Papierfabrik August Koehler decides to reenter US market for lightweight thermal paper after US preliminary decision Dec. 26 not to apply dumping duty on imports of the grade from Germany; company says latest investigation found no evidence of dumping

Debra Garcia

GREAT NECK, New York , February 12, 2014 (press release) – Koehler America, Inc. announced today that its parent company, Papierfabrik August Koehler SE (Koehler), is preparing to reenter the U.S. market for lightweight thermal paper after the U.S. Department of Commerce issued a preliminary decision to apply a zero-percent dumping duty rate in the Department’s fourth administrative review of the antidumping order on lightweight thermal paper from Germany.

On December 26, 2013, the Department of Commerce published its preliminary finding that Koehler’s U.S. sales during the fourth review period were not dumped and that Koehler’s duty rate going forward should be zero. Koehler expects that the Department will reach the same conclusion when it publishes its final results in the spring of this year, notwithstanding the political pressure to reach a different result. If, as expected, the Department upholds its preliminary conclusions, Koehler will reenter the U.S. market for lightweight thermal paper with a zero-percent duty in April-June 2014, with the exact date determined by government deadlines.

The zero-percent rate calculated in the fourth review is based on actual sales information that the Department’s investigators verified. Specifically, during August and September 2013, the investigators examined Koehler’s sales and financial records for the relevant period, found that the information was accurate and complete, and concluded that the data show no dumping.

The petitioner has expressed disappointment with the preliminary finding of no dumping and is pressuring the Administration to increase the rate in its final decision. On February 3, 2014, a group of ten members of the U.S. Congress submitted a letter to the Secretary of Commerce expressing concern regarding the Department’s preliminary finding of no dumping. The letter appears to be based on incomplete information. The petitioner apparently provided information from the prior review (with a 75% penalty rate), focusing on old issues concerning a misreporting of sales (which Koehler corrected) and requesting reconsideration of arguments that Commerce already rejected in the preliminary results of the fourth annual review.

In addition to the Department’s annual reviews, the government also reviews every dumping order after five years. As part of that review, on February 10, 2014, Commerce issued a preliminary decision to continue the antidumping order, as is common practice for the Department. Recent press coverage could be interpreted to suggest that Koehler’s lightweight thermal paper will continue to be subject to the 75% duty rate. This is not the case. The new rate from the fourth review will apply. The final decision on whether Commerce will continue to conduct annual reviews in the future will be made by the International Trade Commission. The ITC conducts an extensive examination of the market and its participants, and is expected to issue its decision in October 2014.
 

Key Facts Regarding the Antidumping Case

• The current antidumping proceedings began in 2007 with the petitioner filing a petition alleging injurious dumping by German and Chinese exporters. During the investigation that ensued, Commerce calculated a 6.5% dumping margin for Koehler. In a parallel proceeding, the International Trade Commission (ITC) – in a 3-3 split decision – found that the U.S. lightweight thermal paper industry was threatened with material injury by imports from Germany. As a result, the U.S. authorities imposed antidumping orders on imports from both Germany and China, requiring Koehler to pay 6.5% in antidumping duty deposits.
• Since the original order was imposed, Commerce has commenced five administrative reviews of the order. In the first two, Commerce found that Koehler was dumping at rates of less than 5 percent.
• Commerce and Koehler are currently involved in litigation regarding the results of the second review, which Commerce has sought to reopen based on the misreporting of certain transactions that came to light during the third review (as discussed below). Commerce is expected to issue a decision in that matter on April 15, 2014. That decision will then be submitted to the U.S. Court of International Trade and may be subject to further review. The outcome of the litigation regarding the second review will have no effect on the duty rate to be paid going forward.
• In the third review, Commerce found – erroneously, in Koehler’s view – that imports of the company’s product should be subject to a penalty rate of 75% due to the actions of a small number of employees that resulted in the misreporting of certain transactions. Commerce made this decision despite the fact that Koehler provided Commerce with the missing information during the review, with plenty of time for Commerce to take it into consideration, and took strong corrective actions. As with the first two reviews, the results of the third review are on appeal to the Court of International Trade. Meanwhile, Koehler has been unable to sell into the U.S. market with the 75% rate in place.
• In the fourth review, Koehler reported all sales correctly, and Commerce officials verified the data. There is no evidence to suggest that the isolated and unsanctioned misconduct discovered during the third review affected the data reported to the Department in connection with the fourth review. The Commerce December 26 preliminary decision sets a zero-percent duty. Koehler expects Commerce to reach the same conclusion in its final decision in the spring, which will allow Koehler to reenter the U.S. market.
• Koehler’s fifth review commenced in January 2014 and is on-going. Koehler fully expects to receive a zero rate in the fifth review as well.
• On February 10, 2014, the Department of Commerce issued the preliminary results of the review that it was required to conduct five years after entry of the antidumping duty order. It is extremely rare for Commerce to terminate an antidumping duty order. Commerce’s practice is to continue an antidumping duty order if it found any dumping after imposition of the original order. Following that practice, and based on its prior decisions to assess antidumping duties, Commerce preliminarily chose to continue the antidumping duty order. However, an order can remain in place even while Commerce finds a lack of dumping and imposes a duty rate of zero percent in an administrative review, as has happened here.
• The International Trade Commission will be hearing arguments this summer on whether to revoke the antidumping duty order. The ITC’s review focuses on harm to the U.S. industry. Testimony and information from converters will help them reach an informed decision. The ITC’s decision will be made in October 2014, and Koehler is hopeful the order will be terminated.

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