Notice of Initiation of Countervailing Duty Investigation: Certain Kitchen Appliance Shelving and Racks from the People's Republic of China, 50304-50307 [E8-19778]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 73, Number 166 (Tuesday, August 26, 2008)]
[Notices]
[Pages 50304-50307]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-19778]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

(C-570-942)


Notice of Initiation of Countervailing Duty Investigation: 
Certain Kitchen Appliance Shelving and Racks from the People's Republic 
of China

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

EFFECTIVE DATE: August 26, 2008.

FOR FURTHER INFORMATION CONTACT: Scott Holland and Yasmin Nair, AD/CVD 
Operations, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230; telephone: (202) 482-1279 and (202) 482-3813, 
respectively.

SUPPLEMENTARY INFORMATION:

The Petition

    On July 31, 2008, the Department of Commerce (the ``Department'') 
received a petition filed in proper form by Nashville Wire Products 
Inc., SSW Holding Company, Inc., United Steel, Paper and Forestry, 
Rubber, Manufacturing, Energy, Allied-Industrial and Service Workers 
International Union, and the International Association of Machinists 
and Aerospace Workers, District Lodge 6 (Clinton, IA) (the 
``petitioners''), domestic producers of certain kitchen appliance 
shelving and racks (``kitchen shelving and racks''). In response to the 
Department's requests, the petitioners provided timely information 
supplementing the petition on August 13 and 15, 2008.
    In accordance with section 702(b)(1) of the Tariff Act of 1930, as 
amended (``the Act''), the petitioners allege that manufacturers, 
producers, or exporters of certain kitchen appliance shelving and racks 
in the People's Republic of China ( the ``PRC''), receive 
countervailable subsidies within the meaning of section 701 of the Act 
and that such imports are materially injuring, or threatening material 
injury to, an industry in the United States.
    The Department finds that the petitioners filed the petition on 
behalf of the domestic industry because they are interested parties as 
defined in section 771(9)(C) and (D) of the Act and the petitioners 
have demonstrated sufficient industry support with respect to the 
countervailing duty investigation (see ``Determination of Industry 
Support for the Petition'' section below).

Period of Investigation

    The period of investigation is January 1, 2007, through December 
31, 2007.

Scope of the Investigation

    The scope of this investigation consists of shelving and racks for 
refrigerators, freezers, combined refrigerator-freezers, other 
refrigerating or freezing equipment, cooking stoves, ranges, and ovens 
(``certain kitchen appliance shelving and racks'' or ``the subject 
merchandise''). Certain kitchen appliance shelving and racks are 
defined as shelving, baskets, racks (with or without extension slides, 
which are carbon or stainless steel hardware devices that are connected 
to shelving, baskets, or racks to enable sliding), side racks (which 
are welded wire support structures for oven racks that attach to the 
interior walls of an oven cavity that does not include support ribs as 
a design feature), and subframes (which are welded wire support 
structures that interface with formed support ribs inside an oven 
cavity to support oven rack assemblies utilizing extension slides) with 
the following dimensions:
--shelving and racks with dimensions ranging from 3 inches by 5 inches 
by 0.10 inch to 28 inches by 34 inches by 6 inches; or
--baskets with dimensions ranging from 2 inches by 4 inches by 3 inches 
to 28 inches by 34 inches by 16 inches; or
--side racks from 6 inches by 8 inches by 0.1 inch to 16 inches by 30 
inches by 4 inches; or
--subframes from 6 inches by 10 inches by 0.1 inch to 28 inches by 34 
inches by 6 inches.
    The subject merchandise is comprised of carbon or stainless steel 
wire ranging in thickness from 0.050 inch to 0.500 inch and may include 
sheet metal of either carbon or stainless steel ranging in thickness 
from 0.020 inch to 0.2 inch. The subject merchandise may be coated or 
uncoated and may be formed and/or welded. Excluded from the scope of 
this investigation is shelving in which the support surface is glass. 
The merchandise subject to this investigation is currently classifiable 
in the Harmonized Tariff Schedule of the United States (``HTSUS'') 
statistical reporting numbers 8418.99.80.50, 7321.90.50.00, 
7321.90.60.90 and 8516.90.80.00. Although the HTSUS subheadings are 
provided for convenience and customs purposes, the written description 
of the scope of this investigation is dispositive.

Comments on the Scope of the Investigation

    During our review of the petition, we discussed the scope with the 
petitioners to ensure that it is an accurate reflection of the products 
for which the domestic industry is seeking relief. Moreover, as 
discussed in the preamble to the regulations (Antidumping Duties; 
Countervailing Duties, 62 FR 27296, 27323 (May 19, 1997)), we are 
setting aside a period for interested parties to raise issues regarding 
product coverage. The Department encourages all interested parties to 
submit such comments within 20 calendar days of the publication of this 
notice. Comments should be addressed to Import Administration's Central 
Records Unit (``CRU''), Room 1117, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230. The period of 
scope consultations is intended to provide the Department with ample 
opportunity to consider all comments and to consult with parties prior 
to the issuance of the preliminary determination.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department 
invited representatives of the Government of the PRC for consultations 
with respect to the countervailing duty petition. The Department held 
these consultations in Beijing, China, with representatives of the 
Government of the PRC on August 15, 2008. See the Memorandum to The 
File, entitled, ``Consultations with Officials from the Government of 
the People's Republic of China'' (August 15,

[[Page 50305]]

2008) on file in the CRU of the Department of Commerce, Room 1117.

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (i) at least 
25 percent of the total production of the domestic like product; and 
(ii) more than 50 percent of the production of the domestic like 
product produced by that portion of the industry expressing support 
for, or opposition to, the petition. Moreover, section 702(c)(4)(D) of 
the Act provides that, if the petition does not establish support of 
domestic producers or workers accounting for more than 50 percent of 
the total production of the domestic like product, the Department 
shall: (i) poll the industry or rely on other information in order to 
determine if there is support for the petition, as required by 
subparagraph (A), or (ii) determine industry support using a 
statistically valid sampling method.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers as a whole of a domestic like product. Thus, to determine 
whether a petition has the requisite industry support, the statute 
directs the Department to look to producers and workers who produce the 
domestic like product. The U.S. International Trade Commission 
(``ITC''), which is responsible for determining whether ``the domestic 
industry'' has been injured, must also determine what constitutes a 
domestic like product in order to define the industry. While both the 
Department and the ITC must apply the same statutory definition 
regarding the domestic like product (section 771(10) of the Act), they 
do so for different purposes and pursuant to a separate and distinct 
authority. In addition, the Department's determination is subject to 
limitations of time and information. Although this may result in 
different definitions of the like product, such differences do not 
render the decision of either agency contrary to law. See Algoma Steel 
Corp., Ltd. v. United States, 688 F. Supp. 639, 644 (CIT 1988), aff'd 
865 F.2d 240 (Fed. Cir. 1989), cert. denied 492 U.S. 919 (1989).
    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this subtitle.'' Thus, the reference point from which the 
domestic like product analysis begins is ``the article subject to an 
investigation'' (i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition).
    With regard to the domestic like product, the petitioners contend 
that there are two domestic like products: certain refrigeration 
shelving and certain oven racks. The petitioners note that the two like 
products, when considered together, correspond to the product scope 
description. Based on our analysis of the information submitted on the 
record, we have determined that refrigeration shelving and certain oven 
racks constitute two domestic like products, and we have analyzed 
industry support in terms of those domestic like products. For a 
discussion of the domestic like product analysis in this case, see 
``Countervailing Duty Investigation Initiation Checklist: Certain 
Kitchen Appliance Shelving and Racks from the People's Republic of 
China (``Initiation Checklist''), Industry Support at Attachment II, on 
file in the CRU, Room 1117 of the main Department of Commerce building.
    With regard to section 702(c)(4)(A) of the Act, in determining 
whether the petitioners have standing (i.e., the domestic workers and 
producers supporting the Petition account for (1) at least 25 percent 
of the total production of the domestic like product and (2) more than 
50 percent of the production of the domestic like product produced by 
that portion of the industry expressing support for, or opposition to, 
the Petition), we considered the industry support data contained in the 
Petition with reference to the domestic like products. To establish 
industry support, the petitioners provided their own production volume 
of the domestic like products for calendar year 2007, and compared that 
to total production volume of the domestic like products for the 
industry. We have relied upon data the petitioners provided for 
purposes of measuring industry support. For further discussion, see 
Initiation Checklist at Attachment II (Industry Support).
    The Department's review of the data provided in the petition, 
supplemental submissions, and other information readily available to 
the Department indicates that petitioners have established industry 
support. First, the petition establishes support from domestic 
producers (or workers) accounting for more than 50 percent of the total 
production of the domestic like products and, as such, the Department 
is not required to take further action in order to evaluate industry 
support (i.e., polling). See section 702(c)(4)(D) of the Act and 
Initiation Checklist at Attachment II (Industry Support). Second, the 
domestic producers (or workers) have met the statutory criteria for 
industry support under section 702(c)(4)(A)(i) of the Act because the 
domestic producers (or workers) who support the petition account for at 
least 25 percent of the total production of the domestic like products. 
See Initiation Checklist at Attachment II (Industry Support). Finally, 
the domestic producers (or workers) have met the statutory criteria for 
industry support under section 702(c)(4)(A)(ii) of the Act because the 
domestic producers (or workers) who support the petition account for 
more than 50 percent of the production of the domestic like products 
produced by that portion of the industry expressing support for, or 
opposition to, the petition. Accordingly, the Department determines 
that the petition was filed on behalf of the domestic industry within 
the meaning of section 702(b)(1) of the Act. See Initiation Checklist 
at Attachment II (Industry Support).
    The Department finds that the petitioners filed the petition on 
behalf of the domestic industry because they are interested parties as 
defined in sections 771(9)(C) and (D) of the Act and have demonstrated 
sufficient industry support with respect to the countervailing duty 
investigation that they are requesting the Department initiate. See 
Initiation Checklist at Attachment II (Industry Support).

Injury Test

    Because the PRC is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, section 701(a)(2) of the Act 
applies to this investigation. Accordingly, the ITC must determine 
whether imports of the subject merchandise from the PRC materially 
injure, or threaten material injury to, a U.S. industry.

Allegations and Evidence of Material Injury and Causation

    The petitioners allege that imports of certain refrigeration 
shelving and certain oven racks from the PRC are benefitting from 
countervailable subsidies and that such imports are causing or threaten 
to cause, material injury to the domestic industries producing certain 
refrigeration shelving and certain oven racks. In addition, the 
petitioners allege that subsidized imports exceed the negligibility 
threshold provided for under section 771(24)(A) of the Act.
    The petitioners contend that the industries' injured condition is 
illustrated by reduced market share, underselling and price depressing 
and

[[Page 50306]]

suppressing effects, lost sales and revenue, reduced production and 
capacity utilization, reduced shipments, reduced employment, and an 
overall decline in financial performance. We have assessed the 
allegations and supporting evidence regarding material injury, threat 
of material injury, and causation, and we have determined that these 
allegations are properly supported by adequate evidence and meet the 
statutory requirements for initiation. See Initiation Checklist at 
Attachment III (Injury).
    We are including in our investigation the following programs 
alleged in the petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in the PRC:

A. Income Tax Programs

    1. ``Two Free, Three Half'' program
    2. Income tax exemption program for export-oriented FIEs
    3. Income tax refund for reinvestment of profits in export-oriented 
enterprises
    4. Income tax subsidies for FIEs based on geographic location
    5. Preferential tax subsidies for research and development by FIEs
    6. Income tax credits on purchases of domestically-produced 
equipment by FIEs
    7. Income tax credits for domestically-owned companies purchasing 
domestically-produced equipment
    8. Income tax exemption for investment in domestic ``Technological 
Renovation
    9. Reduction in or exemption from the fixed assets investment 
orientation regulatory tax

B. Indirect Tax Programs and Import Tariff Programs

    10. Value Added Tax (``VAT'') rebates for FIEs purchasing 
domestically-produced equipment
    11. Import tariff and VAT exemptions for FIEs and certain domestic 
enterprises using imported equipment in encouraged industries
    12. Import tariff exemptions for the ``encouragement of investment 
by Taiwan Compatriots

C. Provincial/Local Subsidy Programs

    13. Local income tax exemption and reduction program for 
``productive'' FIEs
    Guangdong Province:
    14. Exemption from city construction tax and education tax for FIEs 
in Guangdong Province
    15. Exemption from real estate tax and dyke maintenance fee for 
FIEs in Guangdong Province
    16. Import tariff refunds and exemptions for FIEs in Guangdong 
Province
    17. Preferential loans and interest rate subsidies in Guangdong 
Province
    18. Direct grants in Guangdong Province
    19. Funds for ``outward expansion'' of industries in Guangdong 
Province
    20. Land-related subsidies to companies located in specific regions 
of Guangdong Province
    21. Government provision of electricity and water at less than 
adequate remuneration to companies located in development zones in 
Guangdong Province
    Zhejiang Province
    22. Import tariff and VAT refunds and exemptions for FIEs in 
Zhejiang
    23. Grants to promote exports from Zhejiang Province
    24. Land-related subsidies to companies located in specific regions 
of Zhejiang

D. Provision of Goods and Services for Less than Adequate Remuneration 
by the GOC

    25. Wire Rod and Nickel
    For further information explaining why the Department is 
investigating these programs, see Initiation Checklist.
    We are not including in our investigation the following programs 
alleged to benefit producers and exporters of the subject merchandise 
in the PRC:

A. Government Restraints on Exports

    1. Wire Rod and Nickel
    Petitioners allege the GOC restrains exports of wire rod and nickel 
by means of export taxes and export licenses, which artificially 
suppress the prices wire rod and nickel producers in China can charge 
for these products. Petitioners have not adequately shown how these 
particular export taxes and licenses constitute entrustment or 
direction of private entities by the GOC to provide a financial 
contribution to producers of subject merchandise. Moreover, the 
petitioners have not provided sufficient data regarding historic price 
trends demonstrating, e.g., price decreases correlated with the 
imposition of the alleged export restraints. Therefore, we do not plan 
to investigate this program.

B. Preferential Lending

    1. Preferential policy loans to favored industries, including the 
electrical appliance industry in Guangdong Province
    The petitioners allege that the Guangdong province's five-year plan 
stipulates that the provincial government will actively coordinate 
financing from the financial market. According to this policy, the 
provincial government will support the home electric appliances 
industry, including suppliers of parts or components, by coordinating 
financial institutions to assemble funds to stimulate investments in 
the form of bank credit or loans. Petitioners have not sufficiently 
alleged the elements necessary for the imposition of a countervailing 
duty and did not support the allegation with reasonably available 
information. For example, there is insufficient evidence that kitchen 
shelving and racks products are within the scope of the provincial 
government's economic development plans. Moreover, there is no clear 
indication that any such plans include lending to the kitchen shelving 
and racks producers. Therefore, we do not plan to investigate this 
program.
    2. Preferential policy loans to favored industries, including the 
electrical appliance industry in Zhejiang Province
    Petitioners allege that the electrical appliance industry is 
considered a ``pillar'' industry at both the provincial and local-
levels in Zhejiang province. Petitioners assert that preferential 
lending exists to support ``pillar'' industries pursuant to five-year 
plans or other policies issued by provincial and local authorities in 
these provinces. Petitioners have not sufficiently alleged the elements 
necessary for the imposition of a countervailing duty and did not 
support the allegation with reasonably available information. For 
example, there is insufficient evidence that kitchen shelving and racks 
products are within the scope of the provincial government's economic 
development plans. Moreover, there is no clear indication that any such 
plans include lending to the kitchen shelving and racks producers. 
Therefore, we do not plan to investigate this program.

C. Income Tax Programs

    1. Tax reduction for enterprises making little profit
    Petitioners allege that ``enterprises making little profit'' pay 
reduced income taxes and that such enterprises comprise a de jure 
specific group. Petitioners have not established with reasonably 
available evidence that ``enterprises making little profit'' are a 
specific group pursuant to section 771(5A)(D) of the Act. Therefore, we 
do not plan to investigate tax reductions for enterprises making little 
profit.
    2. Tax incentives for domestic enterprises engaging in research and 
development

[[Page 50307]]

    According to China's WTO subsidies notification, domestic 
industrial enterprises whose research and development expenses 
increased 10 percent from the previous year may offset 150 percent of 
the research expenditures from their income tax obligation. Petitioners 
allege that domestic companies engaging in research and development 
comprise a de jure specific group. Petitioners have not established 
with reasonably available evidence that such enterprises are a specific 
group pursuant to section 771(5A)(D) of the Act. Therefore, we do not 
plan to investigate this program.

D. Indirect Tax Programs

    1. Import tariff and VAT refunds to promote the development of 
equipment manufacturing in China
    Petitioners allege that the Chinese government refunds import 
tariffs and VAT for equipment and raw materials that cannot be 
domestically produced. Petitioners have not sufficiently established 
that this import tariff and VAT refund program is specific. Therefore, 
we do not plan to investigate this program.
    2. VAT exemptions for the ``encouragement of investment by Taiwan 
Compatriots''
    Petitioners allege that the Chinese government offers VAT 
exemptions to encourage Taiwanese investors to establish export-
oriented and technologically advanced enterprises. Petitioners have not 
sufficiently established that this VAT exemption program constitutes a 
countervailable subsidy because our regulations permit exemption or 
remission of indirect taxes such as the VAT, unless the exemption or 
remission is excessive in accordance with 19 C.F.R. 351.517(a). 
Therefore, because petitioners have not shown that there is an 
excessive exemption, remuneration or rebate of VAT, we do not plan to 
investigate this program.

E. Provincial/Local Subsidy Programs

    1. VAT Refunds and Exemptions for FIEs in Guangdong Province
    The petitioners allege that, in Guangdong province, export-oriented 
FIEs are exempt from import-related VAT on raw materials, parts and 
components, accessories, packing materials, and other inputs used in 
production. Encouraged FIEs in Guangdong also receive VAT exemptions on 
imported equipment. The petitioners provided evidence that certain 
Chinese producers of kitchen shelving and racks are export-oriented 
FIEs that are located in Guangdong province. However, petitioners have 
not sufficiently established that the VAT exemption program for export-
oriented FIEs in Guangdong constitutes a countervailable subsidy 
because our regulations permit exemption or remission of VAT, unless 
the exemption or remission is excessive, and petitioners have not 
provided allegation or information regarding excessivity in accordance 
with 19 C.F.R. 351.517(a). Therefore, we do not plan to investigate 
this program.
    2. Provision of land at less than adequate remuneration in specific 
regions of Zhejiang Province
    Petitioners allege that firms in the Ningbo Economic and 
Technological Development Zone (``ETDZ'') are eligible to receive 
reductions or exemptions of the land-use fee and site-developing fee. 
We do not recommend plan to investigate the provision of land for less 
than adequate remuneration in Ningbo ETDZ or the reduction in or 
exemption from site use fees in Ningbo ETDZ, because the petitioners 
have not provided evidence that any Chinese producers of kitchen 
shelving or racks are located in Ningbo city, generally, or in the 
Ningbo EDTZ.

F. Currency Manipulation

    Petitioners allege that the PRC government's policy of maintaining 
an undervalued RMB is an export subsidy that provides either a direct 
transfer of funds or the provision of a good or service at less than 
adequate remuneration. Petitioners have not sufficiently alleged the 
elements necessary for the imposition of a countervailing duty and did 
not support the allegation with reasonably available information. 
Therefore, we do not plan to investigate the currency manipulation 
program.

Respondent Selection

    To determine the total and relative volume and value of import data 
for each potential respondent, the Department normally relies on 
Customs and Border Protection import data for the POI. However, in the 
instant proceeding, HTSUS categories that include subject merchandise 
are very broad, and include products other than products subject to 
this investigation. Therefore, because of the unique circumstances of 
this case, the Department will issue ``Quantity and Value 
Questionnaires'' to potential respondents for the purposes of 
respondent selection.
    The Department will send the quantity and value questionnaire to 
those PRC companies identified in the July 31, 2008, petition, at 
Exhibit 3. The responses must be submitted by those exporters/producers 
that receive a quantity and value questionnaire no later than September 
4, 2008. The Department will post the quantity and value questionnaire 
along with the filing instructions on the Import Administration's 
website, at https://ia.ita.doc.gov/ia-highlights-and-news.html.

Distribution of Copies of the Petition

    In accordance with section 702(b)(4)(A)(i) of the Act, a copy of 
the public version of the petition has been provided to the Government 
of the PRC. As soon as and to the extent practicable, we will attempt 
to provide a copy of the public version of the petition to each 
exporter named in the petition, consistent with 19 CFR 351.203(c)(2).

ITC Notification

    We have notified the ITC of our initiation, as required by section 
702(d) of the Act.

Preliminary Determination by the ITC

    The ITC will preliminarily determine, within 25 days after the date 
on which it receives notice of the initiation, whether there is a 
reasonable indication that imports of subsidized kitchen appliance 
shelving and racks from the PRC are causing material injury, or 
threatening to cause material injury, to a U.S. industry. See section 
703(a)(2) of the Act. A negative ITC determination will result in the 
investigation being terminated; otherwise, the investigation will 
proceed according to statutory and regulatory time limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: August 20, 2008.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E8-19778 Filed 8-25-08; 8:45 am]
Billing Code: 3510-DS-S