[Federal Register Volume 76, Number 7 (Tuesday, January 11, 2011)]
[Notices]
[Pages 1971-1974]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-392]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-570-966]


Drill Pipe From the People's Republic of China: Final Affirmative 
Countervailing Duty Determination, Final Affirmative Critical 
Circumstances Determination

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

SUMMARY: The Department of Commerce (the Department) determines that 
countervailable subsidies are being provided to producers and exporters 
of drill pipe 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: January 11, 2011.

FOR FURTHER INFORMATION CONTACT: Kristen Johnson or 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) 482-4793 and (202) 482-6071, 
respectively.

SUPPLEMENTARY INFORMATION:

Background

    This investigation covers 40 programs. The respondent in this 
investigation is the DP Master Group, which consists of the following 
companies: DP Master Manufacturing Co., Ltd. (DP Master), Jiangyin 
Sanliang Petroleum Machinery Co., Ltd. (SPM), Jiangyin Liangda Drill 
Pipe Co., Ltd. (Liangda), Jiangyin Sanliang Steel Pipe Trading Co., 
Ltd. (SSP), and Jiangyin Chuangxin Oil Pipe Fittings Co., Ltd. 
(Chuangxin) (collectively, the DP Master Group). Xigang Seamless Steel 
Tube Co., Ltd. (Xigang) and Wuxi Seamless Pipe Co., Ltd. (WSP) were 
also selected mandatory respondents; however, both companies reported 
to the Department that they did not export subject merchandise to the 
United States during the period of investigation (POI). The petitioners 
in this investigation are VAM Drilling USA, Inc., Texas Steel 
Conversion, Inc., Rotary Drilling Tools, TMK IPSCO, and United Steel, 
Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial 
and Service Workers International Union, AFL-CIO.

Period of Investigation

    The POI for which we are measuring subsidies is January 1, 2009, 
through December 31, 2009, which corresponds to the PRC's most recently 
completed fiscal year at the time we initiated this investigation. See 
19 CFR 351.204(b)(2).

Case History

    The following events have occurred since the Department signed the 
Preliminary Determination on June 7, 2010. See Drill Pipe From the 
People's Republic of China: Preliminary Affirmative Countervailing Duty 
Determination, 75 FR 33245 (June 11, 2010) (Preliminary Determination). 
On June 18, 2010, we issued second supplemental questionnaires to the 
DP Master Group and the Government of the People's Republic of China 
(GOC).\1\ On June 21, 2010, the Department published in the Federal 
Register the notice to align this final countervailing duty (CVD) 
determination with the final antidumping duty determination. See Drill 
Pipe From the People's Republic of China: Alignment of Final 
Countervailing Duty Determination with Final Antidumping Duty 
Determination, 75 FR 34974 (June 21, 2010).
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    \1\ A public version of these documents and all public documents 
are available on the public file located in the Department's Central 
Records Unit (CRU), Room 7046 of the main Commerce building.
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    On June 30, 2010, the DP Master Group made a factual submission 
regarding technical specifications of casing, tubing, and drill pipe. 
We received the DP Master Group's second supplemental questionnaire 
response on July 7, 2010, and the GOC's second supplemental 
questionnaire response on July 9, 2010. On July 7, 8, and 12, 2010, we 
received requests to hold a hearing from the DP Master Group, 
petitioners, and the GOC, respectively.
    On July 8, 2010, petitioners submitted a critical circumstances 
allegation. On July 12, 2010, we issued to the DP Master Group a third 
supplemental questionnaire and received the company's response on July 
21, 2010. On July 13, 2010, petitioners submitted U.S. Census Data in 
support of its critical circumstances allegation.
    On August 2, 2010, we issued a third supplemental questionnaire to 
the GOC and received the government's response on August 16, 2010. On 
August 3, 2010,

[[Page 1972]]

we issued to the GOC the verification outline for meetings scheduled in 
Jiangyin City, Jiangsu Province. On August 9, 2010, the Department made 
a preliminary affirmative determination of critical circumstances. See 
Drill Pipe from the People's Republic of China: Notice of Preliminary 
Affirmative Determination of Critical Circumstances, 75 FR 49891 
(August 16, 2010) (Preliminary Critical Circumstances Determination).
    On August 6, 2010, we issued the verification outline to the DP 
Master Group. On August 17, 2010, petitioners submitted to the 
Department pre-verification comments. On August 19, 2010, we placed on 
the record of this investigation our analysis of entry documentation 
obtained from U.S. Customs and Border Protection (CBP) for the products 
that Xigang and WSP exported to the United States during the POI.\2\ 
Based on our analysis of the entry packages, we found that the 
documentation supports the claims of non-shipment of subject 
merchandise to the United States during the POI by Xigang and WSP and, 
therefore, we did not issue verification outlines to or conduct 
verification of either company.
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    \2\ See Memorandum to the File from Kristen Johnson, Trade 
Analyst, Operations Office 3, ``Examination of Entry 
Documentation,'' (August 19, 2010).
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    On August 20, 2010, we issued a fourth supplemental questionnaire 
to both the GOC and DP Master Group. We received responses from the GOC 
and the DP Master Group on September 2, 2010.
    On September 3, 2010, petitioners submitted additional factual 
information regarding green tubes used for drill pipe and certain 
finished casing and tubing products. On September 6, 2010, the DP 
Master Group submitted factual information related to income tax 
information, green tube benchmark, and bank loan benchmark. 
Subsequently, on September 14, 2010, the DP Master Group filed rebuttal 
comments to petitioners' September 3, 2010, factual submission.
    We conducted verification of the questionnaire responses submitted 
by the GOC on September 10, 2010, and by the DP Master Group from 
September 13 through 15, 2010, in Jiangyin City, Jiangsu Province.
    On September 13, 2010, petitioners submitted comments regarding the 
inclusion of green tubes used in producing drill pipe within the scope 
of the investigation. On September 23, 2010, the DP Master Group 
submitted rebuttal comments in regard to petitioners'' scope comments. 
See ``Scope Comments'' section below for additional information.
    On October 13, 2010, the DP Master Group requested an extension of 
time for the filing of new factual information and submitted on the 
record information regarding the Department's scope determination of 
green tubes in this investigation. On October 18 and 21, 2010, we 
released the verification reports for the meetings we held with the GOC 
and the DP Master Group, respectively.\3\ On October 26, 2010, we 
issued a post-preliminary determination memorandum and preliminarily 
found that the following programs provided countervailable export 
subsidies to the DP Master Group during the POI: Technology to Improve 
Trade Research and Development and Outstanding Growth Private 
Enterprise and Small and Medium-sized Enterprises in Jiangyin Fund.\4\ 
Additionally, we preliminarily determined that none of the DP Master 
Group companies acquired land-use rights for less than adequate 
remuneration (LTAR) based on being located within a special, economic, 
or development zone or area during the period December 11, 2001, 
through December 31, 2009.\5\
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    \3\ See Memorandum to Melissa Skinner, Director, AD/CVD 
Operations, Office 3, from Eric B. Greynolds, Program Manager, AD/
CVD Operations, Office 3 and Kristen Johnson, Trade Analyst, AD/CVD 
Operations, Office 3, regarding ``Verification of Information 
Submitted by the Government of the People's Republic of China,'' 
(October 18, 2010) (GOC Verification Report) and Memorandum to 
Melissa Skinner, Director, AD/CVD Operations, Office 3, from Eric B. 
Greynolds, Program Manager, AD/CVD Operations, Office 3 and Kristen 
Johnson, Trade Analyst, AD/CVD Operations, Office 3, regarding 
``Verification of Information Submitted by the DP Master Group,'' 
(DP Master Group Verification Report) (October 21, 2010).
    \4\ See Memorandum to Ronald K. Lorentzen, Deputy Assistant 
Secretary for Import Administration, from Susan H. Kuhbach, Acting 
Deputy Assistant Secretary for Antidumping and Countervailing Duty 
Operations, regarding ``Post-Preliminary Determination Memorandum,'' 
(October 26, 2010) at 1-4.
    \5\Id. at 4-7.
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    Interested parties submitted the case and rebuttal briefs on 
November 3, 2010, and November 10, 2010, respectively. In their 
respective case briefs, the GOC, DP Master Group, and petitioners 
withdrew their requests for a hearing and, therefore, a public hearing 
was not held in this investigation. On November 29, 2010, Department 
officials met with counsel for the DP Master Group, who gave a verbal 
presentation of case/rebuttal brief arguments regarding the following 
issues: construction of green tube benchmark, calculation of the 
benefit under the Two Free/Three Half Tax Exemption program, and a 
grant received by Chuangxin.\6\ On December 6, 2010, Department 
officials met with petitioners' counsel, who gave a verbal presentation 
of case/rebuttal brief arguments regarding the following issues: use of 
tier-one or tier-two benchmark for the provision of green tubes for 
LTAR program, bestowal of benefit under the Two Free/Three Half Tax 
program, and sales denominator to use in the calculations for the 
provision of inputs for LTAR programs.\7\
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    \6\ See Memorandum to the File through Melissa Skinner, 
Director, AD/CVD Operations, Office 3, from Kristen Johnson, Trade 
Analyst, AD/CVD Operations, Office 3, regarding ``Meeting with 
Counsel for the DP Master Group,'' (November 29, 2010).
    \7\ See Memorandum to the File through Melissa Skinner, 
Director, AD/CVD Operations, Office 3, from Kristen Johnson, Trade 
Analyst, AD/CVD Operations, Office 3, regarding ``Meeting with 
Counsel for Petitioners,'' (December 6, 2010).
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Scope of Investigation

    The products covered by the investigation are steel drill pipe and 
steel drill collars, whether or not conforming to American Petroleum 
Institute (API) or non-API specifications. Included are finished drill 
pipe and drill collars without regard to the specific chemistry of the 
steel (i.e., carbon, stainless steel, or other alloy steel), and 
without regard to length or outer diameter. Also included are 
unfinished drill collars (including all drill collar green tubes) and 
unfinished drill pipe (including drill pipe green tubes, which are 
tubes meeting the following description: seamless tubes with an outer 
diameter of less than or equal to 6[frac5s8] inches (168.28 
millimeters), containing between 0.16 and 0.75 percent molybdenum, and 
containing between 0.75 and 1.45 percent chromium). The scope does not 
include tool joints not attached to the drill pipe, nor does it include 
unfinished tubes for casing or tubing covered by any other antidumping 
(AD) or CVD order.
    The subject products are currently classified in the following 
Harmonized Tariff Schedule of the United States (HTSUS) categories: 
7304.22.0030, 7304.22.0045, 7304.22.0060, 7304.23.3000, 7304.23.6030, 
7304.23.6045, 7304.23.6060, 8431.43.8040 and may also enter under 
8431.43.8060, 8431.43.4000, 7304.39.0028, 7304.39.0032, 7304.39.0036, 
7304.39.0040, 7304.39.0044, 7304.39.0048, 7304.39.0052, 7304.39.0056, 
7304.49.0015, 7304.49.0060, 7304.59.8020, 7304.59.8025, 7304.59.8030, 
7304.59.8035, 7304.59.8040, 7304.59.8045, 7304.59.8050, and 
7304.59.8055.

[[Page 1973]]

    While HTSUS subheadings are provided for convenience and customs 
purposes, the written description of the scope of the investigation is 
dispositive.

Scope Comments

    In the preliminary determination of the concurrent AD 
investigation, the Department indicated that it would solicit 
additional comments from parties regarding the specifications of drill 
pipe green tube. See Drill Pipe From the People's Republic of China: 
Preliminary Determination of Sales at Less Than Fair Value and 
Affirmative Determination of Critical Circumstances, and Postponement 
of Final Determination, 75 FR 51004, 51005-06 (August 18, 2010); and 
Drill Pipe From the People's Republic of China: Notice of Correction to 
the Preliminary Determination of Sales at Less Than Fair Value and 
Affirmative Determination of Critical Circumstances, and Postponement 
of Final Determination, 75 FR 51014 (August 18, 2010). Between 
September 13 and 23, 2010, petitioners and the DP Master Group placed 
additional information on the record of the AD and CVD investigations 
regarding the characteristics of drill pipe green tube. Additionally, 
petitioners and the DP Master Group commented on the scope of the 
investigation in their case briefs submitted on the record of the AD 
investigation. Based on analysis of that information and arguments, the 
Department has modified the scope of the AD and CVD investigations to 
define drill pipe green tubes which were previously described as 
``green tubes suitable for drill pipe.'' \8\
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    \8\ See companion antidumping duty final determination and 
accompanying issues and decision memorandum at comment 2, issued 
concurrently with this notice.
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Injury Test

    Because the PRC is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Tariff Act of 1930, as amended (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 
March 8, 2010, the ITC published its preliminary determination finding 
that there is a reasonable indication that an industry in the United 
States is threatened with material injury by reason of imports of drill 
pipe and drill collars from the PRC that are alleged to be sold in the 
United States at less than fair value and subsidized by the GOC. See 
Drill Pipe and Drill Collars From China, Investigation Nos. 701-TA-474 
and 731-TA-1176 (Preliminary), 75 FR 10501 (March 8, 2010).

Critical Circumstances

    In the Preliminary Critical Circumstances Determination, the 
Department concluded that critical circumstances exist with respect to 
imports of drill pipe from the PRC from the DP Master Group, in 
accordance with section 703(e)(1) of the Act. We also preliminarily 
determined, based on the shipment experience of the DP Master Group, 
that critical circumstances exist as well for imports of drill pipe 
from the PRC from ``all other'' exporters, in accordance with section 
703(e)(1) of the Act. Our analysis of the results of verification and 
the comments submitted by interested parties have not lead us to change 
our preliminary affirmative finding of critical circumstances for the 
DP Master Group and ``all other'' exporters. Therefore, in accordance 
with section 705(a)(2) of the Act, we continue to find that critical 
circumstances exist with respect to imports of subject merchandise from 
the PRC from the DP Master Group and ``all other'' exporters.

Analysis of Comments Received

    All issues raised in the case and rebuttal briefs by parties to 
this investigation are addressed in the Memorandum from Christian 
Marsh, Deputy Assistant Secretary for Antidumping and Countervailing 
Duty Operations, to Ronald K. Lorentzen, Deputy Assistant Secretary for 
Import Administration, entitled ``Issues and Decision Memorandum for 
the Final Determination in the Countervailing Duty Investigation of 
Drill Pipe from the People's Republic of China,'' (January 3, 2011) 
(Decision Memorandum), which is hereby adopted by this notice. Attached 
to this notice as an Appendix is a list of the issues that parties 
raised and to which we have responded in the Decision Memorandum. 
Parties can find a complete discussion of all issues raised in this 
investigation and the corresponding recommendations in this public 
memorandum, which is on file in the Department's Central Records Unit, 
room 7046 of the main Department of Commerce building. In addition, a 
complete version of the Decision Memorandum can be accessed directly on 
the Internet at http://trade.gov/ia. The paper copy and electronic 
version of the Decision Memorandum are identical in content.

Suspension of Liquidation

    In accordance with section 705(c)(1)(B)(i)(I) of the Act, we have 
calculated an individual rate for the DP Master Group. Section 
705(c)(5)(A) of the Act states that for companies not investigated, we 
will determine an all others rate by weighting the individual company 
subsidy rate of each of the companies investigated by each company's 
exports of the subject merchandise to the United States. The all others 
rate may not include zero and de minimis net subsidy rates, or any 
rates based solely on the facts available. Because we have calculated a 
rate for only the DP Master Group, the rate for the DP Master Group is 
the all others rate.
    We determine the total estimated net countervailable subsidy rates 
to be:

------------------------------------------------------------------------
                                                         Net subsidy  Ad
                   Producer/Exporter                      Valorem  rate
                                                            (percent)
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DP Master Manufacturing Co., Ltd. (DP Master),                     18.18
 Jiangyin Sanliang Petroleum Machinery Co., Ltd.
 (SPM); Jiangyin Liangda Drill Pipe Co., Ltd.
 (Liangda); Jiangyin Sanliang Steel Pipe Trading Co.,
 Ltd. (SSP), and Jiangyin Chuangxin Oil Pipe Fittings
 Co., Ltd. (Chuangxin) (collectively, DP Master Group)
All Others............................................             18.18
------------------------------------------------------------------------

    As a result of our Preliminary Determination and pursuant to 
section 703(d) of the Act, we instructed CBP to suspend liquidation of 
all entries of subject merchandise from the PRC which were entered or 
withdrawn from warehouse, for consumption on or after June 11, 2010, 
the date of the publication of the Preliminary Determination in the 
Federal Register. Subsequently, as a result of our Preliminary Critical 
Circumstances

[[Page 1974]]

Determination, we instructed CBP to suspend liquidation of all entries 
of subject merchandise from the PRC which were entered or withdrawn 
from warehouse, for consumption on or after March 13, 2010, which is 90 
days prior to the date of publication in the Federal Register of the 
Preliminary Determination. In accordance with section 703(d) of the 
Act, we later issued instructions to CBP to discontinue the suspension 
of liquidation for CVD purposes for subject merchandise entered, or 
withdrawn from warehouse, on or after October 9, 2010, but to continue 
the suspension of liquidation of all entries from June 11, 2010, 
through October 8, 2010.
    We will issue a CVD order and reinstate the suspension of 
liquidation under section 706(a) of the Act if the ITC issues a final 
affirmative injury determination, and will require a cash deposit of 
estimated CVDs for such entries of merchandise in the amounts indicated 
above. If the ITC determines that material injury, or threat of 
material injury, does not exist, this proceeding will be terminated and 
all estimated duties deposited or securities posted as a result of the 
suspension of liquidation will be refunded or canceled.

ITC Notification

    In accordance with section 705(d) 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 related 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 (APO), without the written 
consent of the Assistant Secretary for Import Administration.

Return or Destruction of Proprietary Information

    In the event that the ITC issues a final negative injury 
determination, this notice will serve as the only reminder to parties 
subject to an APO of their responsibility concerning the destruction of 
proprietary information disclosed under APO in accordance with 19 CFR 
351.305(a)(3). Timely written notification of the return/destruction of 
APO materials or conversion to judicial protective order is hereby 
requested. Failure to comply with the regulations and terms of an APO 
is a violation which is subject to sanction.
    This determination is published pursuant to sections 705(d) and 
777(i) of the Act.

    Dated: January 3, 2011.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.

Appendix

List of Comments and Issues in the Decision Memorandum

Comment 1: Application of CVD Law to the PRC
Comment 2: Whether Application of the CVD Law to Chinese Imports 
Violates the Administrative Procedure Act
Comment 3: Double Counting/Double Remedy
Comment 4: Cutoff Date for Identifying Subsidies
Comment 5: Critical Circumstances
Comment 6: Attribute Benefits From Tied Subsidies Only to the 
Products That Benefit
Comment 7: Apply 2009 Short-Term Interest Rate Benchmark and Adjust 
Benefit Calculation Based on China's Inflation Rate
Comment 8: Preferential Loans to the Drill Pipe Industry
Comment 9: Construction of the Green Tube Benchmark
Comment 10: Ministerial Error In the Green Tube Benefit Calculation
Comment 11: The Department Should Account For the Premium Quality of 
Steel Rounds
Comment 12: Timing of Receipt of the Benefit Under the Two Free, 
Three Half Tax Exemption for Foreign Invested Enterprises
Comment 13: Tying and Attribution Issues Regarding the Grant 
Received Under the Outstanding Growth Private Enterprise and Small 
and Medium-sized Enterprises Development in Jiangyin Fund
[FR Doc. 2011-392 Filed 1-10-11; 8:45 am]
BILLING CODE 3510-DS-P