04-5281. Final Results and Partial Rescission of Countervailing Duty Expedited Reviews: Certain Softwood Lumber Products From Canada

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of final results and partial rescission of countervailing duty expedited reviews.

SUMMARY:

On November 24, 2003, the Department of Commerce (the Department) published the preliminary results of the expedited reviews of 16 Group 2 companies and rescinded the reviews of five companies. See Preliminary Results and Partial Rescission of Countervailing Duty Expedited Reviews: Certain Softwood Lumber Products from Canada, 68 FR 65879 (November 24, 2003) (Preliminary Results). We are now issuing the final results of review of 14 companies and rescinding the reviews of two additional companies. Based on our analysis of the comments received on the Preliminary Results, we have made changes to the estimated net subsidy rates determined in the Preliminary Results. For information on estimated net subsidies, see the “Final Results of Reviews” section of this notice.

EFFECTIVE DATE:

March 9, 2004.

FOR FURTHER INFORMATION CONTACT:

Stephanie Moore or Cindy Lai Robinson, Office of AD/CVD Enforcement VI, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone] or [phone].

SUPPLEMENTARY INFORMATION:

Background

On November 24, 2003, the Department published the preliminary results of review of 16 Group 2 companies and rescinded the review of five companies. See Preliminary Results, 68 FR 65879 (November 24, 2003). Since the publication of the Preliminary Results, the Department has received timely requests to rescind the expedited review for R. Fryer Forest Products Ltd., and Federated Co-operatives Ltd.

We provided interested parties an opportunity to comment on the Preliminary Results. We received comments filed on behalf of the Ontario Forest Industries Association, the Ontario Lumber Manufacturers Association, Aspen Planers Ltd., Downie Timber Ltd., Gorman Bros. Lumber Ltd., Haida Forest Products Ltd., Kenora Forest Products Ltd. (Kenora), Liskeard Lumber Limited, Mill & Timber Products Ltd., North Enderby Timber Ltd., Olav Haavaldsrud Timber Company Limited, Selkirk Specialty Wood Ltd., Tembec Inc., and Tyee Timber Products Ltd. (the B&H Group) and from the Coalition for Fair Lumber Imports Executive Committee (petitioner). We also received comments filed on behalf of the Gouvernement du Quebec (GOQ). In addition, we received rebuttal comments from Canadian Forest Products, Ltd. (Canfor) and Terminal Forest Products (Terminal), the Government of Canada (GOC), and the B&H Group. We also received ministerial error allegations from Federated Co-operatives Ltd. (Federated) and Kenora.

Companies Addressed in These Final Results

This notice includes the final results of review for 14 of the 16 companies examined in the Preliminary Results. The following 11 companies from Group 2, Round 1 are included:

Cambie Cedar Products Ltd.;

Canadian Forest Products Ltd.;

Commonwealth Plywood Co. Ltd.;

E. Tremblay et fils ltee;

Greenwood Forest Products Ltd.;

Kalesnikoff Lumber Co. Ltd.;

Kenora Forest Products Ltd.;

Lakeland Mills Ltd.;

Lulumco Inc.;

Terminal Forest Products Ltd.;

The Pas Lumber Company Ltd.

These final results also include the final results of review of the following three Group 2, Round 2 companies:

Shawood Lumber Inc.;

St. Jean Lumber (1984) Ltd.;

Wynndel Box & Lumber Co. Ltd.

In addition, the expedited reviews of the following two Round 1 companies included in the Preliminary Results, were rescinded:

Federated Co-operatives Ltd.;

R. Fryer Forest Products Ltd.

These final results also include the rescission of the expedited review of five additional companies:

Kootenay Innovate Wood Inc. (Group 1, Round 1);

Lukwa Mills Ltd. (Group 2, Round 2);

South East Forest Products Ltd. (Group 2, Round 2);

Teal Cedar Products Ltd. (Group 2, Round 2);

West Fraser Mills Ltd. (Group 1, Round 2).

Scope of the Reviews

The products covered by this order are softwood lumber, flooring and siding (softwood lumber products). Softwood lumber products include all products classified under headings 4407.1000, 4409.1010, 4409.1090, and 4409.1020, respectively, of the Harmonized Tariff Schedule of the United States (HTSUS), and any softwood lumber, flooring and siding described below. These softwood lumber products include:

(1) Coniferous wood, sawn or chipped lengthwise, sliced or peeled, whether or not planed, sanded or finger-jointed, of a thickness exceeding six millimeters;

(2) Coniferous wood siding (including strips and friezes for parquet flooring, not assembled) continuously shaped (tongued, grooved, rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like) along any of its edges or faces, whether or not planed, sanded or finger-jointed;

(3) Other coniferous wood (including strips and friezes for parquet flooring, not assembled) continuously shaped (tongued, grooved, rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like) along any of its edges or faces (other than wood moldings and wood dowel rods) whether or not planed, sanded or finger-jointed; and

(4) Coniferous wood flooring (including strips and friezes for parquet flooring, not assembled) continuously shaped (tongued, grooved, rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like) along any of its edges or faces, whether or not planed, sanded or finger-jointed.

Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise subject to this order is dispositive.

As specifically stated in the Issues and Decision Memorandum accompanying the Notice of Final Determination of Sales at Less Than Fair Value: Certain Softwood Lumber Products from Canada, 67 FR 15539 (April 2, 2002) (see comment 53, item D, page 116, and comment 57, item B-7, page 126), available at www.ia.ita.doc.gov, drilled and notched lumber and angle cut lumber are covered by the scope of this order.

The following softwood lumber products are excluded from the scope of this order provided they meet the specified requirements detailed below:

(1) Stringers (pallet components used for runners): if they have at least two notches on the side, positioned at equal distance from the center, to properly accommodate forklift blades, properly classified under HTSUS 4421.90.98.40.

(2) Box-spring frame kits: if they contain the following wooden pieces—two side rails, two end (or top) rails and varying numbers of slats. The side rails and the end rails should be radius-cut at both ends. The kits should be individually packaged, they should contain the exact number of wooden components needed to make a particular box spring frame, with no further processing required. None of the components exceeds 1” in actual thickness or 83″ in length.

(3) Radius-cut box-spring-frame components, not exceeding 1” in actual thickness or 83” in length, ready for assembly without further processing. The radius cuts must be present on both ends of the boards and must be substantial cuts so as to completely round one corner.

(4) Fence pickets requiring no further processing and properly classified under HTSUS heading 4421.90.70, 1″ or less in actual thickness, up to 8″ wide, 6′ or less in length, and have finials or decorative cuttings that clearly identify them as fence pickets. In the case of dog-eared fence pickets, the corners of the boards should be cut off so as to remove pieces of wood in the shape of isosceles right angle triangles with sides measuring 3/4 inch or more.

(5) U.S. origin lumber shipped to Canada for minor processing and imported into the United States, is excluded from the scope of this order if the following conditions are met: (1) The processing occurring in Canada is limited to kiln-drying, planing to create smooth-to-size board, and sanding, and (2) if the importer establishes to the satisfaction of the United States Customs and Border Protection (CBP) that the lumber is of U.S. origin.

(6) Softwood lumber products contained in single family home packages or kits,^[1] regardless of tariff classification, are excluded from the scope of this order if the importer certifies to items 6 A, B, C, D, and requirement 6 E is met:

A. The imported home package or kit constitutes a full package of the number of wooden pieces specified in the plan, design or blueprint necessary to produce a home of at least 700 square feet produced to a specified plan, design or blueprint;

B. The package or kit must contain all necessary internal and external doors and windows, nails, screws, glue, sub floor, sheathing, beams, posts, connectors, and if included in the purchase contract, decking, trim, drywall and roof shingles specified in the plan, design or blueprint.

C. Prior to importation, the package or kit must be sold to a retailer of complete home packages or kits pursuant to a valid purchase contract referencing the particular home design plan or blueprint, and signed by a customer not affiliated with the importer;

D. Softwood lumber products entered as part of a single family home package or kit, whether in a single entry or multiple entries on multiple days, will be used solely for the construction of the single family home specified by the home design matching the entry.

E. For each entry, the following documentation must be retained by the importer and made available to the CBP upon request:

i. A copy of the appropriate home design, plan, or blueprint matching the entry;

ii. A purchase contract from a retailer of home kits or packages signed by a customer not affiliated with the importer;

iii. A listing of inventory of all parts of the package or kit being entered that conforms to the home design package being entered;

iv. In the case of multiple shipments on the same contract, all items listed in E(iii) which are included in the present shipment shall be identified as well.

Lumber products that the CBP may classify as stringers, radius cut box-spring-frame components, and fence pickets, not conforming to the above requirements, as well as truss components, pallet components, and door and window frame parts, are covered under the scope of this order and may be classified under HTSUS subheadings 4418.90.45.90 , 4421.90.70.40, and 4421.90.97.40.

Finally, as clarified throughout the course of the investigation, the following products, previously identified as Group A, remain outside the scope of this order. They are:

1. Trusses and truss kits, properly classified under HTSUS 4418.90;

2. I-joist beams;

3. Assembled box spring frames;

4. Pallets and pallet kits, properly classified under HTSUS 4415.20;

5. Garage doors;

6. Edge-glued wood, properly classified under HTSUS item 4421.90.98.40;

7. Properly classified complete door frames;

8. Properly classified complete window frames;

9. Properly classified furniture.

In addition, this scope language has been further clarified to now specify that all softwood lumber products entered from Canada claiming non-subject status based on U.S. country of origin will be treated as non-subject U.S.-origin merchandise under the countervailing duty order, provided that these softwood lumber products meet the following condition: upon entry, the importer, exporter, Canadian processor and/or original U.S. producer establish to CBP's satisfaction that the softwood lumber entered and documented as U.S.-origin softwood lumber was first produced in the United States as a lumber product satisfying the physical parameters of the softwood lumber scope.^[2] The presumption of non-subject status can, however, be rebutted by evidence demonstrating that the merchandise was substantially transformed in Canada.

Methodology

Stumpage Programs

These final results include companies that source less than a majority of their wood (less than 50 percent of their inputs) from the United States, the Maritime Provinces, Canadian private lands, and/or Canadian companies excluded from the order, and have acquired Crown timber through their own tenure contracts. We included in our subsidy calculations only harvested softwood sawlogs processed by the firm's sawmills. We calculated company-specific benefit rates as follows: for logs harvested under a company's own tenure, we first calculated, on a species-specific basis, an average unit benefit from “Crown land harvesting.” We divided the stumpage fees each company paid by the total quantity harvested from Crown land to obtain the stumpage price. The resulting unit stumpage price was adjusted by the company-specific unit tenure costs to derive an adjusted stumpage price for each species.^[3] The adjusted species-specific stumpage price then was compared to the appropriate benchmark for that province to determine the species-specific per-unit benefit, which was multiplied by the harvest volume ^[4] for each species to obtain the total species-specific benefit. Species-specific benefits were summed up to derive the total benefit from Crown land harvesting. For all wood inputs (logs and lumber) acquired from other subsidized sources, we applied the same methodology used in Group1: we calculated the benefit by multiplying the quantity purchased by the province-specific stumpage benefit amount calculated in the underlying investigation (i.e., the average per-unit differential between the calculated adjusted stumpage fee for the relevant province and the appropriate benchmark for that province). Also see 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) (Final Determination), and Issues and Decision Memorandum: Final Results of the Countervailing Duty Investigation of Certain Softwood Lumber Products from Canada (Investigation Decision Memo).

We then divided the combined stumpage benefit resulting from harvesting under a company's own tenure and from purchases of logs and lumber through other subsidized sources by the appropriate value of the company's sales (scope and non-scope softwood lumber products, net of resales, and softwood lumber by-products) to determine the company's estimated subsidy rate from stumpage and then added any benefit from other programs to obtain the net subsidy rate for the company.

As indicated in the Notice of Initiation of Expedited Reviews of the Countervailing Duty Order: Certain Softwood Lumber Products From Canada, 67 FR 46955 (July 17, 2002), we have not attributed a benefit to (1) logs or lumber acquired from the Maritime Provinces, (2) logs or lumber of U.S. origin, (3) lumber produced by companies excluded in the investigation, and (4) logs from Canadian private land. Furthermore, as already stated, we are not including logs which the companies claim to have acquired and resold without any processing in our subsidy rate calculations. In addition, we are also not including in our calculations of company-specific subsidy rates lumber purchased and resold without any further manufacturing.

Other Programs

In the underlying investigation, the Department determined that the province of British Columbia provided countervailable benefits under the Forest Renewal program and the Job Protection program, while the province of Quebec provided countervailable benefits under the Private Forest Development Program (PFDP). In addition, the Department examined loans issued by Investment Quebec, lending under Article 28 of the Society for the Industrial Development of Quebec (SDI), and loans issued by the Society for the Recuperation and Development of Quebec Forests (Rexfor). Based upon our decision in the underlying investigation, the Department requested information from companies regarding the use of these programs.

Kalesnikoff was the only company that reported using one such program, the Forest Renewal program. However, Kalesnikoff reported that it did not receive any grants or loans under this program during the POR; rather it acted as a delivery agent for silviculture and resource inventory activities. Kalesnikoff was reimbursed for non-profit activities on behalf of the Forest Renewal Program for the administration and overhead costs incurred in delivering this program to the Province. On this basis, we find that Kalesnikoff did not receive countervailable benefits under this program. No other company reported using any of the British Columbia or Quebec programs during the POR.

Analysis of Comments Received

Issues raised by interested parties in comments submitted in response to the Preliminary Results are addressed in the “Issues and Decision Memorandum: Final Results of Expedited Review of 16 Group 2 Companies,” dated concurrently with this notice, which is hereby adopted by this notice. A list of the issues which interested 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. The Decision Memorandum is on file in the Central Records Unit in room B-099 of the Main Commerce Building. In addition, a complete version of the Decision Memorandum can be accessed directly on the World Wide Web at http://ia.ita.doc.gov,, under the heading “Federal Register Notices.” The paper copy and electronic version of the Decision Memorandum are identical in content.

Final Results of Review

In accordance with 19 CFR 351.221(b)(4)(i), we calculated an individual subsidy rate for each producer/exporter subject to these expedited reviews. For the period April 1, 2000 to March 31, 2001, we determine the net subsidy to be as follows:

Net subsidies—producer/exporter	Net subsidy rate percent
Cambie Cedar Products Ltd	14.59
Canadian Forest Products Ltd	12.24
Commonwealth Plywood Co. Ltd	2.89
E. Tremblay et fils ltee	6.36
Greenwood Forest Products Ltd	7.95
Kalesnikoff Lumber Co. Ltd	12.10
Kenora Forest Products Ltd	7.39
Lakeland Mills Ltd	8.85
Lulumco Inc	13.74
Terminal Forest Products Ltd	10.00
The Pas Lumber Company Ltd	7.45
Shawood Lumber Inc	5.46
St. Jean Lumber (1984) Ltd	33.27
Wynndel Box & Lumber Co. Ltd	12.89

The Department will instruct the CBP to collect cash deposits of estimated countervailing duties in the amounts indicated above of the f.o.b. invoice price on all shipments of the subject merchandise produced by the reviewed companies, entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of these reviews.

These results of expedited reviews cover only those companies that we have specifically identified. We will address in the final results of the expedited reviews, the issue of the adjustment of the cash deposit rate for all other non-reviewed companies subject to the country-wide rate to account for the benefit and the sales values of the companies that have received company-specific rates.

These expedited reviews and notice are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 1675(a)(1) and 19 U.S.C. 1677(i)(1)).

Dated: March 2, 2004.

James J. Jochum,

Assistant Secretary for Import Administration.

Appendix I

List of Comments and Issues in the Decision Memorandum

List of Comments

1. Use of Cross-Border Benchmarks

2. Correction of Kenora's Ministerial Errors

3. Canadian Forest Products, Ltd. (Canfor) Merger

4. Unprocessed Sales

5. Cash Deposit Rates

6. Verification

7. Lumber versus Log Inputs

8. Recalculated Country-Wide Rate

9. Countervailable Benefits of Certain Non-Stumpage Programs in Quebec

Footnotes

1.  To ensure administrability, we clarified the language of exclusion number 6 to require an importer certification and to permit single or multiple entries on multiple days as well as instructing importers to retain and make available for inspection specific documentation in support of each entry.

2.  See the scope clarification message (#3034202), dated February 3, 2003, to the CBP, regarding treatment of U.S. origin lumber on file in the Central Records Unit, Room B-099 of the main Commerce Building.

3.  These cost adjustments were limited to those granted in the underlying investigation.

4.  Certain companies reported that certain harvested softwood sawlogs were not used in lumber production. These were excluded from our calculations.