[Federal Register Volume 74, Number 210 (Monday, November 2, 2009)]
[Notices]
[Pages 56576-56592]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-26322]


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DEPARTMENT OF COMMERCE

International Trade Administration

(C-570-946)


Pre-Stressed Concrete Steel Wire Strand from the People's 
Republic of China: Preliminary Affirmative Countervailing Duty 
Determination

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) preliminarily 
determines that countervailable subsidies are being provided to 
producers and exporters of pre-stressed concrete steel wire strand (PC 
strand) from the People's Republic of China (PRC). For information on 
the estimated subsidy rates, see the ``Suspension of Liquidation'' 
section of this notice.

EFFECTIVE DATE: November 2, 2009.

FOR FURTHER INFORMATION CONTACT: Robert Copyak or Jolanta Lawska, AD/
CVD Operations, Office 3, Operations, Import Administration, U.S. 
Department of Commerce, Room 4014, 14th Street and Constitution Avenue, 
NW, Washington, DC 20230; telephone: (202) 482-2209 and (202) 482-8362, 
respectively.

SUPPLEMENTARY INFORMATION:

Case History

    On May 27, 2009, the Department received a petition in proper form 
by the petitioners.\1\ This investigation was initiated on June 16, 
2009. See Pre-Stressed Concrete Steel Wire Strand From the People's 
Republic of China: Initiation of Countervailing Duty Investigation, 74 
FR 29670 (June 23, 2009) (Initiation), and accompanying Initiation 
Checklist.\2\ On August 12, 2009, we postponed the deadline for the 
preliminary determination by 65 days to no later than October 24, 
2009.\3\ See Pre-Stressed Concrete Steel Wire Strand From the Peoples 
Republic of China: Notice of Postponement of Preliminary Determination 
in the Countervailing Duty Investigation, 74 FR 40567 (August 12, 
2009).
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    \1\ Petitioners are American Spring Wire Corp., Insteel Wire 
Products Company, and Sumiden Wire Products Corp.
    \2\ A public version of this and all public Departmental 
memoranda is on file in the Central Records Unit (CRU), room 1117 in 
the main building of the Commerce Department.
    \3\ October 24, 2009, falls on a weekend. Therefore the actual 
signature date is October 26, 2009.
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    Due to the large number of producers and exporters of PC strand in 
the PRC, we determined that it was not possible to investigate 
individually each producer or exporter and, therefore, selected two 
producers/exporters of PC strand to be mandatory respondents: Fasten 
Group Import & Export Co., Ltd. (Fasten I&E) and Xinhua Metal Products 
Company (Xinhua). See Memorandum through Melissa G. Skinner, Director, 
Operations, Office 3, to John M. Andersen, Acting Deputy Assistant 
Secretary for Antidumping and Countervailing Duty Operations, regarding 
``Respondent Selection,'' (July 2, 2009).\4\
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    \4\ A public version of this memorandum is available in the CRU.
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    On July 2, 2009, we issued the initial countervailing duty (CVD) 
questionnaire to the Government of the People's Republic of China (GOC) 
and the mandatory respondents. On August 4, 2009, Xinhua submitted its 
initial questionnaire response. On August 24, 2009, the GOC and Fasten 
I&E submitted its initial questionnaire responses.\5\ Regarding the 
GOC, we issued supplemental questionnaires on September 2, 8, 15, 18, 
22, and 29, 2009, to which the GOC submitted responses on September 29, 
2009, and October 13, 15, and 19. Regarding the Fasten Companies, we 
issued supplemental questionnaires on September 11, and 14 2009, as 
well as October 1, 2, 9, and 16, 2009, to which the Fasten Companies 
responded on September 14, 22, 24, 2009, and October 13, 15, and 19, 
2009. In the September 11, 2009, supplemental questionnaire the 
Department instructed the Fasten

[[Page 56577]]

Companies to submit an initial questionnaire response on behalf of 
Hongsheng, to which Hongsheng responded on October 6, 2009. Regarding 
Xinhua, we issued a supplemental questionnaire on September 3 and 29, 
2009, as well as October 6, 2009, to which Xinhua responded on 
September 21, 2009, and October 15, 2009. On August 14, 2009, we issued 
an initial CVD questionnaire to Xinhua's parent company, Xinyu Iron and 
Steel Joint Stock Limited Company (Xinyu), to which Xinyu responded on 
September 17, 2009. On September 1, 2009, we issued an initial CVD 
questionnaire to the parent of Xinyu, Xinyu Iron and Steel Limited 
Liability Company (Xingang), to which Xingang responded on September 
17, 2009.
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    \5\ Included with the initial questionnaire of Fasten I&E were 
questionnaire responses from the Fasten Group Corporation (Fasten 
Corp.), Jiangyin Fasten Steel (Fasten Steel), Jiangyin Hongyu Metal 
Products Co., Ltd. (Hongyu Metal), and Jiangyin Walsin Steel Cable 
Co., Ltd. (Walsin). In this preliminary determination, we refer to 
the aforementioned companies and Jiangyin Hongsheng Co., Ltd. 
(Hongsheng) as the Fasten Companies.
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Scope of the Investigation

    For purposes of this investigation, PC strand is steel wire strand, 
other than of stainless steel, which is suitable for use in, but not 
limited to, pre-stressed concrete (both pre-tensioned and post-
tensioned) applications. The scope of this investigation encompasses 
all types and diameters of PC strand whether uncoated (uncovered) or 
coated (covered) by any substance, including but not limited to, 
grease, plastic sheath, or epoxy. This merchandise includes, but is not 
limited to, PC strand produced to the American Society for Testing and 
Materials (ASTM) A-416 specification, or comparable domestic or foreign 
specifications. PC strand made from galvanized wire is excluded from 
the scope if the zinc and/or zinc oxide coating meets or exceeds the 
0.40 oz./ft\2\ standard set forth in ASTM-A-475.
    The PC strand subject to this investigation is currently 
classifiable under subheadings 7312.10.3010 and 7312.10.3012 of the 
Harmonized Tariff Schedule of the United States (HTSUS). Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
the written description of the scope of this investigation is 
dispositive.

Scope Comments

    In accordance with the Preamble to the Department's regulations 
(see Antidumping Duties; Countervailing Duties, 62 FR 27296, 27323 (May 
19, 1997) (Preamble)), in the Initiation Notice, we set aside a period 
of time for parties to raise issues regarding product coverage, and 
encouraged all parties to submit comments within 20 calendar days of 
publication of the Initiation Notice. The Department did not receive 
scope comments from any interested party.

Injury Test

    Because the PRC is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, the International Trade 
Commission (the ITC) is required to determine whether imports of the 
subject merchandise from the PRC materially injure, or threaten 
material injury to, a U.S. industry. On June 3, 2008, the ITC published 
its preliminary determination finding that there is a reasonable 
indication that an industry in the United States is materially injured 
or threatened with material injury by reason of imports from the PRC of 
the subject merchandise. See Pre-Stressed Concrete Steel Wire Strand 
from China, Investigation Nos. 701-TA-464 and 731-TA-1160 
(Preliminary), 74 FR 34782 (July 17, 2009).

Period of Investigation

    The period of investigation (the POI) for which we are measuring 
subsidies is January 1, 2008, through December 31, 2008, which 
corresponds to the PRC's most recently completed fiscal year. See 19 
CFR 351.204(b)(2).

Application of the Countervailing Duty Law to Imports from the PRC

    On October 25, 2007, the Department published Coated Free Sheet 
Paper from the People's Republic of China: Final Affirmative 
Countervailing Duty Determination, 72 FR 60645 (October 25, 2007) (CFS 
from the PRC), and accompanying Issues and Decision Memorandum (CFS 
from the PRC Decision Memorandum). In CFS from the PRC, the Department 
found that:
    . . . given the substantial differences between the Soviet-style 
economies and the PRC's economy in recent years, the Department's 
previous decision not to apply the CVD law to these Soviet-style 
economies does not act as a bar to proceeding with a CVD investigation 
involving products from the PRC.
See CFS Decision Memorandum at Comment 6. The Department has affirmed 
its decision to apply the CVD law to the PRC in subsequent final 
determinations. See, e.g., Circular Welded Carbon Quality Steel Pipe 
from the People's Republic of China: Final Affirmative Countervailing 
Duty Determination and Final Affirmative Determination of Critical 
Circumstances, 73 FR 31966 (June 5, 2008) (CWP from the PRC), and 
accompanying Issues and Decision Memorandum (CWP from the PRC Decision 
Memorandum).
    Additionally, for the reasons stated in the CWP Decision 
Memorandum, we are using the date of December 11, 2001, the date on 
which the PRC became a member of the World Trade Organization (WTO), as 
the date from which the Department will identify and measure subsidies 
in the PRC for purposes of this preliminary determination. See CWP from 
the PRC Decision Memorandum at Comment 2.

Attribution of Subsidies

    The Department's regulations at 19 CFR 351.525(b)(6)(i) state that 
the Department will normally attribute a subsidy to the products 
produced by the corporation that received the subsidy. However, 19 CFR 
351.525(b)(6)(ii) - (v) provides that the Department will attribute 
subsidies received by certain other companies to the combined sales of 
those companies when: (1) two or more corporations with cross-ownership 
produce the subject merchandise; (2) a firm that received a subsidy is 
a holding or parent company of the subject company; (3) a firm that 
produces an input that is primarily dedicated to the production of the 
downstream product; or (4) a corporation producing non-subject 
merchandise received a subsidy and transferred the subsidy to a 
corporation with cross-ownership with the subject company.
    According to 19 CFR 351.525(b)(6)(vi), cross-ownership exists 
between two or more corporations where one corporation can use or 
direct the individual assets of the other corporation(s) in essentially 
the same ways it can use its own assets. This regulation states that 
this standard will normally be met where there is a majority voting 
interest between two corporations or through common ownership of two 
(or more) corporations. See also the Preamble to the Department's 
regulations, which states ``{I{time} n certain circumstances, a large 
minority voting interest (for example, 40 percent) or a `golden share' 
may also result in cross-ownership.'' See Preamble, 63 FR at 65401. The 
Court of International Trade (CIT) has further upheld the Department's 
authority to attribute subsidies based on whether a company could use 
or direct the subsidy benefits of another company in essentially the 
same way it could use its own subsidy benefits. See Fabrique de Fer de 
Charleroi v. United States, 166 F. Supp. 2d 593, 600-603 (CIT 2001) 
(Fabrique).

The Fasten Companies

    Based on the initial questionnaire responses of the Fasten 
Companies, we have indentified Fasten Corp. as the parent of the Fasten 
Companies, Fasten I&E as the trading company that

[[Page 56578]]

exported subject merchandise during the POI, and Hongsheng as an input 
supplier. The Fasten Companies stated that Fasten Steel, Walsin, and 
Company X produced PC strand that was exported to the United States 
during the POI through Fasten I&E.\6\ According to the Fasten 
Companies, Hongyu Metal, though it produced PC strand, did not supply 
Fasten I&E with PC strand during the POI.
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    \6\ The identity of Company X is proprietary. See Preliminary 
Calculation Memo for Fasten Companies.
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    Based on the ownership information contained in the Fasten 
Companies' questionnaire responses, we find for purposes of this 
preliminary determination that, in accordance with 19 CFR 
351.525(b)(6)(vi), Fasten Corp. is cross-owned with Fasten I&E and 
Hongsheng. Our finding in this regard is based on the fact that Fasten 
I&E and Hongsheng are majority-owned by Fasten Corp.\7\ We further find 
that pursuant to 19 CFR 351.525(b)(6)(vi), Hongyu Metal is cross-owned 
with Fasten Corp., Fasten I&E, and Hongsheng by virtue of Hongsheng's 
majority ownership of Hongyu Metal.
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    \7\ The exact level of ownership is proprietary.
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    In addition, we find that Fasten Steel and Walsin are affiliated 
with Hongsheng and, thus Fasten Corp. and Fasten I&E as well, as 
defined under section 771(33)(E) of the Act.\8\ As explained above, 
under 19 CFR 351.525(b)(6)(vi), cross-ownership is normally found where 
majority voting ownership interests between two corporations or through 
common ownership of two (or more) corporations exists. The Preamble 
goes on to explain that the Department may, nonetheless, find cross-
ownership where the level of ownership is less than 50 percent if the 
Department finds that the interests of the firms in question have 
merged to such a degree that one corporation can use or direct the 
individual assets (or subsidy benefits) of the other firm in 
essentially the same ways it can use its own assets (or subsidy 
benefits). See Preamble, 63 FR at 65401.
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    \8\ The level of ownership of Fasten Steel and Walsin held by 
Hongsheng is proprietary.
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    Based on Hongsheng's level of ownership of Fasten Steel, combined 
with the information in the Fasten Companies October 15, 2009, we 
preliminarily determine that Fasten Steel is cross-owned with Hongsheng 
and, thus, is cross-owned with the Fasten Companies. The Fasten 
Companies October 15, 2009, submission indicates that Hongsheng 
possesses a significant ability to control the operations of Fasten 
Steel. Hongsheng appointed three out of seven of directors in Fasten 
Steel's board of directors. One of the individuals appointed to the 
board of Fasten Steel serves as the board chairman. The other two board 
members of appointed by Hongsheng serve Fasten Steel's as director and 
general manager. See the Fasten Companies October 15, 2009, submission 
at 1 through 4. In addition, the October 15, 2009, submission indicates 
that Hongsheng served as the guarantor on several of Fasten Steel's 
loans. Also, the October 15, 2009, submission indicates a degree of 
cooperation with respect to the wire rod that Hongsheng acquired from 
wire rod suppliers during the POI. As the Fasten Companies explain, 
``during Hongsheng's negotiations with rod suppliers, Fasten Steel did 
play an import role because, as a producer of the subject merchandise, 
Fasten Steel had a better understanding of the wire rod market and 
prices.'' See October 19, 2009, submission as 3. Lastly, information 
supplied by Hongyu Metal indicates that during the POI, Hongyu Metal 
paid its electricity expenses to Fasten Steel thereby further 
indicating the degree to which Fasten Steel inter-connected with 
subsidiaries of Hongsheng. See Hongyu Metal's August 26, 2009, 
submission at 22. Therefore, based on this information, we 
preliminarily determine that Fasten Steel is cross-owned with Hongsheng 
as well as Fasten Corp., Hongyu Metal, and Fasten I&E. Consequently, as 
explained further below, measurement of any subsidy benefits received 
by Fasten I&E, Hongyu Metal or Fasten Steel are subject to the cross-
ownership regulations under 19 CFR 351.525(b), as applicable.
    Regarding Walsin, we have not reached any conclusions with respect 
to cross-ownership. However, as a producer of subject merchandise whose 
goods were exported by Fasten I&E to the United States during the POI, 
we find that any subsidies to Walsin are attributable to the subject 
merchandise pursuant to the Department's trading company regulation at 
19 CFR 351.525(c). Therefore, we find it unnecessary to reach any 
conclusions with respect to cross-ownership.
    Regarding Company X, we find that affiliation and cross-ownership 
do not exist with regard to Fasten Corp., Fasten I&E, Hongsheng, Fasten 
Steel, or Hongyu Metal. However, measurement of any subsidy benefits 
received by Company X remains subject to our trading company regulation 
within the meaning of 19 CFR 351.525(c).
    Regardless of cross-ownership, under 19 CFR 351.525(c), benefits 
from subsidies provided to a trading company which exports subject 
merchandise shall be cumulated with benefits from subsidies provided to 
the firm which is producing subject merchandise that is sold through 
the trading company. However, when investigating or reviewing 
companies, the Department, has, in some instances, limited the number 
of producers it examines under 19 CFR 351.525(c). For example, in Pasta 
from Italy, one of the mandatory respondents selected was a trading 
company that exported pasta produced by multiple pasta manufacturers. 
In accordance with 19 CFR 351.525(c), the Department cumulated the 
benefits received by the trading company and its pasta producers, but, 
limited its analysis to the two major pasta manufacturers that supplied 
the trading company during the period of review (POR). See Certain 
Pasta from Italy: Final Results of the Fourth Countervailing Duty 
Administrative Review, 66 FR 64214 (December 12, 2001) (Pasta from 
Italy), and accompanying Issues and Decision Memorandum (Pasta from 
Italy Decision Memorandum) at ``Attribution.''
    Similarly, in light of the circumstances of the instant case, we 
preliminarily determine that it is appropriate to limit our examination 
of possible subsidies to PC strand producers to the following 
companies, all of whom are affiliated in some manner with the Fasten 
Corp.: Fasten Steel, Hongyu Metal, and Walsin. We note that, when 
compared with Company X, Walsin accounted for a larger share of PC 
strand exported to the United States by Fasten I&E during the POI. See 
the Memorandum to the File from Eric B. Greynolds, Program Manager, 
Office 3, ``Analysis of Fasten Group Import & Export Co., Ltd.'s 
(Fasten I&E) Suppliers of Subject Merchandise'' (October 26, 2009), of 
which the public version is on file in the CRU of the Commerce 
Building.
    In consideration of the foregoing, in accordance with 19 CFR 
351.525(b)(6)(iii), we have attributed subsidies received by the Fasten 
Corp. to the consolidated sales of the Fasten Corp., which include 
Fasten I&E. In accordance with 19 CFR 351.525(b)(6)(i), we have 
attributed subsidies received by Fasten I&E to the sales of Fasten I&E.
    In accordance with 19 CFR 351.525(c), we have cumulated the 
subsidies received by Walsin with benefits from subsidies attributable 
to Fasten I&E. Specifically, for each countervailable subsidy received 
by Walsin, we derived the benefit and calculated a program subsidy 
rate. We then multiplied the total subsidy rate

[[Page 56579]]

calculated for Walsin by Walsin's share of PC strand that was exported 
to the United States during the POI by Fasten I&E.\9\ Lastly, we added 
the apportioned subsidy rate to the other subsidy rates attributable to 
Fasten I&E.
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    \9\ In deriving the share of PC strand produced by Fasten Steel 
and Walsin that was exported by Fasten Steel I&E during the POI, we 
did not include the sales volume of Company X.
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    Concerning Hongyu Metal and Fasten Steel, we are attributing 
subsidies received those firms by the sum of the firms' respective 
total sales and the sales of Fasten I&E. See 19 C.F.R. 
351.525(b)(6)(ii). As noted above, Hongyu Metal did not produce PC 
strand that was exported to the United States by Fasten I&E during the 
POI. Nonetheless, our decision to examine subsidies received by Hongyu 
Metal is consistent with the Department's prior practice, which was 
affirmed by the Court of International Trade. See Cut-to-Length Carbon 
Steel Plate From Belgium; Final Results of Countervailing Duty 
Administrative Review, 64 FR 12982, 12984 (March 16, 1999); see also 
Fabrique, 166 F. Supp. 2d 593, 603-604.
    As explained in the ``Analysis of Programs'' section below, we are 
examining whether Hongsheng purchased wire rod for LTAR.\10\ Hongsheng 
did not produce the wire rod that it sold to Fasten Steel and Hongyu 
Metal during the POI. Rather, Hongsheng acquired the inputs from other 
producers. Therefore, in conducting our subsidy analysis of the 
provision of wire rod for LTAR program, we limited our benefit 
calculations to Hongsheng's wire rod suppliers that we have determined 
are government authorities capable of providing a financial 
contribution as described under 771(5)(D)(iv) of the Act. In accordance 
with 19 CFR 351.525(b)(6)(iii), we are attributing subsidies received 
by Hongsheng to sales of Hongsheng, Hongyu Metal, Fasten Steel, and 
Fasten I&E.
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    \10\ Concerning Walsin, during the POI it purchased its wire rod 
inputs from suppliers other than Hongsheng.
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    Further, we are attributing any benefits received by Walsin in 
connection with the purchase of wire rod for LTAR produced by 
government authorities to the total sales of Walsin. In addition, we 
are cumulating the subsidies received by Walsin with those subsidies 
received by Fasten I&E in the manner described above.

Xinhua, Xinyu, and Xingang (Collectively the Xinhua Companies)

    In its initial questionnaire response, Xinhua reported that it is 
wholly-owned by Xinyu and that Xinyu, in turn, is wholly-owned by 
Xingang. In accordance with 19 CFR 351.525(b)(6)(vi), we preliminarily 
determine that Xinhua, Xinyu, and Xingang are cross-owned. Further, 
pursuant to 19 CFR 351.525(b)(6)(iii), we are attributing the subsidies 
received by Xingang to the consolidated sales of Xingang, which include 
Xinyu and Xinhua. Similarly, we are attributing the subsidies received 
by Xinyu to the consolidated sales of Xinyu, which include Xinhua. And, 
in accordance with 19 CFR 351.525(b)(6)(i), we are attributing 
subsidies received by Xinhua to the sales of Xinhua. Lastly, pursuant 
to 19 CFR 351.525(b)(6)(v), we are attributing subsidies transferred to 
Xinhua from a cross-owned firm to the sales of Xinhua.
    Xinhua reported that it acquired a relatively small quantity of 
wire rod inputs from Xinyu during the POI. For purposes of the 
preliminary determination, we are treating Xinhua's purchases of wire 
rod from Xinyu as an internal transaction that does not constitute a 
financial contribution from a government authority. Therefore, we have 
not included such transactions in our subsidy analysis.

Allocation Period

    Under 19 CFR 351.524(b), non-recurring subsidies are allocated over 
a period corresponding to the average useful life (AUL) of the 
renewable physical assets used to produce the subject merchandise. 
Pursuant to 19 CFR 351.524(d)(2), there is a rebuttable presumption 
that the AUL will be taken from the U.S. Internal Revenue Service's 
1977 Class Life Asset Depreciation Range System (IRS Tables), as 
updated by the Department of Treasury. For the subject merchandise, the 
IRS Tables prescribe an AUL of 12 years. As no interested party has 
claimed that the AUL of 12 years is unreasonable, we will allocate non-
recurring subsidies over a period of 12 years.
    Further, for non-recurring subsidies, we have applied the ``0.5 
percent expense test'' described in 19 CFR 351.524(b)(2). Under this 
test, we divide the amount of subsidies approved under a given program 
in a particular year by the sales (total sales or total export sales, 
as appropriate) for the same year. If the amount of subsidies is less 
than 0.5 percent of the relevant sales, then the benefits are allocated 
to the year of receipt rather than allocated over the AUL period.
    Additionally, in accordance with the Department's practice we have 
determined that we will identify and measure subsidies in China 
beginning on the date of the country's accession to the World Trade 
Organization (WTO), December 11, 2001. See, e.g., Circular Welded 
Carbon Quality Steel Line Pipe from the People's Republic of China: 
Final Affirmative Countervailing Duty Determination, 73 FR 70961 
(November 24, 2008) (Line Pipe from the PRC), and accompanying Issues 
and Decision Memorandum (Line Pipe from the PRC Decision Memorandum) at 
``Allocation Period'' section and Comment 18.

Adverse Facts Available

Provision of Electricity for LTAR

    On July 2, 2009, the Department issued its initial questionnaire to 
the GOC. In the questionnaire, the Department asked the GOC several 
questions regarding its alleged provision of electricity to the 
mandatory respondents for LTAR. See Appendix 7 of the Department's 
initial questionnaire. The GOC failed to respond to these questions. 
See the GOC's August 24, 2009, questionnaire response at 52 through 55. 
The Department issued a supplemental questionnaire in which it asked 
the GOC once again to submit the requested information concerning the 
provision of electricity for LTAR program. See the Department's 
September 2, 2009, supplemental questionnaire. Again, the GOC failed to 
provide all of the requested information with regard to several of the 
Department's questions. See the GOC's September 29, 2009, supplemental 
questionnaire response at 12 through 14.
    Section 776(a)(2)(A) of the Act states that the Department shall 
use facts available when a party withholds information that has been 
requested by the Department. Further, section 776(b) of the Act states 
that if the Department finds that an interested party fails to 
cooperate by not acting to the best of its ability to comply with a 
request for information, the Department may use an inference that is 
adverse to the interests of that party in selecting from the facts 
otherwise available.
    As summarized above, the GOC did not provide the information 
requested by the Department as it pertains to the provision of 
electricity for LTAR program. We find that in failing to provide the 
requested information the GOC did not act to the best of its ability. 
Accordingly, in selecting from among the facts available, we are 
drawing an adverse inference with respect to the provision of 
electricity in the PRC and determine that the GOC is providing a 
financial contribution that is specific within the meaning of section 
771(5A)(D)(iv) of the Act. See the ``Federal Provision of Electricity 
for

[[Page 56580]]

LTAR'' section of this preliminary determination for a discussion of 
the Department's derivation of the benefit.

Various Grant Programs

    The Fasten Companies and the Xinhua Companies reported receiving 
grants under various central, provincial, and municipal level programs. 
We sent out supplemental questionnaires to the GOC regarding these 
grant programs. In certain instances, the GOC failed to provide the 
information necessary for the Department to conduct its subsidy 
analysis as it pertains to the issue of de facto specificity, as 
described under section 771(5A)(D)(iii) of the Act. Namely, the GOC 
failed to provide, as requested, information concerning the manner in 
which the various grants were distributed across firms and industries.
    We preliminarily determine that by failing to provide the requested 
information, the use of facts available, as described under 
776(a)(2)(A) of the Act, is warranted. We further preliminarily 
determine that the GOC has failed to act to the best of its ability 
concerning these grant programs and that the application of AFA, 
described under section 776(b) of the Act, is warranted. Therefore, we 
are finding that the grant programs are specific under section 
771(5A)(D)(iii) of the Act. The grant programs for which we are 
applying AFA in this regard are discussed below in the ``Analysis of 
Programs'' section.

Status of Wire Rod Suppliers

    The Department is investigating the extent to which firms, acting 
as government authorities, sold wire rod to the respondents for LTAR. 
As discussed in further detail below in the ``Provision of Wire Rod for 
LTAR'' section, the Department sought information from the mandatory 
respondents and the GOC concerning the identity of the firms that 
produced the wire rod ultimately sold to the mandatory respondents 
during the POI. In other words, the Department sought information that 
would enable it to determine whether the input suppliers acted either 
as producers of the input or as trading companies that resold the input 
that was produced by other firms. Without being able to confirm the 
identity of the ultimate producer of the wire rod, the Department is 
unable to determine whether the wire rod was supplied by government 
authorities. In some instances, the GOC and the mandatory respondents 
failed to provide the requested information. We preliminarily determine 
that the GOC and the mandatory respondents have not provided the 
requested information and that the use of facts available, as described 
under section 776(a)(2)(A) of the Act is warranted. We further 
preliminarily determine that the GOC and the mandatory respondents did 
not act to the best of their ability, as described under section 776(b) 
of the Act, when failing to respond to the Department's requests for 
information concerning the status of the mandatory respondents' input 
suppliers. Therefore, as AFA in this preliminary determination, we are 
making the following assumptions:
    1. In instances in which a mandatory respondent identified an input 
supplier as a private company but failed to indicate whether the 
supplier was an input producer or a trading company, we are assuming 
that the supplier acted as a trading company, and;
    2. In instances in which the mandatory respondent indentified an 
input supplier as a state-owned company but failed to indicate whether 
the supplier was an input producer or a trading company, we are 
assuming that the supplier acted as a producer.
These adverse assumptions have the effect of increasing the amount of 
benefits attributed to the mandatory respondent in question.

Subsidies Valuation Information

Benchmarks and Discount Rates

Benchmarks for Short-Term RMB Denominated Loan

    Section 771(5)(E)(ii) of the Act explains that the benefit for 
loans is the ``difference between the amount the recipient of the loan 
pays on the loan and the amount the recipient would pay on a comparable 
commercial loan that the recipient could actually obtain on the 
market.'' Normally, the Department uses comparable commercial loans 
reported by the company for benchmarking purposes. See 19 CFR 
351.505(a)(3)(i). If the firm did not have any comparable commercial 
loans during the period, the Department's regulations provide that we 
``may use a national interest rate for comparable commercial loans.'' 
See 19 CFR 351.505(a)(3)(ii).
    As noted above, section 771(5)(E)(ii) of the Act indicates that the 
benchmark should be a market-based rate. For the reasons explained in 
CFS from the PRC, loans provided by Chinese banks reflect significant 
government intervention in the banking sector and do not reflect rates 
that would be found in a functioning market. See CFS from the PRC 
Decision Memorandum at Comment 10. Because of this, any loans received 
by respondents from private Chinese or foreign-owned banks would be 
unsuitable for use as benchmarks under 19 CFR 351.505(a)(2)(i). 
Similarly, we cannot use a national interest rate for commercial loans 
as envisaged by 19 CFR 351.505(a)(3)(ii). Therefore, because of the 
special difficulties inherent in using a Chinese benchmark for loans, 
the Department is selecting an external market-based benchmark interest 
rate. The use of an external benchmark is consistent with the 
Department's practice. For example, in Softwood Lumber from Canada, the 
Department used U.S. timber prices to measure the benefit for 
government-provided timber in Canada. See Notice of Final Affirmative 
Countervailing Duty Determination and Final Negative Critical 
Circumstances Determination: Certain Softwood Lumber Products From 
Canada, 67 FR 15545 (April 2, 2002) (Softwood Lumber from Canada), and 
accompanying Issues and Decision Memorandum (Softwood Lumber from 
Canada Decision Memorandum) at ``Analysis of Programs, Provincial 
Stumpage Programs Determined to Confer Subsidies, Benefit.''
    We are calculating the external benchmark using the regression-
based methodology first developed in CFS from the PRC and more recently 
updated in LWTP from the PRC. See CFS from the PRC Decision Memorandum 
at Comment 10; see also LWTP from the PRC Decision Memorandum at 
``Benchmarks and Discount Rates'' section. This benchmark interest rate 
is based on the inflation-adjusted interest rates of countries with per 
capita GNIs similar to the PRC, and takes into account a key factor 
involved in interest rate formation, that of the quality of a country's 
institutions, that is not directly tied to the state-imposed 
distortions in the banking sector discussed above.
    Following the methodology developed in CFS from the PRC, we first 
determined which countries are similar to the PRC in terms of gross 
national income (GNI), based on the World Bank's classification of 
countries as: low income; lower-middle income; upper-middle income; and 
high income. The PRC falls in the lower-middle income category, a group 
that includes 55 countries as of July 2007. As explained in CFS from 
the PRC, this pool of countries captures the broad inverse relationship 
between income and interest rates.
    Many of these countries reported lending and inflation rates to the 
International Monetary Fund and they

[[Page 56581]]

are included in that agency's international financial statistics (IFS). 
With the exceptions noted below, we have used the interest and 
inflation rates reported in the IFS for the countries identified as 
``low middle income'' by the World Bank. First, we did not include 
those economies that the Department considered to be non-market 
economies for antidumping (AD) purposes for any part of the years in 
question (Armenia, Azerbaijan, Belarus, Georgia, Moldova, 
Turkmenistan). Second, the pool necessarily excludes any country that 
did not report both lending and inflation rates to IFS for those years. 
Third, we removed any country that reported a rate that was not a 
lending rate or that based its lending rate on foreign-currency 
denominated instruments. Specifically, Jordan reported a deposit rate, 
not a lending rate, and the rates reported by Ecuador and Timor L'Este 
are dollar-denominated rates; therefore, the rates for these three 
countries have been excluded. Finally, for each year the Department 
calculated an inflation-adjusted short-term benchmark rate, we have 
also excluded any countries with aberrational or negative real interest 
rates for the year in question.
    The resulting inflation-adjusted benchmark lending rates are 
provided in the respondents' preliminary calculation memoranda. Because 
these are inflation-adjusted benchmarks, it is necessary to adjust the 
respondents' interest payments for inflation. This was done using the 
PRC inflation figure as reported in the IFS.

Benchmarks for Long-Term Loans

    The lending rates reported in the IFS represent short- and medium-
term lending, and there are not sufficient publicly available long-term 
interest rate data upon which to base a robust benchmark for long-term 
loans. To address this problem, the Department has developed an 
adjustment to the short- and medium-term rates to convert them to long-
term rates using Bloomberg U.S. corporate BB-rated bond rates. See 
Light-Walled Rectangular Pipe and Tube From the People's Republic of 
China: Final Affirmative Countervailing Duty Investigation 
Determination, 73 FR 35642 (June 24, 2008) (LWRP from the PRC), and 
accompanying Issues and Decision Memorandum (LWRP from the PRC Decision 
Memorandum) at ``Discount Rates'' section. In Citric Acid from the PRC, 
this methodology was revised by switching from a long-term mark-up 
based on the ratio of the rates of BB-rated bonds to applying a spread 
which is calculated as the difference between the two-year BB bond rate 
and the n-year BB bond rate, where n equals or approximates the number 
of years of the term of the loan in question. See Citric Acid and 
Certain Citrate Salts From the People's Republic of China: Final 
Affirmative Countervailing Duty Determination, 74 FR 16836 (April 13, 
2009) (Citric Acid from the PRC), and accompanying Issues and Decision 
Memorandum (Citric Acid from the PRC Decision Memorandum) at Comment 
14. Finally, because these long-term rates are net of inflation as 
noted above, we adjusted the PRC respondents' payments to remove 
inflation.

Benchmarks for Foreign Currency-Denominated Loans

    For foreign currency-denominated short-term loans, the Department 
used as a benchmark the one-year dollar interest rates for the London 
Interbank Offering Rate (LIBOR), plus the average spread between LIBOR 
and the one-year corporate bond rates for companies with a BB rating. 
See LWTP from the PRC Decision Memorandum at ``Benchmarks and Discount 
Rates'' section. For long-term foreign currency-denominated loans, the 
Department added the applicable short-;term LIBOR rate to a spread 
which is calculated as the difference between the one-year BB bond rate 
and the n-year BB bond rate, where n equals or approximates the number 
of years of the term of the loan in question.

Discount Rates

    Consistent with 19 CFR 351.524(d)(3)(i)(A), we have used as our 
discount rate the long-term interest rate calculated according to the 
methodology described above for the year in which the government agreed 
to provide the subsidy.

Analysis of Programs

I. Programs Preliminarily Determined To Be Countervailable

A. Provision of Wire Rod from LTAR

    The Department is investigating whether producers and suppliers, 
acting as Chinese government authorities, sold wire rod to the 
mandatory respondents for LTAR. The Xinhua Companies and the Fasten 
Companies reported obtaining wire rod during the POI from trading 
companies as well as directly from wire rod producers.
    In Tires from the PRC, the Department determined that majority 
government ownership of an input producer is sufficient to qualify it 
as an ``authority.'' See Certain New Pneumatic Off-the-Road Tires From 
the People's Republic of China: Final Affirmative Countervailing Duty 
Determination and Final Negative Determination of Critical 
Circumstances, 73 FR 40480 (July 15, 2008) (Tires from the PRC), and 
accompanying Issues and Decision Memorandum (Tires from the PRC 
Decision Memorandum) at ``Government Provision of Rubber for Less than 
Adequate Remuneration.'' Based on the record in the instant 
investigation, we determine that wire rod producers that supply 
respondents and that are majority-government owned are ``authorities.'' 
As a result, we determine that wire rod supplied by companies deemed to 
be government authorities constitute a financial contribution to 
respondents in the form of a governmental provision of a good and that 
the respondents received a subsidy to the extent that the price they 
paid for wire rod produced by these suppliers was sold for LTAR. See 
sections 771(5)(D)(iv) and 771(5)(E)(iv) of the Act.
    The Fasten Companies and the Xinhua Companies reported acquiring 
certain quantities of wire rod from trading companies. In prior CVD 
proceedings involving the PRC, the Department has determined that when 
a respondent purchases an input from a trading company or non-producing 
supplier, a subsidy is conferred if the producer of the input is an 
``authority'' within the meaning of section 771(5)(B) of the Act and 
the price paid by the respondent for the input was sold for LTAR. See 
CWP from the PRC Decision Memorandum at ``Hot-Rolled Steel for Less 
Than Adequate Remuneration'' section; see also Certain Kitchen Shelving 
and Racks from the People's Republic of China: Final Affirmative 
Countervailing Duty Determination, 74 FR 37012 (July 27, 2009) (Racks 
from the PRC), and accompanying Issues and Decision Memorandum (Racks 
from the PRC Decision Memorandum) at ``Provision of Wire Rod for Less 
than Adequate Remuneration'' section, and CWASPP from the PRC Decision 
Memorandum at ``Provision of SSC for LTAR.'' Therefore, in our initial 
questionnaire, we requested that the respondent companies and the GOC 
work together in order to identify the producers from whom the trading 
companies acquired the wire rod that was subsequently sold to 
respondents during the POI and to provide information that would allow 
the Department to determine whether those producers were government 
authorities. In several instances, the GOC and the mandatory 
respondents were able to supply the requested information.
    However, in some instances, although the GOC and the mandatory 
respondents properly indicated whether

[[Page 56582]]

the wire rod suppliers were trading companies in the business of 
reselling wire rod they were, nonetheless, unable to identify the 
producers that supplied the trading companies. Because the respondent 
companies and the GOC have not been able to supply the requested 
information, we find that the necessary information is not on the 
record and, as a result, we are resorting to the use of facts available 
(FA) within the meaning of sections 776(a)(1) and (2) of the Act. In 
its response, the GOC provided information on the amount of wire rod 
produced by state-owned enterprises (SOEs) and private producers in the 
PRC. Using these data, we derived the ratio of wire rod produced by 
SOEs during the POI. Thus, pursuant to sections 776(a)(1) and (2) of 
the Act, we have resorted to the use of FA with regard to the wire rod 
sold to the Fasten Companies and Xinhua Companies by certain domestic 
trading companies. Specifically, we assumed that the percentage of wire 
rod supplied by these domestic trading companies that is produced by 
government authorities is equal to the ratio of wire rod produced by 
SOEs during the POI.\11\ See Preliminary Calculation Memoranda for the 
Fasten Companies and the Xinhua Companies. The approach is consistent 
with the Department's practice. See, e.g., CWP from the PRC Decision 
Memorandum at ``Hot-Rolled Steel for Less Than Adequate Remuneration;'' 
see also LWRP from the PRC Decision Memorandum at ``Hot-Rolled Steel 
for Less Than Adequate Remuneration.''
---------------------------------------------------------------------------

    \11\ In other words, in instances where we are applying FA, we 
are assuming that the percentage of wire rod purchased by domestic 
trading companies during the POI was equal to the ratio of wire rod 
produced by SOEs during the POI, as indicated by the aggregate data 
supplied in the questionnaire responses of the GOC.
---------------------------------------------------------------------------

    In other instances, the GOC and the mandatory respondents failed to 
indicate, as instructed, whether their wire rod suppliers were 
producers or trading companies. This lack of information impedes our 
ability to determine whether the wire sold by these wire rod suppliers 
was, in fact, produced by a government authority. See section 
776(a)(2)(A) and (C) of the Act. Therefore, as discussed in the 
``Adverse Facts Available'' section, we are resorting to the use of AFA 
as described under section 776(b) of the Act. Specifically, we are 
making the following adverse assumptions:
    1. In instances in which a mandatory respondent identified an input 
supplier as a private company but failed to indicate whether the 
supplier was an input producer or a trading company, we are assuming 
that the supplier acted as a trading company, and;
    2. In instances in which the mandatory respondent indentified an 
input supplier as a state-owned company but failed to indicate whether 
the supplier was an input producer or a trading company, we are 
assuming that the supplier acted as a producer.
These adverse assumptions have the effect of increasing the amount of 
benefits attributed to the mandatory respondent in question.
    Having addressed the issue of financial contribution, we must next 
analyze whether the sale of wire rod to the mandatory respondents by 
suppliers designated as government authorities conferred a benefit 
within the meaning of section 771(5)(iv) of the Act. The Department's 
regulations at 19 CFR 351.511(a)(2) set forth the basis for identifying 
appropriate market-determined benchmarks for measuring the adequacy of 
remuneration for government-provided goods or services. These potential 
benchmarks are listed in hierarchical order by preference: (1) market 
prices from actual transactions within the country under investigation 
(e.g., actual sales, actual imports or competitively run government 
auctions) (tier one); (2) world market prices that would be available 
to purchasers in the country under investigation (tier two); or (3) an 
assessment of whether the government price is consistent with market 
principles (tier three). As we explained in Softwood Lumber from 
Canada, the preferred benchmark in the hierarchy is an observed market 
price from actual transactions within the country under investigation 
because such prices generally would be expected to reflect most closely 
the prevailing market conditions of the purchaser under investigation. 
See Softwood Lumber from Canada Decision Memorandum at ``Market-Based 
Benchmark'' section.
    Beginning with tier-one, we must determine whether the prices from 
actual sales transactions involving Chinese buyers and sellers are 
significantly distorted. As explained in the Preamble:
    Where it is reasonable to conclude that actual transaction prices 
are significantly distorted as a result of the government's involvement 
in the market, we will resort to the next alternative {tier two{time}  
in the hierarchy.
    See Preamble to Countervailing Duty Regulations, 63 FR 65377, 
(November 25, 1998) (Preamble). The Preamble further recognizes that 
distortion can occur when the government provider constitutes a 
majority or, in certain circumstances, a substantial portion of the 
market. Id.
    In the instant investigation, the GOC reported the total wire rod 
production by state-owned entities during the POI. The number of these 
state-owned entities (SOEs and COEs) accounted for approximately the 
same percentage of the wire rod production in the PRC as was recently 
found in Shelving and Racks from the PRC, in which the Department 
determined that the GOC had direct ownership or control of wire rod 
production. See Shelving and Racks Decision Memorandum, at Comment 4. 
Because the GOC has not provided any information that would lead the 
Department to reconsider the determination in Shelving and Racks from 
the PRC, we find that the substantial market share held by SOEs shows 
that the government plays a predominant role in the this market. See 
Shelving and Racks Decision Memorandum at 15. The government's 
predominant position is further demonstrated by the low level of 
imports, which accounted for only 0.91 percent of the volume of wire 
rod available in the Chinese market during the POI. See GOC's September 
15, 2009, questionnaire response at 23. Because the share of imports of 
wire rod into the PRC is small relative to Chinese domestic production 
of wire rod, it would be inappropriate to use import values to 
calculate a benchmark. This is consistent with the Department's 
approach discussed in LWRP Decision Memorandum, at Comment 7.
    In addition to the government's predominant role in the market, we 
found in Shelving and Racks from the PRC that the 10 percent export 
tariff and export licensing requirement instituted by the GOC 
contributed to the distortion of the domestic market in the PRC for 
wire rod. Such export restraints can discourage exports and increase 
the supply of wire rod in the domestic market, with the result that 
domestic prices are lower than they would otherwise be. See Shelving 
and Racks Decision Memorandum at 15. Consequently, we determine that 
there are no appropriate tier one benchmark prices available for wire 
rod.
    We note that Fasten I&E reported that it imported wire rod during 
the POI. See Exhibit 1 of Fasten I&E's September 22, 2009, supplemental 
questionnaire response. As noted above, imports of wire rod accounted 
for a small percent of the volume of wire rod available in the Chinese 
market during the POI. As explained above, we have determined that 
there are no appropriate tier-one

[[Page 56583]]

benchmark prices on the record, including import prices. This is 
consistent with the Department's approach in prior CVD proceedings 
involving the PRC. See LWRP from the PRC Decision Memorandum at Comment 
7; see also Racks from the PRC Decision Memorandum at ``Provision of 
Wire Rod for Less Than Adequate Remuneration'' section. Consequently, 
because we determine that there are no available tier-one benchmark 
prices, we have turned to tier-two, i.e., world market prices available 
to purchasers in the PRC.
    We next examined whether the record contained data that could be 
used as a tier-two wire rod benchmark under 19 CFR 351.511(a)(2)(ii). 
The Department has on the record of the investigation prices for SWRH 
82B wire rod (or high carbon wire rod), as sourced from the American 
Metals Market (AMA). See petitioners' October 6, 2009, submission at 
Exhibit 4. The benchmark prices are reported on a monthly basis in U.S. 
dollars per metric ton (MT). Petitioners provide information indicating 
that one of the producers of subject merchandise, Walsin, uses SWRH 82B 
to produce subject merchandise. No other interested party submitted 
tier-two wire prices on the record of the investigation.
    Therefore, for purposes of the preliminary determination, we find 
that the data from AMA should be used to derive a tier-two, world 
market price for wire rod that would be available to purchasers of wire 
rod in the PRC. We note that the Department has relied on pricing data 
from industry publications in recent CVD proceedings involving the PRC. 
See, e.g., CWP from the PRC Decision Memorandum at ``Hot-Rolled Steel 
for Less Than Adequate Remuneration'' section; see also LWRP from the 
PRC Decision Memorandum at ``Hot-Rolled Steel for Less Than Adequate 
Remuneration'' section. We find that, for purposes of the preliminary 
determination, prices from the AMA to be sufficiently reliable and 
representative.
    To determine whether wire rod suppliers, acting as government 
authorities, sold wire rod to respondents for LTAR, we compared the 
prices the respondents paid to the suppliers to our wire rod benchmark 
price. We conducted our comparison on a monthly basis. When conducting 
the price comparison, we converted the benchmark to the same currency 
and unit of measure as reported by the mandatory respondents for their 
purchases of wire rod.
    Under 19 CFR 351.511(a)(2)(iv), when measuring the adequacy of 
remuneration under tier one or tier two, the Department will adjust the 
benchmark price to reflect the price that a firm actually paid or would 
pay if it imported the product, including delivery charges and import 
duties. Regarding delivery charges, at this time we lack information 
and, therefore, have not adjusted the benchmark in this regard, but 
will continue to seek the relevant information for the final 
determination. However, we have added import duties, as reported by the 
GOC, and the VAT applicable to imports of wire rod into the PRC. With 
respect to the three percent insurance charge on imports noted by the 
petitioner, consistent with Racks from the PRC, while the Department 
will consider in future determinations the propriety of including 
insurance as a delivery charge, the existing record of this 
investigation does not support such an adjustment. See Racks from the 
PRC Decision Memorandum.
    Comparing the benchmark unit prices to the unit prices paid by 
respondents for wire rod, we determine that wire rod was provided for 
LTAR and that a benefit exists in the amount of the difference between 
the benchmark and what the respondent paid. See section 771(5)(E)(iv) 
of the Act and 19 CFR 351.511(a). In the case of the Xinhua Companies, 
we compared the wire rod benchmarks prices to the prices the Xinhua 
Companies paid to their wire rod suppliers. Xinhua purchased some of 
its wire rod from Xinyu. As explained in the ``Attribution'' section 
above, we are not including Xinhua's purchases of wire rod from Xinyu 
in our subsidy calculations. In the case of Hongsheng, we compared the 
wire rod benchmark prices to the prices Hongsheng paid to its wire rod 
suppliers. In the case of Walsin, it purchased its wire rod from 
suppliers other than Hongsheng. Thus, we compared the wire rod 
benchmark prices to the prices Walsin paid to its suppliers.
    Finally, with respect to specificity, the third subsidy element 
specified under the Act, the GOC has provided information on end uses 
for wire rod. See Exhibit 58 of the GOC's August 26, 2009, 
questionnaire response. The GOC stated that the end uses of wire rod 
relate to the type of industry involved as a direct purchaser of the 
input. The GOC further stated that the consumption of wire rod occurs 
across a broad range of industries. While numerous companies may 
comprise the listed industries, section 771(5A)(D)(iii)(I) of the Act 
clearly directs the Department to conduct its analysis on an industry 
or enterprise basis. Based on our review of the data and consistent 
with our past practice, we determine that the industries named by the 
GOC are limited in number and, hence, the subsidy is specific. See 
section 771(5A)(D)(iii)(I) of the Act. See LWRP from the PRC Decision 
Memorandum at Comment 7; see also Racks from the PRC Decision 
Memorandum at ``Provision of Wire Rod from Less Than Adequate 
Remuneration.''
    We find that the GOC's provision of wire rod for LTAR to be a 
domestic subsidy as described under 19 CFR 351.525(b)(3). Therefore, to 
calculate the net subsidy rate, we divided the benefit by a denominator 
comprised of total sales. Regarding the Xinhua companies, for wire rod 
sold to Xinhua for LTAR, we divided Xinhua's benefit by Xinhua's total 
sales. Regarding the Fasten Companies, for wire rod sold to Hongsheng 
for LTAR, we divided Hongsheng's benefit by combined total sales of 
Hongsheng, Fasten Steel, Hongyu Metal, and Fasten I&E. Regarding wire 
rod sold to Walsin for LTAR, we divided Walsin's benefit by its total 
sales. We then cumulated the benefits Walsin received under the program 
using the methodology described in the ``Attribution'' section of this 
preliminary determination. Specifically, we multiplied the total 
subsidy rate for Walsin by its share of PC strand that was exported to 
the United States during the POI by Fasten I&E. We then added the 
resulting apportioned rate to the total subsidy rate calculated for 
Fasten I&E. On this basis, we calculated a total net subsidy rate of 
9.78 percent ad valorem for the Xinhua Companies and 5.57 percent ad 
valorem for the Fasten Companies.

B. Provision of Land Use Rights for LTAR to FIEs in Jiangxi and the 
City of Xinyu

    As explained in the Initiation Checklist that accompanied the 
Initiation, we are investigating the extent to which Jiangxi Province 
has industrial plans in place that support the provision of land to the 
members of the steel industry for LTAR and whether the City of Xinyu 
provides land to FIEs for LTAR. See Initiation Checklist at 13, of 
which a public version is available in room 1117 of the CRU of the 
Commerce Building. The Xinhua Companies are located in Jiangxi Province 
and the City of Xinyu. The Fasten Companies are not located in Jiangxi 
Province or the City of Xinyu. Therefore, we are not examining the 
Fasten Companies under this program. On this basis, we preliminarily 
determine that the Fasten Companies did not use this program during the 
POI.

[[Page 56584]]

    The Xinhua Companies reported that Xinyu acquired three parcels of 
land from government authorities located in the City of Xinyu. Two 
purchases occurred in 1996. The other purchase occurred in 2004. As 
explained above, we are limiting our analysis of subsidies beginning 
after December 11, 2001, which is the date of the PRC's accession to 
the WTO. Thus, we are not examining the land Xinyu acquired from 
government authorities in 1996. Regarding the land Xinyu acquired in 
2004, information supplied by the Xinhua Companies indicates that Xinyu 
acquired the land from the Xinyu Hi-Tech Economic Development Zone 
Committee, which we find is controlled by City of Xinyu, and that the 
land purchased is located in a development zone.
    The Department determined in LWS from the PRC that the provision of 
land-use rights constitutes the provision of a good within the meaning 
of section 771(5)(D)(iii) of the Act. See Laminated Woven Sacks from 
the People's Republic of China: Final Affirmative Countervailing Duty 
Determination and Final Affirmative Determination, in Part, of Critical 
Circumstances, 73 FR 35639 (June 24, 2008) (LWS from the PRC), and 
accompanying Issues and Decision Memorandum (LWS from the PRC Decision 
Memorandum) at Comment 8. The Department also found that when the 
provision of land-use rights in an industrial park is limited to a 
designated geographical region within the seller's (e.g., county's or 
municipality's) jurisdiction, the provision of the land-use rights is 
regionally specific under section 771(5A)(D)(iv) of the Act. Id. at 
Comment 9. In the instant investigation, the Xinyu Hi-Tech Economic 
Development Zone is a designated area within the area under the 
jurisdiction of the City of Xinyu. Therefore, consistent with LWS from 
the PRC, we preliminarily determine that Xinyu's purchase of granted 
land-use rights located within the Xinyu Hi-Tech Economic Development 
Zone in 2004 gives rise to countervailable subsidies to the extent that 
the purchases conferred a benefit.
    To determine whether the Xinhua Companies received a benefit, we 
have analyzed potential benchmarks in accordance with 19 CFR 
351.511(a). First, we look to whether there are market-determined 
prices (referred to as tier-one prices in the LTAR regulation) within 
the country. See 19 CFR 351.511(a)(2)(i). In LWS from the PRC, the 
Department determined that ``Chinese land prices are distorted by the 
significant government role in the market'' and, hence, that tier-one 
benchmarks do not exist. See LWS from the PRC Decision Memorandum at 
Comment 10. The Department also found that tier-two benchmarks (world 
market prices that would be available to purchasers in China) are not 
appropriate. Id. at ``Analysis of Programs-Government Provision of Land 
for Less Than Adequate Remuneration''; see also 19 CFR 
351.511(a)(2)(ii). Therefore, the Department determined the adequacy of 
remuneration by reference to tier-three and found that the sale of 
land-use rights in China was not consistent with market principles 
because of the overwhelming presence of the government in the land-use 
rights market and the widespread and documented deviation from the 
authorized methods of pricing and allocating land. See LWS from the PRC 
Decision Memorandum at Comment 10; see also 19 CFR 351.511(a)(2)(iii). 
We preliminarily determine that in the instant investigation the GOC 
has not submitted any information that rebuts the conclusions reached 
by the Department in LWS from the PRC.
    For these reasons, we are not able to use Chinese or world market 
prices as a benchmark. Therefore, we are preliminarily comparing the 
price that the Xinyu paid for its granted land-use rights with 
comparable market-based prices for land purchases in a country at a 
comparable level of economic development that is reasonably proximate 
to, but outside of, China. Specifically, we are preliminarily comparing 
the price Xinyu paid to the City of Xinyu in 2004 to the price of 
certain industrial land in industrial estates, parks, and zones in 
Thailand in 2004. See LWS from the PRC Decision Memorandum at 
``Analysis of Programs Government Provision of Land for Less Than 
Adequate Remuneration.''
    To calculate the benefit, we computed the amount that Xinyu would 
have paid for its granted land-use rights and subtracted the amount 
Xinyu actually paid for its 2004 purchase. Our comparison indicates 
that the price Xinyu paid to the government authority in 2004 was less 
than our land benchmark price and, thus, that Xinyu received a benefit 
under section 771(5)(E)(iv) of the Act. Next, in accordance with 19 CFR 
351.524(b)(2), we examined whether the subsidy amount exceeded 0.5 
percent of Xinyu's total consolidated sales in the year of purchase. 
Our analysis indicates that the subsidy amount exceeded the 0.5 percent 
threshold. Therefore, we used the discount rate described under the 
``Benchmarks and Discount Rates'' section of this preliminary 
determination to allocate the benefit over the life of the land-use 
rights contract, which is 50 years.
    To calculate the net subsidy rate, we divided the benefit by 
Xinyu's consolidated sales for the POI. On this basis, we calculated a 
net subsidy rate of 0.01 percent ad valorem.

C. Import Tariff and Value Added Tax Exemptions for FIES and Certain 
Domestic Enterprises Using Imported Equipment in Encouraged Industries

    Enacted in 1997, the State Council's Circular on Adjusting Tax 
Policies on Imported Equipment (Guofa No. 37) (Circular No. 37) exempts 
both foreign invested enterprises (FIEs) and certain domestic 
enterprises from the value-added tax (VAT) and tariffs on imported 
equipment used in their production. The National Development and Reform 
Commission (NDRC) and the General Administration of Customs are the 
government agencies responsible for administering this program. The 
objective of the program is to encourage foreign investment and to 
introduce foreign advanced technology equipment and industry technology 
upgrades. Under the program, companies are authorized to receive the 
exemptions based on their FIE status and the list of assets approved by 
the GOC at the time their FIE status was approved. Domestic enterprises 
eligible for the VAT and duty exemptions must have government-approved 
projects that are in line with the current ``Catalog of Key Industries, 
Products, and Technologies the Development of Which is Encouraged by 
the State.'' Whether an FIE or domestic enterprise, only equipment that 
is not listed in the Catalog on Non-Duty Exemptible Article for 
Importation is eligible for the VAT and duty exemptions. Different 
catalogs are prepared for FIEs and domestic enterprises. To receive the 
exemptions, a qualified enterprise has to show a certificate provided 
by the NDRC, or its provincial branch, to the customs officials upon 
importation of the equipment.
    Xinhua, Xinyu, and Xingang reported receiving VAT and duty 
exemptions under this program due to its status as a qualified domestic 
enterprise. Walsin and Hongyu Metal also reported using this program 
due to their status as FIEs.
    We preliminarily determine that the VAT and duty exemptions 
received under the program constitute a financial contribution in the 
form of revenue forgone by the GOC, which provide a benefit to the 
recipients in the amount of the VAT and tariff savings. See

[[Page 56585]]

sections 771(5)(D)(ii) and 771(5)(E) of the Act, as well as 19 CFR 
351.510(a)(1).
    We acknowledge that the pool of companies eligible for benefits is 
larger than FIEs because some domestic companies may also qualify for 
the exemptions. However, as explained above and in past CVD 
proceedings, the domestic enterprises must have government-approved 
projects which are in line with the current ``Catalog of Key 
Industries, Products, and Technologies the Development of Which Is 
Encouraged by the State,'' and must be approved by the State Council, 
NDRC, or another agency to which authority has been delegated. 
Therefore, we determine that the addition of certain domestic 
enterprises as eligible users does not broaden the reach or variety of 
users sufficiently to render the program non-specific. On this basis, 
we continue to find the program is specific under section 
771(5A)(D)(iii)(I) of the Act. Our determination to countervail this 
program is consistent with the Department's treatment of this program 
in past CVD proceedings involving the PRC. See, e.g., CFS from the PRC 
Decision Memorandum at ``VAT and Tariff Exemptions on Imported 
Equipment'' and Comment 16; see also Tires from the PRC Decision 
Memorandum at ``VAT and Tariff Exemptions for FIEs and Certain Domestic 
Enterprises Using Imported Equipment on Encouraged Industries.''
    Normally, we treat exemptions from indirect taxes and import 
charges, such as the VAT and tariff exemptions, as recurring benefits, 
consistent with 19 CFR 351.524(c)(1) and allocate these benefits only 
in the year that they were received. However, when an indirect tax or 
import charge exemption is provided for, or tied to, the capital 
structure or capital assets of a firm, the Department may treat it as a 
non-recurring benefit and allocate the benefit to the firm over the 
AUL. See 19 CFR 351.524(c)(2)(iii) and 19 CFR 351.524(d)(2). Therefore, 
we are examining the VAT and tariff exemptions Xinhua received under 
the program during the POI and prior years.
    To calculate the amount of import duties exempted under the 
program, we multiplied the value of the imported equipment by the 
import duty rate that would have been levied absent the program. To 
calculate the amount of VAT exempted under the program, we multiplied 
the value of the imported equipment (inclusive of import duties) by the 
VAT rate that would have been levied absent the program. Our derivation 
of VAT in this calculation is consistent with the Department's 
approach. See, e.g., Line Pipe from the PRC Decision Memorandum at 
Comment 8: ''. . . we agree with petitioners that VAT is levied on the 
value of the product inclusive of delivery charges and import duties.'' 
Next, we summed the amount of duty and VAT exemptions received in each 
year. For each year, we divided the total grant amount by the 
corresponding total sales of the respondent for the year in question. 
Pursuant to 19 CFR 351.524(b)(2), we expensed the grant amounts to the 
year of receipt for those years in which the grant amount was less than 
0.5 percent of the total sales of Xinhua. For those years in which the 
grant amounts were greater than 0.5 percent of respondent's total 
sales, we allocated the benefit to the POI using the methodology 
described under 19 CFR 351.524(d). We derived the long-term discount 
rate using the methodology described in the ``Subsidies Valuation 
Information'' section of this memorandum. We then calculated the total 
benefit under the program by summing all of the benefit amounts 
allocated to the POI.
    To calculate the net subsidy rate for Xinhua, we divided the total 
benefit by Xinhua's total sales for the POI. To calculate the total net 
subsidy rate for Xinyu, we divided the total benefit by Xinyu's 
consolidated sales for the POI. To calculate the total net subsidy rate 
for Xingang, we divided the total benefit by Xingang's consolidated 
sales for the POI. On this basis, we calculated a total net subsidy 
rate of 0.41 percent ad valorem for the Xinhua Companies.
    Regarding Walsin, we divided the total benefit it received under 
the program by its total sales. As explained in the ``Attribution'' 
section, we then cumulated the subsidies received by Walsin under the 
program with benefits from subsidies received by Fasten I&E. 
Specifically, we multiplied the total subsidy rate for Walsin by 
Walsin's share of PC strand that was exported to the United States 
during the POI by Fasten I&E. We then added the resulting apportioned 
rate to the total subsidy rate calculated for Fasten I&E. Concerning 
Hongyu Metal, we divided the benefits it received under the program by 
the combined total sales of Hongyu Metal and Fasten I&E. On this basis, 
we calculated a total net subsidy rate of 0.44 percent ad valorem for 
the Fasten Companies.

D. Subsidies for Development of Famous Export Brands and China World 
Top Brands at Central and Sub-Central Level

    The Famous Brand program is administered at the central, 
provincial, and municipal government level. During the POI, Xinhua 
reported receiving a grant under the Famous Brand program from the City 
of Xinyu. Fasten Corp. reported receiving a grant from the Jiangsu 
Province.
    The Notice of Xinyu People's Government on Issuing Administration 
Rules for Xinyu City Famous Brand Products (Administration Rules) 
states that firms with the famous brand designation are eligible to 
receive grants from the City of Xinyu. The Administration Rules state 
that they were drafted in accordance with the Strategic Work Plan for 
Industries in Jiangxi Province, as issued by the Jiangxi Provincial 
Government (1995), document number 86 (Strategic Work Plan). 
See Xinhua's August 4, 2009, questionnaire response at Annex 16. The 
Strategic Work Plan lists the requirements that applicants must meet in 
order to receive the famous brand designation. Among those requirements 
is the following:
    The product should have high market share, high economic benefits, 
high economic driving force or high ability to earn foreign exchange 
through export.
Id. Xinhua reported applying for and receiving a grant from the City of 
Xinyu during the POI pursuant to the Administration Rules.
    Based on the information available on the record of the 
investigation, we preliminarily determine that grants Xinhua received 
from the City of Xinyu under the famous brand program constitute a 
financial contribution and a benefit under sections 771(5)(D)(i) and 
771(5)(E) of the Act, respectively. Regarding specificity, section 
771(5A)(B) of the Act states that an export subsidy is a subsidy that 
is, in law or in fact, contingent upon export performance, alone or as 
one of two or more conditions. Based on the information contained in 
the Strategic Work Plan, we preliminarily determine that grants 
provided by the City of Xinyu under the famous brands program are 
contingent on export activity. Therefore, we find that the program is 
specific under section 771(5A)(B) of the Act.
    Concerning Fasten Corp., information in its questionnaire response 
indicates that it received a grant from Jiangsu Province during the POI 
that was contingent upon export performance. See Fasten Corp.'s August 
26, 2009, questionnaire response at 50. Therefore, we find the grant 
Fasten Corp. received under the Famous Brand program of Jiangsu 
Province to be countervailable for the same reasons as discussed above.
    The grant that Xinhua and Fasten Corp. received during the POI was 
less than 0.5 percent of their respective total

[[Page 56586]]

export sales during the POI.\12\ Therefore, pursuant to 19 CFR 
351.524(b)(2), we expensed the grant amount to the POI (year of 
receipt). On this basis, we calculated a total net subsidy rate of 0.03 
percent ad valorem for the Xinhua Companies and a total net subsidy 
rate of 0.01 percent ad valorem for the Fasten Companies.
---------------------------------------------------------------------------

    \12\ As explained in the ``Attribution'' section, we used the 
total consolidated export sales of Fasten Corp. when conducting the 
0.5 percent test described under 19 CFR 351.524(b)(2).
---------------------------------------------------------------------------

E. Implementing Measures on the Supporting Fund for Foreign Trade & 
Economic Development of Jiangxi Province (Implementing Measures)

    Under the Implementing Measures, the Government of Jiangxi Province 
provides grants to firms with positive growth rates that export between 
$10 million and $20 million worth of high-tech mechanical or electrical 
products. See Xinhua Questionnaire response at page 104 and Annex 17. 
Xinhua reported applying for and receiving a grant pursuant to the 
Implementing Measures during the POI.
    Based on the information available on the record of the 
investigation, we preliminarily determine that the grant Xinhua 
received from the Government of Jiangxi Province under the Implementing 
Measures constitutes a financial contribution and a benefit under 
sections 771(5)(D)(i) and 771(5)(E) of the Act, respectively. Regarding 
specificity, section 771(5A)(B) of the Act states that an export 
subsidy is a subsidy that is, in law or in fact, contingent upon export 
performance, alone or as one of two or more conditions. We 
preliminarily determine that the grant provided by the Government of 
Jiangxi Province under the Implementing Measures program is contingent 
on export performance. Therefore, we find that the program is specific 
under section 771(5A)(B) of the Act.
    The grant that Xinhua received during the POI was less than 0.5 
percent of its total export sales during the POI. Therefore, pursuant 
to 19 CFR 351.524(b)(2), we expensed the grant amount to the POI. On 
this basis, we calculated a total net subsidy rate of 0.06 percent ad 
valorem for the Xinhua Companies.

F. Circular on Issuance of Management Methods for Foreign Trade 
Development Support Fund (Support Fund)

    Under the Support Fund, firms with an annual export value of 
$1,000,000 to $5,000,000 are eligible to receive grants from the 
Ministry of Foreign Trade and Economic Cooperation. See Xinhua 
Questionnaire response at page 112 and Annex 18. Xinhua reported 
applying for and receiving a grant pursuant to the Support Fund during 
the POI.
    Based on the information available on the record of the 
investigation, we preliminarily determine that the grant Xinhua 
received from the GOC under the Support Fund constitutes a financial 
contribution and a benefit under sections 771(5)(D)(i) and 771(5)(E) of 
the Act, respectively. Regarding specificity, section 771(5A)(B) of the 
Act states that an export subsidy is a subsidy that is, in law or in 
fact, contingent upon export performance, alone or as one of two or 
more conditions. We preliminarily determine that the grant provided by 
the GOC under the Support Fund is contingent on export activity. 
Therefore, we find that the program is specific under section 
771(5A)(B) of the Act.
    The grant that Xinhua received during the POI was less than 0.5 
percent of its total export sales during the POI. Therefore, pursuant 
to 19 CFR 351.524(b)(2), we expensed the grant amount to the POI. On 
this basis, we calculated a total net subsidy rate of 0.05 percent ad 
valorem for the Xinhua Companies.

G. Export Grants Under Regulations for Export Product Research and 
Development Fund Management

    In its questionnaire response, Xinhua indicated that in 2007 it 
received a grant from the Ministry of Finance pursuant to the Notice on 
Publishing Management Fund Used in Research and Development of Export 
Mechanical and Electrical Products (WJMJCF (2007) (Document Number 
527). The legislation indicates that receipt of the grant was 
contingent upon export performance.
    We preliminarily determine that the grant constitutes a financial 
contribution in the form of a direct transfer of funds and confers a 
benefit under sections 771(5)(D)(i) and 771(5)(E) of the Act, 
respectively. We further preliminarily determine that the grant program 
is specific under section 771(5A)(B) of the Act because receipt of the 
grant is contingent upon exports.
    Because Xinhua received the grant in 2007, we conducted the ``0.5 
percent expense test'' as described under 19 CFR 351.524(b)(2). Because 
the grant that Xinhua received in 2007 was greater than 0.5 percent of 
its total export sales for 2007, we have allocated the grant over the 
AUL established for this proceeding. See 19 CFR 351.524(b)(1). We 
allocated the grant to the POI using the methodology described under 19 
CFR 351.524(d)(1). We divided the benefit allocated to the POI by 
Xinhua's total export sales for the POI. On this basis, we calculated a 
total net subsidy rate of 0.03 percent ad valorem for the Xinhua 
Companies.

H. Rebates for Export and Credit Insurance Fee

    In its questionnaire response, Fasten I&E reported that it received 
grants during the POI from the GOC in connection with export and credit 
insurance fees it incurred.
    We preliminary determine that the grants received by Fasten I&E 
constitute a financial contribution and a benefit under sections 
771(5)(D)(i) and 771(5)(E) of the Act, respectively. Regarding 
specificity, we preliminarily determine that the program is contingent 
upon export activity and therefore is specific under section 771(5A)(B) 
of the Act.
    The grants that Fasten I&E received under the program during the 
POI were less than 0.5 percent of its total export sales during the 
POI. Therefore, pursuant to 19 CFR 351.524(b)(2), we expensed the grant 
amount to the POI (year of receipt). Specifically, we divided the 
grants amounts received by Fasten I&E by the company's total export 
sales during the POI. On this basis, we calculated a total net subsidy 
rate of 0.04 percent ad valorem for the Fasten Companies.

I. Income Tax Benefits for FIEs Based on Geographic Location

    This program provides tax incentives for enterprises located in 
special zones. The GOC states that the program was first enacted on 
June 15, 1988, pursuant to the Provisional Rules on Exemption and 
Reduction of Corporate Income Tax and Business Tax of FIEs in Coastal 
Economic Zones, as issued by the Ministry of Finance. The GOC states 
that the program was continued on July 1, 1991, pursuant to Article 30 
of the FIE Tax Law. Specifically, pursuant to Article 7 of the FIE Tax 
Law for productive FIEs established in a coastal economic development 
zone, special economic zone, or economic technology development zone, 
the applicable enterprise income tax rate is 15 or 24 percent, 
depending on the zones in which productive FIE are located, as opposed 
to the standard 30 percent income tax rate.
    We preliminarily determine that this program constitutes a 
financial contribution in the form of revenue forgone and confers a 
benefit equal to the amount of tax savings within the meaning of 
sections 771(5)(D)(ii) and 771(5)(E) of the Act. Because eligibility 
under this program is limited to firms located within designated 
geographical

[[Page 56587]]

regions, we preliminarily determine that the program is specific within 
the meaning of section 771(5A)(D)(iv) of the Act. We note that the 
Department has found this program countervailable in previous CVD 
proceedings. See, e.g., CFS from the PRC Decision Memorandum at 
``Reduced Income Tax Rates for FIEs Based on Location.''
    Under 19 CFR 351.509(b), in the case of an income tax reduction 
program, the Department normally will consider the benefit as having 
been received on the date on which the recipient firm would otherwise 
have had to pay the taxes associated with the reduction. Normally, this 
date is the date on which the firm in question filed its tax return.
    Fasten Steel, Walsin, and Hongyu Metal received an income tax 
reduction under the program with respect to the tax returns they filed 
during the POI. Therefore, we determine that these companies received 
countervailable benefits under this program during the POI. No other 
mandatory respondent reported receiving benefits under this program 
during the POI.
    In accordance with 19 CFR 351.509(a), to calculate the benefit, we 
subtracted the income tax rates the companies paid under the program 
from the income tax rate that the firms would have paid absent the 
program and multiplied the difference by the firms' taxable income.
    To calculate the net subsidy rate for Fasten Steel, we divided the 
benefit by the combined total sales of Fasten Steel and Fasten I&E for 
the POI. To calculate the net subsidy rate for Walsin, we divided the 
total benefit by Walsin's total sales for the POI. Next, as explained 
in the ``Attribution'' section, we multiplied the total subsidy rate 
for Walsin by its respective share of PC strand that was exported to 
the United States during the POI by Fasten I&E. We then added the 
resulting apportioned rate to the total subsidy rate calculated for 
Fasten I&E. Regarding Hongyu Metal, we divided the benefit it received 
under the program by the combined total sales of Hongyu Metal and 
Fasten I&E. On this basis, we calculated a total net subsidy rate of 
0.09 percent ad valorem for the Fasten Companies.
    The Fasten Companies claim in their September 22, 2009 supplemental 
questionnaire response that the GOC terminated the Tax Benefits for 
FIEs Based on Geographic Location program. We find that we currently do 
not have sufficient information to determination whether this program 
was terminated. We will continue to examine the Fasten Companies' claim 
that this program has been terminated.

J. Two Free, Three Half Tax Exemptions for FIEs

    The Foreign Invested Enterprise and Foreign Enterprise Income Tax 
Law (FIE Tax Law), enacted in 1991, established the tax guidelines and 
regulations for FIEs in the PRC. The intent of this law is to attract 
foreign businesses to the PRC. According to Article 8 of the FIE Tax 
Law, FIEs that are ``productive'' and scheduled to operate not less 
than 10 years are exempt from income tax in their first two profitable 
years and pay half of their applicable tax rate for the following three 
years. FIEs are deemed ``productive'' if they qualify under Article 72 
of the Detailed Implementation Rules of the Income Tax Law of the 
People's Republic of China of Foreign Investment Enterprises and 
Foreign Enterprises. Hongyu Metal received benefits under this program 
that are attributable to the POI.
    We determine that the exemption or reduction in the income tax paid 
by ``productive'' FIEs under this program confers a countervailable 
subsidy. The exemption/reduction is a financial contribution in the 
form of revenue forgone by the GOC and it provides a benefit to the 
recipients in the amount of the tax savings. See sections 771(5)(D)(ii) 
and 771(5)(E) of the Act and 19 CFR 351.509(a)(1). We further determine 
that the exemption/reduction afforded by this program is limited as a 
matter of law to certain enterprises, ``productive'' FIEs, and, hence, 
is specific under section 71(5A)(D)(i) of the Act. Our approach in this 
regard is consistent with the Department's practice. See CFS from the 
PRC Decision Memorandum at ``Two Free/Free Half Program.''
    To calculate the benefit from this program, we compared the tax 
rate paid to the rate that otherwise would have been paid by Hongyu 
Metal and multiplied the difference by Hongyu Metal's taxable income. 
We attributed the benefit received to the combined total sales of 
Hongyu Metal and Fasten I&E. On this basis, we preliminarily determine 
a countervailable subsidy of 0.03 percent ad valorem for the Fasten 
Companies.

K. Local Tax Exemptions and Reduction Programs for ``Productive:'' FIEs

    Pursuant to Article 9 of the FIE Tax Law and Article 71 of Decree 
85 of the Council of 1991, local provinces can establish eligibility 
criteria and administer the application process for local income tax 
reductions or exemptions for FIEs, effectively extending the tax 
exemptions or reductions that are allowed to FIEs by the national Two 
Free, Three Half program. In its questionnaire response, Hongyu Metal 
indicated that it received benefits under this program and its tax 
return filed during the POI confirms it benefitted from this program.
    We preliminarily determine that the exemption or reduction in the 
local income tax paid by ``productive'' FIEs under this program confers 
a countervailable subsidy. The exemption/reduction is a financial 
contribution in the form of revenue forgone by the government and it 
provides a benefit to the recipients in the amount of the tax savings. 
See section 771(5)(D)(ii) of the Act and 19 CFR 351.509(a)(1). We also 
preliminarily determine that the exemption/reduction afforded by this 
program is limited as a matter of law to certain enterprises, 
``productive'' FIEs, and, hence, is specific under section 
771(5A)(D)(i) of the Act. The Department has also found this program to 
be countervailable in prior CVD proceedings involving the PRC. See 
Tires from the PRC Decision Memorandum at ``Tax Subsidies to FIEs in 
Specially Designated Geographic Areas, and Local Income Tax Exemption 
and Reduction Programs for Productive' FIEs''; see also CFS from the 
PRC Decision Memorandum at ``Local Income Tax Exemption and Reduction 
Program for ``Productive'' FIEs.''
    To calculate the benefit to Hongyu Metal from this program, we 
treated the income tax exemption claimed by Hongyu Metal as a recurring 
benefit, consistent with 19 CFR 351.524(c)(1). To compute the amount of 
tax savings, we compared the tax rate paid to the rate that otherwise 
would have been paid by Hongyu Metal (the standard local rate is 3 
percent) and multiplied the difference by Hongyu Metal's taxable 
income. We attributed the benefit received to the combined total sales 
of Hongyu Metal and Fasten I&E. On this basis, we preliminarily 
determine a countervailable subsidy of 0.01 percent ad valorem for the 
Fasten Companies.

L. Federal Provision of Electricity for LTAR\13\
---------------------------------------------------------------------------

    \13\ Our preliminary findings regarding the federal provision of 
electricity for LTAR encompasses other electricity for LTAR programs 
referenced in the Initiation.
---------------------------------------------------------------------------

    For the reasons explained, supra, at ``Adverse Facts Available,'' 
we are basing our determination regarding the government's provision of 
electricity programs on AFA. Section 776(b) of the Act authorizes the 
Department to use as AFA information derived from the

[[Page 56588]]

petition, the final determination, a previous administrative review, or 
other information placed on the record. In a CVD case, the Department 
requires information from both the government of the country whose 
merchandise is under the order and the foreign producers and exporters. 
When the government fails to provide requested information concerning 
alleged subsidy programs, the Department, as AFA, typically finds that 
a financial contribution exists under the alleged program and that the 
program is specific. For example in CTL Plate from Korea, the 
Department, relying on adverse inferences, determined that the 
Government of Korea directed credit to the steel industry in a manner 
that constituted a financial contribution and was specific to the steel 
industry within the meaning of sections 771(5)(D)(i) and 
771(5A)(D)(iii) of the Act, respectively. See Notice of Preliminary 
Results of Countervailing Duty Administrative Review: Certain Cut-to-
Length Carbon-Quality Steel Plate from the Republic of Korea, 71 FR 
11397, 11399 (March 7, 2006) (Preliminary Results of CTL Plate from 
Korea) (unchanged in the Notice of Final Results of Countervailing Duty 
Administrative Review: Certain Cut-to-Length Carbon-Quality Steel Plate 
from the Republic of Korea, 71 FR 38861 (July 10, 2006) (CTL Plate from 
Korea). Similarly, in this instance, because the GOC failed to provide 
certain information concerning the Provision of Electricity for Less 
than Adequate Remuneration program, the Department, as AFA, determines 
that the program confers a financial contribution and is specific 
pursuant to sections 771(5)(D) and 771(5A) of the Act, respectively.
    Where possible, the Department will normally rely on the responsive 
producer's or exporter's records to determine the existence and amount 
of the benefit to the extent that those records are useable and 
verifiable. For example, in prior investigations including LWTP from 
the PRC and Racks from the PRC, the Department determined the existence 
and amount of the benefit attributable to the provision of electricity 
for LTAR by comparing the rates paid by the mandatory respondents for 
electricity to the higher, benchmark electricity rates. In this 
investigation, however, while respondents provided some information 
with respect to their electricity usage and payments, we do not have on 
the record information that could meaningfully be compared to the 
appropriate benchmarks. Therefore, we are relying on the highest 
subsidy rate calculated for the same or similar program in a China CVD 
investigation. Specifically, we have determined that, for the purposes 
of this preliminary determination, the rate found for the provision of 
electricity for LTAR in the LWTP from the PRC of 0.07 percent ad 
valorem is appropriate. We find that this rate is both reliable and 
relevant as it was calculated in prior final CVD determination for a 
program of the same type.
    On this basis, we calculated a net subsidy rate of 0.07 percent ad 
valorem for the Xinhua Companies and a net subsidy rate of 0.07 percent 
ad valorem for the Fasten Companies.

M. Grants Under the Science and Technology Program of Jiangsu Province

    The Fasten Companies reported that Fasten Corp. received a grant 
during the POI under the science and technology program of Jiangsu 
province. The Jiangsu Department of Science and Technology and the 
Jiangsu Science Federation administer the program pursuant to the 
Administrative Measures on Jiangsu Sci-Tech Public Service Platform 
(SUKEJI (2006) No. 102; SUCAIJIAO (2006) (No. 22)).
    We find that the grant received by Fasten Corp. constitutes a 
financial contribution and a benefit under sections 771(5)(D)(i) and 
771(5)(E) of the Act, respectively. The information in the legislation 
indicates that the program is not limited to a particular enterprise or 
industry. Therefore, we find that the program is not de jure specific 
as described under section 771(5A)(D)(i) of the Act. We further find 
that the legislation governing the program does not make eligibility 
contingent on export activity as discussed under section 771(5A)(B) of 
the Act. However, as discussed in the ``Adverse Facts Available'' 
section, the GOC failed to provide information for this program that is 
necessary for the Department to conduct its subsidy analysis as it 
pertains to the issue of de facto specificity, as described under 
section 771(5A)(D)(iii) of the Act. Namely, the GOC failed to provide, 
as requested, information concerning the manner in which the various 
grants were distributed across firms and industries. Therefore, we are 
assuming that the grant programs are specific under section 
771(5A)(D)(iii) of the Act.
    We conducted the ``0.5 percent expense test'' as described under 19 
CFR 351.524(b)(2). Because the grant amount was less than 0.5 percent 
of the total consolidated sales of the Fasten Corp., we expense the 
grant to the year of receipt, which is the POI. On this basis, we 
calculated a net subsidy rate of 0.01 percent ad valorem for the Fasten 
Companies.

N. Federal, Provincial, and Municipal Level Policy Lending to Producers 
of PC Strand

    The Department is examining whether PC strand producers receive 
preferential lending through state-owned commercial or policy banks. 
Record evidence demonstrates that the GOC, particularly at the 
provincial and municipal levels of government, has highlighted and 
advocated the development of the PC strand industry and the mandatory 
respondents in this investigation. Moreover, GOC directives in this 
regard include financing support. Thus, we preliminarily determine that 
loans received by the PC strand industry from state-owned commercial 
banks (SOCBs) and policy banks were made pursuant to government 
directives. The Fasten Companies and the Xinhua Companies had loans 
outstanding during the POI.
    At the national level, in the Steel and Iron Industry Development 
Policy (July 2005) at Article 16, the GOC states that it will `` 
enhance the R&D, design, and manufacture level in relation to the key 
technology, equipment and facilities for the Chinese steel industry.'' 
To accomplish this, the GOC states it will provide support to key steel 
projects relying on domestically produced and newly developed equipment 
and facilities, through tax and interest assistance, and scientific 
research expenditures. See GOC's August 26, 2009, questionnaire 
response at Exhibit 5, page 6.
    Turning to the provincial and municipal levels, the excerpts below 
demonstrate the support these governments have shown for the PC strand 
industry and the respondents in this investigation.
Outline of Eleventh Five-year Program (Guihua) for Industrial 
Structural Adjustment in Jiangsu: ``Emphasize the development of fine 
metal products such as high-strength pc strand, automobile tire steel 
cords, and non-ferrous deep processed products.'' See GOC's August 26, 
2009, questionnaire response at Exhibit 16, page 9.
Outline of the Development Program (Guihua) for Metallurgical 
Industries within the Eleventh Five-year Period in Jiangsu: ``In the 
metal product industry of our province, a large set of metal products 
enterprises have been formed with Fasten Group as vanguard and with 
Jinyang Group Co. Ltd., Jiangsu Xingda Steel Tyre Cord Co., Ltd., and 
Nantong Steel Rope Factory etc. as backbone enterprises.'' See GOC's

[[Page 56589]]

August 26, 2009, questionnaire response at Exhibit 22, at page 2.
Special Program (Guihua) on Adjustment & Development of Iron and Steel 
Industries during the Eleventh Five-year Period in Jiangsu: ``We shall 
strengthen the guidance of industrial policies, the support from credit 
policy and the regulation by fiscal and taxation policies to guide the 
direction of investments.'' See GOC's August 26, 2009, questionnaire 
response at Exhibit 23 pages 4-5.
Special Program (Guihua) on Adjustment & Development of Iron and Steel 
Industries during the Eleventh Five-year Period in Jiangsu: ``Improve 
the funding ability and enlarge the capital accumulation by the ways of 
enlarging credit granting, increasing loans,...`` See GOC's August 26, 
2009, questionnaire response at Exhibit 23, page 13.
Eleventh Five-year Plan (Guihua) for Structural Adjustjment and 
Development of the Jiangxi Metallurgical (Iron & Steel) Industries: 
``We shall vigorously boost the construction of competitive sheet 
material and wire rod relied on Xinyu Iron and Steel `` GOC's August 
26, 2009, questionnaire response at Exhibit 18, page 9.
Outline of the Tenth Five-year Plan (Jihua) of Social and Economic 
Development on Xinyu Municipality: ``For the iron and steel industry, 
we should, by taking Xinyu Iron & Steel Co., Ltd., as the flagship, 
focus on improving the conditions of key equipments, optimizing the 
process and technological structure, reinforcing the basic management, 
adjusting the product structure, and expanding the production 
capacity.'' See GOC's August 26, 2009, questionnaire response at 
Exhibit 14, page 14.
Development Program (Guihua) of Xinyu Metallurgical (Iron & Steel) 
Industries (2008-2012): `` exerting the efforts to support Xinyu Iron & 
Steel Co., Ltd. to increase capital stock and raise funds for project 
construction `` See GOC's August 26, 2009, questionnaire response at 
Exhibit 20, page 13.
Development Program (Guihua) of Xinyu Metallurgical (Iron & Steel) 
Industries (2008-2012): `` fourthly, suggesting the provincial 
government to carry out the favorable policies concerning finance and 
tax revenue for the metallurgy (steel and iron) enterprises . . .'' See 
GOC's August 26, 2009, questionnaire response at Exhibit 20, page 16.
    In addition, in Tires from the PRC and the Preliminary 
Determination of OCTG from the PRC, the Department found that in 2005, 
the GOC implemented the Decision of the State Council on Promulgating 
the ``Interim Provisions on Promoting Industrial Structure Adjustment'' 
for Implementation (No. 40 (2005)) (Decision 40) in order to achieve 
the objectives of the Eleventh Five-Year Plan. Decision 40 references 
the Directory Catalogue on Readjustment of Industrial Structure 
(Industrial Catalogue), which outlines the projects which the GOC deems 
``encouraged,'' ``restricted,'' and ``eliminated,'' and describes how 
these projects will be considered under government policies. For 
``encouraged'' projects, Decision 40 outlines several support options 
available to the government, including financing. See Tires from the 
PRC Decision Memorandum at Comment E.1; see also Certain Oil Country 
Tubular Goods From the People's Republic of China: Preliminary 
Affirmative Countervailing Duty Determination, Preliminary Negative 
Critical Circumstances Determination, 74 FR 47210, 47217 (September 15, 
2009) (Preliminary Determination of OCTG from the PRC). We are placing 
these additional documents on the record of this investigation for 
further consideration and comment. Memorandum to File from Eric B. 
Greynolds, Program Manager, Office 3, Operations, ``Additional 
Documents Placed on the Record,'' (October 26, 2009).
    Finally, we examined the loan documentation provided by the GOC and 
noted language for certain loans which also reflects the banks' 
conclusions that lending to this industry is consistent with the GOC's 
industrial policy goals. As this information is business proprietary, 
it is discussed in a separate memorandum. See Memorandum to the File 
from Eric B. Greynolds, Program Manager, Office 3, Operations, 
``Excerpts from Internal Loan Documents of Mandatory Respondents,'' 
(October 26, 2009), of which the public version is on file in the CRU 
of the Commerce Building.
    In response to our questions about the above-cited excerpts, the 
GOC has stated that the language does not specify a particular 
government action to achieve the particular goal or that the statement 
reflects only a proposal. However, taken together, these plans clearly 
indicate state support and, specifically, credit or financing support 
for the producers of PC strand. In these circumstances, it is the 
Department's policy to find a policy lending program that is specific 
to the industry and, moreover, based on the analysis developed in CFS 
from the PRC, that national and local government control over the SOCBs 
results in the loans being a financial contribution by the GOC. See 
Citric Acid from the PRC Decision Memorandum at Comment 5; see also CFS 
from the PRC Decision Memorandum at Comment 8.
    Therefore, on the basis of the record information described above, 
we preliminarily determine that the GOC has a policy in place to 
encourage the development of production of PC strand through policy 
lending. Therefore, the loans to PC strand producers from Policy Banks 
and SOCBs in the PRC constitute a direct financial contribution from 
the government, pursuant to section 771(5)(D)(i) of the Act, and they 
provide a benefit equal to the difference between what the recipients 
paid on their loans and the amount they would have paid on comparable 
commercial loans (see section 771(5)(e)(2)). Finally, we determine that 
the loans are de jure specific because of the GOC's policy, as 
illustrated in the government plans and directives, to encourage and 
support the growth and development of the PC strand industry.
    To calculate the benefit under the policy lending program, we 
compared the amount of interest the mandatory respondents paid on their 
outstanding loans to the amount they would have paid on comparable 
commercial loans. See 19 CFR 351.505(c). In conducting this comparison, 
we used the interest rates described in the ``Subsidies Valuation - 
Benchmarks and Discount Rates'' section above.
    We have attributed benefits under this program to total sales. In 
calculating the net subsidy rate for the mandatory respondents, we 
followed the methodology described in the attribution sections. 
Specifically, for the Fasten Companies, we attributed subsidies 
received by the Fasten Corp. to its total consolidated sales. We 
attributed subsidies received by Fasten I&E to its total sales. We 
attributed subsidies received by Hongsheng to the combined total sales 
of Hongsheng, Fasten Steel and Hongyu Metal. We attributed subsidies 
received by Fasten Steel to the combined total sales of Fasten Steel 
and Fasten I&E. We attributed subsidies received by Hongyu Metal to the 
combined sales of Hongyu Metal and Fasten I&E. We attributed subsidies 
received by Walsin by its total sales. We then apportioned the 
resulting subsidy rate by Walsin's share of PC strand that was exported 
to the United States during the POI by Fasten I&E.\14\ For the Xinhua 
Companies, we

[[Page 56590]]

attributed subsidies received by Xingang to its total consolidated 
sales. We attributed subsidies received by Xinyu to its total 
consolidated sales. We attributed subsidies received by Xinhua to its 
total sales. On this basis, we calculated a total net subsidy rate of 
1.26 percent ad valorem for the Fasten Companies and 0.58 percent ad 
valorem for the Xinhua Companies.
---------------------------------------------------------------------------

    \14\ In deriving the share of PC strand produced by Fasten Steel 
and Walsin that was exported by Fasten Steel I&E during the POI, we 
did not include the sales volume of Company X.
---------------------------------------------------------------------------

O. Income Tax Credits for Purchases of Domestically-Produced Equipment 
by Domestically Owned Firms

    Xingang reported receiving an income tax deduction on the tax 
return it filed during the POI under the Income Tax Credits on 
Purchases of Domestically Produced Equipment by Domestically Owned 
Companies program. According to the GOC, this program was established 
on July 1, 1999 pursuant to ``Provisional Measures on Enterprise Income 
Tax Credit for Investment in Domestically Produced Equipment for 
Technology Renovation Projects.'' The GOC states that under the program 
a domestically invested company may claim tax credits on the purchase 
of domestic equipment if the project is compatible with the industrial 
policies of the GOC. Specifically, a tax credit up to 40 percent of the 
purchase price of the domestic equipment may apply to the incremental 
increase in tax liability from the previous year. The GOC further 
states that pursuant to the ``Circular on Relevant Issues with Respect 
to Ceasing Implementing of Income Tax Credit to Purchase of 
Domestically Produced Equipment by Enterprises,'' the program was 
terminated effective January 1, 2008.
    We determine that the income tax deductions provided under the 
program constitute a financial contribution, in the form of revenue 
forgone, and a benefit, in an amount equal to the tax savings, under 
sections 771(5)(D)(i) and 771(5)(E) of the Act, respectively. We 
further find that this program is specific under section 771(5A)(A) of 
the Act because the receipt of the tax savings is contingent upon the 
use of domestic over imported goods. We note that the Department found 
this program countervailable in Line Pipe from the PRC. See Line Pipe 
from the PRC Decision Memorandum at ``Income Tax Credits on Purchases 
of Domestically-Produced Equipment by Domestically Owned Companies.''
    To calculate the net subsidy rate, we divided the benefit by the 
combined 2008 sales of Xingang. On this basis, we calculated a net 
countervailable subsidy rate of 0.41 percent ad valorem for the Xingang 
Companies.

II. Programs Preliminarily Determined Not To Provide Benefits During 
the POI

    Based on our analysis of the programs listed below, the benefits to 
respondents during the POI under the programs listed below are less 
than 0.005 percent ad valorem and are not considered numerically 
significant, are not allocable to the POI, or have been found to be 
tied to non-subject merchandise. Consistent with our past practice, we 
therefore have not included these programs in our preliminary net 
countervailing duty rate calculations. See, e.g., CFS from the PRC 
Decision Memorandum at ``Analysis of Programs, Programs Determined Not 
To Have Been Used or Not To Have Provided Benefits During the POI for 
GE,'' and Final Results of Countervailing Duty Administrative Review: 
Low Enriched Uranium from France, 70 FR 39998 (July 12, 2005), and 
accompanying Issues and Decision Memorandum at ``Purchases at Prices 
that Constitute More than Adequate Remuneration,'' (``Uranium from 
France'') (citing Notice of Final Results of Countervailing Duty 
Administrative Review and Rescission of Certain Company-Specific 
Reviews: Certain Softwood Lumber Products From Canada, 69 FR 75917 
(December 20, 2004), and accompanying Issues and Decision Memorandum at 
``Other Programs Determined to Confer Subsidies''). For information 
concerning the programs we have preliminarily determined to be tied to 
non-subject merchandise, see the Memorandum to the File from Eric B. 
Greynolds, Program Manager, Office 3, Operations (October 26, 2009), a 
public document on file in the CRU of the Commerce building.

A. Programs Used by Xinyu

    1. Jiangxi Provincial Special Science Fund: Heavy Plate Production 
Line & Research on Technical Application
    2. Jiangxi Provincial Special Science Fund: Gas desulfurization of 
coke oven, development and application of tar purificaiton technology
    3. Xinyu Municipal Science Planning Program, 3-Items Funds: 
Research and development of steel products, process and technology
    4. Xinyu Municipal Science Planning Program, 3-Items Funds: 
Development and application of power generation process with residual 
heat from boiler
    5. Jiangxi Provincial Science and Technology Awards: Technology 
Advancement Award
    6. Xinyu Municipal Science and Technology Awards: Technology 
Advancement Award
    7. Xinyu Municipal Science and Technology Awards: Technology 
Progress Award for BOF-quality hard-line 35-75.65 steel
    8. Xinyu City Intellectual Property Research Program: Strategic 
Research Council for Intellectual Property of Xinyu Iron and Steel 
Industry
    9. 2008 National Science and Technology Support Fund: Research on 
Controlled Cooling after Rolling Production Technology of High-Strength 
Electricity Power Use Special Angle Steel
    10. Jiangxi Provincial Science And Technology Support Fund: 
Development And Application For The Comprehensive Utilization Of 
Industrial Waste In Metallurgical Industry
    11. Jiangxi Provincial Wall Material Renovation Special Fund: 
Special Subsidies For New Wall Materials
    l2. Jiangzi Provincial Bulk Cement Special Fund: Transformation Of 
Bulk Cement Facilities And Equipment
    13. Xinyu City ``Final Battle to Complete Industry GGP 50 Billion 
Award''
    14. Jiangxi Provincial Environmental Protection Special Fund: 
Transformation Grant HPF Gas Desulfurization System
    15. Jiangxi Provincial Environmental Protection Special Fund: 
Reconstruction project grants for transportation system of good mine 
and tailings
    16. Jiangxi Provincial Environmental Protection Special Fund: 
Project Grants For Desulfuration By Wet Process Of HPF Coal Oven Gas
    17. Jiangxi Provincial Environmental Protection Special Fund: Grant 
To Converter One-Time De-Dusting
    18. Tertiary Technological Renovation Grants For Discounts
    19. Xinyu Municipal Environmental Protection Special Fund: Grants 
For Pollution Control Facilities And Construction
    20. National Environmental Protection And Resource Saving Program: 
Grants For The Optimization Of Energy Systems
    21. Jiangxi Provincial Energy Saving Special Fund Program: Grants 
For Energy-Saving And Emissions-Reducing Coke Oven 1580mm Sheet Items
    22. Treasury Bond Fund Grant (Also referred to as Resource Saving 
and Environmental Protection Program)
    23. Interest Subsidy Grant Under Fund for Technology Renovation 
Project Loans (Also referred to as

[[Page 56591]]

Discount Fund Provided In Accordance With Cai Qi (2006) No. 426 Decree 
Issued By The Ministry Of Finance)
    24. Measures Regarding the Management of the Interest Subsidy Fund 
for Technology Renovation Project Loans
    25. Fenyi County Government Incentives

B. Programs Used by Xingang

    1. Stamp Exemption on Share Transfers Under Non-Tradable Share 
Reform
    2. Various Tax Benefits
    3. Various VAT Deductions

C. Programs Used by Fasten Corp.

    1. Assistance for Technology Innovation - R&D Project
    2. Assistance for Optimizing the Structure of Import/Export of 
High-Tech Products
    3. Assistance for the Development of Company Owned Brand
    4. Wuxi Tengfei Award
    5. Award for Provincial R&D Platform - Famous Brands
    6. Award for Provincial R&D Platform
    7. National Science & Technology Assistance Program
    8. Award for Wuxi Municipal Level R&D Center
    9. Intellectual Property Fund of Jiangsu Province
    10. Natural Science Fund of Jiangsu Province
    11. Important Structural Adjustment Program of Jiangsu Province
    12. Technology Innovation Program of Wuxi

D. Fasten I&E

    1. Subsidy on VAT Tax Refund for Exports
    2. Rebates of Antidumping Legal fees

E. Various Firms

    1. Provision of Water for LTAR
    2. Export Incentive Payments Characterized as ``VAT Rebates''
    The Department's regulations state that in the case of an exemption 
upon export of indirect taxes, a benefit exists only to the extent that 
the Department determines that the amount exempted ``exceeds the amount 
levied with respect to the production and distribution of like products 
when sold for domestic consumption.'' See 19 CFR 351.517(a); see also 
19 CFR 351.102 (for a definition of ``indirect tax''). To determine 
whether the GOC provided a benefit under this program, we compared the 
VAT exemption upon export to the VAT levied with respect to the 
production and distribution of like products when sold for domestic 
consumption. Information from the GOC indicates that the VAT levied on 
PC strand sales in the domestic market (17 percent) exceeded the amount 
of VAT exempted upon the export of PC strand (5 percent). Thus, we 
preliminarily determine that the VAT exempted upon the export of PC 
strand did not confer a countervailable benefit.

III. Programs Preliminarily Determined To Be Not Used

A. Treasury Bond Loans
B. Provision of Electricity and Water at LTAR for FIEs and 
``Technologically Advanced'' Enterprises by Jiangsu Province
C. Import Tariff and VAT Refunds to Promote the Development of 
Equipment Manufacturing in China
D. State Key Technology Fund
E. Exemptions for SOEs from Distributing Dividends to the State
F. Grants to Loss-Making SOEs
G. Income Tax Exemptions for Export-Oriented FIEs
H. Local Income Tax Exemption and Reduction Programs for ``Productive 
FIEs
I. Preferential Tax Programs for Foreign-Invested Enterprises 
Recognized as High or New Technology Enterprises
J. VAT Refunds for FIE's Purchasing Domestically-Produced Equipment
K. Honorable Enterprise Program
L. Preferential Loans for Key Projects and Technologies
M. Reduction in or exemption from Fixed Assets Investment Orientation 
Regulatory Tax
N. Preferential Loans for SOEs

IV. Programs Preliminarily Determined Not To Exist

A. Income Tax Exemption for Investment in Domestic Technological 
Renovation

V. Programs for Which We Need More Information

A. Deed Tax Exemption for SOEs Undergoing Mergers or Restructurings
B. Elimination of Backward Production Capacity Award Fund
C. Heavy and Middle Plate Project Loan Program
D. Reward for Export Program
E. Pollution Charge Refund Program
F. Tax Revenue Return Program

Verification

    In accordance with section 782(i)(1) of the Act, we intend to 
verify the information submitted by the Xinhua and Fasten Companies, 
and the GOC prior to making our final determination.

Suspension of Liquidation

    In accordance with section 703(d)(1)(A)(i) of the Act, we have 
calculated individual rates for subject merchandise produced and 
exported by the entities identified below. We preliminarily determine 
the total estimated net countervailable subsidy rate to be:

------------------------------------------------------------------------
            Producer/Exporter                     Net Subsidy Rate
------------------------------------------------------------------------
Xinhua Metal Products Company (Xinhua),         12.06 percent ad valorem
 Xinyu Iron and Steel Joint Stock Limited
 Company (Xinyu), and Xinyu Iron and
 Steel Limited Liability Company
 (Xingang) (Collectively the Xinhua
 Companies)..............................
Fasten Group Corporation (Fasten Corp.),         7.53 percent ad valorem
 Fasten Group Import & Export Co., Ltd.
 (Fasten I&E), Jiangyin Hongsheng Co.
 Ltd. (Hongsheng), Jiangyin Fasten Steel
 (Fasten Steel), Jiangyin Hongyu Metal
 Products Co., Ltd. (Hongyu Metal), and
 Jiangyin Walsin Steel Cable Co., Ltd.
 (Walsin) (Collectively, the Fasten
 Companies)..............................
All Others...............................        9.80 percent ad valorem
------------------------------------------------------------------------

    Sections 703(d) and 705(c)(5)(A) of the Act state that for 
companies not investigated, we will determine an all-others rate by 
weighting the individual company subsidy rate of each of the companies 
investigated by each company's exports of the subject merchandise to 
the United States. However, the all-others rate may not include zero 
and de minimis net subsidy rates, or any rates based solely on the 
facts available.
    Notwithstanding the language of section 705(c)(1)(B)(i)(I) of the 
Act, we have not calculated the all-others rate by weight averaging the 
rates of the Xinhua and Fasten Companies because doing so risks 
disclosure of proprietary information. Therefore, for the all-others 
rate, we have calculated a simple average of the two responding firms' 
rates.
    In accordance with sections 703(d) (1) (B) and (2) of the Act, we 
are directing U.S. Customs and Border Protection (CBP) to suspend 
liquidation of all

[[Page 56592]]

entries of the subject merchandise from the PRC that are entered or 
withdrawn from warehouse, for consumption on or after the date of the 
publication of this notice in the Federal Register, and to require a 
cash deposit or bond for such entries of the merchandise in the amounts 
indicated above.

ITC Notification

    In accordance with section 703(f) 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 relating 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 administrative protective order, without the written consent 
of the Assistant Secretary for Import Administration.
    In accordance with section 705(b) (2) of the Act, if our final 
determination is affirmative, the ITC will make its final determination 
within 45 days after the Department makes its final determination.

Disclosure and Public Comment

    In accordance with 19 CFR 351.224(b), the Department will disclose 
to the parties the calculations for this preliminary determination 
within five days of its announcement. Case briefs for this 
investigation must be submitted no later than one week after the 
issuance of the last verification report. See 19 CFR 351.309(c) (for a 
further discussion of case briefs). Rebuttal briefs, which must be 
limited to issues raised in the case briefs, must be filed within five 
days after the deadline for submission of case briefs. See 19 CFR 
351.309(d). A list of authorities relied upon, a table of contents, and 
an executive summary of issues should accompany any briefs submitted to 
the Department. Executive summaries should be limited to five pages 
total, including footnotes.
    In accordance with 19 CFR 351.310(c), we will hold a public 
hearing, if requested, to afford interested parties an opportunity to 
comment on this preliminary determination. Individuals who wish to 
request a hearing must submit a written request within 30 days of the 
publication of this notice in the Federal Register to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, 14th Street and Constitution Avenue, NW, Washington, DC 20230. 
Parties will be notified of the schedule for the hearing and parties 
should confirm the time, date, and place of the hearing 48 hours before 
the scheduled time. Requests for a public hearing should contain: (1) 
party's name, address, and telephone number; (2) the number of 
participants; and (3) to the extent practicable, an identification of 
the arguments to be raised at the hearing.
    This determination is issued and published pursuant to sections 
703(f) and 777(i) of the Act and 19 CFR 351.221(b)(4).

    Dated: October 26, 2009.
John M. Andersen,
Acting Deputy Assistant Secretary for Antidumping and Countervailing 
and Duty Operations.
[FR Doc. E9-26322 Filed 10-30-09; 8:45 am]
BILLING CODE 3510-DS-S