E7-21036. Coated Free Sheet Paper from the Republic of Korea: Notice of Final Affirmative Countervailing Duty Determination

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

We determine that countervailable subsidies are being provided to producers and exporters of coated free sheet paper from the Republic of Korea. For information on the estimated subsidy rates, see the “Suspension of Liquidation” section of this notice.

EFFECTIVE DATE:

October 25, 2007.

FOR FURTHER INFORMATION CONTACT:

Robert Copyak, AD/CVD Operations, Office 3, Import Administration, International Trade Administration, U.S. Department of Commerce, Room 4012, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230; Telephone: [phone].

SUPPLEMENTARY INFORMATION:

Background

This investigation covers 19 programs and the following manufacturer/exporters: EN Paper Mfg. Co., Ltd. (EN Paper) (formerly Shinho Paper Co., Ltd. (Shinho Paper)), Kyesung Paper Co., Ltd. and its affiliate Namhan Paper Co., Ltd. (collectively, Kyesung), Moorim Paper Co. Ltd. (formerly Shinmoorim Paper Mfg. Co., Ltd.) and its affiliate Moorim SP (collectively, Moorim), and Hansol Paper Co., Ltd. (Hansol) (collectively, respondents).

On April 9, 2007, the Department of Commerce (the Department) published in the Federal Register its preliminary affirmative determination in the countervailing duty investigation of coated free sheet paper from the Republic of Korea. See Coated Free Paper from the Republic of Korea: Preliminary Affirmative Countervailing Duty Determination, 72 FR 17507, 17520 (April 9, 2007) (Preliminary Determination).

On May 8, 2007, the Department published in the Federal Register the Notice of Amended Preliminary Countervailing Duty Determination: Coated Free Sheet Paper from the Republic of Korea, 72 FR 26074 (May 8, 2007) (Amended Preliminary Determination). From June 11 through June 29, 2007, we conducted verification of the questionnaire responses submitted by the Government of Korea and respondents.

In the Preliminary Determination, we found that we required additional information in order to determine whether respondents' short-term financing from GOK-owned banks and commercial banks conferred countervailable benefits. Similarly, regarding the Industrial Base Fund (IBF), we found that we required additional information in order to determine whether the program conferred a countervailable subsidy. On September 6, 2007, we issued our preliminary findings regarding these programs. See Memorandum to David M. Spooner, Assistant Secretary for Import Administration, through Stephen J. Claeys, Deputy Assistant Secretary for Import Administration (Preliminary Decision Memorandum).

We invited interested parties to comment on the Preliminary Determination and Preliminary Decision Memorandum. We received case and rebuttal briefs from petitioner and respondents regarding the Preliminary Determination on August 13 and August 22, 2007, respectively.¹ On September 14 and September 19, 2007, we received case and rebuttal briefs from petitioner and respondents regarding the Preliminary Decision Memorandum.

Period of Investigation

The period of investigation (POI) is January 1, 2005, through December 31, 2005.

Scope of 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-colored, surface-decorated, printed (except as described below), embossed, or perforated. The subject merchandise includes single- and double-side-coated free sheet paper; coated free sheet paper in both sheet or roll form; and is inclusive of all weights, brightness levels, and finishes. The terms “wood free” or “art” paper may also be used to describe the imported product.

Excluded from the scope are: (1) coated free sheet paper that is imported printed with final content printed text or graphics; (2) base paper to be sensitized for use in photography; and (3) paper containing by weight 25 percent or more cotton fiber.

Coated free sheet paper is classifiable under subheadings 4810.13.1900, 4810.13.2010, 4810.13.2090, 4810.13.5000, 4810.13.7040, 4810.14.1900, 4810.14.2010, 4810.14.2090, 4810.14.5000, 4810.14.7040, 4810.19.1900, 4810.19.2010, and 4810.19.2090 of the Harmonized Tariff Schedule of the United States (HTSUS). While HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of this investigation is dispositive.

Scope Comments

On August 20, August 28, and September 10, 2007, the petitioner requested that the Department clarify the scope of the antidumping and countervailing duty investigations of CFS paper from Indonesia, Korea and the People's Republic of China. Specifically, the petitioner asked the Department to “clarify that the scope of the investigation includes coated free sheet paper containing hardwood BCTMP.”

Because this was a general issue pertaining to all six investigations, the Department set up a general issues file to handle this scope request. A hearing on the scope request was held on September 26, 2007. The hearing comprised a public session, a closed session for the antidumping investigation from Korea, and a closed session for the countervailing duty investigation from the PRC. After considering the comments submitted by the parties to these investigations, we have determined not to adopt the scope clarification sought by the petitioner. See Memorandum to Stephen J. Claeys, Deputy Assistant Secretary for Import Administration, entitled “Scope Clarification Request: NewPage Corporation” dated concurrently with this notice, which is appended to “Issues and Decision Memorandum for the Final Determination in the Countervailing Duty Investigation of Coated Free Sheet Paper from the People's Republic of China.”

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” (Decision Memorandum) dated October 17, 2007, which is hereby adopted by this notice. A list of issues that parties have raised and to which we have responded, all of which are in the Decision Memorandum, is attached to this notice as Appendix I. 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. In addition, a complete version of the Decision Memorandum can be accessed directly on the World Wide Web at http://ia.ita.doc.gov/​frn. The paper copy and electronic version of the Decision Memorandum are identical in content.

Suspension of Liquidation

In accordance with section 705(c)(1)(B)(i)(I) of the Tariff Act of 1930 (as amended) (the Act), we have calculated individual rates for the companies under investigation. For the period January 1, 2005, through December 31, 2005, we determine the net subsidy rates for the investigated companies are as follows:

Producer/Exporter	Net Subsidy Rate
EN Paper Mfg. Co., Ltd. (EN Paper)	0.04 percent (de minimis)
Kyesung Paper Co., Ltd. and its affiliate Namhan Paper Co., Ltd. (collectively, Kyesung)	1.46 percent ad valorem
Moorim Paper Co. Ltd. and its affiliate Moorim SP (collectively, Moorim)	0.00 percent
Hansol Paper Co., Ltd. (Hansol)	0.17 percent (de minimis)
All Others Rate	1.46 percent ad valorem

Under section 705(c)(5)(A) of the Act, the “All Others” rate is equal to the weight-averaged countervailable subsidy rates established for exporters and producers individually investigated, excluding any zero and de minimis countervailable subsidy rates and any rates determined under section 776 of the Act. In this investigation, the “All Others” rate is equal to the countervailable net subsidy rate calculated for Kyesung, the only individually investigated respondent with an affirmative net subsidy rate.

In accordance with our Amended Preliminary Determination, we instructed U.S. Customs and Border Protection (CBP) to terminate suspension of liquidation of all entries of subject merchandise from Korea on or after April 9, 2007, the date of the publication of our Preliminary Determination in the Federal Register.

We will reinstate suspension of liquidation under sections 705(c)(1)(C) and 703(d)(2) of the Act for all entries of subject merchandise other than those produced and exported by EN Paper, Hansol, and Moorim and will require a cash deposit or posting of a bond equal to estimated countervailing duties in the amounts indicated above, effective the publication date of our final determination in the Federal Register.

If the International Trade Commission (ITC) determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or canceled. If however, the ITC determines that such injury does exist, we will issue a countervailing duty order.

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 that 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 APO of their responsibility concerning the destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Failure to comply is a violation of the APO.

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

Dated: October 17, 2007.

David M. Spooner,

Assistant Secretary for Import Administration.

Appendix I

I. SUMMARY

II. SCOPE COMMENTS

III. PERIOD OF INVESTIGATION

IV. SUBSIDIES VALUATION INFORMATION

A. Benchmark for Short-Term Loans

B. Benchmark for Long-Term Loans

C. Benchmark Discount Rates

D. Allocation Period

V. CROSS-OWNERSHIP

VI. CREDITWORTHINESS

VII. EQUITYWORTHINESS

VIII. PROGRAMS DETERMINED TO BE COUNTERVAILABLE

A. Poongman Restructuring

B. Export and Import Credit Financing from KEXIM

C. Sale of Pulp for Less Than Adequate Remuneration

D. Sales of Pulp From Raw Material Reserve for Less Than Adequate Remuneration

E. Reduction in Taxes for Operation in Regional and National Industrial Complexes

F. Duty Drawback on Non-Physically Incorporated Items and Excess Loss Rate

G. Loans Under the Industrial Base Fund (IBF)

H. Export Loans by Commercial Banks Under KEXIM's Trade Bill Rediscounting Program

I. D/A Loans Issued by the KDB and Other Government-Owned Banks

IX. PROGRAMS DETERMINED TO BE NOT COUNTERVAILABLE

A. Long-Term Lending Provided by the KDB and Other GOK-Owned Institutions

B. Direction of Credit to the Pulp and Paper Sector

C. Usance Loans Issued by the KDB and Other Government-Owned Banks

D. Shinho Restructuring

1. Debt-to-Equity Swaps and Conversion of Convertible Bonds to Equity

2. Extension of Debt Maturities

3. New Loans

X. OTHER PROGRAMS: LOANS UNDER THE ACCL PROGRAM

A. Trade Financing Under the ACCL Program

B. Commercial Paper Loans Under the ACCL Program

C. Corporate Procurement Loans Under the ACCL Program

D. Electronically Processed Secured Receivables Loans

E. Funds for the Production of Basic Materials or Parts

XI. TERMINATED PROGRAMS

A. Loans Under the KDB's Rediscount Program

XII. ANALYSIS OF COMMENTS

Comment 1: Whether the GOK Directed Credit to the Pulp and Paper Industry

Comment 2: Stainless Steel Is Not Applicable to Poongman's Restructuring

Comment 3: GOK Assisted and Directed Credit to Poongman During its Restructuring

Comment 4: Poongman Was Unequityworthy and Uncreditworthy

Comment 5: Poongman Did Not Benefit from Debt Forgiveness

Comment 6: Evidence of Entrustment or Direction of Shinho's Creditors

Comment 7: GOK Ownership of Shinho's Creditors and the Corporate Restructuring Process

Comment 8: Whether Shinho Was Uncreditworthy During its 1998, 2000, and 2002 Restructurings and 2004 Syndicated Loan

Comment 9: Whether Shinho Was Unequityworthy During its 1998, 2000, and 2002 Restructurings

Comment 10: The Validity of the Analyses of Shinho's Financial Status Conducted by Third Parties

Comment 11: Donghae Pulp's Sale of Chemical Pulp for Less Than Adequate Remuneration

Comment 12: Commerce Correctly Calculated the Benefits from Donghae Pulp Based On Monthly Weighted-Average Prices

Comment 13: If the Department Continues to Calculate Monthly Weighted-Average Prices for Donghae Pulp, Certain Methodological Corrections Are Required

Comment 14: Hansol's Arguments that Donghae Pulp is Owned or Controlled by the GOK

Comment 15: The Benefit Calculation for Donghae Pulp's Sale of Pulp Must Account for Prevailing Market Conditions

Comment 16: Whether Usance and Document Acceptance Loans Provided Outside of the ACCL Program Are Countervailable

Comment 17: Whether the Department Should Pro-Rate Benefits on D/A Loans Under the Korea Export Import Bank (KEXIM ) Program

Comment 18: Source Data of the Benchmark To Be Applied to D/A Loans Under the KEXIM Rediscount Program and Usance Loans Issued by GOK Authorities

Comment 19: Calculation of Benchmark To Be Applied to D/A Loans Under the KEXIM Rediscount Program

Comment 20: Whether Commercial Paper and Corporate Procurement Loans are Countervailable

Comment 21: Use of Company-Specific Benchmark to Measure the Benefit to Hansol Under KEXIM's Export and Import Credit Financing Program

Comment 22: Use of Non-Company-Specific Benchmarks for KEXIM's Import and Export Credit Financing Program

Comment 23: Whether Hansol Received Countervailable Benefits Through the KDB's Placement of its Corporate Bonds

Comment 24: Whether Loans from the Industrial Base Fund (IBF) Constitute Countervailable Export Subsidies

Comment 25: Benchmark Rates for Long-Term Korean Won-Denominated Loans

XIII. RECOMMENDATION

Footnotes

1.  Petitioner is the New Page Corporation.