73 FR 35642, June 24, 2008
DEPARTMENT OF COMMERCE
International Trade Administration
[C-570-915]
Light-Walled Rectangular Pipe and Tube From People's Republic of China:
Final Affirmative Countervailing Duty Investigation Determination
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce (the ``Department'') has made a
final determination that countervailable subsidies are being provided
to producers and exporters of light-walled rectangular pipe and tube
(``LWR'') 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 24, 2008.
FOR FURTHER INFORMATION CONTACT: Shane Subler, or Damian Felton, 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, or (202) 482-0133 respectively.
Petitioner
The Petitioners in this investigation are the Allied Tube &
Conduit, Atlas Tube, Bull Moose Tube, California Tube and Steel,
EXLTUBE, Hannibal Industries, Leavitt Tube, Maruichi American
Corporation, Searing Industries, Southland Tube, Vest, Inc. Welded Tube
and Western Tube (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
30, 2007. See Light-Walled Rectangular Pipe and Tube from the People's
Republic of China: Preliminary Affirmative Countervailing Duty
[[Page 35643]]
Determination and Alignment of Final Countervailing Duty Determination
with Final Antidumping Duty Determination, 72 FR 67703 (Nov. 30, 2007)
(``Preliminary Determination'').
On December 5, 2007, supplemental questionnaires were issued to the
Government of the People's Republic of China (``GOC''); Kunshan Lets
Win Steel Machinery Co., Ltd. (``Lets Win''); and Zhangjiagang
Zhongyuan Pipe-making Co., Ltd. and its affiliates, Jiangsu Zhongjia
Steel Co., Ltd.; Zhangjiagang Zhongxin Steel Product Co., Ltd.;
Zhangjiagang Baoshuiqu Jiaqi International Business Co.; and Jiangsu
Qiyuan Group Co., Ltd. (``collectively ZZ Pipe''). We received
responses to these questionnaires from Lets Win on December 18, 2007,
from ZZ Pipe on December 26, 2007, and from the GOC on December 28 and
December 31, 2007.
On December 27, 2007, the Department published an Amended
Affirmative Preliminary Determination to correct a significant
ministerial error in the Preliminary Determination. See Light-walled
Rectangular Tube and Pipe from the People's Republic of China: Notice
of Amended Affirmative Preliminary Countervailing Duty Determination,
72 FR 73322 (Dec. 27, 2007) (``Amended Preliminary Determination'').
The GOC and ZZ Pipe submitted factual information regarding the
GOC's provision of land within various deadlines set by the Department
subsequent to the Preliminary Determination for submissions of factual
information and/or arguments.
From January 7 through January 18, 2008, we conducted verification
of the questionnaire responses submitted by the GOC, Lets Win, and ZZ
Pipe.
On April 21, 2008, we issued our post-preliminary determination
regarding the provision of land for less than adequate remuneration.
See Memorandum to David M. Spooner, Assistant Secretary for Import
Administration, entitled Post-Preliminary Analysis for the Provision of
Land For Less Than Adequate Remuneration, dated April 21, 2008, which
is on file in the Central Records Unit (``CRU'').
We received case briefs from the GOC and Guangdong Walsall Steel
Pipe Industrial Co., Ltd. (``GWSP'') and Petitioners on April 30, 2008.
Rebuttal briefs were submitted by the GOC, GWSP and Petitioners on May
5, 2008, and by Lets Win on May 6, 2008. A hearing for this
investigation was held on May 9, 2008.
Scope of the Investigation
The merchandise that is the subject of this investigation is
certain welded carbon-quality light-walled steel pipe and tube, of
rectangular (including square) cross section (LWR), having a wall
thickness of less than 4mm.
The term carbon-quality steel includes both carbon steel and alloy
steel which contains only small amounts of alloying elements.
Specifically, the term carbon-quality includes products in which none
of the elements listed below exceeds the quantity by weight
respectively indicated: 1.80 percent of manganese, or 2.25 percent of
silicon, or 1.00 percent of copper, or 0.50 percent of aluminum, or
1.25 percent of chromium, or 0.30 percent of cobalt, or 0.40 percent of
lead, or 1.25 percent of nickel, or 0.30 percent of tungsten, or 0.10
percent of molybdenum, or 0.10 percent of niobium, or 0.15 percent
vanadium, or 0.15 percent of zirconium. The description of carbon-
quality is intended to identify carbon-quality products within the
scope. The welded carbon-quality rectangular pipe and tube subject to
this investigation is currently classified under the Harmonized Tariff
Schedule of the United States (``HTSUS'') subheadings 7306.61.50.00 and
7306.61.70.60. While HTSUS subheadings are provided for convenience and
customs purposes, our written description of the scope of this
investigation is dispositive.
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 International Trade Commission (``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 28, 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 LWR. See ITC Affirmative Preliminary
Determination, 72 FR 49310 (August 28, 2007).
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)
[[Page 35644]]
of the Act also authorizes the Department to use as adverse facts
available (``AFA'') information derived from the petition, the final
determination, a previous 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 Qingdao Xiangxing Steel Pipe Co., Ltd.
(``Qingdao'') on adverse facts available. Qingdao did not respond to
the Department's requests on August 7 and October 24, 2007, to respond
to the CVD questionnaire. By failing to submit a response to the
Department's CVD questionnaire, Qingdao did not cooperate to the best
of its ability in this investigation. Consequently, 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
to ensure that Qingdao will not obtain a more favorable result than had
it fully complied with our request in this investigation. Thus, our
final determination for Qingdao is based on total AFA.
We have also concluded that it is appropriate to apply adverse
facts available to determine the percentage of hot-rolled steel
production accounted for by state-owned enterprises. Specifically, the
GOC reported that the China Iron and Steel Association (``CISA'')
determined the ownership structure of certain hot-rolled steel
producers. Subsequently, we learned that the reported ownership
structures were developed by the GOC's legal counsel, not by CISA as
the GOC claimed. Therefore, the GOC misrepresented the source of the
reported ownership structure of hot-rolled steel producers.
Consequently, we find that the GOC did not act to the best of its
ability because they failed to properly disclose how the reported
ownership structures of CISA members were obtained. In misrepresenting
how the information was obtained, the GOC did not provide the
Department with ``full and complete answers.'' See Nippon Steel Corp.
v. United States, 337 F.3d 1373, 1382 (Fed. Cir. 2003). Instead, the
GOC purposefully made a decision to conceal how the information on
ownership structure was derived. Accordingly, in selecting from among
the facts available, we are drawing an adverse inference with respect
to the ownership of HRS producers in the PRC.
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''
and 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, with respect to Qingdao, for every program based on the
provision of goods for less than adequate remuneration, the Department
has used ZZ Pipe's rate for the provision of hot-rolled steel for less
than adequate remuneration. For grant programs we are relying on the
rate applied to ZZ Pipe in the form of revenue forgone in relation to
its purchase of land-use rights. 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 applying the highest subsidy rate for any program otherwise listed,
which in this instance is ZZ Pipe's rate for the provision of hot-
rolled steel for less than adequate remuneration. Similarly, neither
respondent received any countervailable subsidies from loan programs;
hence, we are applying the highest subsidy rate for any program
otherwise listed, which in this instance is ZZ Pipe's rate for the
provision of hot-rolled steel for less than adequate remuneration.
Since we do not have information regarding the location of Qingdao, we
are attributing all three loan programs to Qingdao, in the calculation
of their AFA rate. In the instant investigation, there is no record
evidence indicating that Qingdao did not operate within the provinces
at issue in this investigation (i.e., Zhejiang, Liaoning).
Consequently, we are including provincial-specific programs in
Qingdao's AFA rate.
Finally, for the six alleged income tax programs pertaining to
either the reduction of the income tax rates or the reduction or
exemption from income tax, we continue to apply an adverse inference
that Qingdao 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
[[Page 35645]]
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 ZZ Pipe's rate for the
provision of hot-rolled-steel at less than adequate remuneration. For
income tax deduction or credit programs, we are applying the highest
subsidy rate for any program otherwise listed, which in this instance
is ZZ Pipe's rate for the provision of hot-rolled-steel for less than
adequate remuneration.
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 where the GOC did not provide
information regarding the companies' ownership. See Decision Memorandum
at ``Analysis of Programs'' and Comment 5.
Suspension of Liquidation
In accordance with section 705(c)(1)(B)(i)(I) of the Act, we have
calculated an individual rate for each of the companies investigated,
Lets Win, ZZ Pipe and for Qingdao. 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 of the Act. As
Qingdao's rate was calculated under section 776 of the Act, it is not
included in the all-others rate. In addition, pursuant to 19 CFR
351.204(d)(3), we have excluded Lets Win's rate because it is a
voluntary respondent. Consequently, we have assigned ZZ Pipe's rate as
the all-others rate.
---------------------------------------------------------------------------
Exporter/Manufacturer Net Subsidy Rate
---------------------------------------------------------------------------
Kunshan Lets Win Steel Machinery Co., Ltd................. 2.17 [percent]
Zhangjiagang Zhongyuan Pipe-making Co., Ltd., Jiangsu
Qiyuan Group Co., Ltd.................................... 15.28 [percent]
Qingdao Xiangxing Steel Pipe Co., Ltd..................... 200.58 [percent]
All-Others................................................ 15.28 [percent]
---------------------------------------------------------------------------
As a result of our Preliminary Determination and pursuant to
section 703(d) of the Act, we instructed the U.S. Customs and Border
Protection (``CBP'') to suspend liquidation of all entries of LWR from
the PRC which were entered or withdrawn from warehouse, for consumption
on or after November 30, 2007, the date of the publication of the
Preliminary Determination in the Federal Register, except for entries
from Lets Win, which had a de minimis rate.
On December 27, 2007, the Department issued its Amended Affirmative
Preliminary Determination in this countervailing duty investigation. In
that determination, ZZ Pipe's rate fell below the de minimis level.
Consequently, we instructed CBP to release any suspended entries and to
discontinue the suspension of liquidation for ZZ Pipe. See Amended
Affirmative Preliminary Determination, 72 FR 73322.
In accordance with section 703(d) of the Act, we instructed CBP to
discontinue the suspension of liquidation for countervailing duty
purposes on all shipments of the subject merchandise entered, or
withdrawn from the warehouse, for consumption on or after March 29,
2008, but to continue the suspension of liquidation of entries made
from November 30, 2007 through March 28, 2008. This did not apply to
Lets Win and ZZ Pipe as their entries were not being suspended.
We will issue a countervailing duty order and suspend liquidation
for Lets Win and ZZ Pipe as well as reinstate the suspension of
liquidation for Qingdao and all other companies under section 706(a) of
the Act if the 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: June 13, 2008.
David M. Spooner,
Assistant Secretary for Import Administration.
Appendix
List of Comments and Issues in the Decision Memorandum
Comment 1: Application of CVD Law to Non-Market Economies
Comment 2: Double Counting/Overlapping Remedies
Comment 3: Requirement to Provide Evidence of Lower Prices
Comment 4: Proposed Cutoff Date for Identifying Subsidies
Comment 5: Purchases of Hot-rolled Steel by Respondents
Comment 6: Whether State-owned Hot-rolled Steel Suppliers are ``Authorities``
Comment 7: Hot-rolled Steel Benchmark Issues
Comment 8: Use of Hot-Rolled Steel to Produce Subject merchandise Shipped
to the United States
Comment 9: One Supplier Treated as State-owned is Private and the Volume of
Hot-Rolled Steel Supplied by Baosteel
Comment 10: Land/Financial Contribution
Comment 11: Land/Benchmark
Comment 12: Discount Rate
Comment 13: Provision of Water
Comment 14: Government Policy Lending
Comment 15: All-Others Rate
[FR Doc. E8-14250 Filed 6-23-08; 8:45 am]
BILLING CODE 3510-DS-S