[Federal Register Volume 74, Number 198 (Thursday, October 15, 2009)]
[Notices]
[Pages 52945-52948]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-24834]



[[Page 52945]]

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DEPARTMENT OF COMMERCE

International Trade Administration

(C-570-957)


Certain Seamless Carbon and Alloy Steel Standard, Line, and 
Pressure Pipe from the People's Republic of China: Initiation of 
Countervailing Duty Investigation

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

EFFECTIVE DATE: October 15, 2009.

FOR FURTHER INFORMATION CONTACT: Yasmin Nair and Joseph Shuler, AD/CVD 
Operations, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230; telephone: (202) 482-3813 and (202) 482-1293, 
respectively.

SUPPLEMENTARY INFORMATION:

The Petition

    On September 16, 2009, the Department of Commerce (``Department'') 
received a countervailing duty (``CVD'') petition concerning imports of 
certain seamless pipe (``seamless pipe'') from the People's Republic of 
China (``PRC'') filed in proper form by United States Steel Corporation 
and V&M Star L.P. (collectively, ``Petitioners'').\1\ On September 25, 
2009, the Petition was amended to add TMK IPSCO and The United Steel, 
Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial 
and Service Worker International Union as additional Petitioners. On 
September 21 and 22, 2009, the Department issued requests to 
Petitioners for additional information and for clarification of certain 
areas of the Petition. Based on the Department's requests, Petitioners 
filed a supplement to the Petition, regarding general issues, on 
September 25, 2009 (``Supplement to the AD/CVD Petitions''). On 
September 25, 2009, the Department requested further information from 
Petitioners, including suggested refinements to the scope. On September 
28, 2009, Petitioners filed a supplement to the Petition, regarding the 
CVD allegations. On September 29, 2009, Petitioners filed an additional 
supplement to the Petition in response to the Department's September 
25, 2009 request (``Second Supplement to the AD/CVD Petitions''). Also, 
on September 29, 2009, the Department issued a further request to 
Petitioners for information and clarification of certain aspects of the 
Petition. In response to the Department's request, Petitioners filed a 
supplement to the Petition regarding general issues, on October 1, 
2009.
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    \1\ See Petition for the Imposition of Antidumping and 
Countervailing Duties Pursuant to Sections 701 and 731 of the Tariff 
Act of 1930, as Amended: Certain Seamless Carbon and Alloy Steel 
Standard, Line, and Pressure Pipe from the People's Republic of 
China, dated September 16, 2009 (``Petition'').
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    In accordance with section 702(b)(1) of the Tariff Act of 1930, as 
amended (``Act''), Petitioners allege that producers/exporters of 
seamless pipe from the PRC received countervailable subsidies within 
the meaning of sections 701 and 771(5) of the Act, and that imports 
from these producers/exporters materially injure, and threaten further 
material injury to, an industry in the United States.
    The Department finds that Petitioners filed the Petition on behalf 
of the domestic industry because Petitioners are interested parties, as 
defined in section 771(9)(C) of the Act, and have demonstrated 
sufficient industry support with respect to the investigation that they 
request the Department to initiate (see ``Determination of Industry 
Support for the Petition'' below).

Period of Investigation

    The period of investigation is January 1, 2008, through December 
31, 2008.

Scope of Investigation

    The products covered by this investigation are seamless pipe from 
the PRC. For a full description of the scope of the investigation, 
please see the ``Scope of the Investigation'' in Appendix I of this 
notice.

Comments on the Scope of Investigation

    During our review of the Petition, we discussed the scope of the 
investigation with Petitioners and suggested a number of revisions to 
the scope language, including the removal from the scope of all 
language that relies on end-use to define covered merchandise. While 
Petitioners made a number of the suggested revisions to the scope, they 
did not remove end-use language from the scope. See Supplement 
Regarding General Issues to the AD/CVD Petition at 4; Second Supplement 
Regarding General Issues to the AD/CVD Petition, Item 3; and memorandum 
to the file from Drew Jackson regarding ``Initiation of the Antidumping 
Duty Investigation of Certain Seamless Carbon and Alloy Steel Standard, 
Line, and Pressure Pipe from the People's Republic of China''. The 
Department has inherent authority to define the scope of the 
investigation and may depart from the scope as proposed by a petition. 
NTN Bearing Corp. v. U.S., 747 F. Supp. 726, 731 (CIT 1990). In this 
case, consistent with the position taken in circular welded carbon 
quality steel pipe from the PRC, we have revised the scope by removing 
all end-use language from it. See Notice of Final Determination of 
Sales at Less Than Fair Value and Affirmative Final Determination of 
Critical Circumstances: Circular Welded Carbon Quality Steel Pipe from 
the People's Republic of China, 73 FR 31970 (June 5, 2008) (``Circular 
Welded Pipe'') at Comment 1 (`` the Department prefers to define 
product coverage by the physical characteristics of the merchandise 
subject to investigation.''). As noted in Circular Welded Pipe, 
excluding end-use language from the scope provides certainty with 
respect to product coverage and will enable any potential future orders 
to be effectively administered by the Department and enforced by U.S. 
Customs and Border Protection (``CBP''). Further, clarity with respect 
to scope will ensure that respondents in the investigation will know 
precisely what is included in the definition of subject merchandise.
    As discussed in the preamble to the Department's 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 the product coverage of the scope. 
The Department encourages all interested parties to submit such 
comments by October 26, 2009, which is twenty calendar days from the 
signature date of this notice. Comments should be addressed to Import 
Administration's APO/Dockets Unit, Room 1870, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 
20230. The period for 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 in this investigation.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, on September 22, 
2009, the Department invited representatives of the Government of the 
PRC for consultations with respect to the Petition. The Government of 
the PRC did not request such consultations.

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

[[Page 52946]]

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 to poll 
the industry.
    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 (see 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.\2\
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    \2\ 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).
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    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, Petitioners did 
not offer a definition of domestic like product distinct from the scope 
of the investigation requested in the Petition. As noted, the 
Department has changed the definition of the class or kind of 
merchandise to be investigated from that which was initially requested 
by Petitioners. The reference point from which the domestic like 
product is defined is the class or kind of merchandise that is the 
basis for the Department's initiation of this investigation. Based on 
our analysis of the information submitted on the record, we have 
determined that seamless pipe constitutes a single domestic like 
product and we have analyzed industry support in terms of that domestic 
like product.\3\
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    \3\ For a discussion of the domestic like product analysis in 
this case, see Countervailing Duty Investigation Initiation 
Checklist: Certain Seamless Pipe from the PRC (``Initiation 
Checklist'') at Attachment II (``Industry Support''), dated 
concurrently with this notice and on file in the Central Records 
Unit (CRU), Room 1117 of the main Department 
of Commerce building.
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    In determining whether Petitioners have standing under section 
702(c)(4)(A) of the Act, we considered the industry support data 
contained in the Petition with reference to the domestic like product 
as defined in the ``Scope of the Investigation'' in Appendix I of this 
notice. To establish industry support, Petitioners provided their own 
2008 production of the domestic like product, and compared this to the 
estimated total production of the domestic like product for the entire 
domestic industry.\4\ To estimate 2008 production of the domestic like 
product, Petitioners used data from an industry publication, published 
by the American Iron and Steel Institute (``AISI''), which compiles 
data on domestic producers' shipments of seamless standard, line and 
pressure pipe. Petitioners approximated domestic production of seamless 
pipe by inflating the volume of domestic shipments reported by AISI by 
the ratio of the difference between Petitioners' own production and 
shipments in the applicable calendar year.\5\
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    \4\ See Initiation Checklist at Attachment II.
    \5\ See id.
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    Our review of the data provided in the Petition, supplemental 
submissions, and other information readily available to the Department, 
including a search of the Internet, indicates that 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).\6\ Second, the domestic 
producers (or workers) have met the statutory criteria for industry 
support under section 702(c)(4)(A)(i) of the Act 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.\7\ 
Finally, the domestic producers (or workers) have met the statutory 
criteria for industry support under section 702(c)(4)(A)(ii) of the Act 
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.\8\
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    \6\ See Section 702(c)(4)(D) of the Act, and Initiation 
Checklist at Attachment II.
    \7\ See Initiation Checklist at Attachment II.
    \8\ See id.
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    The Department finds that Petitioners filed the Petition on behalf 
of the domestic industry because Petitioners are interested parties 
(e.g., domestic producers) as defined in section 771(9)(C) of the Act 
and have demonstrated sufficient industry support with respect to the 
CVD investigation that they are requesting that the Department 
initiate.\9\
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    \9\ See id.
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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

    Petitioners allege imports of seamless pipe from the PRC are 
benefitting from countervailable subsidies and that such imports are 
causing, or threaten to cause material injury to the domestic industry 
producing seamless pipe. In addition, Petitioners alleged that subject 
imports exceed the negligibility threshold provided for under section 
771(24)(A) of the Act.
    Petitioners contended that the industry's injured condition is 
illustrated by reduced market share, increased import penetration, 
underselling and price depressing and suppressing effects, lost sales 
and

[[Page 52947]]

revenue, reduced production, reduced shipments, increased inventory 
overhang, reduced employment and wages, and an overall decline in 
financial performance.\10\ We have assessed the allegations and 
supporting evidence regarding material injury, threat of material 
injury, and causation, and have determined that these allegations are 
properly supported by adequate evidence and meet the statutory 
requirements for initiation.\11\
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    \10\ See Initiation Checklist at Attachment III for details.
    \11\ See id.
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Initiation of Countervailing Duty Investigation

    Section 702(b)(1) of the Act requires the Department to initiate a 
CVD 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 Petition on seamless pipe 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 CVD investigation to determine whether manufacturers, 
producers, or exporters of seamless pipe 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 in the PRC:
A. Preferential Loans
    1. Policy Loans to the Seamless Pipe Industry
    2. Export Loans
    3. Treasury Bond Loans
    4. Preferential Loans for State-Owned Enterprises (``SOEs'')
    5. Preferential Loans for Key Projects and Technologies
    6. Preferential Lending to Seamless Pipe Producers and Exporters 
Classified as ``Honorable Enterprises
    7. Loans and Interest Subsidies Provided Pursuant to the Northeast 
Revitalization Program
B. Equity Programs
    1. Debt-to-Equity Swaps
    2. Equity Infusions
    3. Exemptions for SOEs From Distributing Dividends to the State
    4. Loan and Interest Forgiveness for SOEs
C. Tax Benefit Programs
    1. Income Tax Credits for Domestically Owned Companies Purchasing 
Domestically Produced Equipment
    2. Preferential Income Tax Policy for Enterprises in the Northeast 
Region
    3. Forgiveness of Tax Arrears for Enterprises in the Old Industrial 
Bases of Northeast China
    4. Reduction in or Exemption from Fixed Assets Investment 
Orientation Regulatory Tax
D. Subsidies for Foreign Invested Enterprises (``FIEs'')
    1. ``Two Free, Three Half'' Program
    2. Local Income Tax Exemption and Reduction Programs for 
``Productive'' FIEs
    3. Preferential Tax Programs for FIEs Recognized as High or New 
Technology Enterprises
    4. Income Tax Reductions for Export-Oriented FIEs
E. Tariff and Indirect Tax Programs
    1. Stamp Exemption on Share Transfers Under Non-Tradable Share 
Reform
    2. Value Added Tax (``VAT'') and Tariff Exemptions for Purchases of 
Fixed Assets Under the Foreign Trade Development Fund Program
    3. Import Tariff and VAT Exemptions for FIEs and Certain Domestic 
Enterprises Using Imported Equipment in Encouraged Industries
    4. Deed Tax Exemption For SOEs Undergoing Mergers or Restructuring
    5. Export Incentive Payments Characterized as ``VAT rebates''
F. Government Provision of Goods and Services for Less Than Adequate 
Remuneration
    1. Provision of Land to SOEs for Less Than Adequate Remuneration
    2. Provision of Land Use Rights for Less Than Adequate Remuneration
    3. Provision of Steel Rounds for Less Than Adequate Remuneration
    4. Provision of Electricity for Less Than Adequate Remuneration
    5. Provision of Electricity and Water for Less Than Adequate 
Remuneration to Seamless Pipe Producers Located in Jiangsu Province
    6. Export Restrictions on Coke
    7. Provision of Coking Coal for Less Than Adequate Remuneration
G. Grant Programs
    1. The State Key Technology Project Fund
    2. Foreign Trade Development Fund (Northeast Revitalization 
Program)
    3. Export Assistance Grants
    4. Program to Rebate Antidumping Duties
    5. Subsidies for Development of Famous Export Brands and China 
World Top Brands
    6. Sub-central Government Programs to Promote Famous Export Brands 
and China World Top Brands
    7. Grants to Loss-Making SOEs
    8. Export Interest Subsidies
H. Other Regional Programs
    1. Subsidies Provided in the Tianjin Binhai New Area and the 
Tianjin Economic and Technological Development Area
    2. High-Tech Industrial Development Zones
    For further information explaining why the Department is 
investigating these programs, see 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:

A. Tax Benefit Programs

    Income Tax Benefits for Domestically-Owned Enterprises Engaging in 
Research and Development
    Petitioners allege that according to the PRC's World Trade 
Organization subsidies notification, domestic industrial enterprises 
whose research and development expenses increased by 10 percent from 
the previous year may offset 150 percent of the research expenditures 
from their income tax obligations. Petitioners have not sufficiently 
established that this tax reduction program is specific. Consequently, 
we do not plan to investigate this program.

B. Provision of Inputs for Less than Adequate Remuneration

    Export Restrictions on Steel Rounds
    Petitioners allege that effective January 1, 2008, the Government 
of the PRC increased the export tax on steel billets, including steel 
rounds, from 15 to 25 percent. The result, according to Petitioners, 
was a decline in exports of this product from the PRC. Specifically, 
Petitioners provide information indicating that exports of steel rounds 
fell by 92.6 percent on an annual basis for the first two months of the 
year, and were zero in the month of February 2008. The further result 
of the export tax, according to Petitioners, was a sharp divergence in 
domestic PRC and world prices of steel rounds. While Petitioners have 
provided reasonably available information showing that domestic PRC 
prices are less than world prices, the information does not show a 
connection between the export

[[Page 52948]]

restraints and this price difference. Consequently, we do not plan to 
investigate this program.

Respondent Selection

    For this investigation, the Department expects to select 
respondents based on CBP data for U.S. imports during the period of 
investigation. 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 and 19 CFR 
351.202(f), a copy of the public version of the Petition has been 
provided to the representatives of the Government of the PRC. Because 
of the particularly large number of producers/exporters identified in 
the Petition, the Department considers the service of the public 
version of the Petition to the foreign producers/exporters satisfied by 
the delivery of the public version to the Government of the PRC, 
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 45 days after the date 
on which the Petition is filed, whether there is a reasonable 
indication that imports of subsidized seamless pipe 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: October 6, 2009.
Ronald K. Lorentzen,
Acting Assistant Secretary for Import Administration.

Appendix I

Scope of the Investigation

Attachment I

The merchandise covered by this investigation is certain seamless 
carbon and alloy steel (other than stainless steel) pipes and redraw 
hollows, less than or equal to 16 inches (406.4 mm) in outside 
diameter, regardless of wall-thickness, manufacturing process (e.g., 
hot-finished or cold-drawn), end finish (e.g., plain end, beveled end, 
upset end, threaded, or threaded and coupled), or surface finish (e.g., 
bare, lacquered or coated). Redraw hollows are any unfinished carbon or 
alloy steel (other than stainless steel) pipe or ``hollow profiles'' 
suitable for cold finishing operations, such as cold drawing, to meet 
the American Society for Testing and Materials (``ASTM'') or American 
Petroleum Institute (``API'') specifications referenced below, or 
comparable specifications. Specifically included within the scope are 
seamless carbon and alloy steel (other than stainless steel) standard, 
line, and pressure pipes produced to the ASTM A-53, ASTM A-106, ASTM A-
333, ASTM A-334, ASTM A-335, ASTM A-589, ASTM A-795, ASTM A-1024, and 
the API 5L specifications, or comparable specifications, and meeting 
the physical parameters described above, regardless of application, 
with the exception of the exclusion discussed below.
Specifically excluded from the scope of the investigation are 
unattached couplings.
The merchandise covered by the investigation is currently classified in 
the Harmonized Tariff Schedule of the United States (``HTSUS'') under 
item numbers: 7304.19.1020, 7304.19.1030, 7304.19.1045, 7304.19.1060, 
7304.19.5020, 7304.19.5050, 7304.31.6050, 7304.39.0016, 7304.39.0020, 
7304.39.0024, 7304.39.0028, 7304.39.0032, 7304.39.0036, 7304.39.0040, 
7304.39.0044, 7304.39.0048, 7304.39.0052, 7304.39.0056, 7304.39.0062, 
7304.39.0068, 7304.39.0072, 7304.51.5005, 7304.51.5060, 7304.59.6000, 
7304.59.8010, 7304.59.8015, 7304.59.8020, 7304.59.8025, 7304.59.8030, 
7304.59.8035, 7304.59.8040, 7304.59.8045, 7304.59.8050, 7304.59.8055, 
7304.59.8060, 7304.59.8065, and 7304.59.8070.
Although the HTSUS subheadings are provided for convenience and customs 
purposes, our written description of the merchandise subject to this 
scope is dispositive.
[FR Doc. E9-24834 Filed 10-14-09; 8:45 am]
BILLING CODE 3510-DS-S