[Federal Register Volume 74, Number 238 (Monday, December 14, 2009)]
[Notices]
[Pages 66090-66096]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-29725]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-570-953]


Narrow Woven Ribbons with Woven Selvedge from the People's 
Republic of China: Preliminary Affirmative Countervailing Duty 
Determination and Alignment of Final Countervailing Duty Determination 
with Final Antidumping Duty Determination

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce preliminarily determines that 
countervailable subsidies are being provided to producers and exporters 
of narrow woven ribbons with woven selvedge from the People's Republic 
of China. For information on the estimated subsidy rates, see the 
``Suspension of Liquidation'' section of this notice.

EFFECTIVE DATE: December 14, 2009.

FOR FURTHER INFORMATION CONTACT: Scott Holland or Anna Flaaten, AD/CVD 
Operations, Office 1, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
1279 or (202) 482-5156, respectively.

SUPPLEMENTARY INFORMATION:

[[Page 66091]]

Case History

    The following events have occurred since the publication of the 
Department of Commerce's (``Department'') notice of initiation in the 
Federal Register. See Narrow Woven Ribbons With Woven Selvedge From the 
People's Republic of China: Initiation of Countervailing Duty 
Investigation, 74 FR 39298 (August 6, 2009) (``Initiation Notice''), 
and the accompanying Initiation Checklist.\1\
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    \1\ A public version of this and all public Department memoranda 
referenced herein are on file in the Central Records Unit (``CRU'') 
in Room 1117 of the main Department building.
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    On August 25, 2009, the Department selected two Chinese producers/
exporters of narrow woven ribbons with woven selvedge (``Woven 
Ribbons'') as mandatory respondents, Yama Ribbons and Bows Co., Ltd. 
(``Yama'') and Changtai Rongshu Textile Co., Ltd. (``Changtai''). See 
Memorandum to Edward C. Yang, Senior Enforcement Coordinator for the 
China NME Unit for Import Administration, ``Respondent Selection Memo'' 
(August 25, 2009). This memorandum is on file in the Department's CRU.
    On September 8, 2009, the U.S. International Trade Commission 
(``ITC'') issued its affirmative preliminary determination that there 
is a reasonable indication that an industry in the United States is 
threatened with material injury by reason of allegedly subsidized 
imports of Woven Ribbons from the People's Republic of China (``PRC''). 
See Narrow Woven Ribbons With Woven Selvedge From China and Taiwan, 
Investigation Nos. 701-TA-467 and 731-TA-1164-1165, 74 FR 46224 
(September 8, 2009).
    On August 26, 2009, we issued the countervailing duty (``CVD'') 
questionnaires to the Government of the People's Republic of China 
(``GOC''), Yama, and Changtai.
    On September 14, 2009, the Department postponed the deadline for 
the preliminary determination in this investigation until December 7, 
2009. See Narrow Woven Ribbons With Woven Selvedge From the People's 
Republic of China: Postponement of Preliminary Determination in the 
Countervailing Duty Investigation, 74 FR 46978 (September 14, 2009). On 
September 15, 2009, consultants for Changtai notified the Department 
that the company would not participate further in the investigation.
    We received responses to our questionnaire from the GOC and Yama on 
October 19, 2009. See GOC's Original Questionnaire Response (October 
19, 2009) (``GQR'') and Yama's Original Questionnaire Response (October 
19, 2009). We sent supplemental questionnaires to the GOC and Yama, on 
October 30 and November 19, 2009. We received responses to the 
supplemental questionnaires from Yama on November 13, 2009 and November 
23, 2009. See Yama's 1st Supplemental Questionnaire Response (November 
13, 2009) (``YSQR1'') and Yama's 2nd Supplemental Questionnaire 
Response (November 23, 2009) (``YSQR2''). We received a response from 
the GOC to the October 30, 2009, supplemental questionnaire on November 
9, 2009. See GOC's 1st Supplemental Questionnaire Response (November 9, 
2009). On November 25, 2009, the GOC requested an extension of seven 
days to respond to the Department's November 19, 2009, supplemental 
questionnaire, originally due December 1, 2009. The Department granted 
the GOC's request in full. Therefore, the GOC's response is due 
December 8, 2009.
    On October 30, 2009, Berwick Offray LLC and its wholly-owned 
subsidiary Lion Ribbon Company Inc. (collectively, ``Petitioner'') 
requested that the final determination of this CVD investigation be 
aligned with the final determination in the companion antidumping duty 
(``AD'') investigation in accordance with section 705(a)(1) of the 
Tariff Act of 1930, as amended (the ``Act'').

Scope Comments

    In accordance with the preamble to the Department's regulations, we 
set aside a period of time in our Initiation Notice for parties to 
raise issues regarding product coverage, and encouraged all parties to 
submit comments within 20 calendar days of publication of that notice. 
See Antidumping Duties; Countervailing Duties, 62 FR 27296, 27323 (May 
19, 1997), and Initiation Notice, 74 FR at 39299.
    On August 18, 2009, interested parties Costco Wholesale 
Corporation, Hobby Lobby Stores, Inc., Jo-Ann Stores, Inc., Michaels 
Stores, Inc. and Target Corporation (collectively, ``Ribbon 
Retailers''), Papillion Ribbon and Bow, Inc. (``Papillion''), and 
Essential Ribbons, Inc. (``Essential Ribbons'') submitted timely 
comments concerning the scope of the Woven Ribbons AD and CVD 
investigations. Ribbons Retailers urged that the scope definition be 
modified to clarify certain scope exclusions and otherwise exclude 
certain merchandise from the scope. Papillion requested that the 
Department exclude formed rosettes from the scope of the 
investigations. Finally, Essential Ribbons requested that pre-cut, 
hand-finished ribbons for retail packaging, be excluded from the scope.
    The Department is currently evaluating the comments submitted by 
the interested parties and will issue its decision regarding the scope 
of the investigations prior to the preliminary determinations in the 
companion AD investigations due on February 4, 2010.

Scope of the Investigation

    The merchandise subject to the investigation is narrow woven 
ribbons with woven selvedge, in any length, but with a width (measured 
at the narrowest span of the ribbon) less than or equal to 12 
centimeters, composed of, in whole or in part, man-made fibers (whether 
artificial or synthetic, including but not limited to nylon, polyester, 
rayon, polypropylene, and polyethylene teraphthalate), metal threads 
and/or metalized yarns, or any combination thereof. Narrow woven 
ribbons subject to the investigation may:
     also include natural or other non-man-made fibers;
     be of any color, style, pattern, or weave construction, 
including but not limited to single-faced satin, double-faced satin, 
grosgrain, sheer, taffeta, twill, jacquard, or a combination of two or 
more colors, styles, patterns, and/or weave constructions;
     have been subjected to, or composed of materials that have 
been subjected to, various treatments, including but not limited to 
dyeing, printing, foil stamping, embossing, flocking, coating, and/or 
sizing;
     have embellishments, including but not limited to 
appliqu[eacute], fringes, embroidery, buttons, glitter, sequins, 
laminates, and/or adhesive backing;
     have wire and/or monofilament in, on, or along the 
longitudinal edges of the ribbon;
     have ends of any shape or dimension, including but not 
limited to straight ends that are perpendicular to the longitudinal 
edges of the ribbon, tapered ends, flared ends or shaped ends, and the 
ends of such woven ribbons may or may not be hemmed;
     have longitudinal edges that are straight or of any shape, 
and the longitudinal edges of such woven ribbon may or may not be 
parallel to each other;
     consist of such ribbons affixed to like ribbon and/or cut-
edge woven ribbon, a configuration also known as an ``ornamental 
trimming;''
     be wound on spools; attached to a card; hanked (i.e., 
coiled or bundled); packaged in boxes, trays or bags; or configured as 
skeins, balls, bateaus or folds; and/or

[[Page 66092]]

     be included within a kit or set such as when packaged with 
other products, including but not limited to gift bags, gift boxes and/
or other types of ribbon.
    Narrow woven ribbons subject to the investigation include all 
narrow woven fabrics, tapes, and labels that fall within this written 
description of the scope of this investigation.
    Excluded from the scope of the investigation are the following:
(1) formed bows composed of narrow woven ribbons with woven selvedge;
(2) ``pull-bows'' (i.e., an assemblage of ribbons connected to one 
another, folded flat and equipped with a means to form such ribbons 
into the shape of a bow by pulling on a length of material affixed to 
such assemblage) composed of narrow woven ribbons;
(3) narrow woven ribbons comprised at least 20 percent by weight of 
elastomeric yarn (i.e., filament yarn, including monofilament, of 
synthetic textile material, other than textured yarn, which does not 
break on being extended to three times its original length and which 
returns, after being extended to twice its original length, within a 
period of five minutes, to a length not greater than one and a half 
times its original length as defined in the Harmonized Tariff Schedule 
of the United States (``HTSUS''), Section XI, Note 13) or rubber 
thread;
(4) narrow woven ribbons of a kind used for the manufacture of 
typewriter or printer ribbons;
(5) narrow woven labels and apparel tapes, cut-to-length or cut-to-
shape, having a length (when measured across the longest edge-to-edge 
span) not exceeding eight centimeters;
(6) narrow woven ribbons with woven selvedge attached to and forming 
the handle of a gift bag;
(7) cut-edge narrow woven ribbons formed by cutting broad woven fabric 
into strips of ribbon, with or without treatments to prevent the 
longitudinal edges of the ribbon from fraying (such as by merrowing, 
lamination, sono-bonding, fusing, gumming or waxing), and with or 
without wire running lengthwise along the longitudinal edges of the 
ribbon;
(8) narrow woven ribbons comprised at least 85 percent by weight of 
threads having a denier of 225 or higher;
(9) narrow woven ribbons constructed from pile fabrics (i.e., fabrics 
with a surface effect formed by tufts or loops of yarn that stand up 
from the body of the fabric) ;
(10) narrow woven ribbon affixed (including by tying) as a decorative 
detail to non-subject merchandise, such as a gift bag, gift box, gift 
tin, greeting card or plush toy, or affixed (including by tying) as a 
decorative detail to packaging containing non-subject merchandise;
(11) narrow woven ribbon affixed to non-subject merchandise as a 
working component of such non-subject merchandise, such as where narrow 
woven ribbon comprises an apparel trimming, book marker, bag cinch, or 
part of an identity card holder; and
(12) narrow woven ribbon(s) comprising a belt attached to and imported 
with an item of wearing apparel, whether or not such belt is removable 
from such item of wearing apparel.
    The merchandise subject to this investigation is classifiable under 
the HTSUS statistical categories 5806.32.1020; 5806.32.1030; 
5806.32.1050 and 5806.32.1060. Subject merchandise also may enter under 
subheadings 5806.31.00; 5806.32.20; 5806.39.20; 5806.39.30; 5808.90.00; 
5810.91.00; 5810.99.90; 5903.90.10; 5903.90.25; 5907.00.60; and 
5907.00.80 and under statistical categories 5806.32.1080; 5810.92.9080; 
5903.90.3090; and 6307.90.9889. The HTSUS statistical categories and 
subheadings are provided for convenience and customs purposes; however, 
the written description of the merchandise under investigation is 
dispositive.

Period of Investigation

    The period for which we are measuring subsidies, i.e., the period 
of investigation (``POI''), is January 1, 2008, through December 31, 
2008.

Alignment of Final Countervailing Duty Determination with Final 
Antidumping Duty Determination

    On August 6, 2009, the Department initiated the CVD and AD 
investigations of Woven Ribbons from the PRC. See Initiation Notice and 
Narrow Woven Ribbons with Woven Selvedge from the People's Republic of 
China and Taiwan: Initiation of Antidumping Duty Investigations, 74 FR 
39291 (August 6, 2009). The CVD investigation and the AD investigation 
have the same scope with regard to the merchandise covered.
    As noted above, on October 30, 2009, Petitioner submitted a letter 
requesting alignment of the final CVD determination with the final 
determination in the companion AD investigation of Woven Ribbons from 
the PRC. Therefore, in accordance with section 705(a)(1) of the Act and 
19 CFR 351.210(b)(4), we are aligning these final determinations such 
that the final CVD determination will be issued on the same date as the 
final AD determination, which is currently scheduled to be issued no 
later than April 19, 2010.

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 the accompanying Issues and Decision 
Memorandum (``CFS Decision Memorandum''). In CFS from the PRC, the 
Department found that

    given the substantial differences between the Soviet-style 
economies and China'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 China.

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), and accompanying Issues and 
Decision Memorandum (``CWP Decision Memorandum'') at Comment 1.
    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, as the 
date from which the Department will identify and measure subsidies in 
the PRC. See CWP Decision Memorandum at Comment 2.

Use of Facts Otherwise Available and Adverse Inferences

    Sections 776(a)(1) and (2) of the Act provide that the Department 
shall apply ``facts otherwise available'' if, inter alia, necessary 
information is not on the record or an interested party or any other 
person: (A) withholds information that has been requested; (B) fails to 
provide information within the deadlines established, or in the form 
and manner requested by the Department, subject to subsections (c)(1) 
and (e) of section 782 of the Act; (C) significantly impedes a 
proceeding; or (D) provides information that cannot be verified as 
provided by section 782(d) of the Act.
    Section 776(b) of the Act further provides that the Department may 
use an adverse inference in applying the facts otherwise available when 
a party has failed to cooperate by not acting to

[[Page 66093]]

the best of its ability to comply with a request for information.
    As noted above, Changtai was selected as a mandatory respondent. 
Changtai, however, did not provide the requested information necessary 
to determine a CVD rate for this preliminary determination and failed 
to provide information within the deadlines established by the 
Department. Specifically, Changtai did not respond to the Department's 
August 26, 2009 CVD questionnaire. Thus, in reaching our preliminary 
determination, pursuant to section 776(a)(2)(A) and (C) of the Act, we 
have based the CVD rate for Changtai on facts otherwise available.
    We determine that an adverse inference is warranted, pursuant to 
section 776(b) of the Act. On September 15, 2009, consultants for 
Changtai notified the Department that Changtai would not participate in 
the investigation. By electing not to participate, Changtai has not 
cooperated to the best of its ability in this investigation.
    In deciding which facts to use as adverse facts available 
(``AFA''), section 776(b) of the Act and 19 CFR 351.308(c)(1) authorize 
the Department to rely on information derived from: (1) the petition; 
(2) a final determination in the investigation; (3) any previous review 
or determination; or (4) any other information placed on the record. 
The Department's practice when selecting an adverse rate from among the 
possible sources of information is to ensure that the rate is 
sufficiently adverse ``as to effectuate the statutory purposes of the 
adverse facts available rule to induce respondents to provide the 
Department with complete and accurate information in a timely manner.'' 
See, e.g., Notice of Final Determination of Sales at Less Than Fair 
Value: Static Random Access Memory Semiconductors From Taiwan, 63 FR 
8909, 8932 (February 23, 1998). The Department's practice also ensures 
``that the party does not obtain a more favorable result by failing to 
cooperate than if it had cooperated fully.'' See Statement of 
Administrative Action (``SAA'') accompanying the Uruguay Round 
Agreements Act, H.R. Rep. No. 103-316, Vol. I, at 870 (1994), reprinted 
at 1994 U.S.C.C.A.N 4040, 4199.
    It is the Department's practice to select, as AFA, the highest 
calculated rate in any segment of the proceeding. See, e.g., 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 the accompanying Issues and Decision Memorandum at 
``Selection of the Adverse Facts Available'' (``LWS Decision 
Memorandum''). In previous CVD investigations into products from the 
PRC, we have adapted this practice to use the highest rate calculated 
for the same or similar programs in other PRC CVD investigations. See, 
e.g., id. Consistent with the Department's recent practice, we are 
preliminarily computing a total AFA rate for Changtai, generally using 
program-specific rates determined for the cooperating respondent or in 
past cases. Specifically, for programs other than those involving 
income tax exemptions and reductions, we will apply the highest 
calculated rate for the identical program in this investigation if a 
responding company used the identical program. If there is no identical 
program match within the investigation, we will use the highest non-de 
minimis rate calculated for the same or similar program in another PRC 
CVD investigation. Absent an above-de minimis subsidy rate calculated 
for the same or similar program, we will apply the highest calculated 
subsidy rate for any program otherwise listed that could conceivably be 
used by Changtai. See, e.g., Certain Kitchen Shelving and Racks from 
the People's Republic of China: Final Affirmative Countervailing Duty 
Determination, 74 FR 37012 (July 27, 2009) (``Kitchen Racks from the 
PRC''), and the accompanying Issues and Decision Memorandum at ``Use of 
Facts Available and Adverse Facts Available.''
    Further, where the GOC can demonstrate through complete, 
verifiable, positive evidence that Changtai (including all its 
facilities and cross-owned affiliates) is not located in particular 
provinces whose subsidies are being investigated, the Department does 
not intend to include those provincial programs in determining the 
countervailable subsidy rate for Changtai. See Certain Tow-Behind Lawn 
Groomers and Certain Parts Thereof from the People's Republic of China: 
Initiation of Countervailing Duty Investigation, 73 FR 42324 (July 21, 
2008), and the accompanying Initiation Checklist. In supplemental 
questionnaire responses received to date, the GOC has failed to provide 
verifiable information demonstrating that Changtai is located in Fujian 
Province and has no facilities or cross-owned affiliates in any other 
province in the PRC, as requested. Therefore, the Department 
preliminarily makes the adverse inference that Changtai has facilities 
and/or cross-owned affiliates that received subsidies under all of the 
sub-national programs alleged prior to the selection of mandatory 
respondents.

Loans

    For the ``Policy Loans to Narrow Woven Ribbons Producers from 
SOCBs'' program, we have applied the highest non-de minimis subsidy 
rate for any loan program in a prior PRC CVD investigation. This rate 
was 8.31 percent for the ``Government Policy Lending Program.'' See 
Lightweight Thermal Paper from the People's Republic of China: Notice 
of Amended Final Affirmative Countervailing Duty Determination and 
Notice of Countervailing Duty Order, 73 FR 70958 (November 24, 2008).

Grants

    For grant programs, Yama did not use ``State Key Technology Program 
Fund,'' ``Famous Brands,'' ``Export Assistance Grants,'' ``Export 
Interest Subsidy Funds for Enterprises Located in Zhejiang Province,'' 
and ``Technology Development Grants for Enterprises Located in Zhejiang 
Province'' programs. The Department has not calculated above de minimis 
rates for any of these programs in prior investigations and, moreover, 
all previously calculated rates for grant programs from prior PRC CVD 
investigations have been de minimis. Therefore, for each of these 
programs, we have determined to use the highest calculated subsidy rate 
for any program otherwise listed, which could conceivably have been 
used by Changtai. This rate was 13.36 percent for the ``Government 
Provision of Land for Less Than Adequate Remuneration.'' See LWS 
Decision Memorandum at 14-18.

Indirect Tax Credits and VAT/Tariff Reductions and Exemptions

    For the seven indirect tax credit and rebate programs,\2\ which 
Yama did not use, we have preliminarily determined to use the highest 
non-de minimis rate for any indirect tax program from a PRC CVD 
investigation. The rate we selected is 1.51 percent, which was the rate 
calculated for respondent Gold East

[[Page 66094]]

Paper (Jiangsu) Co., Ltd. (GE) for the ``Value-added Tax and Tariff 
Exemptions on Imported Equipment,'' program. See CFS Decision 
Memorandum at 13-14.
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    \2\ ``Corporate Income Tax Refund Program for Reinvestment of 
FIE Profits in Export-Oriented Enterprises;'' ``Preferential Tax 
Policies for Township Enterprises;'' ``Preferential Tax Policies for 
Research and Development for FIEs;'' ``Tax Benefits for FIEs in 
Encouraged Industries that Purchase Domestic Equipment;'' ``Import 
Tariff and VAT Exemptions for FIEs Using Imported Technology and 
Equipment;'' ``Import Tariff and VAT Exemptions for Certain Domestic 
Enterprises Using Imported Technology and Equipment;'' ``VAT Rebate 
for FIE Purchases of Domestically Produced Equipment.''
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Foreign-Invested Enterprise (``FIE'') Income Tax Rate Reduction and 
Exemption Programs

    For the five income tax rate reduction or exemption programs,\3\ we 
have applied an adverse inference that Changtai paid no income tax 
during the POI (i.e., calendar year 2008). The standard income tax rate 
for corporations in the PRC is 30 percent, plus a three percent 
provincial income tax rate. Therefore, the highest possible benefit for 
these five income tax programs is 33 percent. We are applying the 33 
percent AFA rate on a combined basis (i.e., the five programs combined 
provided a 33 percent benefit). This 33 percent AFA rate does not apply 
to tax credit and refund programs.
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    \3\ Preferential Tax Policies for Enterprises with Foreign 
Investment (``Two Free, Three Half'' Program''); ``Tax Subsidies to 
FIEs in Specially Designated Areas;'' ``Preferential Tax Policies 
for Export-Oriented FIEs;'' ``Tax Program for High or New Technology 
FIEs'', and ``Local Income Tax Exemption or Reduction Program for 
``Productive'' FIEs.''
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    For further explanation of the derivation of the AFA rates, see 
Memorandum to the File, ``Adverse Facts Available Rate'' (December 7, 
2009) (``AFA Calculation Memo'').
    Section 776(c) of the Act provides that, when the Department relies 
on secondary information rather than on information obtained in the 
course of an investigation or review, it shall, to the extent 
practicable, corroborate that information from independent sources that 
are reasonably at its disposal. Secondary information is ``information 
derived from the petition that gave rise to the investigation or 
review, the final determination concerning the subject merchandise, or 
any previous review under section 751 concerning the subject 
merchandise.'' See e.g., SAA, at 870, 1994 U.S.C.C.A.N. at 4199. The 
Department considers information to be corroborated if it has probative 
value. See id. To corroborate secondary information, the Department 
will, to the extent practicable, examine the reliability and relevance 
of the information to be used. The SAA emphasizes, however, that the 
Department need not prove that the selected facts available are the 
best alternative information. See SAA at 869, 1994 U.S.C.C.A.N. at 
4199.
    With regard to the reliability aspect of corroboration, we note 
that these rates were calculated in recent final CVD determinations. 
Further, the calculated rates were based upon verified information 
about the same or similar programs. Moreover, no information has been 
presented that calls into question the reliability of these calculated 
rates that we are applying as AFA. Finally, unlike other types of 
information, such as publicly available data on the national inflation 
rate of a given country or national average interest rates, there 
typically are no independent sources for data on company-specific 
benefits resulting from countervailable subsidy programs.
    With respect to the relevance aspect of corroborating the rates 
selected, the Department will consider information reasonably at its 
disposal in considering the relevance of information used to calculate 
a countervailable subsidy benefit. Where circumstances indicate that 
the information is not appropriate as AFA, the Department will not use 
it. See Fresh Cut Flowers From Mexico; Final Results of Antidumping 
Duty Administrative Review, 61 FR 6812 (February 22, 1996).
    In the absence of record evidence concerning these programs due to 
Changtai's decision not to participate in the investigation, the 
Department has reviewed the information concerning PRC subsidy programs 
in this and other cases. For those programs for which the Department 
has found a program-type match, we find that, because these are the 
same or similar programs, they are relevant to the programs of this 
case. For the programs for which there is no program-type match, the 
Department has selected the highest calculated subsidy rate for any PRC 
program from which Changtai could receive a benefit to use as AFA. The 
relevance of this rate is that it is an actual calculated CVD rate for 
a PRC program from which Changtai could actually receive a benefit. 
Further, this rate was calculated for a period close to the POI in the 
instant case. Moreover, Changtai's failure to respond to requests for 
information has ``resulted in an egregious lack of evidence on the 
record to suggest an alternative rate.'' Shanghai Taoen Int'l Trading 
Co., Ltd. v. United States, 360 F. Supp. 2d 1339, 1348 (Ct. Int'l Trade 
2005). Due to the lack of participation by Changtai and the resulting 
lack of record information concerning these programs, the Department 
has corroborated the rates it selected to the extent practicable.
    On this basis, we preliminarily determine that the AFA 
countervailable subsidy rate for Changtai is 118.68 percent ad valorem. 
See AFA Calculation Memo.

Subsidies Valuation Information

Allocation Period

    The average useful life (``AUL'') period in this proceeding, as 
described in 19 CFR 351.524(d)(2), is 10 years according to the U.S. 
Internal Revenue Service's 1977 Class Life Asset Depreciation Range 
System. See U.S. Internal Revenue Service Publication 946 (2007), How 
to Depreciate Property, at Table B-2: Table of Class Lives and Recovery 
Periods. No party in this proceeding has disputed this allocation 
period.

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) direct that the Department will attribute 
subsidies received by certain other companies to the combined sales of 
those companies if (1) cross-ownership exists between the companies, 
and (2) the cross-owned companies produce the subject merchandise, are 
a holding or parent company of the subject company, produce an input 
that is primarily dedicated to the production of the downstream 
product, or transfer a subsidy to a cross-owned company. The Court of 
International Trade has 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, SA v. 
United States, 166 F. Supp. 2d 593, 604 (Ct. Int'l Trade 2001).
    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.
    Yama responded to the Department's questionnaire on behalf of 
itself, a Hong Kong-owned foreign invested enterprise, and an 
affiliated trading company, Xiamen Yama Import and Export Co., Ltd. 
(``Yama Trading''). Based on information reported by Yama, we 
preliminarily determine that cross-ownership exists between Yama and 
Yama Trading as both companies have the same owners. However, according 
to the company's responses, Yama Trading

[[Page 66095]]

did not benefit from any countervailable subsidies during the POI.
    In its questionnaire responses, Yama also acknowledged that it has 
several other affiliated companies in addition to Yama Trading. 
However, Yama reported that these affiliates do not produce the subject 
merchandise and do not provide inputs to Yama. Therefore, because these 
companies do not produce subject merchandise or otherwise fall within 
the situations described in 19 CFR 351.525(b)(6)(iii)-(v), we do not 
reach the issue of whether these companies and Yama are cross-owned 
within the meaning of 19 CFR 351.525(b)(6)(iii)-(vi).

Analysis of Programs

    Based upon our analysis of the petition and the responses to our 
questionnaires, we determine the following:

I. Programs Preliminarily Determined To Be Countervailable

A. Tax Subsidies to FIEs in Specially Designated Areas

    To promote economic development and attract foreign investment, 
``productive'' FIEs located in coastal economic zones, special economic 
zones or economic and technical development zones in the PRC receive 
preferential tax rates of 15 percent or 24 percent, depending on the 
zone, under Article 7 of the Foreign Investment Enterprise Tax Law 
(``FIE Tax Law''). See GQR, at Exhibit G-1.
    The Department has previously found this program to be 
countervailable. See CFS from the PRC and CFS Decision Memorandum at 12 
(Analysis of Programs, I. Programs Determined to be Countervailable for 
GE, C. Reduced Income Tax Rates for FIEs Based on Location), 
Lightweight Thermal Paper From the People's Republic of China: Final 
Affirmative Countervailing Duty Determination, 73 FR 57323 (October 2, 
2008), and the accompanying Issues and Decision Memorandum at 15 
(Analysis of Programs, I. Programs Determined to be Countervailable, D. 
Reduced Income Tax Rates for FIEs Based on Location) and Kitchen Racks 
from the PRC and the accompanying Issues and Decision Memorandum at 11 
(Analysis of Programs, I. Programs Determined to be Countervailable, A. 
Income Tax Reduction for FIEs Based on Geographic Location).
    Yama is located in Xiamen city, a special economic zone, and was 
subject to the reduced income tax rate of 15 percent for the tax 
returned filed during the POI. See YSQR2 at 1.
    We preliminarily determine that the reduced income tax rate paid by 
productive FIEs under this program confers a countervailable subsidy. 
The reduced rate is a financial contribution in the form of revenue 
forgone by the GOC and it provides a benefit to the recipient in the 
amount of the tax savings. See section 771(5)(D)(ii) of the Act and 19 
CFR 351.509(a)(1). We further determine preliminarily that the 
reduction afforded by this program is limited to enterprises located in 
designated geographic regions and, hence, is specific under section 
771(5A)(D)(iv) of the Act.
    To calculate the benefit, we treated Yama's income tax savings as a 
recurring benefit, consistent with 19 CFR 351.524(c)(1), and divided 
the company's tax savings received during the POI by the company's 
total sales during that period. To compute the amount of the tax 
savings, we compared the income tax rate Yama would have paid in the 
absence of the program (30 percent) with the rate it paid (15 percent).
    On this basis, we preliminarily determine that Yama received a 
countervailable subsidy of 0.24 percent ad valorem under this program.

B. Local Income Tax Exemption and Reduction Programs for ``Productive'' 
Foreign-Invested Enterprises

    Under Article 9 of the FIE Tax Law, the provincial governments have 
the authority to exempt FIEs from the local income tax of three 
percent. See GQR at Exhibit G-1. The Department has previously found 
this program to be countervailable. See, e.g., CFS Decision Memorandum 
at 12-13 and Citric Acid and Certain Citrate Salts From the People's 
Republic of China: Final Affirmative Countervailing Duty Determination, 
74 FR 16836 (April 13, 2009), and accompanying Issues and Decision 
Memorandum at 21.
    In Yama's tax return filed for 2007, it reported not paying any 
local income tax during the POI. See YSQR 1 at Exhibit S-1.
    We preliminarily determine that the exemption from or reduction in 
the local income tax received by ``productive'' FIEs under this program 
confers a countervailable subsidy. The exemption or reduction is a 
financial contribution in the form of revenue forgone by the government 
and it provides a benefit to the recipient 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 or reduction 
afforded by this program is limited as a matter of law to certain 
enterprises, i.e., ``productive'' FIEs and, hence, is specific under 
section 771(5A)(D)(i) of the Act.
    To calculate the benefit for Yama, we treated the income tax 
savings enjoyed by the company as a recurring benefit, consistent with 
19 CFR 351.524(c)(1). To compute the amount of the tax savings, we 
compared the local income tax rate that the companies would have paid 
in the absence of the program (i.e., three percent) with the income tax 
rate the company actually paid.
    For Yama, we divided the company's tax savings received during the 
POI by its total sales. On this basis, we preliminarily determine that 
Yama received a countervailable subsidy of 0.05 percent ad valorem 
under this program.

II. Programs For Which More Information Is Required

Other Subsidies

    Section 775 of the Act, requires the Department to investigate any 
other potential subsidies it discovers during the course of this 
investigation that pertain to the manufacture, production, or 
exportation of the subject merchandise. In its supplemental 
questionnaire response, Yama reported that it received eleven subsidies 
under programs that were not alleged by Petitioner in this 
investigation. See YSQR1 at 6.
    As indicated in the Case History section above, on November 19, 
2009, the Department requested additional information on these subsidy 
programs which is still outstanding. We plan to issue a post-
preliminary analysis so that parties will have an opportunity to 
comment on our findings prior to our final determination.

III. Programs Preliminarily Determined To Be Not Used By Yama or To Not 
Provide Benefits During the POI

    Based upon responses and factual information submitted by the GOC 
and Yama, we preliminarily determine that Yama did not apply for or 
receive benefits during the POI under the programs listed below.

A. Loan Programs

    1. Policy Loans to Narrow Woven Ribbon Producers from State-Owned 
Commercial Banks

B. Grant Programs

    2. The State Key Technology Renovation Project Fund
    3. Famous Brands Program
    4. Export Assistance Grants
    5. Export Interest Subsidy Funds for Enterprises Located in 
Zhejiang Province
    6. Technology Grants for Enterprises

[[Page 66096]]

Located in Zhejiang Province

C. Indirect Tax Credits and VAT/Tariff Reductions and Exemptions

    7. Import Tariff and VAT Exemptions for FIEs Using Imported 
Technology and Equipment
    8. Import Tariff and VAT Exemptions for Certain Domestic 
Enterprises Using Imported Technology and Equipment
    9. VAT Rebate for FIE Purchases of Domestically Produced Equipment
    10. Corporate Income Tax Refund Program for Reinvestment of FIE 
Profits in Export-Oriented Enterprises
    11. Preferential Tax Policies for Township Enterprises

D. Foreign-Invested Enterprise (FIE) Income Tax Rate Reduction and 
Exemption Programs

    12. Preferential Tax Policies for Enterprises with Foreign 
Investment (``Two Free, Three Half'') Program
    13. Preferential Tax Policies for Export-Oriented FIEs
    14. Tax Program for High or New Technology FIEs
    15. Preferential Tax Policies for Research and Development for FIEs
    16. Tax Benefits for FIEs in Encouraged Industries that Purchase 
Domestic Equipment

Verification

    In accordance with section 782(i)(1) of the Act, we will verify the 
information submitted by the respondents prior to making our final 
determination.

Suspension of Liquidation

    In accordance with section 703(d)(1)(A)(i) of the Act, we 
calculated an individual rate for each producer/exporter of the subject 
merchandise individually investigated. We preliminarily determine the 
total estimated net countervailable subsidy rates to be:

------------------------------------------------------------------------
                                                            Net Subsidy
                  Exporter/Manufacturer                        Rate
                                                            ([percnt])
------------------------------------------------------------------------
Yama Ribbons and Bows Co., Ltd..........................        0.29 (de
                                                                minimis)
Changtai Rongshu Textile Co., Ltd.......................          118.68
All-Others..............................................           59.49
------------------------------------------------------------------------

    Sections 703(d) and 705(c)(5)(A) of the Act states 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 the company's exports of the subject merchandise to the 
United States. The ``all others'' rate normally does not include zero 
and de minimis rates or any rates based solely on the facts available. 
In this investigation, the net subsidy rate calculated for the two 
investigated companies are either de minimis or based entirely on AFA 
under section 776 of the Act. There is no information on the record 
upon which we could determine an all-others rate. As a result, we have 
calculated the all-others rate as a simple average of Changtai's AFA 
rate and Yama's de minimis rate. See, e.g., LWS from the PRC and LWS 
Decision Memorandum at Comment 21.
    In accordance with sections 703(d)(1)(B) and (2) of the Act, we are 
directing U.S. Customs and Border Protection to suspend liquidation of 
all entries of Woven Ribbons 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 merchandise in the amounts 
indicated above. However, because the estimated CVD rate for Yama is de 
minimis, liquidation will not be suspended and no cash deposits or 
bonds are required for merchandise produced and exported by that 
company.

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), we will disclose to the 
parties the calculations for this preliminary determination within five 
days of its announcement. Due to the anticipated timing of verification 
and issuance of verification reports, 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)(i) (for 
a further discussion of case briefs). Rebuttal briefs must be filed 
within five days after the deadline for submission of case briefs, 
pursuant to 19 CFR 351.309(d)(1). 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. See 19 CFR 
351.309(c)(2) and (d)(2).
    Section 774 of the Act provides that the Department will hold a 
public hearing to afford interested parties an opportunity to comment 
on arguments raised in case or rebuttal briefs, provided that such a 
hearing is requested by an interested party. If a request for a hearing 
is made in this investigation, the hearing will be held two days after 
the deadline for submission of the rebuttal briefs, pursuant to 19 CFR 
351.310(d), at the U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, DC 20230. Parties should confirm 
by telephone the time, date, and place of the hearing 48 hours before 
the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, 14th Street and Constitution Avenue, N.W., Washington, DC 20230, 
within 30 days of the publication of this notice, pursuant to 19 CFR 
351.310(c). Requests should contain: (1) the party's name, address, and 
telephone; (2) the number of participants; and (3) a list of the issues 
to be discussed. Oral presentations will be limited to issues raised in 
the briefs. See id.
    This determination is published pursuant to sections 703(f) and 
777(i) of the Act.

    Dated: December 4, 2009.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. E9-29725 Filed 12-11-09; 8:45 am]
BILLING CODE 3510-DS-S