[Federal Register Volume 77, Number 58 (Monday, March 26, 2012)]
[Notices]
[Pages 17439-17456]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-7273]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-570-980]
Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled
Into Modules, 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 crystalline silicon photovoltaic cells,
whether or not assembled into modules (solar cells) from the People's
Republic of China (PRC). For information on the estimated subsidy
rates, see the ``Suspension of Liquidation'' section of this notice.
DATES: Effective Date: March 26, 2012.
FOR FURTHER INFORMATION CONTACT: Gene Calvert, Jun Jack Zhao, or Emily
Halle, AD/CVD Operations, Office 6, Import Administration, U.S.
Department of Commerce, Room 7866, 14th Street and Constitution Avenue
NW., Washington, DC 20230; telephone: (202) 482-3586, (202) 482-1396,
or (202) 482-0176, respectively.
SUPPLEMENTARY INFORMATION:
Case History
The Department initiated a countervailing duty (CVD) investigation
of solar cells from the PRC on November 8, 2011.\1\ Since the
initiation, the following events have occurred. The Department released
U.S. Customs and Border Protection (CBP) entry data for U.S. imports of
solar cells from the PRC for the period January 1, 2010, through
December 31, 2010, to be used as the basis for respondent selection.
The CBP entry data covered products included in this investigation
which entered under the Harmonized Tariff Schedule of the United States
(HTSUS) numbers likely to include subject merchandise: 8541.40.6020 and
8541.40.6030. The entry data did not cover entries under the other
HTSUS numbers included in the scope description below because those
numbers represent broad basket categories. In the memorandum releasing
the entry data, the Department stated that, because the subject
merchandise is imported as either solar cells or solar cells assembled
into modules or panels, and thus quantity is not recorded consistently
in the entry data, the Department intended to select respondents based
on the aggregate value (as opposed to quantity) of subject merchandise
that was imported into the United States.
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\1\ See Crystalline Silicon Photovoltaic Cells, Whether or Not
Assembled Into Modules, From the People's Republic of China:
Initiation of Countervailing Duty Investigation, 76 FR 70966
(November 16, 2011) (Initiation Notice), and accompanying Initiation
Checklist. Public documents and public versions of proprietary
Departmental memoranda referenced in this notice are on file
electronically on Import Administration's Antidumping and
Countervailing Duty Centralized Electronic Services System (IA
ACCESS), accessible via the Central Records Unit, Room 7046 of the
main Commerce building and on the web at http://ia.ita.doc.gov/frn/.
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On November 29, 2011, the Department completed its respondent
selection analysis. Given available resources, the Department
determined it could examine no more than two producers/exporters and
selected Changzhou Trina Solar Energy Co., Ltd. (Trina Solar) and Wuxi
Suntech Power Co., Ltd. (Wuxi Suntech) as mandatory respondents.\2\
These companies were the two largest producers/exporters of subject
merchandise, based on aggregate value, to the United States.
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\2\ See Memorandum to Christian Marsh, Deputy Assistant
Secretary for Antidumping and Countervailing Duty Operations,
``Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled
Into Modules, from the People's Republic of China, Countervailing
Duty Investigation: Respondent Selection,'' November 29, 2011
(Respondent Selection Memorandum).
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On December 5, 2011, the petitioner, Solar World Industries,
America, Inc. (Petitioner), submitted an additional subsidy allegation,
claiming that the government of the PRC (GOC), through state-owned
enterprises (SOEs),
[[Page 17440]]
provides glass to Chinese producers of subject merchandise for less
than adequate remuneration (LTAR). The Department issued the CVD
questionnaire to the GOC on December 7, 2011. Copies of the
questionnaire were also sent to the mandatory company respondents. On
December 16, 2011, Petitioner submitted a request to extend the
preliminary determination 30 days, from January 12 to February 13,
2012. On December 19, 2011, Petitioner submitted an allegation that
Wuxi Suntech was uncreditworthy from 2005 through 2010. On December 22,
2011, Petitioner submitted an allegation that Trina Solar was
uncreditworthy from 2005 through 2010. Also on December 22, 2011, the
Department determined not to initiate an investigation of Petitioner's
December 5, 2011, allegation that the GOC provides glass for LTAR,
stating that Petitioner did not support its allegation with reasonably
available information, pursuant to section 702(b)(1) of the Tariff Act
of 1930, as amended (the Act). On December 29, 2011, the Department
published in the Federal Register a 30-day postponement of the
preliminary determination until February 11, 2012.\3\
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\3\ See Crystalline Silicon Photovoltaic Cells, Whether or Not
Assembled Into Modules, From the People's Republic of China:
Postponement of Preliminary Determination in the Countervailing Duty
Investigation, 76 FR 81914 (December 29, 2011).
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On January 3, 2012, Wuxi Suntech requested an extension of the
January 13 deadline for responding to the Department's December 7, 2011
questionnaire. On January 5, 2012, the GOC and Trina Solar each
requested an extension of the January 13 deadline for responding to the
questionnaire. The Department extended the deadline until January 23,
2012.
On January 3, 2012, the GOC requested that the Department terminate
the CVD investigation, stating that, in a recent decision, the U.S.
Court of Appeals for the Federal Circuit found that the Department does
not have the authority to apply the CVD law to countries the Department
considers non-market economies (NMEs).\4\ On January 6, 2012, Trina
Solar, Wuxi Suntech, and other interested parties requested that the
Department terminate the CVD investigation, also citing the GPX ruling.
On January 26, 2012, interested parties DelSolar Co., Ltd. and DelSolar
(Wujiang) Ltd. also requested that the CVD investigation be terminated,
citing GPX.
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\4\ GPX Int'l Tire Corp. v. United States, 666 F.3d 732 (Fed.
Cir. 2011) (GPX).
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On January 9, 2012, Trina Solar and Wuxi Suntech each requested
that the Department further extend the deadline for the preliminary
determination by an additional 35 days, noting the Department had the
authority to do so in extraordinary circumstances. In these same
submissions, both Trina Solar and Wuxi Suntech also requested an
additional extension of the deadline for responding to the Department's
December 7, 2011 questionnaire. Also on January 9, 2012, the GOC
reiterated its January 5, 2012 request for additional time to respond
to the Department's December 7, 2011 questionnaire, requesting the
deadline be extended to February 3, 2012. On January 19, 2012,
Petitioner requested that the Department extend the deadline for
submitting additional subsidy allegations. Based on this request from
Petitioner, the Department extended this deadline until February 10,
2012. Also on January 19, 2012, Petitioner requested that the
preliminary determination be further extended until March 2, 2012. On
January 23, Petitioner re-submitted its allegation that the GOC
provided solar cells producers with glass for LTAR. On January 19,
2012, the Department extended the deadline until January 31, 2012, for
the GOC, Trina Solar, and Wuxi Suntech to respond to the Department's
December 7, 2011 questionnaire. On January 31, 2012, the Department
published in the Federal Register the second postponement of the
preliminary determination until March 2, 2012.\5\ Also on January 31,
2012, the GOC, Trina Solar, and Wuxi Suntech each submitted timely
responses to the Department's December 7, 2011 questionnaire.
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\5\ See Crystalline Silicon Photovoltaic Cells, Whether or Not
Assembled Into Modules, From the People's Republic of China: Second
Postponement of the Preliminary Determination in the Countervailing
Duty Investigation, 77 FR 4764 (January 31, 2012).
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On February 9, 2012, Petitioner submitted a request to extend
further the deadline for submitting additional subsidy allegations.
Based on this request from Petitioner, the Department extended the
deadline until February 14, 2012, for submitting additional subsidy
allegations. Also on February 9, 2012, the Department issued
supplemental questionnaires to Trina Solar and Wuxi Suntech. On
February 14, 2012, Trina Solar and Wuxi Suntech each requested that the
Department extend the deadline until February 29, 2012, for responding
to the February 9, 2012 supplemental questionnaire. In its submission,
Wuxi Suntech also reiterated its January 9, 2012 request to extend
fully the deadline for the preliminary determination. The Department
extended the supplemental questionnaire response deadline to February
27, 2012, for Trina Solar and Wuxi Suntech. On February 14, 2012,
Petitioner submitted five additional new subsidy allegations. The
Department has not yet reached a determination of whether to include
these five additional allegations, or the uncreditworthiness
allegations noted above, in the investigation, but intends to do so
after the issuance of this preliminary determination.
On February 15, 2012, the Department issued a supplemental
questionnaire to the GOC. On February 17, 2012, the GOC requested an
extension until March 5, 2012, for responding to the Department's
February 15, 2012 supplemental questionnaire. The Department extended
the deadline until March 1, 2012. On February 22, 2012, the Department
published in the Federal Register the third postponement of the
preliminary determination in the CVD investigation, postponing the
preliminary determination until March 17, 2012.\6\ Between February 22
and February 24, 2012, Petitioner submitted comments on the initial
questionnaire responses submitted by the GOC, Trina Solar, and Wuxi
Suntech. On February 27, 2012, Trina Solar and Wuxi Suntech each
submitted timely responses to the Department's February 9, 2012
supplemental questionnaire. The GOC timely submitted its response to
the supplemental questionnaire on March 1, 2012. On March 7, 2012,
Trina Solar submitted comments to be considered in the Department's
preliminary determination, and Petitioner submitted its pre-preliminary
determination comments on March 8, 2012. Also on March 8, 2012, the
Department initiated the new subsidy allegation for the provision of
glass at LTAR. On March 9, 2012, Petitioner submitted new factual
information for the Department to consider in the preliminary
determination. On March 12, 2012, the GOC submitted pre-preliminary
comments, and Petitioner submitted comments in response to Trina
Solar's March 7, 2012 comments. On March 13, 2012, Wuxi Suntech
submitted pre-preliminary comments, as well as comments on Petitioner's
December 19, 2011 and February 28, 2012 letters regarding Wuxi
Suntech's creditworthiness.
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\6\ See Crystalline Silicon Photovoltaic Cells, Whether or Not
Assembled Into Modules, From the People's Republic of China:
Postponement of Preliminary Determination in the Countervailing Duty
Investigation, 77 FR 10478 (February 22, 2012).
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[[Page 17441]]
Scope Comments
In accordance with the preamble to the Department's regulations, in
our Initiation Notice we set aside a period of time for parties to
raise issues regarding product coverage, and encouraged all parties to
submit comments within 20 calendar days of that notice.\7\ Between
November 23, 2011 and March 14, 2012, we received numerous comments
concerning the scope of the investigations. Based on these comments,
the Department has clarified the scope of the investigation. The
revised scope is set forth in the ``Scope of Investigation'' section
below. A full discussion of the Department's preliminary conclusions
regarding these scope comments are set forth in a memorandum issued
concurrently with this notice.\8\
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\7\ See Antidumping Duties; Countervailing Duties, 62 FR 27296,
27323 (May 19, 1997); see also Initiation Notice, 76 FR at 70967.
\8\ See Memorandum to Christian Marsh, Deputy Assistant
Secretary, Antidumping and Countervailing Duty Operations, from Jeff
Pedersen, Case Analyst, ``Scope Clarification: Antidumping and
Countervailing Duty Investigations of Crystalline Silicon
Photovoltaic Cells, Whether or Not Assembled Into Modules, from the
People's Republic of China,'' March 19, 2012.
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Scope of the Investigation
The merchandise covered by this investigation are crystalline
silicon photovoltaic cells, and modules, laminates, and panels,
consisting of crystalline silicon photovoltaic cells, whether or not
partially or fully assembled into other products, including, but not
limited to, modules, laminates, panels and building integrated
materials.
This investigation covers crystalline silicon photovoltaic cells of
thickness equal to or greater than 20 micrometers, having a p/n
junction formed by any means, whether or not the cell has undergone
other processing, including, but not limited to, cleaning, etching,
coating, and/or addition of materials (including, but not limited to,
metallization and conductor patterns) to collect and forward the
electricity that is generated by the cell.
Subject merchandise may be described at the time of importation as
parts for final finished products that are assembled after importation,
including, but not limited to, modules, laminates, panels, building-
integrated modules, building-integrated panels, or other finished goods
kits. Such parts that otherwise meet the definition of subject
merchandise are included in the scope of this investigation.
Excluded from the scope of this investigation are thin film
photovoltaic products produced from amorphous silicon (a-Si), cadmium
telluride (CdTe), or copper indium gallium selenide (CIGS).
Also excluded from the scope of this investigation are crystalline
silicon photovoltaic cells, not exceeding 10,000mm\2\ in surface area,
that are permanently integrated into a consumer good whose function is
other than power generation and that consumes the electricity generated
by the integrated crystalline silicon photovoltaic cell. Where more
than one cell is permanently integrated into a consumer good, the
surface area for purposes of this exclusion shall be the total combined
surface area of all cells that are integrated into the consumer good.
Modules, laminates, and panels produced in a third-country from
cells produced in the PRC are covered by this investigation; however,
modules, laminates, and panels produced in the PRC from cells produced
in a third-country are not covered by this investigation.
Merchandise covered by this investigation is currently classified
in the Harmonized Tariff System of the United States (HTSUS) under
subheadings 8501.61.0000, 8507.20.80, 8541.40.6020 and 8541.40.6030.
These HTSUS subheadings are provided for convenience and customs
purposes; the written description of the scope of this investigation is
dispositive.
Injury Test
Because the PRC is a ``Subsidies Agreement Country'' within the
meaning of section 701(b) of the Act, the U.S. International Trade
Commission (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 December 16, 2011, the ITC
published its preliminary determination that there is a reasonable
indication that an industry in the United States is materially injured
by reason of imports of solar cells from the PRC.\9\
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\9\ See Crystalline Silicon Photovoltaic Cells from China,
Investigation Nos. 701 TA-481 and 731-TA-1190, Preliminary, 76 FR
78313 (December 16, 2011).
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Application of the Countervailing Duty Law to Imports From the PRC
On October 25, 2007, the Department published its final
determination on coated free sheet paper from the PRC.\10\ In CFS from
the PRC, the Department found that
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\10\ See Coated Free Sheet Paper from the People's Republic of
China: Final Affirmative Countervailing Duty Determination, 72 FR
60645 (October 25, 2007) (CFS from the PRC), and accompanying Issues
and Decision Memorandum (CFS from the PRC Decision Memorandum).
* * *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.\11\
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\11\ See CFS from the PRC Decision Memorandum at Comment 6.
The Department has affirmed its decision to apply the CVD law to the
PRC in numerous subsequent determinations.\12\ Furthermore, on March
13, 2012, HR 4105 was enacted which makes clear that the Department has
the authority to apply the CVD law to NMEs such as the PRC. The
effective date provision of the enacted legislation makes clear that
this provision applies to this proceeding.\13\
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\12\ See, e.g., Circular Welded Carbon Quality Steel Pipe from
the People's Republic of China: Final Affirmative Countervailing
Duty Determination and Final Affirmative Determination of Critical
Circumstances, 73 FR 31966 (June 5, 2008), and accompanying Issues
and Decision Memorandum (CWP from the PRC Decision Memorandum) at
Comment 1.
\13\ See HR 4105, 112th Cong. Sec. 1(b) (2012) (enacted).
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Additionally, for the reasons stated in the CWP from the PRC
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 CVD investigations.\14\
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\14\ See, e.g., CWP from the PRC Decision Memorandum at Comment
2.
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Preliminary Determination of Critical Circumstances
On January 27, 2012, the Department determined that critical
circumstances exist with respect to imports of solar cells from the PRC
for Trina Solar, Wuxi Suntech, and all other PRC producers or
exporters, finding that there have been massive imports of subject
merchandise over a relatively short period of time by these
entities.\15\ Further, at this preliminary stage, the Department
continues to have a reasonable basis to believe or suspect that there
are countervailable subsidies inconsistent with the Subsidies and
Countervailing Measures Agreement of the WTO. As a result, we will
instruct CBP to suspend liquidation of all entries of the subject
[[Page 17442]]
merchandise from the PRC that are entered or withdrawn from warehouse,
for consumption on or after the date 90 days prior to the date of
publication of this notice in the Federal Register, and to require a
cash deposit or bond for such entities of the merchandise in the
amounts indicated in the section ``Suspension of Liquidation,'' below.
Parties will have the opportunity to comment on the Department's
preliminary determination of critical circumstances in their case
briefs for the final determination.
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\15\ See Countervailing Duty Investigation of Crystalline
Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules,
From the People's Republic of China: Preliminary Determination of
Critical Circumstances, 77 FR 5487 (February 3, 2012).
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Voluntary Respondents
On November 17, 2011, CNPV Dongying Solar Power Company Limited
requested that it be selected as a voluntary respondent, if the company
was not selected as a mandatory respondent. Also on November 17, 2011,
Yingli Green Energy Holding Company Limited and Yingli Green Energy
Americas, Inc. requested that they be selected collectively as a
voluntary respondent. On November 22, 2011, both Trina Solar and Wuxi
Suntech requested that they be selected as voluntary respondents.
Jiangsu Green Power PV Co., Ltd. requested that it be selected as a
voluntary respondent on November 28, 2011. On December 23, 2011, Motech
(Suzhou) Renewable Energy Co., Ltd. requested that it be a selected as
a voluntary respondent.
In the Respondent Selection Memorandum, the Department explained
that it did not have resources available to examine any of the several
parties, noted above, requesting to be investigated as voluntary
respondents.\16\ Therefore, we continued, we would not examine any
voluntary respondents unless one of the mandatory respondents failed to
cooperate. In such event, we noted, any party requesting to be a
voluntary respondent would have to be in compliance with four criteria,
one of which was the submission of questionnaire responses in
accordance with deadlines established for the mandatory
respondents.\17\ Subsequently, both mandatory respondents have
cooperated and no voluntary respondent applicant submitted any
questionnaire responses. Therefore, we are not calculating individual
rates for any of the voluntary respondent applicants.
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\16\ Respondent Selection Memorandum at 5.
\17\ Id. at 6.
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Use of Facts Otherwise Available and Adverse Inferences
Sections 776(a)(1) and (2) of the Act provide that the Department
shall apply ``facts otherwise available'' if necessary information is
not on the record or if 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. Section 776(b) of the
Act also authorizes the Department to use as adverse facts available
(AFA), information derived from the petition, the final determination,
a previous administrative review, or other information placed on the
record.
Section 776(c) of the Act provides that, when the Department relies
on secondary information rather than on information obtained in the
course of an investigation or review, it shall, to the extent
practicable, corroborate that information from independent sources that
are reasonably at its disposal. Secondary information is defined as
``{i{time} nformation derived from the petition that gave rise to the
investigation or review, the final determination concerning the subject
merchandise, or any previous review under section 751 concerning the
subject merchandise.'' \18\ For purposes of this preliminary
determination, we find it necessary to apply AFA in the following
circumstances. However, we are not relying upon ``secondary
information'' in our application of AFA in the following circumstances.
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\18\ See Statement of Administrative Action accompanying the
Uruguay Round Agreements Act, H. Doc. No. 316, 103d Cong. 2d
Session, at 870 (1994).
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Application of AFA: Polysilicon Producers Are ``Authorities''
As discussed below under the section ``Programs Preliminarily
Determined to be Countervailable,'' the Department is investigating the
provision of polysilicon for LTAR by the GOC. We requested information
from the GOC regarding the specific companies that produced this input
product that Trina Solar and Wuxi Suntech purchased during the period
of investigation (POI). Specifically, we sought information from the
GOC that would allow us to determine whether the producers are
``authorities'' within the meaning of section 771(5)(B) of the Act. In
our original and supplemental questionnaires, we requested detailed
information from the GOC that would be needed for this analysis.
For each producer in which the GOC was a majority owner, we stated
that the GOC needed to provide the following information that is
relevant to our analysis of whether that producer is an ``authority.''
Translated copies of source documents that demonstrate the
producer's ownership during the POI, such as capital verification
reports, articles of association, share transfer agreements, or
financial statements.
The names of the ten largest shareholders and the total
number of shareholders.
The identification of any government ownership or other
affiliations between the ten largest shareholders and the government.
Total level of state ownership of the company's shares and
the names of all government entities that own shares in the producer
Any other relevant evidence the GOC believes demonstrates
that the company is not controlled by the government.
For each producer that the GOC claimed was privately owned by
individuals or companies during the POI, we requested the following.
Translated copies of source documents that demonstrate the
producer's ownership during the POI, such as capital verification
reports, articles of association, share transfer agreements, or
financial statements.
Identification of the owners, members of the board of
directors, or managers of the producers who were also government or
Chinese Communist Party (CCP) officials or representatives during the
POI.
A statement regarding whether the producer had ever been
an SOE, and, if so, whether any of the current owners, directors, or
senior managers had been involved in the operations of the company
prior to its privatization.
A discussion of whether and how operational or strategic
decisions made by the management or board of directors are subject to
government review or approval.
Finally, for producers owned by other corporations (whether in
whole or in part) or with less-than-majority state ownership during the
POI, we requested information tracing the ownership of the producer
back to the ultimate individual or state owners. For such producers, we
requested the following information.
[[Page 17443]]
The identification of any state ownership of the
producer's shares; the names of all government entities that own
shares, either directly or indirectly, in the producer; the
identification of all owners considered ``SOEs'' by the GOC; and the
amount of shares held by each government owner.
For each level of ownership, identification of the owners,
directors, or senior managers of the producer who were also government
or CCP officials during the POI.
A discussion of whether and how operational or strategic
decisions made by the management or board of directors are subject to
government review or approval.
A statement regarding whether any of the shares held by
government entities have any special rights, priorities, or privileges
with regard to voting rights or other management or decision-making
powers of the company; a statement regarding whether there are
restrictions on conducting, or acting through, extraordinary meetings
of shareholders; a statement regarding whether there are any
restrictions on the shares held by private shareholders; and a
discussion of the nature of the private shareholders' interests in the
company (e.g., operational, strategic, or investment-related).
In its questionnaire response on January 31, 2012, the GOC provided
incomplete ownership information for nearly all of the companies that
produced polysilicon purchased by Trina Solar and Wuxi Suntech. For the
vast majority of these producers, it provided none of the information
requested in the standard ``input producers'' appendix the Department
issues to determine the individual owners of producers and to determine
the extent of GOC control, if any, over the producers.\19\ For example,
for the vast majority of producers, it did not provide capital
verification reports, articles of association, business registrations,
or any other documents demonstrating the producers' ownership. For
other producers, it provided some information, but not enough to trace
ownership back to the ultimate individual owners, as the questionnaire
requested. Further, it provided no information at all regarding the
identification of owners, directors, or senior managers who were also
GOC or CCP officials or representatives. On February 15, 2012, we
issued a supplemental questionnaire to the GOC requesting that it
provide the remaining ownership information for the polysilicon
producers. We also requested that the GOC respond to the questions
above regarding the role, if any, that GOC and CCP officials and
representatives had as owners, directors, or senior managers of the
producers, or explain in detail the efforts it undertook to obtain the
requested information.\20\
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\19\ See the GOC's January 31, 2012 questionnaire response.
\20\ See February 15, 2012 supplemental questionnaire to the
GOC.
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In its March 1, 2012 response, the GOC did not provide any
information regarding the role of GOC and CCP officials and
representatives, nor did the GOC explain the efforts it undertook to
obtain the requested information. The GOC provided further ownership
information, but the information provided was still incomplete in that
no ownership information was provided for some companies, and, in other
instances, the ownership information provided was not sufficient to
determine the ultimate individual owners.\21\ In the GOC's submission,
several companies' ownership is deemed ``uncertain'' by the GOC itself.
The GOC informed the Department that it was still gathering the
requested ownership information and that it expected to submit this
information at a later date.\22\
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\21\ See Memorandum to the File from Emily Halle, ``Analysis of
the GOC's Responses to the Input Producers Appendix,'' March 19,
2012.
\22\ See the GOC's March 1, 2012 supplemental questionnaire
response at 34-38.
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In addition to not providing all of the requested information
regarding government and CCP officials and representatives, the GOC
also declined to answer questions about the CCP's structure and
functions that are relevant to our determination of whether the
producers of polysilicon are ``authorities'' within the meaning of
section 771(5)(B) of the Act. In its initial questionnaire response,
the GOC objected to our questions, stating that the CCP, along with
other related organizations, is not a government organization and that
the involvement of CCP officials in the management or operations of the
input producers ``does not lead to interference by the Chinese
government in the management and operation of the input supplier.''
\23\ Additionally, the GOC stated that Chinese law prohibits GOC
officials from taking positions in private companies.\24\ Furthermore,
the GOC stated that ``there is no central informational database to
search for the requested information and the industry and commerce
administration does not require the companies to provide such
information.'' \25\ As such, the GOC claimed it was unable to respond
to the Department's questions.\26\
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\23\ See the GOC's January 31, 2012 questionnaire response at
II-96.
\24\ See id. at II-98.
\25\ See id. at II-101.
\26\ See id.
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Regarding the GOC's objection to the Department's questions about
the role of CCP officials in the management and operations of the
polysilicon producers, we have explained our understanding of the CCP's
involvement in the PRC's economic and political structure in a past
proceeding.\27\ Public information suggests that the CCP exerts
significant control over activities in the PRC.\28\ This conclusion is
supported by, among other documents, a publicly available background
report from the U.S. Department of State.\29\ With regard to the GOC's
claim that Chinese law prohibits GOC officials from taking positions in
private companies, we have previously found that this particular law
does not pertain to CCP officials.\30\
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\27\ See Memorandum to the File from Emily Halle, ``Additional
Documents for Preliminary Determination,'' March 19, 2012
(Additional Documents Memorandum) at Attachments III and IV (which
include the post-preliminary analysis memorandum from certain
seamless carbon and alloy steel standard, line, and pressure pipe
and a State Department report, both recognizing the significant role
the CCP has in the GOC).
\28\ See id. at Attachment IV.
\29\ See id.; see also Certain Seamless Carbon and Alloy Steel
Standard, Line, and Pressure Pipe From the People's Republic of
China: Final Affirmative Countervailing Duty Determination, Final
Affirmative Critical Circumstances Determination, 75 FR 57444
(September 21, 2010) (Seamless Pipe Final Determination), and
accompanying Issues and Decision Memorandum (Seamless Pipe From the
PRC Decision Memorandum) at Comment 7.
\30\ See Seamless Pipe from the PRC Decision Memorandum at 16.
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Because the GOC did not respond to our requests for information on
this issue, we have no further basis for evaluating the GOC's claim
that the role of the CCP is irrelevant. Thus, the Department finds, as
it has in past investigations, that the information requested regarding
the role of CCP officials in the management and operations of the
polysilicon producers, and in the management and operations of the
producers' owners, is necessary to our determination of whether these
producers are authorities within the meaning of section 771(5)(B) of
the Act. In addition, the GOC did not promptly notify the Department,
in accordance with section 782(c), that it was unable to submit the
information requested in the requested form and manner, nor did it
suggest any alternative forms for submitting this information. Further,
the GOC did not provide any information regarding the attempts it
undertook to obtain this information, despite the fact that we provided
the GOC with a second opportunity to provide the information
[[Page 17444]]
and significant extensions for responding to both the original and
supplemental questionnaires. Therefore, we have no basis to accept the
GOC's claim that it is unable to provide this information. This is
particularly appropriate given that the GOC has informed the Department
that such information regarding the CCP is irrelevant, when the
Department has made it abundantly clear on the record of this
investigation and previous investigations that such information is
relevant to our analysis of whether input producers are ``authorities''
under the statute.
Therefore, we preliminarily determine that the GOC has withheld
necessary information that was requested of it and, thus, that the
Department must rely on ``facts otherwise available'' in making our
preliminary determination.\31\ Moreover, we preliminarily determine
that the GOC has failed to cooperate by not acting to the best of its
ability to comply with our request for information. By stating that the
requested information is not relevant, the GOC has placed itself in the
position of the Department, and only the Department can determine what
is relevant to its investigation.\32\ Furthermore, stating that it is
unable to obtain the information because the CCP is not the government
is effectively telling the Department it must reach the conclusion
based on the statements of the GOC without any of the information that
the Department considers necessary and relevant to evaluating fully the
role of the CCP in the government and in input producers. Consequently,
we determine that the GOC has withheld information and impeded the
investigation, and that an adverse inference is warranted in the
application of facts available.\33\ As AFA, we are finding that all of
the producers of polysilicon purchased by the respondents during the
POI are ``authorities'' within the meaning of section 771(5)(B) of the
Act.
---------------------------------------------------------------------------
\31\ See sections 776(a)(1) and (a)(2)(A) of the Act.
\32\ See Ansaldo Componenti, S.p.A. v. United States, 628 F.
Supp. 198, 205 (CIT 1986) (stating that `` {i{time} t is Commerce,
not the respondent, that determines what information is to be
provided''). The Court in Ansaldo criticized the respondent for
refusing to submit information which the respondent alone had
determined was not needed, for failing to submit data which the
respondent decided could not be a basis for the Department's
decision, and for claiming that submitting such information would be
``an unreasonable and unnecessary burden on the company.'' Id. See
also Essar Steel Ltd. v. United States, 721 F. Supp. 2d 1285, 1298-
99 (CIT 2010) (stating that ``{r{time} egardless of whether Essar
deemed the license information relevant, it nonetheless should have
produced it {in{time} the event that Commerce reached a different
conclusion'' and that ``Commerce, and not Essar, is charged with
conducting administrative reviews and weighing all evidence in its
calculation of a countervailing duty margin''); NSK, Ltd. v. United
States, 919 F. Supp. 442, 447 (CIT 1996) (``NSK's assertion that the
information it submitted to Commerce provided a sufficient
representation of NSK's cost of manufacturing misses the point that
`it is Commerce, not the respondent, that determines what
information is to be provided for an administrative review.''');
Nachi-Fujikoshi Corp. v. United States, 890 F. Supp. 1106, 1111 (CIT
1995) (``Respondents have the burden of creating an adequate record
to assist Commerce's determinations.'').
\33\ See section 776(b) of the Act.
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Application of AFA: The Provision of Polysilicon is Specific to Solar
Cells Producers
The Department asked the GOC to provide a list of industries in the
PRC that purchase polysilicon directly and to provide the amounts
(volume and value) purchased by each of the industries, including the
solar cells industry.\34\ The GOC did not respond as requested, but
instead simply stated that it did ``not impose any limitations on the
use of polysilicon'' and that ``polysilicon has a wide range of uses,
including but not limited to use in the solar and semiconductor
industries.'' \35\ The Department asked this question again in its
supplemental to the GOC, and again the GOC did not provide the
requested information, but simply stated once more that ``polysilicon
has a wide range of uses, including but not limited to use in the solar
and semiconductor industries.'' \36\
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\34\ See December 7, 2011 questionnaire to the GOC at II-10.
\35\ See the GOC's January 31, 2012 questionnaire response at
II-95.
\36\ See the GOC's March 1, 2012 supplemental questionnaire
response at 38.
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Therefore, we preliminarily determine that the GOC has withheld
necessary information that was requested of it and, thus, that the
Department must rely on ``facts available'' in making our preliminary
determination.\37\ Moreover, we preliminarily determine that the GOC
has failed to cooperate by not acting to the best of its ability to
comply with our request for information. Consequently, an adverse
inference is warranted in the application of facts available.\38\ In
drawing an adverse inference, we find that the GOC's provision of
polysilicon to solar cells producers is specific within the meaning of
section 771(5A) of the Act. For details regarding the remaining
elements of our analysis, see the ``Provision of Polysilicon for LTAR''
section below.
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\37\ See sections 776(a)(1)-(a)(2)(A) of the Act.
\38\ See section 776(b) of the Act.
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Application of AFA: Land Provided to Trina Solar Is Specific to the
Solar Cells Industry
In the initial questionnaire, the Department stated that if the GOC
claimed that the provision of land or land-use rights to the
respondents was not contingent upon any particular status or activity
(e.g., being a solar cells producer or residing in an industrial park),
the GOC must provide a discussion of how the prices paid by the
respondents were determined. The Department requested that the GOC
provide information on the policies of the relevant local governments
that had jurisdiction over the land and land-use rights. The GOC
responded that it ``does not direct the price of land or land-use
rights, which were established between the mandatory respondents and
local governments.''\39\ In its questionnaire response, Trina Solar
explained that its land-use rights had been purchased through a public
bidding process and that all of its land was located in an industrial
park. Therefore, in our supplemental questionnaire to the GOC, we asked
the GOC to provide information regarding the public bidding process,
demonstrating, among other things, the floor prices of these auctions,
the public notices inviting bids, and the number of bidders for all of
Trina Solar's land-use rights purchases. The GOC provided the requested
information for only one of the tracts of land provided by the local
land bureau to Trina Solar. In providing this information, the GOC
stated: ``The GOC has obtained and provides information relating to the
fifth piece of Trina's land, but does not warrant that the information
provided below regarding the fifth piece of land is representative for
the other pieces of land for Trina.''\40\
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\39\ See the GOC's January 31, 2012 questionnaire response at
II-143.
\40\ See the GOC's March 1, 2012 supplemental questionnaire
response at 42.
---------------------------------------------------------------------------
Because the GOC did not provide complete responses to either the
Department's initial or supplemental questions regarding the derivation
of the prices paid by Trina Solar for land-use rights, the Department
is unable to determine whether or not the provision of these land use
rights was specific. Therefore, we preliminarily determine that the GOC
has withheld necessary information that was requested of it and, thus,
that the Department must rely on facts available in making our
preliminary determination for all of Trina Solar's tracts. Moreover, we
preliminarily determine that the GOC has failed to cooperate by not
acting to
[[Page 17445]]
the best of its ability to comply with our request for information. The
GOC refused to provide necessary information regarding prices paid by
Trina Solar. In its first response, quoted above, the GOC appears to be
suggesting it cannot obtain information from local governments
regarding land transactions. However, such information has been
provided in other proceedings,\41\ and some information from the local
government was, in fact, provided in this investigation; e.g.,
information concerning one tract of land auctioned to Trina Solar by
the Changzhou government, and the GOC's confirmation that all tracts
sold to the respondents have been reported. In its second response, the
GOC candidly admits the inadequacy of its response when it advises the
Department that it ``does not warrant that the information provided
below regarding the fifth piece of land is representative for the other
pieces of land for Trina.'' Consequently, the GOC has not cooperated to
the best of its ability and an adverse inference is warranted in the
application of facts available.\42\ In drawing an adverse inference, we
find that the GOC's provision of land to Trina Solar is specific within
the meaning of section 771(5A) of the Act. For details regarding the
remainder of our analysis for this program, see the ``Provision of Land
for LTAR'' section below.
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\41\ See, e.g., Additional Documents Memorandum at Attachment V
(includes a public version of a memorandum describing a discussion
with county officials of respondent's land transaction as well as
the transactions of several other nearby companies that were not
even respondents in the proceeding; e.g., ``We asked for and were
provided * * * land contracts as well as the accompanying agreements
for several companies located in the New Century Industrial
Park.'').
\42\ See section 776(b) of the Act.
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Application of AFA: ``Subsidies Discovered During the Investigation''
In supplemental questionnaires to the respondents and the GOC, we
identified a number of grants that the companies appeared to have
received based on information from the financial statements and filings
with the U.S. Securities and Exchange Commission (SEC) that parties had
placed on the record. Respondents had not reported these grants nor did
they complete appropriate appendices, despite the Department's request
in its initial questionnaire that the respondents should report all
subsidies used during the POI, not merely those related to allegations
under investigation. In the supplemental questionnaire, we requested
that Trina Solar and Wuxi Suntech provide more information about these
grants and that the GOC coordinate with the companies to provide
information concerning the programs under which these grants were
provided, including complete responses to the questions on specificity
in our ``standard appendix.'' While both companies provided a listing
of their grants and the names of the projects or programs under which
they themselves classified these grants, the GOC only confirmed the
amounts of the grants reported by one respondent. The GOC did not
provide any other information but instead noted: ``The GOC objects to
inquiries concerning purported subsidies as to which no timely
allegations have been filed, and as to which the Department has not
initiated any investigation.'' \43\
---------------------------------------------------------------------------
\43\ See GOC's March 1, 2012 supplemental questionnaire response
at 55.
---------------------------------------------------------------------------
The Department, however, has the authority pursuant to section 775
of the Act to examine subsidies discovered during the course of an
investigation. Because the GOC has declined to provide information
necessary for our analysis of whether these grants are specific, we
find that the GOC has withheld information that was requested and has
impeded our investigation. Further, the GOC has not cooperated to the
best of its ability in responding to our request for information and
therefore, we find the use of AFA is warranted in determining the
specificity of the grants the respondents reported. Accordingly, as
AFA, we are finding all grant programs for these subsidies to be
specific (hereinafter, referred to as the ``Discovered Grants'' to
distinguish them from other grants provided under programs named in the
petition). A list of all Discovered Grants identified publicly by the
respondents and found to be used in the POI is included below in the
section ``Programs Preliminarily Determined to be Countervailable.''
Most grants provided prior to the POI did not pass the ``0.5 percent
test'' provided for in 19 CFR 351.524(b)(2) (discussed below) and,
thus, no benefit is allocable to the POI from these grants. A list of
the grants provided prior to the POI that can be identified publicly is
included below in the section ``Programs Preliminarily Determined to be
Not Used By Respondents.'' Because the names of some of the grants were
bracketed by the respondents, a full list of the Discovered Grants can
only be found in the business-proprietary Preliminary Calculations
Memoranda.\44\
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\44\ Memorandum to Mark Hoadley, Program Manager, ``Preliminary
Affirmative Countervailing Duty Determination: Crystalline Silicon
Photovoltaic Cells, Whether or Not Assembled Into Modules, from the
People's Republic of China; Preliminary Determination Calculations
for Wuxi Suntech Power Co., Ltd.,'' March 19, 2012, and Memorandum
to Mark Hoadley, Program Manager, ``Preliminary Affirmative
Countervailing Duty Determination: Crystalline Silicon Photovoltaic
Cells, Whether or Not Assembled Into Modules, from the People's
Republic of China; Preliminary Determination Calculations for
Changzhou Trina Solar Energy Co., Ltd.,'' March 19, 2012
(collectively, Preliminary Calculations Memoranda).
---------------------------------------------------------------------------
Subsidies Valuation Information
Period of Investigation
The POI for which we are measuring subsidies is January 1, 2010,
through December 31, 2010.\45\
---------------------------------------------------------------------------
\45\ See 19 CFR 351.204(b)(2).
---------------------------------------------------------------------------
Allocation Period
The Department normally allocates the benefits from non-recurring
subsidies over the average useful life (AUL) of renewable physical
assets used in the production of subject merchandise. The Department
finds the AUL in this proceeding to be 10 years, pursuant to 19 CFR
351.524(d)(2) and the U.S. Internal Revenue Service's 1977 Class Life
Asset Depreciation Range System.\46\ The Department notified the
respondents of the 10-year AUL in the initial questionnaire and
requested data accordingly.\47\ No party in this proceeding has
disputed this allocation period.
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\46\ See U.S. Internal Revenue Service Publication 946 (2008),
``How to Depreciate Property,'' at Table B-2: Table of Class Lives
and Recovery Periods.
\47\ As discussed above and in accordance with the Department's
practice, regardless of the AUL chosen, we will not countervail
subsidies conferred before December 11, 2011, the date of the PRC's
accession to the WTO. See, e.g., Certain Magnesia Carbon Bricks From
the People's Republic of China: Final Affirmative Countervailing
Duty Determination, 75 FR 45472 (August 2, 2010), and accompanying
Issues and Decision Memorandum at ``Subsidies Valuation
Information.''
---------------------------------------------------------------------------
Furthermore, for non-recurring subsidies, we have applied the ``0.5
percent test,'' as described in 19 CFR 351.524(b)(2). Under this test,
we divide the amount of subsidies approved under a given program in a
particular year by the relevant sales value (e.g., total sales or
export sales) for the same year. If the amount of the subsidies is less
than 0.5 percent of the relevant sales value, then the benefits are
allocated to the year of receipt rather than across the AUL.
Attribution of Subsidies
In accordance with 19 CFR 351.525(b)(6)(i), the Department normally
attributes a subsidy to the products produced by the company that
received the subsidy. However, 19 CFR 351.525(b)(6)(ii)-(v) provides
additional rules for the attribution of subsidies received by
respondents with cross-owned affiliates. Subsidies to the following
types of cross-owned affiliates
[[Page 17446]]
are covered in these additional attribution rules: (ii) Producers of
the subject merchandise; (iii) holding companies or parent companies;
(iv) producers of an input that is primarily dedicated to the
production of the subject merchandise; or (v) an affiliate producing
non-subject merchandise that otherwise transfers a subsidy to a
respondent.
Cross-Ownership
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 another corporation in essentially the
same ways it can use its own assets. 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 ways it
could use its own subsidy benefits.\48\
---------------------------------------------------------------------------
\48\ See Fabrique de Fer de Charleroi v. United States, 166 F.
Supp 2d 593, 600-604 (CIT 2001).
---------------------------------------------------------------------------
Based on information on the record, we preliminarily determine that
cross-ownership exists, in accordance with 19 CFR 351.525(b)(6)(vi),
among the following companies.
1. The Trina Solar Companies
As discussed above, we selected Changzhou Trina Solar Energy Co.,
Ltd. (i.e., Trina Solar) as a mandatory respondent. Trina Solar
reported that it is affiliated with Trina Solar (Changzhou) Science and
Technology Co., Ltd. (TST), which is a producer of subject merchandise
located in the PRC. Since both companies produce subject merchandise,
Trina Solar and TST responded collectively to the Department's
questionnaires. In the questionnaire responses, these companies stated
that they have the same board of directors and chairman. Both Trina
Solar and TST are ultimately owned by Trina Solar Limited (TSL), a
company located in the Cayman Islands that is publicly traded on the
New York Stock Exchange.\49\ Trina Solar and TST have reported that the
CEO of TSL is also their shared board chairman. Therefore, pursuant to
19 CFR 351.525(b)(6)(vi), we preliminarily determine that Trina Solar
and TST are cross-owned.\50\ Trina Solar has reported that both it and
TST are affiliated with numerous companies.\51\ While Trina Solar has
stated that, for various reasons, none of these affiliates are required
to provide questionnaire responses under the Department's attribution
and cross-ownership regulations, we will be seeking further information
and will be examining the relationship between and among Trina Solar,
TST, and its affiliated companies during the course of this
investigation. Because both Trina Solar and TST are producers of
subject merchandise, we are attributing any subsidy received by either
company to the combined sales of both companies, excluding intercompany
sales. Hereinafter, we refer to Trina Solar and TST collectively as
Trina Solar, unless otherwise indicated.
---------------------------------------------------------------------------
\49\ See Trina Solar's January 31, 2012 questionnaire response
at III-2.
\50\ The Department's regulations at 19 CFR 351.525(b)(6)(vi)
state that cross-ownership exists when one corporation can use or
direct the assets of another corporation in essentially the same way
it can use its own. Normally, however, ``this standard will be met
where there is a majority voting ownership interest between two
corporations or through common ownership of two (or more)
corporations.''
\51\ See, e.g., Trina Solar's January 31, 2012 questionnaire
response at Exhibits 1 and 2.
---------------------------------------------------------------------------
2. The Wuxi Suntech Companies
Wuxi Suntech has responded to the Department's original and
supplemental questionnaires on behalf of itself and five cross-owned
affiliates: Luoyang Suntech Power Co., Ltd. (Luoyang Suntech), Suntech
Power Co., Ltd. (Shanghai Suntech), Yangzhou Rietech Renewal Energy
Co., Ltd. (Yangzhou Rietech), Zhenjiang Huantai Silicon Science &
Technology Co., Ltd. (Zhenjiang Huantai), and Kuttler Automation
Systems (Suzhou) Co., Ltd. (Suzhou Kuttler). In its annual Form 20-F
SEC filing for the year ending December 31, 2010,\52\ Suntech Power
Holdings Co., Ltd. (Suntech Holdings), the holding company registered
in the Cayman Islands and listed on the New York Stock Exchange,
reported that it owns the majority (i.e., wholly owns or owns more than
50 percent) of the shares of Wuxi Suntech, Luoyang Suntech, Shanghai
Suntech, Yangzhou Rietech, Zhenjiang Huantai and Suzhou Kuttler. As all
these companies have common ownership through Suntech Holdings, we
preliminarily determine that Wuxi Suntech, Luoyang Suntech, Shanghai
Suntech, Yangzhou Rietech, Zhenjiang Huantai and Suzhou Kuttler are
cross-owned within the meaning of 19 CFR 351.525(b)(6)(vi). Wuxi
Suntech has reported that it is affiliated with numerous companies.
While Wuxi Suntech has stated that, for various reasons, none of these
affiliates are required to provide questionnaire responses under the
Department's attribution and cross-ownership regulations, we will be
seeking further information and will be examining the relationship
between and among these various affiliated companies during the course
of this investigation.\53\
---------------------------------------------------------------------------
\52\ See Wuxi Suntech's January 31, 2012 questionnaire response
at Exhibit 10.
\53\ See ``Programs for Which Additional Information is
Required,'' below.
---------------------------------------------------------------------------
Wuxi Suntech, Luoyang Suntech, and Shanghai Suntech are producers
of subject merchandise. Accordingly, we are attributing subsidies
received by Wuxi Suntech, Luoyang Suntech, and Shanghai Suntech to the
combined sales of the three companies, excluding inter-company sales,
in accordance with 19 CFR 351.525(b)(6)(ii). Yangzhou Rietech,
Zhenjiang Huantai and Suzhou Kuttler provide either inputs or equipment
for the production of subject merchandise. With regard to the inputs,
we preliminarily determine that these inputs are primarily dedicated to
the production of solar cells in accordance with 19 CFR
351.524(b)(6)(iv).\54\ Therefore, we are attributing subsidies received
by each of these three companies to the combined sales of the company
itself and the three producers of subject merchandise discussed above,
excluding inter-company sales, in accordance with 19 CFR
351.525(b)(6)(iv).
---------------------------------------------------------------------------
\54\ See Preliminary Calculations Memoranda.
---------------------------------------------------------------------------
Hereinafter, we refer to Wuxi Suntech, Luoyang Suntech, Shanghai
Suntech, Yangzhou Rietech, Zhenjiang Huantai, and Suzhou Kuttler
collectively as Wuxi Suntech, unless otherwise indicated.
Denominators
When selecting an appropriate denominator for use in calculating
the ad valorem subsidy rate, the Department considers the basis for the
respondent's receipt of benefits under each program. As discussed in
further detail below in the ``Programs Preliminarily Determined to be
Countervailable'' section, where the program has been found to be an
export subsidy, we used the recipient's total export sales as the
denominator (or the total combined export sales of the cross-owned
affiliates, as described above). Where the program has been found to be
countervailable as a domestic subsidy, we used the recipient's total
sales as the denominator (or the total combined sales of the cross-
owned affiliates, as described above). For a further discussion of the
denominators used,
[[Page 17447]]
see the Preliminary Calculations Memoranda.
Discount Rates for Allocating Non-Recurring Subsidies
Consistent with 19 CFR 351.524(d)(3)(i)(C) and the Department's
practice over multiple PRC CVD investigations, we have used as our
discount rates the long-term interest rate benchmarks calculated
according to the methodology described below for the years in which the
government provided non-recurring subsidies.
Interest Rate Benchmarks
1. Short-Term Interest Rate Benchmark
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,'' indicating that a benchmark must be a market-based rate.
Normally, the Department uses comparable commercial loans reported by
the company for benchmarking purposes.\55\ If the firm does not receive
any comparable commercial loans during the relevant periods, the
Department's regulations provide that we ``may use a national average
interest rate for comparable commercial loans.''\56\ The Department,
however, has determined that 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.\57\
Therefore, the benchmarks that are described under 19 CFR 351.505(a)(3)
are not appropriate options. The Department is, therefore, using an
external, market-based benchmark interest rate.
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\55\ 19 CFR 351.505(a)(3)(i).
\56\ 19 CFR 351.505(a)(3)(ii).
\57\ See CFS from the PRC Decision Memorandum at Comment 10.
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In past proceedings involving imports from the PRC, we calculated
the external benchmark using the methodology first developed in CFS
from the PRC \58\ and more recently updated in LWTP from the PRC.\59\
Under that methodology, we first determine which countries are similar
to the PRC in terms of gross national income (GNI), based on the World
Bank's classification of countries as: Low income; lower-middle income;
upper-middle income; and high income. As explained in CFS from the PRC,
this pool of countries captures the broad inverse relationship between
income and interest rates. For 2001 through 2009, the PRC fell in the
lower-middle income category.\60\ Beginning in 2010, however, the PRC
is in the upper-middle income category. Accordingly, as explained
further below, we are using the interest rates of upper-middle income
countries to construct the 2010 benchmark.
---------------------------------------------------------------------------
\58\ Id.
\59\ See 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
8-10.
\60\ See The World Bank Country Classification, http://econ.worldbank.org/.
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After identifying the appropriate interest rates, the next step in
constructing the benchmark has been to incorporate an important factor
in interest rate formation, the strength of governance. These
indicators measure the quality of the countries' institutions and they
have been built into the analysis by using a regression analysis that
relates the interest rates to the governance indicators. In each of the
years from 2001-2009, the results of the regression analysis reflected
the intended, common sense result: stronger institutions meant
relatively lower interest rates, while weaker institutions meant
relatively higher interest rates. For 2010, however, the regression
does not yield that outcome for the PRC's income group.
This contrary result for a single year in ten does not lead us to
reject the strength of governance as a determinant of interest rates.
As confirmed by the Federal Reserve, ``there is a significant negative
correlation between institutional quality and the real interest rate,
such that higher quality institutions are associated with lower real
interest rates.'' \61\ However, for 2010, incorporating the governance
indicators in our analysis does not make for a better benchmark.
Therefore, while we have continued to rely on the regression-based
analysis used since CFS from the PRC to compute the benchmarks for
loans taken out prior to the POI, for the 2010 benchmark we are using
an average of the interest rates of the upper-middle income countries.
Based on our experience for the 2001-2009 period, in which the average
interest rate of the lower-middle income group did not differ
significantly from the benchmark rate resulting from the regression for
that group, use of the average interest rate for 2010 does not
introduce a distortion into our calculations.
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\61\ See Additional Documents Memorandum at Attachment I (a
Department memorandum entitled ``Consultations with Government
Agencies'').
---------------------------------------------------------------------------
With the following exceptions, we have used the interest and
inflation rates reported in the International Financial Statistics
(IFS), collected by the International Monetary Fund, for the countries
identified as ``upper middle income'' by the World Bank for 2010 and
``lower-middle income'' for 2001-2009.\62\ First, we did not include
those economies that the Department considered to be NMEs for
antidumping purposes during 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 lending and inflation rates to the 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, if a country reports a deposit
rate, not a lending rate, or reports dollar-denominated rates, not
rates in its local currency, the rate for such a country has been
excluded. Finally, for each year for which the Department calculated a
benchmark rate, we have also excluded any countries with aberrational
or negative real interest rates for the year in question.\63\ Because
the resulting interest rate benchmarks are net of inflation, we
adjusted the benchmarks to include an inflation component.
---------------------------------------------------------------------------
\62\ As discussed below, short-term loan benchmarks are the
basis for long-term loan benchmarks. Therefore, we calculated short-
term loan benchmarks for several years other than those in which
short-terms loans were provided that were outstanding in the POI.
\63\ Because we are countervailing loans provided in a number of
years, for the exact details regarding the countries excluded in
each year, see Memorandum regarding ``Preliminary Affirmative
Countervailing Duty Determination: Crystalline Silicon Photovoltaic
Cells, Whether or Not Assembled Into Modules, from the People's
Republic of China--Preliminary Benchmark Memorandum,'' March 19,
2012 (Preliminary Benchmark Memorandum).
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For loans denominated in U.S. dollars, we are again following the
methodology developed over a number of successive PRC investigations.
Specifically, for U.S. dollar loans, the Department used as a benchmark
the one-year dollar London Interbank Offering Rate (LIBOR), plus the
average spread between LIBOR and the one-year corporate bond rates for
companies with a BB rating. Likewise, for loans denominated in other
foreign currencies, we used as a benchmark the one-year LIBOR for the
given currency plus the average spread between the LIBOR rate and the
one-year corporate bond rate for companies with a BB rating.
[[Page 17448]]
2. Long-Term Interest Rate
The lending rates reported in the IFS represent short-term and
medium-term lending, and there are not sufficient, publicly available
long-term interest rate data upon which to base a robust benchmark for
long-term loans. To address this problem, the Department previously
developed an adjustment to the short-term rates described above to
convert them to long-term rates using BB-rated corporate bond
rates.\64\ In subsequent CVD investigations, this long-term conversion
markup was revised to equal 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.\65\ The
resulting inflation-adjusted lending rates, which we are also using as
discount rates, are provided in the Preliminary Benchmark
Memorandum.\66\ We continue to use the same methodology for this case.
---------------------------------------------------------------------------
\64\ See, e.g., 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) and
accompanying Issues and Decision Memorandum at 8.
\65\ See Citric Acid and Certain Citrate Sales From the People's
Republic of China: Final Affirmative Countervailing Duty
Determination, 74 FR 16836 (April 13, 2009) and accompanying Issues
and Decision Memorandum at Comment 14.
\66\ See Preliminary Benchmark Memorandum at Attachment 12.
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Land Benchmark
Section 351.511(a)(2) of the Department's regulations sets forth
the basis for identifying comparative benchmarks for determining
whether a government good or service is provided for LTAR. These
potential benchmarks are listed in hierarchical order by preference:
(1) Market prices from actual transactions within the country under
investigation; (2) world market prices that would be available to
purchasers in the country under investigation; or (3) an assessment of
whether the government price is consistent with market principles. As
explained in detail in previous investigations, the Department cannot
rely on the use of so called ``first-tier'' and ``second-tier''
benchmarks to assess the benefits from the provision of land for LTAR
in the PRC.\67\
---------------------------------------------------------------------------
\67\ See, e.g., Laminated Woven Sacks From the People's Republic
of China: Preliminary Affirmative Countervailing Duty Determination;
Preliminary Affirmative Determination of Critical Circumstances, In
Part; and Alignment of Final Countervailing Duty Determination With
Final Antidumping Duty Determination, 72 FR 67893, 67906-08
(December 3, 2007) (LWS Preliminary Determination), unchanged in
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).
---------------------------------------------------------------------------
Consistent with the prior determinations, we have preliminarily
determined that measuring the extent by which land is provided for LTAR
is best achieved by comparing prices for land-use rights in the PRC
with comparable market-based prices in a country at a comparable level
of economic development that is within the geographic vicinity of the
PRC. In previous PRC investigations,\68\ we concluded that the most
appropriate benchmark for the respondents' land-use rights were sales
of certain industrial land plots in industrial estates, parks, and
zones in Thailand. We relied on prices from a real estate market report
on Asian industrial property that was prepared outside the context of
any Department proceeding by an independent and internationally
recognized real estate agency with a long-established presence in Asia.
In relying on a land benchmark from Thailand, we noted that the PRC and
Thailand had similar levels of per capita GNI and that population
density in the PRC and Thailand are roughly comparable. Additionally,
we noted that producers consider a number of markets, including
Thailand, as options for diversifying production bases in Asia beyond
the PRC. Therefore, we concluded, the same producers may compare prices
across borders when deciding what land to buy. We cited to a number of
sources which named Thailand as an alternative production base to the
PRC.\69\
---------------------------------------------------------------------------
\68\ See LWS Preliminary Determination, 72 FR at 67909.
\69\ See Certain New Pneumatic Off-the-Road Tires from the
People's Republic of China: Preliminary Affirmative Countervailing
Duty Determination, 72 FR 71360, 71368 (December 17, 2007).
---------------------------------------------------------------------------
For this investigation, we have obtained updated data from the same
independent and internationally recognized real estate agency for all
four quarters of 2010. These are updated versions of the same reports,
relied on in the prior determinations, which include industrial land
values for plots in industrial estates, parks, and zones in Thailand,
the Philippines, and other Asian countries. We are placing all four of
the Asian Marketview reports, which are publicly available on the
Internet, on the record of this investigation.\70\ In evaluating which
of these locations is most appropriate to use as the source of the
benchmark, we have focused on Thailand, consistent with the prior
determinations.
---------------------------------------------------------------------------
\70\ See Preliminary Benchmark Memorandum at Attachment 5.
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Based on our analysis, we preliminarily determine that a simple
average of all land values for industrial property in Thailand provides
the closest match, among options on the record, to the PRC in terms of
per capita GNI and population density. The per capita GNI of Thailand
is $3,760, compared to $3,590 for the PRC, while the per capita GNI for
the Philippines is $2,840.\71\ (Asian Marketview includes data for
other Asian nations, but all have either higher incomes or are
considered NMEs by the Department; e.g., Singapore and Vietnam.) For
2010, Thailand is also a closer match in terms of population density
with 135 people per square kilometer (psk) compared to the PRC's 140
people psk (the Philippines has a population density of 311 psk).\72\
The calculated average of the rates for Thailand is $8.21 per square
foot.\73\ As explained in the Preliminary Benchmark Memorandum, the
Department is deflating this value to calculate the benchmark for any
land that may have been purchased in 2008 and 2009.
---------------------------------------------------------------------------
\71\ All GNI figures are from the World Development Report 2011,
published by the World Bank.
\72\ See Additional Documents Memorandum at Attachment II (which
includes relevant sections of the United Nation's World Population
Prospects: The 2010 Revision).
\73\ See Preliminary Benchmark Memorandum at Attachment 7.
---------------------------------------------------------------------------
We are continuing to use the 2007 benchmark calculated in the
investigations of laminated woven sacks and new pneumatic off-the-road
tires cited above as the land benchmark for any land that may have been
purchased in 2007 or earlier years. As mentioned, this benchmark was
calculated using the same source, Asian Marketview,\74\ discussed
above, and also is a simple average of industrial land values reported
in Asian Marketview for Thailand. The analysis relied upon in
determining that this figure was the most appropriate benchmark for PRC
land-use rights in 2007 can be found in those prior determinations.\75\
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\74\ The report, published by CB Richard Ellis, is currently
entitled Asian Marketview, but older versions were entitled Asian
Marketwatch.
\75\ See, e.g., LWS Preliminary Determination, 72 FR at 67909.
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Polysilicon Benchmark
We have selected the benchmark for measuring the adequacy of the
remuneration for polysilicon in accordance with 19 CFR 351.511(a)(2).
In its supplemental questionnaire response, the GOC confirmed that
there were 47 producers in the PRC of polysilicon during the POI, but
the GOC did not provide the production volume
[[Page 17449]]
for any of these polysilicon producers, claiming it was prohibited from
providing such information.\76\ The GOC provided the names of nine
polysilicon producers in which it maintains an ownership or management
interest according to the National Bureau of Statistics of the GOC.\77\
The mandatory respondents purchased polysilicon from 30 polysilicon
producers during the POI, two of which were included in the list of
producers in which the GOC maintains an ownership or management
interest.\78\
---------------------------------------------------------------------------
\76\ See the GOC's March 1, 2012 supplemental questionnaire
response at 36.
\77\ See the GOC's January 31, 2012 questionnaire response at
II-91.
\78\ See Trina Solar's January 31, 2012 questionnaire response
at Exhibit 27; Wuxi Suntech's January 31, 2012 questionnaire
response at Exhibit S-17; Zhenjiang Huantai's February 27, 2012
questionnaire response at Exhibit S-19; and Yangzhou Rietech's
January 31, 2012 questionnaire response at Exhibit 5.
---------------------------------------------------------------------------
As explained in the ``Application of AFA: Polysilicon Producers are
`Authorities''' section above, the Department has preliminarily
determined that all the producers of polysilicon purchased by the
respondents during the POI are ``authorities'' within the meaning of
section 771(5)(B) of the Act. Because the GOC did not provide the
production volumes for any of the polysilicon producers in the PRC, the
Department cannot determine, on the basis of production volumes, what
percentage of total domestic production or total domestic consumption
is accounted for by the producers determined to be ``authorities.''\79\
Therefore, we have determined whether polysilicon consumption in the
PRC is dominated by the GOC based on the number of producers that are
``authorities.'' In addition to the 30 producers determined to be
``authorities,'' the GOC reports it maintains an ownership or
management interest in another seven,\80\ bringing to 37 the number of
producers through which the GOC influences and distorts the domestic
market for polysilicon, out of a total universe of 47 producers in the
PRC.
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\79\ See section 776(b) of the Act.
\80\ The GOC reported that it maintains an ownership or
management interest in nine producers. However, two of these
companies were among the 30 already analyzed above.
---------------------------------------------------------------------------
Therefore, we determine that the GOC is the predominant provider of
polysilicon in the PRC and that its significant presence in the market
distorts all transaction prices. As such, we cannot rely on domestic
prices in the PRC as a ``tier-one'' benchmark. For the same reasons, we
determine that import prices into the PRC cannot serve as a benchmark.
Turning to tier-two benchmarks, i.e., world market prices available to
purchasers in the PRC, pursuant to 19 CFR 351.511(a)(2)(ii), Petitioner
submitted monthly world market prices for polysilicon.\81\ Based on our
review of the data, we are preliminarily relying on these world market
prices, from Photon Consulting ``Silicon Price Index,'' as a benchmark
price for polysilicon.
---------------------------------------------------------------------------
\81\ See October 19, 2011 CVD Petition at 40, Exhibit 154.
---------------------------------------------------------------------------
We note that Petitioner submitted alternative polysilicon benchmark
data in its pre-preliminary determination comments. It argued that
these data were more appropriate because they represent values for
long-term contracts in 2008, which might cover shipments in 2010,
according to the SEC filings of Trina Solar. Trina Solar's SEC filings,
however, state that it purchased polysilicon in 2007 and 2008 ``through
a combination of multi-year supply agreements, short-term supply
arrangements and spot market purchases.''\82\ In addition, the Web site
for Photon Consulting states that its ``Silicon Price Index'' is a
``weighted index in which silicon prices reported by each survey
participant are weighted to reflect the nuances found in the length of
reported silicon contracts, prepayments and price digression.''\83\
Therefore, it appears that the Photon Consulting price index is the
most appropriate match to Trina Solar's purchases.\84\ We intend,
however, to gather information concerning the exact structure of the
respondents' purchases of polysilicon to evaluate whether their
purchase terms indicate that the use of a different benchmark is more
appropriate.
---------------------------------------------------------------------------
\82\ See Trina Solar's February 27, 2012 supplemental
questionnaire response at Exhibit 16-18.
\83\ See Preliminary Benchmark Memorandum at Attachment 2.
\84\ There appears to be no information on the record indicating
whether Suntech purchases polysilicon through short-term or long-
term contracts, the spot market, or a mixture of one or more of
these.
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Terminated Programs
The GOC reported that six programs used by the respondents have
been terminated. However, the GOC did not request a program wide change
adjustment to the cash deposit rate under 19 CFR 351.526(a), nor did it
provide all of the documentation necessary to conduct such an
evaluation. In addition, several of the programs the GOC claims were
terminated have residual benefits in the POI. For example, certain
parties continue to enjoy benefits from the ``Two Free, Three Half''
income tax program for Foreign Invested Enterprises (FIEs). Therefore,
we are not making any adjustments to the cash deposit rates in this
preliminary determination for terminated programs.
Analysis of Programs
Based upon our analysis of the petition, the responses to our
questionnaires, and other information on the record, we preliminarily
determine the following.
I. Programs Preliminarily Determined To Be Countervailable
A. Golden Sun Demonstration Program
The Golden Sun Demonstration Program (Golden Sun program) is a
combination of financial assistance, technological support, and market
approaches developed to accelerate the industrialization and
development of the PRC's domestic photovoltaic power industry and to
promote the progress of photovoltaic power generation. According to the
GOC, the central government has allocated renewable energy funds to
support the implementation of the Golden Sun program under Article 20
of the GOC's ``Renewable Energy Law.'' As detailed in the ``Notice
concerning the Implementation of the Golden Sun Demonstration
Project,'' (CaiJian {2009{time} No. 397), the program was established
in 2009, and was designed to provide one-time assistance to recipients
over the course of its two-year term.
The GOC states that the Golden Sun program was created to assist
constructive investment in photovoltaic electricity-generation
projects, with the goal of narrowing the gap between the costs of
photovoltaic electricity generation and the costs of fossil fuel
electricity generation. Financial assistance through this program
includes support for, inter alia, the following: (1) The use of large-
scale mining, commercial enterprises, and public welfare institutions
to construct the user's side of the electrical grid for photovoltaic
power generation demonstration projects; (2) increasing the power
supply capacity in remote locations; and (3) construction of large-
scale grid-connected photovoltaic power generation demonstration
projects in solar energy rich regions.
To be eligible for financial support for this program, the GOC
states that projects must: (1) Be included in the Golden Sun program
within the local geographic region; (2) have an installed capacity of
not less than 300 kWh; (3) have a construction period of not more than
one year, and an operation period
[[Page 17450]]
of not less than 20 years; (4) the total assets of the owner hosting
the project must not be less than 100 million Yuan, and its capital
must not be less than 30 percent of the total investment; and (5) the
photovoltaic project must be technologically advanced, and the
project's host must be able to operate and protect the project. Project
applications are then reviewed by the GOC's Ministry of Finance,
Ministry of Science, and the National Energy Board. According to the
GOC, grid-connected photovoltaic power generation projects can receive
up to 50 percent of their total investment from the GOC. For
independent photovoltaic power generation systems located in distant
areas without an established electrical grid, project operators can
receive up to 70 percent of their total investment from the GOC.
To receive funding under this program, the GOC states that an
operator of an eligible project must complete any preparation work
beforehand, which includes inviting bids for necessary equipment,
finalizing plans for the project's construction, and submitting
application documents to the GOC. Once these documents are approved by
the GOC, the Ministry of Finance will allocate the funds to the
project's operator.
Wuxi Suntech reported that it did not participate in this program
in 2009 (the year this program was established) or during the POI.
Trina Solar, however, reported that it received a grant during the POI
from the Jiangsu Reform and Development Committee for installing a
photovoltaic energy-generating project.\85\ We preliminarily determine
that the grant received by Trina Solar through the Golden Sun program
confers a countervailable subsidy. The grant is a financial
contribution pursuant to section 771(5)(D)(i) of the Act and provides a
benefit in the amount of the grant provided, pursuant to 19 CFR
351.504(a). We find that grants from this program are specific as a
matter of law to certain enterprises, namely those involved in the
construction of solar-powered projects, pursuant to section
771(5A)(D)(i) of the Act. In its March 1, 2012 supplemental
questionnaire, the GOC contends that the Golden Sun program is similar
to several programs alleged in the CVD petition for wind towers from
the PRC that the Department determined not to investigate. According to
the GOC, the Department determined the benefit element of a subsidy had
not been demonstrated, despite the petition's allegation that wind
tower producers benefitted through an increase in demand caused by the
GOC's financial assistance to the operators of wind tower projects.\86\
Thus, the GOC contends that the Department should discontinue its
investigation of the Golden Sun program because it does not benefit
Chinese producers of solar cells, only those involved in the
construction of solar power projects.\87\ However, in the instant
investigation, it is not necessary to address this argument as Trina
Solar benefitted directly from the program as the recipient of the
grant.
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\85\ Besides this single grant, other grants have been approved
for respondents but none resulted in disbursements during the POI.
\86\ See Utility Scale Wind Towers From the People's Republic of
China: Initiation of Countervailing Duty Investigation, 77 FR 3447
(January 24, 2012), and accompanying Initiation Checklist at 38-39;
see also the GOC's March 1, 2012 supplemental questionnaire response
at 3.
\87\ See the GOC's March 1, 2012 supplemental questionnaire
response at 4.
---------------------------------------------------------------------------
In accordance with 19 CFR 351.504(c)(1) and 19 CFR 351.524(b)(2),
we have treated the grant as a non-recurring subsidy and performed the
``0.5 percent test'' for the year the grant was provided to Trina
Solar. Specifically, we divided the total amount of the grant by the
appropriate total sales denominator, as discussed in the ``Subsidies
Valuation Information'' section above, and in the Preliminary
Calculations Memoranda. Because the resulting percentage was less than
0.5 percent, we have expensed the full amount of the grant in the POI.
To determine Trina Solar's subsidy rate from the grant, we divided the
benefit expensed in the POI by the appropriate total sales denominator,
as discussed in the ``Subsidies Valuation Information'' section above,
and in the Preliminary Calculations Memoranda. On this basis, we
preliminarily determine a countervailable subsidy rate of 0.09 percent
ad valorem for Trina Solar.
B. Preferential Policy Lending
Petitioner alleged that the GOC subsidizes solar cells producers
through the provision of policy loans. According to Petitioner, the GOC
provides for preferential policy lending to solar cells producers
through the Renewable Energy Law, the Medium- and Long-Term Development
Plan for Renewable Energy in China, the ``Interim Measures for the
Administration of Financial Subsidy Fund for Renewable and Energy
Saving-Building Materials,'' and a ``multitude of other Chinese central
government programs and measures, notably including the PRC's Twelfth
Five-Year Plan.''
Both respondents reported having loans outstanding during the POI.
The Department finds that the loans to both respondents are
countervailable. The information on the record indicates the GOC has
placed great emphasis on targeting the renewable energy industry,
including solar cells producers, for development in recent years.\88\
The Renewable Energy Law, in Article 25, calls specifically for the use
of loans in implementing the GOC's plans for renewable energy:
``Financial institutions may offer favorable loans with a financial
discount for renewable energy development and utilization projects that
are listed in the renewable energy industry development guidance
catalogue and meet credit requirements.'' The catalogue referenced in
the Renewable Energy Law includes an entire section for solar power
projects. Among those projects, most, if not all, of which would
require the use of solar cells, are three projects specifically for the
production of solar cells, including subject merchandise: ``Single
crystal silicon solar energy cell and multi-crystal silicon solar
energy cell'' (project 39). As Petitioner notes, the Renewable Energy
Law is noted by Trina Solar in its 2010 SEC filing (form 20-F). On page
49 of its SEC filing, Trina Solar notes that the law ``provides
financial incentives, such as national funding, preferential loans and
tax preferences for the development of renewable energy projects.''
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\88\ In addition to the documents noted by Petitioner, referred
to above, concern with the solar cells industry is demonstrated in
the National Medium- and Long-Term Program for Science and
Technology Development (the GOC's January 31, 2012 questionnaire
response at Exhibit O-II-A-6-b) and the Interim Measures for Special
Fund Management for the Development of Renewable Energies (the GOC's
January 31, 2012 questionnaire response at Exhibit O-II-A-6-d), and
specific projects undertaken pursuant to these plans, laws, and
measures, such as the Golden Sun program (O-II-A-6-h). This concern
has culminated in the recently issued five-year plan for the Solar
Cells Industry (for the 12th planning period, beginning after the
end of the POI), the first five-year plan issued for this industry.
---------------------------------------------------------------------------
Renewable energy is also among the projects listed in the
``Directory Catalogue on Readjustment of Industrial Structure'' of the
National Development and Reform Commission (NDRC) (Catalogue No. 40),
which contains a list of encouraged projects the GOC develops through
loans and other forms of assistance,\89\ and which the Department has
relied upon in prior specificity determinations. Catalogue
[[Page 17451]]
No. 40 includes an encouraged project (number IV(5)) for: ``Development
and utilization of wind energy power to generate electricity and such
renewable resources as solar energy, geothermal energy, ocean energy,
biomass energy and etc.'' \90\
---------------------------------------------------------------------------
\89\ See, e.g., 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 Final
Determination) and accompanying Issues and Decision Memorandum at
``Government Policy Lending'' section.
\90\ Additional Documents Memorandum (which includes the
Directory Catalogue on Readjustment of Industrial Structure (2005
version)) at Attachment VI.
---------------------------------------------------------------------------
Therefore, given the evidence demonstrating the GOC's objective of
developing the renewable energy sector, and solar cells producers in
particular, through loans and other financial incentives, we
preliminarily determine there is a program of preferential policy
lending specific to solar cells producers, within the meaning of
section 771(5A)(D)(i) of the Act. We also preliminarily find that loans
from state owned commercial banks (SOCBs) under this program constitute
financial contributions, pursuant to sections 771(5)(B)(i) and
771(5)(D)(i) of the Act, because SOCBs are ``authorities.'' \91\ The
loans 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.\92\ To calculate the benefit from this
program, we have used the benchmarks discussed above under the
``Subsidy Valuation Information'' section.\93\ On this basis, we
preliminarily determine a subsidy rate of 0.84 percent ad valorem for
Trina Solar and 1.23 percent ad valorem for Wuxi Suntech.
---------------------------------------------------------------------------
\91\ See, e.g., Tires Final Determination, and accompanying
Issues and Decision Memorandum at Comment E2.
\92\ See section 771(5)(E)(ii) of the Act.
\93\ See also 19 CFR 351.505(c).
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C. Provision of Polysilicon for LTAR
Petitioners have alleged that the respondents received
countervailable subsidies in the form of the provision of polysilicon
for LTAR. For the reasons explained in the ``Use of Facts Otherwise
Available and Adverse Inferences'' section above, we are basing our
determination regarding the government's provision of polysilicon, in
part, on AFA. Specifically, we have determined as AFA that the
producers of the polysilicon purchased by both respondents are
``authorities'' within the meaning of section 771(5)(B) of the Act and,
as such, the provision of polysilicon constitutes a financial
contribution under section 771(5)(D)(iii) of the Act. Further, we have
determined as AFA that the provision of polysilicon at LTAR is specific
to solar cells producers. Lastly, a benefit is being conferred because
the polysilicon is being provided for LTAR, as explained below.
As discussed above under the ``Subsidies Valuation Information''
section, the Department is selecting for polysilicon benchmarks
contemporaneous monthly world market prices from Photon Consulting's
``Silicon Price Index.'' This information was placed on the record of
this investigation in the petition. The Department has adjusted the
benchmark price to include delivery charges, import duties, and value
added tax (VAT) pursuant to 19 CFR 351(a)(2)(iv).\94\ Regarding
delivery charges, we have included ocean freight and the inland freight
charges that would be incurred to deliver polysilicon to respondents'
production facilities. We have added import duties as reported by the
GOC, and the VAT applicable to imports of polysilicon into the PRC,
also as reported by the GOC.\95\ In calculating VAT, we applied the
applicable VAT rate to the benchmark after first adding amounts for
ocean freight and import duties. We have compared these monthly
benchmark prices to the respondents' reported purchase prices for
individual transactions, including VAT and delivery charges.
---------------------------------------------------------------------------
\94\ The Department has concluded that these data do not already
include delivery charges. See Preliminary Benchmark Memorandum.
\95\ See Preliminary Benchmark Memorandum for a full explanation
of how the benchmarks were adjusted.
---------------------------------------------------------------------------
Based on this comparison, we preliminarily determine that
polysilicon was provided for LTAR and that a benefit exists for each
respondent in the amount of difference between the benchmark prices and
the prices each respondent paid.\96\ We divided the total benefits for
each respondent by the appropriate total sales denominator, as
discussed in the ``Subsidies Valuation Information'' section above, and
in the Preliminary Calculations Memoranda. On this basis, we
preliminarily determine a countervailable subsidy rate of 1.07 percent
ad valorem for Trina Solar and 0.35 percent ad valorem for Wuxi
Suntech.
---------------------------------------------------------------------------
\96\ See 19 CFR 351.511(a).
---------------------------------------------------------------------------
D. Provision of Land for LTAR
Petitioner has alleged that Trina Solar and Wuxi Suntech benefited
from the provision of land to solar cells producers by the GOC at
either a discounted rate or for free. The sale of land-use rights
constitutes a financial contribution from a government authority in the
form of providing goods or services pursuant to section 771(5)(D)(iii)
of the Act. As discussed above in the ``Application of AFA: Land
Provided to Trina Solar is Specific to the Solar Cells Industry''
section, the Department has preliminarily determined as AFA that the
provision of land to Trina Solar was specific.
In order to calculate the benefit, we first multiplied the Thailand
industrial land benchmarks discussed above under the ``Land Benchmark''
section, by the total area of Trina Solar's countervailed tracts. As
noted above, we have benchmarks for 2007 and 2010. For other years in
which land was provided, we deflated either the 2007 or 2010 figure,
depending on which was closer in time to the year of the relevant land-
use agreement. We then subtracted the price actually paid for each
tract to derive the total unallocated benefit. We next conducted the
``0.5 percent test'' of 19 CFR 351.524(b)(2) for the year of the
relevant land-use agreement by dividing the total unallocated benefit
for each tract by the appropriate sales denominator. If more than one
tract was provided in a single year, we combined the total unallocated
benefits from the tracts before conducting the ``0.5 percent test.'' As
a result, we found that the benefits were greater than 0.5 percent of
relevant sales and that allocation was appropriate for all tracts. We
allocated the total unallocated benefit amounts across the terms of the
land-use agreements, using the standard allocation formula of 19 CFR
351.524(d), and determined the amount attributable to the POI. We then
summed all of the benefits attributable to the POI and divided this
amount by the appropriate total sales denominator, as discussed in the
``Subsidies Valuation Information'' section above, and in the
Preliminary Calculations Memoranda, to derive a subsidy rate of 0.63
percent ad valorem for Trina Solar.
As discussed below under the section ``Programs for Which
Additional Information is Required,'' we will be requesting additional
information regarding land-use rights provided to Wuxi Suntech.
E. ``Two Free, Three Half'' Program for Foreign-Invested Enterprises
Under Article 8 of the ``Income Tax Law of the People's Republic of
China for Enterprises with Foreign Investment and Foreign
Enterprises,'' an FIE that is ``productive'' and scheduled to operate
for more than ten years may be exempted from income tax in the first
two years of profitability and pay income taxes at half the standard
rate for the next three years. According to the GOC, the program was
terminated effective January 1, 2008, by the Enterprise Income Tax Law,
but
[[Page 17452]]
companies already enjoying the preference were permitted to continue
paying taxes at reduced rates. Trina Solar did not claim these tax
exemptions during the POI. However, two of Wuxi Suntech's cross-owned
affiliated companies, Luoyang Suntech and Zhenjiang Huantai, paid taxes
at a reduced rate under this program during the POI.
The Department has previously found the ``Two Free, Three Half''
program to confer a countervailable subsidy.\97\ Consistent with the
earlier cases, we preliminarily determine that the ``Two Free, Three
Half'' income tax exemption/reduction 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
recipient in the amount of the tax savings.\98\ We also determine that
the exemption/reduction afforded by the program is limited as a matter
of law to certain enterprises, i.e., productive FIEs, and, hence, is
specific under section 771(5A)(D)(i) of the Act.
---------------------------------------------------------------------------
\97\ See CFS from the PRC and CFS from the PRC Decision
Memorandum at 11-12; see also Seamless Pipe Final Determination, and
Seamless Pipe from the PRC Decision Memorandum at 25.
\98\ See section 771(5)(D)(ii) of the Act and 19 CFR
351.509(a)(1).
---------------------------------------------------------------------------
To calculate the benefit, we treated the income savings by Luoyang
Suntech and Zhenjiang Huantai as a recurring benefit, consistent with
19 CFR 351.524(c)(1). To compute the amount of the tax savings, we
compared the two companies' tax rates to the rates they would have paid
in the absence of the program. We divided Luoyang Suntech's and
Zhenjiang Huantai's tax savings for their returns filed during the POI
by the appropriate total sales denominator, as discussed in the
``Subsidies Valuation Information'' section above, and in the
Preliminary Calculations Memoranda, in accordance with 19 CFR
351.525(b)(6)(ii) and 19 CFR 351.525(b)(6)(iv), respectively. We then
summed the two companies' ad valorem rates to compute Suntech's total
ad valorem rate under this program. On this basis, we preliminarily
determine a countervailable subsidy rate for Wuxi Suntech of 0.13
percent ad valorem for this program.
F. Preferential Tax Programs for High or New Technology Enterprises
\99\
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\99\ The Department notes we initiated an investigation of a
program entitled, ``Preferential Tax Programs for FIEs Recognized as
High or New Technology Enterprises.'' See Initiation Notice and
accompanying Initiation Checklist at 20. The GOC states that this
income tax reduction program for FIEs was terminated, but that a
replacement program was created in 2008 by the Enterprise Income Tax
Law of the PRC. See the GOC's January 31, 2012 questionnaire
response at II-65.
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According to the GOC, this program became effective in January 2008
as part of the Enterprise Income Tax Law of the PRC (Decree 63 of the
PRC, 2007). Article 28.2 of the Enterprise Income Tax Law of the PRC
provides for the reduction of the income tax rate to 15 percent, from
25 percent, for enterprises that are recognized as high or new
technology enterprises (HNTEs), regardless of whether the enterprise is
an FIE or domestic company. The ``Circular of the Ministry of Science
and Technology, the Ministry of Finance and the State Administration of
Taxation on Printing and Distributing the Administrative Measures for
Certification of New and High Technology Enterprises'' (Guo Ke Fa Huo
{2008{time} No. 172), of April 14, 2008, identifies HNTEs as
enterprises that have been registered for more than one year within the
PRC and that have been engaged in continuous research and development
and in the transformation of their scientific and technological
achievements. This circular also specifically identifies the HNTEs that
qualify for key state support, which includes renewable, clean energy
technologies such as solar photovoltaic technologies.\100\
---------------------------------------------------------------------------
\100\ This program was described in detail in the GOC's March 1,
2012 supplemental questionnaire response at 23-24.
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To apply as an HNTE, Chinese companies must complete a self-
assessment process regarding whether they can meet the criteria for an
HNTE, and they must submit the requisite application form, business
license and tax registration forms, and documents that establish that
the company has been conducting high technological or innovative
activities. Enterprises that meet the eligibility criteria will be
certified as HNTEs by the approving GOC authority, and this designation
remains effective for three years. Both Trina Solar and Wuxi Suntech
were recognized as HNTEs by the GOC during the POI, and their income
tax rates were therefore reduced from 25 percent to 15 percent for tax
returns filed during the POI as a result.
We preliminarily determine that the reduction in income tax paid by
HNTEs under this program confers a countervailable subsidy. The income
tax reduction is a financial contribution in the form of revenue
forgone by the government, and it provides a benefit to the recipients
in the amount of the tax savings, pursuant to section 771(5)(D)(ii) of
the Act and 19 CFR 351.509(a)(1). We also preliminarily determine that
the income tax reduction afforded by this program is limited as a
matter of law to certain enterprises, i.e., HNTEs, and, thus, is
specific under section 771(5A)(D)(i) of the Act.
To calculate the benefit from this program to Trina Solar and Wuxi
Suntech, we treated the income tax reductions claimed by Trina Solar
and Wuxi Suntech as recurring benefits, consistent with 19 CFR
351.524(c)(1). To compute the amount of the tax savings, we compared
their tax rates (15 percent) to the rate that would have been paid by
Trina Solar and Wuxi Suntech otherwise (the standard income tax rate of
25 percent). We multiplied the difference by the taxable income of each
company. We then divided these amounts by the appropriate total sales
denominator, as discussed in the ``Subsidies Valuation Information''
section above, and in the Preliminary Calculations Memoranda. On this
basis, we preliminarily determine a countervailable subsidy rate of
1.25 percent ad valorem for Trina Solar and 0.28 percent ad valorem for
Wuxi Suntech.
G. Import Tariff and Value Added Tax (VAT) Exemptions for Use of
Imported Equipment
Enacted in 1997, the ``Circular of the State Council on Adjusting
Tax Policies on Imported Equipment'' (GUOFA No. 37), exempts both FIEs
and certain domestic enterprises from VAT and tariffs on imported
equipment used in projects identified in related catalogues. The NDRC,
or its provincial branch, provides a certificate to enterprises that
receive the exemption. The objective of the program is to encourage
foreign investment and to introduce foreign advanced technology
equipment and industry technology upgrades. Trina Solar, Wuxi Suntech,
Luoyang Suntech, Shanghai Suntech, Zhenjiang Huantai, and Suzhou
Kuttler received VAT and tariff exemptions under this program as FIEs.
The Department has previously found VAT and tariff exemptions under
this program to confer countervailable subsidies.\101\
---------------------------------------------------------------------------
\101\ See CFS from the PRC Decision Memorandum at 13-14; see
also Seamless Pipe Final Determination, and Seamless Pipe from the
PRC Decision Memorandum at 23-25.
---------------------------------------------------------------------------
Consistent with the earlier cases, we preliminarily determine that
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 they provide a benefit to
the recipient in the amount of VAT and tariff savings.\102\ We also
[[Page 17453]]
preliminarily determine that the VAT and tariff exemptions afforded by
the program are specific under section 771(5A)(D)(iii)(I) of the Act
because the program is limited to certain enterprises, i.e., FIEs and
domestic enterprises involved in ``encouraged'' projects.\103\
---------------------------------------------------------------------------
\102\ See section 771(5)(D)(ii) of the Act and 19 CFR
351.510(a)(1).
\103\ See CFS from the PRC Decision Memorandum at Comment 16.
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Normally, we treat exemptions from indirect taxes and import
charges, such as VAT and tariff exemptions, as recurring benefits,
consistent with 19 CFR 351.524(c)(1), and allocate the benefits to the
year in which 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 normally treats
it as a non-recurring benefit and allocates the benefit to the firm
over the AUL.\104\ In the instant investigation, Trina Solar, Wuxi
Suntech, Luoyang Suntech, Shanghai Suntech, Zhenjiang Huantai, and
Suzhou Kuttler have provided a list of VAT and tariff exemptions that
they received for capital equipment imported after December 11, 2001.
Based on this submitted information, we preliminarily determine that
the VAT and tariff exemptions are tied to the capital structure or
capital assets of these companies, and, as such, should be allocated
over time.
---------------------------------------------------------------------------
\104\ See 19 CFR 351.524(c)(2)(iii) and 19 CFR 351.524(d)(2).
---------------------------------------------------------------------------
To calculate the countervailable subsidy, we used our standard
methodology for non-recurring grants.\105\ In the years that the
benefits received by each company under this program exceeded 0.5
percent of relevant sales for that year, we allocated the benefits over
the AUL of 10 years, pursuant to 19 CFR 351.524(b)(1); in the years
that the benefits received by each company under this program did not
exceed 0.5 percent of relevant sales for that year, we expensed those
benefits to the years that they were received, pursuant to 19 CFR
351.524(b)(2). We used the discount rates described above in the
section ``Subsidies Valuation Information,'' to calculate the amount of
the benefit allocable to the POI. We then divided the benefit amount by
the appropriate sales denominators as discussed in the ``Subsidies
Valuation Information'' section above. On this basis, we preliminarily
determine that Trina Solar received a countervailable benefit of 0.45
percent ad valorem and Wuxi Suntech received a countervailable benefit
of 0.55 percent ad valorem for this program.
---------------------------------------------------------------------------
\105\ See 19 CFR 351.524(b).
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H. VAT Rebates on FIE Purchases of Chinese-Made Equipment
As outlined in GUOSHUIFA (1999) No. 171, ``Trial Administrative
Measures on Purchase of Domestically Produced Equipment by FIEs,'' the
GOC refunds the VAT on purchases of certain Chinese produced equipment
to FIEs if the equipment is used for certain encouraged projects
identified in related catalogues.\106\ The Department has previously
found this program to be countervailable.\107\
---------------------------------------------------------------------------
\106\ See the GOC's January 31, 2012 questionnaire response at
II-79, and at Exhibit O-II-D-2-a.
\107\ See Citric Acid from the PRC Decision Memorandum at 20;
see also CFS from the PRC Decision Memorandum at 13-14.
---------------------------------------------------------------------------
Trina Solar reported using this program from 2005 through 2009;
Louyang Suntech reported using this program in 2008; and Zhenjiang
Huantai reported using this program from 2004 through 2008. We
preliminarily determine that the rebate of the VAT paid on purchases of
Chinese-made equipment by FIEs confers a countervailable subsidy. The
rebates are a financial contribution in the form of revenue forgone by
the GOC and they provide a benefit to the recipients in the amount of
the tax savings.\108\ We further preliminarily determine that the VAT
rebates are contingent upon the use of domestic over imported equipment
and, hence, specific under section 771(5A)(A) and (C) of the Act.
---------------------------------------------------------------------------
\108\ See section 771(5)(D)(ii) of the Act and 19 CFR
351.510(a)(1).
---------------------------------------------------------------------------
Normally, we treat rebates from indirect taxes and import charges,
such as VAT rebates, as recurring benefits, consistent with 19 CFR
351.524(c)(1), and expense these benefits in the year 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 normally treats it as a non-recurring benefit and
allocates the benefit to the firm over the AUL.\109\ Because the
rebates under this program were tied to purchased equipment, we
preliminarily determine that the benefits under this program are tied
to the capital structure or capital assets of the companies and that
they should be allocated over time.
---------------------------------------------------------------------------
\109\ See 19 CFR 351.524(c)(2)(iii) and 19 CFR 351.524(d)(2).
---------------------------------------------------------------------------
For those companies that received benefits under this program, we
applied the ``0.5 percent test,'' pursuant to 19 CFR 351.524, for each
of the years in which rebates were received. For the years in which the
rebate amount was less than 0.5 percent of the relevant sales figure,
we expensed the rebates in the year of receipt, consistent with 19 CFR
351.524(a). For those years in which the VAT rebates were greater than
or equal to 0.5 percent, we allocated the rebate amount over the AUL.
We used the discount rates described above in the ``Subsidies Valuation
Information'' section to calculate the amount of the benefit allocable
to the POI. On this basis, we preliminarily determine that Trina Solar
received a countervailable subsidy rate of 0.01 percent ad valorem
under this program. As Luoyang Suntech and Zhenjiang Huantai did not
receive rebates during the POI and, as none of the rebates they
received prior to the POI passed the 0.5 percent test, no benefits for
either company were allocated to the POI. Therefore, we preliminarily
determine that Wuxi Suntech did not receive a benefit under this
program during the POI.
I. Sub-Central Government Subsidies for Development of ``Famous
Brands'' and ``China World Top Brands''
According to the ``Implementation Opinion on Further Promoting the
Development of Brand Economy'' (XIZHENGFA {2006{time} No. l06), the
government of Wuxi City provides a lump sum award to enterprises that
receive a ``famous brands'' certificate. The award is jointly provided
by the city, county, and district finance bureaus. Though this program
is operated at the local level, the GOC issued the circular titled
``Measures for the Administration of Chinese Top-Brand Products,''
which requires that firms provide information in their ``famous
brands'' applications concerning their export ratios as well as the
extent to which their product quality meets international
standards.\110\ During the POI, Wuxi Suntech reported receiving a
famous brands grant under this program from the local government.
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\110\ See the GOC's March 1, 2012 supplemental questionnaire
response at Exhibit S1-1-a, Chapter 3 of the ``Measures for the
Administration of Chinese Top-Brand Products.''
---------------------------------------------------------------------------
We preliminarily determine that the grant that Wuxi Suntech
received under this program constitutes a financial contribution and a
benefit under sections 771(5)(D)(i) and 771(5)(E) of the Act,
respectively. Regarding specificity, section 771(5A)(B) of the Act
states that an export subsidy is a subsidy that is, in law or in fact,
contingent upon export performance, alone or as one of two or more
conditions. Consistent with prior determinations regarding grants under
[[Page 17454]]
the famous brands program,\111\ we determine that the grant provided to
Wuxi Suntech under the ``famous brands'' program is contingent on
export activity. As noted above, ``Measures for the Administration of
Chinese Top-Brand Products'' of the central government makes clear that
one criterion under this program is a company's export activity. As
such, therefore, we find that the program is specific under section
771(5A)(B) of the Act. Grants are normally treated as non-recurring
subsidies under 19 CFR 351.524(c). After conducting the ``0.5 percent
test'' of 19 CFR 351.524(b)(2), we determine that the grant should be
expensed to the year of receipt (i.e., the POI). To calculate the
subsidy, we divided the full amount of the grant received in the POI by
the appropriate total sales denominator, as discussed in the
``Subsidies Valuation Information'' section above, and in the
Preliminary Calculations Memoranda, to determine a subsidy rate less
than 0.005 percent ad valorem. As such, this subsidy has no impact on
the overall subsidy rate.
---------------------------------------------------------------------------
\111\ See, e.g., Aluminum Extrusions From the People's Republic
of China: Final Affirmative Countervailing Duty Determination, 76 FR
18521 (April 4, 2011), and accompanying Issues and Decision
Memorandum at the section ``GOC and Sub-Central Government Grants,
Loans, and Other Incentives for Development of Famous Brands and
China World Top Brands,'' and 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 the
section ``Subsidies for Development of Famous Export Brands and
China World Top Brands at Central and Sub-Central Level.''
---------------------------------------------------------------------------
J. Discovered Grants
As explained above, the Department has determined that numerous
grants provided to respondents are countervailable based upon AFA.
Pursuant to 19 CFR 351.524(c) the Department normally treats grants as
non-recurring subsidies. As such, the Department applied the ``0.5
percent test'' of 19 CFR 351.524(b) to each grant, individually, to
determine whether it should be allocated. None of the Discovered Grants
received during the POI passed the 0.5 percent test and, therefore, all
such grants were attributed to the POI. In addition, some of the
Discovered Grants received prior to the POI passed the 0.5 percent test
and have been allocated to the POI. We calculated the subsidy from each
grant separately by dividing the entire amount of the grant by the
appropriate sales figure for the POI. Respondents' program descriptions
indicate certain grants were export contingent. We determined such
grants were export subsidies and used total export sales as the
denominator. If the subsidy rate calculated for any particular grant
was less than 0.005 percent ad valorem, that grant was determined to
have no impact on the overall subsidy rate, and was therefore
disregarded. After summing all the subsidy rates arising from the
remaining Discovered Grants, rounded to the nearest one-hundredth of
one percent, we calculated a combined subsidy rate of 0.39 percent ad
valorem for Trina Solar and 0.36 percent ad valorem for Wuxi Suntech.
The grants found to be used during the POI that are publicly identified
by respondents are listed below. Those grants that were bracketed by
the respondents, along with the individual subsidy rates for all
grants, are listed in the business-proprietary Preliminary Calculations
Memoranda.\112\
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\112\ The Department intends to seek clarification from the
respondents regarding why most program names are business
proprietary.
1. Wuxi Airport 800KW program
2. PV Technology Research Institute of Jiangsu (Suntech)
3. Fund for Solar Optoelectronic Application Demonstration by
Management Committee of the New District
4. Self-Research on Core Equipment of Solar PV and Semiconductor
Lighting Industry--Self Research on New On-Line Direct Method PEVCD
5. Demonstration Project of 300KW Roof Solar PV Grid Power Generation
System
6. Industrialization and Research of New Solar Cells
7. Research and Industrialization of Thin Film Cells
8. Research on Highly Efficient and Low-Cost Thin Film Cells
9. Technology and Application Research on Glass-Base Suede Gazno
Transparent and Electrically Conductive Film Manufacture
10. Demonstration Program of 300KV Roof Solar PV Grid Power Generation
System
11. Renewable Energy of Finance of Bureau, Wuxi City
12. Research on New-Style High-Transmission Solar Cell Reducing the
Refection Film with Nano Structure
13. Fund for Construction of Suntech's Energy Institution by the
Management Committee of New District
14. Public Welfare Project Funding From Supervision and Examination
Station of Product Quality, Wuxi City
15. Provincial Export Credit Insurance Supporting Development Fund
Allocation by Management Committee of New District from December 2008
to June 2009
16. Patent Fund from Management Committee of New District, Wuxi
Government
17. Special Reward for ``333'' Program by Municipal Organization
Department
18. Science and Research Budget Allocation for Renewable-Energy
Construction Application Technology Project of Wuxi Suntech's R&D
Building by Construction Bureau of Wuxi
19. Photovoltaic Technology Research Expenses by Personnel Bureau
20. Social Insurance Fund for Employers from Sichuan Earthquake
Stricken Area
21. Import Discount by Jiangsu Provincial Government
22. Employment Expansion Planning Reward by Management Committee of New
District
23. Fund for Demonstration Company of 2009 Provincial Intelligence
Introduction Program
24. The First Group of Patent Fund in 2010 Provided by the Wuxi
Government
25. Research, Development and Industrialization of Technology and Key
Equipment for P-Type Solar Power Cells with High Efficiency and Low
Cost
26. Award for Luoyang City Outstanding Private Enterprise for 2009
27. Plan for Thousand Talents
II. Programs Preliminarily Determined To Be Not Used by Respondents in
the POI
We preliminarily determine that Trina Solar and Wuxi Suntech did
not apply for or receive benefits during the POI under the programs
listed below. Because of the complicated cross-ownership issues in this
investigation, we are continuing to gather information concerning the
reported non-use of these programs by all companies that may be cross-
owned within each company's corporate structure.
[[Page 17455]]
A. Export Product Research and Development Fund
B. Subsidies for Development of ``Famous Brands'' and ``China World Top
Brands''
C. Special Energy Fund (Established by Shandong Province
D. Funds for Outward Expansion of Industries in Guangdong Province
E. Government Provision of Aluminum for LTAR
Petitioner's allegation focused on primary aluminum.\113\ Both
respondents reported that they did not purchase primary aluminum, only
aluminum extrusions, a downstream product produced from primary
aluminum. Therefore, we are preliminarily finding this program to be
not used by the respondents.
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\113\ See Initiation Checklist at 12.
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F. Income Tax Reductions for Export-Oriented FIEs
G. Income Tax Benefits for FIEs Based on Geographic Location
H. Local Income Tax Exemption and Reduction Programs for ``Productive''
FIEs
I. Tax Refunds for Reinvestment of FIE Profits in Export-Oriented
Enterprises
J. Tax Reductions for High and New-Technology Enterprises Involved in
Designated Projects
K. Preferential Income Tax Policy for Enterprises in the Northeast
Region
L. Guangdong Province Tax Programs
M. VAT and Tariff Exemptions for Purchases of Fixed Assets Under the
Foreign Trade and Development Fund Program
N. Tax Reductions for FIEs Purchasing Chinese-Made Equipment
Certain cross-owned affiliates of the respondents reported
receiving tax reductions under this program prior to the POI. Because
the Department has treated this program as a recurring subsidy program
in prior investigations, we preliminarily determine the reductions to
be recurring in this investigation as well. Therefore, no benefits were
received during the POI by the respondents.
O. Export Credit Subsidy Programs
P. Export Guarantees and Insurance for Green Technology
After analyzing the responses of Trina Solar and Wuxi Suntech, the
Department preliminarily determines that neither of the respondents
received benefits under this program during the POI.\114\
---------------------------------------------------------------------------
\114\ See Preliminary Calculations Memoranda for an analysis of
the respondents' business proprietary information.
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Q. Discovered Grants
As explained above, the Department has determined, as AFA, that
numerous grants provided to the respondents are countervailable.
Pursuant to 19 CFR 351.524(c) the Department normally treats grants as
non-recurring subsidies. As such, the Department applied the ``0.5
percent test'' of 19 CFR 351.524(b) to each grant, individually, to
determine whether it should be allocated. Most of the Discovered Grants
received prior to the POI failed the 0.5 percent test and were
therefore expensed prior to the POI. Thus, all such grants are
preliminarily found to have been not used during the POI by the
respondents. None of these grants were publicly identified by the
respondents. Therefore, these ``non-used'' grants are all listed in the
business-proprietary Preliminary Calculations Memoranda.
III. Programs for Which Additional Information Is Required
The Department finds that additional information is needed in order
to determine whether the following programs are countervailable. After
gathering and analyzing the additional information, the Department
intends to issue a post-preliminary analysis regarding whether these
programs are countervailable.
A. The Provision of Land for LTAR to Wuxi Suntech
As discussed above, the GOC did not provide all of the information
requested regarding how prices paid by respondents for land-use rights
were determined and the information provided requires further
clarification.\115\ The Department intends to request further
information for land provided to Wuxi Suntech. The Department also
intends to request additional information from the GOC regarding the
reported private nature of some of the parties from which Wuxi Suntech
purchased land-use rights.
---------------------------------------------------------------------------
\115\ The Department did not ask exactly the same questions of
the GOC regarding land provided to both respondents. The Department
had additional questions regarding auction sales to Trina Solar that
were not relevant to Suntech.
---------------------------------------------------------------------------
B. Provision of Electricity for LTAR
The questionnaire responses were not complete regarding the alleged
provision of electricity for LTAR. These questions requested
information needed by the Department to determine whether such a
provision was specific with the meaning of section 771(5A) of the Act,
and whether a benefit within the meaning of section 771(5)(E) of the
Act was provided. The Department intends to request further information
from the GOC after the issuance of this preliminary determination.
C. Enterprise Income Tax Law, Research and Development (R&D) Program
According to the GOC, Article 30.1 of the Enterprise Income Tax Law
of the PRC created a new program regarding the deduction of research
and development expenditures for all enterprises.\116\ This provision
allows enterprises to deduct, through tax credits, research
expenditures incurred in the development of new technologies, products,
and processes. Article 95 of ``The Release of Regulations on the
Implementation of Enterprise Income Tax Law of the People's Republic of
China by the State Council, [2007] No. 512,'' December 6, 2007,
provides that if eligible research expenditures do not ``form part of
the intangible assets value,'' an additional 50 percent deduction from
taxable income may be taken on top of the actual accrual amount. Where
these expenditures form the value of certain intangible assets, the
expenditures may be amortized based on 150 percent of the intangible
assets costs. Trina Solar and Wuxi Suntech both reported benefitting
from this program during the POI. The Department intends to request
additional information regarding the specificity of the program.
---------------------------------------------------------------------------
\116\ The GOC notes that the provision providing this income tax
reduction to FIEs was terminated in 2008 by the Enterprise Income
Tax Law of the PRC. See the GOC's January 31, 2012 submission at II-
62.
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Verification
In accordance with section 782(i)(1) of the Act, the Department
will verify the information submitted by the GOC, Trina Solar, and Wuxi
Suntech, prior to making our final determination.
Suspension of Liquidation
In accordance with section 705(c)(1)(B)(i)(I) of the Act, we have
calculated an individual countervailable subsidy rate for each
respondent. Section 705(c)(5)(A)(i) of the Act states that for
companies not individually investigated, we will determine an all
others rate equal to the weighted average of the countervailable
subsidy rates established for exporters and producers individually
investigated, excluding any zero and de minimis countervailable subsidy
rates, and any
[[Page 17456]]
rates based entirely on AFA under section 776 of the Act.
Notwithstanding the language of section 705(c)(5)(A)(i) of the Act,
we have not calculated the ``all others'' rate by weight averaging the
rates of Trina Solar and Wuxi Suntech, because doing so risks
disclosure of proprietary information. Therefore, we have calculated an
average rate using other information on the record.\117\ Since both
Trina Solar and Wuxi Suntech received countervailable export subsidies
and the ``all others'' rate is an average based on the individually
investigated exporters and producers, the ``all others'' rate includes
export subsidies.
---------------------------------------------------------------------------
\117\ See Memorandum to the File from Emily Halle, ``Calculation
of the All-Others Rate,'' March 19, 2012, providing the precise
calculation and demonstrating the proximity of the resulting figure
to the figure derived using the business-proprietary data.
---------------------------------------------------------------------------
We preliminarily determine the total countervailable subsidy rates
to be as follows.
------------------------------------------------------------------------
Company Subsidy rate
------------------------------------------------------------------------
Changzhou Trina Solar Energy Co., 4.73 percent ad valorem.
Ltd..
Trina Solar (Changzhou) Science
and Technology Co., Ltd
(collectively, Trina Solar).
Wuxi Suntech Power Co., Ltd...... 2.90 percent ad valorem.
Luoyang Suntech Power Co., Ltd...
Suntech Power Co., Ltd...........
Yangzhou Rietech Renewal Energy
Co., Ltd.
Zhenjiang Huantai Silicon Science
& Technology Co., Ltd.
Kuttler Automation Systems
(Suzhou) Co., Ltd (collectively,
Wuxi Suntech).
All Others Rate.................. 3.61 percent ad valorem.
------------------------------------------------------------------------
In accordance with sections 703(d)(1)(B) and (2), and 703(e)(2)(A)
of the Act, in light of our preliminary affirmative determination of
critical circumstances, we are directing 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 90 days
prior to the date of publication of this notice in the Federal
Register, and to require a cash deposit or bond for such entities 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), we will disclose to the
parties the calculations for this preliminary determination within five
days of its announcement. We will notify parties of the schedule for
submitting case briefs and rebuttal briefs, in accordance with 19 CFR
351.309(c) and 19 CFR 351.309(d)(1), respectively. 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. Section 774 of the Act provides that the Department will
hold a public hearing to afford interested parties an opportunity to
comment on arguments raised in case or rebuttal briefs, provided that
such a hearing is requested by an interested party.
Interested parties who wish to request a hearing, or to participate
if one is requested, must submit a written request to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
1870, within 30 days of the publication of this notice, pursuant to 19
CFR 351.310(c). Requests should contain: (1) The party's name, address,
and telephone number; (2) the number of participants; and (3) a list of
the issues to be discussed. Oral presentations will be limited to
issues raised in the briefs. If a request for a hearing is made in this
investigation, we intend to hold the hearing two days after the
deadline for submission of the rebuttal briefs, pursuant to 19 CFR
351.310(d). Any such hearing will be held at the U.S. Department of
Commerce, 14th Street and Constitution Avenue NW., Washington, DC
20230. Parties should confirm by telephone, the date, time, and place
of the hearing 48 hours before the scheduled time.
This determination is issued and published pursuant to sections
703(f) and 771(i) of the Act.
Dated: March 19, 2012.
Paul Piquado,
Assistant Secretary for Import Administration.
[FR Doc. 2012-7273 Filed 3-23-12; 8:45 am]
BILLING CODE 3510-DS-P