[Federal Register Volume 73, Number 122 (Tuesday, June 24, 2008)]
[Notices]
[Pages 35642-35645]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-14250]


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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./P>

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://ia.ita.doc.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.

------------------------------------------------------------------------
                                                             Net Subsidy
                   Exporter/Manufacturer                         Rate
------------------------------------------------------------------------
Kunshan Lets Win Steel Machinery Co., Ltd..................  2.17[percnt
                                                                       ]
Zhangjiagang Zhongyuan Pipe-making Co., Ltd., Jiangsu              15.28
 Qiyuan Group Co., Ltd.....................................     [percnt]
Qingdao Xiangxing Steel Pipe Co., Ltd......................  200.58[perc
                                                                     nt]
All-Others.................................................  15.28[percn
                                                                      t]
------------------------------------------------------------------------

    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