[Federal Register: June 5, 2008 (Volume 73, Number 109)]
[Notices]
[Page 31966-31970]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05jn08-19]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-570-911]
Circular Welded Carbon Quality Steel Pipe from the People's
Republic of China: Final Affirmative Countervailing Duty Determination
and Final Affirmative Determination of Critical Circumstances
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce (the ``Department'') has determined
that countervailable subsidies are being provided to producers and
exporters of circular welded carbon quality steel pipe (``CWP'') from
the People's Republic of China (``PRC''). For information on the
estimated countervailing duty rates, please see the ``Suspension of
Liquidation'' section, below.
EFFECTIVE DATE: June 5, 2008.
FOR FURTHER INFORMATION CONTACT: Shane Subler, Damian Felton or Salim
Bhabhrawala, 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:
(202) 482-0189, (202) 482-0133 or (202) 482-1784 respectively.
SUPPLEMENTARY INFORMATION:
Petitioner
The Petitioners in this investigation are the Ad Hoc Coalition for
Fair Pipe Imports from the People's Republic of China and the United
States Steel Workers (collectively, ``Petitioners'').
Period of Investigation
The period for which we are measuring subsidies, or period of
investigation, is January 1, 2006, through December 31, 2006.
Case History
The following events have occurred since the announcement of the
preliminary determination published in the Federal Register on November
13, 2007. See Circular Welded Carbon Quality Steel Pipe from the
People's Republic of China: Preliminary Affirmative Countervailing Duty
Determination; Preliminary Affirmative Determination of Critical
Circumstances; and Alignment of Final Countervailing Duty Determination
with Final Antidumping Duty Determination, 72 FR 63875 (November 13,
2007) (``Preliminary Determination'').
On November 13, 2007, the Department issued questionnaires to
Weifang East Steel Pipe Co., Ltd. (``East Pipe''); Zhejiang Kingland
Pipeline and Technologies Co., Ltd., Kingland Group Co., Ltd., Beijing
Kingland Century Technologies Co., Ltd., Zhejiang Kingland Pipeline
Industry Co., Ltd., and Shanxi Kingland Pipeline Co., Ltd.
(collectively, ``Kingland'') and, the Government of the People's
Republic of China (``GOC'') regarding new subsidy allegations made by
petitioners on October 3, 2007. We received responses to these
questionnaires from Kingland on November 22, 2007, and from the GOC and
East Pipe on December 5, 2007.
We issued supplemental questionnaires to East Pipe and Kingland on
November 16, 2007, and to the GOC on November 19, 2007. We received
responses to these questionnaires from Kingland on December 4, 2007,
from East Pipe on December 12, 2007, and from the GOC on December 17,
2007. We issued additional supplemental questionnaires to Kingland on
December 14, 2007, and East Pipe on December 17, 2007. We received
responses to these questionnaires from Kingland and East Pipe on
December 27, 2007.
The GOC, East Pipe, Kingland, Petitioners, and interested parties
also submitted factual information, comments, and arguments at numerous
instances prior to the final determination based on various deadlines
for submissions of factual information and/or arguments established by
the Department subsequent to the Preliminary Determination.
From January 14 through January 23, 2008, we conducted verification
of the questionnaire responses submitted by the GOC, Kingland, and East
Pipe.
On April 9, 2008, we issued our post-preliminary determination
regarding the provision of land for less than adequate remuneration and
new subsidy allegations. We addressed our preliminary findings in an
April 9, 2008, memorandum to David M. Spooner, Assistant Secretary for
Import Administration, entitled Post-Preliminary Findings for the
Provision of Land for Less Than Adequate Remuneration and New Subsidy
Allegations, which is on file in the Central Records Unit (``CRU'').
We received case briefs from the GOC, East Pipe, Kingland,
Petitioners, certain members of the Specialty Steel Industry of North
America (``SSINA''), United States Steel Corporation (``US Steel''),
Western International Forest Products, LLC (``Western''), MAN
Ferrostaal, Inc., Commercial Metals Company and QT Trading LP
(collectively, ``MAN Ferrostaal''), and SeAH Steel America (``SSA'') on
April 17, 2008. The same parties submitted rebuttal briefs on April 22
and April 29, 2008. We held a hearing for this investigation on May 5,
2008.
Scope of the Investigation
The scope of this investigation covers certain welded carbon
quality steel pipes and tubes, of circular cross-section, and with an
outside diameter of 0.372 inches (9.45 mm) or more, but not more than
16 inches (406.4 mm), whether or not stenciled, regardless of wall
thickness, surface finish (e.g., black, galvanized, or painted), end
finish (e.g., plain end, beveled end, grooved, threaded, or threaded
and coupled), or industry specification (e.g., ASTM, proprietary, or
other), generally known as standard pipe and structural pipe (they may
also be referred to as circular, structural, or mechanical tubing).
Specifically, the term ``carbon quality'' includes products in
which (a) iron predominates, by weight, over each of the other
contained elements; (b) the carbon content is 2 percent or less, by
weight; and (c) none of the elements listed below exceeds the quantity,
by weight, as indicated:
(i) 1.80 percent of manganese;
(ii) 2.25 percent of silicon;
(iii) 1.00 percent of copper;
(iv) 0.50 percent of aluminum;
(v) 1.25 percent of chromium;
(vi) 0.30 percent of cobalt;
(vii) 0.40 percent of lead;
(viii) 1.25 percent of nickel;
(ix) 0.30 percent of tungsten;
(x) 0.15 percent of molybdenum;
(xi) 0.10 percent of niobium;
(xii) 0.41 percent of titanium;
(xiii) 0.15 percent of vanadium; or
(xiv) 0.15 percent of zirconium.
Standard pipe is made primarily to American Society for Testing and
Materials (``ASTM'') specifications, but
[[Page 31967]]
can be made to other specifications. Standard pipe is made primarily to
ASTM specifications A-53, A-135, and A-795. Structural pipe is made
primarily to ASTM specifications A-252 and A-500. Standard and
structural pipe may also be produced to proprietary specifications
rather than to industry specifications. This is often the case, for
example, with fence tubing. Pipe multiple-stenciled to a standard and/
or structural specification and to any other specification, such as the
American Petroleum Institute (``API'') API-5L specification, is also
covered by the scope of this investigation when it meets the physical
description set forth above and also has one or more of the following
characteristics: is 32 feet in length or less; is less than 2.0 inches
(50 mm) in outside diameter; has a galvanized and/or painted surface
finish; or has a threaded and/or coupled end finish. (The term
``painted'' does not include coatings to inhibit rust in transit, such
as varnish, but includes coatings such as polyester.)
The scope of this investigation does not include: (a) pipe suitable
for use in boilers, superheaters, heat exchangers, condensers, refining
furnaces and feedwater heaters, whether or not cold drawn; (b)
mechanical tubing, whether or not cold-drawn; (c) finished electrical
conduit; (d) finished scaffolding; (e) tube and pipe hollows for
redrawing; (f) oil country tubular goods produced to API
specifications; and (g) line pipe produced to only API specifications.
The pipe products that are the subject of this investigation are
currently classifiable in HTSUS statistical reporting numbers
7306.30.10.00, 7306.30.50.25, 7306.30.50.32, 7306.30.50.40,
7306.30.50.55, 7306.30.50.85, 7306.30.50.90, 7306.50.10.00,
7306.50.50.50, 7306.50.50.70, 7306.19.10.10, 7306.19.10.50,
7306.19.51.10, and 7306.19.51.50. However, the product description, and
not the Harmonized Tariff Schedule of the United States (``HTSUS'')
classification, is dispositive of whether merchandise imported into the
United States falls within the scope of the investigation.
Scope Comments
The scope listed above has changed from the Preliminary
Determination.
On December 19, 2007, Petitioners requested that the Department
clarify the scope of this investigation and the companion antidumping
duty investigation of CWP from the PRC. We have analyzed the request
and comments of the interested parties regarding the scope of this
investigation. Our position on these comments is discussed in the final
determination in the companion antidumping duty investigation of CWP
from the PRC.
Injury Test
Because the PRC is a ``Subsidies Agreement Country'' within the
meaning of section 701(b) of the Tariff Act of 1930, as amended, (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. On August 3, 2007, the ITC published its
preliminary determination that there is a reasonable indication that an
industry in the United States is materially injured or threatened with
material injury by reason of imports from China of circular welded
carbon-quality steel pipe. 72 FR 43295.
Critical Circumstances
In the Preliminary Determination, the Department determined that
critical circumstances exist with respect to imports of circular welded
pipe from certain PRC exporters, pursuant to section 703(e) of the Act
and 19 CFR 351.206. Preliminary Determination, 72 FR at 63879-80. The
Department continues to find critical circumstances in this final
determination. For further discussion on this issue, see ``Issues and
Decision Memorandum for the Final Determination,'' from Stephen J.
Claeys, Deputy Assistant Secretary for Import Administration, to David
M. Spooner, Assistant Secretary for Import Administration, dated May
29, 2008 (``Decision Memorandum'') at Comments 10, 11, and 12, and
Memorandum to the File Re ``Critical Circumstances Analysis for
Zhejiang Kingland Pipeline and Technologies Co., Ltd. Import Shipment
Analysis for Zhejiang Kingland Pipeline and Technologies Co., Ltd. and
``All Others'' (May 29, 2008) (``Final Critical Circumstances
Memorandum'') (this memorandum is on file in the Department's CRU).
Analysis of Comments Received
All issues raised in the case and rebuttal briefs by parties to
this investigation are addressed in the Decision Memorandum, which is
hereby adopted by this notice. Attached to this notice as an Appendix
is a list of the issues that parties have raised and to which we have
responded in the Decision Memorandum. Parties can find a complete
discussion of all issues raised in this investigation and the
corresponding recommendations in this public memorandum, which is on
file in the CRU. In addition, a complete version of the Decision
Memorandum can be accessed directly on the Internet at http://
enforcement.trade.gov/frn/. The paper copy and electronic version of the
Decision Memorandum are identical in content.
Use of Adverse Facts Available
Sections 776(a)(1) and (2) of the Act provide that the Department
shall apply ``facts otherwise available'' if, inter alia, necessary
information is not on the record or an interested party or any other
person: (A) withholds information that has been requested; (B) fails to
provide information within the deadlines established, or in the form
and manner requested by the Department, subject to subsections (c)(1)
and (e) of section 782 of the Act; (C) significantly impedes a
proceeding; or (D) provides information that cannot be verified as
provided by section 782(i) of the Act.
Where the Department determines that a response to a request for
information does not comply with the request, section 782(d) of the Act
provides that the Department will so inform the party submitting the
response and will, to the extent practicable, provide that party the
opportunity to remedy or explain the deficiency. If the party fails to
remedy the deficiency within the applicable time limits and subject to
section 782(e) of the Act, the Department may disregard all or part of
the original and subsequent responses, as appropriate. Section 782(e)
of the Act provides that the Department ``shall not decline to consider
information that is submitted by an interested party and is necessary
to the determination but does not meet all applicable requirements
established by the administering authority'' if the information is
timely, can be verified, is not so incomplete that it cannot be used,
and if the interested party acted to the best of its ability in
providing the information. Where all of these conditions are met, the
statute requires the Department to use the information if it can do so
without undue difficulties.
Section 776(b) of the Act further provides that the Department may
use an adverse inference in applying the facts otherwise available when
a party has failed to cooperate by not acting to the best of its
ability to comply with a request for information. Section 776(b) of the
Act also authorizes the Department to use as adverse facts available
(``AFA'') information derived from the petition, the final
determination, a previous
[[Page 31968]]
administrative review, or other information placed on the record.
Section 776(c) of the Act provides that, when the Department relies
on secondary information rather than on information obtained in the
course of an investigation or review, it shall, to the extent
practicable, corroborate that information from independent sources that
are reasonably at its disposal. Secondary information is defined as
``{i{time} nformation derived from the petition that gave rise to the
investigation or review, the final determination concerning the subject
merchandise, or any previous review under section 751 concerning the
subject merchandise.'' See Statement of Administrative Action (``SAA'')
accompanying the Uruguay Round Agreements Act, attached to H.R. Rep.
No. 103-316, Vol. I at 870 (1994), reprinted in 1994 U.S.C.C.A.N. 3773,
4163 (``SAA''). Corroborate means that the Department will satisfy
itself that the secondary information to be used has probative value.
See SAA at 870. To corroborate secondary information, the Department
will, to the extent practicable, examine the reliability and relevance
of the information to be used. The SAA emphasizes, however, that the
Department need not prove that the selected facts available are the
best alternative information. See SAA at 869.
The Department has concluded that it is appropriate to base the
final determination for Tianjin Shuangjie Steel Pipe Group Co., Ltd.
(``Shuangjie'') on facts otherwise available. Shuangjie failed to
respond at all to the Department's October 24, 2007, request for
shipment data relating to the allegation of critical circumstances, did
not respond to the Department's October 25, 2007, supplemental
questionnaire, and finally, on October 31, 2007, withdrew all of its
proprietary information from the record.
Consequently, the use of facts otherwise available is warranted
under section 776(a)(2)(A) of the Act.
In selecting from among the facts available, the Department has
determined that an adverse inference is warranted, pursuant to section
776(b) of the Act because, in addition to not fully responding to all
of our requests for information, Shuangjie withdrew from all
participation in the investigation and did not provide the Department
with the opportunity to verify the information it did submit. Thus,
Shuangjie failed to cooperate by not acting to the best of its ability,
and our final determination is based on total AFA.
We have also determined that it is appropriate to apply facts
available with respect to certain information that the GOC failed to
provide, or information that could not be verified. Specifically,
despite the Department's requests to submit sub-national government
plans relating to the steel industry in the PRC, the GOC stated that
none existed. However, at verification the Department discovered the
existence of the Shandong Provincial Steel Plan. Additionally, the
Department was unable to verify information regarding the level of
state ownership in the HRS industry in the PRC because the GOC
misrepresented the source of the data. In both instances, the GOC
failed to act to the best of its ability and, consequently, application
of AFA is warranted.
Selection of the Adverse Facts Available
In deciding which facts to use as AFA, section 776(b) of the Act
and 19 CFR 351.308(c)(1) authorize the Department to rely on
information derived from (1) the petition, (2) a final determination in
the investigation, (3) any previous review or determination, or (4) any
information placed on the record. It is the Department's practice to
select, as AFA, the highest calculated rate in any segment of the
proceeding. See, e.g., Certain In-shell Roasted Pistachios from the
Islamic Republic of Iran: Final Results of Countervailing Duty
Administrative Review, 71 FR 66165 (November 13, 2006), and
accompanying Issues and Decision Memorandum at ``Analysis of Programs''
& Comment 1.
The Department's practice when selecting an adverse rate from among
the possible sources of information is to ensure that the margin is
sufficiently adverse ``as to effectuate the purpose of the facts
available role to induce respondents to provide the Department with
complete and accurate information in a timely manner.'' See Notice of
Final Determination of Sales at Less than Fair Value: Static Random
Access Memory Semiconductors From Taiwan, 63 FR 8909, 8932 (February
23, 1998). The Department's practice also ensures ``that the party does
not obtain a more favorable result by failing to cooperate than if it
had cooperated fully.'' See SAA at 870. In choosing the appropriate
balance between providing a respondent with an incentive to respond
accurately and imposing a rate that is reasonably related to the
respondent's prior commercial activity, selecting the highest prior
margin ``reflects a common sense inference that the highest prior
margin is the most probative evidence of current margins, because, if
it were not so, the importer, knowing of the rule, would have produced
current information showing the margin to be less.'' See Rhone Poulenc,
Inc. v. United States, 899 F. 2d 1185, 1190 (Fed. Cir. 1990).
Therefore, for every program based on the provision of goods at
less than adequate remuneration, the Department used the Kingland rate
for the provision of hot-rolled steel for less than adequate
remuneration. For value added tax (``VAT'') programs, we are unable to
utilize company-specific rates from this proceeding because neither
respondent received any countervailable subsidies from these subsidy
programs. Therefore, for VAT programs we are also applying the highest
subsidy rate for any program otherwise listed, which in this instance
is Kingland's rate for the provision of hot-rolled steel for less than
adequate remuneration.
Similarly, for the grant programs, we are not relying on the
highest calculated final rate because it is de minimis. Instead, we are
applying the highest calculated final subsidy rate, which in this
instance is Kingland's rate for the provision of hot-rolled steel for
less than adequate remuneration.
Finally, for the six alleged income tax programs pertaining to
either the reduction of the income tax rates or exemption from income
tax, we have applied an adverse inference that Shuangjie paid no income
tax during the period of investigation (i.e., calendar year 2006). The
standard income tax rate for corporations in the PRC is 30 percent,
plus a 3 percent provincial income tax rate. Therefore, the highest
possible benefit for these six income tax rate programs is 33 percent.
We are applying the 33 percent AFA rate on a combined basis (i.e., the
six programs combined provided a 33 percent benefit). This 33 percent
AFA rate does not apply to income tax deduction or credit programs. For
income tax deduction or credit programs, we are applying the highest
subsidy rate for any program otherwise listed, which in this instance
is Kingland's rate for the provision of hot-rolled-steel at less than
adequate remuneration.
In a change from the Preliminary Determination, we are not
assigning rates for alleged provincial subsidy programs where record
evidence shows that Tianjin Shuangjie was not located in those
provinces. See Decision Memorandum at Comment 15.
We do not need to corroborate these rates because they are not
considered secondary information as they are based on information
obtained in the course of this investigation, pursuant to section
776(c) of the Act. See also SAA at 870.
Regarding the application of adverse facts available to the GOC, we
have treated companies as state-owned
[[Page 31969]]
where the GOC did not provide information regarding the companies'
ownership. Also, where the provincial steel plan was not provided, we
are finding that policy lending existed in that province. See Decision
Memorandum at ``Analysis of Programs;'' Comment 3; and Comment 8.
Suspension of Liquidation
In accordance with section 705(c)(1)(B)(i)(I) of the Act, we have
calculated an individual rate for the companies under investigation,
East Pipe, Kingland and Shuangjie. Section 705(c)(5)(A)(i) of the Act
states that for companies not investigated, we will determine an ``all
others'' rate equal to the weighted average countervailable subsidy
rates established for exporters and producers individually
investigated, excluding any zero and de minimis countervailable subsidy
rates, and any rates determined entirely under section 776. As
Shuangjie's rate was calculated under section 776 of the Act, it is not
included in the ``all others'' rate.
Nothwithstanding the language of section 705(c)(1)(B)(i)(I) of the
Act, we have not calculated the ``all others'' rate by weight averaging
the rates of East Pipe and Kingland, because doing so risks disclosure
of proprietary information. Therefore, we have calculated a simple
average of the two responding firms' rates. Since there were either no
or de minimis countervailable export subsidies for Kingland and East
Pipe and because the ``all others'' rate is a simple average based on
the individually investigated exporters and producers, the ``all
others'' rate does not include export subsidies.
------------------------------------------------------------------------
Net Subsidy
Exporter/Manufacturer Rate
------------------------------------------------------------------------
Weifang East Steel Pipe Co., Ltd........................ 29.57[percnt]
Zhejiang Kingland Pipeline and Technologies Co., Ltd., 44.86 [percnt]
and affiliated companies...............................
Tianjin Shuangjie Steel Pipe Co., Ltd.; Tianjin 615.92[percnt]
Shuangjie Steel Pipe Group Co., Ltd.; Tianjin Wa Song
Imp. & Exp. Co., Ltd.; and Tianjin Shuanglian
Galvanizing Products Co., Ltd..........................
All Others.............................................. 37.22[percnt]
------------------------------------------------------------------------
Because we preliminarily determined that critical circumstances
exist for entries of CWP manufactured/exported by Kingland, Shuangjie
and ``all other'' Chinese manufacturers/exporters and pursuant to
sections 703(d)(1)(B) and (2) and 703(e)(2)(A) of the Act, we
instructed the U.S. Customs and Border Protection (``CBP'') to suspend
liquidation of entries of CWP manufactured/exported by Kingland,
Shuangjie and ``all other'' Chinese exports of CWP which were entered
or withdrawn from warehouse, for consumption on or after November 13,
2007, and to apply the suspension of liquidation to any unliquidated
entries entered, or withdrawn from warehouse for consumption, on or
after August 15, 2007 (90 days before the date of publication of the
Preliminary Determination. Also, in accordance with section 703(d) of
the Act, we instructed CBP to discontinue the suspension of liquidation
for countervailing duty purposes for subject merchandise entered on or
after March 12, 2008, but to continue the suspension of liquidation of
entries made from August 15, 2007, through March 12, 2008. Preliminary
Determination, 72 FR at 6386.
For entries of CWP manufactured/exported by East Pipe, we did not
instruct CBP to suspend liquidation because we preliminarily determined
that East Pipe did not receive any countervailable subsidies.
We will issue a countervailing duty order and reinstate the
suspension of liquidation under section 706(a) of the Act (for all
companies including East Pipe) if the International Trade Commission
(``ITC'') issues a final affirmative injury determination, and will
require a cash deposit of estimated countervailing duties for such
entries of merchandise in the amounts indicated above. If the ITC
determines that material injury, or threat of material injury, does not
exist, this proceeding will be terminated and all estimated duties
deposited or securities posted as a result of the suspension of
liquidation will be refunded or canceled.
ITC Notification
In accordance with section 705(d) of the Act, we will notify the
ITC of our determination. In addition, we are making available to the
ITC all non-privileged and non-proprietary information related to this
investigation. We will allow the ITC access to all privileged and
business proprietary information in our files, provided the ITC
confirms that it will not disclose such information, either publicly or
under an APO, without the written consent of the Assistant Secretary
for Import Administration.
Return or Destruction of Proprietary Information
In the event that the ITC issues a final negative injury
determination, this notice will serve as the only reminder to parties
subject to an administrative protective order (``APO'') of their
responsibility concerning the destruction of proprietary information
disclosed under APO in accordance with 19 CFR 351.305(a)(3). 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 terms of an APO is a violation which is
subject to sanction.
This determination is published pursuant to sections 705(d) and
777(i) of the Act.
Dated: May 29, 2008.
David M. Spooner,
Assistant Secretaryfor Import Administration.
Appendix
List of Comments and Issues in the Decision Memorandum
Comment 1: The Department's Authority to Apply the Countervailing Duty
Law to China
Comment 2: Subsidies Prior to China's Accession to the World Trade
Organization
Comment 3: Adverse Facts Available (``AFA'')
Comment 4: Attribution of Subsidies Received by Affiliates of Zhejiang
Kingland Pipeline and Technologies Co., Ltd.
Comment 5: Scope of the Investigation
Comment 6: Sales Denominator for Weifang East Steel Pipe Company Ltd.
Comment 7: Provision of Hot-rolled Steel for Less Than Adequate
Remuneration
Comment 8: Government Policy Lending
Comment 9: Provision of Electricity for Less Than Adequate Remuneration
Comment 10: Critical Circumstances on an Importer Specific Basis
Comment 11: Base and Comparison Period for Critical Circumstances
Comment 12: Kingland Export Subsidy and Finding of Critical
Circumstances
Comment 13: East Pipe Debt Forgiveness
Comment 14: Discount Rate
Comment 15: Programs Included in AFA Rate for Tianjin Shuangjie Steel
Pipe Co., Ltd.
[[Page 31970]]
Comment 16: Double Remedy
[FR Doc. E8-12606 Filed 6-4-08; 8:45 am]
BILLING CODE 3510-DS-S