[Federal Register: November 24, 2008 (Volume 73, Number 227)]
[Notices]               
[Page 70961-70963]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24no08-66]                         

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DEPARTMENT OF COMMERCE

International Trade Administration

[C-570-936]

 
Circular Welded Carbon Quality Steel Line Pipe from the People's 
Republic of China: Final Affirmative Countervailing Duty Determination

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) determines that 
countervailable subsidies are being provided to producers and exporters 
of circular welded carbon quality steel line pipe (line pipe) from the 
People's Republic of China (the PRC). For information on the estimated 
subsidy rates, see the ``Suspension of Liquidation'' section of this 
notice.

DATES: Effective Date: November 24, 2008.

FOR FURTHER INFORMATION CONTACT: Kristen Johnson or John Conniff, AD/
CVD Operations, Office 3, Operations, Import Administration, U.S. 
Department of Commerce, Room 4014, 14th Street and Constitution Avenue, 
NW., Washington, DC 20230; telephone: (202) 482-4793 and (202) 482-
1009, respectively.

SUPPLEMENTARY INFORMATION: 

Background

    This investigation covers 30 programs and the following producers/
exporters: Huludao Seven-Star Steel Pipe Group Co., Ltd. (Huludao Seven 
Star Group), Huludao Steel Pipe Industrial Co. Ltd. (Huludao Steel 
Pipe), and Huludao Bohai Oil Pipe Industrial Co. Ltd. (Huludao Bohai 
Oil Pipe) (collectively, the Huludao Companies), and Liaoning Northern 
Steel Pipe Co., Ltd. (Northern Steel).
    The petitioners in this investigation are United States Steel 
Corporation, Maverick Tube Corporation, Tex-Tube Company, and the 
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied 
Industrial and Service Workers International Union, AFL-CIO-CLC 
(collectively, the petitioners).

Period of Investigation

    The period of investigation (the POI) for which we are measuring 
subsidies is

[[Page 70962]]

January 1, 2007, through December 31, 2007, which corresponds to the 
PRC's most recently completed fiscal year. See 19 CFR 351.204(b)(2).

Case History

    The following events have occurred since the Department announced 
the preliminary determination on September 3, 2008. See Circular Welded 
Carbon Quality Steel Line Pipe from the People's Republic of China: 
Preliminary Affirmative Countervailing Duty Determination, 73 FR 52297 
(September 9, 2008) (Line Pipe Preliminary Determination).
    On September 17, 2008, we issued a supplemental questionnaire to 
the Government of the People's Republic of China (GOC) and the Huludao 
Companies. On September 24, 2008, the GOC and the Huludao Companies 
submitted responses to the Department supplemental questionnaire. No 
supplemental questionnaire was issued to Northern Steel.
    On September 23, 2008, the Department determined not to investigate 
petitioners' uncreditworthy allegations as well as certain subsidy 
allegations involving Northern Steel. Memorandum to Melissa G. Skinner, 
Director, Office 3, Operations, from Eric B. Greynolds, Program 
Manager, Office 3, Operations, ``Status of New Subsidy and 
Uncreditworthy Allegations Filed By Petitioners,'' the Department 
determined that it did not have the resources or time to examine 
petitioners' uncreditworthy allegations.
    Also, in September 2008, petitioners and the GOC made several new 
factual submissions consistent within the deadline for the submission 
of factual information established by 19 CFR 351.301(b)(1).
    From October 7 through October 14, 2008, we conducted verification 
of the questionnaire responses submitted by the GOC, Huludao Seven Star 
Group, Huludao Steel Pipe, and Huludao Bohai Oil Pipe and Northern 
Steel (collectively, respondents). We issued the verification reports 
on October 23, 24, 27, and 28, 2008.\1\
---------------------------------------------------------------------------

    \1\ The public version of the verification reports and all 
public reports are on file in the Central Records Unit, room 1117 in 
the main building of the Commerce Department.
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    On November 3, 2008, we received case briefs from petitioners, the 
GOC, and the Huludao Companies. Rebuttal briefs were submitted on 
November 10, 2008. On November 12, 2008, we held separate ex parte 
meetings with representatives of petitioners and the GOC. See the 
Department's November 12, 2008, memoranda to the file, which are public 
documents on file in room 1117 of the main Commerce building.

Scope of Investigation

    The merchandise covered by this investigation is circular welded 
carbon quality steel pipe of a kind used for oil and gas pipelines 
(welded line pipe), not more than 406.4 mm (16 inches) in outside 
diameter, regardless of wall thickness, length, surface finish, end 
finish or stenciling.
    The term ``carbon quality steel'' includes both carbon steel and 
carbon steel mixed with small amounts of alloying elements that may 
exceed the individual weight limits for non alloy steels imposed in the 
Harmonized Tariff Schedule of the United States (HTSUS). Specifically, 
the term ``carbon quality'' includes products in which (1) iron 
predominates by weight over each of the other contained elements, (2) 
the carbon content is 2 percent or less by weight and (3) none of the 
elements listed below exceeds the quantity by weight respectively 
indicated:
    (i) 2.00 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) 0.012 percent of boron,
    (xi) 0.50 percent of molybdenum,
    (xii) 0.15 percent of niobium,
    (xiii) 0.41 percent of titanium,
    (xiv) 0.15 percent of vanadium, or
    (xv) 0.15 percent of zirconium.
    Welded line pipe is normally produced to specifications published 
by the American Petroleum Institute (API) (or comparable foreign 
specifications) including API A-25, 5LA, 5LB, and X grades from 42 and 
above, and/or any other proprietary grades or non-graded material. 
Nevertheless, all pipe meeting the physical description set forth above 
that is of a kind used in oil and gas pipelines, including all 
multiple-stenciled pipe with an API welded line pipe stencil is covered 
by the scope of this investigation.
    Excluded from this scope are pipes of a kind used for oil and gas 
pipelines that are multiple-stenciled to a standard and/or structural 
specification and have 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 welded line pipe products that are the subject of these 
investigations are currently classifiable in the HTSUS under 
subheadings 7306.19.10.10, 7306.19.10.50, 7306.19.51.10, and 
7306.19.51.50. While HTSUS subheadings are provided for convenience and 
customs purposes, the written description of the scope of these 
investigations 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), the International Trade Commission (the ITC) is required to 
determine whether imports of the subject merchandise from the PRC 
materially injure, or threaten material injury, to a U.S. industry. On 
June 3, 2008, the ITC published its preliminary determination finding 
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 the PRC of the subject merchandise. See Certain 
Circular Welded Carbon Quality Steel Line Pipe from China and Korea, 
Investigation Nos. 701-TA-455 and 731-TA-1149-1150 (Preliminary), 73 FR 
31712 (June 3, 2008).

Analysis of Comments Received

    All issues raised in the case and rebuttal briefs by parties to 
this investigation are addressed in the Decision Memorandum. Attached 
to this notice as an Appendix is a list of the issues that parties 
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 Department's Central Records Unit. 
In addition, a complete version of the Decision Memorandum can be 
accessed directly on the Internet at https://enforcement.trade.gov/frn/. The 
paper copy and electronic version of the Decision Memorandum are 
identical in content.

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: 
the Huludao Companies and Northern Steel. Sections 703(d) and 
705(c)(5)(A) of the Act state that for companies not investigated, we 
will determine an all-others rate by weighting the individual company 
subsidy rate of each of the companies investigated by each company's 
exports of the subject

[[Page 70963]]

merchandise to the United States. The all-others rate may not include 
zero and de minimis net subsidy rates, or any rates based solely on the 
facts available.
    Notwithstanding 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 the Huludao Companies and Northern Steel because doing so 
risks disclosure of proprietary information. Therefore, for the all-
others rate, we have calculated a simple average of the two responding 
firms' rates.

------------------------------------------------------------------------
                                                           Subsidy rate
                   Producer/exporter                       (percent ad
                                                             valorem)
------------------------------------------------------------------------
Liaoning Northern Steel Pipe Co., Ltd..................            40.05
Huludao Seven-Star Steel Pipe Group Co., Ltd. (Huludao             35.63
 Seven Star Group), Huludao Steel Pipe Industrial Co.
 Ltd. (Huludao Steel Pipe), and Huludao Bohai Oil Pipe
 Industrial Co. Ltd. (Huludao Bohai Oil Pipe)
 (collectively, the Huludao Companies).................
All Others.............................................            37.84
------------------------------------------------------------------------

    As a result of the Line Pipe 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 line pipe 
from the PRC which were entered or withdrawn from warehouse, for 
consumption on or after September 9, 2008, the date of the publication 
of the Line Pipe Preliminary Determination in the Federal Register.
    We will issue a CVD order 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: November 17, 2008.
David M. Spooner,
Assistant Secretary for Import Administration.

Appendix--Issues and Decision Memorandum

List of Comments and Issues in the Decision Memorandum

    Comment 1: Whether the Department Should Reject the Ownership 
Data Supplied by the GOC for Use in the Provision of Hot-Rolled 
Steel (HRS) for Less Than Adequate Remuneration (LTAR) Program and 
Resort to the Use of Adverse Facts Available (AFA).
    Comment 2: Whether the Huludao Companies Submitted Sufficient 
Information to Establish the Identity and Ownership of Producers 
that Sold HRS to the Huludao Companies through Trading Companies.
    Comment 3: Whether the Five Factor Test Should Be Used To Asses 
Which Producers of HRS Are State-Owned.
    Comment 4: Whether the Sale of HRS from Privately-Held Trading 
Companies Constitutes a Financial Contribution Under the Act.
    Comment 5: Whether the Use of an In-Country Benchmark is 
Permissible When Calculating Benefits Under the Provision of HRS for 
LTAR Program.
    Comment 6: Whether the Department's De Facto Specificity 
Analysis Under the Provision of HRS for LTAR Program was Flawed.
    Comment 7: Whether to Adjust the Benchmark Used in the Provision 
of HRS for LTAR Program for International Freight.
    Comment 8: Whether the Department Erred When Adding Import 
Duties and VAT to the Benchmark Price Used in the Provision of HRS 
for LTAR Program.
    Comment 9: Whether the Department Should Add VAT of 17 Percent 
to the Purchase Price of HRS the Huludao Companies Acquired During 
the POI When Examining the Provision of HRS for LTAR.
    Comment 10: Whether the Department Erred in Using an Inflation-
Adjusted Interest Rate to Calculate the Short-Term Benchmark.
    Comment 11: Whether the Department Should Revise Its Short-Term 
Benchmark Methodology by Either Basing the Short-Term Benchmark On a 
Simple Average of Applicable Short-Term Rates or Adding an 
Additional ``Governance Factor'' to the Regression Analysis.
    Comment 12: Whether the IMF Rates Used in the Department's 
Short-Term Regression-Based Benchmark Methodology are, In Fact, 
Long-Term Rates and Therefore Flawed.
    Comment 13: Whether the Regression-Based Analysis Used to Derive 
the Short-Term Benchmark Interest Rate is Invalid.
    Comment 14: Whether the Department Should Revise the Manner in 
Which It Incorporated a Risk Premium to the RMB Denominated Long-
Term Benchmark.
    Comment 15: Whether the Department's Regulations Authorize the 
Use of Out-Of-Country Interest Rate Benchmarks.
    Comment 16: Whether the Department Has the Legal Authority to 
Apply the CVD Law to the PRC While Simultaneously Treating the PRC 
as an NME in Parallel Antidumping Investigations.
    Comment 17: Whether the Application of the CVD Law to the PRC 
Results in Double Counting of Duties.
    Comment 18: Whether the Department Should Use a ``Cut-Off'' Date 
That Is More Recent Than December 11, 2001.
    Comment 19: Whether Certain Interest-Free Loans the Huludao 
Companies Received Constituted Financial Contributions Received 
After December 11, 2001, the Date of the PRC's Accession to the 
World Trade Organization (WTO).
    Comment 20: Whether the Department Erred in Refusing to 
Investigate the Creditworthiness of the Huludao Companies for Years 
2004 Through 2007.
    Comment 21: Whether the GOC Established an Industrial Policy to 
Encourage Preferential Lending to the Producers of Subject 
Merchandise.
    Comment 22: Whether the Department Should Countervail the 
Provision of Land at LTAR.
    Comment 23: Whether the Department Should Add an Additional 
Land-Use Right Acquisition by the Huludao Companies to its Subsidy 
Analysis Under the Provision of Land for LTAR Program.
    Comment 24: Whether Northern Steel Acquired Land-Use Rights from 
a Government Authority.
    Comment 25: Whether Certain Loans Issued to the Huludao 
Companies from State-Owned Banks Were Contingent Upon Exports.
    Comment 26: Whether There Is Sufficient Information to Determine 
that a Program-Wide Change Occurred With Respect to the Domestic 
Income Tax Credit for Domestically-Produced Equipment Program.
 [FR Doc. E8-27889 Filed 11-21-08; 8:45 am]

BILLING CODE 3510-DS-P