[Federal Register Volume 86, Number 6 (Monday, January 11, 2021)]
[Notices]
[Pages 1933-1935]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00212]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-570-120]


Certain Vertical Shaft Engines Between 225cc and 999cc, and Parts 
Thereof From the People's Republic of China: Final Affirmative 
Countervailing Duty Determination and Final Negative Critical 
Circumstances Determination

AGENCY: Enforcement and Compliance, International Trade Administration, 
Department of Commerce.

SUMMARY: The Department of Commerce (Commerce) determines that 
countervailable subsidies are being provided to producers and/or 
exporters of certain vertical shaft engines between 225cc and 999cc, 
and parts thereof (vertical shaft engines) from the People's Republic 
of China (China).

DATES: Applicable January 11, 2021.

FOR FURTHER INFORMATION CONTACT: Andrew Huston, AD/CVD Operations, 
Office VII, Enforcement and Compliance, International Trade 
Administration, U.S. Department of Commerce, 1401 Constitution Avenue 
NW, Washington, DC 20230; telephone: (202) 482-4261.

SUPPLEMENTARY INFORMATION:

Background

    The petitioners in this investigation are the Coalition of American 
Vertical Engine Producers and its individual members.\1\ In addition to 
the Government of China, the mandatory respondents in this 
investigation are Loncin Motor Co. (Loncin) and Chongqing Zongshen 
General Power Machine Co., Ltd. (Zongshen).
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    \1\ Individual members are Kohler Co. and Briggs & Stratton 
Corporation.
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    On June 19, 2020, Commerce published in the Federal Register the 
Preliminary Determination of this investigation.\2\ On November 4, 
2020, Commerce issued a Post-Preliminary Analysis.\3\ For a complete 
description of the events that followed the Preliminary Determination 
of this investigation, see the Issues and Decision Memorandum.\4\ The 
Issues and Decision Memorandum is a public document and is on file 
electronically via Enforcement and Compliance's Antidumping and 
Countervailing Duty Centralized Electronic Service System (ACCESS). 
ACCESS is available to registered users at http://access.trade.gov. In 
addition, a complete version of the Issues and Decision Memorandum can 
be accessed directly at http://enforcement.trade.gov/frn/. The signed 
and electronic versions of the Issues and Decision Memorandum are 
identical in content.
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    \2\ See Certain Vertical Shaft Engines Between 225cc and 999cc, 
and Parts Thereof from the People's Republic of China: Preliminary 
Affirmative Countervailing Duty Determination, Preliminary Negative 
Critical Circumstances Determination, and Alignment of Final 
Determination With Final Antidumping Duty Determination, 85 FR 37061 
(June 19, 2020) (Preliminary Determination), and accompanying 
Preliminary Decision Memorandum (PDM).
    \3\ See Memorandum, ``Post-Preliminary Analysis of 
Countervailing Duty Investigation of Certain Vertical Shaft Engines 
Between 225cc and 999cc, and Parts Thereof from the People's 
Republic of China,'' dated June 4, 2020.
    \4\ See Memorandum, ``Decision Memorandum for the Final 
Affirmative Determination and Final Negative Critical Circumstances 
Determination in the Countervailing Duty Investigation of Certain 
Vertical Shaft Engines Between 225cc and 999cc, and Parts Thereof 
from the People's Republic of China,'' dated concurrently with, and 
hereby adopted by, this notice (Issues and Decision Memorandum).
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Scope of the Investigation

    The products covered by this investigation are certain vertical 
shaft engines from China. For a complete description of the scope of 
this investigation, see Appendix I.

Period of Investigation

    The period of investigation is January 1, 2019 through December 31, 
2019.

Use of Adverse Facts Available

    In making this final determination, Commerce is relying on facts 
otherwise available, including adverse facts available (AFA), pursuant 
to section 776(a) and (b) of the Tariff Act of 1930, as amended (the 
Act). For a full discussion of our application of AFA, see the 
Preliminary Determination.\5\
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    \5\ We are making no changes to our application of AFA, and thus 
incorporate by reference our discussion from the Preliminary 
Determination. See PDM at ``Use of Facts Otherwise Available and 
Adverse Inferences.''
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Analysis of Comments Received

    In the Issues and Decision Memorandum, we address all issues raised 
in parties' case and rebuttal briefs. A list of the issues that parties 
raised, and to which we responded, is attached to this notice as 
Appendix II.

Changes Since the Preliminary Determination

    Based on our review and analysis of the comments received from 
parties, we made changes to Loncin and Zongshen's subsidy rate 
calculations. For a discussion of the changes, see the Issues and 
Decision Memorandum.\6\
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    \6\ See Issues and Decision Memorandum at ``Analysis of 
Programs.''

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[[Page 1934]]

All-Others Rate

    In accordance with section 705(c)(1)(B)(i)(I) of the Act, Commerce 
calculated a countervailable subsidy rate for the individually 
investigated exporters/producers of the subject merchandise. Consistent 
with sections 705(c)(1)(B)(i)(I) and 705(c)(5)(A) of the Act, Commerce 
also calculated an estimated all-others rate for exporters and 
producers not individually investigated. Section 705(c)(5)(A)(i) of the 
Act provides that the all-others rate shall be an amount equal to the 
weighted-average of the countervailable subsidy rates established for 
individually investigated exporters and producers, excluding any rates 
that are zero or de minimis or any rates determined entirely under 
section 776 of the Act. In this investigation, Commerce calculated 
individual estimated countervailable subsidy rates for Loncin and 
Zongshen that are not zero, de minimis, or based entirely on facts 
otherwise available. Therefore, Commerce calculated the all-others rate 
using a weighted average of the individual estimated subsidy rates 
calculated for the examined respondents using each company's publicly-
ranged values for the merchandise under consideration.\7\
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    \7\ With two respondents under examination, Commerce normally 
calculates: (A) a weighted-average of the estimated subsidy rates 
calculated for the examined respondents; (B) a simple average of the 
estimated subsidy rates calculated for the examined respondents; and 
(C) a weighted-average of the estimated subsidy rates calculated for 
the examined respondents using each company's publicly-ranged U.S. 
sale quantities for the merchandise under consideration. Commerce 
then compares (B) and (C) to (A) and selects the rate closest to (A) 
as the most appropriate rate for all other producers and exporters. 
See, e.g., Ball Bearings and Parts Thereof from France, Germany, 
Italy, Japan, and the United Kingdom: Final Results of Antidumping 
Duty Administrative Reviews, Final Results of Changed-Circumstances 
Review, and Revocation of an Order in Part, 75 FR 53661, 53663 
(September 1, 2010). As complete publicly ranged sales data were 
available, Commerce based the all-others rate on the publicly ranged 
sales data of the mandatory respondents. For a complete analysis of 
the data, please see the All-Others Rate Calculation Memorandum 
dated concurrently with this determination.
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Final Negative Determination of Critical Circumstances

    Commerce determines that critical circumstances do not exist within 
the meaning of 703(e)(1) of the Act. For further information, see 
Issues and Decision Memorandum.

Final Determination

    In accordance with section 705(c)(1)(B)(i)(I) of the Act, we 
established individual estimated countervailable subsidy rates for 
Loncin, and Zongshen. Commerce determines the total estimated net 
countervailable subsidy rates to be the following:

------------------------------------------------------------------------
                                                           Subsidy rate
                   Producers/exporters                       (percent)
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Loncin Motor Co.........................................           17.75
Chongqing Zongshen General Power Machine Co.............           19.29
All Others..............................................           18.72
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Disclosure

    We intend to disclose to parties in this proceeding the 
calculations performed for this final determination within five days of 
the date of public announcement of our final determination, in 
accordance with 19 CFR 351.224(b).

Continuation of Suspension of Liquidation

    As a result of our Preliminary Determination, and pursuant to 
sections 703(d)(1)(B) and (2) of the Act, we instructed U.S. Customs 
and Border Protection (CBP) to suspend liquidation of all entries of 
merchandise under consideration from China that were entered or 
withdrawn from warehouse, for consumption, on or after June 19, 2020, 
the date of publication of the Preliminary Determination in the Federal 
Register. In accordance with section 703(d) of the Act, we issued 
instructions to CBP to discontinue the suspension of liquidation for 
CVD purposes for subject merchandise entered, or withdrawn from 
warehouse, on or after October 17, 2020, but to continue the suspension 
of liquidation of all entries from June 19, 2020 through October 16, 
2020.
    If the U.S. International Trade Commission (the ITC) issues a final 
affirmative injury determination, we will issue a CVD order and will 
reinstate the suspension of liquidation under section 706(a) of the Act 
and will require a cash deposit of estimated CVDs for such entries of 
subject merchandise in the amounts indicated above. If the ITC 
determines that material injury, or threat of material injury, does not 
exist, this proceeding will be terminated and all estimated duties 
deposited or securities posted as a result of the suspension of 
liquidation will be refunded or canceled.

International Trade Commission Notification

    In accordance with section 705(d) of the Act, we will notify the 
U.S. International Trade Commission (ITC) of the final affirmative 
determination of countervailable subsidies. Because the final 
determination in this proceeding is affirmative, in accordance with 
section 705(b) of the Act, the ITC will make its final determination as 
to whether the domestic industry in the United States is materially 
injured, or threatened with material injury, by reason of imports of 
certain vertical shaft engines from China no later than 45 days after 
our final determination. If the ITC determines that material injury or 
threat of material injury does not exist, the proceeding will be 
terminated and all cash deposits will be refunded. If the ITC 
determines that such injury does exist, Commerce will issue a CVD order 
directing CBP to assess, upon further instruction by Commerce, 
countervailing duties on all imports of the subject merchandise 
entered, or withdrawn from warehouse, for consumption on or after the 
effective date of the suspension of liquidation, as discussed above in 
the ``Continuation of Suspension of Liquidation'' section.

Notification Regarding Administrative Protective Orders

    This notice will serve as a reminder to the parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of propriety information disclosed under APO 
in accordance with 19 CFR 351.305(a)(3). Timely written notification of 
return or destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and terms of an APO is a sanctionable violation.

Notification to Interested Parties

    This determination is issued and published in accordance with 
sections 735(d) and 777(i)(1) of the Act and 19 CFR 351.210(c).

    Dated: January 4, 2021.
Jeffrey I. Kessler,
Assistant Secretary for Enforcement and Compliance.

Appendix I

Scope of the Investigation

    The merchandise covered by this investigation consists of spark-
ignited, non-road, vertical shaft engines, whether finished or 
unfinished, whether assembled or unassembled, primarily for riding 
lawn mowers and zero-turn radius lawn mowers. Engines meeting this 
physical description may also be for other non-hand-held outdoor 
power equipment such as, including but not limited to, tow-behind 
brush mowers, grinders, and vertical shaft generators. The subject 
engines are spark ignition, single or multiple cylinder, air cooled, 
internal combustion engines with vertical power take off shafts with 
a minimum displacement of 225 cubic centimeters (cc) and a maximum 
displacement of 999cc. Typically, engines

[[Page 1935]]

with displacements of this size generate gross power of between 6.7 
kilowatts (kw) to 42 kw.
    Engines covered by this scope normally must comply with and be 
certified under Environmental Protection Agency (EPA) air pollution 
controls title 40, chapter I, subchapter U, part 1054 of the Code of 
Federal Regulations standards for small non-road spark-ignition 
engines and equipment. Engines that otherwise meet the physical 
description of the scope but are not certified under 40 CFR part 
1054 and are not certified under other parts of subchapter U of the 
EPA air pollution controls are not excluded from the scope of this 
proceeding. Engines that may be certified under both 40 CFR part 
1054 as well as other parts of subchapter U remain subject to the 
scope of this proceeding.
    For purposes of this investigation, an unfinished engine covers 
at a minimum a sub-assembly comprised of, but not limited to, the 
following components: Crankcase, crankshaft, camshaft, piston(s), 
and connecting rod(s). Importation of these components together, 
whether assembled or unassembled, and whether or not accompanied by 
additional components such as an oil pan, manifold, cylinder 
head(s), valve train, or valve cover(s), constitutes an unfinished 
engine for purposes of this investigation. The inclusion of other 
products such as spark plugs fitted into the cylinder head or 
electrical devices (e.g., ignition modules, ignition coils) for 
synchronizing with the motor to supply tension current does not 
remove the product from the scope. The inclusion of any other 
components not identified as comprising the unfinished engine 
subassembly in a thirdcountry does not remove the engine from the 
scope.
    The engines subject to this investigation are typically 
classified in the Harmonized Tariff Schedule of the United States 
(HTSUS) at subheadings: 8407.90.1020, 8407.90.1060, and 
8407.90.1080. The engine subassemblies that are subject to this 
investigation enter under HTSUS 8409.91.9990. Engines subject to 
this investigation may also enter under HTSUS 8407.90.9060 and 
8407.90.9080. The HTSUS subheadings are provided for convenience and 
customs purposes only, and the written description of the 
merchandise under investigation is dispositive.

Appendix II

List of Topics Discussed in the Decision Memorandum

I. Summary
II. Background
III. Final Negative Determination of Critical Circumstances
IV. Scope Comments
V. Scope of the Investigation
VI. Subsidies Valuation
VII. Analysis of Programs
    General Issues
    Comment 1: Export Buyer's Credit Program
    Comment 2: Policy Loans to the VSE Industry
    Comment 3: Electricity for LTAR Program
    Comment 4: Whether Input Suppliers are Authorities
    Comment 5: Income Tax Deduction for R&D Expenses
    Comment 6: Uncreditworthiness Findings
    Comment 7: Benchmark for Unwrought Aluminum
    Comment 8: Inland Freight Rates for the Unwrought Aluminum 
Benchmark
    Comment 9: Critical Circumstances
    Issues Related to Zongshen
    Comment 10: Denominators and Attribution of Subsidies for 
Zongshen Affiliates
    Comment 11: Alleged Error in Zongshen's Policy Lending 
Calculations
    Comment 12: Zongshen Power's Electricity Calculations
    Comment 13: Minor Corrections for Export Seller's Credits and 
Policy Loans to the VSE Industry Programs
    Comment 14: Alleged Error in Zongshen's Export Seller's Credits 
Program Calculations
    Comment 15: Zongshen's Land-Use Rights for LTAR
    Comment 16: Zongshen's Consolidated Sales Denominators
    Issues Related to Loncin
    Comment 17: Income Tax Deduction for R&D Expenses Program
    Comment 18: Whether Loans Received by Loncin Group and Loncin 
Holdings are Policy Loans to the VSE Industry
    Comment 19: Loncin's Loan Calculations
    Comment 20: Loncin's Unwrought Aluminum Calculations
    Comment 21: Loncin's Other Subsidies
    Comment 22: Loncin's Policy Loans
    Comment 23: Loans from DBS Bank China
    Comment 24: Alleged Errors in Loncin's Electricity for LTAR 
Calculations
    Comment 25: Loncin's Sales Denominators
    Comment 26: Loncin's Land-Use Rights for LTAR Calculations
VIII. Analysis of Comments
IX. Recommendation

[FR Doc. 2021-00212 Filed 1-8-21; 8:45 am]
BILLING CODE 3510-DS-P