed in hierarchical
order by preference: (1) market prices from actual transactions within
the country under investigation; (2) world market prices that would be
available to purchasers in the country under investigation; or (3) an
assessment of whether the government price is consistent with market
principles. This hierarchy reflects a logical preference for achieving
the objectives of the statute.
The most direct means of determining whether the government
required adequate remuneration is by comparison with private
transactions for a comparable good or service in the country. Thus, the
preferred benchmark in the hierarchy is an observed market price for
the good, in the country under investigation, from a private supplier
(or, in some cases, from a competitive government auction) located
either within the country, or outside the country (the latter
transaction would be in the form of an import). This is because such
prices generally would be expected to reflect most closely the
commercial environment of the purchaser under investigation.
Thus, in accordance with the first preference in the hierarchy, to
determine the existence and extent of the benefit, we would need to
identify an observed market stumpage price from a private supplier in
Indonesia. The GOI reported that there were only 233,811 hectares of
private forest land and that it does not maintain information on the
value of any private sales of standing timber in Indonesia. See the
GOI's March 6, 2007 response at page 3. We preliminarily determine that
there are no market-determined stumpage fees in Indonesia upon which to
base a ``first tier'' benchmark. This is consistent with our finding in
Lined Paper Final at ``Benchmark for Stumpage'' section. As noted
above, the GOI has not provided any information on the sale of either
privately-owned standing timber in Indonesia, or the stumpage fees
charged by private timber companies. See the GOI's March 6, 2007
response at page 3. Nor has the Department been able to identify such
information from any other available source. Accordingly, the
Department has no private stumpage data in Indonesia that could even be
evaluated for purposes of a ``first tier'' benchmark.
The ``second tier'' benchmark, according to the regulations, relies
on world market prices that would be available to the purchasers in the
country in question, though not necessarily reflecting prices of actual
transactions involving that particular producer. In selecting a world
market price under this second approach, the Department will examine
the facts on the record regarding the nature and scope of the market
for that good to determine if that market price would be available to
an in-country purchaser. As discussed in the CVD Preamble, the
Department will consider whether the market conditions in the country
are such that it is reasonable to conclude that a purchaser in the
country could obtain the good or service on the world market. For
example, a European price for electricity normally would not be an
acceptable comparison price for electricity provided by a Latin
American government, because electricity from Europe in all likelihood
would not be available to consumers in Latin America. However, as
another example, the world market price for commodity products, such as
certain metals and ores, or for certain industrial and electronic goods
commonly traded across borders, could be an acceptable comparison price
for a government-provided good, provided that it is reasonable to
conclude from record evidence that the purchaser would have access to
such internationally traded goods. See CVD Preamble at 63 FR 65377.
We have insufficient evidence of world market prices for standing
timber on the record of this investigation. This finding is also
consistent with Lined Paper. Respondents have provided information
regarding stumpage rates in the United States and have argued that the
Department should use U.S. stumpage rates as a benchmark, consistent
with our determination in Notice of Final Affirmative Countervailing
Duty Determination and Final Negative Critical Circumstances
Determination: Certain Softwood Lumber Products From Canada, 67 FR
15545 (April 2, 2002) (``Lumber'') and accompanying Issues and Decision
Memorandum at section ``C.I.B.'' However, respondents have not
demonstrated that the types of U.S. timber they are suggesting for
comparison purposes are grown in similar conditions as those in
Indonesia and are similar to the species harvested in Indonesia as
pulpwood. These were all important factors which supported the
Department's decision to use U.S. stumpage prices in Lumber. Id. Based
on the record in this investigation, we preliminarily determine that
U.S. stumpage prices do not satisfy the ``second tier'' benchmark
requirements.
In the alternative, respondents have also provided information on
Malaysian stumpage rates for acacia, one of the species used to produce
pulp and paper products in Indonesia. However, the information
respondents provided is a study commissioned by them for purposes of
this investigation and consists of a statement of opinion that includes
no supporting documentation to establish the authenticity of the
figures used to calculate this benchmark rate. Even if this study were
independent and the data in it supported, the respondents have not
addressed how these Malaysian stumpage rates are representative of
rates that would be available to a purchaser in Indonesia.
Consequently, these data do not provide an appropriate basis for a
``second tier'' benchmark.
Since we are not able to conduct our analysis under the ``second
tier'' of the regulations, consistent with the hierarchy, we are
preliminarily measuring the adequacy of remuneration by assessing
whether the government price is consistent with market principles. This
approach is set forth in section 351.511(a)(2)(iii) of the Department's
regulations and is explained further in the CVD Preamble at 65378:
``Where the government is the sole provider of a good or service, and
there are no world market prices available or accessible to the
purchaser, we will assess whether the government price was set in
accordance with market principles through an analysis of such factors
as the government's price-setting philosophy, costs (including rates of
[[Page 17504]]
return sufficient to ensure future operations), or possible price
discrimination.'' The regulations do not specify how the Department is
to conduct such a market principle analysis. By its nature the analysis
depends upon available information concerning the market sector at
issue and, therefore, must be developed on a case-by-case basis.
The GOI has not provided information or documentation which
demonstrates that the stumpage fees it charges are established in
accordance with market principles. Although the PSDH rates are
established as a percentage of the reference price of logs, we cannot
conclude that the log reference price is reflective of market
principles or is a market-determined price. The GOI reported that the
reference price is normally determined by a weighted-average of both
the Indonesian domestic and export prices for logs. However, since a
log export ban is in place, the reference price is currently determined
solely from domestic prices. See GOI's January 25, 2007 response at
page 15. Through its ownership of virtually all of Indonesia's
harvestable forests, the GOI has complete control over access to the
timber supply. In addition, the ban on the export of logs affects the
price for logs. Id. at Exhibit 7 under Regulations 1132/Kpts-II/2001
and 292/MPP/Kep/ 10/2001; see also GOI's March 6, 2007 response at
Exhibit Supp-12 and the paper by the Centre for Strategic and
International Studies on ``Competitiveness and Efficiency of the Forest
Product Industry in Indonesia'' (noting a study on page 6 that the
``stumpage value was reduced by 33[percnt] under the log export ban
policy.''). As such, the reference prices for logs cannot be considered
market-based. Thus, we preliminarily determine that the stumpage fees
charged by the GOI which are charged as a percentage of a non-market
determined reference price are not based on market principles.
Since the government price was not set in accordance with market
principles, we looked for an appropriate proxy to determine a market-
based stumpage benchmark. It is generally accepted that the market
value of timber is derivative of the value of the downstream products.
The species, dimension and growing condition of a tree largely
determine the downstream products that can be produced from a tree; the
value of a standing tree is derived from the demand for logs produced
from that tree and the demand for logs is in turn derived from the
demand for the products produced from these logs. See e.g., Notice of
Final Results of Countervailing Duty Administrative Review and
Rescission of Certain Company-Specific Reviews: Certain Softwood Lumber
Products From Canada, 69 FR 75917 (December 20, 2004), and accompanying
Issues and Decision Memorandum at pages 16-18.
As a result of the geographic proximity and the similarities of
forest conditions, climate, and tree species between Indonesia and
Malaysia, we have selected Malaysian pulp log export prices as the most
appropriate basis for evaluating whether Indonesian stumpage is priced
consistent with market principles. See section 351.511(a)(2)(iii) of
the Department's regulations; see also Preliminary Affirmative
Countervailing Duty Determination on Coated Free Sheet Paper from
Indonesia: Analysis Memorandum on Calculations for PT. Pabrik Kertas
Tjiwi Kimia Tbk and PT. Pindo Deli Pulp and Paper Mills (Preliminary
Analysis Memo), dated March 29, 2007. This is consistent with our
finding in Lined Paper Final. Furthermore, neither party has argued
that Malaysian pulpwood is not suitable for comparison purposes. These
export transactions reflect prices resulting from private transactions
between Malaysian pulp log sellers and pulp log buyers in the
international market; thus, they represent market-determined prices.
Accordingly, we are using the value of pulp log exports from Malaysia
during the POI, as reported in the ``World Trade Atlas,'' as the
starting point for determining whether the GOI is providing standing
timber for less than adequate remuneration.
To determine which Malaysian export statistics to include in the
benchmark, we evaluated the suggestions submitted by the parties
regarding Malaysian log export prices for several types and species of
logs. The respondents have reported that acacia and MTH are the types
of timber that were harvested from HTI plantations for pulp and paper
production in Indonesia and that AA, WKS, SPA, RAL, and FI harvested
either one or both of these types of pulpwood from plantations. See
respondents' March 6, 2007 questionnaire response at Exhibit Supp-10;
see also Cross-Ownership Memo on timber purchased by AA and WKS from
the suppliers that we have preliminarily determined are also cross-
owned. For acacia, none of the parties suggested using anything other
than the value of acacia pulp log exports from Malaysia. No record
information suggests that exports of acacia pulp logs are not the
appropriate basis to use as the starting point for determining whether
the GOI is providing acacia pulpwood for less than adequate
remuneration.
For MTH, respondents suggested that we rely on export data for
three categories of pulpwood, one of which is identified as light
hardwood pulpwood and the other two as light hardwood pulpwood of the
species batai and meransi. Petitioner has suggested that we use the
same benchmark for MTH that we used in Lined Paper Final, which was
based on the value of exports of sawlogs, veneer logs, and other wood
of the species kapur, keruin, ramin, and other tropical woods. We do
not find it appropriate to use the export values of the types of logs
used in the Lined Paper Final, as suggested by petitioner, because
those log types included saw logs and veneer logs, as adverse facts
available in that case. In addition, we have preliminarily determined
not to include the batai and meransi categories of pulp logs suggested
by respondents because they have not demonstrated that these particular
types of wood are harvested as pulpwood in Indonesia. If the GOI can
demonstrate that these other types of wood are harvested as pulpwood in
Indonesia, we will consider including them in any calculation of the
Malaysian export values in the final determination. Therefore, for
purposes of this preliminary determination, we have decided to use
Malaysian exports of light hardwood pulpwood, of a type not elsewhere
specified (HTS 4403.99.195) as the starting point for determining
whether the GOI is providing MTH pulp logs and chipwood for less than
adequate remuneration.
Using the Malaysian export data for acacia and light hardwood
pulpwood, we calculated two unit values: one to use for acacia pulp
logs and one to use for MTH chipwood and pulp logs. See Preliminary
Analysis Memo. To derive a market-based benchmark price for Indonesian
stumpage, we then adjusted the Malaysian export log prices to remove
the Indonesian costs of extraction (harvesting) of the standing timber.
To determine the Indonesian harvesting costs (including a reasonable
amount for profit associated with extraction), we used information
contained in ``Addicted to Rent: Corporate and Spatial Distribution of
Forest Resources in Indonesia; Implications of Forest Sustainability
and Government Policy.'' This study, which was submitted as Exhibit V-8
of the October 31, 2006 petition, provided the only independent source
that specifies extraction costs and profit in Indonesia. The amounts in
this report are $17 for extraction costs and $5 for profit in
connection with extraction.
Both the petitioner and the respondents have argued (albeit for
[[Page 17505]]
different reasons and for different adjustments) that the Department
could use the forestry/logging companies' reported actual costs for
harvesting to adjust the Malaysian log export prices. However, for
purposes of this preliminary determination, we have decided not to use
these actual costs. We may consider using these actual costs for the
final determination if the GOI can demonstrate that it has a system in
place to evaluate exactly which costs are legitimately considered to be
harvesting and extraction costs, and that it has evaluated how to
distinguish the types of costs relevant to harvesting on plantations
versus the natural forest, and that it has a system in place to
distinguish the costs of extraction on plantations versus other
plantation development and maintenance costs.
Based on our analysis of the information on the record, as well as
our own research which shows that acacia is grown on plantations in
Malaysia just as it is in Indonesia, we preliminarily determine that no
other adjustments (other than the extraction costs and the profit
associated with extraction) are necessary to the Malaysian export
prices to derive a market-based stumpage price in Indonesia. See
Preliminary Analysis Memo.
We then compared this derived market-based stumpage price to the
stumpage fees paid by respondents' cross-owned forestry/logging
companies.\2\ Where possible, we used the reported PSDH royalty fees
and the relevant DR reforestation fees that the respondents' cross-
owned forestry/logging companies reported paying during the POI for
each of the types of Indonesian pulp logs (acacia and MTH) harvested
during the POI. See respondents' March 6, 2007 response at Exhibit
Supp-10. For MTH chipwood and pulp logs (the GOI defines chipwood as
timber of any length whose diameter is less than 29 centimeters),
respondents reported payments of both PSDH and DR; for acacia,
respondents only reported payments of PSDH because DR fees are not
required on these logs which are harvested from the plantation. Id. at
page 16.
---------------------------------------------------------------------------
\2\ Because the Malaysian export values are reported in ringgits
and the Indonesian stumpage fees are in rupiahs, and because the
sales values reported by IK, Lontar, TK and PD were in U.S. dollars,
we have converted all values into U.S. dollars using the annual
average exchange rate for the POI reported in the International
Monetary Fund Statistics. In addition, where it was necessary to
convert between tons and cubic meters, we used a conversion factor
reported in the Food and Agriculture Organization of the United
Nations' ``Forest Products Yearbook 2003'' which we have placed on
the record in the Preliminary Analysis Memo.
---------------------------------------------------------------------------
To determine the existence and extent of the benefit for acacia and
MTH on a per-unit basis, we compared the actual payment of PSDH fees by
AA, WKS, SPA, RAL and FI on accacia to the benchmark stumpage fee
derived from the Malaysian export prices for accacia pulp logs. We then
compared, where possible, the actual PSDH fees and DR fees paid by AA,
WKS, SPA, RAL and FI on MTH chipwood and pulp logs, to the
corresponding derived stumpage benchmark for MTH pulpwood. Respondents
claimed that the Department should make adjustments to these actual
stumpage payments to the GOI for a number of harvesting costs, taxes
and annual license fees that the companies incur. We have already
factored in, as a deduction from the Malaysian export prices, an amount
for total harvesting costs. The GOI has provided no basis for making an
adjustment for taxes. While an adjustment for an annual licensing fee
may be warranted, the GOI did not provide any information on what those
annual licensing fees are and the companies did not report what they
paid in annual licensing fees during the POI.
Based on the comparison of the per-unit stumpage fees actually paid
on each type of wood with the market-derived stumpage benchmark, we
determine that the GOI provided standing timber for less than adequate
remuneration. We then multiplied the difference between the actual fee
paid on a per-unit basis and the benchmark stumpage rate, by
multiplying this per-unit stumpage benefit for each type of wood by the
reported volume of each type of wood that was harvested and sold to IK
and Lontar during the POI for these five forestry/logging companies.
For the pulp logs purchased by AA and WKS from the additional
suppliers that we have preliminarily determined are cross-owned (see
``Cross-Ownership'' section above), we did not have information about
the actual stumpage and DR fees paid. We calculated the amount of the
stumpage paid for acacia by multiplying the volume of acacia pulp logs
produced by these suppliers which was purchased by AA and WKS, by the
PSDH that would have been charged by the GOI during the POI. The MTH
stumpage payments were calculated by multiplying the volume of MTH pulp
logs produced by these suppliers which was purchased by AA and WKS, by
the PSDH that would have been charged by the GOI during the POI, plus
the DR fee charged on MTH pulp logs that would have been charged by the
GOI during the POI. We compared the resulting calculated stumpage and
DR fees paid by pulp log type, to the appropriate benchmark. We
multiplied the resulting difference by the volume of pulp logs sold to
AA and WKS by these cross-owned pulp log suppliers to determine the
benefit.
Since we have preliminarily determined that the forestry/logging
companies are cross- owned with the pulp and paper producers and that
the pulp logs produced by these cross-owned forestry/logging companies
are primarily dedicated to the production of the downstream products
(see ``Cross-Ownership'' section above), we preliminarily find that the
GOI's provision of timber for less than adequate remuneration provides
a countervailable subsidy to TK/PD. To determine the subsidy rate, we
first summed all of the benefit amounts calculated for the cross-owned
forestry/logging companies. We then divided the aggregate benefit by
the sum of the external sales values of TK, PD, IK, and Lontar (i.e.,
total FOB sales values minus any cross-owned inter-company sales),
adjusted, where possible, for sales returns, claims, and discounts. We
have not included in the denominator any external sales of the cross-
owned forestry/logging companies because, as discussed above, we are
capturing in the benefit calculation only pulp logs that were
harvested/produced by the cross-owned forestry/logging companies that
were sold to IK and Lontar. This calculation yields a countervailable
subsidy rate of 21.23 percent ad valorem for the combined entity TK/PD.
Although the Department initiated an investigation of whether the
GOI ban on log exports provides a countervailable subsidy to the
respondents, we determine that the issue of the countervailability of
the log export ban need not be reached for purposes of this preliminary
determination. First, the only source of pulp logs for IK and Lontar,
the cross-owned pulp producers which supplied pulp to TK and PD during
the POI, was from the cross-owned forestry/logging companies.
Respondents stated that ``IK and Lontar did not purchase timber from
any supplier other than AA and WKS during the POI.'' See respondents'
March 6, 2007 response at page 10. Second, we have preliminarily found
that IK's and Lontar's total supply of pulp logs is roughly equivalent
to the total quantity of pulp logs harvested by AA and WKS, plus the
quantity of pulp logs purchased by AA and WKS from cross-owned
forestry/logging companies in the CFS production chain. As such, we
find it reasonable to conclude for purposes of
[[Page 17506]]
this preliminary determination that IK's and Lontar's supply of pulp
logs was exclusively sourced from the production of these cross-owned
companies.
Because we would not attribute to the downstream cross-owned pulp
and paper producers a benefit that encompasses a quantity of pulp logs
that is greater than the quantity of pulp logs actually produced and
sold by the cross-owned forestry/logging companies to the downstream
producers, we need not evaluate whether the remaining purchases by AA
and WKS of pulp logs from unaffiliated suppliers are benefitting from a
subsidy through the log export ban. Furthermore, because we have used
export prices of pulp logs from Malaysia as the starting point for
deriving a market-based stumpage benchmark, the amount of any benefit
to the combined entity TK/PD that might be found in an evaluation of
the log export ban is included in the calculation for the provision of
standing timber for less than adequate remuneration. Thus, because the
total quantity of pulp logs produced by the cross-owned forestry
logging companies in the production chain captures the total quantity
of pulp logs sold by the cross-owned forestry/logging companies to IK
and Lontar, the entire amount of any countervailable subsidy is
subsumed under the ``Provision of Standing Timber for Less than
Adequate Remuneration'' program, noted above.
B. Subsidized Funding for Reforestation (Hutan Tanaman Industria or HTI
Program): ``Zero Interest'' Rate Loans
The GOI reported that ``zero interest'' rate loans were available
to some holders of HTI licenses; such licenses are issued for
harvesting timber from plantations. The GOI has reported that there are
three types of plantations in Indonesia: (1) Privately owned, (2)
voluntary HTI joint ventures, and (3) compelled HTI joint ventures for
the purpose of implementing transmigration policy. Of these three types
of plantations, only HTI joint ventures could apply for zero-interest
rate loans.
The GOI reported that the loaned amounts came from the DR Fund. The
HTI joint venture could apply for zero-interest loans from the DR Fund
for the establishment phase of the plantation. According to the GOI,
loan amounts were payable to the joint venture in increments based on
the amount of harvesting done each year and the total amount of the
loan could not exceed 32.5 percent of the calculated plantation costs.
The GOI required that the private party guarantee the loan repayment in
full. In 2000, the GOI discontinued funding joint ventures through the
DR Fund loan programs, although existing joint ventures which had
previously obtained loans through the DR Fund would receive loan
disbursements and would be required to make loan payments as required
by loan agreements finalized before 2000.
The respondents reported that of the cross-owned forestry/logging
companies (see ``Cross-Ownership'' section above), only RAL (a
compelled joint venture) and FI (a voluntary joint venture) received
``zero interest'' loans prior to 2000 that remained outstanding during
the POI. These loans provide a financial contribution as described in
section 771(5)(D)(i) of the Act, as a direct transfer of funds in the
form of loans. The loans give rise to a benefit in the amount of the
difference between the amount of interest the borrowers actually paid
and the amount of interest the borrowers would have paid on a
comparable commercial loan under section 771(5)(E)(ii) of the Act. The
loan program is specific within the meaning of section 771(5A)(D)(i) of
the Act, because participation in the program is limited to HTI joint
venture plantations. Therefore, we preliminarily determine that these
loans confer countervailable subsidies.
To calculate the benefit (the amount of the interest savings), we
applied the benchmark interest rate described in the ``Loan
Benchmarks'' section above to the average loan balance outstanding
during the POI for both RAL and FI. We then divided the amount of
interest savings by the total external sales values of all the cross-
owned companies in the production chain (i.e., total FOB sales values
minus any cross-owned inter-company sales), adjusted, where possible,
for sales returns, claims, and discounts. Thus, we preliminarily
determine the countervailable subsidy from the HTI zero-interest rate
loan program to be 0.01 percent ad valorem for the combined entity TK/
PD.
II. Programs Preliminarily Determined To Be Not Used
A. Subsidized Funding for Reforestation (Hutan Tanaman Industria or HTI
Program): Commercial Rate Loans
Neither TK, PD, nor any of their cross-owned suppliers reported
receiving loans under this program. Therefore, we preliminarily
determine that this program was not used.
B. Subsidized Funding for Reforestation (Hutan Tanaman Industria or HTI
Program): Government Capital Infusions into Joint Venture Forest
Plantation
The respondents reported that RAL and FI, both HTI joint ventures,
received captial infusions in the 1990s under this program. However,
petitioner's unequityworthiness allegation, and the Department's
subsequent initiation, addressed the companies' unequityworthiness from
2001 through the POI (see Initiation Checklist). Because the capital
infusions were provided prior to 2001, we have not examined whether the
GOI provision of capital to joint venture forest plantations provides a
countervailable subsidy. Therefore, we preliminarily determine that
this program was not used.
Verification
As provided in section 782(i)(1) of the Act, we intend to conduct
verification of the GOI's and respondents' questionnaire responses
following the issuance of the preliminary determination.
Suspension of Liquidation
In accordance with section 703(d)(1)(A)(i) of the Act, we have
calculated a single subsidy rate for the two cross-owned producers/
exporters of the subject merchandise. We preliminarily determine the
total countervailable subsidy rate to be:
------------------------------------------------------------------------
Producer/exporter Rate
------------------------------------------------------------------------
PT. Pabrik Kertas Tjiwi Kimia Tbk/ PT. Pindo Deli Pulp and 21.24
Paper Mills................................................ [percnt]
All Others.................................................. 21.24
[percnt]
------------------------------------------------------------------------
In accordance with sections 703(d) and 705(c)(5)(A) of the Act, we
have set the ``all others'' rate as the rate for TK/PD because it is
the only producer/exporter investigated.
In accordance with sections 703(d)(1)(B) and (2) of the Act, we are
directing U.S. Customs and Border Protection (CBP) to suspend
liquidation of all entries of the subject merchandise from Indonesia,
which are entered or withdrawn from warehouse, for consumption on or
after the date of the publication of this notice in the Federal
Register, and to require a cash deposit or the posting of a bond for
such entries of the merchandise in the amounts indicated above. This
suspension will remain in effect until further notice.
ITC Notification
In accordance with section 703(f) of the Act, we will notify the
ITC of our
[[Page 17507]]
determination. In addition, we are making available to the ITC all non-
privileged and non-proprietary information relating 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, without the written consent
of the Assistant Secretary for Import Administration.
In accordance with section 705(b)(2) of the Act, if our final
determination is affirmative, the ITC will make its final determination
within 45 days after the Department makes its final determination.
Notification of Parties
In accordance with section 351.224(b) of the Department's
regulations, we will disclose to the parties the calculations for this
preliminary determination within five days of its announcement. Unless
otherwise notified by the Department, interested parties may submit
case briefs within 50 days of the date of publication of the
preliminary determination in accordance with section 351.309(c)(i) of
the Department's regulations. As part of the case brief, parties are
encouraged to provide a summary of the arguments not to exceed five
pages and a table of statutes, regulations, and cases cited pursuant to
section 351.309(c)(2) of the Department's regulations. Rebuttal briefs,
which must be limited to issues raised in the case briefs, must be
filed within five days after the case briefs are filed in accordance
with section 351.309(d) of the Department's regulations.
In accordance with section 351.310 of the Department's regulations,
we will hold a public hearing, if requested, to afford interested
parties an opportunity to comment on this preliminary determination.
Individuals who wish to request a hearing of the Department's
regulations must submit a written request pursuant to section
351.310(c) within 30 days of the publication of this notice in the
Federal Register to the Assistant Secretary for Import Administration,
U.S. Department of Commerce, Room 1870, 14th Street and Constitution
Avenue, NW, Washington, DC 20230. Pursuant to section 351.310(c) of the
Department's regulations, parties will be notified of the schedule for
the hearing and parties should confirm by telephone the time, date, and
place of hearing 48 hours before the scheduled time. Requests for a
public hearing should contain: (1) party's name, address, and telephone
number; (2) the number of participants; and, (3) to the extent
practicable, an identification of the arguments to be raised at the
hearing.
This determination is issued and published pursuant to sections
703(f) and 777(i) of the Act.
Dated: March 29, 2007.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E7-6499 Filed 4-6-07; 8:45 am]
BILLING CODE 3510-DS-S