Light-walled Rectangular Pipe and Tube from the People's Republic of China: Preliminary Affirmative Countervailing Duty Determination and Alignment of Final Countervailing Duty Determination with Final Antidumping Duty Determination, 67703-67711 [E7-23283]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 72, Number 230 (Friday, November 30, 2007)]
[Notices]
[Pages 67703-67711]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-23283]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-570-915]


Light-walled Rectangular Pipe and Tube from the People's Republic 
of China: Preliminary Affirmative Countervailing Duty Determination and 
Alignment of Final Countervailing Duty Determination with Final 
Antidumping Duty Determination

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce preliminarily determines that 
countervailable subsidies are being provided to producers and exporters 
of light-walled rectangular pipe and tube from the People's Republic of 
China. For information on the estimated subsidy rates, see the 
``Suspension of Liquidation'' section of this notice.

EFFECTIVE DATE: November 30, 2007.

FOR FURTHER INFORMATION CONTACT: Damian Felton or Shane Subler, 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-
0133 and (202) 482-0189, respectively.

SUPPLEMENTARY INFORMATION:

Case History

    The following events have occurred since the publication of the 
Department of Commerce's (the Department) notice of initiation in the 
Federal Register. See Notice of Initiation of Countervailing Duty 
Investigation: Light-Walled Rectangular Pipe and Tube from the People's 
Republic of China, 72 FR 40281 (July 24, 2007) (Initiation Notice).
    On August 7, 2007, the Department selected the two largest Chinese 
producers/exporters of light-walled rectangular pipe and tube (LWRP), 
Qingdao Xiangxing Steel Pipe Co., Ltd. (Qingdao) and Zhangjiagang 
Zhongyuan Pipe-Making Co., Ltd. (ZZPC), as mandatory respondents. See 
Memorandum to Stephen J. Claeys, Deputy Assistant Secretary for Import 
Administration, ``Respondent Selection'' (August 4, 2007). This 
memorandum is on file in the Department's Central Records Unit in Room 
B-099 of the main Department building (CRU). On August 7, 2007, we 
issued the countervailing duty (CVD) questionnaire to the Government of 
the People's Republic of China (GOC), Qingdao and ZZPC.
    On August 22, 2007, the International Trade Commission (ITC) issued 
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 LWRP from the People's 
Republic of China (PRC). See Light-Walled Rectangular Pipe and Tube 
from China, Korea, Mexico and Turkey, Investigation Nos. 701-TA-449 and 
731-TA-1118-1121, 72 FR 49310 (Preliminary) (August 28, 2007).
    On August 24, 2007, we published a postponement of the preliminary 
determination of this investigation until November 26, 2007. See Light-
Walled Rectangular Pipe and Tube from the People's Republic of China: 
Notice of Postponement of Preliminary Determination in the 
Countervailing Duty Investigation, 72 FR 48618 (August 24, 2007).
    Petitioners\1\ filed a new subsidy allegation on August 29, 2007. 
The GOC submitted comments responding to petitioners' new subsidy 
allegation on September 10, 2007. On September 20, 2007, the Department 
determined to investigate aspects of the newly alleged subsidy relating 
to currency retention. See Memorandum to Susan Kuhbach, Director, AD/
CVD Operations, Office 1, ``New Subsidy Allegation'' (September 20, 
2007). Questions regarding this newly alleged subsidy were sent to the 
GOC and the respondent companies on September 20, 2007.
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    \1\ Allied Tube & Conduit; Atlas Tube; Bull Moose Tube Company; 
California Steel and Tube; EXLTUBE; Hannibal Industries; Levitt Tube 
Company LLC, Maruichi American Corporation; Searing Industries; 
Southland Tube; Vest Inc.; Welded Tube; and Western Tube and Conduit 
(collectively, petitioners).
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    We received responses to our CVD questionnaires from ZZPC, the GOC, 
and a voluntary respondent, Kunshan Lets Win Steel Machinery Co., Ltd. 
(``Lets Win'') on September 27, 2007, September 28, 2007, October 1, 
2007, October 2, 2007, and October 3, 2007. Qingdao, however, did not 
respond to the Department's CVD questionnaire. The petitioners filed 
comments on the responses from ZZPC and Lets Win on October 9, 2007, 
and comments on the GOC's responses on October 17, 2007.
    On October 15, 2007, the Department accepted Lets Win as a 
voluntary respondent to the proceeding pursuant to 19 CFR 351.204(d). 
See Memorandum to Stephen J. Claeys, Deputy Assistant Secretary for 
Import Administration, ``Voluntary Respondent Selection'' (October 15, 
2007). Then, on October 24, 2007, the Department issued a letter giving 
Qingdao a final opportunity to respond to the CVD questionnaire issued 
on August 7, 2007. We never received a CVD questionnaire response from 
Qingdao. We address the use of facts otherwise available for Qindago 
below.
    We issued supplemental questionnaires as follows: the GOC on 
October 16, 2007, October 24, 2007, and November 19, 2007; Lets Win on 
October 17, 2007; and ZZPC on October 17 and October 18, 2007. We 
received responses to these supplemental questionnaires as follows: the 
GOC on October 23, 2007, November 7, 2007 and November 21, 2007; ZZPC 
on November 5, 2007, and November 14, 2007; and Lets Win on October 31, 
2007. We received a corrected response from ZZPC on November 23, 2007, 
but are not considering this submission for the purposes of this 
preliminary determination. This submission came three days before the 
preliminary

[[Page 67704]]

determination and, thus, the Department was unable to complete the 
necessary analyses of ZZPC's submission. This data will be considered 
for the final determination.
    The GOC and petitioners filed comments in advance of the 
preliminary determination on November 13 and 14, 2007, respectively. 
Finally, Lets Win submitted an updated questionnaire response on 
November 16, 2007, which was filed after the deadline originally set by 
the Department.

Scope Comments

    In accordance with the preamble to the Department's regulations, we 
set aside a period of time in our initiation notice for parties to 
raise issues regarding product coverage, and encouraged all parties to 
submit comments within 20 calendar days of publication of that notice. 
See Antidumping Duties; Countervailing Duties, 62 FR 27296, 27323, (May 
19, 1997) and Initiation Notice, 72 FR at 40281. We did not receive any 
comments.

Scope of the Investigation

    The merchandise that is the subject of this investigation is 
certain welded carbon-quality light-walled steel pipe and tube, of 
rectangular (including square) cross section (LWR), having a wall 
thickness of less than 4mm.
    The term carbon-quality steel includes both carbon steel and alloy 
steel which contains only small amounts of alloying elements. 
Specifically, the term carbon-quality includes products in which none 
of the elements listed below exceeds the quantity by weight 
respectively indicated: 1.80 percent of manganese, or 2.25 percent of 
silicon, or 1.00 percent of copper, or 0.50 percent of aluminum, or 
1.25 percent of chromium, or 0.30 percent of cobalt, or 0.40 percent of 
lead, or 1.25 percent of nickel, or 0.30 percent of tungsten, or 0.10 
percent of molybdenum, or 0.10 percent of niobium, or 0.15 percent 
vanadium, or 0.15 percent of zirconium. The description of carbon-
quality is intended to identify carbon-quality products within the 
scope. The welded carbon-quality rectangular pipe and tube subject to 
this investigation is currently classified under the Harmonized Tariff 
Schedule of the United States (``HTSUS'') subheadings 7306.61.50.00 and 
7306.61.70.60. While HTSUS subheadings are provided for convenience and 
customs purposes, our written description of the scope of this 
investigation is dispositive.

Use of Facts Otherwise Available

    Sections 776(a)(1) and (2) of the Tariff Act of 1930, as amended 
(the Act), provide that the Department shall apply ``facts otherwise 
available'' if, inter alia, necessary information is not on the record 
or an interested party or any other person: (A) withholds information 
that has been requested; (B) fails to provide information within the 
deadlines established, or in the form and manner requested by the 
Department, subject to subsections (c)(1) and (e) of section 782 of the 
Act; (C) significantly impedes a proceeding; or (D) provides 
information that cannot be verified as provided by section 782(i) of 
the Act.
    Where the Department determines that a response to a request for 
information does not comply with the request, section 782(d) of the Act 
provides that the Department will so inform the party submitting the 
response and will, to the extent practicable, provide that party the 
opportunity to remedy or explain the deficiency. If the party fails to 
remedy the deficiency within the applicable time limits and subject to 
section 782(e) of the Act, the Department may disregard all or part of 
the original and subsequent responses, as appropriate. Section 782(e) 
of the Act provides that the Department ``shall not decline to consider 
information that is submitted by an interested party and is necessary 
to the determination but does not meet all applicable requirements 
established by the administering authority'' if the information is 
timely, can be verified, is not so incomplete that it cannot be used, 
and if the interested party acted to the best of its ability in 
providing the information. Where all of these conditions are met, the 
statute requires the Department to use the information if it can do so 
without undue difficulties.
    In this case, Qingdao did not provide information we requested that 
is necessary to determine a countervailing duty rate for this 
preliminary determination. Specifically, Qingdao did not respond to the 
Department's requests on August 7, 2007, and October 24, 2007, to 
respond to the CVD questionnaire. Thus, in reaching our preliminary 
determination, pursuant to sections 776(a)(2)(A) and (C) of the Act, we 
have based Qingdao's countervailing duty rate on facts otherwise 
available.
    We have also identified one program for which the GOC did not 
provide the requested information. Specifically, in our questionnaire, 
we asked the GOC to provide information about the hot-rolled steel 
industry in the PRC (including a description of the industry, users of 
hot-rolled steel in the PRC, and whether hot-rolled steel producers are 
state-owned enterprises (SOEs)). The GOC limited its response to the 
``hot-rolled steel narrow strip'' industry, claiming that LWRP is 
produced chiefly from this form of hot-rolled steel. In our 
supplemental questionnaire, we asked the GOC to provide the requested 
information for the hot-rolled steel industry as a whole. While some 
limited information was provided in the GOC's supplemental 
questionnaire response (November 7, 2007), the GOC did not provide a 
breakdown of the production accounted for by SOEs or that accounted for 
by private producers. Thus, in reaching our preliminary determination, 
pursuant to sections 776(a)(2)(A) and (C) of the Act, we are relying on 
facts otherwise available to determine the countervailable subsidy 
conferred by the government's provision of hot-rolled steel for less 
than adequate remuneration.
    Section 776(b) of the Act further provides that the Department may 
use an adverse inference in applying the facts otherwise available when 
a party has failed to cooperate by not acting to the best of its 
ability to comply with a request for information. Section 776(b) of the 
Act also authorizes the Department to use as adverse facts available 
(AFA) information derived from the petition, the final determination, a 
previous administrative review, or other information placed on the 
record.
    Section 776(c) of the Act provides that, when the Department relies 
on secondary information rather than on information obtained in the 
course of an investigation or review, it shall, to the extent 
practicable, corroborate that information from independent sources that 
are reasonably at its disposal. Secondary information is defined as 
``{i{time} nformation derived from the petition that gave rise to the 
investigation or review, the final determination concerning the subject 
merchandise, or any previous review under section 751 concerning the 
subject merchandise.'' See Statement of Administrative Action (SAA) 
accompanying the Uruguay Round Agreements Act, H. Doc. No. 316, 103d 
Cong., 2d Session (1994) at 870. Corroborate means that the Department 
will satisfy itself that the secondary information to be used has 
probative value. See SAA at 870. To corroborate secondary information, 
the Department will, to the extent practicable, examine the reliability 
and relevance of the information to be used. The SAA emphasizes, 
however, that the Department need not prove that the

[[Page 67705]]

selected facts available are the best alternative information. See SAA 
at 869.
    In selecting from among the facts available for Qingdao, the 
Department has determined that an adverse inference is warranted, 
pursuant to section 776(b) of the Act. By failing to submit a response 
to the Department's CVD questionnaire, Qingdao did not cooperate to the 
best of its ability in this investigation. Accordingly, we find that an 
adverse inference is warranted to ensure that Qingdao will not obtain a 
more favorable result than had it fully complied with our request in 
this investigation.
    Similarly, we are applying an adverse inference in selecting among 
the facts available for valuing the benefit conferred by the GOC's 
provision of hot-rolled steel for less than adequate remuneration. In 
its response, the GOC stated, ``it is difficult to provide a definitive 
assessment'' of the share of hot-rolled production accounted for by 
SOEs and private suppliers because there are so many producers in 
China. See GOC supplemental questionnaire response (November 7, 2007) 
at 9. The failure to provide this information within the established 
deadlines has impeded our investigation. Moreover, the GOC has not 
provided us with any plausible explanation as to why it cannot provide 
us with the information within the established deadlines. Thus, we 
preliminarily conclude that the GOC has failed to act to the best of 
its ability.

Selection of the Adverse Facts Available Rate

    In deciding which facts to use as AFA, section 776(b) of the Act 
and 19 CFR 351.308(c)(1) authorize the Department to rely on 
information derived from (1) the petition, (2) a final determination in 
the investigation, (3) any previous review or determination, or (4) any 
information placed on the record. It is the Department's practice to 
select, as AFA, the highest calculated rate in any segment of the 
proceeding. See, e.g., Certain In-shell Roasted Pistachios from the 
Islamic Republic of Iran: Final Results of Countervailing Duty 
Administrative Review, 71 FR 66165 (November 13, 2006), and 
accompanying Issues and Decision Memorandum at ``Analysis of 
Programs.''
    The Department's practice when selecting an adverse margin from 
among the possible sources of information is to ensure that the margin 
is sufficiently adverse ``as to effectuate the purpose of the facts 
available role to induce respondents to provide the Department with 
complete and accurate information in a timely manner.'' 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). The Department's practice also ensures ``that the party does 
not obtain a more favorable result by failing to cooperate than if it 
had cooperated fully.'' See SAA at 870. In choosing the appropriate 
balance between providing a respondent with an incentive to respond 
accurately and imposing a rate that is reasonably related to the 
respondent's prior commercial activity, selecting the highest prior 
margin ``reflects a common sense inference that the highest prior 
margin is the most probative evidence of current margins, because, if 
it were not so, the importer, knowing of the rule, would have produced 
current information showing the margin to be less.'' See Rhone Poulenc, 
Inc. v. United States, 899 F. 2d 1185, 1190 (Fed. Cir. 1990).
    Because Qingdao failed to act to the best of its ability, as 
discussed above, for each program examined, we made the adverse 
inference that Qingdao benefitted from the program unless the record 
evidence made it clear that Qingdao could not have received benefits 
from the program because, for example, we have preliminarily found the 
program not countervailable. See, e.g., Certain Cold-Rolled Carbon 
Steel Flat Products From Korea; Final Affirmative CVD Determination, 67 
FR 62102 (October 3, 2002) and accompanying Issues and Decision 
Memorandum at ``Methodology and Background Information.'' To calculate 
the program rates, we have generally relied upon the highest program 
rate calculated for any responding company in this investigation as 
adverse facts available. See Certain In-shell Roasted Pistachios from 
the Islamic Republic of Iran: Final Results of Countervailing Duty 
Administrative Review, 71 FR 66165 (November 13, 2006) and accompanying 
Issues and Decision Memorandum at ``Analysis of Programs.''
    Thus, for programs based on the provision of goods at less than 
adequate remuneration, we have used the ZZPC rate for the provision of 
hot-rolled steel for less than adequate remuneration. For value added 
tax (VAT) and grant programs, we are unable to utilize company-specific 
rates from this proceeding because neither Lets Win nor ZZPC received 
any countervailable subsidies from these subsidy programs. Therefore, 
for VAT and grant programs we are applying the highest subsidy rate for 
any program otherwise listed, which in this instance is ZZPC's rate for 
the provision of hot-rolled steel for less than adequate remuneration.
    Finally, for the seven alleged income tax programs pertaining to 
either the reduction of the income tax rates or the payment of no 
income tax, we have applied an adverse inference that Qingdao paid no 
income tax during the period of investigation (i.e., calendar year 
2006). The standard income tax rate for corporations in the PRC is 30 
percent, plus a 3 percent provincial income tax rate. Therefore, the 
highest possible benefit for these seven income tax rate programs is 33 
percent. We are applying the 33 percent AFA rate on a combined basis 
(i.e., the seven programs combined provided a 33 percent benefit). This 
33 percent AFA rate does not apply to income tax deduction or credit 
programs. For income tax deduction or credit programs we are applying 
the highest subsidy rate for any program otherwise listed, which in 
this instance is ZZPC's rate for the provision of hot-rolled steel at 
less than adequate remuneration. See Memorandum to the File, entitled 
Selection of the Adverse Facts Available Rate for Qingdao Xiangxing 
Steel Pipe Co., Ltd.'' (November 26, 2007) (this memorandum is on file 
in the Department's CRU).
    We do not need to corroborate the calculated subsidy rates we are 
using as AFA because they are not considered secondary information as 
they are based on information obtained in the course of this 
investigation. See section 776(c) of the Act; see also the SAA at 870.
    Regarding the GOC's failure to provide requested information 
regarding the hot-rolled steel industry in the PRC, the Department is 
preliminarily rejecting prices in the PRC as possible benchmarks for 
determining whether hot-rolled steel is being provided for less than 
adequate remuneration. Instead, as described in the Programs 
Preliminarily Determined to be Countervailable/Provision of Inputs for 
Less than Adequate Remuneration/Hot-rolled Steel section below, we are 
using a world market price as the benchmark to value this subsidy.
    Because this information is taken from the petition, it is 
secondary information and must be corroborated to the extent 
practicable. We have compared the world-market prices being used to the 
prices of hot-rolled steel imports into the PRC during the POI, and 
find that the world-market prices are reliable and relevant. See 
Memorandum from Damian Felton to Susan Kuhbach Re: Preliminary 
Affirmative Countervailing Duty Determination: Light-walled Rectangular 
Pipe and Tube from the

[[Page 67706]]

People's Republic of China; Preliminary Results Calculation Memorandum 
for Zhangjiagang Zhongyuan Pipe-Making Co., Ltd.; Jiangsu Qiyuan Group 
Co., Ltd.; Jiangsu Zhongjia Steel Co., Ltd.; Zhangjiagang Zhongxin 
Steel Product Co., Ltd.; and Zhangjiagang Baoshuiqu Jiaqi International 
Business Co., Ltd. (November 26, 2007) (ZZPC Calculation Memorandum).

Alignment of Final Countervailing Duty Determination with Final 
Antidumping Duty Determination

    On July 24, 2007, the Department initiated the countervailing duty 
and antidumping duty investigations of LWRP from the PRC. See 
Initiation Notice and Initiation of Antidumping Duty Investigations: 
Light-Walled Rectangular Pipe and Tube from Republic of Korea, Mexico, 
Turkey, and the People's Republic of China, 72 FR 40274 (July 24, 
2007). The countervailing duty investigation and the antidumping duty 
investigation have the same scope with regard to the merchandise 
covered.
    On November 16, 2007, petitioners submitted a letter, in accordance 
with section 705(a)(1) of the Act, requesting alignment of the final 
countervailing duty determination with the final determination in the 
companion antidumping duty investigation of LWRP from the PRC. 
Therefore, in accordance with section 705(a)(1) of the Act and 19 CFR 
351.210(b)(4), we are aligning the final countervailing duty 
determination with the final determination in the companion antidumping 
duty investigation of LWRP from the PRC. The final countervailing duty 
determination will be issued on the same date as the final antidumping 
duty determination, which is currently scheduled to be issued on April 
7, 2008. See Notice of Postponement of Preliminary Determination of 
Antidumping Duty Investigation: Light-Walled Rectangular Pipe and Tube 
from the People's Republic of China, 72 FR 65564 (November 21, 2007).

Application of the Countervailing Duty Law to Imports from the PRC

    On October 25, 2007, the Department published Coated Free Sheet 
Paper from the People's Republic of China: Final Affirmative 
Countervailing Duty Determination, 72 FR 60645 (October 25, 2007) (CFS 
from the PRC). In that determination, the Department found, ''. . . 
given the substantial differences between the Soviet-style economies 
and the PRC's economy in recent years, the Department's previous 
decision not to apply the CVD law to these Soviet-style economies does 
not act as a bar to proceeding with a CVD investigation involving 
products from China.'' CFS from the PRC, and accompanying Issues and 
Decision Memorandum at Comment 6; see also Memorandum to David M. 
Spooner, ``Countervailing Duty Investigation of Coated Free Sheet Paper 
from the People's Republic of China - Whether the Analytical Elements 
of the Georgetown Steel Opinion are Applicable to China's Present-day 
Economy,'' (March 29, 2007) at 2 (Georgetown Steel Memo).
    More recently, the Department preliminarily determined that it is 
appropriate and administratively desirable to identify a uniform date 
from which the Department will identify and measure subsidies in the 
PRC for purposes of the CVD law. See Circular Welded Carbon Quality 
Steel Pipe from the People's Republic of China: Preliminary Affirmative 
Countervailing Duty Determination; Preliminary Affirmative 
Determination of Critical Circumstances; and Alignment of Final 
Countervailing Duty Determination with Final Antidumping Duty 
Determination, 72 FR 63875 (November 13, 2007) (CWP from the PRC). In 
CWP from the PRC, we preliminarily determined that date to be December 
11, 2001, the date on which the PRC became a member of the WTO. 
Therefore, for the reasons outlined in CWP from the PRC, we have 
limited our analysis to subsidies bestowed after December 11, 2001, for 
this preliminary determination.

Period of Investigation

    The period for which we are measuring subsidies, or the period of 
investigation (POI), is calendar year 2006.

Subsidies Valuation Information

Allocation Period

    The average useful life (AUL) period in this proceeding as 
described in 19 CFR 351.524(d)(2) is 15 years according to the U.S. 
Internal Revenue Service's 1977 Class Life Asset Depreciation Range 
System for assets used to manufacture primary steel mill products. No 
party in this proceeding has disputed this allocation period.

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) 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. The Court of International 
Trade (CIT) has upheld the Department's authority to attribute 
subsidies based on whether a company could use or direct the subsidy 
benefits of another company in essentially the same way it could use 
its own subsidy benefits. See Fabrique de Fer de Charleroi v. United 
States, 166 F. Supp. 2d. 593, 604 (CIT 2001).
    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.
    Lets Win: Lets Win responded on behalf of itself, a Taiwanese-owned 
``productive'' foreign invested enterprise. Lets Win also named two 
affiliates involved in the company's export activities. These companies 
are located outside of the PRC and are not included in our analysis.
    ZZPC: In its response, ZZPC identified numerous affiliated 
companies and responded on behalf of itself, a producer of the subject 
merchandise, and four of its affiliates: ZZPC's parent company, Jiangsu 
Qiyuan Group Co., Ltd. (Group); and three input suppliers to ZZPC, 
Jiangsu Zhongjia Steel Co., Ltd. (JZS), Zhangjiagang Zhongxin Steel 
Product Co., Ltd. (ZZSP), and Zhangjiagang Baoshuiqu Jiaqi 
International Business Co., Ltd. (Jiaqi). The remaining affiliates do 
not produce subject merchandise or otherwise fall within the situations 
described in 19 CFR 351.525(b)(6)(iii)-(v). Therefore, they are not 
addressed further here.
    The details of the affiliations between ZZPC, Group, JZS, ZZSP, and 
Jiaqi are proprietary and, hence, addressed separately. See ZZPC 
Calculation Memorandum. Based on the reported information, we 
preliminarily determine that ZZPC, Group, JZS, ZZSP, and Jiaqi are 
cross-owned companies within the meaning of 19 CFR 35.525(b)(6)(vi).
    Because they are cross-owned and because Group is the parent 
company of

[[Page 67707]]

ZZPC, we preliminarily determine that any subsidies bestowed on Group 
are properly attributed to Group's consolidated sales under 19 CFR 
351.525(b)(6)(iii). With respect to Jiaqi, this company is a trading 
company and does not produce any merchandise. Instead, it purchased and 
provided inputs to ZZPC during the POI. Because it is not an input 
producer, we are not treating Jiaqi as an input supplier as described 
in 19 CFR 351.525(b)(6)(iv) (which refers to subsidies received by the 
input producer). Instead, for the preliminary determination, we are 
treating any subsidies conferred by the government's provision of hot-
rolled steel for less than adequate remuneration as having been 
transferred to ZZPC through Jiaqi's resale of the hot-rolled steel to 
ZZPC, consistent with 19 CFR 351.525(b)(6)(v).
    ZZPC's other input suppliers, JZS and ZZSP, provide ZZPC with steel 
strip. These companies are not trading companies: both produce cold-
rolled steel. The types of inputs they provide to ZZPC are proprietary 
and are addressed separately. See ZZPC Calculation Memorandum.
    In its November 13, 2007, submission, the GOC argues, inter alia, 
that any hot-rolled or cold-rolled products sold by JZS and ZZSP cannot 
be considered ``primarily dedicated'' to the production of LWRP or any 
particular downstream products, as that term is used in 19 CFR 
351.525(b)(6)(iv). We agree that there is no evidence on the record to 
support a finding that these cold-rolled products are primarily 
dedicated to ZZPC's production of the downstream product and, 
therefore, for purposes of this preliminary determination we are not 
attributing any subsidies received by these cross-owned cold-rolled 
steel producers to LWRP produced by ZZPC.
    However, for any hot-rolled steel products which ZZPC purchased 
from JZS or ZZSP, we preliminarily determine that these companies are 
not input suppliers as described in 19 CFR 351.525(b)(6)(iv). Instead, 
as with the trading company, Jiaqi, we are treating any subsidies 
conferred by the government's provision of hot-rolled steel for less 
than adequate remuneration as having been transferred to ZZPC through 
JZS' and ZZSP's sale of hot-rolled steel products to ZZPC, consistent 
with 19 CFR 351.525(b)(6)(v).

Creditworthiness

    Petitioners alleged that Baosteel received countervailable loans 
and that it was uncreditworthy (see Initiation Notice, 72 FR at 36671). 
Because we did not select Baosteel as a mandatory respondent in this 
investigation, we are making no finding regarding that company's 
creditworthiness.

Analysis of Programs

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

I. Programs Preliminarily Determined to Be Countervailable

A. Income Tax Subsidies for Foreign Invested Enterprises (FIEs)

Reduced Income Tax Rates for FIEs Based on Location

    FIEs are encouraged to locate in designated coastal economic zones, 
special economic zones, and economic and technical development zones in 
the PRC through preferential tax rates. This program was originally 
created in 1988 under the Provisional Regulations of the Ministry of 
Finance of the People's Republic of China Concerning the Reduction and 
Exemption from Enterprise Income Tax and Consolidated Industrial and 
Commercial Tax for the Encouragement of Foreign Investment in Coastal 
Open Economic Zones and is currently administered under the Income Tax 
Law of the People's Republic of China for Enterprises with Foreign 
Investment and Foreign Enterprises (FIE Tax Law). Under Article 7 of 
the FIE Tax Law, ``productive'' FIEs located in the designated economic 
zones pay corporate income tax at a reduced rate of either 15 or 24 
percent, depending on the zone. According to the GOC, the FIE Tax Law 
has been repealed effective January 1, 2008, and there are no 
provisions regarding this program in the new Income Tax Law of the 
People's Republic of China for Enterprises.
    Lets Win is located in a coastal economic development zone and paid 
income tax at the reduced rate of 24 percent during the POI.
    We preliminarily determine that the reduced income tax rate paid by 
``productive'' FIEs under this program confers a countervailable 
subsidy. The reduced rate 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 further determine preliminarily that the 
reduction afforded by this program is limited to enterprises located in 
designated geographic regions and, hence, is specific under section 
771(5A)(D)(iv) of the Act.
    To calculate the benefit, we treated the income tax savings enjoyed 
by Lets Win as a recurring benefit, consistent with 19 CFR 
351.524(c)(1), and divided the company's tax savings received during 
the POI by the company's total sales during that period. To compute the 
amount of the tax savings, we compared the rate Lets Win would have 
paid in the absence of the program (30 percent) with the rate it paid 
(24 percent).
    On this basis, we preliminarily determine that Lets Win received a 
countervailable subsidy of 0.27 percent ad valorem under this program.

B. Provision of Inputs for Less than Adequate Remuneration

Hot-rolled Steel

    Hot-rolled steel suppliers in the PRC have varying ownership 
structures including state ownership, joint stock companies with state 
and foreign ownership, collective ownership, and wholly private 
ownership. According to the GOC, prices for hot-rolled steel are not 
set by regulation. Instead, Chinese producers set prices taking into 
account their production costs and supply and demand considerations. 
The GOC further claims that prices are differentiated in the hot-rolled 
steel market, with both state-owned and private producers pricing at 
different levels for the same product and that, at any given point in 
time, pricing leaders can be private or state-owned producers.
    During the POI, the ZZPC companies purchased from state-owned 
suppliers, collectives, and privately-owned companies. Lets Win 
provided information that it purchased hot-rolled steel only from 
privately-owned suppliers.
    We preliminarily determine that the GOC provided hot-rolled steel 
to certain of the ZZPC companies during the POI for less than adequate 
remuneration through the GOC-owned steel companies. In its response, 
the GOC listed the industries that use hot-rolled steel: construction, 
machinery and equipment (including industrial boilers, internal 
combustion engines, machine tools, electrical tools, smelter equipment, 
chemical equipment, feedstock processing machinery, packaging 
machinery, tractors, pollution prevention and remediation equipment, 
electricity generators and electrical motors, among others), 
automotive, pipe and tube, shipbuilding, railway industries (including 
profiled bar for rail construction and locomotive engines), 
petrochemical (including oil country tubular goods), household 
appliances, and freight containers. See GOC supplemental questionnaire 
response (November 7, 2007) at 10. We preliminarily find that these 
industries

[[Page 67708]]

are ``limited in number'' and, hence, that the provision of hot-rolled 
steel is de facto specific under section 771(5A)(D)(iii)(I) of the Act. 
See also Notice of Final Affirmative Countervailing Duty: Certain Cold-
Rolled Carbon Flat Steel Products from the Republic of Korea, 67 FR 
62102 (October 3, 2002) and accompanying Issues and Decision Memorandum 
at Comment 1 and Comment 2, where the Department found that Posco's 
provision of hot-rolled coil was countervailable.
    We further determine preliminarily that the GOC's provision of hot-
rolled steel through its state-owned producers is a government 
financial contribution within the meaning of section 771(5)(D)(iii) of 
the Act and that it confers a benefit on ZZPC because the good is being 
sold for less than adequate remuneration as described in section 
771(5)(E)(iv) of the Act. In determining what constitutes adequate 
remuneration, the Department is not relying on prices in the PRC, as 
explained in the Selection of the Adverse Facts Available Rate section, 
above. Instead, in accordance with 19 CFR 351.511(a)(2), we have used a 
world market price as a benchmark to compare to the respondent's 
reported purchase prices from state-owned steel suppliers. 
Specifically, we used the ``World Export Price'' from Steel 
Benchmarker, as provided in Exhibit 173, Attachment 2, Volume IV, of 
the Petition (July 6, 2007).
    We have rejected internal prices in the PRC because we do not know 
the share of steel produced and sold by SOEs in the PRC. As explained 
in the preambular language addressing 19 CFR 351.511(a), ``While we 
recognize that government involvement in a market may have some impact 
on the price of the good or service in that market, such distortion 
will normally be minimal unless the government provider constitutes a 
majority, or in certain circumstances, a substantial portion of the 
market.'' See Countervailing Duties; Final Rule, 63 FR 65348, 65377 
(November 25, 1998) (CVD Preamble). Because we are not able to gauge 
the extent of government involvement in the PRC hot-rolled steel 
market, we have made the adverse inference that the market is dominated 
by SOEs and that this distorts the prices for this product in the PRC.
    To calculate the benefit, we compared the monthly weighted-average 
prices paid by the ZZPC companies for hot-rolled steel purchased from 
SOEs to the average monthly prices reported in Steel Benchmarker. Steel 
Benchmarker does not include prices for January - March 2006; 
therefore, we have used the April 2006 price as a surrogate. We treated 
the difference in the amounts that ZZPC would have paid using the Steel 
Benchmarker prices to the amounts actually paid as the benefit, and 
divided the benefit by ZZPC's total sales. On this basis, we 
preliminarily determine that ZZPC received a countervailable benefit of 
2.99 percent ad valorem.
    In its November 14, 2007 submission, ZZPC reported that the hot-
rolled steel strip purchased by JZS from the SOE, Shangahi Baosteel 
Steel Products Trade Co., Ltd., Wuxi Branch is used to produce 
electronic pipe, which ZZPC claims is non-subject merchandise. ZZPC 
provided no evidence to support these claims. Therefore, for the 
preliminary determination, we are treating this steel as having been 
used as an input for LWRP.

Water

    According to the GOC, water suppliers in the PRC are highly 
localized. Many suppliers are SOEs, particularly in cities, but there 
is also private ownership. Water prices generally are regulated by the 
local governments. See, e.g., the Regulation on Administration of City 
Water Supply (Decree 158 of the State Council, 1994), GOC response 
(September 28, 2007) at Exhibit 118.
    The GOC has provided the water rate schedules in effect during the 
POI for Zhangjiagang, where ZZPC is located. Rate changes were effected 
during the POI and both sets of rates were submitted.
    The GOC states that all users within a given rate category pay the 
same fixed rate per ton. However, based on our comparison, the rates 
actually paid by ZZPC are lower than the published rates for industrial 
users. In our supplemental questionnaire to ZZPC, we asked about this 
discrepancy and, while ZZPC claims it did not receive a discount, it 
did not adequately explain why its rates diverged from the published 
rates.
    Based on this, we preliminarily determine that the GOC's provision 
of water to ZZPC during the POI confers a countervailable subsidy. The 
provision of water to this company is de facto specific because ZZPC 
pays a different price from the price paid by all industrial users in 
this jurisdiction. See section 771(5A)(D)(iii)(I) of the Act.
    We further determine preliminarily that the GOC's provision of 
water is a financial contribution within the meaning of section 
771(5)(D)(iii) of the Act and that it confers a benefit on ZZPC because 
the good is being sold for less than adequate remuneration as described 
in section 771(5)(E)(iv) of the Act. In determining what constitutes 
adequate remuneration, the Department is relying on the schedules of 
prices paid by other industrial users in Zhangjiagang City during the 
POI. We are using this benchmark because no market-determined prices 
for water have been provided for this jurisdiction and we have no 
information indicating that there is a world-market price for water. 
See 19 CFR 351.511(a)(i) and (ii). Consequently, we are selecting a 
benchmark under 19 CFR 351.511(a)(iii). As stated in the preambular 
language discussing that section of our regulations, where the 
government is the sole provider of a good or service, including in the 
case of water, the Department may assess whether the government price 
was set in accordance with market principles, which may include an 
analysis of whether there is price discrimination among the users of 
the good or service that is provided and that ``{w{time} e would only 
rely on a price discrimination analysis if the government good or 
service is provided to more than a specific enterprise or industry, or 
group thereof.'' See CVD Preamble at 63 FR 65378. In the case of 
Zhangjiagang City, the GOC has reported that there are over 1,000 
industrial users paying the published schedule rates for water. 
Therefore, we preliminarily determine that the published rate for 
industrial users of water in Zhangjiagang City is an appropriate 
benchmark for determining whether the GOC provided water to ZZPC for 
less than adequate remuneration.
    To calculate the benefit, we compared the monthly weighted-average 
prices paid by ZZPC for water with the published rates for industrial 
users of water in Zhangjiagang City. We treated the difference in the 
amounts that ZZPC would have paid using the published rates to the 
amounts actually paid as the benefit, and divided the benefit by ZZPC's 
total sales. On this basis, we preliminarily determine that ZZPC 
received a countervailable benefit of less than 0.005 percent ad 
valorem.
    Where the countervailable subsidy rate for a program is less than 
.005 percent, the program is not included in the total countervailing 
duty rate. See, e.g., Final Results of Countervailing Duty 
Administrative Review: Low Enriched Uranium from France, 70 FR 39998 
(July 12, 2005), and the accompanying Issues and Decision Memorandum, 
at ``Purchases at Prices that Constitute 'More than Adequate 
Remuneration''' (citing Final Results of Administrative Review: Certain 
Softwood Lumber Products from Canada, 69 FR 75917 (December 20,

[[Page 67709]]

2004), and the accompanying Issues and Decision Memorandum, ``Other 
Programs Determined to Confer Subsidies'').
    Regarding Lets Win, the GOC provided the rate schedule that came 
into effect on September 10, 2006, for the water authority in Kunshan. 
Subsequent to that date, the rates actually paid by Lets Win were less 
than, equal to, or in excess of the newly established rates for 
industrial water users, suggesting that it took some time for the new 
rates to be reflected in the bills and payments. We intend to request 
an explanation from Lets Win and to request the rate schedule for the 
period prior to September 10, 2006, and will address whether the GOC 
provided water to Lets Win for less than adequate remuneration in our 
final determination.

II. Programs Preliminarily Determined to Be Not Countervailable

A. Government Policy Lending Program

    In CFS from the PRC, the Department found Government Policy Lending 
to provide a countervailable subsidy because record evidence indicated 
that: (i) the GOC had a policy in place to encourage and support the 
growth and development of the forestry and paper industry through 
preferential financing initiatives as illustrated in the GOC's five-
year plans and industrial policies; and (ii) the GOC's policy toward 
the paper industry was carried out by the central and local governments 
through the provision of loans extended by GOC Policy Banks and state-
owned commercial banks. See CFS from the PRC and accompanying Issues 
and Decision Memorandum at Comment 8.
    In this investigation, the evidence submitted to date does not 
support a finding that the LWRP industry in the PRC received 
preferential financing pursuant to the GOC's Iron and Steel Policy. 
Therefore, we preliminarily determine that producers and exporters of 
LWRP in the PRC did not receive government policy loans. We will, 
however, continue to investigate whether the GOC's Iron and Steel 
Policy or other plans apply to the LWRP industry, and, if so, the 
purpose of those policies and whether preferential lending was provided 
to the LWRP industry pursuant to those policies.

B. Provision of Inputs for Less than Adequate Remuneration

    Electricity: According to the GOC, electricity in the PRC is 
produced by numerous power plants and it is transmitted for local 
distribution by two state-owned transmission companies, State Grid and 
China South Power Grid. Generally, prices for uploading electricity to 
the grid and transmitting it are regulated by the GOC, as are the final 
sales prices. See, e.g., Circular on Implementation Measures Regarding 
Reform of Electricity Prices, (FAGAIJIAGE {2005{time}  No. 514, 
National Development and Reform Commission) at Appendix 3, Provisional 
Measures on Prices for Sales of Electricity at Article 29 (``Government 
departments in charge of pricing at various levels shall be responsible 
for the administration and supervision of electricity sales prices.''), 
GOC response (September 28, 2007) at Exhibit 114.
    Electricity consumers are divided into broad categories such as 
residential, commercial, large-scale industry and agriculture. The 
rates charged vary across customer categories and within customer 
categories based on the amount of electricity consumed. Moreover, among 
industrial users, certain industries are specifically broken out and 
these industries receive special, discounted rates. Based on our review 
of the rate schedules submitted for Jiangsu Province (where both Lets 
Win and ZZPC are located), discounted rates are established for 
producers of calcium carbide, electrolyte caustic soda, synthetic 
ammonia, yellow phosphorus with electric furnace, chlorine alkali, 
electrolyzed aluminum, and fertilizer. Thus, there is not a discounted 
rate for LWRP producers and, according to the GOC, the types of 
industries in Jiangsu province that fall into the large-scale industry 
category (which includes the LWRP producers) cover virtually all 
economic sectors outside of agriculture and services.
    Based on the record evidence, we preliminarily determine that the 
provision of electricity to large-scale enterprises in the PRC is 
neither de jure nor de facto specific. Although producers in a few 
particular industries are eligible for discounts under the law, all 
other large-scale enterprises within a locality pay the same rate for 
their electricity. Moreover, the absence of price discrimination among 
most users may also support a preliminary finding that electricity is 
not being provided to LWRP producers for less than adequate 
remuneration. See Programs Preliminarily Determined to Be 
Countervailable/Provision of Goods for Less Than Adequate Remuneration/
Water, above.
    On this basis, we preliminarily determine that the GOC's provision 
of electricity does not confer a countervailable subsidy.

C. VAT Rebates (originally referred to as ``Export Incentive Payments 
Characterized as VAT Rebates'')

    According to the GOC, the ``exemption, deduction and refund'' of 
VAT applies if a manufacturer exports its self-produced goods by itself 
or via a trading company. See Article 1 of the Circular on Further 
Promotion of Methodology of ``Exemption, Deduction, and Refund'' of Tax 
for Exported Goods (CAISHUI (2002) No. 7), GOC response (September 28, 
2007) at Exhibit 98. Under the ``VAT refund system,'' when a producer/
exporter purchases inputs (e.g,, raw materials, components, fuel and 
power) it pays a VAT based on the purchase price of inputs. The GOC 
reported the VAT rates paid by LWRP producers/exports for inputs are as 
follows: raw materials and electricity - 17 percent; and, fuel and 
water - 13 percent. Once the exporter/producer exports subject 
merchandise, a VAT payment and tax exemption form is prepared and filed 
with the relevant state tax authority. LWRP exporters received a VAT 
refund of 13 percent of the export price during the POI.
    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.'' 19 CFR 351.517(a); see also 19 
CFR 351.102 (for a definition of ``indirect tax''). Information in the 
companies' responses shows that Lets Win and ZZPC paid the VAT on their 
inputs, and applied for and received a VAT refund on their export 
sales.
    To determine whether a benefit was provided under this program, the 
Department analyzed whether the amount of VAT exempted during the POI 
exceeded the amount levied with respect to the production and 
distribution of like products when sold for domestic consumption. 
Because the VAT rate levied on LWRP in the domestic market (17 percent) 
exceeded the amount of VAT exempted upon the export of LWRP (13 
percent), the Department preliminarily determines that, for the 
purposes of this investigation, the VAT refund received upon the export 
of LWRP does not confer a countervailable benefit.
    The GOC has additionally reported that effective July 1, 2007, the 
VAT refund rate for exports of LWRP was set at zero percent.

[[Page 67710]]

III. Post-POI Programs

E. Government Restraints on Exports

    Hot-rolled Steel and Zinc: Petitioners alleged that the GOC 
restrains exports of hot-rolled steel and zinc by means of export 
taxes, which artificially suppress the price a producer in the PRC can 
charge for these inputs into LWRP.
    In its response, the GOC provided the Announcement on Adjustment of 
Provisional Import or Export Duty for Certain Merchandises (PRC Customs 
Announcement No. 22, 2007) See GOC questionnaire response (September 
28, 2007) at Exhibit 122. This document shows that on May 30, 2007, the 
GOC announced a provisional export duty rate for hot-rolled steel of 
five percent and an increase in the provisional export duty rate for 
zinc from five percent to ten percent. These changes were implemented 
retroactively to begin on July 1, 2006.
    The POI for this investigation is January 1, 2006, through December 
31, 2006, and the export restraints allegedly giving rise to a subsidy 
were announced on May 30, 2007, i.e., after the POI. Although the 
export duties were implemented retroactively, there is no basis to 
conclude that the export duties affected the prices paid by the 
respondents for hot-rolled steel and zinc prior to May 30, 2007, 
because those purchases had already been made. Therefore, any subsidy 
conferred by the export duties on hot-rolled steel and zinc would 
properly be addressed under our Program-wide Change regulation, 19 CFR 
351.526(a). That regulation states that the Department may take a 
program-wide change into account in establishing the estimated 
countervailing duty cash deposit rate if: (1) the Department determines 
that subsequent to the period of investigation or review, but before a 
preliminary determination in an investigation, a program-wide change 
has occurred; and (2) the Department is able to measure the change in 
the amount of countervailable subsidies provided under the program in 
question.
    In this investigation, Lets Win submitted its monthly purchase 
prices for hot-rolled steel and zinc for periods prior to and following 
the May 30, 2007 announcement. ZZPC did not purchase zinc, but ZZPC 
submitted its purchase prices for hot-rolled steel. The data show 
fluctuations in the prices of these inputs both before and after the 
announcement of the export duties. Moreover, the data available for the 
months after the announcement are limited. For these reasons, we cannot 
measure the subsidy, if any, arising from the imposition of the export 
duties, and we are not including these alleged subsidy programs in our 
cash-deposit rates.

IV. Programs Determined To Be Terminated

A. Exemption from Payment of Staff and Worker Benefits for Export-
oriented Industries

    The Department has determined that this program was terminated on 
January 1, 2002, with no residual benefits. See CFS from the PRC and 
accompanying Issues and Decision Memorandum at ``Programs Determined to 
be Terminated.''

V. Programs Preliminarily Determined To Be Not Used By Lets Win and 
ZZPC

    We preliminarily determine that Lets Win and ZZPC did not apply for 
or receive benefits during the POI under the programs listed below.
A. Loans and Interest Subsidies Provided Pursuant to the Northeast 
Revitalization Program
B. The ``Two Free, Three Half'' Program
C. Local Income Tax Exemption and Reduction Program for ``Productive'' 
FIEs
D. Income Tax Exemption Program for Export-oriented FIEs
E. Corporate Income Tax Refund Program for Reinvestment of FIE Profits 
in Export-oriented Enterprises
F. Reduced Income Tax Rate for Technology and Knowledge Intensive FIEs
G. Reduced Income Tax Rate for High or New Technology FIEs
H. Preferential Tax Policies for Research and Development at FIEs
I. Income Tax Credits on Purchases of Domestically Produced Equipment 
by Domestically Owned Companies
J. Income Tax Credits on Purchases of Domestically Produced Equipment 
by FIEs
K. Program to Rebate Antidumping Legal Fees in Shenzen and Zhejiang 
Provinces
L. Funds for ``Outward Expansion'' of Industries in Guangdong Province
M. Export Interest Subsidy Funds for Enterprises Located in Shenzhen 
and Zhejiang Provinces
N. Loans Pursuant to Liaoning Province's Five-year Framework
O. VAT and Tariff Exemptions on Imported Equipment
P. VAT Rebates on Domestically Produced Equipment
Q. The State Key Technologies Renovation Project Fund
R. Grants to Loss-making State-owned Enterprises
S. Provision of Inputs for Less Than Adequate Remuneration: Natural Gas
T. Foreign Currency Retention Program
    For purposes of this preliminary determination, we have relied on 
the GOC's and responding companies' responses to preliminarily 
determine non-use of the programs listed above. During the course of 
verification, the Department will further investigate whether these 
programs were used by respondent companies during the POI.

VI. Programs for Which More Information is Required

A. Provision of Land for Less than Adequate Remuneration

    Citing Article 29 of the Implementation Rules of the Law on 
Administration of Land, land-use rights can be obtained from the 
government in one of three ways: 1) purchase; 2) lease; and 3) as an 
equity investment. See GOC response (September 28, 2007) at Exhibit 
121. The GOC further states that the price of land-use rights may be 
determined by means of public bidding, auction, independent appraisal, 
and negotiation. According to the GOC, no formal appraisal was 
conducted in connection with the sale of land use rights to Lets Win or 
ZZPC. Instead, the purchase prices for these companies' land use rights 
``were determined through arm's length negotiations, taking into 
consideration the prices of land in the neighboring area, local 
economic development level, and the specific conditions of the land 
under consideration.'' See GOC Supplemental Questionnaire Response 
(November 7, 2007) at 17.
    Lets Win reported that it purchased its land use rights from its 
local county government in March 2001. ZZPC reported that it owns land 
use rights for three lots. For two lots, the land use rights were 
purchased prior to December 11, 2001. Because these purchases occurred 
prior to December 11, 2001, we preliminarily determine that the GOC's 
provision of these land use rights does not confer a countervailable 
subsidy. See Application of the Countervailing Duty Law to Imports from 
the PRC section, above.
    ZZPC purchased its third lot from the Zhangjiagang Jingang Town 
Assets Management Company after December 11, 2001. According to ZZPC 
and the GOC, no appraisals or valuations of the land use rights were 
conducted to support this purchase.
    It is difficult for the Department to reconcile the GOC's claim 
that the local land authority took into consideration ``the prices of 
land in the neighboring area, local economic development level, and the 
specific conditions of the land''

[[Page 67711]]

with the fact that no appraisal or valuation was conducted. Neither the 
GOC nor ZZPC has provided any explanation of the process used by the 
Zhangjiagang Jingang Town Assets Management Company or ZZPC to 
establish the value of the land use rights, a description of the 
negotiation process, or the prices for land use rights for comparable 
plots. Without this information, we are not able to determine whether 
the provision of land to ZZPC should be considered specific within the 
meaning of section 771(5A) of the Act and, if so, how to determine what 
would constitute adequate remuneration for the land use rights.
    We intend to seek further information on these questions and to 
issue an interim analysis describing our preliminary findings with 
respect to this program before the final determination so that parties 
will have the opportunity to comment on our findings before the final 
determination. In the meantime, we invite parties to submit information 
and argument on the basis for making a specificity determination with 
respect to the provision of land and how adequate remuneration should 
be determined. These submissions should be made no later than December 
21, 2007.

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 703(d)(1)(A)(i) of the Act, we 
calculated an individual rate for each exporter/manufacturer of the 
subject merchandise. We preliminarily determine the total estimated net 
countervailable subsidy rates to be:

------------------------------------------------------------------------
                                                             Net Subsidy
                   Exporter/Manufacturer                         Rate
------------------------------------------------------------------------
Kunshan Lets Win Steel Machinery Co., Ltd..................         0.27
                                                                 percent
Qingdao Xiangxing Steel Pipe Co............................        77.85
                                                                 percent
Zhangjiagang Zhongyuan Pipe-making Co., Ltd., Jiangsu               2.99
 Qiyuan Group Co, Ltd......................................      percent
All-Others.................................................         2.99
                                                                 percent
------------------------------------------------------------------------

    Sections 703(d) and 705(c)(5)(A) of the Act state that for 
companies not investigated, we will determine an all-others rate by 
weighting the individual company subsidy rate of each of the companies 
investigated by each company's exports of the subject merchandise to 
the United States. However, the all-others rate may not include zero 
and de minimis rates or any rates based solely on the facts available. 
In this investigation, because we have only one rate that can be used 
to calculate the all-others rate, ZZPC's rate, we have assigned that 
rate to all-others.
    In accordance with sections 703(d)(1)(B) and (2) of the Act, we are 
directing CBP to suspend liquidation of all entries of LWRP from the 
PRC that are entered, or withdrawn from warehouse, for consumption on 
or after the date of the publication of this notice in the Federal 
Register, and to require a cash deposit or bond for such entries of 
merchandise in the amounts indicated above. Neither the suspension of 
liquidation nor the requirement for a cash deposit or bond will apply 
to merchandise produced and exported by Lets Win because the Department 
has preliminarily determined that Lets Win received de minimis 
subsidies.

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.
    Case briefs for this investigation must be submitted no later than 
one week after the issuance of the last verification report. See 19 CFR 
351.309(c) (for a further discussion of case briefs). Rebuttal briefs 
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.
    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 tentatively 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, N.W., Washington, D.C. 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 submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice, pursuant to 19 
CFR 351.310(c). Requests should contain: (1) the party's name, address, 
and telephone; (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.
    This determination is published pursuant to sections 703(f) and 
777(i) of the Act.

    Dated: November 26, 2007.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E7-23283 Filed 11-29-07; 8:45 am]
BILLING CODE 3510-DS-S