[Federal Register Volume 73, Number 37 (Monday, February 25, 2008)]
[Notices]
[Pages 9994-9997]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-3510]


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DEPARTMENT OF COMMERCE

International Trade Administration

(C-570-931)


Circular Welded Austenitic Stainless Pressure Pipe from the 
People's Republic of China: Notice of Initiation of Countervailing Duty 
Investigation

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

EFFECTIVE DATE: February 25, 2008.

FOR FURTHER INFORMATION CONTACT: Darla Brown or Eric Greynolds, AD/CVD 
Operations, Office 3, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-2849 
and (202) 482-6071, respectively.

SUPPLEMENTARY INFORMATION:

The Petition

    On January 30, 2008, the Department of Commerce (the 
``Department'') received a petition filed in proper form by Bristol 
Metals, L.P., Felker Brothers Corp., Marcegaglia USA Inc., Outokumpu 
Stainless Pipe, Inc., and the United Steel Workers of America (the 
``petitioners''), domestic producers of circular welded austenitic 
stainless pressure pipe (``CWASPP'' or ``subject merchandise''). In 
response to the Department's request, the petitioners provided timely 
information supplementing the petition on February 5, February 11, and 
February 14, 2008.
    In accordance with Section 702(b)(1) of the Tariff Act of 1930, as 
amended (``the Act''), the petitioners allege that manufacturers, 
producers, or exporters of CWASPP in the People's Republic of China 
(``PRC'') receive 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 the petitioners filed the petition on 
behalf of the domestic industry because they are interested parties as 
defined in Section 771(9)(C) of the Act and the petitioners have 
demonstrated sufficient industry support with respect to the 
countervailing duty investigation (see ``Determination of Industry 
Support for the Petition'' section below).

Period of Investigation

    The period of investigation (``POI'') is January 1, 2007, through 
December 31, 2007.

Scope of the Investigation

    The merchandise covered by this investigation is circular welded 
austenitic stainless pressure pipe (``CWASPP'') not greater than 14 
inches in outside diameter. This merchandise includes, but is not 
limited to, the American Society for Testing and Materials (ASTM) A-312 
or ASTM A-778 specifications, or comparable domestic or foreign 
specifications. ASTM A-358 products are only included when they are 
produced to meet ASTM A-312 or ASTM A-778 specifications, or comparable 
domestic or foreign specifications.
    Excluded from the scope are: (1) Welded stainless mechanical 
tubing, meeting ASTM A-554 or comparable domestic or foreign 
specifications; (2) boiler, heat exchanger, superheater, refining 
furnace, feedwater heater, and condenser tubing, meeting ASTM A-249, 
ASTM A-688 or comparable domestic or foreign specifications; and (3) 
specialized tubing, meeting ASTM A-269, ASTM A-270 or comparable 
domestic or foreign specifications.
    The subject imports are normally classified in subheadings 
7306.40.5005, 7306.40.5040, 7306.40.5062, 7306.40.5064, and 
7306.40.5085 of the Harmonized Tariff Schedule of the United States 
(``HTSUS''). They may also enter under HTSUS subheadings 7306.40.1010, 
7306.40.1015, 7306.40.5042, 7306.40.5044, 7306.40.5080, and 
7306.40.5090. The HTSUS subheadings are provided for convenience and 
customs purposes only; the written description of the scope is 
dispositive.

Comments on Scope of Investigation

    During our review of the petition, we discussed the scope with the 
petitioners to ensure that it is an accurate reflection of the products 
for which the domestic industry is seeking relief. Moreover, as 
discussed in the preamble to the regulations, we are setting aside a 
period for interested parties to raise issues regarding product 
coverage. See Antidumping Duties; Countervailing Duties; Final Rule, 62 
FR 27296, 27323 (May 19, 1997). 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 NW, 
Washington, DC 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 PRC for consultations 
with respect to the countervailing duty petition. The Department held 
these consultations in Beijing, China, with representatives of the 
Government of the PRC on February 15, 2008. See the February 15, 2008, 
Memorandum to The File, entitled,

[[Page 9995]]

``Consultations Regarding the Petition on Welded Stainless Steel 
Pressure Pipe from the People's Republic of China'' on file in the CRU 
of the Department of Commerce, Room 1117.

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act requires that a petition be filed by 
or 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 (CIT 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 title.'' 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, the petitioners do 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 CWASPP constitutes a single 
domestic like product, which is defined further in the ``Scope of the 
Investigation'' section above, 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 Countervailing Duty 
Investigation Initiation Checklist: Circular Welded Austenitic 
Stainless Pressure Pipe from the People's Republic of China (``PRC 
Initiation Checklist'') at Attachment II, on file in the CRU.
    In determining whether the petitioners have standing (i.e., those 
domestic workers and producers supporting the petition account for (1) 
at least 25 percent of the total production of the domestic like 
product and (2) 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), we considered the 
industry support data contained in the petition with reference to the 
domestic like product as defined in Attachment I (Scope of the 
Petition), to the PRC Initiation Checklist. To establish industry 
support, the petitioners provided their shipments for the domestic like 
product for the year 2007 and compared them to shipments of the 
domestic like product for the industry. In their February 13, 2008, 
supplement to the petition, the petitioners demonstrated the 
correlation between shipments and production. See February 13, 2008, 
Supplement to the petition. Based on the fact that total industry 
production data for the domestic like product for 2007 is not 
reasonably available, and that the petitioners have established that 
shipments are a reasonable proxy for production data, we have relied 
upon shipment data for purposes of measuring industry support. For 
further discussion see PRC Initiation Checklist at Attachment II 
(Industry Support).
    Our review of the data provided in the petition, supplemental 
submissions, and other information readily available to the Department 
indicates that the petitioners have established industry support. 
First, 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. Second, the domestic 
producers have met the statutory criteria 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 criteria for industry support under Section 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 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 PRC 
Initiation Checklist at Attachment II (Industry Support).
    The Department finds that the petitioners filed the petition on 
behalf of the domestic industry because they are an interested party as 
defined in section 771(9)(C) and (D) of the Act and they have 
demonstrated sufficient industry support with respect to the 
countervailing duty investigation that they are requesting the 
Department initiate. See PRC Initiation Checklist at Attachment II 
(Industry Support).

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 petitioners allege that imports of CWASPP from the PRC are 
benefitting from countervailable subsidies and that such imports are 
causing, or threatening to cause, material injury to the domestic 
industry producing CWASPP. In addition, the petitioners allege that 
subsidized imports exceed the negligibility threshold provided for

[[Page 9996]]

under Section 771(24)(A) of the Act. The petitioners contend 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 depression or suppression, 
lost revenue, reduced employment, decline in financial performance and 
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 PRC Initiation Checklist at Attachment III (Injury).

Initiation of Countervailing Duty Investigation

    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(s) supporting the allegations. The Department has examined 
the countervailing duty petition on CWASPP from the PRC and finds 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 CWASPP in the PRC receive 
countervailable subsidies. For a discussion of evidence supporting our 
initiation determination, see PRC 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 in the PRC:

Preferential Lending

    1. Loans and Export Credits Pursuant to the Northeast 
Revitalization Program

Income Tax Programs

    2. ``Two Free, Three Half'' Program
    3. Income Tax Reductions for Export-oriented Foreign Investment 
Enterprises (``FIEs'')
    4. Reduced Income Tax Rate for FIEs Located in Economic and 
Technological Development Zones and Other Special Economic Zones
    5. Income Tax Credit or Refund for Reinvestment of FIE Profits
    6. Provincial and Local Tax Exemptions and Reductions for 
Productive FIEs
    7. Local Income Tax Reductions in Certain Development Zones
    8. Preferential Tax Policies for Research and Development at FIEs

Indirect Tax Programs and Import Tariff Program

    9. VAT Refunds on Purchases of Domestically-produced Equipment by 
FIEs
    10. Tax Credits on Purchases of Domestically-produced Equipment by 
Domestically-owned Companies

Provincial Subsidy Programs

    11. Guangdong Province's ``Outward Expansion'' Program
    12. Preferential Loans Pursuant to Liaoning Province's Five-Year 
Framework
    13. Preferential Tax Policies for Town and Village Enterprises 
(``TVEs'')

Provision of Goods or Services for Less than Adequate Remuneration

    14. Provision of Stainless Steel Coil for Less than Adequate 
Remuneration
    15. Provision of Land Use Rights for Less than Adequate 
Remuneration

Government Restraints on Exports

    16. Export Restraints on Flat-rolled Steel
    For further information explaining why the Department is 
investigating these programs, see the PRC 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:
    1. Guangshou High Technologic Enterprise: Petitioners allege that a 
producer of CWASPP located in Guangshou received subsidies by virtue of 
its status as a high technology enterprise, but failed to explain what 
those alleged subsidies were. Petitioners have 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 do not plan to investigate this program.
    2. Exemption of Export Taxes for CWASPP: Petitioners allege that 
producers of CWASPP are exempt from paying certain export taxes that 
the Government of China (``GOC'') levies on other steel products. 
Consistent with the Department's decision in the initiation of Light-
walled Rectangular Pipe and Tube from the PRC, we find that petitioners 
have failed to adequately allege how CWASPP producers have been 
relieved of taxes they would otherwise have paid. See Notice of 
Initiation of Countervailing Duty Investigation: Light-walled 
Rectangular Pipe and Tube from the People's Republic of China, 72 FR 
40281, 40283 (July 24, 2007) (``LWRP Initiation Notice'').
    3. City of Shenzhen's Grants to Exporter to Cover Interest on 
Loans: Petitioners allege that the City of Shenzhen provides interest 
payment grants to exporters in the Shenzhen Special Economic Zone 
(``SEZ''). Consistent with the Department's practice in recent 
initiations, we are declining to initiate on the allegation because 
petitioners have failed to provide information indicating that a 
producer of CWASPP is located in the Shenzhen SEZ. See, e.g., LWRP 
Initiation Notice 72 FR at 40284.
    4. ``Famous Brands'' Program: Petitioners allege that the GOC 
designates the products of certain firms as ``Famous Brands,'' thereby 
making the firms eligible for grants and for enhanced trademark 
protection. In addition, petitioners allege that some provinces have 
coordinated efforts to build brands from their provinces. Petitioners 
have not sufficiently alleged the elements necessary for the imposition 
of a countervailing duty and did not support their allegation with 
reasonably available information. Therefore, we do not plan to 
investigate the ``Famous Brands'' program.
    5. Reduced Income Tax Rate for Technology and Knowledge Intensive 
FIEs: Petitioners allege that FIEs that qualify as technology intensive 
or knowledge intensive and have major products listed in a catalogue 
issued by the Ministry of Science and Technology (``MOST'') pay a 
reduced income tax of 15 percent. However, there is no mention of 
``pipe'' in the catalogue, a fact that petitioners acknowledge. Thus, 
based on record evidence, producers of subject merchandise cannot use 
this program. Therefore, we do not plan to investigate this program.
    6. Provision of Electricity, Natural Gas, and Water for Less than 
Adequate Remuneration: Petitioners allege that the GOC controls 
electricity, natural gas, and water prices through the National 
Development and Reform Commission. Petitioners state that the 
government caps the price that power generation companies can charge. 
Petitioners maintain that the steel industry has benefited from 
preferential treatment in both the prices of these utilities as well as 
access to the utilities.

[[Page 9997]]

    Petitioners have not sufficiently alleged the elements necessary 
for the imposition of a countervailing duty and did not support their 
allegation with reasonably available information. Therefore, we are not 
investigating the provision of electricity, natural gas, and water for 
less than adequate remuneration.
    7. The State Key Technologies Renovation Project Fund: Petitioners 
allege that the purpose of this subsidy program is to promote 
technological renovations and improvements in key industries through 
the grant of funds equal to two or three years of interest expense 
payments for the projects depending upon the region of the country in 
which the project occurs, not to exceed 15 percent of the total cost of 
the project. Petitioners have not sufficiently alleged the elements 
necessary for the imposition of a countervailing duty and did not 
support their allegation with reasonably available information. 
Therefore, we do not plan to investigate ``The State Key Technologies 
Renovation Project Fund'' program.
    Because petitioner has not sufficiently alleged countervailable 
subsidies for these programs, we are not initiating on them at this 
time.

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 duty 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 10 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 2001-2002 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 CVD 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 the petitioners have provided sufficient allegations 
and support of their allegations to meet the statutory criteria for 
initiating a CVD investigation of CWASPP from the PRC, initiation of a 
CVD 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 Government 
of the PRC. As soon as and 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, consistent with 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 the initiation, whether there is a 
reasonable indication that imports of subsidized CWASPP from the PRC 
are causing material injury, or threatening to cause 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: February 19, 2008.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E8-3510 Filed 2-22-08; 8:45 am]
BILLING CODE 3510-DS-S