E9-18892. Narrow Woven Ribbons With Woven Selvedge From the People's Republic of China: Initiation of Countervailing Duty Investigation

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

DATES:

Effective Date: August 6, 2009.

FOR FURTHER INFORMATION CONTACT:

Robert Copyak, Shelly Atkinson, or Justin Neuman, AD/CVD Operations, Office 1, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone], and [phone], respectively.

SUPPLEMENTARY INFORMATION:

The Petition

On July 9, 2009, the Department of Commerce (“the Department”) received countervailing duty (“CVD”) and antidumping duty (“AD”) petitions concerning imports of narrow woven ribbons with woven selvedge (“narrow woven ribbons”) from the People's Republic of China (“PRC”). The petitions were filed in proper form by Berwick Offray LLC and its wholly-owned subsidiary Lion Ribbon Company, Inc. (collectively, “the Petitioner”), a domestic producer of narrow woven ribbons. See “Petition for Countervailing Duty and Antidumping Duty Investigations of China and an Antidumping Duty Investigation of Taiwan on Imports of Narrow Woven Ribbons with Woven Selvedge” (“the Petition”). On July 13, 2009, the Department issued a request for additional information and clarification of certain of the Petitioner's subsidy allegations. See Letter from Brandon Farlander, Program Manager, AD/CVD Operations, Office 1, to the Petitioner, “Petition for the Imposition of Countervailing Duties on Imports of Narrow Woven Ribbons with Woven Selvedge from the People's Republic of China: Questions Regarding the Countervailing Duty Allegations,” dated July 13, 2009. In response to the Department's request, the Petitioner timely filed additional information on July 17, 2009. See Supplement to the CVD Petition, dated July 17, 2009. On July 14, 2009, the Department contacted the Petitioner by telephone seeking additional information and clarification regarding the Petition. See Memorandum to the File from Matthew Glass, “Scope Call with the Petitioner,” dated July 14, 2009. On July 15, 2009, a request seeking clarification regarding the general issues of the Petition was sent to the Petitioner. See Letter from Shawn Thompson, Program Manager, AD/CVD Operations, Office 2, to the Petitioner, “Regarding Petitions for the Imposition of Antidumping and Countervailing Duties on Imports of Narrow Woven Ribbons with Woven Selvedge (“NWR”) from the People's Republic of China and Antidumping Duties on Imports of NWR from Taiwan: Supplemental Questions,” dated July 15, 2009. A second request seeking additional information and clarification regarding the Petition was sent to the Petitioner on July 17, 2009. See Letter from Brandon Farlander, Program Manager, AD/CVD Operations, Office 1, to the Petitioner, “Petition for the Imposition of Countervailing Duties on Imports of Narrow Woven Ribbons with Woven Selvedge from the People's Republic of China: Questions Regarding the Countervailing Duty Allegations,” dated June 17, 2009. In response to the Department's request, the Petitioner timely filed additional information pertaining to the Petition on July 21, 2009. See Supplement to the AD/CVD Petitions, dated July 21, 2009. On July 22, 2009, another request seeking clarification regarding the general issues of the Petition was sent to the Petitioner. See Letter from Shawn Thompson, Program Manager, AD/CVD Operations, Office 2, to the Petitioner, “Regarding Supplement to the Petitions for the Imposition of Antidumping and Countervailing Duties on Imports of Narrow Woven Ribbons with Woven Selvedge (NWR) from the People's Republic of China and Antidumping Duties on Imports of NWR from Taiwan: Additional Questions,” dated July 22, 2009. On July 23, 2009, and July 24, 2009, the Department contacted the Petitioner by telephone seeking additional information and clarification regarding the Petition. See Memorandum to the File from Meredith A.W. Rutherford, “General Issues Discussion with the Petitioner,” dated July 23, 2009; see also Memorandum to the File from David Layton, Trade Analyst, AD/CVD Operations, Office 1, “Petition for the Imposition of Countervailing Duties on Imports of Narrow Woven Ribbons with Woven Selvedge from the People's Republic of China: Question Regarding the Countervailing Duty Allegations,” dated July 24, 2009. Based on the Department's request, the Petitioner timely filed additional information pertaining to the Petition on July 27, 2009. See Second Supplement to the AD/CVD Petitions, dated July 27, 2009. On July 28, 2009, the Department again contacted the Petitioner by telephone seeking additional information and clarification regarding certain general issues of the Petition. See Memorandum to the File from Meredith A.W. Rutherford, “Phone Call with the Petitioner,” dated July 28, 2009, and Memorandum to the File from Elizabeth Eastwood, “Scope Calls with the Petitioner,” dated July 29, 2009. Based on the Department's request, the Petitioner timely filed additional information pertaining to the Petition on July 29, 2009. See Third Supplement to the AD/CVD Petitions, dated July 29, 2009.

In accordance with section 702(b)(1) of the Tariff Act of 1930, as amended (“the Act”), the Petitioner alleges that producers/exporters of narrow woven ribbons in the PRC received countervailable subsidies within the meaning of sections 701 and 771(5) of the Act and that imports materially injure, or threaten material injury to, an industry in the United States.

The Department finds that the Petitioner filed this Petition on behalf of the domestic industry because it is an interested party as defined in section 771(9)(C) of the Act, and the Petitioner has demonstrated sufficient industry support with respect to the CVD investigation that it is requesting the Department to initiate (see “Determination of Industry Support for the Petition” below).

Period of Investigation

The anticipated period of investigation (“POI”) is calendar year 2008. See 19 CFR 351.204(b)(2).

Scope of Investigation

The products covered by this investigation are narrow woven ribbons with woven selvedge from the PRC. For a full description of the scope of the investigation, please see the “Scope of Investigation” in Appendix I to this notice.

Comments on Scope of Investigation

During our review of the Petition, we discussed the scope with the Petitioner to ensure that it is an accurate reflection of the products for which the domestic industry is seeking relief. Moreover, as discussed in the preamble to the regulations (See Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997)), we are setting aside a period for interested parties to raise issues regarding product coverage. The Department encourages all interested parties to submit such comments by August 18, 2009, twenty calendar days from the signature of this notice. Comments should be addressed to Import Administration's APO/Dockets Unit, Room 1870, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. The period of scope consultations is intended to provide the Department with ample opportunity to consider all comments and to consult with parties prior to the issuance of the preliminary determinations.

Consultations

Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department held consultations with the Government of the PRC (hereinafter, the GOC) with respect to the Petition on July 24, 2009. See Memorandum to the File, “Countervailing Duty Petition on Narrow Woven Ribbons with Woven Selvedge from the People's Republic of China—Consultations with the Government of China,” on file in the CRU, Room 1117 of the main Department of Commerce building.

Determination of Industry Support for the Petition

Section 702(b)(1) of the Act requires that a petition be filed on behalf of the domestic industry. Section 702(c)(4)(A) of the Act provides that a petition meets this requirement if the domestic producers or workers who support the petition account for: (i) At least 25 percent of the total production of the domestic like product; and (ii) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition. Moreover, section 702(c)(4)(D) of the Act provides that, if the petition does not establish support of domestic producers or workers accounting for more than 50 percent of the total production of the domestic like product, the Department shall: (i) Poll the industry or rely on other information in order to determine if there is support for the petition, as required by subparagraph (A); or (ii) determine industry support using a statistically valid sampling method to poll the industry.

Section 771(4)(A) of the Act defines the “industry” as the producers as a whole of a domestic like product. Thus, to determine whether a petition has the requisite industry support, the statute directs the Department to look to producers and workers who produce the domestic like product. The International Trade Commission (“ITC”), which is responsible for determining whether “the domestic industry” has been injured, must also determine what constitutes a domestic like product in order to define the industry. While both the Department and the ITC must apply the same statutory definition regarding the domestic like product (section 771(10) of the Act), they do so for different purposes and pursuant to a separate and distinct authority. In addition, the Department's determination is subject to limitations of time and information. Although this may result in different definitions of the like product, such differences do not render the decision of either agency contrary to law. See USEC, Inc. v. United States, 132 F. Supp. 2d 1, 8 (Ct. Int'l Trade 2001), citing Algoma Steel Corp., Ltd. v. United States, 688 F. Supp. 639, 644 (Ct. Int'l Trade 1988), aff'd 865 F.2d 240 (Fed. Cir. 1989), cert. denied 492 U.S. 919 (1989).

Section 771(10) of the Act defines the domestic like product as “a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this title.” Thus, the reference point from which the domestic like product analysis begins is “the article subject to an investigation” (i.e., the class or kind of merchandise to be investigated, which normally will be the scope as defined in the petition).

With regard to the domestic like product, the Petitioner does not offer a definition of domestic like product distinct from the scope of the investigation. Based on our analysis of the information submitted on the record, we have determined that narrow woven ribbons constitute a single domestic like product and we have analyzed industry support in terms of that domestic like product. For a discussion of the domestic like product analysis in this case, see Countervailing Duty Investigation Initiation Checklist: Narrow Woven Ribbons with Woven Selvedge from the People's Republic of China (“CVD Initiation Checklist”) at Attachment II (Industry Support), dated concurrently with this notice and on file in the CRU, Room 1117 of the main Department of Commerce building.

In determining whether the Petitioner has standing under section 702(c)(4)(A) of the Act, we considered the industry support data contained in the Petition with reference to the domestic like product as defined in the “Scope of Investigation” in Appendix I. To establish industry support, the Petitioner provided its production of the domestic like product for the year 2008, and compared this to the total estimated production of the domestic like product for the entire domestic industry. See Volume I of the Petition, at 7, and Exhibits 2, 4, and 5, Supplement to the AD/CVD Petitions, dated July 21, 2009, at A-9-11, Second Supplement to the AD/CVD Petitions, dated July 27, 2009, at A-1-2 and Exhibit 117, and Third Supplement to the AD/CVD Petitions, dated July 29, 2009, at Attachment II. To estimate 2008 production of the domestic like product, the Petitioner used its own data and industry specific knowledge. The Petitioner calculated total domestic production based on its own production plus estimates from the nine other producers of the domestic like product in the United States. See id., see also CVD Initiation Checklist at Attachment II, Industry Support.

Our review of the data provided in the Petition, supplemental submissions, and other information readily available to the Department indicates that the Petitioner has established industry support. First, the Petition established support from domestic producers (or workers) accounting for more than 50 percent of the total production of the domestic like product and, as such, the Department is not required to take further action in order to evaluate industry support (e.g., polling). See section 702(c)(4)(D) of the Act; see also CVD Initiation Checklist at Attachment II. Second, the domestic producers (or workers) have met the statutory criteria for industry support under section 702(c)(4)(A)(i) of the Act because the domestic producers (or workers) who support the Petition account for at least 25 percent of the total production of the domestic like product. See CVD Initiation Checklist at Attachment II. Finally, the domestic producers (or workers) have met the statutory criteria for industry support under section 702(c)(4)(A)(ii) of the Act because the domestic producers (or workers) who support the Petition account for more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the Petition. Accordingly, the Department determines that the Petition was filed on behalf of the domestic industry within the meaning of section 702(b)(1) of the Act. See id.

Injury Test

Because the PRC is a “Subsidies Agreement Country” within the meaning of section 701(b) of the Act, section 701(a)(2) of the Act applies to this investigation. Accordingly, the ITC must determine whether imports of the subject merchandise from the PRC materially injure, or threaten material injury to, a U.S. industry.

Allegations and Evidence of Material Injury and Causation

The Petitioner alleges that imports of narrow woven ribbons from the PRC are benefitting from countervailable subsidies and that such imports are causing, or threaten to cause, material injury to the domestic industry producing narrow woven ribbons. In addition, the Petitioner alleges that subsidized imports exceed the negligibility threshold provided for under section 771(24)(A) of the Act.

The Petitioner contends that the industry's injured condition is illustrated by reduced market share, underselling and price depressing and suppressing effects, increased import penetration, lost sales and revenue, reduced production, reduced capacity, reduced capacity utilization, reduced shipments, reduced employment, and an overall decline in financial performance. We have assessed the allegations and supporting evidence regarding material injury, threat of material injury, and causation, and we have determined that these allegations are properly supported by adequate evidence and meet the statutory requirements for initiation. See CVD Initiation Checklist at Attachment III (Analysis of Allegations and Evidence of Material Injury and Causation for the Petition).

Initiation of Countervailing Duty Investigation

Section 702(b) of the Act requires the Department to initiate a CVD proceeding whenever an interested party files a CVD petition on behalf of an industry that: (1) Alleges the elements necessary for an imposition of a duty under section 701(a) of the Act; and (2) is accompanied by information reasonably available to the petitioner supporting the allegations.

The Department has examined the Petition on narrow woven ribbons from the PRC and finds that it complies with the requirements of section 702(b) of the Act. Therefore, in accordance with section 702(b) of the Act, we are initiating a CVD investigation to determine whether producers/exporters of narrow woven ribbons in the PRC receive countervailable subsidies. For a discussion of evidence supporting our initiation determination, see CVD Initiation Checklist.

We are including in our investigation the following programs alleged in the Petition to provide countervailable subsidies to producers/exporters of the subject merchandise:

A. Loan Programs

1. Policy Loans to Narrow Woven Ribbon Producers From State-Owned Commercial Banks

B. Grant Programs

2. The State Key Technology Renovation Project Fund

3. Famous Brands Program

4. Export Assistance Grants

5. Export Interest Subsidy Funds for Enterprises Located in Zhejiang Province

6. Technology Grants for Enterprises Located in Zhejiang Province

C. Income and Other Direct Tax Programs

7. Preferential Tax Policies for Enterprises with Foreign Investment (“Two Free Three Half”) Program

8. Tax Subsidies to FIEs in Specially Designated Areas

9. Preferential Tax Policies for Export-Oriented FIEs

10. Corporate Income Tax Refund Program for Reinvestment of FIE Profits in Export-Oriented Enterprises

11. Local Income Tax Exemption and Reduction Programs for “Productive” FIEs

12. Tax Program for High or New Technology FIEs

13. Preferential Tax Policies for Township Enterprises

14. Preferential Tax Policies for Research and Development for FIEs

15. Tax Benefits for FIEs in Encouraged Industries that Purchase Domestic Equipment

D. Indirect Tax and Tariff Exemption Programs

16. Import Tariff and VAT Exemptions for FIEs Using Imported Technology and Equipment

17. Import Tariff and VAT Exemptions for Certain Domestic Enterprises Using Imported Technology and Equipment

18. VAT Rebate for FIE Purchases of Domestically Produced Equipment

For further information explaining why the Department is investigating these programs, see CVD Initiation Checklist.

We are not including in our investigation the following programs alleged to benefit producers/exporters of the subject merchandise in the PRC:

1. Loan Guarantees to Narrow Woven Ribbon Producers from State-Owned Commercial Banks

2. Export Loans

3. Loan Forgiveness

4. Loan Interest Forgiveness

5. Grants for High-Technology Equipment

6. Technology Development Grants for Enterprises Located in Wenzhou Municipality

7. Grants to Loss-Making SOEs

8. Provision of Land Use Rights to SOEs for LTAR

9. Provision of Land Use Rights for LTAR in Certain Geographical Regions

10. Provision of Yarn for LTAR

For further information explaining why the Department is not initiating an investigation of these programs, see CVD Initiation Checklist.

Respondent Selection

For this investigation, the Department intends to select respondents based on U.S. Customs and Border Protection (“CBP”) data for U.S. imports under HTSUS numbers 5806.32.1020, 5806.32.1030, 5806.32.1050, and 5806.32.1060, the four HTSUS categories most specific to the subject merchandise, during the POI. We intend to release the CBP data under Administrative Protective Order (“APO”) to all parties with access to information protected by APO within five days of the announcement of the initiation of this investigation. Interested parties may submit comments regarding the CBP data and respondent selection within seven calendar days of publication of this notice. We intend to make our decision regarding respondent selection within 20 days of publication of this notice. Interested parties must submit applications for disclosure under APO in accordance with 19 CFR 351.305. Instructions for filing such applications may be found on the Department's Web site at http://ia.ita.doc.gov/​apo.

Distribution of Copies of the Petition

In accordance with section 702(b)(4)(A)(i) of the Act and 19 CFR 351.202(f), a copy of the public version of the Petition has been provided to the representatives of the GOC. Because of the particularly large number of producers/exporters identified in the Petition, the Department considers the service of the public version of the Petition to the foreign producers/exporters satisfied by the delivery of the public version to the GOC, consistent with 19 CFR 351.203(c)(2).

ITC Notification

We have notified the ITC of our initiation, as required by section 702(d) of the Act.

Preliminary Determination by the ITC

The ITC will preliminarily determine, within 25 days after the date on which it receives notice of the initiation, whether there is a reasonable indication that imports of subsidized narrow woven ribbons from the PRC materially injure, or threaten material injury to, a U.S. industry. See section 703(a)(2) of the Act. A negative ITC determination will result in the investigation being terminated; see section 703(a)(1) of the Act. Otherwise, the investigation will proceed according to statutory and regulatory time limits.

This notice is issued and published pursuant to section 777(i) of the Act.

Dated: July 29, 2009.

Ronald K. Lorentzen,

Acting Assistant Secretary for Import Administration.

Appendix I

Scope of the Investigation

The merchandise subject to the investigation is narrow woven ribbons with woven selvedge, in any length, but with a width (measured at the narrowest span of the ribbon) less than or equal to 12 centimeters, composed of, in whole or in part, man-made fibers (whether artificial or synthetic, including but not limited to nylon, polyester, rayon, polypropylene, and polyethylene teraphthalate), metal threads and/or metalized yarns, or any combination thereof. Narrow woven ribbons subject to the investigation may:

• Also include natural or other non-man-made fibers;
• Be of any color, style, pattern, or weave construction, including but not limited to single-faced satin, double-faced satin, grosgrain, sheer, taffeta, twill, jacquard, or a combination of two or more colors, styles, patterns, and/or weave constructions;
• Have been subjected to, or composed of materials that have been subjected to, various treatments, including but not limited to dyeing, printing, foil stamping, embossing, flocking, coating, and/or sizing;
• Have embellishments, including but not limited to appliqué, fringes, embroidery, buttons, glitter, sequins, laminates, and/or adhesive backing;
• Have wire and/or monofilament in, on, or along the longitudinal edges of the ribbon;
• Have ends of any shape or dimension, including but not limited to straight ends that are perpendicular to the longitudinal edges of the ribbon, tapered ends, flared ends or shaped ends, and the ends of such woven ribbons may or may not be hemmed;
• Have longitudinal edges that are straight or of any shape, and the longitudinal edges of such woven ribbon may or may not be parallel to each other;
• Consist of such ribbons affixed to like ribbon and/or cut-edge woven ribbon, a configuration also known as an “ornamental trimming;”
• Be wound on spools; attached to a card; hanked (i.e., coiled or bundled); packaged in boxes, trays or bags; or configured as skeins, balls, bateaus or folds; and/or
• Be included within a kit or set such as when packaged with other products, including but not limited to gift bags, gift boxes and/or other types of ribbon.

Narrow woven ribbons subject to the investigation include all narrow woven fabrics, tapes, and labels that fall within this written description of the scope of this investigation.

Excluded from the scope of the investigation are the following:

(1) Formed bows composed of narrow woven ribbons with woven selvedge;

(2) “Pull-bows” (i.e., an assemblage of ribbons connected to one another, folded flat and equipped with a means to form such ribbons into the shape of a bow by pulling on a length of material affixed to such assemblage) composed of narrow woven ribbons;

(3) Narrow woven ribbons comprised at least 20 percent by weight of elastomeric yarn (i.e., filament yarn, including monofilament, of synthetic textile material, other than textured yarn, which does not break on being extended to three times its original length and which returns, after being extended to twice its original length, within a period of five minutes, to a length not greater than one and a half times its original length as defined in the Harmonized Tariff Schedule of the United States (HTSUS), Section XI, Note 13) or rubber thread;

(4) Narrow woven ribbons of a kind used for the manufacture of typewriter or printer ribbons;

(5) Narrow woven labels and apparel tapes, cut-to-length or cut-to-shape, having a length (when measured across the longest edge-to-edge span) not exceeding 8 centimeters;

(6) Narrow woven ribbons with woven selvedge attached to and forming the handle of a gift bag;

(7) Cut-edge narrow woven ribbons formed by cutting broad woven fabric into strips of ribbon, with or without treatments to prevent the longitudinal edges of the ribbon from fraying (such as by merrowing, lamination, sono-bonding, fusing, gumming or waxing), and with or without wire running lengthwise along the longitudinal edges of the ribbon;

(8) Narrow woven ribbons comprised at least 85 percent by weight of threads having a denier of 225 or higher;

(9) Narrow woven ribbons constructed from pile fabrics (i.e., fabrics with a surface effect formed by tufts or loops of yarn that stand up from the body of the fabric);

(10) Narrow woven ribbon affixed (including by tying) as a decorative detail to non-subject merchandise, such as a gift bag, gift box, gift tin, greeting card or plush toy, or affixed (including by tying) as a decorative detail to packaging containing non-subject merchandise;

(11) Narrow woven ribbon affixed to non-subject merchandise as a working component of such non-subject merchandise, such as where narrow woven ribbon comprises an apparel trimming, book marker, bag cinch, or part of an identity card holder; and

(12) Narrow woven ribbon(s) comprising a belt attached to and imported with an item of wearing apparel, whether or not such belt is removable from such item of wearing apparel.

The merchandise subject to this investigation is classifiable under the HTSUS statistical categories 5806.32.1020; 5806.32.1030; 5806.32.1050 and 5806.32.1060. Subject merchandise also may enter under subheadings 5806.31.00; 5806.32.20; 5806.39.20; 5806.39.30; 5808.90.00; 5810.91.00; 5810.99.90; 5903.90.10; 5903.90.25; 5907.00.60; and 5907.00.80 and under statistical categories 5806.32.1080; 5810.92.9080; 5903.90.3090; and 6307.90.9889. The HTSUS statistical categories and subheadings are provided for convenience and customs purposes; however, the written description of the merchandise under investigation is dispositive.