Notice of Final Results of Antidumping Duty Administrative Review and Notice of Final Results of Antidumping Duty Changed Circumstances Review: Certain Softwood Lumber Products From Canada

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On June 14, 2004, the Department of Commerce (the Department) published the preliminary results of its first administrative review of the antidumping duty order on certain softwood lumber from Canada. The review covers the following producers of subject merchandise: Abitibi-Consolidated Inc. (Abitibi), Buchanan Lumber Sales, Inc. (Buchanan), Canfor Corporation (Canfor), Slocan Forest Products Ltd. (Slocan), Tembec Inc. (Tembec), Tolko Industries, Inc. (Tolko), West Fraser Timber Co. Ltd. (West Fraser), and Weyerhaeuser Company (Weyerhaeuser). In addition, based on the preliminary results for these respondents selected for individual review, we have also determined a weighted-average margin for those companies that requested, but were not selected for, individual review. The period of review (POR) is May 22, 2002, through April 30, 2003. We have noted the changes made since the preliminary results below in the “Changes Since the Preliminary Results” section. The final results are listed below in the “Final Results of Review” section.

The Department also initiated a changed circumstances review on the merger of two companies, Canfor and Slocan. On September 14, 2004, the Department published the preliminary results of the antidumping duty changed circumstances review. These final results did not differ from the preliminary results.

DATES:

Effective Date: December 20, 2004.

FOR FURTHER INFORMATION CONTACT:

Constance Handley or James Kemp, at (202) 482-0631 or (202) 482-5346, respectively; AD/CVD Operations, Office 1, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street & Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

On June 14, 2004, the Department published in the Federal Register the preliminary results of the first administrative review of the antidumping duty order on certain softwood lumber from Canada. See Notice of Preliminary Results of Antidumping Duty Administrative Review: Certain Softwood Lumber from Canada, 69 FR 33235 (June 14, 2004) (Preliminary Results). On August 5, 2004, an amended notice to the initiation and preliminary results was published. See Notice of Amended Initiation and Amended Preliminary Results of Antidumping Duty Administrative Review: Certain Softwood Lumber Products From Canada, 69 FR 47413 (August 5, 2004). The notice initiated a review of 22 additional companies and applied to these companies the review-specific average margin for respondents not selected for an individual review as calculated in the Preliminary Results.

The Coalition for Fair Lumber Imports Executive Committee, the petitioner in this case, submitted a request that the Department initiate a changed circumstances review of the antidumping duty order on certain softwood lumber products from Canada. On May 11, 2004, the Department published a notice of initiation of changed circumstances review to determine the appropriate cash deposit rate for Canfor, which merged with Slocan as of April 1, 2004. See Initiation of Antidumping Duty Administrative Changed Circumstances Review: Certain Softwood Lumber Products From Canada, 69 FR 26072 (May 11, 2004). The Department published the preliminary results of the changed circumstances review on September 14, 2004. See Notice of Preliminary Results of Antidumping Duty Administrative Changed Circumstances Review: Certain Softwood Lumber Products From Canada, 69 FR 55406 (September 14, 2004) (Changed Circumstances Preliminary Results). In the Changed Circumstances Preliminary Results, the Department determined that post-merger Canfor should be assigned a cash deposit rate reflecting a weighted-average of Canfor's and Slocan's respective cash deposit rates prior to the merger, and that the final results of the changed circumstances review would be aligned with the final results of the antidumping administrative review for the purposes of establishing the final cash deposit rate for post-merger Canfor.

We invited parties to comment on the Preliminary Results and the Changed Circumstances Preliminary Results. On August 20, 2004, we received case briefs from the above-mentioned respondents, the petitioner, and other interested parties. The parties submitted rebuttal briefs on September 8, 2004. A public hearing was requested and held on October 6, 2004. On October 14, 2004, we also received comments on the Changed Circumstances.

Preliminary Results

Scope of the Order

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 under investigation is dispositive. Preliminary scope exclusions and clarifications were published in three separate Federal Register notices.

Softwood lumber products excluded from the scope:

• Trusses and truss kits, properly classified under HTSUS 4418.90.
• I-joist beams.
• Assembled box spring frames.
• Pallets and pallet kits, properly classified under HTSUS 4415.20.
• Garage doors.
• Edge-glued wood, properly classified under HTSUS 4421.90.97.40 (formerly HTSUS 4421.90.98.40).
• Properly classified complete door frames.
• Properly classified complete window frames.
• Properly classified furniture.

Softwood lumber products excluded from the scope only if they meet certain requirements:

• 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 4421.90.97.40 (formerly HTSUS 4421.90.98.40).
• 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.
• 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.
• Fence pickets requiring no further processing and properly classified under HTSUS 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.
• 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) the importer establishes to U.S. Customs and Border Protection's (CBP) satisfaction that the lumber is of U.S. origin.

• Softwood lumber products contained in single family home packages or kits, regardless of tariff classification, are excluded from the scope of the orders if the following criteria are met:

1. 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;

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

3. 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;

4. The whole package must be imported under a single consolidated entry when permitted by CBP, whether or not on a single or multiple trucks, rail cars or other vehicles, which shall be on the same day except when the home is over 2,000 square feet;

5. The following documentation must be included with the entry documents:

• A copy of the appropriate home design, plan, or blueprint matching the entry;
• A purchase contract from a retailer of home kits or packages signed by a customer not affiliated with the importer;
• A listing of inventory of all parts of the package or kit being entered that conforms to the home design package being entered;
• In the case of multiple shipments on the same contract, all items listed immediately above which are included in the present shipment shall be identified as well.

We have determined that the excluded products listed above are outside the scope of this order provided the specified conditions are met. Lumber products that 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 4418.90.40.90, 4421.90.70.40, and 4421.90.98.40. Due to changes in the 2002 HTSUS whereby subheading 4418.90.40.90 and 4421.90.98.40 were changed to 4418.90.45.90 and 4421.90.97.40, respectively, we are adding these subheadings as well.

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 antidumping and countervailing duty orders, 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. The presumption of non-subject status can, however, be rebutted by evidence demonstrating that the merchandise was substantially transformed in Canada.

Analysis of Comments Received

The issues raised in the case briefs by parties to this administrative review and changed circumstances review are addressed in the Issues and Decision Memorandum from Barbara E. Tillman, Acting Deputy Assistant Secretary, to James J. Jochum, Assistant Secretary for Import Administration, (Decision Memorandum), dated December 13, 2004, which is hereby adopted by this notice. A list of the issues addressed in the Decision Memorandum is appended to this notice. The Decision Memorandum is on file in the Central Records Unit in Room B-099 of the main Commerce building, and can also be accessed directly on the Web at http://www.ia.ita.doc.gov/frn. The paper copy and electronic version of the Decision Memorandum are identical in content.

Changes Since the Preliminary Results

Based on our findings at verification, and analysis of comments received, we have made adjustments to the preliminary results calculation methodologies in calculating the final dumping margins in these proceedings. A brief description of the company-specific changes are discussed below. We note that for all respondents, we changed the calculation of normal value in our programming language so that the level of trade (LOT) adjustment was added to normal value instead of subtracted.

Abitibi

In the Preliminary Results, we applied the adjustment for the byproduct offset to company-wide costs, but for the final results, we applied the adjustment to the cost of the mills in each province requiring an adjustment. Therefore, we applied the adjustment for the byproduct offset for wood chips on a province-specific basis.

Slocan

In the Preliminary Results, the Department applied the U.S. Federal Reserve short-term interest rate in Slocan's calculations. Based on verification, the Department have now used a London Inter-Bank Offer Rate (LIBOR) in Slocan's calculations. The Department has also modified its programming language to reflect Slocan's billing adjustment fields as reported on a total per-line basis, and unlike in the Preliminary Results, the Department has refrained from deducting future revenues from Slocan's U.S. price.

Tembec

For wood chips sold to affiliates, we made province-specific adjustments and applied the adjustments to the mills involved in affiliated sales of wood chips within the particular province.

We recalculated Tembec's general and administrative (G&A) expense rate by allocating the corporate G&A expenses to all of its consolidated subsidiaries and joint ventures. We also revised Tembec's comparison market program to correctly incorporate all the home market verification changes.

Tolko

We adjusted Tolko's reported cost of manufacture (TOTCOM) upward to account for purchases of logs from affiliated parties at non-arm's-length prices.

West Fraser

The Department used the incorrect database in the calculation of West Fraser's cost of production in the preliminary margin calculation. Therefore, for the final results, we used West Fraser's cost file based on the length-specific prices. We also applied the adjustment for the byproduct offset for wood chips on a province-specific basis. In the Preliminary Results, we applied the adjustment for the byproduct offset to company-wide costs, but for the final results, we applied the adjustment to the cost of the mills in each province requiring an adjustment.

Weyerhaeuser

We have included purchased and harvested wood costs in the denominator used to calculate the adjustment factor related to miscellaneous revenues and expenses. For the Preliminary Results, we incorrectly applied the finger-jointing costs to all products, not just finger-jointed products. Therefore, for the final results we have revised the programming instructions to correct for this error. We have also revised Weyerhaeuser's G&A expense rate to include the closure and severance expenses incurred at the WCL and WSL level in their respective companies' G&A expense rates. In addition, we revised the headquarter parent company G&A expense rate, used to allocate the portion of the parent company expenses incurred on behalf of WCL and WSL, to exclude all charges for closure and severance expenses and a gain on a sale of a timberland located in the United States. We also changed the level of trade (LOT) classification of U.S. Vendor Managed Inventory sales from LOT 2 to LOT 1. We also recalculated U.S. inventory carrying costs using a short-term borrowing rate associated with U.S.-dollar loans in the United States. Additionally, where necessary, we changed our formula for this calculation to include gross unit price, net of U.S. selling expenses, instead of the total cost of manufacturing (TOTCOM). Finally, we added programming language to the margin program to ensure that there were no similar matches across product characteristics for category, species, or NLGA grade group.

Final Results of Changed Circumstances Review

Based on the information provided by Canfor, and the fact that neither Canfor nor the petitioner raised any objections in their invited comments during the period following the preliminary results of this review, the Department determines that post-merger Canfor will be assigned a cash deposit rate reflecting a weighted-average of Canfor's and Slocan's respective cash deposit rates prior to the merger. Therefore, Canfor's new cash deposit rate is stated below in the “Final Results” section. The new deposit rate will become effective upon publication of this notice in the Federal Register

Review-Specific Average Rate

Due to the number of mandatory selected respondents, requests by companies to be considered as voluntary respondents, and complex circumstances unique to this review, the Department was not able to review all companies under the antidumping order. Therefore, the Department has determined a review-specific weighted-average margin for those companies that requested, but were not selected for, individual review. The review-specific average rate for these companies can be found in the final results below. This is distinguished from the “All Others” Rate, which is the weighted-average margin calculated in the investigation and which continues to apply to all exporters and producers not listed below.

Final Results of Review

As a result of our review, we determine that the following weighted-average margins exist for the period of April 10, 2002, through September 30, 2003:

Assessment

The Department will determine, and CBP shall assess, antidumping duties on all appropriate entries, pursuant to 19 CFR 351.212(b). The Department calculated importer-specific duty assessment rates on the basis of the ratio of the total amount of antidumping duties calculated for the examined sales to the total entered value of the examined sales for that importer. Where the assessment rate is above de minimis, we will instruct CBP to assess duties on all entries of subject merchandise by that importer. The Department will issue appropriate assessment instructions directly to CBP within 15 days of publication of these final results of review.

Cash Deposits

Furthermore, the following deposit requirements will be effective upon publication of the final results of this administrative review for all shipments of certain softwood lumber products from Canada entered, or withdrawn from warehouse, for consumption on or after the publication date of these final results, as provided by section 751(a) of the Tariff Act of 1930 (the Act), as amended: (1) For companies covered by this review, the cash deposit rate will be the rate listed above; (2) for merchandise exported by producers or exporters not covered in this review but covered in the investigation, the cash deposit rate will continue to be the company-specific rate from the final determination in the less-than-fair-value investigation; (3) if the exporter is not a firm covered in this review or the investigation, but the producer is, the cash deposit rate will be that established for the producer of the merchandise in these final results of review or in the final determination; and (4) if neither the exporter nor the producer is a firm covered in this review or the investigation, the cash deposit rate will be 8.43 percent, the “All Others” rate established in the less-than-fair-value investigation. These deposit requirements shall remain in effect until publication of the final results of the next administrative review.

This notice also serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred, and in the subsequent assessment of double antidumping duties.

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

We are issuing and publishing these results and notice in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Appendix

I. General Issues

Comment 1: Treatment of Countervailing Duties

Comment 2: Collection of Cash Deposits

Comment 3: Value-Based Cost Methodology

Comment 4: Treatment of Non-Dumped Sales

Comment 5: Price Reallocation

Comment 6: Liquidation Instructions

Comment 7: Valuation of Wood Chips

Comment 8: Inclusion of Purchase Costs for Commingled Lumber

II. Company-Specific Issues

Issues Specific to Abitibi

Comment 9: General and Administrative Expense Offset-Sale of a Line of Business

Comment 10: Calculation of Financial Expense Ratio-Asset or Cost of Sales Allocation

Comment 11: Cost of Machine Stress Rated Testing

Issues Specific to Buchanan

Comment 12: Calculation of Buchanan's Credit Expense

Comment 13: Assessment Rate for Buchanan Affiliates

Issues Specific to Canfor

Comment 14: Sinclar as an Affiliated Reseller

Comment 15: Treatment of Purchased Lumber as Commingled Inventory

Comment 16: Railcar Lease Revenue

Comment 17: Calculation of Financial Expense Ratio-Net Financial Income

Comment 18: Calculation of General and Administrative Expenses-Sale of Land

Comment 19: Cash Deposit Rate Instructions

Issues Specific to Slocan

Comment 20: Calculation of Stumpage Costs By Species

Comment 21: Interest Expense Calculation-Credit Expense

Comment 22: Clerical Error Allegations

Issues Specific to Tembec

Comment 23: General and Administrative Expense Rates-Consolidated vs. Producer

Comment 24: Financial Expense Ratio-Foreign Exchange Gains and Losses

Comment 25: Clerical Errors

Issues Specific to Tolko

Comment 26: Lavington Sales

Comment 27: Unreconciled Cost Differences

Comment 28: Log Purchases from Affiliated Parties

Comment 29: General and Administrative Expenses-Payments to Trade Council

Comment 30: Allocation of Mixed-Length Tallies

Issues Specific to West Fraser

Comment 31: Exemption from Administrative Review

Comment 32: Length-Specific Background Prices

Comment 33: Start-Up Adjustment

Issues Specific to Weyerhaeuser

Comment 34: Freight Calculations

Comment 35: General and Administrative Expense Calculation—Severance and Closure Sale of Timber Mill

Comment 36: British Columbia Coastal's Log Costs

Comment 37: Below-Cost Sales

Comment 38: Level of Trade Classification of Home Market and U.S. Vendor Managed Inventory Sales

Comment 39: Interest Rate for U.S. Inventory Carrying Costs

Comment 40: Clerical Errors

Comment 41: Clerical Errors in Cost Calculation

Issues Specific to Lignum

Comment 42: Respondents Selected for Administrative Review

Issues Specific to the Changed Circumstances Review

Comment 43: Changed Circumstances Review