[Federal Register Volume 72, Number 233 (Wednesday, December 5, 2007)]
[Notices]
[Pages 68568-68571]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-23573]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-570-926]


Sodium Nitrite from the People's Republic of China: Initiation of 
Countervailing Duty Investigation

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: (December 5, 2007.

FOR FURTHER INFORMATION CONTACT: Sean Carey or Gene Calvert, AD/CVD 
Operations, Office 6, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 
482-3964 and (202) 482-3586, respectively.

SUPPLEMENTARY INFORMATION:

Initiation of Investigation:

The Petition

    On November 8, 2007, the Department of Commerce (the Department) 
received a petition filed in proper form by General Chemical LLC 
(petitioner). On November 14 and November 15, 2007, the Department 
issued requests for additional information and clarification of certain 
areas of the petition involving general issues and the countervailable 
subsidy allegations, respectively. Based on the Department's request, 
petitioner filed additional information concerning the petition on 
November 19 and November 20, 2007.
    In accordance with section 702(b)(1) of the Tariff Act of 1930, as 
amended (the Act), petitioner alleges that manufacturers, producers, or 
exporters of sodium nitrite in the People's Republic of China (the PRC) 
received countervailable subsidies within the meaning of section 701 of 
the Act, and that such imports are materially injuring or threatening 
material injury to an industry in the United States.
    The Department finds that petitioner filed this petition on behalf 
of the domestic industry because it is an interested party as defined 
in section 771(9)(C) of the Act, and petitioner has demonstrated 
sufficient industry support with respect to the countervailing duty 
investigation that it

[[Page 68569]]

is requesting the Department to initiate (see, infra, ``Determination 
of Industry Support for the Petition'').

Period of Investigation

    The anticipated period of investigation (POI) is calendar year 
2006. See 19 CFR 351.204(b)(2).

Scope of Investigation

    The merchandise covered by this investigation is sodium nitrite in 
any form, at any purity level. In addition, the sodium nitrite covered 
by this investigation may or may not contain an anti-caking agent. 
Examples of names commonly used to reference sodium nitrite are nitrous 
acid, sodium salt, anti-rust, diazotizing salts, erinitrit, and 
filmerine. The chemical composition of sodium nitrite is NaNO2 and it 
is generally classified under subheading 2834.10.1000 of the Harmonized 
Tariff Schedule of the United States (HTSUS). The American Chemical 
Society Chemical Abstract Service (CAS) has assigned the name ``sodium 
nitrite'' to sodium nitrite. The CAS registry number is 7632-00-0. For 
purposes of the scope of this investigation, the narrative description 
is dispositive, not the tariff heading, CAS registry number or CAS 
name, which are provided for convenience and customs purposes.

Comments on Scope of Investigation

    During our review of the petition, we discussed the scope with 
petitioner to ensure that it is an accurate reflection of the 
merchandise for which the domestic industry is seeking relief. 
Moreover, as discussed in the preamble to the regulations (Antidumping 
Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 
1997)), we are setting aside a period for interested parties to raise 
issues regarding product coverage. The Department encourages all 
interested parties to submit such comments within 20 calendar days of 
the publication of this notice. Comments should be addressed to Import 
Administration's Central Records Unit (CRU), Room 1870, U.S. Department 
of Commerce, 14th Street and Constitution Avenue, N.W., Washington, 
D.C. 20230. The period of scope consultations is intended to provide 
the Department with ample opportunity to consider all comments and to 
consult with parties prior to the issuance of the preliminary 
determination.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department 
invited representatives of the Government of the People's Republic of 
China (the GOC) for consultations with respect to the countervailing 
duty petition. The Department held these consultations in Beijing, 
China with representatives of the GOC on November 26, 2007. See the 
Memorandum to the File, entitled, ``Consultations with Officials from 
the Government of the People's Republic of China on the Countervailing 
Duty Petition: Sodium Nitrite from the People's Republic of China'' 
(November 26, 2007), a public document on file in the CRU.

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (i) at least 
25 percent of the total production of the domestic like product; and 
(ii) more than 50 percent of the production of the domestic like 
product produced by that portion of the industry expressing support 
for, or opposition to, the petition. Moreover, section 702(c)(4)(D) of 
the Act provides that, if the petition does not establish support of 
domestic producers or workers accounting for more than 50 percent of 
the total production of the domestic like product, the Department 
shall: (i) poll the industry or rely on other information in order to 
determine if there is support for the petition, as required by 
subparagraph (A), or (ii) determine industry support using a 
statistically valid sampling method.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers as a whole of a domestic like product. Thus, to determine 
whether a petition has the requisite industry support, the statute 
directs the Department to look to producers and workers who produce the 
domestic like product. The International Trade Commission (ITC), which 
is responsible for determining whether ``the domestic industry'' has 
been injured, must also determine what constitutes a domestic like 
product in order to define the industry. While both the Department and 
the ITC must apply the same statutory definition regarding the domestic 
like product (section 771(10) of the Act), they do so for different 
purposes and pursuant to a separate and distinct authority. In 
addition, the Department's determination is subject to limitations of 
time and information. Although this may result in different definitions 
of the like product, such differences do not render the decision of 
either agency contrary to law. See USEC, Inc. v. United States, 132 F. 
Supp. 2d 1, 8 (CIT 2001), citing Algoma Steel Corp. Ltd. v. United 
States, 688 F. Supp. 639, 644 (1988), aff'd 865 F.2d 240 (Fed. Cir. 
1989), cert. denied 492 U.S. 919 (1989).
    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this subtitle.'' Thus, the reference point from which the 
domestic like product analysis begins is ``the article subject to an 
investigation,'' (i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition).
    With regard to the domestic like product, petitioner does not offer 
a definition of domestic like product distinct from the scope of the 
investigation. Based on our analysis of the information submitted on 
the record, we have determined that sodium nitrite constitutes a single 
domestic like product and we have analyzed industry support in terms of 
that domestic like product. For a discussion of the domestic like 
product analysis in this case, see the Countervailing Duty 
Investigation Initiation Checklist: Sodium Nitrite from the People's 
Republic of China (PRC) (Initiation Checklist), Industry Support at 
Attachment II, on file in the CRU.
    Our review of the data provided in the Petition, supplemental 
submissions, and other information readily available to the Department 
indicates that the Petitioner has established industry support. To 
establish industry support, the Petitioner demonstrated that it was the 
sole producer of the domestic like product in 2006. Therefore, the 
Petition established support from domestic producers (or workers) 
accounting for more than 50 percent of the total production of the 
domestic like product and, as such, the Department is not required to 
take further action in order to evaluate industry support (e.g., 
polling). See Section 702(c)(4)(D) of the Act. In addition, the 
domestic producers have met the statutory criterion for industry 
support under 702(c)(4)(A)(i) because the domestic producers (or 
workers) who support the Petition account for at least 25 percent of 
the total production of the domestic like product. Finally, the 
domestic producers have met the statutory criterion for industry 
support under 702(c)(4)(A)(ii) because the domestic producers (or 
workers) who support the Petition account for more than 50 percent of 
the production of the domestic like product produced by that portion of 
the industry expressing support for, or opposition to, the

[[Page 68570]]

Petition. Accordingly, the Department determines that the petition was 
filed on behalf of the domestic industry within the meaning of section 
702(b)(1) of the Act. See CVD Initiation Checklist at Attachment II 
(Industry Support).
    The Department finds petitioner has filed the petition on behalf of 
the domestic industry because it is an interested party as defined in 
sections 771(9)(C) of the Act and it has demonstrated sufficient 
industry support with respect to the countervailing duty investigation 
that it is requesting the Department to initiate. See Initiation 
Checklist at Attachment II.

Injury Test

    Because the PRC is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of 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.

Allegations and Evidence of Material Injury and Causation

    The petitioner alleges that the U.S. industry producing the 
domestic like product is being materially injured, or is threatened 
with material injury, by reason of the subsidized imports of the 
subject merchandise. The petitioner contends that the industry's 
injured condition is illustrated by reduced market share, lost sales, 
reduced production capacity and capacity utilization rate, reduced 
shipments, underselling and price depressing and suppressing effects, 
lost revenue, reduced employment, decline in financial performance, and 
an increase in import penetration. We have assessed the allegations and 
supporting evidence regarding material injury and causation, and we 
have determined that these allegations are properly supported by 
adequate evidence and meet the statutory requirements for initiation. 
See Initiation Checklist at Attachment III (Injury).

Subsidy Allegations

    Section 702(b) of the Act requires the Department to initiate a 
countervailing duty proceeding whenever an interested party files a 
petition on behalf of an industry that (1) alleges the elements 
necessary for an imposition of a duty under section 701(a) of the Act 
and (2) is accompanied by information reasonably available to the 
petitioner supporting the allegations. The Department has examined the 
countervailing duty petition on sodium nitrite from the PRC and found 
that it complies with the requirements of section 702(b) of the Act. 
Therefore, in accordance with section 702(b) of the Act, we are 
initiating a countervailing duty investigation to determine whether 
manufacturers, producers, or exporters of sodium nitrite in the PRC 
receive countervailable subsidies. For a discussion of evidence 
supporting our initiation determination, see Initiation Checklist.
    We are including in our investigation the following programs 
alleged in the petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise:

GOC Loan Program

1. Loans and Interest Subsidies Related to the Northeast Revitalization 
Program

GOC Grant Programs

2. The State Key Technology Renovation Project Fund
3. Grants to Loss-Making State-Owned Enterprises

GOC Provision of Goods or Services for Less than Adequate Remuneration

4. Provision of Electricity to State-Owned Enterprises (SOEs) for Less 
than Adequate Remuneration
5. Provision of Land to SOEs for Less than Adequate Remuneration

GOC Income Tax Programs

6. Income Tax Exemption for Export-Oriented FIEs
7. Preferential Tax Policies for Foreign Invested Enterprises (FIEs) 
(Two Free, Three Half Program)
8. Reduced Income Tax Rates for FIEs Based on Location
9. Corporate Income Tax Refund Program for Reinvestment of FIE Profits 
in Export-Oriented Enterprises
10. Reduced Income Tax Rate for New or High Technology Enterprises
11. Preferential Tax Policies for Research and Development by FIEs
12. Income Tax Credits on Purchases of Domestically Produced Equipment 
by Domestically Owned Companies
13. Income Tax Credits on Purchases of Domestically Produced Equipment 
by FIEs
14. Reduced Income Tax Rate for FIEs Under the West Revitalization 
Program
15. Income Tax Reduction or Exemption for Export-Oriented or High 
Technology Enterprises under the West Revitalization Program
16. Preferential Tax Policies Under the West Revitalization Program

GOC Indirect Tax Programs and Import Tariff Programs

17. VAT Rebate for FIE Purchases of Domestically Produced Equipment
18. VAT and Tariff Exemptions for FIEs and Certain Domestic Enterprises 
Using Imported Equipment in Encouraged Industries

Provincial Loan Program

19. Reduced Interest Rate Loans Provided by Liaoning Province

Provincial Grant Programs

20. Provincial Export Interest Subsidies (Guangdong and Zhejiang 
Provinces)
21. Guangdong Province Funds for Outward Expansion of Industries

Provincial and Local Provision of Goods for Less than Adequate 
Remuneration

22. Provision of Land for Less than Adequate Remuneration (Jiangsu and 
Zhejiang Provinces, and Chongqing Municipality)
23. Provision of Electricity for Less than Adequate Remuneration 
(Jiangsu and Zhejiang Provinces)
24. Provision of Water for Less than Adequate Remuneration (Zhejiang 
Province)

Provincial and Local Income Tax Programs

25. Income Tax Exemption and Reduction Programs (Provinces of Jiangsu, 
Zhejiang, Guangdong, and Shandong; Municipalities of Beijing, Tianjin, 
Shanghai, and Chongqing)For further information explaining why the 
Department is investigating these programs, see the Initiation 
Checklist.

We are not including in our investigation the following programs 
alleged to benefit producers and exporters of the subject merchandise 
in the PRC:

GOC Loan Program

1. Government Policy Lending Program
    Petitioner alleges that under the GOC's National Tenth Five-year 
Plan as well as the Tenth and Eleventh Five-year plans of the Chemical 
Industry, sodium nitrite producers may benefit from the provision of 
loans by state-owned commercial banks as part of the GOC's policy to 
encourage and to advance the chemical industry. In support of its 
allegation, Petitioner provided translated copies of the ``Tenth Five-
year Plan for National Economic and Social Development,'' and the 
``Tenth Five-year Plan of the Chemical Industry and Its Development,'' 
and a short, translated excerpt of the ``Eleventh Five-year Plan of the 
Chemical Industry and Its Development.'' Our review of these documents 
did not indicate that financing or loans were available pursuant to the 
GOC's Chemical Policy.

[[Page 68571]]

Accordingly, we find that petitioner has not provided sufficient 
information to warrant initiation of an investigation of this program.

GOC Provision of Goods for Less than Adequate Remuneration

2. Provision of Natural Gas and Water to State-Owned Enterprises (SOEs) 
for Less than Adequate Remuneration
    Petitioner alleges that the GOC provides natural gas and water to 
SOEs and special industrial sectors at subsidized prices. Petitioner 
further alleges that end-user prices for natural gas and for water are 
set by the National Development and Reform Commission, and rarely 
reflect the true market price of these commodities. For purposes of 
this initiation, we find that petitioner has not sufficiently alleged 
the elements necessary for a less than adequate remuneration subsidy, 
as identified in 19 CFR 351.511. Petitioner has not provided sufficient 
information demonstrating that the GOC has provided natural gas and 
water for less than adequate remuneration and that this program is 
specific. Accordingly, we find that petitioner has not provided 
sufficient information to warrant initiation of an investigation of 
these programs.

GOC Indirect Tax Program and Import Tariff Program

3. VAT Exemptions on Exports
    Petitioner alleges that the GOC enterprises are exempted from 
paying import tariffs and VAT payments on imported equipment provided 
that these goods are not for resale. Petitioner notes that in certain 
cases, a full 17-percent VAT exemption will apply upon export. 
Petitioner states that the program, by definition, is conditioned upon 
export performance, and therefore, is an export subsidy. Petitioner 
further alleges that this is a prohibited export subsidy if the 
exemption or reduction of indirect taxes on the exported product 
exceeds the indirect taxes levied on the inputs into the exported 
product. We find that Petitioner has not sufficiently alleged the 
elements necessary for the imposition of a countervailing duty and did 
not support the allegation with reasonably available information. 
Therefore, we are not initiating an investigation of this program.

Application of the Countervailing Duty Law to the PRC

    The Department has treated the PRC as a non-market economy (NME) 
country in all past antidumping investigations and administrative 
reviews. In accordance with section 771(18)(C)(i) of the Act, any 
determination that a country is an NME country shall remain in effect 
until revoked by the administering authority. See e.g., Tapered Roller 
Bearings and Parts Thereof, Finished and Unfinished, (TRBs) From the 
People's Republic of China: Preliminary Results of 2001-2002 
Administrative Review and Partial Rescission of Review, 68 FR 7500, 
7500-1 (February 14, 2003), unchanged in TRBs from the People's 
Republic of China: Final Results of 2001-2001 Administrative Review, 68 
FR 70488, 70488-89 (December 18, 2003).
    In the final affirmative countervailing duty determination on 
coated free sheet paper from the PRC, the Department determined that 
the current nature of the PRC economy does not create obstacles to 
applying the necessary criteria in the countervailing duty law. See 
Coated Free Sheet Paper from the People's Republic of China: Final 
Affirmative Countervailing Duty Determination, 72 FR 60645 (October 25, 
2007), and the accompanying Issues and Decision Memorandum, at Comment 
1. Therefore, because petitioner has provided sufficient allegations 
and support of its allegations to meet the statutory criteria for 
initiating a countervailing duty investigation of sodium nitrite from 
the PRC, initiation of a countervailing duty investigation is warranted 
in this case.

Respondent Selection

    For this investigation, the Department expects to select 
respondents based on U.S. Customs and Border Protection (CBP) data for 
U.S. imports during the POI. We intend to make our decision regarding 
respondent selection within 20 days of publication of this Federal 
Register notice. The Department invites comments regarding the CBP data 
and respondent selection within seven calendar days of publication of 
this Federal Register notice.

Distribution of Copies of the Petition

    In accordance with section 702(b)(4)(A)(i) of the Act, a copy of 
the public version of the petition has been provided to the GOC. To the 
extent practicable, we will attempt to provide a copy of the public 
version of the petition to each exporter named in the petition, as 
provided under 19 CFR 351.203(c)(2).

ITC Notification

    We have notified the ITC of our initiation, as required by section 
702(d) of the Act.

Preliminary Determination by the ITC

    The ITC will preliminarily determine, within 25 days after the date 
on which it receives notice of this initiation, whether there is a 
reasonable indication that imports of subsidized sodium nitrite from 
the PRC are materially injuring, or threatening material injury to, a 
U.S. industry. See section 703(a)(2) of the Act. A negative ITC 
determination will result in the investigation being terminated; 
otherwise, the investigation will proceed according to statutory and 
regulatory time limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: November 28, 2007.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E7-23573 Filed 12-4-07; 8:45 am]
BILLING CODE 3510-DS-S