Certain Tissue Paper Products and Crepe Paper Products From China Investigation No. 731-TA-1070 (Preliminary) Publication 3682 April 2004 U.S. International Trade Commission Contains Business Proprietary Information Washington, DC 20436 2 U.S. International Trade Commission COMMISSIONERS Deanna Tanner Okun, Chairman Jennifer A. Hillman, Vice Chairman Marcia E. Miller Stephen Koplan Charlotte R. Lane Daniel R. Pearson Robert A. Rogowsky Director of Operations Staff assigned Fred Ruggles, Investigator Alfred Forstall, Industry Analyst Mary Pedersen, Economist Chand Mehta, Accountant Gracemary Roth-Roffy, Attorney Mark Rees, Attorney Lita David-Harris, Statistician Douglas Corkran, Supervisory Investigator Address all communications to Secretary to the Commission United States International Trade Commission Washington, DC 20436 U.S. International Trade Commission Washington, DC 20436 www.usitc.gov Certain Tissue Paper Products and Crepe Paper Products From China Investigation No. 731-TA-1070 (Preliminary) Publication 3682 April 2004 CONTENTS Page Determination .................................................................. 1 Views of the Commission ......................................................... 3 Part I: Introduction ............................................................ I-1 Background .................................................................. I-1 Previous and related investigations................................................ I-1 Organization of the report....................................................... I-1 Summary of data presented in the report ........................................... I-2 The nature and extent of alleged sales at LTFV ...................................... I-2 Summary of market participants.................................................. I-2 The subject products ........................................................... I-2 Commerce’s scope.......................................................... I-2 U.S. tariff treatment......................................................... I-3 General .................................................................. I-4 Certain tissue paper products .................................................. I-4 Certain crepe paper products .................................................. I-9 Domestic like product issues .................................................... I-11 Physical characteristics and uses............................................... I-12 Manufacturing facilities and production employees ................................ I-13 Interchangeability and customer and producer perceptions .......................... I-13 Channels of distribution...................................................... I-14 Price .................................................................... I-14 Part II: Conditions of competition in the U.S. market ................................ II-1 Channels of distribution and market segmentation.................................... II-1 Supply and demand considerations ................................................ II-1 U.S. supply ............................................................... II-1 U.S. demand .............................................................. II-2 Substitutability issues .......................................................... II-4 Part III: U.S. producers’ production, shipments, and employment ...................... III-1 U.S. producers ............................................................... III-1 Petitioners ................................................................ III-2 Non-petitioning firms ....................................................... III-4 U.S. production capacity, production, capacity utilization, and shipments of certain tissue paper products ........................................................ III-6 U.S. producers’ inventories of certain tissue paper products ............................ III-8 U.S. producers’ employment, compensation, and productivity with respect to certain tissue paper products ........................................................ III-8 U.S. production capacity, production, capacity utilization, and shipments of certain crepe paper products ........................................................ III-9 U.S. producers’ inventories of certain crepe paper products ............................ III-9 U.S. producers’ employment, compensation, and productivity with respect to certain crepe paper products ........................................................ III-9 i CONTENTS Page Part IV: U.S. imports, apparent U.S. consumption, and market shares .................. IV-1 U.S. imports of certain tissue paper products ........................................ IV-1 Apparent U.S. consumption of certain tissue paper products and market shares ............. IV-1 U.S. imports of certain crepe paper products ........................................ IV-5 Apparent U.S. consumption of certain crepe paper products and market shares ............. IV-5 Part V: Pricing and related information ............................................ V-1 Factors affecting prices......................................................... V-1 U.S. inland transportation .................................................... V-1 Exchange rates............................................................. V-2 Pricing practices.............................................................. V-2 Pricing methods ............................................................ V-2 Sales terms and discounts .................................................... V-3 Internet reverse auctions ..................................................... V-3 Price data ................................................................... V-3 Price comparisons .......................................................... V-4 Lost sales and lost revenue...................................................... V-6 Part VI: Financial experience of the U.S. producers .................................. VI-1 Background .................................................................. VI-1 Operations on certain tissue paper products ......................................... VI-1 Investment in productive facilities, capital expenditures, and research and development expenses............................................................... VI-4 Capital and investment ...................................................... VI-4 Operations on certain crepe paper products ......................................... VI-4 Investment in productive facilities, capital expenditures, and research and development expenses............................................................... VI-5 Capital and investment ...................................................... VI-6 Part VII: Threat considerations .................................................. VII-1 Background .................................................................. VII-1 The industry in China producing certain tissue paper products .......................... VII-2 U.S. importers’ inventories of certain tissue paper products ............................ VII-3 U.S. importers’ current orders for certain tissue paper products ......................... VII-3 Antidumping duty orders in third-country markets ................................... VII-3 The industry in China producing certain crepe paper products .......................... VII-5 U.S. importers’ inventories of certain crepe paper products ............................. VII-6 U.S. importers’ current orders for certain crepe paper products .......................... VII-6 Antidumping duty orders in third-country markets ................................... VII-6 ii CONTENTS Page Appendixes A. Federal Register notices....................................................... A-1 B. Conference witnesses ......................................................... B-1 C. Summary data............................................................... C-1 D. Alleged effects of imports on producers’ existing development and production efforts, growth, investment, and ability to raise capital ................................... D-1 Note.--Information that would reveal confidential operations of individual concerns may not be published and therefore has been deleted from this report. Such deletions are indicated by asterisks. iii GLOSSARY OF FIRMS American Crepe..................... American Crepe Corp. American Greetings.................. American Greetings Beistle ............................ The Beistle Company Burrows ........................... Burrows Paper Corporation Chemco ........................... Chemco Cindus ............................ Cindus Corporation Creative Expressions ................. Creative Expressions/Hoffmaster Crystal Creative...................... Crystal Creative Products, Inc. DMD ............................. DMD Industries Eagle ............................. Eagle Tissue LLC Flower City ........................ Flower City Tissue Mills Co. Garlock............................ Garlock Printing & Converting Inc. Green Mountain ..................... Green Mountain Specialties Inc. Hallmark........................... Hallmark Cards, Inc. Pacon ............................. Pacon Corporation Paper Service....................... Paper Service Limited Printwrap .......................... Printwrap Corp. Putney ............................ Putney Paper Co., Inc. Seaman............................ Seaman Paper Co. of Mass. & Dennecrepe Sullivan ..........................