[Federal Register Volume 75, Number 17 (Wednesday, January 27, 2010)]
[Notices]
[Pages 4345-4348]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-1629]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
[C-570-966]
Drill Pipe from the People's Republic of China: Initiation of
Countervailing Duty Investigation
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
DATES: Effective Date:
January 27, 2010.
FOR FURTHER INFORMATION CONTACT: John Conniff and Eric B. Greynolds,
AD/CVD Operations, Office 3, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Room 4014, Washington, DC 20230; telephone:
(202) 482-1009, (202) 482-6071, respectively.
SUPPLEMENTARY INFORMATION:
The Petition
On December 31, 2009,\1\ the Department of Commerce (the
Department) received a petition concerning imports of drill pipe from
the People's Republic of China (PRC) filed in proper form by VAM
Drilling USA, Inc., Texas Steel Conversions, Inc., Rotary Drilling
Tools, TMK IPSCO, and United Steel, Paper and Forestry, Rubber,
Manufacturing, Energy, Allied Industrial and Service Workers
International Union, AFL-CIO-CLC (collectively, the petitioners). See
Petitions for the Imposition of Antidumping and Countervailing Duties:
Drill Pipe from the People's Republic of China, dated December 31, 2009
(Petition). On January 6, 2010, the Department issued additional
requests for information and clarification of certain areas of the
Petition. Petitioners filed timely additional information pertaining to
general issues on January 11, 2010. See Petition for the Imposition of
Antidumping Duties on Drill Pipe from the PRC: Response to Department's
Letter of January 6, 2010 (Supplement to the AD/CVD Petitions). On
January 8, 2010, the Department issued a request for additional
information pertaining to countervailing duty (CVD) issues. Petitioners
filed timely information regarding countervailing issues on January 13,
2010. See Petitions for the Imposition of Antidumping and
Countervailing Duties: Drill Pipe from the PRC: Response to Pre-
initiation CVD questions (Supplement to the CVD Petition). On January
14, 2010, the Department issued an additional request for information
and clarification regarding general issues and dumping. Petitioners
filed a response containing additional information related to both
general issues and dumping on January 15, 2010. See Petitions for the
Imposition of Antidumping and Countervailing Duties: Drill Pipe from
the PRC: Response to the Department's Letter of January 14, 2010
(Second Supplement to the AD/CVD Petitions). Petitioners also filed
additional information pertaining to general issues on January 15,
2010. See Petitions for the Imposition of Antidumping and
Countervailing Duties: Drill Pipe from the PRC: Response to
Department's Letter of January 14, 2010: Additional Affidavit (Third
Supplement to the AD/CVD Petitions). On January 19, 2010, petitioners
filed further clarifications related to general issues. See Petitions
for the Imposition of Antidumping and Countervailing Duties: Drill Pipe
from the PRC: Response to Department's Letter of January 14, 2010:
Additional Affidavit: (Fourth Supplement to the AD/CVD Petitions). In
addition, on both January 15, and January 19, 2010, we received
comments filed by Lehnardt & Lehnardt, LLC, on behalf of Downhole Pipe
& Equipment, LP (Downhole Pipe) and Command Energy Services
International (Command Energy), U.S. importers of drill pipe from
China. Downhole Pipe and Command Energy are interested parties per
section 771(9)(A) of the Act.
---------------------------------------------------------------------------
\1\ Petitioners filed the Petition at the International Trade
Commission (ITC) after 12:00 noon on December 30, 2009, therefore,
pursuant to 19 CFR 207.10(a), the ITC deemed the Petition to have
been filed on the next business day, December 31, 2009. Section
702(b)(2) of the Tariff Act of 1930, as amended (the Act) requires
simultaneous filings of countervailing duty petitions with the
Department of Commerce and the ITC, therefore, we deem the Petition
to have been filed with Commerce on December 31, 2009. This file
date will change the initiation date from January 19, 2009, to
January 20, 2009. See Memorandum to Ronald K. Lorentzen, entitled
``Decision Memorandum Concerning Petitions Filing Date,'' dated
concurrently with this checklist.
---------------------------------------------------------------------------
In accordance with section 702(b)(1) of the Act, petitioners allege
that manufacturers, producers, or exporters of drill pipe in the PRC
receive countervailable subsidies within the meaning of section 701 of
the Act, and that such imports are materially injuring, or threatening
material injury to, an industry in the United States.
The Department finds that petitioners filed the Petition on behalf
of the domestic industry because they are interested parties as defined
in section 771(9)(C) and (D) of the Act, and petitioners have
demonstrated sufficient industry support with respect to the CVD
investigation (see ``Determination of Industry Support for the
Petition'' section below).
Period of Investigation
The proposed period of investigation (POI) is January 1, 2009,
through December 31, 2009.
Scope of Investigation
The products covered by this investigation are drill pipe from the
PRC. For a full description of the scope of the investigation, see the
``Scope of the Investigation'' in Appendix I of this notice.
Comments on Scope of Investigation
During our review of the Petition, we discussed the scope with
petitioners to ensure that it is an accurate reflection of the products
for which the domestic industry is seeking relief. Moreover, as
discussed in the preamble to the Department's regulations (Antidumping
Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19,
1997)), we are setting aside a period for interested parties to raise
issues regarding product coverage. The Department encourages all
interested parties to submit such comments by Wednesday, February 10,
2010, twenty calendar days from the signature date of this notice.
Comments should be addressed to Import Administration's APO/Dockets
Unit, Room 1870, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230. The period for scope
consultations is intended to provide the Department with ample
[[Page 4346]]
opportunity to consider all comments and to consult with parties prior
to the issuance of the preliminary determination.
Consultations
Pursuant to section 702(b)(4)(A)(ii) of the Act, on January 8,
2010, the Department invited representatives of the Government of the
PRC (GOC) for consultations with respect to the CVD petition. On
January 15, 2010, the Department held consultations with
representatives of the GOC in Beijing.
Determination of Industry Support for the Petition
Section 702(b)(1) of the Act requires that a petition be filed on
behalf of the domestic industry. Section 702(c)(4)(A) of the Act
provides that a petition meets this requirement if the domestic
producers or workers who support the petition account for: (i) at least
25 percent of the total production of the domestic like product; and
(ii) more than 50 percent of the production of the domestic like
product produced by that portion of the industry expressing support
for, or opposition to, the petition. Moreover, section 702(c)(4)(D) of
the Act provides that, if the petition does not establish support of
domestic producers or workers accounting for more than 50 percent of
the total production of the domestic like product, the Department
shall: (i) poll the industry or rely on other information in order to
determine if there is support for the petition, as required by
subparagraph (A), or (ii) determine industry support using a
statistically valid sampling method to poll the industry.
Section 771(4)(A) of the Act defines the ``industry'' as the
producers as a whole of a domestic like product. Thus, to determine
whether a petition has the requisite industry support, the statute
directs the Department to look to producers and workers who produce the
domestic like product. The ITC, which is responsible for determining
whether ``the domestic industry'' has been injured, must also determine
what constitutes a domestic like product in order to define the
industry. While both the Department and the ITC must apply the same
statutory definition regarding the domestic like product (section
771(10) of the Act), they do so for different purposes and pursuant to
a separate and distinct authority. In addition, the Department's
determination is subject to limitations of time and information.
Although this may result in different definitions of the like product,
such differences do not render the decision of either agency contrary
to law. See USEC, Inc. v. United States, 132 F. Supp. 2d 1, 8 (Ct.
Int'l Trade 2001), citing Algoma Steel Corp., Ltd. v. United States,
688 F. Supp. 639, 644 (Ct. Int'l Trade 1988), aff'd 865 F.2d 240 (Fed.
Cir. 1989), cert. denied 492 U.S. 919 (1989).
Section 771(10) of the Act defines the domestic like product as ``a
product which is like, or in the absence of like, most similar in
characteristics and uses with, the article subject to an investigation
under this title.'' Thus, the reference point from which the domestic
like product analysis begins is ``the article subject to an
investigation'' (i.e., the class or kind of merchandise to be
investigated, which normally will be the scope as defined in the
petition).
With regard to the domestic like product, petitioners do not offer
a definition of domestic like product distinct from the scope of the
investigation. Based on our analysis of the information submitted on
the record, we have determined that drill pipe constitutes a single
domestic like product and we have analyzed industry support in terms of
that domestic like product. For a discussion of the domestic like
product analysis in this case, see ``Countervailing Duty Investigation
Initiation Checklist: Drill Pipe from the People's Republic of China''
(Initiation Checklist), at Attachment II, Analysis of Industry Support
for the Petitions Covering Drill Pipe from the People's Republic of
China, on file in the Central Records Unit (CRU), Room 1117 of the main
Department of Commerce building.
In determining whether petitioners have standing under section
702(C)(4)(A) of the Act, we considered the industry support data
contained in the Petition with reference to the domestic like product.
To establish industry support, petitioners provided their production of
the domestic like product in 2008, and compared this to the estimated
total production of the domestic like product for the entire domestic
industry. See Volume I of the Petition, at 2-3; see also Supplement to
the AD/CVD Petitions at 6-13 and Exhibit 3; Second Supplement to the
AD/CVD Petitions at 1-4 and Exhibits 1-3; Third Supplement to the AD/
CVD Petitions at Exhibit 1, and Fourth Supplement to the AD/CVD
Petitions at Exhibit I. To estimate 2008 production of the domestic
like product, petitioners used their own data and industry specific
knowledge. See Second Supplement to the AD/CVD Petitions at 1-4 and
Exhibits 1-3; see also Initiation Checklist at Attachment II. We have
relied upon data petitioners provided for purposes of measuring
industry support. For further discussion, see Initiation Checklist at
Attachment II.
Based on information provided in the Petition, supplemental
submissions, and other information readily available to the Department,
we determine that the domestic producers and workers have met the
statutory criteria for industry support under section 702(c)(4)(A)(i)
of the Act because the domestic producers (or workers) who support the
Petition account for at least 25 percent of the total production of the
domestic like product. Because the Petition and supplemental
submissions did not establish support from domestic producers (or
workers) accounting for more than 50 percent of the total production of
the domestic like product, the Department was required to take further
action in order to evaluate industry support. See section 702(c)(4)(D)
of the Act. In this case, the Department was able to rely on other
information, in accordance with section 702(c)(4)(D)(i) of the Act, to
determine industry support. See Initiation Checklist at Attachment II.
Based on information provided in the Petition and other submissions,
the domestic producers and workers have met the statutory criteria for
industry support under section 702(c)(4)(A)(ii) of the Act because the
domestic producers (or workers) who support the Petition account for
more than 50 percent of the production of the domestic like product
produced by that portion of the industry expressing support for, or
opposition to, the Petition. Accordingly, the Department determines
that the Petition was filed on behalf of the domestic industry within
the meaning of section 702(b)(1) of the Act. See Initiation Checklist
at Attachment II.
The Department finds that petitioners filed the Petition on behalf
of the domestic industry because they are an interested party as
defined in sections 771(9)(C) and 771(9)(D) of the Act and has
demonstrated sufficient industry support with respect to the CVD
investigation that it is requesting the Department initiate. See
Initiation Checklist at Attachment II.
Injury Test
Because the PRC is a ``Subsidies Agreement Country'' within the
meaning of section 701(b) of the Act, section 701(a)(2) of the Act
applies to this investigation. Accordingly, the ITC must determine
whether imports of subject merchandise from the PRC materially injure,
or threaten material injury to, a U.S. industry.
[[Page 4347]]
Allegations and Evidence of Material Injury and Causation
Petitioners allege that imports of drill pipe from the PRC are
benefitting from countervailable subsidies and that such imports are
causing, or threaten to cause, material injury to the domestic industry
producing drill pipe. In addition, petitioners allege that subsidized
imports exceed the negligibility threshold provided for under section
771(24)(A) of the Act.
Petitioners contend that the industry's injured condition is
illustrated by reduced market share, reduced production, reduced
shipments, reduced capacity and capacity utilization, underselling and
price depression or suppression, reduced employment, hours worked, and
wages paid, decline in financial performance, lost sales and revenue,
and increase in import penetration. We have assessed the allegations
and supporting evidence regarding material injury, threat of material
injury, and causation, and we have determined that these allegations
are properly supported by adequate evidence and meet the statutory
requirements for initiation. See Initiation Checklist at Attachment III
(Analysis of Injury Allegations and Evidence of Material Injury and
Causation).
Initiation of Countervailing Duty Investigation
Section 702(b) of the Act requires the Department to initiate a CVD
proceeding whenever an interested party files a petition on behalf of
an industry that: (1) alleges the elements necessary for an imposition
of a duty under section 701(a) of the Act; and (2) is accompanied by
information reasonably available to the petitioner(s) supporting the
allegations.
The Department has examined the CVD Petition on drill pipe from the
PRC and finds that it complies with the requirements of section 702(b)
of the Act. Therefore, in accordance with section 702(b) of the Act, we
are initiating a CVD investigation to determine whether manufacturers,
producers, or exporters of drill pipe in the PRC receive
countervailable subsidies. For a discussion of evidence supporting our
initiation determination, see Initiation Checklist.
We are including in our investigation the following programs
alleged in the Petition to have provided countervailable subsidies to
producers and exporters of the subject merchandise in the PRC:
A. Preferential Loans and Interest Rates
1. Policy Loans To The Drill Pipe (DP) Industry
2. Export Loans from Policy Banks and State-Owned Commercial Banks
(SOCBs)
3. Treasury Bond Loans
4. Preferential Loans for State-Owned Enterprises (SOEs)
5. Preferential Loans for Key Projects and Technologies
6. Preferential Lending to DP Producers and Exporters Classified as
``Honorable Enterprises''
B. Debt-To-Equity Swaps and Loan Forgiveness
1. Debt-to-Equity Swaps
2. Loan and Interest Forgiveness for SOEs
C. Income Tax and Other Direct Tax Benefit Programs
1. Income Tax Credits for Domestically-Owned Companies Purchasing
Domestically Produced Equipment
2. Reduction In Or Exemption From Fixed Assets Investment
Orientation Regulatory Tax
D. Subsidies for Foreign Invested Enterprises (FIES)
1. ``Two Free, Three Half'' Program
2. Local Income Tax Exemption and Reduction Programs for
``Productive'' FIEs
3. Preferential Tax Programs for FIEs Recognized as High or New
Technology Enterprises
4. Income Tax Reductions For Export-Oriented FIEs
B. Indirect Tax and Tariff Exemption Programs
1. Indirect Tax And Tariff And Vat Exemptions For FIEs And Certain
Domestic Enterprises Using Imported Equipment In Encourage Industries
2. Deed Tax Exemption for SOEs Undergoing Mergers or Restructuring
3. Export Subsidies Characterized as ``VAT Rebates''
F. Government Provision of Goods and Services for Less Than Adequate
Remuneration (LTAR)
1. Provision of Land to SOEs for LTAR
2. Provision of Land Use Rights Within Designated Geographical
Areas for LTAR
3. Provision of Steel Rounds for LTAR
4. Provision of Hot-Rolled Steel (HRS) for LTAR
5. Provision of Green Tube for LTAR
6. Provision of Electricity for LTAR
7. Provision of Electricity and Water at LTAR to DP Producers
Located in Jiangsu Province
8. Provision of Coking Coal for LTAR
G. Grant Programs
1. State Key Technology Project Fund
2. Export Assistance Grants
3. Programs to Rebate Antidumping Legal Fees
4. GOC and Sub-Central Government Grants, Loans, and Other
Incentives for Development of Famous Brands and China World Top Brands
5. Grants and Tax Benefits to Loss-Making SOEs at National and
Local Level
H. Subsidies To DP Producers Located in Economic Development Zones
1. Economic and Technological Development Zones (ETDZ) Located in
Tianjin Binhai New Area (TBNA)
2. ETDZs Located in Tianjin Economic and Technological Development
Area (TEDA)
3. ETDZs Located in Yangtze Riverside Economic Development Zone
(YREDZ)
4. High-Tech Industrial Development Zones (HTDZ)
For further information explaining why the Department is
investigating these programs, see the Initiation Checklist.
Respondent Selection
For this investigation, the Department expects to select
respondents based on U.S. Customs and Border Protection (CBP) data for
U.S. imports during the POI. We intend to release the CBP data under
Administrative Protective Order (APO) to all parties with access to
information protected by APO within five days of the announcement of
the initiation of this investigation. Interested parties may submit
comments regarding the CBP data and respondent selection within seven
calendar days of publication of this notice. We intend to make our
decision regarding respondent selection within 20 days of publication
of this Federal Register notice. Interested parties must submit
applications for disclosure under APO in accordance with 19 CFR
351.305(b). Instructions for filing such applications may be found on
the Department's website at http://ia.ita.doc.gov/apo.
Distribution of Copies of the Petition
In accordance with section 702(b)(3)(A) of the Act and 19 CFR
351.202(f), copies of the public versions of the Petition have been
provided to the representatives of the GOC. Because of the large number
of producers/exporters identified in the Petition, the Department
considers the service of the public version of the Petition to the
[[Page 4348]]
foreign producers/exporters satisfied by the delivery of the public
version to the Government of the PRC, consistent with 19 CFR
351.203(c)(2).
ITC Notification
We have notified the ITC of our initiation, as required by section
702(d) of the Act.
Preliminary Determination by the ITC
The ITC will preliminarily determine, within 25 days after the date
on which it receives notice of the initiation, whether there is a
reasonable indication that imports of subsidized drill pipe from the
PRC are causing material injury, or threatening to cause material
injury, to a U.S. industry. See section 703(a)(2) of the Act. A
negative ITC determination will result in the investigation being
terminated; otherwise, the investigation will proceed according to
statutory and regulatory time limits.
This notice is issued and published pursuant to section 777(i) of
the Act.
Dated: January 20, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
Appendix I
Scope of the Investigation
The products covered by this investigation are steel drill pipe,
and steel drill collars, whether or not conforming to American
Petroleum Institute (API) or non-API specifications, whether
finished or unfinished (including green tubes suitable for drill
pipe), without regard to the specific chemistry of the steel (i.e.,
carbon, stainless steel, or other alloy steel), and without regard
to length or outer diameter. The scope does not include tool joints
not attached to the drill pipe, nor does it include unfinished tubes
for casing or tubing covered by any other antidumping or
countervailing duty order.
The subject products are currently classified in the following
Harmonized Tariff Schedule of the United States (HTSUS) categories:
7304.22.0030, 7304.22.0045, 7304.22.0060, 7304.23.3000,
7304.23.6030, 7304.23.6045, 7304.23.6060, 8431.43.8040 and may also
enter under 8431.43.8060, 8431.43.4000, 7304.39.0028, 7304.39.0032,
7304.39.0036, 7304.39.0040, 7304.39.0044, 7304.39.0048,
7304.39.0052, 7304.39.0056, 7304.49.0015, 7304.49.0060,
7304.59.8020, 7304.59.8025, 7304.59.8030, 7304.59.8035,
7304.59.8040, 7304.59.8045, 7304.59.8050, and 7304.59.8055.\2\
While HTSUS subheadings are provided for convenience and Customs
purposes, the written description of the scope of these
investigations is dispositive.
---------------------------------------------------------------------------
\2\ Prior to February 2, 2007, these imports entered under
different tariff classifications, including 7304.21.3000,
7304.21.6030, 7304.21.6045, and 7304.21.6060.
---------------------------------------------------------------------------
[FR Doc. 2010-1629 Filed 1-26-10; 8:45 am]
BILLING CODE 3510-DS-S