[Federal Register Volume 77, Number 151 (Monday, August 6, 2012)]
[Notices]
[Pages 46717-46730]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-19058]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-570-984]


Drawn Stainless Steel Sinks 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 (``Department'') preliminarily 
determines that countervailable subsidies are being provided to 
producers and exporters of drawn stainless steel sinks (``SS sinks'') 
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: August 6, 2012.

FOR FURTHER INFORMATION CONTACT: Shane Subler or Hermes Pinilla, AD/CVD 
Operations, Office 1, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-
0189 or (202) 482-3477, respectively.

SUPPLEMENTARY INFORMATION:

Case History

    The following events have occurred since the publication of the 
notice of initiation in the Federal Register.\1\
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    \1\ See Drawn Stainless Steel Sinks from the People's Republic 
of China: Initiation of Countervailing Duty Investigation, 77 FR 
18211 (March 27, 2012) (``Initiation Notice''), and the accompanying 
Initiation Checklist (``SS Sinks Checklist'').
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    On April 20, 2012, the U.S. International Trade Commission 
(``ITC'') published its affirmative preliminary determination that 
there is a reasonable indication that an industry in the United States 
is materially injured by reason of allegedly subsidized imports of SS 
sinks from the PRC.\2\
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    \2\ See Drawn Stainless Steel Sinks From China, 77 FR 23752 
(April 20, 2012).
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    The Department released U.S. Customs and Border Protection 
(``CBP'') entry data for U.S. imports of SS sinks from the PRC between 
January 1, 2011, and December 31, 2011, to be used as the basis for 
respondent selection.\3\ The Department received comments on this CBP 
data from the petitioner, Elkay Manufacturing Company (``Petitioner''), 
Zhongshan Superte Kitchenware Co.,

[[Page 46718]]

Ltd. (``Superte''), Foshan Zhaoshun Trade Co., Ltd. (``Zhaoshun''), the 
Government of the PRC (``GOC''), Zoje Holding Group Co., Ltd., Jiangxi 
Zoje Kitchen & Bath Industry Co., Ltd., and Jiangxi Offidun Industry 
Co., Ltd. (collectively, ``Zoje''), Guangdong Yingao Kitchen Utensils 
Co., Ltd. (``Yingao'') and Guangdong Kitchenware Industrial Co., Ltd. 
The Department addressed these comments in its respondent selection 
memorandum, discussed below.
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    \3\ See Memorandum from Hermes Pinilla, International Trade 
Compliance Analyst to the File, ``Release of Customs and Border 
Protection Entry Data to Interested Parties for Comment,'' dated 
March 28, 2012.
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    On May 9, 2012, the Department issued its respondent selection 
analysis.\4\ Given available resources, the Department determined it 
could examine no more than two producers/exporters and selected Yingao 
and Superte. Id. These companies were the two largest producers/
exporters of subject merchandise, based on aggregate volume, to the 
United States.
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    \4\ See Memorandum from Hermes Pinilla, International Trade 
Analyst, through Shane Subler, Senior International Trade Analyst, 
and Susan Kuhbach, Office Director, to Christian Marsh, Deputy 
Assistant Secretary for Antidumping and Countervailing Duty 
Operations, ``Selection of Respondents for the Countervailing Duty 
Investigation of Drawn Stainless Steel Sinks from the People's 
Republic of China,'' dated May 9, 2012.
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    On March 22, 2012, prior to the Initiation Notice, we received a 
request from Zoje to be a voluntary respondent.\5\ Zoje did not, 
however, submit a response to the Department's initial questionnaire 
issued to the GOC on May 10, 2012.
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    \5\ See letter from Zoje to the Department dated March 22, 2012, 
``Request for Voluntary Respondent Treatment in the Antidumping and 
Countervailing Duty Investigations of Drawn Stainless Steel Sinks 
from People's Republic of China (A-570-983 and C-570-984).''
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    On May 10, 2012, the Department postponed the deadline for the 
preliminary determination in this investigation until July 30, 2012.\6\
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    \6\ See Drawn Stainless Steel Sinks From the People's Republic 
of China: Postponement of Preliminary Determination in the 
Countervailing Duty Investigation, 77 FR 27437 (May 10, 2012).
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    Also on May 10, the Department issued the countervailing duty 
(``CVD'') questionnaire to the GOC. We received initial questionnaire 
responses from the GOC, Yingao, and Superte on June 28, 2012. 
Supplemental questionnaires were sent to Yingao on July 10, and to the 
GOC and Superte on July 12, 2012. We received supplemental 
questionnaire responses (``SQR'') from Yingao on July 19 and 24, 2012; 
from the GOC on July 20 and 26, 2012; and from Superte on July 23, 
2012.
    On June 6, 2012, Petitioner submitted new subsidy allegations 
requesting the Department to expand its CVD investigation to include an 
additional subsidy programs. The Department is currently reviewing 
these new subsidy allegations.
    We received deficiency comments on the GOC's, Yingao's and 
Superte's responses from Petitioner on July 11, 2012. We received pre-
preliminary comments from Petitioner on July 23 and 24, 2012.

Period of Investigation

    The period for which we are measuring subsidies, i.e., the period 
of investigation (``POI''), is January 1, 2011, through December 31, 
2011.

Scope Comments

    In accordance with the preamble to the Department's regulations,\7\ 
in the 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 publication of the 
Initiation Notice. On April 10, 2012, we received scope comments from 
Blanco America, Inc. (``Blanco''), an importer of subject merchandise. 
The Department is evaluating the comments submitted by Blanco and will 
issue its decision regarding the scope of the antidumping (``AD'') and 
CVD investigations in the preliminary determination of the companion AD 
investigation, which is due for signature on September 27, 2012. Scope 
decisions made in the AD investigation will be incorporated into the 
scope of the CVD investigation.
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    \7\ See Antidumping Duties; Countervailing Duties, 62 FR 27296, 
27323 (May 19, 1997).
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Scope of the Investigation

    The products covered by the scope of this investigation are 
stainless steel sinks with single or multiple drawn bowls, with or 
without drain boards, whether finished or unfinished, regardless of 
type of finish, gauge, or grade of stainless steel (``SS sinks''). 
Mounting clips, fasteners, seals, and sound-deadening pads are also 
covered by the scope of this investigation if they are included within 
the sales price of the SS sinks.\8\ For purposes of this scope 
definition, the term ``drawn'' refers to a manufacturing process using 
metal forming technology to produce a smooth basin with seamless, 
smooth, and rounded corners. SS sinks are available in various shapes 
and configurations and may be described in a number of ways including 
flush mount, top mount, or undermount (to indicate the attachment 
relative to the countertop). SS sinks with multiple drawn bowls that 
are joined through a welding operation to form one unit are covered by 
the scope of the investigation. SS sinks are covered by the scope of 
the investigation whether or not they are sold in conjunction with non-
subject accessories such as faucets (whether attached or unattached), 
strainers, strainer sets, rinsing baskets, bottom grids, or other 
accessories.
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    \8\ Mounting clips, fasteners, seals, and sound deadening pads 
are not covered by the scope of this investigation if they are not 
included within the sales price of the SS sinks, regardless of 
whether they are shipped with or entered with SS sinks.
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    Excluded from the scope of the investigation are SS sinks with 
fabricated bowls. Fabricated bowls do not have seamless corners, but 
rather are made by notching and bending the stainless steel, and then 
welding and finishing the vertical corners to form the bowls. SS sinks 
with fabricated bowls may sometimes be referred to as ``zero radius'' 
or ``near zero radius'' sinks.
    The products covered by this investigation are currently classified 
in the Harmonized Tariff Schedule of the United States (``HTSUS'') 
under statistical reporting number 7324.10.0000. Although the HTSUS 
subheading is provided for convenience and customs purposes, the 
written description of the products under investigation is dispositive 
of its inclusion as subject merchandise.

Application of the Countervailing Duty Law to Imports From the PRC

    On October 25, 2007, the Department published Coated Free Sheet 
Paper From the People's Republic of China: Final Affirmative 
Countervailing Duty Determination, 72 FR 60645 (October 25, 2007) 
(``Coated Paper from the PRC''), and the accompanying Issues and 
Decision Memorandum (``Coated Paper Decision Memorandum''). In Coated 
Paper from the PRC, the Department found that given the substantial 
difference 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{time}  bar to 
proceeding with a CVD investigation involving products from the PRC. 
See Coated Paper Decision Memorandum at Comment 6. The Department has 
affirmed its decision to apply the CVD law to the PRC in numerous 
subsequent determinations.\9\ Furthermore, on March 13, 2012, HR 4105 
was enacted which makes clear that the Department has the authority to 
apply the CVD law to non-

[[Page 46719]]

market economies (``NMEs'') such as the PRC. The effective date 
provision of the enacted legislation makes clear that this provision 
applies to this proceeding.\10\ Additionally, for the reasons stated in 
the CWP Decision Memorandum, we are using the date of December 11, 
2001, the date on which the PRC became a member of the World Trade 
Organization (``WTO''), as the date from which the Department will 
identify and measure subsidies in the PRC. See CWP Decision Memorandum 
at Comment 2.
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    \9\ See, e.g., Circular Welded Carbon Quality Steel Pipe From 
the People's Republic of China: Final Affirmative Countervailing 
Duty Determination and Final Affirmative Determination of Critical 
Circumstances, 73 FR 31966 (June 5, 2008), and accompanying Issues 
and Decision Memorandum (``CWP Decision Memorandum'') at Comment 1.
    \10\ See HR 4105, 112th Cong. Sec.  1(b) (2012) (enacted).
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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, inter alia, necessary 
information is not on the record or an interested party or any other 
person: (A) Withholds information that has been requested; (B) fails to 
provide information within the deadlines established, or in the form 
and manner requested by the Department, subject to subsections (c)(1) 
and (e) of section 782 of the Act; (C) significantly impedes a 
proceeding; or (D) provides information that cannot be verified as 
provided by section 782(i) of the Act.
    Section 776(b) of the Act further provides that the Department may 
use an adverse inference in applying the facts otherwise available when 
a party has failed to cooperate by not acting to the best of its 
ability to comply with a request for information. 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.
    The Department's practice when selecting an adverse rate from among 
the possible sources of information is to ensure that the result is 
sufficiently adverse ``as to effectuate the statutory purposes of the 
AFA rule to induce respondents to provide the Department with complete 
and accurate information in a timely manner.'' \11\ The Department's 
practice also ensures ``that the party does not obtain a more favorable 
result by failing to cooperate than if it had cooperated fully.'' \12\
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    \11\ See Notice of Final Determination of Sales at Less Than 
Fair Value: Static Random Access Memory Semiconductors From Taiwan, 
63 FR 8909, 8932 (February 23, 1998).
    \12\ See Statement of Administrative Action (``SAA'') 
accompanying the Uruguay Round Agreements Act, H. Doc. No. 316, 103d 
Cong. 2d Session, at 870 (1994).
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Application of AFA

GOC--Government Authorities Under Provision of Stainless Steel Coil 
(``SSC'') for Less Than Adequate Remuneration (``LTAR'')
    As discussed below under the section ``Programs Preliminarily 
Determined To Be Countervailable,'' the Department is investigating the 
provision of SSC for LTAR by the GOC. We requested information from the 
GOC regarding the specific companies that produced the SSC that the 
mandatory respondents purchased during the 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.
    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 a 
state-owned enterprise (``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.
    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. Specifically, we requested the 
following information.
     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 June 28, 2012 questionnaire response and its July 20, 2012 
SQR, the GOC provided no ownership information for most of the 
companies that produced SSC purchased by Superte, Yingao and Foshan 
Magang Kitchen Utensils Co., Ltd. (``Magang''). Instead, the GOC stated 
that it was unable to respond to the Department's request and 
characterized the request as ``unreasonable.'' \13\ The GOC did not 
explain what efforts it had made, if any, to seek this information.\14\ 
For one supplier of SSC which it claimed was ``privately owned'' by 
individuals, the GOC provided the business registration, but no 
information regarding the identification of owners, directors, or 
senior managers who were also GOC or CCP officials or representatives. 
In addition, the GOC declined to answer questions about the CCP's 
structure and functions that are relevant to our determination of 
whether the producers of SSC are ``authorities'' within the meaning of 
section 771(5)(B) of the Act. In its initial questionnaire response, 
the GOC asserted that SSC producers are not ``authorities'' within the 
meaning of applicable U.S. law or ``public bodies'' with the meaning of 
the WTO Agreement on Subsidies and Countervailing Measures. 
Additionally, the GOC stated that it does not ``play a role in the 
ordinary business operations, including pricing and marketing 
decisions, of the domestic Chinese SSC industry, including those in 
which the state holds an ownership interest.'' \15\ The GOC argues that 
Chinese law prohibits GOC officials from taking positions in private 
companies.\16\
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    \13\ See GOC's July 20 SQR (``GSQR'') at 7.
    \14\ Id.
    \15\ See GSQR at 70.
    \16\ Id. at 73.

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[[Page 46720]]

    We have explained our understanding of the CCP's involvement in the 
PRC's economic and political structure in a past proceeding.\17\ Public 
information suggests that the CCP exerts significant control over 
activities in the PRC.\18\ This conclusion is supported by, among other 
documents, a publicly available background report from the U.S. 
Department of State.\19\ 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.\20\
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    \17\ See Memorandum to the File from Jennifer Meek, 
International Trade Analyst, AD/CVD Operations, Office 1, regarding 
``Additional Documents for Preliminary Determination,'' dated July 
30, 2012 (``Additional Documents Memorandum'') at Attachments II and 
III (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).
    \18\ Id. at Attachment III.
    \19\ 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), and accompanying Issues and Decision 
Memorandum (``Seamless Pipe Decision Memorandum'') at Comment 7.
    \20\ See Seamless Pipe Decision Memorandum at 16.
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    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 this SSC producer is necessary to our 
determination of whether this producer is an ``authority'' 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) of 
the Act, that it was not able to submit the required information 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 the requested 
information for this SSC supplier.
    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. See sections 776(a)(1) and 776(a)(2)(A) of 
the Act.
    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, 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. See 
section 776(b) of the Act. As AFA, we are finding that all of the 
producers of SSC for which the GOC failed to provide ownership 
information or failed to identify whether the owners were CCP officials 
are ``authorities'' within the meaning of section 771(5)(B) of the Act.

Superte--Government Authorities Under Provision of SSC for LTAR

    In our initial questionnaire to Superte at III-16, we requested 
that Superte provide a spreadsheet showing, among other things, the 
producers of the SSC it purchased. We also requested that Superte 
coordinate with the GOC to ensure that the GOC had the information it 
needed to accurately respond to the Department's questions regarding 
the input suppliers. For certain purchases, Superte did not provide the 
names of the enterprises that produced the SSC.\21\
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    \21\ See Superte's June 28, 2012 initial questionnaire response 
(Superte's IQR'') at Ex-13 and Superte's July 23, 2012 SQR at 32.
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    Because Superte failed to report this information, the GOC was 
unable able to fully respond to the Department's questions about input 
suppliers. As a result, necessary information is not on the record. 
Without this information, the Department is not able to analyze whether 
these suppliers of SSC are ``authorities.'' By failing to identify 
these suppliers, Superte has significantly impeded the proceeding, and 
we are resorting to ``facts otherwise available'' in making our 
preliminary determination. See sections 776(a)(1) and 776(a)(2)(C) of 
the Act.
    Moreover, we preliminarily determine that Superte 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. See section 776(b) of 
the Act. As AFA, we are finding that the unidentified producers of SSC 
are ``authorities'' within the meaning of section 771(5)(B) of the Act. 
\22\
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    \22\ The Department treated a similar situation in this manner 
in High Pressure Steel Cylinders from the People's Republic of 
China: Final Affirmative Countervailing Duty Determination, 77 FR 
26738 (May 7, 2012), and accompanying Issues and Decision Memorandum 
at 13-14.
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GOC--Provision of Electricity for LTAR

    As discussed below under the section ``Programs Preliminarily 
Determined To Be Countervailable,'' the Department is investigating the 
provision of electricity for LTAR by the GOC. The GOC, however, did not 
provide a complete response to the Department's requests for 
information regarding this program. In the Department's initial 
questionnaire, we requested that the GOC provide the provincial price 
proposals for each province in which a mandatory respondent and any 
reported cross-owned company is located for the applicable tariff 
schedules that were in effect during the POI, and to explain how those 
price proposals were created.\23\ We also asked the GOC to explain how 
increases in labor costs, capital expenses, and transmission and 
distribution costs are factored into the price proposals, and how the 
cost element increases in the price proposals and the final price 
increases were allocated across the province and across tariff end-user 
categories.\24\
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    \23\ See the Department's Initial Questionnaire to the GOC (May 
10, 2012) at Electricity Appendix.
    \24\ Id.
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    The GOC responded that it was unable to provide the price proposals 
because they are working documents for the National Development and 
Reform Commission's (``NDRC'') review.\25\ Citing section 782(c)(1) of 
the Act and 19 CFR 351.301(c)(2)(iv), the GOC stated that it was 
``{notifying{time}  the Department of difficulty in obtaining the 
original Provincial Price Proposals.'' \26\ To the questions regarding 
how electricity cost increases are reflected in retail price increases, 
the GOC's response explained theoretically how price increases should 
be formulated and did not explain the actual process that led to the 
price increases.\27\
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    \25\ See the GOC's June 28, 2012 initial questionnaire response 
(``GOC's IQR'') at 58-59.
    \26\ Id.
    \27\ Id. at 59-62.
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    As such, the Department issued a supplemental questionnaire to the 
GOC reiterating its request for this information.\28\ In its SQR to the 
Electricity Appendix questions, the GOC reiterated its initial 
response.\29\
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    \28\ See the Department's Supplemental Questionnaire to the GOC 
(July 12, 2012) at 5-6.
    \29\ See GSQR at 4-6.
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    After reviewing the GOC's responses to the Department's electricity 
questions, we preliminarily determine that the GOC's answers are 
inadequate and do not provide the necessary information required by the 
Department to analyze the provision of electricity in the PRC. The GOC 
did not provide the requested price proposal documents or explain how 
price increases were formulated. As a result, the Department must rely 
on the facts otherwise available in its analysis for this

[[Page 46721]]

preliminary determination. See sections 776(a)(1) and 776(a)(2)(A) of 
the Act.
    Moreover, we preliminarily determine that the GOC has failed to 
cooperate by not acting to the best of its ability to comply with the 
Department's requests for information. Citing section 782(c)(1) of the 
Act and 19 CFR 351.301(c)(2)(iv), the GOC stated it could not provide 
the NDRC documents because they were ``working documents.'' However, 
the GOC did not explain why it could not submit such documents on the 
record of this proceeding, particularly as the Department permits 
parties to submit information under protective order for limited 
disclosure if it is business proprietary. See, e.g., 19 CFR 351.306. 
Nor did the GOC provide any other documents that would have answered 
the Department's questions. Therefore, an adverse inference is 
warranted in the application of facts available. See section 776(b) of 
the Act. Drawing an adverse inference, we preliminarily determine that 
the GOC's provision of electricity constitutes a financial contribution 
within the meaning of section 771(5)(D) of the Act and is specific 
within the meaning of section 771(5A) of the Act.
    We are also relying on an adverse inference by selecting the 
highest electricity rates that were in effect during the POI as our 
benchmarks for determining the existence and amount of any benefit 
under this program. See section 776(b)(4) of the Act. Specifically, the 
GOC provided the provincial rates schedules that were effect during the 
POI,\30\ and we have used those schedules to identify the highest 
provincial electricity rates in effect during POI. For details on the 
preliminary calculated subsidy rates for the respondents, see below at 
``Provision of Electricity for LTAR.''
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    \30\ See the GOC's IQR at Exhibits E3-APP6-3 and E3-APP6-4.
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GOC--``Two New'' Product Special Funds of Guangdong Province and Grant 
for Loan Interest (Zhongshan City)

    The Department will investigate potential subsidies it discovers 
during the course of an investigation, even if those subsidies were not 
alleged in the CVD petition. See section 775 of the Act.
    Yingao indicated that it received a grant under an unknown program 
during the POI.\31\ Also, Superte reported that it received a grant 
under the ``Grant for Loan Interest'' program during the POI.\32\ The 
Department requested that the GOC provide information about ``other 
subsidies'' in the initial questionnaire. In the GOC's IQR, the GOC did 
not provide the requested information. Instead, the GOC asserted that, 
``* * * In the absence of sufficient allegations and evidence 
respecting other programs, consistent with Article 11.2 and other 
relevant articles of the WTO Agreement on Subsidies and Countervailing 
Measures, no reply to this question is warranted or required.'' \33\
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    \31\ See Yingao's June 29, 2012, initial questionnaire response 
(``Yingao's IQR'') at 43-44.
    \32\ See Superte's IQR at 34.
    \33\ See the GOC's IQR at 78-79.
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    In the July 11, 2012, supplemental questionnaire issued to the GOC, 
we again asked the GOC to provide information concerning Yingao's 
unknown subsidy and Superte's subsidy, referring to information 
provided in Yingao's and Superte's questionnaire responses. Although 
the GOC provided the names of these two programs and amounts disbursed, 
it did not provide a response to any of the required appendices (i.e., 
Standard Questions Appendix, Allocation Appendix, and Grant Appendix) 
and, as such, did not provide any information on the specificity of the 
programs.\34\
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    \34\ See GSQR at 1; see also the GOC's July 26, 2012, 
supplemental questionnaire response (``GOC SQR2'') at 4.
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    The Department normally relies on information from the government 
to assess program specificity.\35\ Because the GOC did not provide the 
information that would allow us to determine the specificity of these 
programs, we preliminarily determine that necessary information is not 
on the record. Accordingly, the use of facts otherwise available is 
appropriate. See sections 776(a)(1) and (2)(A),(B), and (C) of the Act.
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    \35\ See Citric Acid and Certain Citrate Salts From the People's 
Republic of China: Final Results of Countervailing Duty 
Administrative Review, 76 FR 77206 (December 12, 2011), and 
accompanying Issues and Decision Memorandum at Comment 8.
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    Further, the GOC has not cooperated to the best of its ability in 
responding to the Department's requests for information. Consequently, 
an adverse inference is warranted in the applicable of facts available. 
See section 776(b) of the Act. As a result, we find the programs to be 
specific under section 771(5A) of the Act.

Subsidies Valuation Information

Allocation Period

    The average useful life (``AUL'') period in this proceeding, as 
described in 19 CFR 351.524(d)(2), is 12 years according to the U.S. 
Internal Revenue Service's 1977 Class Life Asset Depreciation Range 
System.\36\ No party in this proceeding has disputed this allocation 
period.
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    \36\ See U.S. Internal Revenue Service Publication 946 (2008), 
How to Depreciate Property, at Table B-2: Table of Class Lives and 
Recovery Periods.
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Attribution of Subsidies

    The Department's regulations at 19 CFR 351.525(b)(6)(i) state that 
the Department will normally attribute a subsidy to the products 
produced by the corporation that received the subsidy. However, 19 CFR 
351.525(b)(6)(ii) through (v) directs that the Department will 
attribute subsidies received by certain other companies to the combined 
sales of those companies if (1) cross-ownership exists between the 
companies, and (2) the cross-owned companies produce the subject 
merchandise, are a holding or parent company of the subject company, 
produce an input that is primarily dedicated to the production of the 
downstream product, or transfer a subsidy to a cross-owned company.
    According to 19 CFR 351.525(b)(6)(vi), cross-ownership exists 
between two or more corporations where one corporation can use or 
direct the individual assets of the other corporation(s) in essentially 
the same ways it can use its own assets. This regulation states that 
this standard will normally be met where there is a majority voting 
interest between two corporations or through common ownership of two 
(or more) corporations. The Court of International Trade (``CIT'') has 
upheld the Department's authority to attribute subsidies based on 
whether a company could use or direct the subsidy benefits of another 
company in essentially the same way it could use its own subsidy 
benefits.\37\
---------------------------------------------------------------------------

    \37\ See Fabrique de Fer de Charleroi, SA v. United States, 166 
F. Supp. 2d 593, 600-604 (CIT 2001).
---------------------------------------------------------------------------

Superte

    Superte responded to the Department's original and supplemental 
questionnaires on behalf of itself, a producer and exporter of the 
subject merchandise during the POI.\38\ Superte reported that it had no 
affiliated companies during the POI.\39\ Therefore, we are 
preliminarily attributing subsidies received by Superte to its own 
sales, in accordance with 19 CFR 351.525(b)(6)(i).
---------------------------------------------------------------------------

    \38\ See Superte's IQR at 2 and 6.
    \39\ Id. at 3.
---------------------------------------------------------------------------

    The Department also received a questionnaire response from 
Zhaoshun, a trading company not affiliated with Superte, but which 
exported subject merchandise produced by Superte

[[Page 46722]]

during the POI.\40\ Zhaoshun reported that it had no affiliated 
companies during the POI.\41\ Therefore, we are preliminarily 
attributing subsidies received by Zhaoshun to its own sales, in 
accordance with 19 CFR 351.525(b)(6)(i).
---------------------------------------------------------------------------

    \40\ See Zhaoshun's June 28, 2012, initial questionnaire 
response (``Zhaoshun's IQR'') at 2.
    \41\ Id. at 3.
---------------------------------------------------------------------------

    Because Zhaoshun exported subject merchandise produced by Superte 
during the POI, we are preliminarily cumulating the benefit from 
Zhaoshun's subsidies with the benefit from Superte's subsidies, in 
accordance with 19 CFR 351.525(c).

Yingao

    Yingao responded to the Department's original and supplemental 
questionnaires on behalf of itself, a producer and exporter of the 
subject merchandise during the POI.\42\ Yingao also responded on behalf 
of Magang, a producer of subject merchandise during the POI and holding 
company of Yingao during the POI.\43\
---------------------------------------------------------------------------

    \42\ See Yingao's IQR at 5-6.
    \43\ See Magang's June 29, 2012, initial questionnaire response 
at 4; see also Yingao's IQR at 4.
---------------------------------------------------------------------------

    We preliminarily determine Yingao and Magang are ``cross-owned'' 
within the meaning of 19 CFR 351.525(b)(6)(vi) because of Magang's 
ownership position in Yingao.\44\ Because Yingao and Magang are 
producers of subject merchandise and are ``cross-owned,'' we are 
preliminarily attributing subsidies received by Yingao to the combined 
sales of Yingao and Magang (exclusive of intercompany sales), in 
accordance with 19 CFR 351.525(b)(6)(ii). Additionally, because Magang 
is a holding company of Yingao, we are preliminarily attributing 
subsidies received by Magang to Magang's consolidated sales, in 
accordance with 19 CFR 351.525(b)(6)(iii).\45\
---------------------------------------------------------------------------

    \44\ Information on Magang's ownership of Yingao is business 
proprietary. See Yingao's IQR at 4 for Magang's ownership share of 
Yingao.
    \45\ See Seamless Pipe Decision Memorandum at Comment 29(b) 
(discussion of attribution of subsidies to a company that is both a 
producer of subject merchandise and a holding company).
---------------------------------------------------------------------------

    Yingao reported that it is affiliated with other companies.\46\ 
Yingao did not submit questionnaire responses on behalf of these 
companies. In our supplemental questionnaire to Yingao, we asked Yingao 
to explain why it did not submit responses on behalf of these 
affiliated companies.\47\ Yingao responded to these questions in its 
July 24, 2012, supplemental questionnaire response. We intend to 
examine the relationship between Yingao and these various affiliated 
companies during the course of this investigation.
---------------------------------------------------------------------------

    \46\ See Yingao's IQR at 2-3.
    \47\ See the Department's July 12, 2012, supplemental 
questionnaire to Yingao at 4-5.
---------------------------------------------------------------------------

Benchmarks and Discount Rates

    The Department is investigating loans received by the respondents 
from Chinese policy banks and state-owned commercial banks (``SOCBs''), 
as well as non-recurring, allocable subsidies (see 19 CFR 
351.524(b)(1)). The derivation of the benchmark and discount rates used 
to value these subsidies is discussed below.

Short-Term RMB-Denominated Loans

    Section 771(5)(E)(ii) of the Act explains that the benefit for 
loans is the ``difference between the amount the recipient of the loan 
pays on the loan and the amount the recipient would pay on a comparable 
commercial loan that the recipient could actually obtain on the 
market.'' Normally, the Department uses comparable commercial loans 
reported by the company as a benchmark.\48\ If the firm did not have 
any comparable commercial loans during the period, the Department's 
regulations provide that we ``may use a national average interest rate 
for comparable commercial loans.'' \49\
---------------------------------------------------------------------------

    \48\ See 19 CFR 351.505(a)(3)(i).
    \49\ See 19 CFR 351.505(a)(3)(ii).
---------------------------------------------------------------------------

    As noted above, section 771(5)(E)(ii) of the Act indicates that the 
benchmark should be a market-based rate. For the reasons first 
explained in Coated Paper from the PRC,\50\ 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. 
Because of this, any loans received by the respondents from private 
Chinese or foreign-owned banks would be unsuitable for use as 
benchmarks under 19 CFR 351.505(a)(2)(i). For the same reasons, we 
cannot use a national interest rate for commercial loans as envisaged 
by 19 CFR 351.505(a)(3)(ii). Therefore, because of the special 
difficulties inherent in using a Chinese benchmark for loans, the 
Department is selecting an external market-based benchmark interest 
rate. The use of an external benchmark is consistent with the 
Department's practice. For example, in Softwood Lumber from Canada, the 
Department used U.S. timber prices to measure the benefit for 
government-provided timber in Canada.\51\
---------------------------------------------------------------------------

    \50\ See Coated Paper Decision Memorandum at Comment 10; see 
also Memorandum to the File from Jennifer Meek, Trade Analyst, AD/
CVD Operations, Office 1, regarding ``Placement of Banking Memoranda 
on Record of the Instant Investigation,'' dated July 30, 2012 
(``Banking Memoranda'').
    \51\ See Notice of Final Affirmative Countervailing Duty 
Determination and Final Negative Critical Circumstances 
Determination: Certain Softwood Lumber Products From Canada, 67 FR 
15545 (April 2, 2002) (``Softwood Lumber from Canada''), and 
accompanying Issues and Decision Memorandum (``Softwood Lumber 
Decision Memorandum'') at ``Analysis of Programs, Provincial 
Stumpage Programs Determined to Confer Subsidies, Benefit.''
---------------------------------------------------------------------------

    In past proceedings involving imports from the PRC, we calculated 
the external benchmark using the methodology first developed in Coated 
Paper from the PRC \52\ and more recently updated in Thermal Paper from 
the PRC.\53\ Under that methodology, we first determine which countries 
are similar to the PRC in terms of gross national income, based on the 
World Bank's classification of countries as: Low income; lower-middle 
income; upper-middle income; and high income. As explained in Coated 
Paper 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.\54\ Beginning in 
2010, however, the PRC is in the upper-middle income category.\55\ 
Accordingly, as explained further below, we are using the interest 
rates of upper-middle income countries to construct the benchmark. This 
is consistent with the Department's calculation of interest rates for 
recent CVD proceedings involving PRC merchandise.\56\
---------------------------------------------------------------------------

    \52\ See Coated Paper Decision Memorandum at Comment 10.
    \53\ See Lightweight Thermal Paper from the People's Republic of 
China: Final Affirmative Countervailing Duty Determination, 73 FR 
57323 (October 2, 2008) (``Thermal Paper from the PRC''), and 
accompanying Issues and Decision Memorandum at 8-10.
    \54\ See World Bank Country Classification, http://econ.worldbank.org/. See also Memorandum to the File from Austin 
Redington, International Trade Analyst, AD/CVD Operations, Office 1, 
regarding ``Interest Rate Benchmarks,'' dated July 30, 2012 
(``Interest Rate Benchmarks Memorandum'').
    \55\ Id.
    \56\ See e.g., Utility Scale Wind Towers From the People's 
Republic of China: Preliminary Affirmative Countervailing Duty 
Determination, 77 FR 33422, 33435-33436 (June 6, 2012) (``Wind 
Towers from the PRC'').
---------------------------------------------------------------------------

    After the Department identifies 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 
as reflected in the quality of the countries' institutions.\57\ The

[[Page 46723]]

strength of governance has been built into the analysis by using a 
regression analysis that relates the interest rates to 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 real interest rates, while 
weaker institutions meant relatively higher real interest rates.\58\ 
For 2010, however, the regression does not yield that outcome for the 
PRC's income group.\59\
---------------------------------------------------------------------------

    \57\ The World Bank has not yet published World Governance 
Indicators for 2011. Therefore, for purposes of this preliminary 
determination, where the use of a short-term benchmark rate for 2011 
is required, we have applied the 2010 short-term benchmark rate. The 
Department notes that the short-term benchmark may be updated, 
pending the release of all the necessary 2011 data, by the final 
determination.
    \58\ See Additional Documents Memorandum.
    \59\ See Interest Rate Benchmarks Memorandum.
---------------------------------------------------------------------------

    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.'' \60\ 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 Coated Paper 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.
---------------------------------------------------------------------------

    \60\ Id.
---------------------------------------------------------------------------

    Many of the countries in the World Bank's upper-middle and lower-
middle income categories reported lending and inflation rates to the 
International Monetary Fund, and they are included in that agency's 
international financial statistics (``IFS''). With the exceptions noted 
below, we have used the interest and inflation rates reported in the 
IFS for the countries identified as ``upper middle income'' by the 
World Bank for 2010 and ``lower middle income'' for 2001-2009. First, 
we did not include those economies that the Department considered to be 
non-market economies for antidumping purposes for any part of the years 
in question, for example: Armenia, Azerbaijan, Belarus, Georgia, 
Moldova, and Turkmenistan. Second, the pool necessarily excludes any 
country that did not report both lending and inflation rates to IFS for 
those years. Third, we removed any country that reported a rate that 
was not a lending rate or that based its lending rate on foreign-
currency denominated instruments. For example, Jordan reported a 
deposit rate, not a lending rate, and the rates reported by Ecuador and 
Timor L'Este are dollar-denominated rates; therefore, the rates for 
these three countries have been excluded. Finally, for each year the 
Department calculated an inflation-adjusted short-term benchmark rate, 
we have also excluded any countries with aberrational or negative real 
interest rates for the year in question.\61\
---------------------------------------------------------------------------

    \61\ See Interest Rate Benchmarks Memorandum.
---------------------------------------------------------------------------

    Because the resulting rates are net of inflation, we adjusted the 
benchmark to include an inflation component.\62\
---------------------------------------------------------------------------

    \62\ Id.
---------------------------------------------------------------------------

Long-Term RMB-Denominated Loans

    The lending rates reported in the IFS represent short- 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 has developed an 
adjustment to the short- and medium-term rates to convert them to long-
term rates using Bloomberg U.S. corporate BB-rated bond rates.\63\
---------------------------------------------------------------------------

    \63\ See, e.g., Light-Walled Rectangular Pipe and Tube From 
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.
---------------------------------------------------------------------------

    In Citric Acid from the PRC, this methodology was revised by 
switching from a long-term mark-up based on the ratio of the rates of 
BB-rated bonds to applying a spread which is calculated as the 
difference between the two-year BB bond rate and the n-year BB bond 
rate, where ``n'' equals or approximates the number of years of the 
term of the loan in question.\64\ Finally, because these long-term 
rates are net of inflation as noted above, we adjusted the benchmark to 
include an inflation component.\65\
---------------------------------------------------------------------------

    \64\ See Citric Acid and Certain Citrate Salts From the People's 
Republic of China: Final Affirmative Countervailing Duty 
Determination, 74 FR 16836 (April 13, 2009) (``Citric Acid from the 
PRC''), and accompanying Issues and Decision Memorandum at Comment 
14.
    \65\ See Interest Rate Benchmarks Memorandum.
---------------------------------------------------------------------------

Discount Rates

    Consistent with 19 CFR 351.524(d)(3)(i)(A), we have used, as our 
discount rate, the long-term interest rate calculated according to the 
methodology described above for the year in which the government 
provided non-recurring subsidies.\66\ The interest rate benchmarks and 
discount rates used in our preliminary calculations are provided in the 
respondents' preliminary calculations memoranda.\67\
---------------------------------------------------------------------------

    \66\ Id.
    \67\ See Memorandum to the File from Shane Subler, International 
Trade Compliance Analyst, ``Preliminary Determination Calculation 
for Yingao,'' dated July 30, 2012 (``Yingao Preliminary Calculation 
Memo'') and Memorandum to the File from Shane Subler, International 
Trade Compliance Analyst, ``Preliminary Determination Calculation 
for Superte,'' dated July 30, 2012 (``Superte Preliminary 
Calculation Memo'').
---------------------------------------------------------------------------

Analysis of Programs

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

I. Programs Preliminarily Determined To Be Countervailable

A. Two Free, Three Half Program for Foreign Investment Enterprises 
(``FIEs'')
    Under Article 8 of the ``Income Tax Law of the People's Republic of 
China for Enterprises with Foreign Investment and Foreign Enterprises'' 
(``FIE Tax Law''), an FIE that is ``productive'' and scheduled to 
operate more than ten years in exempt from income tax in the first two 
years of profitability and pays income taxes at half the standard rate 
for the next three to five years.\68\ According to the GOC, the program 
was terminated effective January 1, 2008, by the ``Enterprise Income 
Tax Law,'' but companies already enjoying the preference were permitted 
to continue paying taxes at reduced rates.\69\ Yingao benefited from 
tax savings provided under this program during the POI.\70\
---------------------------------------------------------------------------

    \68\ See the GOC's IQR at 37.
    \69\ Id. at 37.
    \70\ Id. at 38; see also Yingao's IQR at 28.
---------------------------------------------------------------------------

    The Department has previously found the ``Two Free, Three Half'' 
program to confer a countervailable subsidy.\71\ 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. See section 771(5)(D)(ii) 
of the Act and 19 CFR 351.509(a)(1). 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.
---------------------------------------------------------------------------

    \71\ See Coated Paper Decision Memorandum at 11-12; see also 
Seamless Pipe Decision Memorandum at 25; see also Wind Towers from 
the PRC.
---------------------------------------------------------------------------

    To calculate the benefit, we treated the income tax savings 
received by

[[Page 46724]]

Yingao as a recurring benefit, consistent with 19 CFR 351.524(c)(1). We 
compared the income tax rate that the company should have paid (25 
percent) with the reduced income tax rate of (12.5 percent), which 
Yingao paid during the POI, to calculate the tax savings. To calculate 
the net subsidy rate, we divided the benefit by Yingao's total POI 
sales, as described above in the ``Subsidies Valuation Information'' 
section.
    On this basis, we preliminarily determine a countervailable subsidy 
rate of 0.29 ad valorem for Yingao.
B. Provision of Electricity for LTAR
    For the reasons explained in the ``Use of Facts Otherwise Available 
and Adverse Inferences'' section above, we are basing our preliminary 
determination regarding the GOC's provision of electricity for LTAR in 
part on AFA. Therefore, we preliminarily determine that the GOC's 
provision of electricity confers a financial contribution as a 
provision of a good under section 771(5)(D)(iii) of the Act, and is 
specific under section 771(5A)(D)(iii) of the Act.
    For determining the existence and amount of any benefit under this 
program, we selected the highest non-seasonal provincial rates in the 
PRC, as provided by the GOC for each electricity category (e.g., 
``large industry,'' ``general industry and commerce'') and ``base 
charge'' (either maximum demand or transformer capacity) used by the 
respondents. Additionally, where applicable, we identified and applied 
the peak, normal, and valley rates within a category.
    Consistent with our approach in Wind Towers from the PRC, we first 
calculated the respondents' variable electricity costs by multiplying 
the monthly kilowatts (kWh) consumed at each price category (e.g., 
peak, normal, and valley, where appropriate) by the corresponding 
electricity rates paid by respondents during each month of the POI.\72\ 
Next, we calculated the benchmark variable electricity costs by 
multiplying the monthly kWh consumed at each price category by the 
highest electricity rate charged at each price category. To calculate 
the benefit for each month, we subtracted the variable electricity 
costs paid by each respondent during the POI from the monthly benchmark 
variable electricity costs.
---------------------------------------------------------------------------

    \72\ See Wind Towers from the PRC, 77 FR at 33436.
---------------------------------------------------------------------------

    To measure whether the respondents received a benefit with regard 
to their base rate (i.e., either maximum demand or transformer capacity 
charge), we first multiplied the monthly base rate charged to the 
companies by the corresponding consumption quantity. Next, we 
calculated the benchmark base rate cost by multiplying the companies' 
consumption quantities by the highest maximum demand or transformer 
capacity rate. To calculate the benefit, we subtracted the maximum 
demand or transformer capacity costs paid by the companies during the 
POI from the benchmark base rate costs. We then calculated the total 
benefit received during the POI under this program by summing the 
benefits stemming from the respondents' variable electricity payments 
and base rate payments.\73\
---------------------------------------------------------------------------

    \73\ For more information on the respondents' electricity usage 
categories and the benchmark rates we have used in the benefit 
calculations, see Memorandum to the File from Shane Subler, AD/CVD 
Operations, Office 1, regarding ``PRC Electricity Benchmark Rates'' 
(July 30, 2012). For the calculations, see Yingao Preliminary 
Calculation Memo and Superte Preliminary Calculation Memo.
---------------------------------------------------------------------------

    To calculate the net subsidy rates attributable to Superte, 
Zhaoshun, and Yingao, we divided the benefit by each company's 
respective sales as described in the ``Subsidies Valuation 
Information'' section above. On this basis, we preliminarily determine 
countervailable subsidy rates of 0.58 percent ad valorem for Superte 
and 1.19 percent ad valorem for Yingao. We preliminarily calculated no 
benefit for Zhaoshun's purchases of electricity. Therefore, Zhaoshun's 
rate for this program is the rate calculated for Superte.
C. Stainless Steel Coils for LTAR
    The Department is investigating whether GOC authorities provided 
SSC to producers of SS sinks for LTAR. Except as noted above under 
``Superte--Government Authorities Under Provision of SSC for LTAR,'' 
the respondent companies identified the suppliers and producers from 
whom they purchased SSC during the POI. In addition, they reported the 
date of payment, quantity, unit of measure, and purchase price for the 
SSC purchased during the POI.
    As discussed above under ``Use of Facts Otherwise Available and 
Adverse Inferences,'' we are finding, as AFA, that certain producers of 
SSC purchased by the respondents during the POI are ``authorities'' 
within the meaning of section 771(5)(B) of the Act. Also as discussed 
under ``Use of Facts Otherwise Available and Adverse Inferences,'' we 
are finding, as AFA, that Superte's unidentified SSC producers are 
``authorities'' within the meaning of section 771(5)(B) of the Act. 
Therefore, we preliminarily determine that the SSC supplied by these 
enterprises is a financial contribution in the form of a governmental 
provision of a good under section 771(5)(D)(iii) of the Act and that 
the respondents received a benefit to the extent that the price they 
paid for SSC produced by these suppliers was for LTAR. See sections 
771(5)(D)(iv) and 771(5)(E)(iv) of the Act.
    Of the remaining SSC producers, the GOC reported that one was an 
SOE but did not provide the further information the Department 
requested in order to determine whether this SOE was an ``authority.'' 
Therefore, consistent with our practice of finding SOEs to be 
authorities,\74\ we preliminarily determine that the SSC supplied by 
this SOE is a financial contribution in the form of a governmental 
provision of a good under section 771(5)(D)(iii) of the Act and that 
the respondents received a benefit to the extent that the price they 
paid for SSC produced by this suppliers was for LTAR. See sections 
771(5)(D)(iv) and 771(5)(E)(iv) of the Act.
---------------------------------------------------------------------------

    \74\ 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) and accompanying Issues 
and Decision Memorandum (``Tires Decision Memorandum'') at 10.
---------------------------------------------------------------------------

    Finally, the GOC identified four SSC producers located in the PRC 
but entirely or substantially owned and controlled by foreign companies 
that are not owned or controlled by the GOC. This is supported by 
record information, for example, these companies' ownership structure, 
articles of association, and the membership and operation of their 
boards of directors and their senior management.\75\ Therefore, we 
preliminarily determine that these SSC producers, in this instance, are 
not ``authorities'' and the SSC purchased from them does not give rise 
to a countervailable subsidy.
---------------------------------------------------------------------------

    \75\ See the GOC's IQR at Exhibits E4-APP-1; E4-APP-2; E4-APP-
26; and E4-APP-27.
---------------------------------------------------------------------------

    Regarding the specificity of SSC provided for LTAR, the GOC has 
stated that it does ``not impose any limitations on the consumption of 
stainless steel coil by law or by policy'' and that ``there is a vast 
number of uses for stainless steel coil, and that the type of consumers 
that may purchase stainless steel coil is highly varied within the 
economy.'' \76\ In support, the GOC provided a list of industries that 
invited bids to supply stainless steel products.\77\ According to the 
GOC's classification,

[[Page 46725]]

these potential users of stainless steel products fall into 20 or 32 
different industry classifications using ISIC and Chinese national 
economy industry classifications, respectively. On this basis, we 
preliminarily determine that the GOC is providing SSC to a limited 
number of industries or enterprises and, hence, that the subsidy is 
specific pursuant to section 771(5A)(D)(iii).\78\
---------------------------------------------------------------------------

    \76\ See the GOC's IQR at 67.
    \77\ See the GOC's IQR at Exhibit E4-14.
    \78\ See section 771(5A)(D)(iii)(I) of the Act.
---------------------------------------------------------------------------

    Finally, regarding benefit, the Department identifies appropriate 
market-determined benchmarks for measuring the adequacy of remuneration 
for government-provided goods or services at 19 CFR 351.511(a)(2). 
These potential benchmarks are listed in hierarchical order by 
preference: (1) Market prices from actual transactions within the 
country under investigation (e.g., actual sales, actual imports or 
competitively run government auctions) (tier one); (2) world market 
prices that would be available to purchasers in the country under 
investigation (tier two); or (3) an assessment of whether the 
government price is consistent with market principles (tier three). As 
provided in our regulations, the preferred benchmark in the hierarchy 
is an observed market price from actual transactions within the country 
under investigation.\79\ This is because such prices generally would be 
expected to reflect most closely the prevailing market conditions of 
the purchaser under investigation.
---------------------------------------------------------------------------

    \79\ See also Softwood Lumber Decision Memorandum at ``Market-
Based Benchmark.''
---------------------------------------------------------------------------

    Based on this hierarchy, we must first determine whether there are 
market prices from actual sales transactions involving Chinese buyers 
and sellers that can be used to determine whether the GOC authorities 
sold SSC to the respondents for LTAR. Notwithstanding the regulatory 
preference for the use of prices stemming from actual transactions in 
the country, where the Department finds that the government provides 
the majority, or a substantial portion of, the market for a good or 
service, prices for such goods and services in the country will be 
considered significantly distorted and will not be an appropriate basis 
of comparison for determining whether there is a benefit.\80\
---------------------------------------------------------------------------

    \80\ See Countervailing Duties; Final Rule, 63 FR 65348, 65377 
(November 25, 1998).
---------------------------------------------------------------------------

    In its initial questionnaire response, the GOC stated that its 
State Statistics Bureau (``SSB'') does not maintain official statistics 
on stainless steel cold-rolled sheet or strip including production 
volume by ownership type or import volumes; that, instead, it maintains 
data on cold-rolled sheet or strip that incorporates stainless and non-
stainless products.\81\ In our supplemental questionnaire, we requested 
that the GOC provide the data for the larger category, cold-rolled 
steel, and asked whether in the GOC's view such data was representative 
of stainless steel production.\82\ The GOC responded that the cold-
rolled steel data collected by the SSB includes four types of cold-
rolled products in terms of chemical composition: non-alloy, low-alloy, 
alloy, and stainless steel.\83\ Moreover, the GOC claimed that 
stainless and non-stainless steel are substantially different products, 
so that relying on information about cold-rolled steel for stainless 
steel could result in inaccurate and seriously distorted results.\84\ 
The GOC did not submit the SSB data for cold-rolled steel.
---------------------------------------------------------------------------

    \81\ See the GOC's IQR at 63.
    \82\ See the Department's July 12, 2012 Supplemental 
Questionnaire to the GOC at 7.
    \83\ See GSQR at 6.
    \84\ Id. at 7.
---------------------------------------------------------------------------

    Accepting the GOC's claim that the cold-rolled steel information is 
not representative of stainless steel production for this preliminary 
determination, the Department has relied instead on record information 
which shows that SOE producers of stainless steel account for at least 
46 percent of Chinese production during the POI.\85\ Consequently, 
because of the government's significant involvement in the stainless 
steel market, the use of private producer prices in the PRC would not 
be an appropriate benchmark (i.e., such a benchmark would reflect the 
distortions of the government presence).\86\ As we explained in 
Softwood Lumber from Canada:
---------------------------------------------------------------------------

    \85\ See Letter from Petitioner, ``Petitions For The Imposition 
Of Antidumping And Countervailing Duties Against Drawn Stainless 
Steel Sinks From The People's Republic of China,'' dated March 1, 
2012 (``Petition''), Volume III at 49 and Exhibit III-57. See also 
Yingao Preliminary Calculation Memo and Superte Preliminary 
Calculation Memo.
    \86\ See Softwood Lumber Decision Memorandum at ``There are no 
market-based internal Canadian benchmarks'' section.

    Where the market for a particular good or service is so 
dominated by the presence of the government, the remaining private 
prices in the country in question cannot be considered to be 
independent of the government price. It is impossible to test the 
government price using another price that is entirely, or almost 
entirely, dependent upon it. The analysis would become circular 
because the benchmark price would reflect the very market distortion 
which the comparison is designed to detect.\87\
---------------------------------------------------------------------------

    \87\ Id. at 38-39.

    For these reasons, prices stemming from private transactions within 
the PRC cannot give rise to a price that is sufficiently free from the 
effects of the GOC's actions and, therefore, cannot be considered to 
meet the statutory and regulatory requirement for the use of market-
determined prices to measure the adequacy of remuneration.
    Given that we have preliminarily determined that no tier one 
benchmark prices are available, we next evaluated information on the 
record to determine whether there is a tier two world market price 
available to producers of subject merchandise in the PRC. Petitioner 
and Yingao both submitted prices that they suggest are appropriate.\88\ 
Petitioner proposes using Management Engineering & Production Services 
(``MEPs'') world market price data, while Yingao has submitted prices 
for imports of SSC into various Asian countries (not including the 
PRC). Consistent with our practice, we have not relied on the import 
prices put forward by Yingao because there is no evidence that such 
prices are available to SS sinks producers in the PRC.\89\ Instead, we 
are preliminarily relying on the MEPs world market prices.
---------------------------------------------------------------------------

    \88\ See Yingao's IQR at Exhibit 21 and July 16, 2012 Factual 
Information Submission from Petitioner at Exhibit 2.
    \89\ See, e.g., 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) and accompanying Issues and Decision Memorandum 
at Comment 9A.
---------------------------------------------------------------------------

    Under 19 CFR 351.511(a)(2)(iv), when measuring the adequacy of 
remuneration under tier one or tier two, the Department will adjust the 
benchmark price to reflect the price that a firm actually paid or would 
pay if it imported the product, including delivery charges and import 
duties. Regarding delivery charges, we have added to the monthly 
benchmark prices ocean freight and inland freight charges that would be 
incurred to deliver SSC from the port to the companies' facilities. We 
have also added the applicable value added tax (``VAT'') and import 
duties, at the rates reported by the GOC.\90\ Our benchmark 
calculations are fully described in Yingao Preliminary Calculation Memo 
and Superte Preliminary Calculation Memo.
---------------------------------------------------------------------------

    \90\ See GOC's IQR at 66.
---------------------------------------------------------------------------

    We then compared the monthly benchmark prices to Superte's and 
Yingao's actual purchase prices for SSC, including taxes and delivery 
charges, as appropriate. In instances in which the benchmark unit price 
was greater than the price paid to GOC authorities, we multiplied the 
difference by the quantity of SSC purchased from the

[[Page 46726]]

GOC authorities to arrive at the benefit.\91\
---------------------------------------------------------------------------

    \91\ See Yingao Preliminary Calculation Memo and Superte 
Preliminary Calculation Memo.
---------------------------------------------------------------------------

    Because the benchmark prices exceeded the prices paid by Superte 
and Yingao for SSC, we preliminarily find that the GOC's provision of 
SSC for LTAR to be a domestic subsidy as described under 19 CFR 
351.525(b)(3). To calculate the net subsidy rates attributable to 
Superte and Yingao, we divided the benefit by each company's respective 
sales as described in the ``Subsidies Valuation Information'' section 
above.
    On this basis, we preliminarily determine countervailable subsidy 
rates of 12.23 percent ad valorem for Superte and 0.49 percent ad 
valorem for Yingao. Because Zhaoshun did not purchase SSC, we are not 
calculating a rate for this company under this program.
D. Land for LTAR to Companies Located in Industrial or Other Special 
Economic Zones
    The Department is investigating whether GOC authorities provided 
land to producers of SS sinks for LTAR. As instructed in the 
Department's questionnaires, the respondent companies identified the 
land-use rights they purchased or their leasing arrangements, as 
appropriate. Superte is located in the Food Industry Park in 
Zhongshan.\92\ Its land-use rights were originally purchased by one of 
Superte's owners in 2004 and 2009.\93\ In 2010, Superte purchased the 
land-use rights from the owner.\94\ Zhaoshun leases office space in 
Foshan from an individual.\95\ Yingao is also located in Foshan, in the 
Xintan Industrial Estate: \96\ It purchased its land-use rights in 
2006.\97\ Magang leases the site for its factory, also in Foshan.\98\
---------------------------------------------------------------------------

    \92\ See Superte's IQR at 27.
    \93\ Id. at 28.
    \94\ Id.
    \95\ See Zhaoshun's IQR at 23.
    \96\ See Yingao's IQR at 5.
    \97\ See Yingao's IQR at 38.
    \98\ See Magang's Section of Yingao's IQR at 24.
---------------------------------------------------------------------------

    The cities of Foshan and Zhongshan are covered by the Pearl River 
Delta Industrial Layout Integration Plan (``Pearl River Delta 
Plan'').\99\ This plan was the basis for Petitioner's allegation and 
the Department's decision to investigate the GOC's provision of land-
use rights in zones within the cities of Foshan and Zhongshan, which 
are covered by the plan.\100\ According to the GOC, the Pearl River 
Delta Plan was enacted in July 2010.\101\ Also according to the GOC, 
none of the responding companies was located in an industrial or other 
special economic zone when its land was acquired.\102\
---------------------------------------------------------------------------

    \99\ See SS Sinks Checklist at 22.
    \100\ Id.
    \101\ See the GOC's IQR at 57.
    \102\ Id.
---------------------------------------------------------------------------

    Based on the GOC's response, we preliminarily determine that the 
``Provision of Land and/or Land Use Rights for LTAR in Industrial and 
Other Special Economic Zones'' program was not used. As explained 
above, Superte's and Yingao's land-use rights were purchased prior to 
implementation of the Pearl River Delta Plan, and there is no 
indication that Magang or Zhaoshun is located in an industrial or other 
special economic zone. Nonetheless, based on our authority to 
investigate practices discovered in the course of an investigation 
which appear to be subsidies pursuant to section 775 of the Act, we 
have requested further information from the GOC about the provision of 
land-use rights in the Zhongshan Food Industry Park to Superte and in 
the Xintan Industrial Estate to Yingao.\103\ We intend to address this 
information in a post-preliminary analysis.
---------------------------------------------------------------------------

    \103\ See the Department's July 12, 2012 Supplemental 
Questionnaire to the GOC at 5.
---------------------------------------------------------------------------

    Also based on section 775 of the Act, we preliminarily determine 
that the GOC conferred a countervailable subsidy on Superte when it 
issued Superte's land-use certificates in 2010, which effectively 
extended Superte's land use rights by additional years without 
additional consideration.\104\ While the details are proprietary and 
addressed separately,\105\ we preliminarily determine that Superte 
received a financial contribution in the form of revenue forgone by the 
GOC and a benefit in the amount of forgone revenue. See section 
771(5)(d)(ii) of the Act. We further preliminarily determine that the 
subsidy was specific to Superte under section 771(5A)(D)(iii)(I) of the 
Act.
---------------------------------------------------------------------------

    \104\ See Superte's IQR at 28.
    \105\ See Superte Preliminary Calculation Memo.
---------------------------------------------------------------------------

    To calculate the benefit, we considered the subsidy to be 
exceptional within the meaning of 19 CFR 351.524(c)(2)(i) and, hence, 
have treated it as non-recurring. Thus, we divided the benefit by 
Superte's total sales in 2010 (the year of approval) pursuant to 19 CFR 
351.524(b)(2). Because the result was greater than 0.5 percent, we 
allocated the benefit over the 12-year AUL, using the discount rate 
described in the ``Benchmarks and Discount Rates'' section above, and 
divided the allocated amount by Superte's total sales during the POI. 
See Superte Preliminary Calculation Memo.
    On this basis, we preliminarily determine a countervailable subsidy 
rate of 0.19 percent ad valorem for Superte. Because Zhaoshun did not 
receive this benefit, its rate for this program is the rate calculated 
for Superte.
E. Policy Lending to the SS Sinks Industry
    The Department is investigating whether the GOC subsidizes SS sinks 
producers through the provision of policy loans. According to 
Petitioner, the GOC provides preferential policy lending to SS sinks 
producers through central level plans that are implemented through 
local government programs and measures, including industry plans and 
the five-year plans for Guangdong province, Foshan City, and Zhongshan 
City.
    As explained below, we preliminarily determine that a local policy 
lending program exists for SS sinks in Zhongshan City. We also 
preliminarily determine that the respondents located elsewhere have not 
received policy loans.
    Upon review of the various planning documents on the record, we 
have found that stainless steel is consistently identified as an 
industry or product for development or encouragement. For example, the 
``Iron and Steel Industry 12th Five-Year Plan (``Iron and Steel 
Plan''), a national planning document that provides direction for iron 
and steel industries, mentions the GOC's intent to support specialty 
steel enterprises, especially those that manufacture high-grade 
stainless steel products.\106\ In efforts to implement many goals and 
objectives of the Iron and Steel Plan, the GOC specifically directs 
coordination between ``finance polic{y{time}  * * * and the iron and 
steel policy.\107\ While this national plan discusses providing support 
to the stainless steel industry and stainless steel products, as noted 
above, Petitioner has alleged that the GOC has in place a national 
policy lending program that is implemented at the local level. Thus, in 
order to make a determination of whether this type of policy lending 
exists, we must turn to the relevant regional, provincial, and city 
level plans on the record.
---------------------------------------------------------------------------

    \106\ See Petition at Exhibit III-9.
    \107\ Id.
---------------------------------------------------------------------------

    First, the Pearl River Delta Plan, which covers the Pearl River 
Delta region in which both respondents are located, states the GOC's 
intention to give priority to the development of ``post processing 
stainless steel plates'' and to build an agglomeration or cluster 
development layout in several cities in the region, including those in 
which the

[[Page 46727]]

respondents are located, in order to focus on the manufacturing of 
certain products, including stainless steel products.\108\ The 
``Guidelines of Foshan City on Industrial Structure Adjustment 
(``Foshan Industrial Plan''), which covers the city in which Yingao is 
located, states Foshan City's intent to develop ``3+9'' special 
industry bases and 15 key industries.\109\ Among these industry bases 
and key industries are ``metal material processing and products.'' 
Further, in efforts to center on these industry bases and key 
industries, the Foshan Industrial Plan states that priorities should be 
given to the construction of 12 industrial key areas, including ``new 
metal materials (new aluminum extrusions, stainless steel, cold rolled 
steel plates and their deeply processed products).'' Finally, this plan 
demands coordination among the government, banks, and enterprises, in 
order to encourage and guide financial institutes to actively provide 
financing services for enterprises in the industry bases outlined in 
the plan. While this plan makes clear the city's intention to 
financially support certain industries, the areas targeted for growth 
are broad and overarching. For example, ``metal material processing and 
products'' could include an infinite number of products.
---------------------------------------------------------------------------

    \108\ See Petition at Exhibit III-15.
    \109\ See Petition at Exhibit III-18; for supplementary 
translation, see the GOC's SQR at Exhibit D.
---------------------------------------------------------------------------

    In reviewing the provincial and city five-year planning documents 
on the record, we again found references to stainless steel. For 
example, Guangdong province's 12th five-year plan mentions the 
potential need to ``scale up'' the steel industry and to ``actively 
promote'' enterprises.\110\ The development of special types of 
stainless steel is also mentioned in Foshan City's 12th five-year 
plan.\111\ The Foshan City 11th five-year plan discusses optimizing, 
uplifting, and developing the stainless steel market as a ``Major 
Mission.'' \112\ However, we find that without further information, 
each of these references to steel or stainless steel is not specific to 
the SS sinks industry or SS sinks producers. Furthermore, the 
references in the Foshan City 12th five-year plan to ``scale up'' and 
``actively promote'' are vague and only pertain to the steel industry 
as a whole.
---------------------------------------------------------------------------

    \110\ See the GOC's IQR at Exhibit B-2-1.
    \111\ See the GOC's IQR at Exhibit B-2-2.
    \112\ Id.
---------------------------------------------------------------------------

    In reviewing Zhongshan City's 12th five year plan, however, we 
noted that the home appliance industry, which includes SS sinks,\113\ 
is specifically targeted for growth.\114\ The plan states the city's 
goal to ``{m{time} ake the 100 billion level industrial clusters for 
the lighting and home appliance industries, and 10 billion level 
industrial clusters for the furniture, hardware, textile and apparel 
industries.'' Moreover, in conjunction with the growth targets 
identified in Zhongshan City's 12th five-year plan, we also found 
certain information provided by the GOC that indicates Superte received 
its loans pursuant to GOC policies.\115\ While this information is not 
necessary in determining whether policy lending exists, in this 
instance, the information contained in the documents support a 
preliminary determination that the GOC has a policy in place to 
encourage the development and production of SS sinks through policy 
lending in Zhongshan City.
---------------------------------------------------------------------------

    \113\ The names of the respondents, and other Chinese producers 
of SS sinks, include the words ``hardware,'' ``kitchen,'' 
``kitchenware,'' ``appliance,'' or ``utensil.'' Moreover, 
information in the respondents' business licenses indicates that SS 
sinks are included in the home appliance industry. See Yingao's IQR 
at Exhibit 7; Superte's IQR at Exhibit 5; Magang's IQR at Exhibit 7; 
and Zhaoshun's IQR at Exhibit 3.
    \114\ See GSQR at Exhibit C.
    \115\ See the GOC's IQR at Exhibit B-8-1 through B-8-6; see also 
Memorandum from Austin Redington, International Trade Compliance 
Analyst to the File, ``BPI Memorandum,'' dated July 30, 2012.
---------------------------------------------------------------------------

    Therefore, given the evidence demonstrating the Zhongshan City's 
objective of developing the home appliance industry through loans and 
other financial incentives, and the specific references found in the 
loan documents on the record, we preliminarily determine there is a 
program of preferential policy lending specific to SS sinks producers 
in Zhongshan City, within the meaning of section 771(5A)(D)(i) of the 
Act. However, based on the remaining planning documents on the record, 
we preliminarily determine that the producers outside of Zhongshan did 
not have policy loans outstanding during the POI.
    We also preliminarily determine that loans from 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.'' \116\ The loans to Superte provide a benefit equal to 
the difference between what the recipients paid on their loans and the 
amount they would have paid on comparable commercial loans. See section 
771(5)(E)(ii) of the Act (our benchmarks are discussed above under the 
``Subsidy Valuation Information'' section). To calculate the net 
subsidy rate attributable to Superte, we divided the benefit by the 
company's total sales in the POI.
---------------------------------------------------------------------------

    \116\ See, e.g., Tires Decision Memorandum at Comment E2, where 
the Department discusses that a complete analysis of the facts and 
circumstances of the Chinese banking system that have led us to find 
that Chinese policy banks and SOCBs constitute a government 
authority as outlined in Coated Paper Decision Memorandum at Comment 
8. See also Banking Memoranda. Parties in the instant case have not 
demonstrated that conditions within the Chinese banking sector have 
changed significantly since that previous decision such that a 
reconsideration of that decision is warranted.
---------------------------------------------------------------------------

    On this basis, we preliminarily determine a countervailable subsidy 
rate of 0.75 percent ad valorem for Superte. Because Zhaoshun is not 
located in Zhongshan and did not receive this benefit, its rate for 
this program is the rate calculated for Superte.\117\
---------------------------------------------------------------------------

    \117\ See Zhaoshun's IQR at 4.
---------------------------------------------------------------------------

F. Export Assistance Grants
    Superte reported that it received a grant under this program during 
the POI.\118\ Yingao reported that it received grants under this 
program in 2010 and during the POI.\119\ The GOC identified the grants 
that Superte and Yingao received under this program as export-
related.\120\
---------------------------------------------------------------------------

    \118\ See Superte's IQR at 13-14.
    \119\ See Yingao's IQR at 13.
    \120\ See the GOC's IQR at 6.
---------------------------------------------------------------------------

    We preliminarily determine that the grants received by Superte and 
Yingao under this program constitute a financial contribution and 
provide a benefit under sections 771(5)(D)(i) and 771(5)(E) of the Act, 
respectively. Moreover, based on record information cited in the 
previous paragraph from the GOC's response, we preliminarily determine 
that this program is contingent upon export and, therefore, specific 
within the meaning of section 771(5A)(B) of the Act.
    The grants that Superte and Yingao received during the POI were 
less than 0.5 percent of their respective POI export sales, as 
described above in the ``Attribution of Subsidies'' section. Therefore, 
pursuant to 19 CFR 351.524(b)(2), we expensed the grant amounts to the 
POI.
    On this basis, we preliminarily determine that Superte received a 
countervailable subsidy of 0.04 percent ad valorem, and that Yingao 
received a countervailable subsidy of 0.04 percent ad valorem. Because 
Zhaoshun did not receive this benefit, its rate for this program is the 
rate calculated for Superte.
    The grant to Yingao in 2010 under this program was less than 0.5 
percent of Yingao's export sales in the year of

[[Page 46728]]

receipt. Therefore, because any potential subsidy would expense prior 
to the POI in accordance with 19 CFR 351.524(b)(2), we preliminarily 
have not included this grant in the subsidy rate for Yingao.
G. Special Funds of Guangdong Province for International Market 
Expansion
    Yingao reported that it received a grant under an unknown program 
during POI.\121\ The GOC identified this grant under the program listed 
above.\122\ The GOC stated that this grant program supports small- and 
medium-sized enterprises in Guangdong Province to expand international 
markets.\123\
---------------------------------------------------------------------------

    \121\ See Yingao's IQR at 43-44.
    \122\ See GSQR at 1.
    \123\ See id.
---------------------------------------------------------------------------

    We preliminarily determine that the grant received by Yingao under 
this program constitutes a financial contribution and provides a 
benefit under sections 771(5)(D)(i) and 771(5)(E) of the Act, 
respectively. Moreover, based on record information cited in the 
previous paragraph from the GOC's response, we preliminarily determine 
that this program is contingent upon export and, therefore, specific 
within the meaning of section 771(5A)(B) of the Act.
    The grant that Yingao received during the POI was less than 0.5 
percent of Yingao's POI export sales, as described above in the 
``Attribution of Subsidies'' section. Therefore, pursuant to 19 CFR 
351.524(b)(2), we expensed the grant amount to the POI. On this basis, 
we preliminarily determine that Yingao received a countervailable 
subsidy of 0.04 percent ad valorem.
H. ``Two New'' Product Special Funds of Guangdong Province
    Yingao reported that it received a grant under another unknown 
program during POI.\124\ The GOC identified this grant under the 
program listed above, but did not respond to any of the questions from 
the Department's initial questionnaire.\125\
---------------------------------------------------------------------------

    \124\ See Yingao's IQR at 43-44.
    \125\ See GSQR at 1.
---------------------------------------------------------------------------

    We preliminarily determine that the grant received by Yingao under 
this program constitutes a financial contribution and provides a 
benefit under sections 771(5)(D)(i) and 771(5)(E) of the Act, 
respectively. Moreover, as discussed under ``Use of Facts Otherwise 
Available and Adverse Inferences,'' above, the Department is relying on 
AFA to preliminarily determine that the grant program is specific.
    The grant that Yingao received during the POI was less than 0.5 
percent of Yingao's POI sales, as described above in the ``Attribution 
of Subsidies'' section. Therefore, pursuant to 19 CFR 351.524(b)(2), we 
expensed the grant amount to the POI. On this basis, we preliminarily 
determine that Yingao received a countervailable subsidy of 0.07 
percent ad valorem.
I. Grant for Loan Interest (Zhongshan City)
    Superte reported that it received a grant under this program during 
POI.\126\ The GOC provided a brief description of the program, but did 
not respond to any of the questions from the Department's initial 
questionnaire.\127\
---------------------------------------------------------------------------

    \126\ See Superte's IQR at 34.
    \127\ See GOC SQR2 at 4.
---------------------------------------------------------------------------

    We preliminarily determine that the grant received by Superte under 
this program constitutes a financial contribution and provides a 
benefit under sections 771(5)(D)(i) and 771(5)(E) of the Act, 
respectively. Moreover, as discussed under ``Use of Facts Otherwise 
Available and Adverse Inferences,'' above, the Department is relying on 
AFA to preliminarily determine that the grant program is specific.
    The grant that Superte received during the POI was less than 0.5 
percent of Superte's POI sales, as described above in the ``Attribution 
of Subsidies'' section. Therefore, pursuant to 19 CFR 351.524(b)(2), we 
expensed the grant amount to the POI. On this basis, we preliminarily 
determine that Superte received a countervailable subsidy of 0.09 
percent ad valorem. Because Zhaoshun did not receive this benefit, its 
rate for this program is the rate calculated for Superte.
J. Grant of Zhongshan City for Enterprises' Participation in Overseas 
Professional Exhibition
    Superte reported that it received a grant under this program during 
the POI.\128\ The GOC stated that the purpose of this program is to 
encourage enterprises in Zhongshan City to explore international 
markets.\129\
---------------------------------------------------------------------------

    \128\ See Superte's IQR at 36-37; see also GOC SQR2 at 4.
    \129\ See GOC SQR2 at 4.
---------------------------------------------------------------------------

    We preliminarily determine that the grant received by Superte under 
this program constitutes a financial contribution and provides a 
benefit under sections 771(5)(D)(i) and 771(5)(E) of the Act, 
respectively. Moreover, based on record information cited in the 
previous paragraph from the GOC's response, we preliminarily determine 
that this program is contingent upon export and, therefore, specific 
within the meaning of section 771(5A)(B) of the Act.
    The grant that Superte received during the POI was less than 0.5 
percent of Superte's POI export sales, as described above in the 
``Attribution of Subsidies'' section. Therefore, pursuant to 19 CFR 
351.524(b)(2), we expensed the grant amount to the POI. On this basis, 
we preliminarily determine that Superte received a countervailable 
subsidy of 0.05 percent ad valorem. Because Zhaoshun did not receive 
this benefit, its rate for this program is the rate calculated for 
Superte.
K. Funds of Guangdong Province To Support the Adoption of E-Commerce by 
Foreign Trade Enterprises
    The GOC reported that Yingao received a grant under this program 
during POI.\130\ The GOC stated that the program supports adoption of 
e-commerce by foreign trade enterprises in Guangdong Province.\131\ 
Superte also reported that it received a grant under this program 
during the POI.\132\
---------------------------------------------------------------------------

    \130\ See id.
    \131\ See id.
    \132\ See Superte's July 23, 2012 SQR at 17.
---------------------------------------------------------------------------

    We preliminarily determine that the grants received by Yingao and 
Superte under this program constitute a financial contribution and 
provide a benefit under sections 771(5)(D)(i) and 771(5)(E) of the Act, 
respectively. Moreover, based on record information cited in the 
previous paragraph from the GOC's response, we preliminarily determine 
that this program is contingent upon export and, therefore, specific 
within the meaning of section 771(5A)(B) of the Act.
    The grant that Superte received during the POI was less than 0.5 
percent of Superte's POI export sales, as described above in the 
``Attribution of Subsidies'' section. Therefore, pursuant to 19 CFR 
351.524(b)(2), we expensed the grant amount to the POI. On this basis, 
we preliminarily determine that Superte received a countervailable 
subsidy of 0.01 percent ad valorem. Because Zhaoshun did not receive 
this benefit, its rate for this program is the rate calculated for 
Superte.
    The grant that Yingao received during the POI was less than 0.005 
percent of Yingao's POI export sales. Therefore, consistent with our 
past practice, we did not include this program in our net 
countervailing duty rate.\133\
---------------------------------------------------------------------------

    \133\ See, e.g., Coated Free Sheet Paper from the People's 
Republic of China: Final Affirmative Countervailing Duty 
Determination, 72 FR 60645 (October 25, 2007), and accompanying 
Issues and Decision Memorandum at 15.

---------------------------------------------------------------------------

[[Page 46729]]

II. Programs for Which More Information Is Necessary

A. Preferential Export Financing
    Superte and Yingao reported that they did not receive preferential 
export financing during the POI.\134\ Based on information in the 
respondents' questionnaire responses, however, we intend to request 
additional information about loans to these companies. We intend to 
address this information in a post-preliminary analysis.
---------------------------------------------------------------------------

    \134\ See Superte's IQR at 20; see also Yingao's IQR at 25.
---------------------------------------------------------------------------

III. Programs Preliminarily Determined To Have Been Not Used by 
Respondents or To Not Provide Benefits During the POI

    We preliminarily determine that the respondents did not apply for 
or receive measurable benefits during the POI under the following 
programs.
A. Export Subsidies Characterized as ``VAT Rebates''
    The Department's regulations state that in the case of an exemption 
upon export of indirect taxes, a benefit exists only to the extent that 
the Department determines that the amount exempted ``exceeds the amount 
levied with respect to the production and distribution of like products 
when sold for domestic consumption.'' \135\
---------------------------------------------------------------------------

    \135\ See 19 CFR 351.517(a); see also 19 CFR 351.102 (for a 
definition of ``indirect tax'').
---------------------------------------------------------------------------

    To determine whether the GOC provided a benefit under this program, 
we compared the VAT exemption upon export to the VAT levied with 
respect to the production and distribution of like products when sold 
for domestic consumption. The GOC reported that the VAT levied on SS 
sinks sales in the domestic market (17 percent) exceeded the amount of 
VAT exempted upon the export of SS sinks (nine percent).\136\
---------------------------------------------------------------------------

    \136\ See the GOC's IQR at 51.
---------------------------------------------------------------------------

    Thus, consistent with past cases, we preliminarily determine that 
the VAT exempted upon the export of SS sinks does not confer a 
countervailable benefit.\137\
---------------------------------------------------------------------------

    \137\ See, e.g., Certain Oil Country Tubular Goods From the 
People's Republic of China: Final Affirmative Countervailing Duty 
Determination, Final Negative Critical Circumstances Determination, 
74 FR 64045 (December 7, 2009), and accompanying Issues and Decision 
Memorandum at 25.
---------------------------------------------------------------------------

B. Grant Programs Identified in Responses
    The GOC, Superte, Zhongshun, and Yingao reported that respondents 
received various grants in 2005, 2008, 2009, and 2010.\138\ We 
preliminarily find that the grants represent less than 0.5 percent of 
Yingao's, Superte's and Zhongshun's respective export or total sales, 
as applicable, for the years of approval. Therefore, we have expensed 
these grants to the year of receipt, in accordance with 19 CFR 
351.524(b)(2), and have not allocated the benefits from these grants to 
the POI. These programs are as follows:
---------------------------------------------------------------------------

    \138\ See the GOC's July 20, 2012, supplemental questionnaire 
response at 2; see also Superte's July 23, 2012, supplemental 
questionnaire response at pages 10-17.

1. Special Funds for Development of Foreign Trade (Foshan City)
2. Special Funds of Guangdong Province for Development of Foreign 
Trade
3. Support Funds of Guangdong Province of Export Rebate for 
Mechanic, Electronic and High-tech Products
4. Special Funds of Shunde District for International Market 
Expansion
5. Subsidy to Attend Domestic Fair in Shanghai
6. Subsidy to Attend Overseas Fair
7. Interest Discount for Export Goods
8. Technology and Trade Specific Fund of Guangdong Province
9. International Market Development Fund for Export Companies

    We also preliminarily determine the following programs to have been 
not used by the respondents:

1. The State Key Technology Renovation Fund
2. ``Famous Brands'' Awards
3. Grants to Cover Legal Fees in Trade Remedy Cases
4. Special Fund for Energy Saving Technology Reform
5. The Clean Production Technology Fund
6. Grants for Listing Shares
7. Guangdong Province Science and Technology Bureau Project Fund 
(aka Guangdong Industry, Research, University Cooperating Fund)
8. Export Rebate for Mechanic, Electronic, and High-tech Products
9. Funds for Outward Expansion of Industries in Guangdong Province
10. Fund for Small and Medium Enterprises (``SME'') Bank-enterprise 
Cooperation Projects
11. Special Fund for Fostering Stable Growth of Foreign Trade
12. Local Government Deposits Into Bank Accounts
13. Treasury Bond Loans or Grants
14. Preferential Loans for State-owned Enterprises (``SOEs'')
15. Provincial Tax Exemptions and Reductions for ``Productive'' 
Foreign Invested Enterprises (``FIEs'')
16. Tax Reductions for FIEs Purchasing Chinese-made Equipment
17. Tax Reductions for FIEs in Designated Geographic Locations
18. Tax Reductions for Technology- or Knowledge-intensive FIEs
19. Tax Reductions for FIEs that are also High or New Technology 
Enterprises (``HNTEs'')
20. Tax Reductions for HNTEs Involved in Designated Projects
21. Tax Offsets for Research and Development at FIEs
22. Tax Credits for Domestically Owned Companies Purchasing Chinese-
made Equipment
23. Tax Reductions for Export-oriented FIEs
24. Tax Refunds for Reinvestment of FIE Profits in Export-Oriented 
Enterprises
25. Tax Reduction for High-tech Industries in Guangdong Province
26. Import Tariff and Value Added Tax (``VAT'') Exemptions for FIEs 
and Certain Domestic Enterprises Using Imported Equipment in 
Encouraged Industries
27. VAT Rebates on FIE Purchases of Domestically Produced Equipment
28. City Tax and Surcharge Exemptions for FIEs
29. Exemptions from Administrative Charges for Companies in 
Industrial Zones
30. VAT and Import Duty Exemptions on Imported Material
31. VAT Rebates on Domestically Produced Equipment
32. Provision of Land to SOEs at LTAR
33. Exemptions from Land Development Fees
34. Land Purchase Grants
35. Grants to Hire Post-doctoral Workers
36. Financial Subsidies: Interest Subsidies, Preferential Loans, and 
Lowered Interest Rates
37. Tax Reductions or Exemptions

Verification

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

Suspension of Liquidation

    In accordance with section 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 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 Yingao and Superte, because doing so risks disclosure of 
proprietary information. Therefore, for the all others rate, we have 
calculated a simple average of the two responding firms' rates.
    We preliminarily determine the total estimated net countervailable 
subsidy rates to be:

[[Page 46730]]



------------------------------------------------------------------------
                                                                   Net
                                                                 subsidy
                       Producer/exporter                          rate
                                                                   (%)
------------------------------------------------------------------------
Guangdong Yingao Kitchen Utensils Co., Ltd., and Foshan Magang      2.12
 Kitchen Utensils Co., Ltd....................................
Zhongshan Superte Kitchenware Co., Ltd........................     13.94
Foshan Zhaoshun Trade Co., Ltd................................     13.94
All Others....................................................      8.03
------------------------------------------------------------------------

    Zhaoshun's cash deposit rate is a ``combination rate'' pursuant to 
19 CFR 351.107(b). It applies only to subject merchandise exported by 
Zhaoshun and produced by Superte.
    In accordance with sections 703(d)(1)(B) and (2) of the Act, we are 
directing CBP to suspend liquidation of all entries of SS sinks from 
the PRC that are entered, or withdrawn from warehouse, for consumption 
on or after the date of the publication of this notice in the Federal 
Register, and to require a cash deposit for such entries of 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. Due to the anticipated timing of verification 
and issuance of verification reports, case briefs for this 
investigation must be submitted no later than one week after the 
issuance of the last verification report. See 19 CFR 351.309(c)(i) (for 
a further discussion of case briefs). Rebuttal briefs must be filed 
within five days after the deadline for submission of case briefs, 
pursuant to 19 CFR 351.309(d)(1). A list of authorities relied upon, a 
table of contents, and an executive summary of issues should accompany 
any briefs submitted to the Department. Executive summaries should be 
limited to five pages total, including footnotes. See 19 CFR 
351.309(c)(2) and (d)(2).
    Section 774 of the Act provides that the Department will hold a 
public hearing to afford interested parties an opportunity to comment 
on arguments raised in case or rebuttal briefs, provided that such a 
hearing is requested by an interested party. If a request for a hearing 
is made in this investigation, the hearing will be held two days after 
the deadline for submission of the rebuttal briefs, pursuant to 19 CFR 
351.310(d), at the U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230. Parties should confirm 
by telephone the time, date, and place of the hearing 48 hours before 
the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must electronically submit a written request to 
the Assistant Secretary for Import Administration using IA ACCESS, 
within 30 days of the publication of this notice, pursuant to 19 CFR 
351.310(c). Requests should contain: (1) The party's name, address, and 
telephone; (2) the number of participants; and (3) a list of the issues 
to be discussed. Oral presentations will be limited to issues raised in 
the briefs. Id.
    This determination is published pursuant to sections 703(f) and 
777(i) of the Act.

    Dated: July 30, 2012.
Paul Piquado,
Assistant Secretary for Import Administration.
[FR Doc. 2012-19058 Filed 8-3-12; 8:45 am]
BILLING CODE 3510-DS-P