[Federal Register Volume 75, Number 172 (Tuesday, September 7, 2010)]
[Notices]
[Pages 54302-54322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-22204]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-570-968]


Aluminum Extrusions 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 aluminum extrusions from the People's 
Republic of China (the PRC). For information on the estimated subsidy 
rates, see the ``Suspension of Liquidation'' section of this notice.

DATES: Effective Date: September 7, 2010.

FOR FURTHER INFORMATION CONTACT: Eric B. Greynolds, AD/CVD Operations, 
Office 3, Import Administration, U.S. Department of Commerce, Room 
4014, 14th Street and Constitution Avenue, NW., Washington, DC 20230; 
telephone: 202-482-6071.

SUPPLEMENTARY INFORMATION:

Case History

    On March 31, 2010, the Department received the petition filed in 
proper form by the petitioners.\1\ The Department initiated the 
investigation on April 20, 2010. See Aluminum Extrusions from the 
People's Republic of China: Initiation of Countervailing Duty 
Investigation, 75 FR 22114 (April 27, 2010) (Initiation), and 
accompanying Initiation Checklist.\2\
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    \1\ Petitioners are Aluminum Extrusion Fair Trade Committee: 
Aerolite Extrusion Company; Alexandria Extrusions Company; Beneda 
Aluminum of Florida, Inc.; William L. Bonnell Company, Inc.; 
Frontier Aluminum Corporation; Futura Industries Corporation; Hydro 
Aluminum North American Inc.; Kaiser Aluminum Corporation; Profile 
Extrusion Company; Sapa Extrusions, Inc.; Western Extrusions 
Corporation; and the United Steel, Paper, and Forestry, Rubber, 
Manufacturing, Energy, Allied Industrial and Service Workers 
International Union.
    \2\ Public and public versions of Departmental memoranda 
referenced in this Notice are on file in the Central Records Unit 
(CRU), Room 1117 in the main building of the Commerce Department.
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    On May 18, 2010, the Department of Commerce (the Department) 
selected the following firms as mandatory respondents in this 
countervailing duty (CVD) investigation: Dragonluxe Limited 
(Dragonluxe), Miland Luck Limited (Miland), and Liaoyang Zhongwang 
Aluminum Profile Co. Ltd./Liaoning Zhongwang Group (collectively, the 
Zhongwang Group) and concurrently issued to them, as well as the 
Government of China (GOC), the initial questionnaire.\3\ We confirmed 
that the three mandatory respondents received the CVD questionnaire.\4\ 
Responses were due on June 24, 2010. However, the June 24, 2010, 
deadline passed with none of the mandatory respondents submitting a 
questionnaire response or requesting an extension.
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    \3\ See Memorandum to John M. Andersen, Acting Deputy Assistant 
Secretary for Antidumping and Countervailing Duty Operations, 
``Respondent Selection,'' (May 18, 2010).
    \4\ See Memorandum to the File, ``Confirmation of Delivery of 
Initial Questionnaire to Firms Selected As Mandatory Respondents,'' 
(June 4, 2010) (Delivery of Questionnaire Memorandum).
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    The Department received requests for individual examination on a 
voluntary basis. On May 6, 2010, we received a request for treatment as 
a voluntary respondent from Zhaoqing New Zhongya Aluminum Co., Ltd. 
(New Zhongya), Zhongya Shaped Aluminum HK Holding Ltd. (Zhongya HK), 
and Karlton Aluminum Company Ltd. (Karlton) (collectively the Zhongya 
Companies), Chinese producers of subject merchandise. On May 26, 2010, 
Guang Ya Aluminum Industries Co., Ltd. (Guang Ya), Foshan Guangcheng 
Aluminum Co., Ltd. (Guangcheng), Guang Ya Aluminum Industries Hong Kong 
(Guang Ya HK), Kong Ah International Company Limited (Kong Ah), and 
Yongji Guanghai Aluminum Industry Co., Ltd. (Guanghai) (collectively 
the Guang Ya Companies), producers of subject merchandise, requested 
treatment as a voluntary respondent. In response to requests from the 
Zhongya and Guang Ya Companies, on June 21 and 22, 2010, we extended, 
by two weeks, the deadline for the submission of questionnaire 
responses by these companies to July 8, 2010. Both the Zhongya and 
Guang Ya Companies submitted questionnaire responses on July 8, 2010.
    On June 21, 2010, the Department postponed the deadline for the 
preliminary determination until August 30, 2010. See Aluminum 
Extrusions from the People's Republic of China: Notice of Postponement 
of Preliminary Determination in the Countervailing Duty Investigation, 
75 FR 34982 (June 21, 2010).
    On July 8, 2010, petitioners' submitted new subsidy allegations 
regarding the Zhongya and Guang Ya Companies.
    On July 21, 2010, the Department selected the Zhongya and Guang Ya 
Companies as voluntary respondents. See the Memorandum to Ronald K. 
Lorentzen, Deputy Assistant Secretary for Import Administration, 
``Acceptance of Requests for Treatment As Voluntary Respondents'' (July 
21, 2010) (Voluntary Respondent Selection Memorandum), a public 
document on file in room 1117 of the CRU. In addition, because 
Dragonluxe, Miland, and the Zhongwang Group did not submit responses to 
the Department's initial questionnaire, we found the firms to be non-
cooperative, mandatory respondents. Id.
    On July 21, 2010, we postponed the GOC's deadline for submitting a 
response to the Department's May 18, 2010, initial questionnaire until 
August 4, 2010. We subsequently extended the deadline until August 9, 
2010. The GOC submitted its initial questionnaire response on August 9, 
2010.
    On July 21, 2010, we also issued supplemental questionnaires to the 
Zhongya Companies, the Guang Ya Companies, and the GOC. We issued 
addenda to these supplemental questionnaires on July 28, 2010. The 
Zhongya and Guang Ya companies submitted responses to the supplemental 
questionnaires on August 6 and August 9, 2010, respectively. The GOC 
submitted its supplemental questionnaire response on August 4 and 
August 9, 2010. The GOC and the Zhonga and Guang Ya companies submitted 
their responses to the

[[Page 54303]]

addendum to the supplemental questionnaire on August 9, 2010.
    On July 28, 2010, petitioners submitted additional new subsidy 
allegations regarding the Zhongya and Guang Ya Companies. On August 11, 
2010, the Department issued a new subsidy memorandum concerning 
petitioners' July 13 and July 28, 2010, new subsidy allegations. See 
the Department's August 11, 2010, Memorandum, ``New Subsidy Allegations 
for the Guang Ya and Zhongya Companies,'' (August 11, 2010) (New 
Subsidy Memorandum), a public document on file in room 1117 of the CRU. 
The Department issued new subsidy questionnaires to the GOC and the 
Zhongya and Guang Ya companies on August 11, 2010. The new subsidy 
questionnaires are due on September 3, 2010, and, as a result, the 
Department is not able to incorporate the responses to the 
questionnaire into the preliminary determination.
    On August 16, 19, and 23, 2010, the Zhongya Companies, Guang Ya 
Companies, and the GOC submitted their second supplemental 
questionnaire responses, respectively.
    In the Initiation, the Department deferred initiating on 
petitioners' allegation that the GOC, in an effort to benefit domestic 
producers, intervenes in the currency market in order to ensure that 
the RMB/U.S. dollar exchange rate understates the value of the RMB. See 
Initiation, 75 FR at 22117. On August 30, 2010, the Department issued a 
decision memorandum concerning petitioners' currency manipulation 
allegation. Specifically, the Department has determined not to initiate 
an investigation of the allegation. See Memorandum to Ronald K. 
Lorentzen, Deputy Assistant Secretary for Import Administration, 
``Subsidy Allegation--Currency,'' (August 30, 2010).

Period of Investigation

    The period of investigation (POI) for which we are measuring 
subsidies is January 1, 2009, through December 31, 2009, which 
corresponds to the most recently completed fiscal year. See 19 CFR 
351.204(b)(2).

Scope of the Investigation

    The merchandise covered by this investigation is aluminum 
extrusions which are shapes and forms, produced by an extrusion 
process, made from aluminum alloys having metallic elements 
corresponding to the alloy series designations published by The 
Aluminum Association commencing with the numbers 1, 3, and 6 (or 
proprietary equivalents or other certifying body equivalents). 
Specifically, the subject merchandise made from aluminum alloy with an 
Aluminum Association series designation commencing with the number 1 
contains not less than 99 percent aluminum by weight. The subject 
merchandise made from aluminum alloy with an Aluminum Association 
series designation commencing with the number 3 contains manganese as 
the major alloying element, with manganese accounting for not more than 
3.0 percent of total materials by weight. The subject merchandise made 
from an aluminum alloy with an Aluminum Association series designation 
commencing with the number 6 contains magnesium and silicon as the 
major alloying elements, with magnesium accounting for at least 0.1 
percent but not more than 2.0 percent of total materials by weight, and 
silicon accounting for at least 0.1 percent but not more than 3.0 
percent of total materials by weight. The subject aluminum extrusions 
are properly identified by a four-digit alloy series without either a 
decimal point or leading letter. Illustrative examples from among the 
approximately 160 registered alloys that may characterize the subject 
merchandise are as follows: 1350, 3003, and 6060.
    Aluminum extrusions are produced and imported in a wide variety of 
shapes and forms, including, but not limited to, hollow profiles, other 
solid profiles, pipes, tubes, bars, and rods. Aluminum extrusions that 
are drawn subsequent to extrusion (``drawn aluminum'') are also 
included in the scope.
    Aluminum extrusions are produced and imported with a variety of 
finishes (both coatings and surface treatments), and types of 
fabrication. The types of coatings and treatments applied to subject 
aluminum extrusions include, but are not limited to, extrusions that 
are mill finished (i.e., without any coating or further finishing), 
brushed, buffed, polished, anodized (including bright-dip anodized), 
liquid painted, or powder coated. Aluminum extrusions may also be 
fabricated, i.e., prepared for assembly. Such operations would include, 
but are not limited to, extrusions that are cut-to-length, machined, 
drilled, punched, notched, bent, stretched, knurled, swedged, mitered, 
chamfered, threaded, and spun. The subject merchandise includes 
aluminum extrusions that are finished (coated, painted, etc.), 
fabricated, or any combination thereof.
    Subject aluminum extrusions may be described at the time of 
importation as parts for final finished products that are assembled 
after importation, including, but not limited to, window frames, door 
frames, solar panels, curtain walls, or furniture. Such parts that 
otherwise meet the definition of aluminum extrusions are included in 
the scope. The scope includes aluminum extrusions that are attached 
(e.g., by welding or fasteners) to form subassemblies, i.e., partially 
assembled merchandise.
    Subject extrusions may be identified with reference to their end 
use, such as heat sinks, door thresholds, or carpet trim. Such goods 
are subject merchandise if they otherwise meet the scope definition, 
regardless of whether they are finished products and ready for use at 
the time of importation.
    The following aluminum extrusion products are excluded: Aluminum 
extrusions made from aluminum alloy with an Aluminum Association series 
designations commencing with the number 2 and containing in excess of 
1.5 percent copper by weight; aluminum extrusions made from aluminum 
alloy with an Aluminum Association series designation commencing with 
the number 5 and containing in excess of 1.0 percent magnesium by 
weight; and aluminum extrusions made from aluminum alloy with an 
Aluminum Association series designation commencing with the number 7 
and containing in excess of 2.0 percent zinc by weight.
    The scope also excludes finished merchandise containing aluminum 
extrusions as parts that are fully and permanently assembled and 
completed at the time of entry, such as finished windows with glass, 
doors, picture frames, and solar panels. The scope also excludes 
finished goods containing aluminum extrusions that are entered 
unassembled in a ``kit.'' A kit is understood to mean a packaged 
combination of parts that contains, at the time of importation, all of 
the necessary parts to fully assemble a final finished good.
    The scope also excludes aluminum alloy sheet or plates produced by 
other than the extrusion process, such as aluminum products produced by 
a method of casting. Cast aluminum products are properly identified by 
four digits with a decimal point between the third and fourth digit. A 
letter may also precede the four digits. The following Aluminum 
Association designations are representative of aluminum alloys for 
casting: 208.0, 295.0, 308.0, 355.0, C355.0, 356.0, A356.0, A357.0, 
360.0, 366.0, 380.0, A380.0, 413.0, 443.0, 514.0, 518.1, and 712.0. The 
scope also

[[Page 54304]]

excludes pure, unwrought aluminum in any form.
    Imports of the subject merchandise are provided for under the 
following categories of the Harmonized Tariff Schedule of the United 
States (``HTS''): 7604.21.0000, 7604.29.1000, 7604.29.3010, 
7604.29.3050, 7604.29.5030, 7604.29.5060, 7608.20.0030, and 
7608.20.0090. The subject merchandise entered as parts of other 
aluminum products may be classifiable under the following additional 
Chapter 76 subheadings: 7610.10, 7610.90, 7615.19, 7615.20, and 7616.99 
as well as under other HTS chapters. While HTS subheadings are provided 
for convenience and customs purposes, the written description of the 
scope in this proceeding 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, 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.
    The Department received several scope comments from interested 
parties. The Department is evaluating the comments submitted by the 
parties and will issue its decision regarding the scope of the 
antidumping (AD) and CVD investigations in the preliminary 
determination of the companion AD investigation, which is due for 
signature on October 27, 2010.

Injury Test

    Because the PRC is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Tariff Act of 1930 (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 May 17, 
2010, the ITC published its preliminary determination finding that 
there is a reasonable indication that an industry in the United States 
is materially injured by reason of imports of certain aluminum 
extrusions from the PRC. See Certain Aluminum Extrusion from China, 
Investigation Nos. 701-TA-475 and 731-TA-1177 (Preliminary), 75 FR 
34482 (May 17, 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 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) (CWP from the PRC), and 
accompanying Issues and Decision Memorandum (CWP from the PRC 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 (WTO), as 
the date from which the Department will identify and measure subsidies 
in the PRC for purposes of this investigation. See CWP Decision 
Memorandum at Comment 2.

Use of Facts Otherwise Available and Adverse Inferences

    Sections 776(a)(1) and (2) of the Tariff Act of 1930, as amended 
(the Act), provide that the Department shall apply ``facts otherwise 
available'' if, inter alia, necessary information is not on the record 
or an interested party or any other person: (A) Withholds information 
that has been requested; (B) fails to provide information within the 
deadlines established, or in the form and manner requested by the 
Department, subject to subsections (c)(1) and (e) of section 782 of the 
Act; (C) significantly impedes a proceeding; or (D) provides 
information that cannot be verified as provided by section 782(i) of 
the Act.
    Section 776(b) of the Act further provides that the Department may 
use an adverse inference in applying the facts otherwise available when 
a party has failed to cooperate by not acting to the best of its 
ability to comply with a request for information.

Application of Adverse Inferences: Non-Cooperative Companies

    As explained above in the ``Background'' section, the Department 
selected Dragonluxe, Miland, and the Zhongwang Group as mandatory 
respondents. Accordingly, the Department sent the initial questionnaire 
to the three companies on May 18, 2010. The Department confirmed that 
the three firms received copies of the initial questionnaire. See 
Delivery of Questionnaire Memorandum. Dragonluxe, Miland, and the 
Zhongwang Group failed to respond the Department's initial 
questionnaire. As a result of the failure of Dragonluxe, Miland, and 
the Zhongwang Group to submit responses to the Department's initial 
questionnaire, we found the firms to be non-cooperative, mandatory 
respondents. See the Voluntary Respondent Memorandum.
    We find that, by not responding to the Department's initial 
questionnaire, Dragonluxe, Miland, and the Zhongwang Group withheld 
requested information and significantly impeded this proceeding. Thus, 
in reaching our preliminary determination, pursuant to sections 
776(a)(2)(A) and (C) of the Act, we are basing the CVD rate for 
Dragonluxe, Miland, and the Zhongwang Group on facts otherwise 
available.
    We further preliminarily determine that an adverse inference is 
warranted, pursuant to section 776(b) of the Act. By failing to submit 
responses to the Department's initial questionnaire, Dragonluxe, 
Miland, and the Zhongwang Group did not cooperate to the best of their 
ability in this investigation. Accordingly, we preliminarily find that 
an adverse inference is warranted to ensure that the three companies 
will not obtain a more favorable result than had they fully complied 
with our request for information. For purposes of this preliminary 
determination, we have limited our application of adverse inferences 
under section 776(b) of the Act to those programs included in the 
Initiation.
    In deciding which facts to use as adverse facts available (AFA), 
section 776(b) of the Act and 19 CFR 351.308(c)(1) and (2) 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

[[Page 54305]]

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 in CVD proceedings 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 accompanying Issues and Decision 
Memorandum (LWS from the PRC Decision Memorandum) at ``Selection of the 
Adverse Facts Available.'' In previous CVD investigations of products 
from the PRC, we adapted the practice to use the highest rate 
calculated for the same or similar program in other PRC CVD proceeding. 
See id. and Certain Tow-Behind Lawn Groomers and Certain Parts Thereof 
From the People's Republic of China: Preliminary Affirmative 
Countervailing Duty Determination and Alignment of Final Countervailing 
Duty Determination With Final Antidumping Duty Determination, 73 FR 
70971, 70975 (November 24, 2008) (unchanged in the Certain Tow-Behind 
Lawn Groomers and Certain Parts Thereof From the People's Republic of 
China: Final Affirmative Countervailing Duty Determination, 74 FR 29180 
(June 19, 2009), and accompanying Issues and Decision Memorandum (Lawn 
Groomers Decision Memorandum) at ``Application of Facts Available, 
Including the Application of Adverse Inferences'').
    Thus, under this practice, for investigations involving the PRC, 
the Department computes the total AFA rate for non-cooperating 
companies generally using program-specific rates calculated for the 
cooperating respondents in the instant investigation or calculated in 
prior PRC CVD cases. Specifically, for programs other than those 
involving income tax exemptions and reductions, the Department applies 
the highest calculated rate for the identical program in the 
investigation if a responding company used the identical program, and 
the rate is not zero. If there is no identical program match within the 
investigation, the Department uses the highest non-de minimis rate 
calculated for the same or similar program (based on treatment of the 
benefit) in another PRC CVD proceeding. Absent an above-de minimis 
subsidy rate calculated for the same or similar program, the Department 
applies the highest calculated subsidy rate for any program otherwise 
listed that could conceivably be used by the non-cooperating companies. 
See, e.g., Lightweight Thermal Paper From the People's Republic of 
China: Final Affirmative Countervailing Duty Determination, 73 FR 57323 
(October 2, 2008) (LWTP from the PRC), and accompanying Issues and 
Decision Memorandum (LWTP from the PRC Decision Memorandum) at 
``Selection of the Adverse Facts Available Rate.''
    However, in the instant investigation the cooperating firms are 
voluntary respondents. Under 19 CFR 351.204(d)(3), in calculating an 
all-others rate under section 705(c)(5) of the Act, the Department will 
exclude net subsidy rates calculated for voluntary respondents. Thus, 
as discussed in further detail below in the ``Suspension of 
Liquidation'' section, in accordance with section 705(c)(5)(A)(ii) of 
the Act and 19 CFR 351.204(d)(3), we have equated the all-others rate 
with the AFA rates calculated for the non-cooperative companies. We 
have adopted this approach because the inclusion of self-selected 
respondents in the derivation of the all-others rate could result in 
the distortion or manipulation of the all-others rate. See Preamble to 
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27310 (May 19, 1997) (Preamble to Procedural Regulations). Furthermore, 
in light of this concern, we determine that it is not appropriate to 
compute total AFA rates for non-cooperative companies using company-
specific rates calculated for participating respondents, because to do 
so would require the use of program rates calculated for voluntary 
respondents. In addition, our reasoning not to base the AFA rate on 
program rates calculated for voluntary respondents extends to our use 
of program rates from other CVD proceedings involving the PRC. Thus, in 
deriving the AFA rate for the three non-cooperating mandatory 
respondents in the instant investigation, we have not utilized company-
specific program rates that were calculated for voluntary respondents.
    Therefore, for purposes of deriving the AFA rate for the three non-
cooperating mandatory respondents, we are using the highest non-de 
minimis rate calculated for the same or similar program (based on 
treatment of the benefit) in another PRC CVD investigation. Absent an 
above-de minimis subsidy rate calculated for the same or similar 
program, we are applying the highest calculated subsidy rate for any 
program otherwise listed that could conceivably be used by the non-
cooperating companies. See, e.g., LWTP from the PRC Decision Memorandum 
at ``Selection of the Adverse Facts Available Rate.''
    Further, where the GOC can demonstrate through complete, 
verifiable, positive evidence that Dragonluxe, Miland, and the 
Zhongwang Group (including all their facilities and cross-owned 
affiliates) are not located in particular provinces whose subsidies are 
being investigated, the Department will not include those provincial 
programs in determining the countervailable subsidy rate for those 
companies. 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) (Racks From the PRC), and 
accompanying Issues and Decision Memorandum (Racks Decision from the 
PRC Decision Memorandum) at ``Use of Facts Otherwise Available and 
Adverse Facts Available.'' In this investigation, the GOC has not 
provided any such information. Therefore, we are making the adverse 
inference that the three non-cooperative companies, Dragonluxe, Miland, 
and the Zhongwang Group, had facilities and/or cross-owned affiliates 
that received subsidies under all of the sub-national programs on which 
the Department initiated.
    For the seven income tax rate reduction or exemption programs at 
issue in the instant investigation, we are applying an adverse 
inference that Dragonluxe, Miland, and the Zhongwang Group paid no 
income taxes during the POI. The seven programs are: (1) Tax Reductions 
for High or New Technology Enterprises (HNTEs) Involved in Designated 
Projects, (2) Two Free, Three Half Tax Exemptions for Productive FIEs, 
(3) Local Income Tax Exemption and Reduction Programs for 
``Productive'' FIEs, (4) Income Tax Benefits for FIEs in Designated 
Geographic Location, (5) Income Tax Benefits for Technology- or 
Knowledge-Intensive FIEs, (6) Income Tax Benefits for FIES That Are 
Also High or New

[[Page 54306]]

Technology Enterprises (HNTEs), and (7) Income Tax Reductions For 
Export-Oriented FIEs.
    The standard income tax rate for corporations in the PRC during the 
POI was 25 percent. See, e.g., ``Notification of the State Council on 
Carrying out the Transition Preferential Policies Concerning Enterprise 
Income Tax, Guo Fa 2007, No. 39 as included in the March 31, 2010, 
petition at Exhibit III-65. Further, the GOC response indicates that 
the three percent provincial income tax was no longer in effect during 
the POI. See the GOC's August 4, 2010, supplemental questionnaire at 4. 
Therefore, the highest possible benefit for all income tax reduction or 
exemption programs combined is 25 percent. Therefore, we are applying a 
CVD rate of 25 percent on an overall basis for these seven income tax 
programs (i.e., these seven income tax programs combined provide a 
countervailable benefit of 25 percent). This 25 percent AFA rate does 
not apply to tax credit or tax refund programs. This approach is 
consistent with the Department's past practice. See, e.g., CWP from the 
PRC Decision Memorandum at 2, and LWTP from the PRC Decision Memorandum 
at ``Selection of the Adverse Facts Available Rate.''
    The 25 percent AFA rate does not apply to the following nine income 
tax credit and rebate or accelerated depreciation programs found 
countervailable because such programs may not affect the tax rate and, 
hence, the subsidy conferred, in the current year: (1) Value Added Tax 
(VAT) and Tariff Exemptions on Imported Equipment to FIEs and Certain 
Domestic Enterprises, (2) VAT Rebates on FIEs Purchases of Chinese-Made 
Equipment, (3) City Tax and Surcharge Exemptions for FIEs, and (4) Tax 
Offsets for Research and Development, (5) Income Tax Credits for 
Domesticall-Owned Companies Purchasing Chinese-Made Equipment, (6) Tax 
Reductions for FIEs Purchasing Chinese-Made Equipment, (7) Tax Refunds 
for Reinvesting of FIE Profits in Export-Oriented Enterprises, (8) 
Accelerated Depreciation for Enterprises Located in Northeast Region, 
and (9) Forgiveness of Tax Arrears for Enterprises in the ``Old 
Industrial Bases'' of Northeast China.
    Based on the methodology discussed above, we preliminarily 
determine to use the highest non-de minimis rate for any indirect tax 
program from a China CVD investigation. The rate we select is 1.51 
percent, calculated for the ``Value-Added Tax and Tariff Exemptions on 
Imported Equipment'' program in CFS from the PRC. See CFS Decision 
Memorandum at ``VAT and Tariff Exemptions on Imported Equipment''.
    Regarding the Preferential Loans as Part of the Northeast 
Revitalization Program and the Policy Loans for Aluminum Extrusion 
Producers, we preliminarily determine to apply the highest non-de 
minimis subsidy rate for any loan program in a prior China CVD 
investigation. The highest non-de minimis subsidy rate is 8.31 percent 
calculated for the ``Government Policy Lending Program,'' from LWTP 
from the PRC. 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) (Amended LWTP from the PRC).
    We are investigating a number of grant programs including: (1) 
State Key Technology Renovation Fund, (2) GOC and Sub-Central 
Government Grants, Loans, and Other Incentives for Development of 
Famous Brands and China World Top Brands, (3) Grants to Cover Legal 
Fees in Trade Remedy Cases in Shenzhen, (4) Special Fund for Energy 
Saving Technology Reform: Guangdong Province, (5) The Clean Production 
Technology Fund, (6) Grants for Listing Shares: Liaoyang City 
(Guangdong Province), Wenzhou Municipality (Zhejiang Province), and 
Quanzhou Municipality (Fujian Province), (7) Northeast Region Foreign 
Trade Development Fund, and (8) Northeast Region Technology Reform 
Fund. The Department has not calculated above de minimis rate for any 
of these programs in prior investigations, and, moreover, all 
previously calculated rates for grant programs from prior China CVD 
investigations have been de minimis. Therefore, for each of these grant 
programs, we preliminarily determine to use the highest calculated 
subsidy rate for any program otherwise listed, which could have been 
used by the non-cooperative companies. We preliminarily determine that 
this rate is 8.31 percent from the ``Government Policy Lending 
Program,'' in the

Amended LWTP From the PRC

    The Department is also investigating several provision of a good or 
service for less than adequate remuneration (LTAR) programs: Provision 
of Land-Use Rights for LTAR in Liaoyang High-Tech Industry Development 
Zone, Provision of Land-Use Rights for LTAR to SOEs, and Provision of 
Primary Aluminum for LTAR. For two of these LTAR programs, we are 
applying the highest non-de minimis subsidy rate for any provision of 
land-use rights for LTAR program in a prior China CVD investigation. 
The highest non-de minimis subsidy rate is 2.55 percent calculated for 
the ``Subsidies Provided in the TBNA and the Tianjin Economic and 
Technological Development Area'' from OCTG from the PRC. See OCTG from 
the PRC Decision Memorandum at ``Subsidies Provided in the TBNA and the 
Tianjin Economic and Technological Development Area.'' Concerning the 
provision of Primary Aluminum for LTAR, the Department has not 
previously investigated allegations concerning this input product. 
Therefore, for this program, we are applying the highest calculated 
subsidy rate for any program otherwise listed that could conceivably be 
used by the non-cooperating companies. We preliminarily determine that 
this similar program rate is 2.55 percent from OCTG from the PRC. Id.
    In addition, the Department is investigating government purchases 
of aluminum extrusions for more than adequate remuneration (MTAR). The 
Department has not previously investigated allegations concerning this 
input. Therefore, for this program, we are applying the highest 
calculated subsidy rate for any program otherwise listed that could 
conceivably be used by the non-cooperating companies. We preliminarily 
determine that this rate is 8.31 percent from the Amended LWTP from the 
PRC.
    On this basis, we preliminarily determine the AFA countervailable 
subsidy rate for the non-cooperative respondents (Dragonluxe, Miland, 
and the Zhongwang Group) to be 137.65 percent ad valorem. See AFA 
Memorandum.
    As noted above, on July 8 and July 28, 2010, petitioners submitted 
new subsidy allegations. On August 11, 2010, the Department initiated 
investigations of all the allegations included in petitioners' July 8 
and July 28, 2010, submissions. See New Subsidy Memorandum. On August 
11, 2010, the Department also sent a new subsidy questionnaire to the 
GOC as well as to the Zhongya and Guang Ya Companies regarding these 
new subsidy allegations. The new subsidy questionnaire responses are 
currently due on September 5, 2010. Therefore, for purposes of the 
preliminary determination, we have not included these additional 
subsidy programs under investigation in this proceeding in the total 
AFA rates calculated for Dragonluxe, Miland, and the Zhongwang Group. 
We invite interested parties to comment on whether the Department 
should include the additional alleged programs and the various programs 
self-reported by the

[[Page 54307]]

Guang Ya and Zhongya companies into the AFA rate calculated for the 
non-cooperating, mandatory respondents.

Various Grant Programs Self-Reported by the Guang Ya Companies

    The Guang Ya Companies self-reported receiving various lump sum 
cash grants from the GOC. As a result, the Department sent 
questionnaires to the GOC regarding these programs. See the July 21, 
2010, first supplemental questionnaire sent to the GOC. In its 
supplemental questionnaire responses the GOC provided information 
concerning the nature of the programs and indicated that the programs 
were not contingent upon exports, and thus are not specific under 
section 771(5A)(B) of the Act. However, the GOC failed to respond to 
the Department's questions concerning the distribution of benefits, 
which is information that the Department uses to determine whether 
alleged subsidy programs are de facto specific under section 
771(5A)(D)(iii) of the Act. See the GOC's August 9, 2010, supplemental 
questionnaire response. Further, the GOC failed to supply the requested 
benefit distribution data in its second supplemental questionnaire 
response, despite the Department's request that it do so. See the GOC's 
August 19, 2010, second supplemental questionnaire response.
    Because the GOC failed to provide the requested benefit 
distribution data, we find that necessary information is not on the 
record, pursuant to section 776(a) of the Act and that the GOC has not 
cooperated to the best of its ability. Therefore, for those programs 
for which we lack the necessary information and for which the GOC 
failed to cooperate, in accordance with section 776(b) of the Act, we 
are assuming as an adverse inference that the programs are de facto 
specific as domestic subsidies within the meaning of section 
771(5A)(D)(iii) of the Act.

The Zhongya Companies' Failure To Report All of Its Sales of Aluminum 
Extrusions Under the Purchase of Aluminum Extrusions for MTAR Program

    In its July 8, 2010, questionnaire response, the Zhongya Companies 
failed to provide any information concerning the purchase of aluminum 
extrusions for MTAR program. In response to the Department's July 21, 
2010, supplemental questionnaire, the Zhongya Companies provided MTAR 
data. See the Zhongya Companies' August 6, 2010, first supplemental 
questionnaire response. However, the dataset was not complete. 
Specifically, the Zhongya Companies provided data for its ``top 10 
domestic customers.'' Id. The Zhongya Companies state that the top 10 
customers accounted for ``more than 70 percent of New Zhongya's total 
domestic sales of subject merchandise during the POI.'' Id. The Zhongya 
Companies did not identify its other customers; therefore we have 
determined that necessary information is not on the record and that the 
Zhongya Companies have therefore ``significantly impeded the 
proceeding,'' pursuant to sections 776(a)(1) and (a)(2) of the Act.
    In light of its failure to provide the requested benefit 
distribution data, we find that the Zhongya Companies have failed to 
cooperate to the best of its ability. See section 776(b) of the Act. 
Therefore, we are applying facts available with an adverse inference 
with respect to the 30 percent of the sales that the Zhongya Companies 
did not report to the Department.
    Materials used in certain government projects are subject to the 
GOC's ``Government Procurement Law of the PRC'' (Procurement Law). See 
the March 31, 2010, petition at Exhibit III-153. Under the Procurement 
Law, government authorities are permitted to procure imported goods or 
services only when domestic goods or services are either unavailable or 
cannot be obtained under ``reasonable commercial conditions.'' The 
``Implementing Measures on the Government Procurement Law of the PRC'' 
(Implementing Measures of the Procurement Law) state that:

    The situation where reasonable commercial terms are not 
available for procurement under Article 10 of the Government 
Procurement Law refers to instances where the lowest offered price 
for domestic goods, construction, or services, that meet the 
requirements of procurement documents, exceeds the lowest offered 
price for foreign goods, construction, or services by more than 20 
percent.

See the March 31, 2010, petition at Exhibit III-155.
    Based on the information in the Implementing Measures of the 
Procurement Law, we are assuming as AFA under section 776(b) of the Act 
that the Zhongya Companies' unreported sales were made to GOC 
authorities and, thus, constitute a financial contribution under 
section 771(5)(D)(iv) of the Act. We are further assuming as AFA that 
the Zhongya Companies received a 20 percent price premium on the 
unreported sales volumes of aluminum extrusions. For further 
information concerning the derivation of the benefit, see the 
``Purchase of Aluminum Extrusions for MTAR'' section below.
    Regarding our decision to apply AFA, we acknowledge that the GOC 
has stated in its questionnaire response that the Zhongya Companies did 
not sell its aluminum extrusions under any procurement program. See, 
e.g., the GOC's August 9, 2010, questionnaire response at 38. However, 
we preliminarily determine that the Zhongya Companies' failure to 
provide any information concerning the missing ``30 percent'' of its 
customers has impeded the Department's ability to adequately 
investigate whether these customers acquired subject merchandise from 
the Zhongya Companies for MTAR. Thus, we preliminarily determine that 
the application of AFA with regard to the Zhongya Companies' use of 
this program is warranted.

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. The Court of International Trade (CIT) 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 v. United States, 166 F. 
Supp. 2d 593, 600-604 (CIT 2001).

[[Page 54308]]

The Guang Ya Companies

    As discussed above, the Guang Ya Companies are Guang Ya, 
Guangcheng, Guanghai, Guang Ya HK, and Kong Ah. Guang Ya and Guangcheng 
are the producers of subject merchandise. Guanghai produces aluminum 
billet that it supplies to Guangcheng. Guang Ya HK and Kong Ah are Hong 
Kong-based trading companies that export merchandise produced by Guang 
Ya and Guangcheng. According to the Guang Ya Companies, only Guang Ya 
HK exported subject merchandise to the United States that was produced 
by the Guang Ya Companies. We find that the Guang Ya Companies are 
cross-owned with each other via common ownership within the meaning of 
19 CFR 351.525(b)(6)(vi). See the Guang Ya Companies July 8, 2010, 
questionnaire response at Exhibit 1.
    Guang Ya and Guangcheng are the members of the Guang Ya Companies 
that produce subject merchandise. Therefore, in accordance with 19 CFR 
351.525(b)(6)(ii), we have attributed subsidies received by Guang Ya 
and Guangcheng to the products produced by the two firms. According to 
the questionnaire response of the Guang Ya Companies, Guanghai is an 
input supplier to Guangcheng. Therefore, in accordance with 19 CFR 
351.525(b)(6)(iv), we would attribute subsidies received by Guanghai to 
the combined sales of the input made by Guanghai and downstream 
products produced by Guang Ya and Guangcheng, excluding the sales 
between corporations.\5\
---------------------------------------------------------------------------

    \5\ For purposes of the preliminary determination, we have not 
calculated net subsidy rates for Guanghai.
---------------------------------------------------------------------------

    As explained above, during the POI Guang Ya HK exported to the 
United States aluminum extrusions produced by Guang Ya and Guangcheng. 
In supplemental questionnaires issued to the Guang Ya Companies, the 
Department inquired about the sales value of extrusions destined for 
the United States that Guang Ya and Guangcheng made to Guang Ya HK 
during the POI. The Department also inquired about the sales value of 
aluminum extrusions Guang Ya HK made to the United States that during 
the POI. The purpose of these questions was to ascertain the extent to 
which the ``export values'' recorded in the books of Guang Ya and 
Guangcheng did not reflect the actual U.S. prices because there was a 
mark-up on those sales by Guang Ya HK, the Hong Kong-based affiliate. 
The Department has six criteria it uses to determine whether such a 
difference in sales values exists and whether an adjustment to the net 
subsidy rate calculations is warranted. See, e.g., Circular Welded 
Austenitic Stainless Pressure Pipe from the People's Republic of China: 
Final Affirmative Countervailing Duty Determination, 74 FR 4936 
(January 28, 2009) (CWASPP from the PRC), and accompanying Issues and 
Decision Memorandum (CWASPP from the PRC Decision Memorandum) at 
``Adjustment to Net Subsidy Rate Calculation,'' in which the Department 
describes the six criteria utilized by the Department.
    We have analyzed the sales information supplied by the Guang Ya 
Companies. Based on our review, we preliminarily determine that an 
adjustment to the net subsidy rate, as described in CWASPP from the 
PRC, is not warranted. We preliminarily determine that the sales data 
reported by the Guang Ya Companies indicate that the sales value of 
aluminum extrusions destined for the United States that Guang Ya and 
Guangcheng made to Guang Ya HK during the POI exceed the sales value of 
aluminum extrusions that Guang Ya HK made to the United States during 
the POI. See the Guang Ya Companies' August 23, 2010, supplemental 
questionnaire at Exhibit 93 and the Guang Ya Companies' August 9, 2010, 
supplemental questionnaire at Exhibit 56.

The Zhongya Companies

    As discussed above, the Zhongya Companies are New Zhongya, Zhongya 
HK, and Karlton. New Zhongya is the producer of subject merchandise. 
Zhongya HK and Karlton are Hong-Kong based firms that are cross-owned 
with New Zhongya, within the meaning of 19 CFR 351.525(b)(6)(vi). 
During the POI, Zhongya HK exported products, including subject 
merchandise, produced by New Zhongya. During the POI, New Zhongya did 
not export aluminum extrusions to the United States through Karlton. In 
this preliminary determination, in accordance with 19 CFR 
351.525(b)(6)(ii), we are attributing subsidies received by New Zhongya 
to products produced by New Zhongya and exported through Zhongya HK.
    In supplemental questionnaires issued to the Zhongya Companies, the 
Department inquired about the sales value of extrusions destined for 
the United States which New Zhongya produced and sold to Zhongya HK 
during the POI. As explained above, the Department also inquired about 
the sales value of aluminum extrusions which New Zhongya produced and 
which Zhongya HK sold to the United States that during the POI. The 
purpose of these questions was to ascertain the extent to which the 
``export values'' recorded in the books of New Zhongya did not reflect 
the actual U.S. prices due to a mark-up on those sales by Zhongya HK, 
the Hong Kong-based affiliate. Based on our review of the information 
submitted by the Zhongya Companies, we preliminarily determine that no 
such mark-up exists and, as a result, an adjustment to the net subsidy 
rate, as discussed in CWASPP from the PRC, is not necessary. See 
Zhongya Companies July 8, 2010, questionnaire response at 6 for 
information concerning the sales of aluminum extrusions Zhongya HK made 
to the United States and the Zhongya Companies August 16, 2010, second 
supplemental questionnaire response at 2 for information concerning the 
sales of aluminum extrusions destined for the United States that New 
Zhongya made to Zhongya HK. In addition, we find that the Zhongya 
Companies have not adequately responded to the Department's questions 
concerning the extent to which the price charged by New Zhonga to 
Zhongya HK differs from the price Zhongya HK charges to its U.S. 
Customers, which is one of the six criteria the Departments examines 
when determining whether to adjust the net subsidy rate. See the 
Zhongya Companies August 6, 2010, first supplemental questionnaire 
response at 12.

Benchmarks and Discount Rates

    The Department is investigating loans received by the Guang Ya 
Companies from Chinese policy banks and state-owned commercial banks 
(SOCBs), which are alleged to have been granted on a preferential, non-
commercial basis. Therefore, the derivation of the Department's 
benchmark and discount rates is discussed below.
    Benchmark for Short-Term RMB Denominated Loans: 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

[[Page 54309]]

should be a market-based rate. However, 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 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, because Chinese banks reflect significant government 
intervention in the banking sector, 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 Decision Memorandum at Comment 
10; see also LWTP from the PRC Decision Memorandum at ``Benchmarks and 
Discount Rates.'' This benchmark interest rate is based on the 
inflation-adjusted interest rates of countries with per capita gross 
national incomes (GNIs) similar to the PRC. The benchmark interest rate 
takes into account a key factor involved in interest rate formation 
(i.e., the quality of a country's institutions), which is not directly 
tied to the state-imposed distortions in the banking sector discussed 
above.
    This methodology relies on data published by the World Bank and 
International Monetary Fund (see further discussion below). For the 
year 2009, the World Bank, however, has not yet published all the 
necessary data relied on by the Department to compute a short-term 
benchmark interest rate for the PRC. Specifically, the following data 
are not yet available: World Governance Indicators and World Bank 
classifications of lower-middle income countries based on GNI per 
capita in U.S. dollars. Therefore, for purposes of this preliminary 
determination, where the use of a short-term benchmark rate for 2009 is 
required, we have applied the 2008 short-term benchmark rate for the 
PRC, as calculated by the Department (see discussion below). The 
Department notes that the current 2008 loan benchmark may be updated, 
by the final determination, pending the release of all the necessary 
2009 data.
    The 2008 short-term benchmark was computed following the 
methodology developed in CFS from the PRC. We first determined which 
countries are similar to the PRC in terms of 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 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 AD purposes for any part of 
the years in question, for example: Armenia, Azerbaijan, Belarus, 
Georgia, Moldova, and 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. For example, 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 the 
calculation of the inflation-adjusted short-term benchmark rate, we 
also excluded any countries with aberrational or negative real interest 
rates for the year in question.
    For the resulting inflation-adjusted benchmark lending rate, see 
Memorandum to the File from Eric B. Greynolds, Program Manager, AD/CVD 
Operations, Office 3, regarding ``2008 Short-Term Interest Rate 
Benchmark'' (August 30, 2010). Because these are inflation-adjusted 
benchmarks, it is necessary to adjust the respondent's interest 
payments for inflation. This was done using the PRC inflation rate as 
reported in the IFS.
    Benchmark for Long-Term RMB Denominated Loans: The lending rates 
reported in the IFS represent short- and medium-term lending, and there 
are no sufficient publicly available long-term interest rate data upon 
which to base a robust long-term benchmark. 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 Decision Memorandum) at ``Discount Rates.'' 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.
    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 provided the subsidy.

Analysis of Programs

Programs Preliminarily Determined To Be Countervailable

A. Exemption From City Construction Tax and Education Tax for FIEs
    Pursuant to the Circular Concerning Temporary Exemption from Urban 
Maintenance and Construction Tax and Additional Education Fees for 
Foreign-Funded and Foreign Enterprises (GUOSHUIFA {1994{time}  No. 38), 
the local tax authorities exempt all FIEs and

[[Page 54310]]

foreign enterprises from the city maintenance and construction tax and 
education fee surcharge. The construction tax is based on the amount of 
product tax; value added tax, and/or business tax actually paid by the 
taxpayer. For taxpayers located in urban areas, the rate is seven 
percent; for taxpayers located in counties or townships, the rate is 
five percent; and for taxpayers located in areas other than urban 
areas, counties, and townships, the rate is one percent. Regarding the 
education fee surcharge, FIEs pay only one percent of the actual amount 
of the product tax, value-added tax, and business tax paid, whereas 
other entities pay four percent of that amount. Guangcheng and New 
Zhongya are FIEs and, therefore, received exemptions under this 
program.
    Consistent with our finding in Racks from the PRC, we preliminarily 
determine that the exemptions from the city construction tax and 
education surcharge under this program confer a countervailable 
subsidy. See Racks from the PRC Decision Memorandum at ``Exemption from 
City Construction Tax and Education Tax for FIEs in Guangdong 
Province.'' The exemptions are financial contributions in the form of 
revenue forgone by the government and provide a benefit to the 
recipient in the amount of the savings. See section 771(5)(D)(ii) of 
the Act and 19 CFR 351.509(a)(1). We also preliminarily determine that 
the exemptions afforded by this program are limited as a matter of law 
to certain enterprises, i.e., FIEs, and, hence, specific under section 
771(5A)(D)(i) of the Act. To calculate the benefit, we treated the tax 
savings and exemptions received by Guangcheng and New Zhongya as 
recurring benefits, consistent with 19 CFR 351.524(c)(1). Guangcheng 
and New Zhongya both reported that they are exempted from the city 
construction tax and education fee surcharge.
    To compute the amount of city construction tax savings, we first 
determined the rate the companies would have paid in the absence of the 
program. Both Guangcheng and New Zhongya reported that a seven percent 
construction tax would have been applied to them absent the program. 
They further reported that they paid a one percent education tax 
instead of a four percent education tax that would have been applicable 
absent the program. Thus, we compared the rates the companies would 
have paid during the POI in the absence of the program (seven percent 
for the construction tax and 4 percent on the education tax) with the 
rate the companies paid (zero percent construction tax and 1 percent 
education tax), because they are FIEs. To calculate the total benefit 
under the program, we summed the savings from the construction tax 
exemption and education fee exemption.
    To calculate the program rate, we divided the companies' tax 
savings received during the POI by their total consolidated sales, net 
of intra-company sales. Specifically, for New Zhongya, we divided the 
benefit by Zhongya's total sales for the POI. For Guangcheng, we 
divided the benefit the combined total sales of Guangcheng and Guang 
Ya.
    On this basis, we preliminarily determine the countervailable 
subsidy to be 0.01 percent ad valorem for the Guang Ya Companies and 
0.07 percent ad valorem for the Zhongya Companies.
B. GOC and Sub-Central Government Grants, Loans, and Other Incentives 
for Development of Famous Brands and China World Top Brands
    The Famous Brand program is administered at the central, 
provincial, and municipal government level. During the POI, New Zhongya 
and Guang Ya reported receiving grants under the Famous Brand program 
from their respective local governments.
    Though operated at the local level, the GOC issued ``Measures for 
the Administration of Chinese Top-Brand Products,'' which state that 
the requirements for application require that firms provide information 
concerning their export ratio as well as the extent to which their 
product quality meets international standards. See Chapter 3 of the 
``Measures for the Administration of Chinese Top-Brand Products'' at 
Exhibit 24 of the Guang Ya Companies July 8, 2010, questionnaire 
response.
    Based on the information available on the record of the 
investigation, we determine that the grants that the Zhongya and Guang 
Ya Companies received 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 on the record 
of the investigation, we determine that grants provided to the Zhongya 
and Guang Ya Companies 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. Our approach in this regard is 
consistent with the Department's findings in prior CVD proceedings 
involving the PRC. See, e.g., Pre-Stressed Concrete Steel Wire Strand 
from the People's Republic of China: Final Affirmative Countervailing 
Duty Determination, 75 FR 28557 (May 21, 2010) (PC Strand from the 
PRC), and accompanying Issues and Decision Memorandum (PC Strand from 
the PRC Decision Memorandum) at ``Subsidies for Development of Famous 
Export Brands and China World Top Brands at Central and Sub-Central 
Level.''
    The grants that the Zhongya and Guang Ya Companies received during 
the POI were less than 0.5 percent of their respective total export 
sales in the year of approval/receipt. Therefore, pursuant to 19 CFR 
351.524(b)(2), we expensed the grant amount year of receipt. Guang Ya 
also received a grant prior to the POI that was greater than 0.5 
percent of its total export sales in the year of approval/receipt. 
Therefore, we allocated the benefit over time using the methodology 
provided under 19 CFR 351.524(d)(2).
    On this basis, we calculated a total net subsidy rate of 0.32 
percent ad valorem for the Guang Ya Companies. Concerning the Zhongya 
Companies, the benefit it received under the program was fully expensed 
prior to the POI.
C. Two Free, Three Half Income 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. New Zhongya reported receiving 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

[[Page 54311]]

matter of law to certain enterprises, ``productive'' FIEs, and, hence, 
is specific under section 771(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 treated the income 
tax exemption claimed as a recurring benefit, consistent with 19 CFR 
351.524(c)(1). We then compared the tax rate paid to the rate that 
otherwise would have been paid by New Zhongya and multiplied the 
difference by the company's taxable income. We divided the benefit by 
the total sales of the Zhongya Companies during the POI.
    On this basis, we determine a countervailable subsidy of 0.53 
percent ad valorem for the Zhongya Companies.
D. Import Tariff and VAT Exemptions for FIEs and Certain Domestic 
Enterprises Using Imported Equipment in Encouraged Industries
    Enacted in 1997, the Circular of the State Council on Adjusting Tax 
Policies on Imported Equipment (Guofa No. 37) (Circular 37) exempts 
both FIEs and certain domestic enterprises from the VAT and tariffs on 
imported equipment used in their production so long as the equipment 
does not fall into prescribed lists of non-eligible items. The National 
Development and Reform Commission (NDRC) and the General Administration 
of Customs are the government agencies responsible for administering 
this program. Qualified enterprises receive a certificate either from 
the NDRC or one of its provincial branches. To receive the exemptions, 
a qualified enterprise only has to present the certificate to the 
customs officials upon importation of the equipment. The objective of 
the program is to encourage foreign investment and to introduce foreign 
advanced technology equipment and industry technology upgrades. The 
Department has previously found this program to be countervailable. 
See, e.g., Citric Acid Decision from the PRC Memorandum at ``VAT Rebate 
on Purchases by FIEs of Domestically Produced Equipment.''
    New Zhongya, an FIE, reported receiving VAT and tariff exemptions 
under this program for imported equipment prior to and during the POI. 
Guangcheng, also an FIE, reported receiving VAT and tariff exemptions 
under this program for imported equipment prior to the POI.
    We determine that the VAT and tariff exemptions on imported 
equipment confer a countervailable subsidy. The exemptions are a 
financial contribution in the form of revenue forgone by the GOC and 
the exemptions provide a benefit to the recipients in the amount of the 
VAT and tariff savings. See section 771(5)(D)(ii) of the Act and 19 CFR 
351.509(a)(1). We further determine that the VAT and tariff exemptions 
under this program are specific under section 771(5A)(D)(iii)(I) of the 
Act because the program is limited to certain enterprises. As described 
above, only FIEs and certain domestic enterprises are eligible to 
receive VAT and tariff exemptions under this program. No information 
has been provided to demonstrate that the beneficiary companies are a 
non-specific group. As noted above, the Department finds FIEs to be a 
specific group under section 771(5A)(D)(i) of the Act. In addition, the 
additional certain enterprises requiring approval by the NDRC does not 
render the program to be non-specific. See, e.g., CFS from the PRC 
Decision Memorandum at Comment 16, and 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 ``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)(1). Therefore, 
we have examined the VAT and tariff exemptions that New Zhongya 
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 
in prior cases. 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 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 then divided the total grant amount by the 
corresponding total sales of the respondents for the year in question.
    For each company, we divided the total amount of VAT and tariff 
exemptions by the corresponding total sales for year in which the 
exemptions were received. Those exemptions that were less than 0.5 
percent of total sales were expensed to the year of receipt. Those 
exemptions that were greater than 0.5 percent of total sales were 
allocated over the AUL using the methodology described under 19 CFR 
351.524(d)(2).
    On this basis, we determine the countervailable subsidy to be 0.52 
percent ad valorem for the Zhongya Companies and less than 0.005 
percent ad valorem for the Guang Ya Companies.\6\
---------------------------------------------------------------------------

    \6\ Consistent with our past practice, we did not include this 
program in the Guang Ya Companies' total net subsidy rate because it 
is not numerically insignificant. 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.''
---------------------------------------------------------------------------

E. International Market Exploration Fund (SME Fund)
    The SME Fund, established under CQ (2000) No. 467, encourages the 
development of small and medium-sized enterprises (SMEs) by reducing 
the risk of operation for these enterprises in the international 
market. To qualify for the program, a company needs to satisfy the 
criteria in CQ (2000), which provides that the SME should have export 
and import rights, exports of less than $15,000,000, an accounting 
system, personnel with foreign trade skills, and a plan for exploring 
the international market. Guang Ya reported receiving funds under this 
program in 2008 and 2009 from the Shishan Town Economic Development 
Office.
    We further preliminarily determine that the grants provided under 
the SME Fund constitute a financial contribution and benefit under 
sections 771(5)(D)(i)

[[Page 54312]]

and 771(5)(E) of the Act, respectively. We also determine that this 
program is an export subsidy, under section 771(5A)(B) of the Act, 
because the program supports the international market activities of 
SMEs and is limited to enterprises that have exports of less than 
$15,000,000. Our findings in this regard are consistent with the 
Department's practice. See Wire Decking from the People's Republic of 
China: Final Affirmative Countervailing Duty Determination, 75 FR 32902 
(June 10, 2010) (Wire Decking from the PRC), and accompanying Issues 
and Decision Memorandum (Wire Decking from the PRC Decision Memorandum) 
at ``International Market Exploration Fund (SME Fund).'' Information on 
the record indicates that the SME Fund provides one-time assistance. 
Therefore, consistent with 19 CFR 351.524(c)(1), we are treating the 
grants received under this program as ``non-recurring.'' To measure the 
benefits of each grant that are allocable to the POI, we first 
conducted the ``0.5 percent test'' for the grant. See 19 CFR 
351.524(b)(2). We divided the total amount approved in 2008 and 2009 by 
the total export sales of Guang Ya and Guangcheng in 2008 and 2009. As 
a result, we found that the grants received by Guang Ya are less than 
0.5 percent and fully expensed to the year of receipt.
    Therefore, for the POI, we calculated a total net subsidy rate of 
0.01 percent ad valorem for the Guang Ya Companies.
F. Preferential Tax Program for FIEs Recognized as High or New 
Technology Enterprises (HNTEs)
    According to the ``Circular of the State Council Concerning the 
Approval of the National Development Zones for New and High Technology 
Industries and the Relevant Policies and Provisions'' at Article 2 and 
4 of Appendix III ``Regulations on the Tax Policy for the National New 
and High Technology Industries Parks), FIEs designated as HNTEs in high 
and new technology parks pay a reduced income tax rate of 15 percent.
    We preliminarily determine that the reduction in the income tax 
paid by FIEs designated as HNTEs under this program confers a 
countervailable subsidy. The 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 sections 
771(5)(D)(ii) and 771(5)(E) of the Act, respectively, and 19 CFR 
351.509(a)(1). We also determine that the reduction afforded by this 
program is limited as a matter of law to certain enterprises, i.e., 
FIEs designated as HNTEs, and, hence, is specific under section 
771(5A)(D)(i) of the Act. The program is also specific pursuant to 
section 771(5A)(D)(iv) of the Act, as only ratified new and high 
technology enterprises located in new and high technology parks 
approved by the State Council can pay the reduced tax rate. Guang Ya 
and Guangcheng reported receiving tax benefits attributable to the POI 
under this program.
    We treated the income tax savings enjoyed by the companies as a 
recurring benefit, consistent with 19 CFR 351.524(c)(1). To compute the 
amount of the tax savings, we compared the rate Guang Ya and Guangcheng 
would have paid in the absence of the program (25 percent) with the 
rate the company paid (15 percent), and divided the tax savings 
received during the POI by the combined total sales of Guang Ya and 
Guangcheng.
    On this basis, we determine the countervailable subsidy 
attributable to Guang Ya Companies to be 0.11 percent ad valorem under 
this program.
G. Policy Loans to Chinese Aluminum Extrusion Producers
    The Department is examining whether aluminum extrusion producers 
receive preferential lending through SOCBs or policy banks. According 
to the allegation, preferential lending to the aluminum extrusion 
industry is supported by the GOC through the issuance of national and 
provincial five-year plans, industrial plans for the steel sector, 
catalogues of encouraged industries, and other government laws and 
regulations. Based on our review of the responses and documents 
provided by the GOC, we preliminarily determine that loans received by 
the aluminum extrusion industry from SOCBs and policy banks were made 
pursuant to government directives.
    Record evidence demonstrates that the GOC, through its directives, 
has highlighted and advocated the development of the aluminum extrusion 
industry. At the national level, the GOC has placed an emphasis on the 
development of high-end, value-added steel products through foreign 
investment as well as through technological research, development, and 
innovation. In laying out this strategy, the GOC has identified 
specific products selected for development. For example, the 
``Catalogue of Major Industries, Products, and Technologies Encouraged 
for Development in China'' (Encouraged Industries Catalogue), issued by 
the GOC in 2000, identifies 526 products, technologies, and 
infrastructure facilities for business promotion. See the GOC's August 
4, 2010, questionnaire response at Exhibit 3. The Encouraged Industries 
Catalogue specifically mentions aluminum extrusion products under the 
non-ferrous metals heading. Id.
    Similarly, there is the Decision of the State Council on 
Promulgating the ``Interim Provisions on Promoting Industrial Structure 
Adjustment'' for Implementation (No. 40 (2005)) (Decision 40). The GOC 
implemented Decision 40 in order to achieve the objectives of the 
Eleventh Five-Year Plan. See the GOC's August 4, 2010, questionnaire 
response at Exhibit 6. 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. Id. Aluminum is mentioned 
as an industry in the Industrial Catalogue as an ``encouraged 
project.'' Id. For the ``encouraged'' projects, Decision 40 outlines 
several support options available from the government, including 
financing. Id.
    In addition, the ``Guidelines on Acceleration of the Adjustment of 
the Aluminum Industry Structure'' (Aluminum Industry Guidelines), 
issued by the GOC in 2006, discusses support that is to be provided to 
producers of aluminum extrusions. See the GOC's August 4, 2010, 
questionnaire response at Exhibit 9. For instance, under the heading 
``Increase Industry Concentration, Encourage Comprehensive Usage and 
Conservation of Resources,'' the Aluminum Industry Guidelines state:

    Create favorable conditions for enterprises M&A and 
restructuring, and accelerate enterprises' merger and restructuring 
via economic means. Support aluminum, electrolytic aluminum, and 
aluminum processing enterprises to undertake merger and 
restructuring, establish internationally competitive enterprise 
group, realize advantage complementation, and increase industry 
concentration. Encourage private capital and foreign capital to 
participate in the reform, restructuring and transformation of 
state-owned enterprises. Encourage backbone enterprises to keep 
raising technology and management levels, accelerate medium and 
small-sized aluminum processing enterprises' technology 
transformation, and improve resource utilization.

Id. The Aluminum Industry Guidelines also make reference to lending 
activities. Under the heading, ``Strengthen the Coordination and 
Cooperation of Credit Policy and Industrial Policy and Establish 
Withdrawal Mechanism Under the

[[Page 54313]]

Policies,'' the Aluminum Industry Guidelines state:

    It is required to strictly abide by the rule that the minimum 
self-owned capital requirement for electrolytic aluminum projects 
shall be no less than 35 percent of the total investment. Financial 
institutions shall rationally allocate the lending credits taking 
into account the national macroeconomic adjustments, industrial 
policies, and ordinary lending principles. Financial institutions 
may continue to provide credits to oxide aluminum or electrolytic 
aluminum enterprises that are in compliance with national industrial 
policies and the market entrance threshold, provided such lending is 
in accordance with the ordinary lending principles. No credit shall 
be provided to those enterprises that do not conform to national 
industrial policies, do not satisfy the market entrance threshold, 
have obsolete manufacturing processes, have been classified as 
prohibited, or have been ordered to cease operation. In the event 
that credits are mistakenly provided to such enterprises, the 
financial institutions shall take appropriate measures to reclaim 
the credits and avoid financial risk.

Id. (emphasis added). Additionally, under the heading ``Enhance the 
Implementation of Environmental Protection Regulations, Eliminate 
Capacities,'' the Aluminum Industry Guidelines state that different 
``financing means'' shall be used ``to support enterprises' 
environmental protection and energy savings.'' Id.
    Support, in the form of financing, is also discussed in the 
``Nonferrous Metal Industry Adjustment and Revitalization Plan'' 
(Nonferrous Metal Plan) that was issued by the GOC in 2009. See the 
GOC's August 4, 2010, questionnaire response at Exhibit 10. Under the 
heading ``Increase Dedication to Technology Improvement and Technology 
Reform,'' the Nonferrous Metal Plan states:

    Set aside some funds from new central investment. Use loan 
interest subsidies to support R&D and technology reform in the 
nonferrous metals industry. Increase the level of financial support 
directed toward reform of energy conservation technologies.

The Nonferrous Metal Plan further references financing to the aluminum 
extrusions industry under the heading, ``Continue To Implement the 
Financing Policy of `Encouragement and Discouragement: ''

    Increase financing support to backbone enterprises in the 
nonferrous metals industry. Provide support to certain enterprises 
in issuing stock, enterprise bonds, and corporate bonds. Enterprises 
eligible to receive such support are those which are engaged in 
projects which, in addition to adhering to investment management 
prescriptions, are in compliance with industry policy as well as 
relevant environmental and land regulations; and implement 
acquisitions, restructuring, ``Going Abroad'' {sic{time}  and 
technological reformation.

Id. (emphasis added).
    As noted in Citric Acid from the PRC, in general, the Department 
looks to whether government plans or other policy directives lay out 
objectives or goals for developing the industry and call for lending to 
support those objectives or goals. See Citric Acid from the PRC 
Decision Memorandum at Comment 5. Where such plans or policy directives 
exist, then it is the Department's practice to determine that a policy 
lending program exists that is specific to the named industry (or 
producers that fall under that industry). See CFS Decision Memorandum 
at Comment 8, and LWTP from the PRC Decision Memorandum at ``Government 
Policy Lending Program.'' Once that finding is made, the Department 
relies upon the analysis undertaken in CFS from the PRC to further 
conclude that national and local government control over the SOCBs 
results in the loans being a financial contribution by the GOC. See CFS 
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 the production of 
aluminum extrusions through policy lending.
    The GOC and the Guang Ya Companies provided source documents 
concerning the largest loans the Guang Ya Companies had outstanding 
during the POI.\7\ Information in these business proprietary documents 
further supports our preliminary determination that the GOC has a 
policy in place to encourage the development of the production of 
aluminum extrusions through policy lending. For further information, 
see the Memorandum to the File from Eric B. Greynolds, Program Manager, 
Office 3, Operations, ``Excerpts of Internal Loan Documents of the 
Guang Ya Companies,'' (August 30, 2010) (Internal Loan Document 
Memorandum).
---------------------------------------------------------------------------

    \7\ The Zhongya Companies reported that they did not have any 
loans outstanding during the POI.
---------------------------------------------------------------------------

    The GOC has argued in its August 4, 2010, questionnaire response 
that the People's Bank of China (PBOC) revoked the PRC's policy lending 
programs in 1999 pursuant to the ``Circular on Improving Administration 
of Special Loans'' (YINFA (1999)) No. 228 (Special Loans Circular). See 
the GOC's August 4, 2010, questionnaire response at Exhibit 18. We 
preliminarily determine that there is no basis to conclude that the 
GOC's policy lending activities ceased with the issuance of the Special 
Loans Circular. The Special Loans Circular states that, while banks 
shall make lending decisions on their own, ``authorities'' may continue 
to ``give advice on the choice of project.'' Further, the Special Loans 
Circular states that firms may continue to receive formerly designated 
``special loans:''

    For those (former special) loans which do not meet the 
commercial lending conditions, if the authorities can provide loan 
interest grant or other subsidies so that the commercial lending 
conditions are fulfilled, the banks may continue to provide the 
loans.

Id. The Special Loans Circular goes on to state that:

    Wholly State-owned banks shall make efforts to implement the 
requirements above, and shall actively communicate with the 
authorities in charge of relevant industries, with a view to gaining 
their understanding and support.

Id. Thus, despite the GOC's claims, the Special Loans Circular provides 
a means by which what it refers to as ``special loans'' may continue to 
be provided to firms in the PRC. In addition, the Special Loans 
Circular states government authorities will continue to ``advise'' and 
monitor the actions of the PRC state-owned lending institutions. 
Furthermore, the Aluminum Industries Guidelines and the Nonferrous 
Metal Plan, both of which mention directing credit to members of the 
aluminum extrusions industry, as well as the loans discussed in the 
Internal Loan Document Memorandum, were issued after the GOC released 
the Special Loans Circular.

    The Guang Ya Companies reported that they had outstanding loans 
from PRC-based banks during the POI. Consistent with our determination 
in prior proceedings, we preliminarily find these PRC-based banks to be 
state-owned commercial banks (SOCBs). See, e.g., Certain Oil Country 
Tubular Goods From the People's Republic of China: Final Affirmative 
Countervailing Duty Determination, Final Negative Critical 
Circumstances Determination, 74 FR 64045 (December 7, 2009) (OCTG from 
the PRC), and accompanying Issues and Decision Memorandum (OCTG 
Decision Memorandum) at Comment 20.
    We preliminarily determine that the loans to aluminum extrusion 
producers from 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)(ii) of the 
Act). We further preliminarily determine that the loans are de jure 
specific within the

[[Page 54314]]

meaning of section 771(5A)(D)(i) of the Act because of the GOC's 
policy, as illustrated in the government plans and directives, to 
encourage and support the growth and development of the aluminum 
extrusions industry.
    To determine whether a benefit is conferred under section 
771(5)(E)(ii) of the Act, we compared the amount of interest the Guang 
Ya Companies paid on their outstanding loans to the amount they would 
have paid on comparable commercial loans. See 19 CFR 351.505(a). In 
conducting this comparison, we used the interest rates described in the 
``Benchmarks and Discount Rates'' section above. We have attributed 
benefits under this program to the combined total sales of Guang Ya and 
Guangcheng.
    On this basis, we preliminarily determine a countervailable subsidy 
of 2.11 percent ad valorem for the Guang Ya Companies.
H. Fund for SME Bank-Enterprise Cooperation Projects
    According to the GOC, 1,000 eligible SMEs along with several 
financial institutions were selected to participate in the program. 
Under the program, financial institutions in the PRC decide whether to 
extend credit to certain eligible SMEs. If they decide to do so, the 
Provincial Government of Guangdong (PGOG) provides loan interest 
assistance to the SME that received the financing from the financial 
institution. The program is administered by the PGOG's Department of 
Finance and the Bureau of SMEs pursuant to the Circular on Printing and 
Distributing of the Measures on Implementing the 2009 Government-Bank-
Enterprise Cooperation Special Fund Program (YUECAIGONG (2009) No. 54) 
(Bank Enterprise Cooperation Measures). See the GOC's August 9, 2010 
supplemental questionnaire response at Supp-1. The Guang Ya Companies 
reported that Guang Ya received a grant under this program during the 
POI.
    We preliminarily determine that the grants issued by the GOC under 
this program constitute a financial contribution under section 
771(5)(D)(i) of the Act, in the form of a direct transfer of funds, and 
a benefit under section 771(5)(E) of the Act.
    According to the Bank Enterprise Cooperation Measures, the 500 SMEs 
deemed as having the ``greatest potential'' as well as enterprises that 
manufacture key equipment, or pursue creative technologies, or engage 
in advanced manufacturing activities backed by both the PGOG and the 
corresponding city will receive preferential treatment under the 
program. In light of the selection process described in the Bank 
Enterprise Cooperation Measures, we preliminarily determine that this 
program is de jure specific under section 771(5)(D)(i) of the Act 
because the measures expressly limit access to certain enterprises.
    To calculate the benefit, we divided the amount of the grant by the 
total sales of Guang Ya and Guangcheng. The grant was less than 0.5 
percent of the export sales of Guang Ya and Guangcheng in the year of 
approval/receipt. 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 0.05 
percent ad valorem for the Guang Ya Companies.
I. Special Fund for Significant Science and Technology in Guangdong 
Province
    Under this program, the PGOG seeks to support major, generic, and 
key technology research and development of Guangdong industries and 
promote technology achievements and diffusion of technological 
knowledge. The program is administered by the Guangdong Science and 
Technology Department pursuant to the Provisional Measures on 
Administration of Guangdong Important Science-Technology Project 
Special Fund (YEUCAIGONG (2009) No. 166). The Guang Ya Companies 
reported that Guang Ya received a grant under this program during the 
POI.
    We preliminarily determine that the grants issued by the GOC under 
this program constitute a financial contribution under section 
771(5)(D)(i) of the Act, in the form of a direct transfer of funds, and 
a benefit under section 771(5)(E) of the Act. As explained in the 
``Various Grant Programs Self-Reported by the Guang Ya Companies'' 
section, the GOC failed to provide benefit distribution data for this 
program. As a result, the Department is applying AFA and assuming that 
the program is specific under section 771(5A)(D)(iii) of the Act.
    To calculate the benefit, we divided the amount of the grant by the 
total sales of Guang Ya and Guangcheng in the year of approval/receipt. 
The grant was less than 0.5 percent of the total sales of Guang Ya and 
Guangcheng. 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 0.12 
percent ad valorem for the Guang Ya Companies.
J. Fund for Economic, Scientific, and Technology Development
    Under this program, the Government of Foshan City distributes 
grants to firms with the aim of fostering technological and economic 
development. The program is administered by the Science and Technology 
Bureau of Foshan Municipality and the Finance Bureau of Foshan 
Municipality pursuant to the Circular on Printing and Distributing of 
the Measures on Administration of Foshan Sci-Tech Development Special 
Fund (FOFUBAN (2008) No. 402). See the GOC's August 9, 2010, 
supplemental questionnaire at Supp-4. The Guang Ya Companies, which are 
located in Foshan City, reported that Guang Ya received a grant under 
this program during the POI.
    We preliminarily determine that the grants issued by the GOC under 
this program constitute a financial contribution under section 
771(5)(D)(i) of the Act and a benefit under section 771(5)(E) of the 
Act. As explained in the ``Various Grant Programs Self-Reported by the 
Guang Ya Companies'' section, the GOC failed to provide benefit 
distribution data for this program. As a result, the Department is 
applying AFA and assuming that the program is specific under section 
771(5A)(D)(iii) of the Act.
    To calculate the benefit, we divided the amount of the grant by the 
total sales of Guang Ya and Guangcheng in the year of approval/receipt. 
The grant was less than 0.5 percent of the total sales of Guang Ya and 
Guangcheng. 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 0.01 
percent ad valorem for the Guang Ya Companies.
K. Provincial Fund for Fiscal and Technological Innovation
    Under this program, the PGOG provides grants to firms for the 
purpose of promoting technological and fiscal innovation. The program 
is administered by the Provincial Department of Finance and Economic 
and Trade Commission of Guangdong Province pursuant to the Provisional 
Measures on Administration of Exploration and Renovation Provincial 
Level Fund (YUECAIQI (2003) No. 140). See the GOC's August 9, 2010, 
supplemental questionnaire at Supp-1. The Guang Ya Companies reported 
that Guangcheng received a grant under this program during the POI.
    We preliminarily determine that the grants issued by the GOC under 
this

[[Page 54315]]

program constitute a financial contribution under section 771(5)(D)(i) 
of the Act and a benefit under section 771(5)(E) of the Act. As 
explained in the ``Various Grant Programs Self-Reported by the Guang Ya 
Companies'' section, the GOC failed to provide benefit distribution 
data for this program. As a result, the Department is applying AFA and 
assuming that the program is specific under section 771(5A)(D)(iii) of 
the Act.
    To calculate the benefit, we divided the amount of the grant by the 
total sales of Guang Ya and Guangcheng in the year of approval/receipt. 
The grant was less than 0.5 percent of the total sales of Guang Ya and 
Guangcheng. 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 0.04 
percent ad valorem for the Guang Ya Companies.
L. Provincial Loan Discount Special Fund for SMEs
    Under this program, the PGOG provides interest subsidy grants in 
order to promote and support SMEs. The program is administered by the 
Provincial Department of Finance and the Guangdong Provincial SME 
Bureau pursuant to the Measures on Administration of SME Loan Interest 
Assistance Special Fund (YUECAIGONG (2009) No. 124). See the GOC's 
August 9, 2010 supplemental questionnaire at Supp-9. The Guang Ya 
Companies reported that Guangcheng received a grant under this program 
during the POI.
    We preliminarily determine that the grants issued by the GOC under 
this program constitute a financial contribution under section 
771(5)(D)(i) of the Act and a benefit under section 771(5)(E) of the 
Act. As explained in the ``Various Grant Programs Self-Reported by the 
Guang Ya Companies'' section, the GOC failed to provide benefit 
distribution data for this program. As a result, the Department is 
applying AFA and assuming that the program is specific under section 
771(5A)(D)(iii) of the Act.
    To calculate the benefit, we divided the amount of the grant by the 
total sales of Guang Ya and Guangcheng. The grant was less than 0.5 
percent of the total sales of Guang Ya and Guangcheng in the year of 
approval/receipt. 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 0.04 
percent ad valorem for the Guang Ya Companies.
M. Export Rebate for Mechanic, Electronic, and High-Tech Products
    The Guang Ya Companies reported that Guangcheng received a grant 
under this program during the POI. See the Guang Ya Companies' July 8, 
2010 initial questionnaire response at 60. The Department sent two 
questionnaires to the GOC concerning this program. In its responses, 
the GOC indicated that it could not find any ``meaningful information'' 
concerning the program. See, e.g., the GOC's August 18, 2010 second 
supplemental questionnaire at 1.
    We preliminarily determine that the grants issued by the GOC under 
this program constitute a financial contribution under section 
771(5)(D)(i) of the Act and a benefit under section 771(5)(E) of the 
Act. Concerning specificity, we are resorting to the use of FA within 
the meaning of section 776(a)(1) of the Act because the necessary 
information concerning the manner in which this program is administered 
is not on the record. Based on the information contained in the July 8, 
2010 questionnaire response of the Guang Ya Companies indicating that 
it received the grant in the form of an ``export rebate,'' we are 
relying upon FA and preliminarily determine that the program is 
contingent upon exports and therefore specific under section 771(5A)(B) 
of the Act.
    To calculate the benefit, we divided the amount of the grant by the 
total export sales of Guang Ya and Guangcheng in the year of approval/
receipt. The grant was less than 0.5 percent of the total export sales 
of Guang Ya and Guangcheng. 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 0.02 
percent ad valorem for the Guang Ya Companies.
N. PGOG Special Fund for Energy Saving Technology Reform
    Under this program, the PGOG provides grants in the amount of RMB 
200 for every one MT of standard coal saved through increased energy 
efficiency during a given year. Firms must demonstrate annual energy 
savings equivalent to 2,000 MT of standard coal in order to be eligible 
to apply for grants under the program. The program is administered by 
the PGOG's Department of Finance and the Economic Trade Commission of 
Guangdong pursuant to the ``Provisional Measures on Administration of 
Guangdong Energy-Saving Special Fund (YUECAIGONG) (2008) No. 126. See 
the GOC's August 4, 2010, initial questionnaire at Exhibit 46. The 
Guang Ya Companies reported that Guangcheng received a grant under this 
program during the POI.
    We preliminarily determine that the grant issued by the GOC under 
this program constitute a financial contribution under section 
771(5)(D)(i) of the Act and a benefit under section 771(5)(E) of the 
Act. As explained in the ``Various Grant Programs Self-Reported by the 
Guang Ya Companies'' section, the GOC failed to provide adequate 
benefit distribution data for this program. In its initial 
questionnaire, the GOC provided the amount of grants received by all 
firms (including Guangcheng) during the POI. It also provided for the 
POI the amount of grants received by aluminum extrusions producers as 
well as the total amount of grants issued under the program. However, 
the GOC did not provide, as requested by the Department, the amounts 
disbursed to other industries during the POI. In addition, the GOC did 
not provide, as requested by the Department, information concerning the 
distribution of benefits provided to firms and industry groups in the 
three years preceding the POI. See the GOC's August 4, 2010, initial 
questionnaire at 104-111 and Exhibit 46. Further, the GOC did not 
provide the requested information concerning the distribution of 
benefits in its second supplemental questionnaire response. See the 
GOC's August 19, 2010, second supplemental questionnaire at 1. As a 
result, the Department is applying AFA and assuming that the program is 
specific under section 771(5A)(D)(iii) of the Act.
    To calculate the benefit, we divided the amount of the grant by the 
total sales of Guang Ya and Guangcheng in the year of approval/receipt. 
The grant was less than 0.5 percent of the total sales of Guang Ya and 
Guangcheng. 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 0.06 
percent ad valorem for the Guang Ya Companies.
O. PGOG Science and Technology Bureau Project Fund (Also Referred to as 
Guangdong Industry, Research, University Cooperating Fund)
    Under this program, the PGOG distributes grants to universities and 
firms to support, among other things, industrial development and 
innovation in the province. The program is administered by the PGOG's 
Department of Finance and Department of Science and Technology. See the 
GOC's August 9, 2010, first supplemental questionnaire response at 41-
50 and Exhibit Supp-5. The Guang Ya

[[Page 54316]]

Companies reported that Guang Ya received a grant under this program 
during the POI.
    We preliminarily determine that the grant issued by the GOC under 
this program constitutes a financial contribution under section 
771(5)(D)(i) of the Act and a benefit under section 771(5)(E) of the 
Act. As explained in the ``Various Grant Programs Self-Reported by the 
Guang Ya Companies'' section, the GOC failed to provide benefit 
distribution data for this program. As a result, the Department is 
applying AFA and assuming that the program is specific under section 
771(5A)(D)(iii) of the Act.
    To calculate the benefit, we divided the amount of the grant by the 
total sales of Guang Ya and Guangcheng in the year of approval/receipt. 
The grant was less than 0.5 percent of the total sales of Guang Ya and 
Guangcheng. 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 Guang Ya Companies.
P. PGOG Tax Offsets Grants for Research and Development (R&D)
    Under this program, for R&D expenses incurred for developing new 
products and technologies that cannot be treated as intangible assets, 
50 percent of the R&D expense shall be deducted as a tax offset. For 
R&D expenses considered intangible assets, the tax offset shall be 
amortized based on 150 percent of the R&D expenses. The program is 
administered by the PGOG's Science and Technology Department and the 
Economic Trade Commission pursuant to the ``Trial Administrative 
Measures for the Pre-Tax Deduction of Enterprises R&D Expenses'' (R&D 
Measures). See the Guang Ya Companies' July 8, 2010, questionnaire 
response at Exhibit 23. Article 5 of the R&D Measures states that 
eligible R&D projects:

    shall be in line with national and Guangdong provincial 
technological policies and industrial policies. Any projects 
belonging to producer projects, technological projects, or process 
projects eliminated or restricted by the central or Guangdong 
provincial government shall not enjoy the policy of additional 
calculation of R&D expenses.

Id. The Guang Ya Companies reported that Guangcheng received a grant 
under this program during the POI.
    We preliminarily determine that the grant issued by the GOC under 
this program constitutes a financial contribution under section 
771(5)(D)(i) of the Act and a benefit under section 771(5)(E) of the 
Act. Concerning specificity, as noted above in the ``Policy Loans to 
Chinese Aluminum Extrusion Producers'' section, we have preliminarily 
determined that the GOC and the PGOG have targeted the aluminum 
extrusions industry for development and assistance in a manner that is 
specific under section 771(5A)(D)(i) of the Act, as illustrated in the 
government plans and directives, to encourage and support the growth 
and development of the aluminum extrusions industry. Given this 
preliminary finding and in light of the language in Article 5 of the 
R&D Measures, we preliminarily determine that the grants provided under 
this program are de jure specific within the meaning of section 
771(5A)(D)(i) of the Act.
    To calculate the benefit, we divided the amount of the grant by the 
total sales of Guang Ya and Guangcheng in the year of approval/receipt. 
The grant was less than 0.5 percent of the total sales of Guang Ya and 
Guangcheng. 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 0.04 
percent ad valorem for the Guang Ya Companies.
Q. Refund of Land-Use Tax for Firms Located in the Zhaoqing New and 
High-Tech Industrial Development Zone (ZHTDZ)
    The Zhongya Companies reported that New Zhongya received a refund 
during the POI of land-use taxes paid to the ZHTDZ local authority in 
2007. According to the Zhongya Companies, the ZHTDZ local authority 
reduced its land-use tax rate from 5 RMB per square meter to 2 RMB per 
square meter. The Zhongya Companies state that receipt of the land-use 
tax refund was contingent upon New Zhongya's location in the ZHTDZ. See 
the Zhongya Companies August 6, 2010, supplemental questionnaire 
response at 27. The Zhongya Companies reported that New Zhongya 
recorded the tax refund in its ``subsidy income'' ledger. Id.
    We preliminarily determine that the land-use tax refund received by 
the Zhongya Companies constitutes a financial contribution, in the form 
of revenue foregone, and a benefit, equal to the amount of the refund, 
as described under sections 771(5)(D)(ii) and 771(5)(E) of the Act. 
Because the tax refund is limited to firms located in the ZHTDZ, we 
preliminarily determine that the program is regionally-specific under 
section 771(5A)(D)(iv) of the Act.
    To calculate the benefit, we divided the amount of the land-use tax 
received during the POI by the Zhongya Companies' total sales. On this 
basis, we calculated a total net subsidy rate of 0.13 percent ad 
valorem for the Zhongya Companies.
R. Development Assistance Grants From the ZHTDZ Local Authority
    The Zhongya Companies reported that New Zhongya received a one-time 
development assistance grant from the ZHTDZ local authority during the 
POI. According to the Zhongya Companies, in determining eligibility, 
the ZHTDZ local authority examines firms' output, tax payments, the 
level of foreign investment, and whether the firms' have received 
famous brand designation. See the Zhongya Companies' August 6, 2010, 
supplemental questionnaire response at 17.
    We preliminarily determine that the grant issued by the GOC under 
this program constitutes a financial contribution under section 
771(5)(D)(i) of the Act and a benefit under section 771(5)(E) of the 
Act. Concerning specificity, as explained above in the ``GOC and Sub-
Central Government Grants, Loans, and Other Incentives for Development 
of Famous Brands and China World Top Brands'' section, we have 
preliminarily determined that the Famous Brand program is contingent 
upon export activity and, thus, is specific under section 771(5A)(B) of 
the Act. The Zhongya Companies indicate that famous brand designation 
is among the factors considered when determining eligibility under this 
program. Section 771(5A)(B) of the Act states that a program shall be 
deemed an export subsidy if receipt of the subsidy is contingent upon 
export performance, alone or as one of two or more conditions. 
Accordingly, because famous brand designation is among the factors the 
ZHTDZ local authority considers when determining eligibility and 
because the famous brand designation is contingent upon export 
activity, we preliminarily determine that the program is specific under 
section 771(5A)(B) of the Act. Our interpretation of section 771(5A)(B) 
of the Act in this regard is consistent with the Department's practice. 
See, e.g., PC Strand from the PRC Decision Memorandum at ``Subsidies 
for Development of Famous Export Brands and China World Top Brands at 
Central and Sub-Central Level.''
    To calculate the benefit, we divided the amount of the grant by the 
total export sales of the Zhongya Companies in the year of approval/
receipt. The grant was less than 0.5 percent of the export sales of the 
Zhongya Companies. Therefore, pursuant to 19 CFR

[[Page 54317]]

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 0.13 
percent ad valorem for the Zhongya Companies.
S. Provision of Primary Aluminum for LTAR
    The Department is investigating whether producers and suppliers, 
acting as Chinese government authorities, sold primary aluminum to the 
Guang Ya and Zhongya Companies for LTAR. The Guang Ya and Zhongya 
Companies reported obtaining primary aluminum during the POI from 
trading companies as well as directly from primary aluminum producers. 
In the case of the Zhongya Companies, they were able to identify all of 
the firms that produced the primary aluminum that the Zhongya Companies 
purchased during the POI. Concerning the Guang Ya Companies, in some 
instances they were not able to identify the producers of the primary 
aluminum that the Guang Ya Companies purchased during the POI.
    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 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 
primary aluminum producers, which supplied respondents, and that are 
majority-government owned are ``authorities.'' As a result, we 
determine that primary aluminum supplied by companies deemed to be 
government authorities constitute(s) a financial contribution in the 
form of a governmental provision of a good and that the respondents 
received a benefit to the extent that the price they paid for primary 
aluminum produced by these suppliers was for LTAR. See sections 
771(5)(D)(iv) and 771(5)(E)(iv) of the Act. We will follow-up with the 
GOC to determine whether suppliers that have less than majority 
government ownership should also be determined to be ``authorities'' 
under our CVD regulations.
    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;'' Racks from the PRC 
Decision Memorandum at ``Provision of Wire Rod for Less than Adequate 
Remuneration;'' 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 together 
identify the producers from whom the trading companies acquired the 
primary aluminum 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.
    The Zhongya Companies were able to identify the entities that 
produced the primary aluminum that they acquired during the POI. 
Regarding the Guang Ya Companies, for certain purchases, they were able 
to identify the producers. However, for several other purchases, 
although they identified their primary aluminum suppliers and indicated 
whether the suppliers were trading companies in the business of 
reselling primary aluminum, the Guang Ya Companies did not identify the 
producers that supplied the trading companies. For purposes of this 
preliminary determination, where available, we are relying on the 
information supplied by the GOC and by the Guang Ya and Zhongya 
Companies when determining whether the suppliers identified in the 
firms' questionnaires responses are government authorities. We will 
follow-up with the Guang Ya Companies with respect to the identity of 
the producers that supplied the trading companies.
    Because the Guang Ya Companies 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 
primary aluminum produced by state-owned enterprises (SOEs) and private 
producers in the PRC. Using these data, we derived the ratio of primary 
aluminum 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 primary aluminum sold to the Guang Ya Companies by 
certain domestic trading companies. Specifically, we assumed that the 
percentage of primary aluminum supplied by these domestic trading 
companies that is produced by government authorities is equal to the 
ratio of primary aluminum produced by SOEs during the POI.\8\ Regarding 
this ratio, we note that the GOC classified the CHALCO Aluminum 
Corporation of China (CHALCO) as a privately-owned primary aluminum 
producer. However, based on publicly available information, we are 
treating CHALCO as a GOC authority. See the Memorandum to the File, 
``Factual Information Placed On Record Regarding the Ownership of a 
Primary Aluminum Producer,'' (August 16, 2010) (CHALCO Memorandum), a 
public document on file in room 1117 of the CRU. Our use of FA in this 
regard 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.'' The 
Department will continue to examining the identities of the firms that 
produced the primary aluminum that was purchased by the Guang Ya 
Companies during the POI and will continue to investigate whether the 
firms that produced the primary aluminum for both the Guang Ya and the 
Zhongya Companies operated as government authorities.
---------------------------------------------------------------------------

    \8\ In other words, in instances where we are applying FA, we 
are assuming that the percentage of primary aluminum purchased by 
domestic trading companies during the POI was equal to the ratio of 
primary aluminum produced by SOEs during the POI, as indicated by 
the aggregate data supplied in the questionnaire responses of the 
GOC.
---------------------------------------------------------------------------

    Having addressed the issue of financial contribution, we must next 
analyze whether the sale of primary aluminum to the mandatory 
respondents by suppliers designated as government authorities conferred 
a benefit within the meaning of section 771(5)(E)(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

[[Page 54318]]

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 primary 
aluminum production by SOEs during the POI. The share of production 
number of these SOEs, after adjustment by the Department, accounted for 
more than 50 percent of the PRC's production. See Memorandum to the 
File from Eric B. Greynolds, Program Manager, ``Share of Primary 
Aluminum Production During Period of Investigation,'' (August 30, 
2010). We find this majority share by SOEs makes it reasonable to 
conclude that actual transaction prices are significantly distorted as 
a result of the government's involvement in the market. See Preamble, 
63 FR at 65337. Our finding in this regard is in accordance with the 
Department's practice. See, e.g., Wire Decking from the PRC Decision 
Memorandum at ``Provision of Zinc for LTAR.'' In addition, as further 
evidence of the government's predominant role in the market, we note 
that GOC has imposed export tariffs on two of the three HTS categories 
that cover primary aluminum. Such export restraints can discourage 
exports and increase the supply of primary aluminum in the domestic 
market, with the result that domestic prices are lower than they would 
be otherwise. See, e.g., Racks from the PRC Decision Memorandum at 15. 
For this reason, we preliminarily determine that domestic prices 
charged by privately-owned primary aluminum producers based in the PRC 
may not serve as viable, tier one benchmark prices.
    The Department has on the record primary aluminum prices, as 
published by the London Metals Exchange (LME). We find that these 
prices may serve as a tier-two benchmark, as described under 19 CFR 
351.511(a)(2)(ii), when determining whether the Zhongya Companies 
received a benefit on its purchases of primary aluminum from government 
authorities. Concerning the LME prices, we note that the Department has 
relied on pricing data from industry publications in prior 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. For purposes of 
the preliminary determination, we find prices from the LME to be 
sufficiently reliable and representative for use in the benchmark 
calculation.
    The Zhongya and Guang Ya Companies reported that they imported 
primary aluminum. In past cases, the Department has incorporated prices 
on company-specific imports into the LTAR benchmark provided that the 
Department's analysis indicates that the company-specific import prices 
are not distorted by the dominance of government production in the PRC. 
See, e.g., Circular Welded Austenitic Stainless Pressure Pipe from the 
People's Republic of China: Final Affirmative Countervailing Duty 
Determination, (74 FR 4936) January 28, 2009, (CWASPP from the PRC), 
and accompanying Issues and Decision Memorandum (CWASPP from the PRC 
Decision Memorandum) at ``Provision of SSC for LTAR;'' see also CWP 
from the PRC Decision Memorandum at Comment 7.
    However, upon further examination, we preliminarily determine that 
when the Department has determined that it is reasonable to conclude 
that actual transaction prices are significantly distorted as a result 
of the government's involvement in the market, it is not appropriate to 
utilize company-specific prices as a tier-one benchmark. This is 
consistent with the language of the Preamble. We preliminarily 
determine that it is reasonable to conclude that the prices of goods 
that are imported into the domestic market are also significantly 
distorted as a result of the government's involvement in the market.
    To determine whether primary aluminum suppliers, acting as 
government authorities, sold primary aluminum to respondents for LTAR, 
we compared the prices the respondents paid to the suppliers to our 
primary aluminum 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 primary aluminum.
    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. Accordingly, in deriving the benchmark prices, we ensured that 
ocean freight and inland freight were included. Specifically, we 
included ocean freight pricing data from the Maersk shipping company 
pertaining to shipments of aluminum, articles of aluminum, and metal 
products from the port of Busan, South Korea, to Hong Kong. See 
petitioners' August 20, 2010, submission at Exhibit 4. We used this 
information because it was the only information on the record for ocean 
freight. Concerning inland freight, we calculated company-specific 
inland freight rates using cost data supplied by the Guang Ya and 
Zhongya Companies. Further, we added to the benchmark import duties and 
the VAT applicable to imports of primary aluminum into the PRC as 
reported by the GOC. In deriving the benchmark we did not include 
marine insurance. In prior CVD investigations involving the PRC, the 
Department has found that while the PRC customs authorities impute an 
insurance cost on certain imports for purposes of levying duties and 
compiling statistical data, there is no evidence to suggest that PRC 
customs authorities require importers to pay insurance charges. See, 
e.g., PC Strand from the PRC Decision Memorandum at Comment 13. 
Further, we have not added separate brokerage, handling, and 
documentation fees to the benchmark because we find that such costs are 
already reflected in the ocean freight cost from Maersk that is being 
used in this preliminary determination. See petitioners' August 20, 
2010, submission at Exhibit 4.
    Regarding the primary aluminum prices that respondents paid to 
government authorities, both the Zhongya and Guang Ya Companies 
reported their prices to the Department inclusive of inland freight and 
indicated the domestic VAT applied to their purchases. Accordingly, 
when performing our comparison, we included the domestic VAT paid on 
purchases from government authorities. In this manner, we find the 
Department

[[Page 54319]]

has conducted the comparison on an apples-to-apples basis.
    Comparing the benchmark unit prices to the unit prices paid by 
respondents for primary aluminum, we determine that primary aluminum 
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).
    Finally, with respect to specificity, the third subsidy element 
specified under the Act, the GOC has provided information on end uses 
for primary aluminum. The GOC stated that the end uses of primary 
aluminum relate to the type of industry involved as a direct purchaser 
of the input. The GOC further stated that the consumption of primary 
aluminum 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 for Less Than 
Adequate Remuneration.''
    We find that the GOC's provision of primary aluminum 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 Zhongya Companies, 
we divided the benefit by the companies' total sales during the POI. 
Regarding the Guang Ya Companies, we divided the benefit by combined 
total sales of Guang Ya and Guangcheng.
    On this basis, we calculated a total net subsidy rate of 2.36 
percent ad valorem for the Zhongya Companies and 3.07 percent ad 
valorem for the Guang Ya Companies.
T. Purchase of Aluminum Extrusions for MTAR
    We initiated on a program that alleged that the GOC, under the 
Government Procurement Law and the Indigenous Innovation program, 
purchases aluminum extrusions for MTAR. Therefore, the Department 
requested information on whether the GOC or GOC authorities purchased 
aluminum extrusions from respondents for MTAR. The GOC and the two 
company respondents stated that neither the two companies nor their 
products are listed in local government indigenous innovation 
catalogues; therefore, we preliminarily determine that the companies 
did not use the Indigenous Innovation programs. However, information 
provided in the companies' responses indicate that they may have 
benefited from the government's purchase of aluminum extrusions under 
the Government Procurement Law.
    The Guang Ya and Zhongya Companies provided information concerning 
their sales of aluminum extrusions during the POI. The Guang Ya 
Companies provided complete sales information. The Guang Ya Companies 
report in their questionnaire response which customers were GOC 
authorities and which were private companies. See the Guang Ya 
Companies August 9, 2010, supplemental questionnaire response at 
Exhibits 68 and 69. The Zhongya Companies provided the requested sales 
information for 70 percent of its sales, which corresponded to its top 
ten customers.\9\ The Zhongya Companies report that these top ten 
customers were private companies. See Attachment 4 of the Zhongya 
Companies' August 6, 2010, supplemental questionnaire. However, as 
discussed above in the ``Adverse Facts Available'' section, the Zhongya 
Companies' failed to report the requested information for the remaining 
30 percent of its sales value.
---------------------------------------------------------------------------

    \9\ For purposes of this preliminary determination, we are 
assuming that the Zhongya Companies made this statement in reference 
to their sales value.
---------------------------------------------------------------------------

    The Department also requested information from the GOC regarding 
the ownership structure of the customers that purchased aluminum 
extrusions from the Guang Ya and Zhongya Companies. Specifically, the 
Department requested ownership information that would enable it to 
determine whether the two firms' customers were government authorities 
capable of providing a financial contribution under section 
771(5)(D)(iv) of the Act. In the case of the Guang Ya Companies, the 
GOC provided ownership information for a portion of the companies' 
customers. For the Zhongya Companies, the GOC provided ownership 
information for six out of the ten customers.
    For purposes of this preliminary determination, we are relying on 
the information supplied by the GOC and by the Guang Ya and Zhongya 
Companies when determining whether the customers identified in the 
firms' questionnaire responses are government authorities. Accordingly, 
we determine that the aluminum extrusions the Guang Ya Companies sold 
to GOC authorities constitute a financial contribution under section 
771(5)(D)(iv) of the Act. Concerning the Zhongya Companies, as 
explained in the ``Adverse Facts Available'' section, we are assuming 
as AFA that the Zhongya Companies' unreported sales values were made to 
GOC authorities and, thus, constitute a financial contribution under 
section 771(5)(D)(iv) of the Act. We will continue to solicit 
information from the GOC, the Zhongya Companies, and Guang Ya Companies 
concerning the identities and ownership structure of their customers.
    Having addressed the issue of financial contribution, we must next 
analyze whether the sales of aluminum extrusions to GOC authorities 
conferred a benefit within the meaning of section 771(5)(E)(iv) of the 
Act. The Department has investigated subsidy allegations involving the 
sale of a good for MTAR in relatively few proceedings. The most recent 
proceeding in which the Department investigated the provision of a good 
for MTAR was Low Enriched Uranium (LEU) from France. See, e.g., Notice 
of Final Affirmative Countervailing Duty Determination: Low Enriched 
Uranium From France, 66 FR 65901 (December 21, 2001) (LEU from France), 
and accompanying Decision Memorandum (LEU from France Decision 
Memorandum) at ``Purchase at Prices that Constitute More Than Adequate 
Remuneration.'' In LEU from France, the Department measured whether a 
benefit was conferred by comparing the price the government authority 
paid to the respondent for LEU compared to the prices the government 
authority paid to other foreign suppliers of LEU. Id. In LEU from 
France, the Department indicated that it was conducting the benefit 
calculation in this manner because it was the only means by which the 
Department would be able to utilize benchmark prices paid in the 
country of provision. Id. Thus, in LEU from France, the Department's 
aim was to utilize a benchmark available in the country of provision. 
In LEU from France, such a benchmark was only available using pricing 
data supplied by the Government of France (e.g., pricing data from the 
perspective of the buyer).
    In the instant investigation, we preliminarily determine that there 
are benchmark data available from the perspective of the seller. The 
Guang Ya Companies provided information concerning the sales of 
aluminum extrusions made to private customers. For purposes of the 
preliminary determination, we find that these prices

[[Page 54320]]

constitute prices available in the PRC and, thus, are suitable for use 
as a benchmark. Further, at this time, we preliminarily determine there 
is no information on the record of the investigation to suggest that 
the prices paid by private purchasers of aluminum extrusions in the PRC 
are distorted as a result of the GOC's involvement in the market for 
aluminum extrusions.
    Thus, to determine whether a benefit was conferred on the Guang Ya 
Companies' sale of aluminum extrusions to GOC authorities, we compared 
the prices the Guang Ya Companies charged to state-owned firms to the 
prices the Guang Ya Companies charged to privately-owned customers. As 
stated above, for purposes of the preliminary determination, we have 
relied on information supplied by the Guang Ya Companies and the GOC in 
determining which customers were government authorities and which were 
private companies. We conducted our comparison on a monthly basis using 
average unit prices. In deriving the benchmark, we used weighted 
average, monthly prices. We will continue to examine the benchmark used 
in this MTAR benefit calculation in order to determine the most 
appropriate benchmark for the final determination and we invite 
interested parties to comment on this issue.
    Comparing the benchmark unit sales prices to the unit sales prices 
the Guang Ya Companies sold to GOC authorities, we determine that a 
benefit exists in the amount of the difference between the benchmark 
sales price and the sale prices charged to GOC authorities. See section 
771(5)(E)(iv). To calculate the benefit on each transaction, we 
multiplied the unit benefit by the corresponding quantity. We then 
summed the benefits on each transaction to calculate the total benefit 
attributable to the Guang Ya Companies.
    Regarding the Zhongya Companies, as noted above they failed to 
provide any information regarding 30 percent of its sales value. 
Therefore, we are assuming as AFA that the unreported sales were made 
to GOC authorities and, thus, we must determine whether a benefit was 
conferred on the sales. Therefore, to calculate the benefit, we first 
used the total sales value reported by the Zhongya Companies (70 
percent of its total sales) to derive the Zhongya Companies' total 
sales of aluminum extrusions. Next, we calculated the difference 
between these two sales values to derive the total sales value for the 
30 percent of aluminum extrusion sales that the Zhongya Companies 
failed to report to the Department. As discussed in the ``Adverse Facts 
Available'' section, we are assuming as AFA that the Zhongya Companies 
made these sales to GOC authorities. Further, as discussed in the 
``Adverse Facts Available'' section, as AFA we assumed that the Zhongya 
Companies received a 20 percent price premium on its sales to GOC 
authorities. Accordingly, we calculated the benefit by multiplying the 
derived total sales value for the sales that were not reported by the 
Zhongya Companies by 20 percent. In this manner, we determine that the 
Zhongya Companies received a benefit under the program within the 
meaning of section 771(5)(E)(iv) of the Act.
    Finally, with respect to specificity, we preliminarily determine 
that this program is specific under section 771(5A)(C) of the Act 
because the government procurement program is contingent upon the use 
of domestic goods over imported goods, as evidenced by the price 
premium set forth in the Implementing Measures of the Procurement Law.
    On this basis, we calculated a total net subsidy rate of 6.63 
percent ad valorem for the Zhongya Companies and 0.14 percent ad 
valorem for the Guang Ya Companies.

Programs Preliminarily Determined Not To Confer a Benefit During the 
POI

    Regarding programs listed below, benefits from these programs 
result in net subsidy rates that are less than 0.005 percent ad valorem 
or constitute benefits that were fully expensed prior to the POI. 
Consistent with our past practice, we therefore have not included these 
programs in our 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.''

A. Labor and Social Security Allowance Grants in Sanshui District of 
Guangdong Province
B. ``Large and Excellent'' Enterprises Grant
C. Advanced Science/Technology Enterprise Grant
D. Advanced Science/Technology Enterprise Grant
E. Award for Self-Innovation Brand/Grant for Self-Innovation Brand and 
Enterprise Listing
F. Tiaofeng Electric Power Subscription Subsidy Funds
G. Award for Excellent Enterprise
H. Export Incentive Payments Characterized as Value Added Tax (VAT) 
Rebates

Programs Preliminarily Determined Not To Be Used \10\
---------------------------------------------------------------------------

    \10\ In this section we refer to programs preliminarily 
determined to be not used by the two participating respondent 
companies.
---------------------------------------------------------------------------

A. Loans and Interest Subsidies Provided Pursuant to the Northeast 
Revitalization Program
B. Provincial Tax Exemptions and Reductions for ``Productive'' FIEs
C. Tax Reductions for FIEs Purchasing Chinese-Made Equipment
D. Tax Reductions for FIEs in Designated Geographic Locations
E. Tax Reductions for Technology- or Knowledge-Intensive FIEs
F. Tax Credits for Domestically-Owned Companies Purchasing Chinese-Made 
Equipment
G. Tax Reductions for Export-Oriented FIEs
H. Tax Refunds for Reinvesting of FIE Profits in Export-Oriented 
Enterprises
I. Accelerated Depreciation for Enterprises Located in the Northeast 
Region
J. Forgiveness of Tax Arrears for Enterprises in the Old Industrial 
Bases of Northeast China
K. VAT Rebates on FIE Purchases of Chinese-Made Equipment
L. Exemptions from Administrative Charges for Companies in the ZHTIDZ
M. The State Key Technology Renovation Project Fund
N. Grants to Cover Legal Fees in Trade Remedy Cases in Zhenzhen
O. The Clean Production Technology Fund
P. Grants for Listing Shares: Liaoyang City (Guangzhou Province), 
Wenzhou Municipality (Zhejiang Province), and Quanzhou Municipality 
(Fujian Province)
Q. The Northeast Region Foreign Trade Development Fund
R. The Northeast Region Technology Reform Fund
S. Land Use Rights in the Liaoyang High-Tech Industry Development Zone
T. Allocated Land Use Rights for SOEs

Verification

    In accordance with section 782(i)(1) of the Act, we intend to 
verify the information submitted by the Zhongya Companies, the Guang Ya 
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 an individual rate for subject merchandise produced and 
exported by the entities individually investigated. We have also 
calculated an all-others

[[Page 54321]]

rate. We preliminarily determine the total estimated net 
countervailable subsidy rates to be:

------------------------------------------------------------------------
             Company                    Ad valorem net subsidy rate
------------------------------------------------------------------------
Guang Ya Aluminum Industries Co.,  6.18 percent ad valorem.
 Ltd. (Guang Ya), Foshan
 Guangcheng Aluminum Co., Ltd.
 (Guangcheng), Guang Ya Aluminum
 Industries Hong Kong (Guang Ya
 HK), Kong Ah International
 Company Limited (Kong Ah), and
 Yongji Guanghai Aluminum
 Industry Co., Ltd. (Guanghai)
 (collectively the Guang Ya
 Companies).
Zhaoqing New Zhongya Aluminum      10.37 percent ad valorem.
 Co., Ltd. (New Zhongya), Zhongya
 Shaped Aluminum HK Holding Ltd.
 (Zhongya HK), and Karlton
 Aluminum Company Ltd. (Karlton)
 (collectively the Zhongya
 Companies).
Dragonluxe Limited (Dragonluxe)..  137.65 percent ad valorem.
Miland Luck Limited (Miland).....  137.65 percent ad valorem.
Liaoyang Zhongwang Aluminum        137.65 percent ad valorem.
 Profile Co. Ltd./Liaoning
 Zhongwang Group (collectively,
 the Zhongwang Group).
All Others Rate..................  137.65 percent ad
                                   valorem.
------------------------------------------------------------------------

    We note that section 705(c)(5)(A)(i) of the Act states that for 
companies not investigated, we will determine an all-others rate equal 
to the weighted average countervailable subsidy rates established for 
exporters and producers individually investigated, excluding any zero 
and de minimis countervailable subsidy rates, and any rates determined 
entirely under section 776 of the Act. However, as discussed above in 
the ``Application of Adverse Inferences: Non-Cooperative Companies'' 
section, the companies under individual investigation that participated 
in the investigation are voluntary respondents. The Department's 
regulations state that in calculating the all-others rate under section 
705(c)(5) of the Act, the Department will exclude net subsidy rates 
calculated for voluntary respondents. See 19 CFR 351.204(d)(3). The 
Preamble to Procedural Regulations further explains that while this 
principle of excluding voluntary rates from the all-others rate is not 
directly addressed in the statute, Article 9.4 of the Antidumping 
Agreement implies that the all-others rate cannot be a function of 
subsidy rates calculated for voluntary respondents. See Preamble to 
Procedural Regulations, 62 FR at 27310. The Preamble to Procedural 
Regulations further explains that the purpose of excluding voluntary 
respondents from the all-others rate calculation is to prevent the 
``distortion or outright manipulation of the all others rate.'' Id.
    We acknowledge that in a prior CVD investigation involving the PRC 
the Department, despite the language in the Preamble to Procedural 
Regulations and 19 CFR 351.204(d)(3), calculated the all-others rate by 
simple-averaging the AFA rates of the non-cooperating, mandatory 
respondents with the rate calculated for a voluntary respondent. See 
LWS from the PRC Decision Memorandum at Comment 21. However, upon 
further examination, we now determine that the potential for voluntary 
respondents' net subsidy rates to distort or manipulate the all-others 
rate is too great and, thus, we find that reliance on the approach from 
LWS from the PRC is no longer appropriate.
    Accordingly, because we lack subsidy rates established for 
exporters and producers individually investigated, we must resort to 
``any reasonable method'' to derive the all-others rate, as described 
under section 705(c)(5)(A)(ii) of the Act. We preliminarily determine 
that equating the all-others rate with the total AFA rate applied to 
the non-cooperating, mandatory respondents constitutes a ``reasonable 
method'' under 705(c)(5)(A)(ii) of the Act. See, e.g., Certain 
Potassium Phosphate Salts From the People's Republic of China: Final 
Affirmative Countervailing Duty Determination and Termination of 
Critical Circumstances Inquiry, 75 FR 30375 (June 1, 2010) (in an 
investigation where all of the mandatory respondents received a rate 
based on adverse facts available, using the AFA rate assigned to the 
mandatory respondents as the all-others rate).
    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 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

[[Page 54322]]

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: August 30, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-22204 Filed 9-3-10; 8:45 am]
BILLING CODE 3510-DS-P