Ni-Resist Piston Inserts From Argentina and the Republic of Korea: Initiation of Countervailing Duty Investigations, 8054-8058 [E9-3795]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 74, Number 34 (Monday, February 23, 2009)]
[Notices]
[Pages 8054-8058]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-3795]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-357-819, C-580-862]


Ni-Resist Piston Inserts From Argentina and the Republic of 
Korea: Initiation of Countervailing Duty Investigations

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

DATES: Effective Date: February 23, 2009.

[[Page 8055]]


FOR FURTHER INFORMATION CONTACT: Kristen Johnson (Argentina) or John 
Conniff (Republic of Korea), AD/CVD Operations, Office 3, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230; telephone: (202) 482-4793 and (202) 482-1009, respectively.

SUPPLEMENTARY INFORMATION: 

The Petitions

    On January 26, 2009, the Department of Commerce (the Department) 
received countervailing duty (CVD) petitions concerning Ni-resist 
piston inserts from Argentina and the Republic of Korea (Korea) filed 
in proper form by Korff Holdings, LLC doing business as Quaker City 
Castings (Petitioner). See Imposition of Countervailing Duties on Ni-
Resist Piston Inserts from Argentina and the Republic of Korea, dated 
January 26, 2009 (the petitions).
    On January 29, 2009, and February 6, 9, and 10, 2009, the 
Department issued requests for additional information and clarification 
of certain areas of the petitions. Based on the Department's requests, 
Petitioner filed additional information supplementing the petitions on 
February 5, 10, 11, and 12, 2009.
    In accordance with section 702(b)(1) of the Tariff Act of 1930, as 
amended (the Act), Petitioner alleges that manufacturers, producers, or 
exporters of Ni-resist piston inserts in Argentina and Korea 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 Petitioner filed the petitions on behalf 
of the domestic industry because it is an interested party as defined 
in section 771(9)(C) of the Act and Petitioner has demonstrated 
sufficient industry support with respect to the CVD investigations that 
it requests the Department to initiate (see ``Determination of Industry 
Support for the Petitions'' section below).

Period of Investigations

    The anticipated period of the investigations (POI) is January 1, 
2008, through December 31, 2008. See 19 CFR 351.204(b)(2).

Scope of Investigations

    The scope of these investigations includes all Ni-resist piston 
inserts regardless of size, thickness, weight, or outside diameter. Ni-
resist piston inserts may also be called other names including, but not 
limited to, ``Ring Carriers,'' or ``Alfin Inserts.'' Ni-resist piston 
inserts are alloyed cast iron rings, with or without a sheet metal 
cooling channel pressed and welded into the interior of the insert. Ni-
resist piston inserts are composed of the material known as Ni-resist, 
of the chemical composition: 13.5%-17.5% Ni (nickel), 5.5%-8.0% Cu 
(copper), 0.8%-2.5% Cr (chromium), 0.5%-1.5% Mn (manganese), 1.0%-3.0% 
Si (silicon), 2.4%-3.0% C (carbon). The cast iron composition is 
produced primarily to the material specifications of the American 
Society for Testing and Materials (ASTM), ASTM A-436 grade 1.
    The scope of these investigations does not include piston rings nor 
any other product manufactured using the Ni-resist material. The 
subject imports are properly classified under subheading 8409.99.91.90 
of the Harmonized Tariff Schedule of the United States (HTSUS), but 
have been imported under HTSUS 7326.90. The HTSUS subheadings are 
provided for convenience and customs purposes. The written description 
is dispositive of the scope of these investigations.

Comments on Scope of Investigations

    During our review of the petitions, we discussed the scope with 
Petitioner 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: Final Rule, 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 APO/Dockets Unit, Room 1870, 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 
determinations.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department 
invited representatives of the Governments of Argentina and Korea (GOA 
and GOK, respectively) for consultations with regard to the petitions. 
The Department held these consultations in Washington, DC, with 
representatives of the GOK on February 10, 2009, and with 
representatives of the GOA on February 13, 2009. See Memorandum to the 
File regarding ``Consultations with Officials from the Government of 
the Republic of Korea on the Countervailing Duty Petition regarding Ni-
Resist Piston Inserts,'' (dated February 12, 2009), and Memorandum to 
the File regarding ``Consultations with Officials from the Government 
of Argentina on the Countervailing Duty Petition regarding Ni-Resist 
Piston Inserts,'' (dated February 13, 2009); these memoranda are on 
file in the Department's Central Records Unit (CRU), Room 1117 of the 
main Department of Commerce building.

Determination of Industry Support for the Petitions

    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

[[Page 8056]]

may result in different definitions of the like product, such 
differences do not render the decision of either agency contrary to 
law. See USEC, Inc. v. United States, 132 F. Supp. 2d 1, 8 (CIT 2001), 
citing 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 title.'' 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, Petitioner does not offer 
a definition of domestic like product distinct from the scope of these 
investigations. Based on our analysis of the information submitted on 
the record, we have determined that Ni-resist piston inserts as defined 
by Petitioner constitute a single domestic like product, and we have 
analyzed industry support in terms of that domestic like product. For a 
discussion of the domestic like product analysis in this case, see 
``Countervailing Duty Investigation Initiation Checklist: Ni-Resist 
Piston Inserts from Argentina'' (Argentina Checklist), at Attachment II 
(Industry Support), and ``Countervailing Duty Investigation Initiation 
Checklist: Ni-Resist Piston Inserts from the Republic of Korea'' (Korea 
Checklist), at Attachment II (Industry Support) (dated February 17, 
2009), on file in the CRU.
    With regard to section 702(c)(4)(A) of the Act, in determining 
whether Petitioner has standing (i.e., the domestic workers and 
producers supporting the petitions 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 petitions), we considered the industry support data contained in 
the petitions with reference to the domestic like product as defined in 
the ``Scope of Investigations'' section above. To establish industry 
support, Petitioner indicated that it was the sole producer of the 
domestic like product and provided its production statistics for the 
domestic like product for the year 2008. We have relied upon data 
Petitioner provided for purposes of measuring industry support. No 
comments were submitted challenging Petitioner's industry support 
claims. For further discussion, see Argentina Checklist and Korea 
Checklist at Attachment II (Industry Support).
    The Department's review of the data provided in the petitions, 
supplemental submissions, and other information readily available to 
the Department indicates that Petitioner has established industry 
support. First, the petitions establish support from the domestic 
producer 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 Argentina Checklist 
and Korea Checklist at Attachment II (Industry Support). Second, the 
domestic producer has met the statutory criteria for industry support 
under section 702(c)(4)(A)(i) of the Act because the domestic producer 
who supports the petitions accounts for at least 25 percent of the 
total production of the domestic like products. See Argentina Checklist 
and Korea Checklist at Attachment II (Industry Support). Finally, the 
domestic producer has met the statutory criteria for industry support 
under section 702(c)(4)(A)(ii) of the Act because the domestic producer 
supporting the petitions accounts for 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 petitions. 
Accordingly, the Department determines that the petitions were filed on 
behalf of the domestic industry within the meaning of section 702(b)(1) 
of the Act. See Argentina Checklist and Korea Checklist at Attachment 
II (Industry Support).
    The Department finds that Petitioner filed the petitions on behalf 
of the domestic industry because Petitioner is an interested party as 
defined in section 771(9)(C) of the Act and has demonstrated sufficient 
industry support with respect to the CVD investigations that it is 
requesting the Department initiate. See Argentina Checklist and Korea 
Checklist at Attachment II (Industry Support).

Injury Test

    Because Argentina and Korea are each a ``Subsidies Agreement 
Country'' within the meaning of section 701(b) of the Act, section 
701(a)(2) of the Act applies to these investigations. Accordingly, the 
ITC must determine whether imports of the subject merchandise from 
Argentina and Korea materially injure, or threaten material injury to, 
a U.S. industry.

Allegations and Evidence of Material Injury and Causation

    Petitioner alleges that imports of Ni-resist piston inserts from 
Argentina and Korea are benefitting from countervailable subsidies and 
that such imports are causing, or threaten to cause, material injury to 
the domestic industries producing Ni-resist piston inserts. In 
addition, Petitioner alleges that subsidized imports exceed the 
negligibility threshold provided for under section 771(24)(A) of the 
Act.
    Petitioner contends that the industry's injured condition is 
illustrated by reduced market share, underselling and price depressing 
and suppressing effects, lost sales and revenue, reduced production, 
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 Argentina Checklist and Korea Checklist at Attachment 
III (Injury).

Subsidy Allegations

    Section 702(b) of the Act requires the Department to initiate a CVD 
proceeding whenever an interested party files a petition on behalf of 
an industry that: (1) Alleges the elements necessary for an imposition 
of a duty under section 701(a) of the Act; and (2) is accompanied by 
information reasonably available to the petitioner supporting the 
allegations. The Department has examined the CVD petitions on Ni-resist 
piston inserts from Argentina and Korea finds that the petitions comply 
with the requirements of section 702(b) of the Act. Therefore, in 
accordance with section 702(b) of the Act, we are initiating CVD 
investigations to determine whether manufacturers, producers, or 
exporters of Ni-resist piston inserts from Argentina and Korea receive 
countervailable subsidies. For a discussion of evidence supporting our 
initiation determination, see Argentina Checklist and Korea Checklist 
at ``Countervailing Duty Investigation Initiation Standard'' section.

I. Argentina

    We are including in our investigation the following program alleged 
in the Argentina petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in Argentina:

[[Page 8057]]

A. Tax Relief Under the Reintegro \1\

    For further information explaining why the Department is 
investigating this program, see Argentina Checklist.
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    \1\ In the Argentina petition, Petitioner submitted a subsidy 
allegation for the program ``Tax Relief under the Reembolso'' (see 
petition at page 19). ``Reembolso,'' however, is the former name of 
the tax relief program. In a prior Argentina CVD proceeding, the 
Department learned that the successor program is named 
``Reintegro.'' See Notice of Preliminary Negative Countervailing 
Duty Determination and Alignment of Final Countervailing Duty 
Determination With Final Antidumping Duty Determinations: Certain 
Cold-Rolled Carbon Steel Flat Products From Argentina, 67 FR 9670, 
9673 (March 4, 2002). Therefore, we are initiating on the program as 
``Tax Relief under the Reintegro.''
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    We are not including in our investigation the following programs 
alleged to benefit producers and exporters of the subject merchandise 
in Argentina:

A. Pre-Export Preferred Financing

    Petitioner alleges that pre-export loans are widely available to 
specific industries in Argentina. Petitioner states that the pre-export 
program makes available to exporters pre-export funds for individual 
sales at an interest rate of one percent up to 180 days, to be repaid 
no later than 60 days after the effective export date. Petitioner also 
states that the funds are provided by the Central Bank of Argentina and 
disbursed through private commercial banks.
    In Cold-Rolled Carbon Steel, the Department found that the pre-
export financing provided by the Argentine Central Bank was terminated. 
See Final Negative Countervailing Duty Determination: Certain Cold-
Rolled Carbon Steel Flat Products From Argentina, 67 FR 62106 (October 
3, 2002) (Cold-Rolled Carbon Steel), and accompanying issues and 
decision memorandum at ``Program Determined To Be Terminated'' (Cold-
Rolled Memorandum). Petitioner has provided no evidence that the 
Central Bank may have resumed its pre-export financing program. 
Therefore, we do not plan to investigate this program.

B. Post-Export Preferred Financing

    Petitioner alleges that the post-shipment financing program (aka, 
Circular OPRAC 1-9 Post-Shipment Financing) provides shipment-specific, 
short-term preferential loans to exporters after a product has been 
exported. Petitioner states that, similar to the pre-export financing, 
the length of the loan is limited to 180 days and interest is paid 
quarterly. Petitioner adds that the loans are granted for up to 30 
percent of the peso equivalent of the foreign currency in which the 
export transaction was paid and that the interest rate on the loans is 
the indexed market rate used by the commercial banks as required under 
Central Bank regulations.
    In Cold-Rolled Carbon Steel, the Department found the post-export 
financing provided by the Argentine Central Bank was terminated. See 
Cold-Rolled Memorandum at ``Program Determined To Be Terminated.'' 
Further, Petitioner has provided no evidence that the Central Bank may 
have resumed its post-export financing program. Therefore, we do not 
plan to investigate this program.

C. Tax Relief Under the Zero Tariff Turnkey Bill

    Petitioner states that the purpose of this program is to provide an 
incentive to import goods and equipment that will be used to modernize 
productive processes in Argentina. Petitioner claims that the program 
achieves its objective by allowing the importation of new merchandise 
and equipment without the payment of import duties. Petitioner states 
that the GOA, through the state-owned Investment and Foreign Trade 
Bank, provides the duty exemption/reductions, which are contingent on 
export performance.
    In Cold-Rolled Carbon Steel, the Department found that the Zero 
Tariff Turnkey Bill to be not countervailable. See Cold-Rolled 
Memorandum at ``Program Determined To Be Not Countervailable.'' 
Specifically, the Department found that this program is neither de jure 
nor de facto specific as described in section 771(5A)(D) of the Act. 
Petitioner has not provided any evidence that the Zero Tariff Turnkey 
Bill may now be specific either in law or in fact. Therefore, we do not 
plan to investigate this program.

D. Tax Relief Under Decrees Nos. 379/2001 and 502/2001

    Petitioner states that the objective of this program is to create 
an incentives regime for Argentine manufacturers of capital goods. 
Under the program, Petitioner alleges there is a tax bond, which is 
applied to the payment of national taxes, equivalent to 10 percent of 
the amount resulting from the deduction from the sales price of the 
value of imported manufacturing inputs, parts or components, 
incorporated into the final product and cleared through customs at an 
import duty of zero percent. Petitioner claims that Ni-resist piston 
insert producers can use this program because the term ``capital 
goods'' can be used to refer to anything that is not an end-product. 
Petitioner claims that a Ni-resist piston insert is not an end-product 
as its only purpose is to assist in the proper functioning of diesel 
pistons within diesel engines.
    We do not plan to investigate this program, which provides a tax 
incentive to manufacturers of capital goods. Ni-resist piston inserts 
are not capital goods and, therefore, producers of the subject 
merchandise could not use this program.

II. Korea

    We are including in our investigation the following programs 
alleged in the Korea petition to have provided countervailable 
subsidies to producers and exporters of the subject merchandise in 
Korea:
    A. Energy Rate Reductions Under the Request Load Adjustment 
Program.
    B. Short-Term Export Financing.
    C. Loans under the Industrial Base Fund (IBF).
    D. Export Loans by Commercial Banks Under the Export-Import Bank of 
Korea (KEXIM) Trade Bill Rediscounting Program.
    E. Reserve for Research and Manpower Development Fund Under Article 
9 of the Restriction of Special Taxation Act (RSTA) (Formerly Article 8 
of Tax Exemption and Reduction Control Act).
    F. Reserve for Investment Funds.
    For further information explaining why the Department is 
investigating these programs, see Korea Checklist.

Respondent Selection

    Normally for an investigation, the Department selects respondents 
based on U.S. Customs and Border Protection (CBP) data for U.S. imports 
during the POI. In this case, the HTSUS category that includes subject 
merchandise is broad and includes products other than products subject 
to these investigations. Therefore, such CBP data would not be 
informative to our selection of respondents for these investigations. 
In the petitions, Petitioner identified the following producers/
exporters of Ni-resist piston inserts from Argentina and Korea as 
having exported the subject merchandise to the United States during the 
POI: Clorindo Appo SRL and Incheon Metal Co., Ltd., respectively. We 
are setting aside a period for interested parties to submit comments on 
the selection of Clorindo Appo SRL and Incheon Metal Co., Ltd. as 
respondents in these investigations. The Department requests interested 
parties to submit such comments within five calendar days after the 
publication of this notice in the Federal Register. Comments should be 
addressed to Import Administration's APO/Dockets Unit, Room 1870, U.S. 
Department of

[[Page 8058]]

Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230.

Distribution of Copies of the Petitions

    In accordance with section 702(b)(4)(A)(i) of the Act, a copy of 
the public version of the petitions has been provided to the GOA and 
GOK. As soon as possible and to the extent practicable, we will attempt 
to provide a copy of the public version of the petitions to each 
company named in the petitions, 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 this initiation, whether there is a 
reasonable indication that imports of subsidized Ni-resist piston 
inserts from Argentina and Korea 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 
investigations being terminated; otherwise, the investigations will 
proceed according to statutory and regulatory time limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: February 17, 2009.
John M. Andersen,
Acting Deputy Assistant Secretary for Antidumping and Countervailing 
Duty Operations.
[FR Doc. E9-3795 Filed 2-20-09; 8:45 am]
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