Pre-Stressed Concrete Steel Wire Strand from the People's Republic of China: Preliminary Affirmative Countervailing Duty Determination, 56576-56592 [E9-26322]
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Federal Register / Vol. 74, No. 210 / Monday, November 2, 2009 / Notices
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never been affiliated with any company
that exported subject merchandise to the
United States during the POI; and (3) its
export activities were not controlled by
the central government of the PRC.
In accordance with 19 CFR
351.214(b)(2)(iv), Yituo submitted
documentation establishing the
following: (1) the date on which it first
shipped new pneumatic off-;the-road
tires for export to the United States and
the date on which the new pneumatic
off-the-road tires were first entered, or
withdrawn from warehouse, for
consumption; (2) the volume of its first
shipment; and (3) the date of its first
sale to an unaffiliated customer in the
United States.
Initiation of New Shipper Review
Pursuant to section 751(a)(2)(B) of the
Tariff Act of 1930, as amended (the
‘‘Act’’) and 19 CFR 351.214(d)(1), we
find that the request submitted by Yituo
meets the threshold requirements for
initiation of a new shipper review for
shipments of new pneumatic off-theroad tires from the PRC produced and
exported by Yituo. See Memorandum to
the File through Wendy Frankel, Office
Director, New Shipper Initiation
Checklist, dated concurrently with this
notice. The POR is February 20, 2008,
through August 31, 2009. See 19 CFR
351.214(g)(1)(i)(A). The Department will
conduct this review according to the
deadlines set forth in section
751(a)(2)(B)(iv) of the Act.
It is the Department’s usual practice,
in cases involving non-market
economies, to require that a company
seeking to establish eligibility for an
antidumping duty rate separate from the
country-wide rate provide evidence of
de jure and de facto absence of
government control over the company’s
export activities. Accordingly, we will
issue questionnaires to Yituo, which
will include separate rate sections. The
review will proceed if the response
provides sufficient indication that Yituo
is not subject to either de jure or de
facto government control with respect to
its export of new pneumatic off-the-road
tires.
We will instruct U.S. Customs and
Border Protection to allow, at the option
of the importer, the posting, until the
completion of the review, of a bond or
security in lieu of a cash deposit for
each entry of the subject merchandise
from Yituo in accordance with section
751(a)(2)(B)(iii) of the Act and 19 CFR
351.214(e). Because Yituo certified that
it both produced and exported the
subject merchandise, the sale of which
is the basis for this new shipper review
request, we will apply the bonding
privilege to Yituo only for subject
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17:03 Oct 30, 2009
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merchandise which Yituo both
produced and exported.
Interested parties requiring access to
proprietary information in this new
shipper review should submit
applications for disclosure under
administrative protective order in
accordance with 19 CFR 351.305 and 19
CFR 351.306.
This initiation and notice are in
accordance with section 751(a)(2)(B) of
the Act and 19 CFR 351.214 and 19 CFR
351.221(c)(1)(i).
Dated: October 27, 2009.
John M. Andersen,
Acting Deputy Assistant Secretary for
Antidumping and Countervailing Duty
Operations.
[FR Doc. E9–26292 Filed 10–30–09; 8:45 am]
BILLING CODE 3510–DS–S
DEPARTMENT OF COMMERCE
International Trade Administration
(C–570–946)
Pre-Stressed Concrete Steel Wire
Strand from the People’s Republic of
China: Preliminary Affirmative
Countervailing Duty Determination
AGENCY: Import Administration,
International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce
(the Department) preliminarily
determines that countervailable
subsidies are being provided to
producers and exporters of pre-stressed
concrete steel wire strand (PC strand)
from the People’s Republic of China
(PRC). For information on the estimated
subsidy rates, see the ‘‘Suspension of
Liquidation’’ section of this notice.
EFFECTIVE DATE: November 2, 2009.
FOR FURTHER INFORMATION CONTACT:
Robert Copyak or Jolanta Lawska, AD/
CVD Operations, Office 3, Operations,
Import Administration, U.S. Department
of Commerce, Room 4014, 14th Street
and Constitution Avenue, NW,
Washington, DC 20230; telephone: (202)
482–2209 and (202) 482–8362,
respectively.
SUPPLEMENTARY INFORMATION:
Case History
On May 27, 2009, the Department
received a petition in proper form by the
petitioners.1 This investigation was
initiated on June 16, 2009. See PreStressed Concrete Steel Wire Strand
From the People’s Republic of China:
1 Petitioners are American Spring Wire Corp.,
Insteel Wire Products Company, and Sumiden Wire
Products Corp.
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Initiation of Countervailing Duty
Investigation, 74 FR 29670 (June 23,
2009) (Initiation), and accompanying
Initiation Checklist.2 On August 12,
2009, we postponed the deadline for the
preliminary determination by 65 days to
no later than October 24, 2009.3 See PreStressed Concrete Steel Wire Strand
From the Peoples Republic of China:
Notice of Postponement of Preliminary
Determination in the Countervailing
Duty Investigation, 74 FR 40567 (August
12, 2009).
Due to the large number of producers
and exporters of PC strand in the PRC,
we determined that it was not possible
to investigate individually each
producer or exporter and, therefore,
selected two producers/exporters of PC
strand to be mandatory respondents:
Fasten Group Import & Export Co., Ltd.
(Fasten I&E) and Xinhua Metal Products
Company (Xinhua). See Memorandum
through Melissa G. Skinner, Director,
Operations, Office 3, to John M.
Andersen, Acting Deputy Assistant
Secretary for Antidumping and
Countervailing Duty Operations,
regarding ‘‘Respondent Selection,’’ (July
2, 2009).4
On July 2, 2009, we issued the initial
countervailing duty (CVD) questionnaire
to the Government of the People’s
Republic of China (GOC) and the
mandatory respondents. On August 4,
2009, Xinhua submitted its initial
questionnaire response. On August 24,
2009, the GOC and Fasten I&E
submitted its initial questionnaire
responses.5 Regarding the GOC, we
issued supplemental questionnaires on
September 2, 8, 15, 18, 22, and 29, 2009,
to which the GOC submitted responses
on September 29, 2009, and October 13,
15, and 19. Regarding the Fasten
Companies, we issued supplemental
questionnaires on September 11, and 14
2009, as well as October 1, 2, 9, and 16,
2009, to which the Fasten Companies
responded on September 14, 22, 24,
2009, and October 13, 15, and 19, 2009.
In the September 11, 2009,
supplemental questionnaire the
Department instructed the Fasten
2 A public version of this and all public
Departmental memoranda is on file in the Central
Records Unit (CRU), room 1117 in the main
building of the Commerce Department.
3 October 24, 2009, falls on a weekend. Therefore
the actual signature date is October 26, 2009.
4 A public version of this memorandum is
available in the CRU.
5 Included with the initial questionnaire of Fasten
I&E were questionnaire responses from the Fasten
Group Corporation (Fasten Corp.), Jiangyin Fasten
Steel (Fasten Steel), Jiangyin Hongyu Metal
Products Co., Ltd. (Hongyu Metal), and Jiangyin
Walsin Steel Cable Co., Ltd. (Walsin). In this
preliminary determination, we refer to the
aforementioned companies and Jiangyin Hongsheng
Co., Ltd. (Hongsheng) as the Fasten Companies.
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Companies to submit an initial
questionnaire response on behalf of
Hongsheng, to which Hongsheng
responded on October 6, 2009.
Regarding Xinhua, we issued a
supplemental questionnaire on
September 3 and 29, 2009, as well as
October 6, 2009, to which Xinhua
responded on September 21, 2009, and
October 15, 2009. On August 14, 2009,
we issued an initial CVD questionnaire
to Xinhua’s parent company, Xinyu Iron
and Steel Joint Stock Limited Company
(Xinyu), to which Xinyu responded on
September 17, 2009. On September 1,
2009, we issued an initial CVD
questionnaire to the parent of Xinyu,
Xinyu Iron and Steel Limited Liability
Company (Xingang), to which Xingang
responded on September 17, 2009.
Scope of the Investigation
For purposes of this investigation, PC
strand is steel wire strand, other than of
stainless steel, which is suitable for use
in, but not limited to, pre-stressed
concrete (both pre-tensioned and posttensioned) applications. The scope of
this investigation encompasses all types
and diameters of PC strand whether
uncoated (uncovered) or coated
(covered) by any substance, including
but not limited to, grease, plastic sheath,
or epoxy. This merchandise includes,
but is not limited to, PC strand
produced to the American Society for
Testing and Materials (ASTM) A–416
specification, or comparable domestic or
foreign specifications. PC strand made
from galvanized wire is excluded from
the scope if the zinc and/or zinc oxide
coating meets or exceeds the 0.40 oz./ft2
standard set forth in ASTM–A–475.
The PC strand subject to this
investigation is currently classifiable
under subheadings 7312.10.3010 and
7312.10.3012 of the Harmonized Tariff
Schedule of the United States (HTSUS).
Although the HTSUS subheadings are
provided for convenience and customs
purposes, the written description of the
scope of this investigation is dispositive.
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Scope Comments
In accordance with the Preamble to
the Department’s regulations (see
Antidumping Duties; Countervailing
Duties, 62 FR 27296, 27323 (May 19,
1997) (Preamble)), in the Initiation
Notice, we set aside a period of time for
parties to raise issues regarding product
coverage, and encouraged all parties to
submit comments within 20 calendar
days of publication of the Initiation
Notice. The Department did not receive
scope comments from any interested
party.
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Injury Test
Because the PRC is a ‘‘Subsidies
Agreement Country’’ within the
meaning of section 701(b) of the Act, the
International Trade Commission (the
ITC) is required to determine whether
imports of the subject merchandise from
the PRC materially injure, or threaten
material injury to, a U.S. industry. On
June 3, 2008, the ITC published its
preliminary determination finding that
there is a reasonable indication that an
industry in the United States is
materially injured or threatened with
material injury by reason of imports
from the PRC of the subject
merchandise. See Pre-Stressed Concrete
Steel Wire Strand from China,
Investigation Nos. 701–TA–464 and
731–TA–1160 (Preliminary), 74 FR
34782 (July 17, 2009).
Period of Investigation
The period of investigation (the POI)
for which we are measuring subsidies is
January 1, 2008, through December 31,
2008, which corresponds to the PRC’s
most recently completed fiscal year. See
19 CFR 351.204(b)(2).
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), and
accompanying Issues and Decision
Memorandum (CFS from the PRC
Decision Memorandum). In CFS from
the PRC, the Department found that:
. . . 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 the PRC.
See CFS Decision Memorandum at
Comment 6. The Department has
affirmed its decision to apply the CVD
law to the PRC in subsequent final
determinations. See, e.g., Circular
Welded Carbon Quality Steel Pipe from
the People’s Republic of China: Final
Affirmative Countervailing Duty
Determination and Final Affirmative
Determination of Critical
Circumstances, 73 FR 31966 (June 5,
2008) (CWP from the PRC), and
accompanying Issues and Decision
Memorandum (CWP from the PRC
Decision Memorandum).
Additionally, for the reasons stated in
the CWP Decision Memorandum, we are
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56577
using the date of December 11, 2001, the
date on which the PRC became a
member of the World Trade
Organization (WTO), as the date from
which the Department will identify and
measure subsidies in the PRC for
purposes of this preliminary
determination. See CWP from the PRC
Decision Memorandum at Comment 2.
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) - (v)
provides that the Department will
attribute subsidies received by certain
other companies to the combined sales
of those companies when: (1) two or
more corporations with cross-ownership
produce the subject merchandise; (2) a
firm that received a subsidy is a holding
or parent company of the subject
company; (3) a firm that produces an
input that is primarily dedicated to the
production of the downstream product;
or (4) a corporation producing nonsubject merchandise received a subsidy
and transferred the subsidy to a
corporation with cross-ownership with
the subject company.
According to 19 CFR
351.525(b)(6)(vi), cross-ownership exists
between two or more corporations
where one corporation can use or direct
the individual assets of the other
corporation(s) in essentially the same
ways it can use its own assets. This
regulation states that this standard will
normally be met where there is a
majority voting interest between two
corporations or through common
ownership of two (or more)
corporations. See also the Preamble to
the Department’s regulations, which
states ‘‘{I}n certain circumstances, a
large minority voting interest (for
example, 40 percent) or a ‘golden share’
may also result in cross-ownership.’’
See Preamble, 63 FR at 65401. The
Court of International Trade (CIT) has
further 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, 600–603 (CIT 2001)
(Fabrique).
The Fasten Companies
Based on the initial questionnaire
responses of the Fasten Companies, we
have indentified Fasten Corp. as the
parent of the Fasten Companies, Fasten
I&E as the trading company that
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exported subject merchandise during
the POI, and Hongsheng as an input
supplier. The Fasten Companies stated
that Fasten Steel, Walsin, and Company
X produced PC strand that was exported
to the United States during the POI
through Fasten I&E.6 According to the
Fasten Companies, Hongyu Metal,
though it produced PC strand, did not
supply Fasten I&E with PC strand
during the POI.
Based on the ownership information
contained in the Fasten Companies’
questionnaire responses, we find for
purposes of this preliminary
determination that, in accordance with
19 CFR 351.525(b)(6)(vi), Fasten Corp. is
cross-owned with Fasten I&E and
Hongsheng. Our finding in this regard is
based on the fact that Fasten I&E and
Hongsheng are majority-owned by
Fasten Corp.7 We further find that
pursuant to 19 CFR 351.525(b)(6)(vi),
Hongyu Metal is cross-owned with
Fasten Corp., Fasten I&E, and
Hongsheng by virtue of Hongsheng’s
majority ownership of Hongyu Metal.
In addition, we find that Fasten Steel
and Walsin are affiliated with
Hongsheng and, thus Fasten Corp. and
Fasten I&E as well, as defined under
section 771(33)(E) of the Act.8 As
explained above, under 19 CFR
351.525(b)(6)(vi), cross-ownership is
normally found where majority voting
ownership interests between two
corporations or through common
ownership of two (or more) corporations
exists. The Preamble goes on to explain
that the Department may, nonetheless,
find cross-ownership where the level of
ownership is less than 50 percent if the
Department finds that the interests of
the firms in question have merged to
such a degree that one corporation can
use or direct the individual assets (or
subsidy benefits) of the other firm in
essentially the same ways it can use its
own assets (or subsidy benefits). See
Preamble, 63 FR at 65401.
Based on Hongsheng’s level of
ownership of Fasten Steel, combined
with the information in the Fasten
Companies October 15, 2009, we
preliminarily determine that Fasten
Steel is cross-owned with Hongsheng
and, thus, is cross-owned with the
Fasten Companies. The Fasten
Companies October 15, 2009,
submission indicates that Hongsheng
possesses a significant ability to control
the operations of Fasten Steel.
Hongsheng appointed three out of seven
6 The identity of Company X is proprietary. See
Preliminary Calculation Memo for Fasten
Companies.
7 The exact level of ownership is proprietary.
8 The level of ownership of Fasten Steel and
Walsin held by Hongsheng is proprietary.
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of directors in Fasten Steel’s board of
directors. One of the individuals
appointed to the board of Fasten Steel
serves as the board chairman. The other
two board members of appointed by
Hongsheng serve Fasten Steel’s as
director and general manager. See the
Fasten Companies October 15, 2009,
submission at 1 through 4. In addition,
the October 15, 2009, submission
indicates that Hongsheng served as the
guarantor on several of Fasten Steel’s
loans. Also, the October 15, 2009,
submission indicates a degree of
cooperation with respect to the wire rod
that Hongsheng acquired from wire rod
suppliers during the POI. As the Fasten
Companies explain, ‘‘during
Hongsheng’s negotiations with rod
suppliers, Fasten Steel did play an
import role because, as a producer of the
subject merchandise, Fasten Steel had a
better understanding of the wire rod
market and prices.’’ See October 19,
2009, submission as 3. Lastly,
information supplied by Hongyu Metal
indicates that during the POI, Hongyu
Metal paid its electricity expenses to
Fasten Steel thereby further indicating
the degree to which Fasten Steel interconnected with subsidiaries of
Hongsheng. See Hongyu Metal’s August
26, 2009, submission at 22. Therefore,
based on this information, we
preliminarily determine that Fasten
Steel is cross-owned with Hongsheng as
well as Fasten Corp., Hongyu Metal, and
Fasten I&E. Consequently, as explained
further below, measurement of any
subsidy benefits received by Fasten I&E,
Hongyu Metal or Fasten Steel are
subject to the cross-ownership
regulations under 19 CFR 351.525(b), as
applicable.
Regarding Walsin, we have not
reached any conclusions with respect to
cross-ownership. However, as a
producer of subject merchandise whose
goods were exported by Fasten I&E to
the United States during the POI, we
find that any subsidies to Walsin are
attributable to the subject merchandise
pursuant to the Department’s trading
company regulation at 19 CFR
351.525(c). Therefore, we find it
unnecessary to reach any conclusions
with respect to cross-ownership.
Regarding Company X, we find that
affiliation and cross-ownership do not
exist with regard to Fasten Corp., Fasten
I&E, Hongsheng, Fasten Steel, or
Hongyu Metal. However, measurement
of any subsidy benefits received by
Company X remains subject to our
trading company regulation within the
meaning of 19 CFR 351.525(c).
Regardless of cross-ownership, under
19 CFR 351.525(c), benefits from
subsidies provided to a trading
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company which exports subject
merchandise shall be cumulated with
benefits from subsidies provided to the
firm which is producing subject
merchandise that is sold through the
trading company. However, when
investigating or reviewing companies,
the Department, has, in some instances,
limited the number of producers it
examines under 19 CFR 351.525(c). For
example, in Pasta from Italy, one of the
mandatory respondents selected was a
trading company that exported pasta
produced by multiple pasta
manufacturers. In accordance with 19
CFR 351.525(c), the Department
cumulated the benefits received by the
trading company and its pasta
producers, but, limited its analysis to
the two major pasta manufacturers that
supplied the trading company during
the period of review (POR). See Certain
Pasta from Italy: Final Results of the
Fourth Countervailing Duty
Administrative Review, 66 FR 64214
(December 12, 2001) (Pasta from Italy),
and accompanying Issues and Decision
Memorandum (Pasta from Italy Decision
Memorandum) at ‘‘Attribution.’’
Similarly, in light of the
circumstances of the instant case, we
preliminarily determine that it is
appropriate to limit our examination of
possible subsidies to PC strand
producers to the following companies,
all of whom are affiliated in some
manner with the Fasten Corp.: Fasten
Steel, Hongyu Metal, and Walsin. We
note that, when compared with
Company X, Walsin accounted for a
larger share of PC strand exported to the
United States by Fasten I&E during the
POI. See the Memorandum to the File
from Eric B. Greynolds, Program
Manager, Office 3, ‘‘Analysis of Fasten
Group Import & Export Co., Ltd.’s
(Fasten I&E) Suppliers of Subject
Merchandise’’ (October 26, 2009), of
which the public version is on file in
the CRU of the Commerce Building.
In consideration of the foregoing, in
accordance with 19 CFR
351.525(b)(6)(iii), we have attributed
subsidies received by the Fasten Corp.
to the consolidated sales of the Fasten
Corp., which include Fasten I&E. In
accordance with 19 CFR
351.525(b)(6)(i), we have attributed
subsidies received by Fasten I&E to the
sales of Fasten I&E.
In accordance with 19 CFR
351.525(c), we have cumulated the
subsidies received by Walsin with
benefits from subsidies attributable to
Fasten I&E. Specifically, for each
countervailable subsidy received by
Walsin, we derived the benefit and
calculated a program subsidy rate. We
then multiplied the total subsidy rate
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calculated for Walsin by Walsin’s share
of PC strand that was exported to the
United States during the POI by Fasten
I&E.9 Lastly, we added the apportioned
subsidy rate to the other subsidy rates
attributable to Fasten I&E.
Concerning Hongyu Metal and Fasten
Steel, we are attributing subsidies
received those firms by the sum of the
firms’ respective total sales and the sales
of Fasten I&E. See 19 C.F.R.
351.525(b)(6)(ii). As noted above,
Hongyu Metal did not produce PC
strand that was exported to the United
States by Fasten I&E during the POI.
Nonetheless, our decision to examine
subsidies received by Hongyu Metal is
consistent with the Department’s prior
practice, which was affirmed by the
Court of International Trade. See Cut-toLength Carbon Steel Plate From
Belgium; Final Results of Countervailing
Duty Administrative Review, 64 FR
12982, 12984 (March 16, 1999); see also
Fabrique, 166 F. Supp. 2d 593, 603–604.
As explained in the ‘‘Analysis of
Programs’’ section below, we are
examining whether Hongsheng
purchased wire rod for LTAR.10
Hongsheng did not produce the wire rod
that it sold to Fasten Steel and Hongyu
Metal during the POI. Rather,
Hongsheng acquired the inputs from
other producers. Therefore, in
conducting our subsidy analysis of the
provision of wire rod for LTAR program,
we limited our benefit calculations to
Hongsheng’s wire rod suppliers that we
have determined are government
authorities capable of providing a
financial contribution as described
under 771(5)(D)(iv) of the Act. In
accordance with 19 CFR
351.525(b)(6)(iii), we are attributing
subsidies received by Hongsheng to
sales of Hongsheng, Hongyu Metal,
Fasten Steel, and Fasten I&E.
Further, we are attributing any
benefits received by Walsin in
connection with the purchase of wire
rod for LTAR produced by government
authorities to the total sales of Walsin.
In addition, we are cumulating the
subsidies received by Walsin with those
subsidies received by Fasten I&E in the
manner described above.
Xinhua, Xinyu, and Xingang
(Collectively the Xinhua Companies)
In its initial questionnaire response,
Xinhua reported that it is wholly-owned
by Xinyu and that Xinyu, in turn, is
9 In deriving the share of PC strand produced by
Fasten Steel and Walsin that was exported by
Fasten Steel I&E during the POI, we did not include
the sales volume of Company X.
10 Concerning Walsin, during the POI it
purchased its wire rod inputs from suppliers other
than Hongsheng.
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17:03 Oct 30, 2009
Jkt 220001
wholly-owned by Xingang. In
accordance with 19 CFR
351.525(b)(6)(vi), we preliminarily
determine that Xinhua, Xinyu, and
Xingang are cross-owned. Further,
pursuant to 19 CFR 351.525(b)(6)(iii),
we are attributing the subsidies received
by Xingang to the consolidated sales of
Xingang, which include Xinyu and
Xinhua. Similarly, we are attributing the
subsidies received by Xinyu to the
consolidated sales of Xinyu, which
include Xinhua. And, in accordance
with 19 CFR 351.525(b)(6)(i), we are
attributing subsidies received by Xinhua
to the sales of Xinhua. Lastly, pursuant
to 19 CFR 351.525(b)(6)(v), we are
attributing subsidies transferred to
Xinhua from a cross-owned firm to the
sales of Xinhua.
Xinhua reported that it acquired a
relatively small quantity of wire rod
inputs from Xinyu during the POI. For
purposes of the preliminary
determination, we are treating Xinhua’s
purchases of wire rod from Xinyu as an
internal transaction that does not
constitute a financial contribution from
a government authority. Therefore, we
have not included such transactions in
our subsidy analysis.
Allocation Period
Under 19 CFR 351.524(b), nonrecurring subsidies are allocated over a
period corresponding to the average
useful life (AUL) of the renewable
physical assets used to produce the
subject merchandise. Pursuant to 19
CFR 351.524(d)(2), there is a rebuttable
presumption that the AUL will be taken
from the U.S. Internal Revenue Service’s
1977 Class Life Asset Depreciation
Range System (IRS Tables), as updated
by the Department of Treasury. For the
subject merchandise, the IRS Tables
prescribe an AUL of 12 years. As no
interested party has claimed that the
AUL of 12 years is unreasonable, we
will allocate non-recurring subsidies
over a period of 12 years.
Further, for non-recurring subsidies,
we have applied the ‘‘0.5 percent
expense test’’ described in 19 CFR
351.524(b)(2). Under this test, we divide
the amount of subsidies approved under
a given program in a particular year by
the sales (total sales or total export sales,
as appropriate) for the same year. If the
amount of subsidies is less than 0.5
percent of the relevant sales, then the
benefits are allocated to the year of
receipt rather than allocated over the
AUL period.
Additionally, in accordance with the
Department’s practice we have
determined that we will identify and
measure subsidies in China beginning
on the date of the country’s accession to
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the World Trade Organization (WTO),
December 11, 2001. See, e.g., Circular
Welded Carbon Quality Steel Line Pipe
from the People’s Republic of China:
Final Affirmative Countervailing Duty
Determination, 73 FR 70961 (November
24, 2008) (Line Pipe from the PRC), and
accompanying Issues and Decision
Memorandum (Line Pipe from the PRC
Decision Memorandum) at ‘‘Allocation
Period’’ section and Comment 18.
Adverse Facts Available
Provision of Electricity for LTAR
On July 2, 2009, the Department
issued its initial questionnaire to the
GOC. In the questionnaire, the
Department asked the GOC several
questions regarding its alleged provision
of electricity to the mandatory
respondents for LTAR. See Appendix 7
of the Department’s initial
questionnaire. The GOC failed to
respond to these questions. See the
GOC’s August 24, 2009, questionnaire
response at 52 through 55. The
Department issued a supplemental
questionnaire in which it asked the GOC
once again to submit the requested
information concerning the provision of
electricity for LTAR program. See the
Department’s September 2, 2009,
supplemental questionnaire. Again, the
GOC failed to provide all of the
requested information with regard to
several of the Department’s questions.
See the GOC’s September 29, 2009,
supplemental questionnaire response at
12 through 14.
Section 776(a)(2)(A) of the Act states
that the Department shall use facts
available when a party withholds
information that has been requested by
the Department. Further, section 776(b)
of the Act states that if the Department
finds that an interested party fails to
cooperate by not acting to the best of its
ability to comply with a request for
information, the Department may use an
inference that is adverse to the interests
of that party in selecting from the facts
otherwise available.
As summarized above, the GOC did
not provide the information requested
by the Department as it pertains to the
provision of electricity for LTAR
program. We find that in failing to
provide the requested information the
GOC did not act to the best of its ability.
Accordingly, in selecting from among
the facts available, we are drawing an
adverse inference with respect to the
provision of electricity in the PRC and
determine that the GOC is providing a
financial contribution that is specific
within the meaning of section
771(5A)(D)(iv) of the Act. See the
‘‘Federal Provision of Electricity for
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LTAR’’ section of this preliminary
determination for a discussion of the
Department’s derivation of the benefit.
srobinson on DSKHWCL6B1PROD with NOTICES
Various Grant Programs
The Fasten Companies and the
Xinhua Companies reported receiving
grants under various central, provincial,
and municipal level programs. We sent
out supplemental questionnaires to the
GOC regarding these grant programs. In
certain instances, the GOC failed to
provide the information necessary for
the Department to conduct its subsidy
analysis as it pertains to the issue of de
facto specificity, as described under
section 771(5A)(D)(iii) of the Act.
Namely, the GOC failed to provide, as
requested, information concerning the
manner in which the various grants
were distributed across firms and
industries.
We preliminarily determine that by
failing to provide the requested
information, the use of facts available,
as described under 776(a)(2)(A) of the
Act, is warranted. We further
preliminarily determine that the GOC
has failed to act to the best of its ability
concerning these grant programs and
that the application of AFA, described
under section 776(b) of the Act, is
warranted. Therefore, we are finding
that the grant programs are specific
under section 771(5A)(D)(iii) of the Act.
The grant programs for which we are
applying AFA in this regard are
discussed below in the ‘‘Analysis of
Programs’’ section.
Status of Wire Rod Suppliers
The Department is investigating the
extent to which firms, acting as
government authorities, sold wire rod to
the respondents for LTAR. As discussed
in further detail below in the ‘‘Provision
of Wire Rod for LTAR’’ section, the
Department sought information from the
mandatory respondents and the GOC
concerning the identity of the firms that
produced the wire rod ultimately sold to
the mandatory respondents during the
POI. In other words, the Department
sought information that would enable it
to determine whether the input
suppliers acted either as producers of
the input or as trading companies that
resold the input that was produced by
other firms. Without being able to
confirm the identity of the ultimate
producer of the wire rod, the
Department is unable to determine
whether the wire rod was supplied by
government authorities. In some
instances, the GOC and the mandatory
respondents failed to provide the
requested information. We preliminarily
determine that the GOC and the
mandatory respondents have not
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provided the requested information and
that the use of facts available, as
described under section 776(a)(2)(A) of
the Act is warranted. We further
preliminarily determine that the GOC
and the mandatory respondents did not
act to the best of their ability, as
described under section 776(b) of the
Act, when failing to respond to the
Department’s requests for information
concerning the status of the mandatory
respondents’ input suppliers. Therefore,
as AFA in this preliminary
determination, we are making the
following assumptions:
1. In instances in which a mandatory
respondent identified an input
supplier as a private company but
failed to indicate whether the
supplier was an input producer or
a trading company, we are
assuming that the supplier acted as
a trading company, and;
2. In instances in which the
mandatory respondent indentified
an input supplier as a state-owned
company but failed to indicate
whether the supplier was an input
producer or a trading company, we
are assuming that the supplier acted
as a producer.
These adverse assumptions have the
effect of increasing the amount of
benefits attributed to the mandatory
respondent in question.
Subsidies Valuation Information
Benchmarks and Discount Rates
Benchmarks for Short-Term RMB
Denominated Loan
Section 771(5)(E)(ii) of the Act
explains that the benefit for loans is the
‘‘difference between the amount the
recipient of the loan pays on the loan
and the amount the recipient would pay
on a comparable commercial loan that
the recipient could actually obtain on
the market.’’ Normally, the Department
uses comparable commercial loans
reported by the company for
benchmarking purposes. See 19 CFR
351.505(a)(3)(i). If the firm did not have
any comparable commercial loans
during the period, the Department’s
regulations provide that we ‘‘may use a
national interest rate for comparable
commercial loans.’’ See 19 CFR
351.505(a)(3)(ii).
As noted above, section 771(5)(E)(ii)
of the Act indicates that the benchmark
should be a market-based rate. For the
reasons explained in CFS from the PRC,
loans provided by Chinese banks reflect
significant government intervention in
the banking sector and do not reflect
rates that would be found in a
functioning market. See CFS from the
PRC Decision Memorandum at
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Comment 10. Because of this, any loans
received by respondents from private
Chinese or foreign-owned banks would
be unsuitable for use as benchmarks
under 19 CFR 351.505(a)(2)(i).
Similarly, we cannot use a national
interest rate for commercial loans as
envisaged by 19 CFR 351.505(a)(3)(ii).
Therefore, because of the special
difficulties inherent in using a Chinese
benchmark for loans, the Department is
selecting an external market-based
benchmark interest rate. The use of an
external benchmark is consistent with
the Department’s practice. For example,
in Softwood Lumber from Canada, the
Department used U.S. timber prices to
measure the benefit for governmentprovided timber in Canada. See Notice
of Final Affirmative Countervailing Duty
Determination and Final Negative
Critical Circumstances Determination:
Certain Softwood Lumber Products
From Canada, 67 FR 15545 (April 2,
2002) (Softwood Lumber from Canada),
and accompanying Issues and Decision
Memorandum (Softwood Lumber from
Canada Decision Memorandum) at
‘‘Analysis of Programs, Provincial
Stumpage Programs Determined to
Confer Subsidies, Benefit.’’
We are calculating the external
benchmark using the regression-based
methodology first developed in CFS
from the PRC and more recently
updated in LWTP from the PRC. See
CFS from the PRC Decision
Memorandum at Comment 10; see also
LWTP from the PRC Decision
Memorandum at ‘‘Benchmarks and
Discount Rates’’ section. This
benchmark interest rate is based on the
inflation-adjusted interest rates of
countries with per capita GNIs similar
to the PRC, and takes into account a key
factor involved in interest rate
formation, that of the quality of a
country’s institutions, that is not
directly tied to the state-imposed
distortions in the banking sector
discussed above.
Following the methodology
developed in CFS from the PRC, we first
determined which countries are similar
to the PRC in terms of gross national
income (GNI), based on the World
Bank’s classification of countries as: low
income; lower-middle income; uppermiddle income; and high income. The
PRC falls in the lower-middle income
category, a group that includes 55
countries as of July 2007. As explained
in CFS from the PRC, this pool of
countries captures the broad inverse
relationship between income and
interest rates.
Many of these countries reported
lending and inflation rates to the
International Monetary Fund and they
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Final Negative Determination of Critical
Circumstances, 73 FR 40480 (July 15,
2008) (Tires from the PRC), and
accompanying Issues and Decision
Memorandum (Tires from the PRC
Decision Memorandum) at
‘‘Government Provision of Rubber for
Less than Adequate Remuneration.’’
Based on the record in the instant
investigation, we determine that wire
rod producers that supply respondents
and that are majority-government
owned are ‘‘authorities.’’ As a result, we
determine that wire rod supplied by
companies deemed to be government
authorities constitute a financial
Benchmarks for Foreign Currencycontribution to respondents in the form
Denominated Loans
of a governmental provision of a good
For foreign currency-denominated
and that the respondents received a
short-term loans, the Department used
subsidy to the extent that the price they
paid for wire rod produced by these
as a benchmark the one-year dollar
suppliers was sold for LTAR. See
interest rates for the London Interbank
sections 771(5)(D)(iv) and 771(5)(E)(iv)
Offering Rate (LIBOR), plus the average
spread between LIBOR and the one-year of the Act.
The Fasten Companies and the
corporate bond rates for companies with
Xinhua Companies reported acquiring
a BB rating. See LWTP from the PRC
Decision Memorandum at ‘‘Benchmarks certain quantities of wire rod from
trading companies. In prior CVD
and Discount Rates’’ section. For longproceedings involving the PRC, the
term foreign currency-denominated
Department has determined that when a
loans, the Department added the
respondent purchases an input from a
applicable short-;term LIBOR rate to a
trading company or non-producing
spread which is calculated as the
supplier, a subsidy is conferred if the
difference between the one-year BB
producer of the input is an ‘‘authority’’
bond rate and the n-year BB bond rate,
within the meaning of section 771(5)(B)
where n equals or approximates the
of the Act and the price paid by the
number of years of the term of the loan
respondent for the input was sold for
in question.
LTAR. See CWP from the PRC Decision
Discount Rates
Memorandum at ‘‘Hot-Rolled Steel for
Less Than Adequate Remuneration’’
Consistent with 19 CFR
351.524(d)(3)(i)(A), we have used as our section; see also Certain Kitchen
Shelving and Racks from the People’s
discount rate the long-term interest rate
Benchmarks for Long-Term Loans
calculated according to the methodology Republic of China: Final Affirmative
The lending rates reported in the IFS
Countervailing Duty Determination, 74
described above for the year in which
represent short- and medium-term
FR 37012 (July 27, 2009) (Racks from
the government agreed to provide the
lending, and there are not sufficient
the PRC), and accompanying Issues and
subsidy.
publicly available long-term interest rate
Decision Memorandum (Racks from the
Analysis of Programs
data upon which to base a robust
PRC Decision Memorandum) at
benchmark for long-term loans. To
I. Programs Preliminarily Determined To ‘‘Provision of Wire Rod for Less than
address this problem, the Department
Adequate Remuneration’’ section, and
Be Countervailable
has developed an adjustment to the
CWASPP from the PRC Decision
short- and medium-term rates to convert A. Provision of Wire Rod from LTAR
Memorandum at ‘‘Provision of SSC for
them to long-term rates using Bloomberg
The Department is investigating
LTAR.’’ Therefore, in our initial
U.S. corporate BB-rated bond rates. See
whether producers and suppliers, acting questionnaire, we requested that the
Light-Walled Rectangular Pipe and Tube as Chinese government authorities, sold respondent companies and the GOC
From the People’s Republic of China:
wire rod to the mandatory respondents
work together in order to identify the
Final Affirmative Countervailing Duty
for LTAR. The Xinhua Companies and
producers from whom the trading
Investigation Determination, 73 FR
the Fasten Companies reported
companies acquired the wire rod that
35642 (June 24, 2008) (LWRP from the
obtaining wire rod during the POI from
was subsequently sold to respondents
PRC), and accompanying Issues and
trading companies as well as directly
during the POI and to provide
Decision Memorandum (LWRP from the from wire rod producers.
information that would allow the
In Tires from the PRC, the Department Department to determine whether those
PRC Decision Memorandum) at
‘‘Discount Rates’’ section. In Citric Acid determined that majority government
producers were government authorities.
ownership of an input producer is
from the PRC, this methodology was
In several instances, the GOC and the
sufficient to qualify it as an ‘‘authority.’’ mandatory respondents were able to
revised by switching from a long-term
See Certain New Pneumatic Off-themark-up based on the ratio of the rates
supply the requested information.
Road Tires From the People’s Republic
However, in some instances, although
of BB-rated bonds to applying a spread
of China: Final Affirmative
the GOC and the mandatory
which is calculated as the difference
Countervailing Duty Determination and respondents properly indicated whether
between the two-year BB bond rate and
are included in that agency’s
international financial statistics (IFS).
With the exceptions noted below, we
have used the interest and inflation
rates reported in the IFS for the
countries identified as ‘‘low middle
income’’ by the World Bank. First, we
did not include those economies that
the Department considered to be nonmarket economies for antidumping (AD)
purposes for any part of the years in
question (Armenia, Azerbaijan, Belarus,
Georgia, Moldova, Turkmenistan).
Second, the pool necessarily excludes
any country that did not report both
lending and inflation rates to IFS for
those years. Third, we removed any
country that reported a rate that was not
a lending rate or that based its lending
rate on foreign-currency denominated
instruments. Specifically, Jordan
reported a deposit rate, not a lending
rate, and the rates reported by Ecuador
and Timor L’Este are dollardenominated rates; therefore, the rates
for these three countries have been
excluded. Finally, for each year the
Department calculated an inflationadjusted short-term benchmark rate, we
have also excluded any countries with
aberrational or negative real interest
rates for the year in question.
The resulting inflation-adjusted
benchmark lending rates are provided in
the respondents’ preliminary
calculation memoranda. Because these
are inflation-adjusted benchmarks, it is
necessary to adjust the respondents’
interest payments for inflation. This was
done using the PRC inflation figure as
reported in the IFS.
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the n-year BB bond rate, where n equals
or approximates the number of years of
the term of the loan in question. See
Citric Acid and Certain Citrate Salts
From the People’s Republic of China:
Final Affirmative Countervailing Duty
Determination, 74 FR 16836 (April 13,
2009) (Citric Acid from the PRC), and
accompanying Issues and Decision
Memorandum (Citric Acid from the PRC
Decision Memorandum) at Comment 14.
Finally, because these long-term rates
are net of inflation as noted above, we
adjusted the PRC respondents’
payments to remove inflation.
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the wire rod suppliers were trading
companies in the business of reselling
wire rod they were, nonetheless, unable
to identify the producers that supplied
the trading companies. Because the
respondent companies and the GOC
have not been able to supply the
requested information, we find that the
necessary information is not on the
record and, as a result, we are resorting
to the use of facts available (FA) within
the meaning of sections 776(a)(1) and (2)
of the Act. In its response, the GOC
provided information on the amount of
wire rod produced by state-owned
enterprises (SOEs) and private
producers in the PRC. Using these data,
we derived the ratio of wire rod
produced by SOEs during the POI.
Thus, pursuant to sections 776(a)(1) and
(2) of the Act, we have resorted to the
use of FA with regard to the wire rod
sold to the Fasten Companies and
Xinhua Companies by certain domestic
trading companies. Specifically, we
assumed that the percentage of wire rod
supplied by these domestic trading
companies that is produced by
government authorities is equal to the
ratio of wire rod produced by SOEs
during the POI.11 See Preliminary
Calculation Memoranda for the Fasten
Companies and the Xinhua Companies.
The approach is consistent with the
Department’s practice. See, e.g., CWP
from the PRC Decision Memorandum at
‘‘Hot-Rolled Steel for Less Than
Adequate Remuneration;’’ see also
LWRP from the PRC Decision
Memorandum at ‘‘Hot-Rolled Steel for
Less Than Adequate Remuneration.’’
In other instances, the GOC and the
mandatory respondents failed to
indicate, as instructed, whether their
wire rod suppliers were producers or
trading companies. This lack of
information impedes our ability to
determine whether the wire sold by
these wire rod suppliers was, in fact,
produced by a government authority.
See section 776(a)(2)(A) and (C) of the
Act. Therefore, as discussed in the
‘‘Adverse Facts Available’’ section, we
are resorting to the use of AFA as
described under section 776(b) of the
Act. Specifically, we are making the
following adverse assumptions:
1. In instances in which a mandatory
respondent identified an input
supplier as a private company but
failed to indicate whether the
supplier was an input producer or
11 In other words, in instances where we are
applying FA, we are assuming that the percentage
of wire rod purchased by domestic trading
companies during the POI was equal to the ratio of
wire rod produced by SOEs during the POI, as
indicated by the aggregate data supplied in the
questionnaire responses of the GOC.
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17:03 Oct 30, 2009
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a trading company, we are
assuming that the supplier acted as
a trading company, and;
2. In instances in which the
mandatory respondent indentified
an input supplier as a state-owned
company but failed to indicate
whether the supplier was an input
producer or a trading company, we
are assuming that the supplier acted
as a producer.
These adverse assumptions have the
effect of increasing the amount of
benefits attributed to the mandatory
respondent in question.
Having addressed the issue of
financial contribution, we must next
analyze whether the sale of wire rod to
the mandatory respondents by suppliers
designated as government authorities
conferred a benefit within the meaning
of section 771(5)(iv) of the Act. The
Department’s regulations at 19 CFR
351.511(a)(2) set forth the basis for
identifying appropriate marketdetermined benchmarks for measuring
the adequacy of remuneration for
government-provided goods or services.
These potential benchmarks are listed in
hierarchical order by preference: (1)
market prices from actual transactions
within the country under investigation
(e.g., actual sales, actual imports or
competitively run government auctions)
(tier one); (2) world market prices that
would be available to purchasers in the
country under investigation (tier two);
or (3) an assessment of whether the
government price is consistent with
market principles (tier three). As we
explained in Softwood Lumber from
Canada, the preferred benchmark in the
hierarchy is an observed market price
from actual transactions within the
country under investigation because
such prices generally would be expected
to reflect most closely the prevailing
market conditions of the purchaser
under investigation. See Softwood
Lumber from Canada Decision
Memorandum at ‘‘Market-Based
Benchmark’’ section.
Beginning with tier-one, we must
determine whether the prices from
actual sales transactions involving
Chinese buyers and sellers are
significantly distorted. As explained in
the Preamble:
Where it is reasonable to conclude
that actual transaction prices are
significantly distorted as a result of
the government’s involvement in
the market, we will resort to the
next alternative {tier two} in the
hierarchy.
See Preamble to Countervailing Duty
Regulations, 63 FR 65377, (November
25, 1998) (Preamble). The Preamble
further recognizes that distortion can
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Sfmt 4703
occur when the government provider
constitutes a majority or, in certain
circumstances, a substantial portion of
the market. Id.
In the instant investigation, the GOC
reported the total wire rod production
by state-owned entities during the POI.
The number of these state-owned
entities (SOEs and COEs) accounted for
approximately the same percentage of
the wire rod production in the PRC as
was recently found in Shelving and
Racks from the PRC, in which the
Department determined that the GOC
had direct ownership or control of wire
rod production. See Shelving and Racks
Decision Memorandum, at Comment 4.
Because the GOC has not provided any
information that would lead the
Department to reconsider the
determination in Shelving and Racks
from the PRC, we find that the
substantial market share held by SOEs
shows that the government plays a
predominant role in the this market. See
Shelving and Racks Decision
Memorandum at 15. The government’s
predominant position is further
demonstrated by the low level of
imports, which accounted for only 0.91
percent of the volume of wire rod
available in the Chinese market during
the POI. See GOC’s September 15, 2009,
questionnaire response at 23. Because
the share of imports of wire rod into the
PRC is small relative to Chinese
domestic production of wire rod, it
would be inappropriate to use import
values to calculate a benchmark. This is
consistent with the Department’s
approach discussed in LWRP Decision
Memorandum, at Comment 7.
In addition to the government’s
predominant role in the market, we
found in Shelving and Racks from the
PRC that the 10 percent export tariff and
export licensing requirement instituted
by the GOC contributed to the distortion
of the domestic market in the PRC for
wire rod. Such export restraints can
discourage exports and increase the
supply of wire rod in the domestic
market, with the result that domestic
prices are lower than they would
otherwise be. See Shelving and Racks
Decision Memorandum at 15.
Consequently, we determine that there
are no appropriate tier one benchmark
prices available for wire rod.
We note that Fasten I&E reported that
it imported wire rod during the POI. See
Exhibit 1 of Fasten I&E’s September 22,
2009, supplemental questionnaire
response. As noted above, imports of
wire rod accounted for a small percent
of the volume of wire rod available in
the Chinese market during the POI. As
explained above, we have determined
that there are no appropriate tier-one
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benchmark prices on the record,
including import prices. This is
consistent with the Department’s
approach in prior CVD proceedings
involving the PRC. See LWRP from the
PRC Decision Memorandum at
Comment 7; see also Racks from the
PRC Decision Memorandum at
‘‘Provision of Wire Rod for Less Than
Adequate Remuneration’’ section.
Consequently, because we determine
that there are no available tier-one
benchmark prices, we have turned to
tier-two, i.e., world market prices
available to purchasers in the PRC.
We next examined whether the record
contained data that could be used as a
tier-two wire rod benchmark under 19
CFR 351.511(a)(2)(ii). The Department
has on the record of the investigation
prices for SWRH 82B wire rod (or high
carbon wire rod), as sourced from the
American Metals Market (AMA). See
petitioners’ October 6, 2009, submission
at Exhibit 4. The benchmark prices are
reported on a monthly basis in U.S.
dollars per metric ton (MT). Petitioners
provide information indicating that one
of the producers of subject merchandise,
Walsin, uses SWRH 82B to produce
subject merchandise. No other
interested party submitted tier-two wire
prices on the record of the investigation.
Therefore, for purposes of the
preliminary determination, we find that
the data from AMA should be used to
derive a tier-two, world market price for
wire rod that would be available to
purchasers of wire rod in the PRC. We
note that the Department has relied on
pricing data from industry publications
in recent CVD proceedings involving the
PRC. See, e.g., CWP from the PRC
Decision Memorandum at ‘‘Hot-Rolled
Steel for Less Than Adequate
Remuneration’’ section; see also LWRP
from the PRC Decision Memorandum at
‘‘Hot-Rolled Steel for Less Than
Adequate Remuneration’’ section. We
find that, for purposes of the
preliminary determination, prices from
the AMA to be sufficiently reliable and
representative.
To determine whether wire rod
suppliers, acting as government
authorities, sold wire rod to respondents
for LTAR, we compared the prices the
respondents paid to the suppliers to our
wire rod benchmark price. We
conducted our comparison on a
monthly basis. When conducting the
price comparison, we converted the
benchmark to the same currency and
unit of measure as reported by the
mandatory respondents for their
purchases of wire rod.
Under 19 CFR 351.511(a)(2)(iv), when
measuring the adequacy of
remuneration under tier one or tier two,
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17:03 Oct 30, 2009
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the Department will adjust the
benchmark price to reflect the price that
a firm actually paid or would pay if it
imported the product, including
delivery charges and import duties.
Regarding delivery charges, at this time
we lack information and, therefore, have
not adjusted the benchmark in this
regard, but will continue to seek the
relevant information for the final
determination. However, we have added
import duties, as reported by the GOC,
and the VAT applicable to imports of
wire rod into the PRC. With respect to
the three percent insurance charge on
imports noted by the petitioner,
consistent with Racks from the PRC,
while the Department will consider in
future determinations the propriety of
including insurance as a delivery
charge, the existing record of this
investigation does not support such an
adjustment. See Racks from the PRC
Decision Memorandum.
Comparing the benchmark unit prices
to the unit prices paid by respondents
for wire rod, we determine that wire rod
was provided for LTAR and that a
benefit exists in the amount of the
difference between the benchmark and
what the respondent paid. See section
771(5)(E)(iv) of the Act and 19 CFR
351.511(a). In the case of the Xinhua
Companies, we compared the wire rod
benchmarks prices to the prices the
Xinhua Companies paid to their wire
rod suppliers. Xinhua purchased some
of its wire rod from Xinyu. As explained
in the ‘‘Attribution’’ section above, we
are not including Xinhua’s purchases of
wire rod from Xinyu in our subsidy
calculations. In the case of Hongsheng,
we compared the wire rod benchmark
prices to the prices Hongsheng paid to
its wire rod suppliers. In the case of
Walsin, it purchased its wire rod from
suppliers other than Hongsheng. Thus,
we compared the wire rod benchmark
prices to the prices Walsin paid to its
suppliers.
Finally, with respect to specificity,
the third subsidy element specified
under the Act, the GOC has provided
information on end uses for wire rod.
See Exhibit 58 of the GOC’s August 26,
2009, questionnaire response. The GOC
stated that the end uses of wire rod
relate to the type of industry involved
as a direct purchaser of the input. The
GOC further stated that the
consumption of wire rod occurs across
a broad range of industries. While
numerous companies may comprise the
listed industries, section
771(5A)(D)(iii)(I) of the Act clearly
directs the Department to conduct its
analysis on an industry or enterprise
basis. Based on our review of the data
and consistent with our past practice,
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we determine that the industries named
by the GOC are limited in number and,
hence, the subsidy is specific. See
section 771(5A)(D)(iii)(I) of the Act. See
LWRP from the PRC Decision
Memorandum at Comment 7; see also
Racks from the PRC Decision
Memorandum at ‘‘Provision of Wire Rod
from Less Than Adequate
Remuneration.’’
We find that the GOC’s provision of
wire rod for LTAR to be a domestic
subsidy as described under 19 CFR
351.525(b)(3). Therefore, to calculate the
net subsidy rate, we divided the benefit
by a denominator comprised of total
sales. Regarding the Xinhua companies,
for wire rod sold to Xinhua for LTAR,
we divided Xinhua’s benefit by
Xinhua’s total sales. Regarding the
Fasten Companies, for wire rod sold to
Hongsheng for LTAR, we divided
Hongsheng’s benefit by combined total
sales of Hongsheng, Fasten Steel,
Hongyu Metal, and Fasten I&E.
Regarding wire rod sold to Walsin for
LTAR, we divided Walsin’s benefit by
its total sales. We then cumulated the
benefits Walsin received under the
program using the methodology
described in the ‘‘Attribution’’ section of
this preliminary determination.
Specifically, we multiplied the total
subsidy rate for Walsin by its share of
PC strand that was exported to the
United States during the POI by Fasten
I&E. We then added the resulting
apportioned rate to the total subsidy rate
calculated for Fasten I&E. On this basis,
we calculated a total net subsidy rate of
9.78 percent ad valorem for the Xinhua
Companies and 5.57 percent ad valorem
for the Fasten Companies.
B. Provision of Land Use Rights for
LTAR to FIEs in Jiangxi and the City of
Xinyu
As explained in the Initiation
Checklist that accompanied the
Initiation, we are investigating the
extent to which Jiangxi Province has
industrial plans in place that support
the provision of land to the members of
the steel industry for LTAR and whether
the City of Xinyu provides land to FIEs
for LTAR. See Initiation Checklist at 13,
of which a public version is available in
room 1117 of the CRU of the Commerce
Building. The Xinhua Companies are
located in Jiangxi Province and the City
of Xinyu. The Fasten Companies are not
located in Jiangxi Province or the City
of Xinyu. Therefore, we are not
examining the Fasten Companies under
this program. On this basis, we
preliminarily determine that the Fasten
Companies did not use this program
during the POI.
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The Xinhua Companies reported that
Xinyu acquired three parcels of land
from government authorities located in
the City of Xinyu. Two purchases
occurred in 1996. The other purchase
occurred in 2004. As explained above,
we are limiting our analysis of subsidies
beginning after December 11, 2001,
which is the date of the PRC’s accession
to the WTO. Thus, we are not examining
the land Xinyu acquired from
government authorities in 1996.
Regarding the land Xinyu acquired in
2004, information supplied by the
Xinhua Companies indicates that Xinyu
acquired the land from the Xinyu HiTech Economic Development Zone
Committee, which we find is controlled
by City of Xinyu, and that the land
purchased is located in a development
zone.
The Department determined in LWS
from the PRC that the provision of landuse rights constitutes the provision of a
good within the meaning of section
771(5)(D)(iii) of the Act. See Laminated
Woven Sacks from the People’s Republic
of China: Final Affirmative
Countervailing Duty Determination and
Final Affirmative Determination, in
Part, of Critical Circumstances, 73 FR
35639 (June 24, 2008) (LWS from the
PRC), and accompanying Issues and
Decision Memorandum (LWS from the
PRC Decision Memorandum) at
Comment 8. The Department also found
that when the provision of land-use
rights in an industrial park is limited to
a designated geographical region within
the seller’s (e.g., county’s or
municipality’s) jurisdiction, the
provision of the land-use rights is
regionally specific under section
771(5A)(D)(iv) of the Act. Id. at
Comment 9. In the instant investigation,
the Xinyu Hi-Tech Economic
Development Zone is a designated area
within the area under the jurisdiction of
the City of Xinyu. Therefore, consistent
with LWS from the PRC, we
preliminarily determine that Xinyu’s
purchase of granted land-use rights
located within the Xinyu Hi-Tech
Economic Development Zone in 2004
gives rise to countervailable subsidies to
the extent that the purchases conferred
a benefit.
To determine whether the Xinhua
Companies received a benefit, we have
analyzed potential benchmarks in
accordance with 19 CFR 351.511(a).
First, we look to whether there are
market-determined prices (referred to as
tier-one prices in the LTAR regulation)
within the country. See 19 CFR
351.511(a)(2)(i). In LWS from the PRC,
the Department determined that
‘‘Chinese land prices are distorted by
the significant government role in the
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market’’ and, hence, that tier-one
benchmarks do not exist. See LWS from
the PRC Decision Memorandum at
Comment 10. The Department also
found that tier-two benchmarks (world
market prices that would be available to
purchasers in China) are not
appropriate. Id. at ‘‘Analysis of
Programs-Government Provision of
Land for Less Than Adequate
Remuneration’’; see also 19 CFR
351.511(a)(2)(ii). Therefore, the
Department determined the adequacy of
remuneration by reference to tier-three
and found that the sale of land-use
rights in China was not consistent with
market principles because of the
overwhelming presence of the
government in the land-use rights
market and the widespread and
documented deviation from the
authorized methods of pricing and
allocating land. See LWS from the PRC
Decision Memorandum at Comment 10;
see also 19 CFR 351.511(a)(2)(iii). We
preliminarily determine that in the
instant investigation the GOC has not
submitted any information that rebuts
the conclusions reached by the
Department in LWS from the PRC.
For these reasons, we are not able to
use Chinese or world market prices as
a benchmark. Therefore, we are
preliminarily comparing the price that
the Xinyu paid for its granted land-use
rights with comparable market-based
prices for land purchases in a country
at a comparable level of economic
development that is reasonably
proximate to, but outside of, China.
Specifically, we are preliminarily
comparing the price Xinyu paid to the
City of Xinyu in 2004 to the price of
certain industrial land in industrial
estates, parks, and zones in Thailand in
2004. See LWS from the PRC Decision
Memorandum at ‘‘Analysis of Programs
Government Provision of Land for Less
Than Adequate Remuneration.’’
To calculate the benefit, we computed
the amount that Xinyu would have paid
for its granted land-use rights and
subtracted the amount Xinyu actually
paid for its 2004 purchase. Our
comparison indicates that the price
Xinyu paid to the government authority
in 2004 was less than our land
benchmark price and, thus, that Xinyu
received a benefit under section
771(5)(E)(iv) of the Act. Next, in
accordance with 19 CFR 351.524(b)(2),
we examined whether the subsidy
amount exceeded 0.5 percent of Xinyu’s
total consolidated sales in the year of
purchase. Our analysis indicates that
the subsidy amount exceeded the 0.5
percent threshold. Therefore, we used
the discount rate described under the
‘‘Benchmarks and Discount Rates’’
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section of this preliminary
determination to allocate the benefit
over the life of the land-use rights
contract, which is 50 years.
To calculate the net subsidy rate, we
divided the benefit by Xinyu’s
consolidated sales for the POI. On this
basis, we calculated a net subsidy rate
of 0.01 percent ad valorem.
C. Import Tariff and Value Added Tax
Exemptions for FIES and Certain
Domestic Enterprises Using Imported
Equipment in Encouraged Industries
Enacted in 1997, the State Council’s
Circular on Adjusting Tax Policies on
Imported Equipment (Guofa No. 37)
(Circular No. 37) exempts both foreign
invested enterprises (FIEs) and certain
domestic enterprises from the valueadded tax (VAT) and tariffs on imported
equipment used in their production.
The National Development and Reform
Commission (NDRC) and the General
Administration of Customs are the
government agencies responsible for
administering this program. The
objective of the program is to encourage
foreign investment and to introduce
foreign advanced technology equipment
and industry technology upgrades.
Under the program, companies are
authorized to receive the exemptions
based on their FIE status and the list of
assets approved by the GOC at the time
their FIE status was approved. Domestic
enterprises eligible for the VAT and
duty exemptions must have
government-approved projects that are
in line with the current ‘‘Catalog of Key
Industries, Products, and Technologies
the Development of Which is
Encouraged by the State.’’ Whether an
FIE or domestic enterprise, only
equipment that is not listed in the
Catalog on Non-Duty Exemptible Article
for Importation is eligible for the VAT
and duty exemptions. Different catalogs
are prepared for FIEs and domestic
enterprises. To receive the exemptions,
a qualified enterprise has to show a
certificate provided by the NDRC, or its
provincial branch, to the customs
officials upon importation of the
equipment.
Xinhua, Xinyu, and Xingang reported
receiving VAT and duty exemptions
under this program due to its status as
a qualified domestic enterprise. Walsin
and Hongyu Metal also reported using
this program due to their status as FIEs.
We preliminarily determine that the
VAT and duty exemptions received
under the program constitute a financial
contribution in the form of revenue
forgone by the GOC, which provide a
benefit to the recipients in the amount
of the VAT and tariff savings. See
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sections 771(5)(D)(ii) and 771(5)(E) of
the Act, as well as 19 CFR 351.510(a)(1).
We acknowledge that the pool of
companies eligible for benefits is larger
than FIEs because some domestic
companies may also qualify for the
exemptions. However, as explained
above and in past CVD proceedings, the
domestic enterprises must have
government-approved projects which
are in line with the current ‘‘Catalog of
Key Industries, Products, and
Technologies the Development of
Which Is Encouraged by the State,’’ and
must be approved by the State Council,
NDRC, or another agency to which
authority has been delegated. Therefore,
we determine that the addition of
certain domestic enterprises as eligible
users does not broaden the reach or
variety of users sufficiently to render the
program non-specific. On this basis, we
continue to find the program is specific
under section 771(5A)(D)(iii)(I) of the
Act. Our determination to countervail
this program is consistent with the
Department’s treatment of this program
in past CVD proceedings involving the
PRC. See, e.g., CFS from the PRC
Decision Memorandum at ‘‘VAT and
Tariff Exemptions on Imported
Equipment’’ and Comment 16; see also
Tires from the PRC Decision
Memorandum at ‘‘VAT and Tariff
Exemptions for FIEs and Certain
Domestic Enterprises Using Imported
Equipment on Encouraged Industries.’’
Normally, we treat exemptions from
indirect taxes and import charges, such
as the VAT and tariff exemptions, as
recurring benefits, consistent with 19
CFR 351.524(c)(1) and allocate these
benefits only in the year that they were
received. However, when an indirect tax
or import charge exemption is provided
for, or tied to, the capital structure or
capital assets of a firm, the Department
may treat it as a non-recurring benefit
and allocate the benefit to the firm over
the AUL. See 19 CFR 351.524(c)(2)(iii)
and 19 CFR 351.524(d)(2). Therefore, we
are examining the VAT and tariff
exemptions Xinhua received under the
program during the POI and prior years.
To calculate the amount of import
duties exempted under the program, we
multiplied the value of the imported
equipment by the import duty rate that
would have been levied absent the
program. To calculate the amount of
VAT exempted under the program, we
multiplied the value of the imported
equipment (inclusive of import duties)
by the VAT rate that would have been
levied absent the program. Our
derivation of VAT in this calculation is
consistent with the Department’s
approach. See, e.g., Line Pipe from the
PRC Decision Memorandum at
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Comment 8: ’’. . . we agree with
petitioners that VAT is levied on the
value of the product inclusive of
delivery charges and import duties.’’
Next, we summed the amount of duty
and VAT exemptions received in each
year. For each year, we divided the total
grant amount by the corresponding total
sales of the respondent for the year in
question. Pursuant to 19 CFR
351.524(b)(2), we expensed the grant
amounts to the year of receipt for those
years in which the grant amount was
less than 0.5 percent of the total sales of
Xinhua. For those years in which the
grant amounts were greater than 0.5
percent of respondent’s total sales, we
allocated the benefit to the POI using
the methodology described under 19
CFR 351.524(d). We derived the longterm discount rate using the
methodology described in the
‘‘Subsidies Valuation Information’’
section of this memorandum. We then
calculated the total benefit under the
program by summing all of the benefit
amounts allocated to the POI.
To calculate the net subsidy rate for
Xinhua, we divided the total benefit by
Xinhua’s total sales for the POI. To
calculate the total net subsidy rate for
Xinyu, we divided the total benefit by
Xinyu’s consolidated sales for the POI.
To calculate the total net subsidy rate
for Xingang, we divided the total benefit
by Xingang’s consolidated sales for the
POI. On this basis, we calculated a total
net subsidy rate of 0.41 percent ad
valorem for the Xinhua Companies.
Regarding Walsin, we divided the
total benefit it received under the
program by its total sales. As explained
in the ‘‘Attribution’’ section, we then
cumulated the subsidies received by
Walsin under the program with benefits
from subsidies received by Fasten I&E.
Specifically, we multiplied the total
subsidy rate for Walsin by Walsin’s
share of PC strand that was exported to
the United States during the POI by
Fasten I&E. We then added the resulting
apportioned rate to the total subsidy rate
calculated for Fasten I&E. Concerning
Hongyu Metal, we divided the benefits
it received under the program by the
combined total sales of Hongyu Metal
and Fasten I&E. On this basis, we
calculated a total net subsidy rate of
0.44 percent ad valorem for the Fasten
Companies.
D. Subsidies for Development of Famous
Export Brands and China World Top
Brands at Central and Sub-Central Level
The Famous Brand program is
administered at the central, provincial,
and municipal government level. During
the POI, Xinhua reported receiving a
grant under the Famous Brand program
PO 00000
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from the City of Xinyu. Fasten Corp.
reported receiving a grant from the
Jiangsu Province.
The Notice of Xinyu People’s
Government on Issuing Administration
Rules for Xinyu City Famous Brand
Products (Administration Rules) states
that firms with the famous brand
designation are eligible to receive grants
from the City of Xinyu. The
Administration Rules state that they
were drafted in accordance with the
Strategic Work Plan for Industries in
Jiangxi Province, as issued by the
Jiangxi Provincial Government (1995),
document number #86 (Strategic Work
Plan). See Xinhua’s August 4, 2009,
questionnaire response at Annex 16.
The Strategic Work Plan lists the
requirements that applicants must meet
in order to receive the famous brand
designation. Among those requirements
is the following:
The product should have high market
share, high economic benefits, high
economic driving force or high
ability to earn foreign exchange
through export.
Id. Xinhua reported applying for and
receiving a grant from the City of Xinyu
during the POI pursuant to the
Administration Rules.
Based on the information available on
the record of the investigation, we
preliminarily determine that grants
Xinhua received from the City of Xinyu
under the famous brand program
constitute a financial contribution and a
benefit under sections 771(5)(D)(i) and
771(5)(E) of the Act, respectively.
Regarding specificity, section
771(5A)(B) of the Act states that an
export subsidy is a subsidy that is, in
law or in fact, contingent upon export
performance, alone or as one of two or
more conditions. Based on the
information contained in the Strategic
Work Plan, we preliminarily determine
that grants provided by the City of
Xinyu under the famous brands program
are contingent on export activity.
Therefore, we find that the program is
specific under section 771(5A)(B) of the
Act.
Concerning Fasten Corp., information
in its questionnaire response indicates
that it received a grant from Jiangsu
Province during the POI that was
contingent upon export performance.
See Fasten Corp.’s August 26, 2009,
questionnaire response at 50. Therefore,
we find the grant Fasten Corp. received
under the Famous Brand program of
Jiangsu Province to be countervailable
for the same reasons as discussed above.
The grant that Xinhua and Fasten
Corp. received during the POI was less
than 0.5 percent of their respective total
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export sales during the POI.12 Therefore,
pursuant to 19 CFR 351.524(b)(2), we
expensed the grant amount to the POI
(year of receipt). On this basis, we
calculated a total net subsidy rate of
0.03 percent ad valorem for the Xinhua
Companies and a total net subsidy rate
of 0.01 percent ad valorem for the
Fasten Companies.
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E. Implementing Measures on the
Supporting Fund for Foreign Trade &
Economic Development of Jiangxi
Province (Implementing Measures)
Under the Implementing Measures,
the Government of Jiangxi Province
provides grants to firms with positive
growth rates that export between $10
million and $20 million worth of hightech mechanical or electrical products.
See Xinhua Questionnaire response at
page 104 and Annex 17. Xinhua
reported applying for and receiving a
grant pursuant to the Implementing
Measures during the POI.
Based on the information available on
the record of the investigation, we
preliminarily determine that the grant
Xinhua received from the Government
of Jiangxi Province under the
Implementing Measures constitutes a
financial contribution and a benefit
under sections 771(5)(D)(i) and
771(5)(E) of the Act, respectively.
Regarding specificity, section
771(5A)(B) of the Act states that an
export subsidy is a subsidy that is, in
law or in fact, contingent upon export
performance, alone or as one of two or
more conditions. We preliminarily
determine that the grant provided by the
Government of Jiangxi Province under
the Implementing Measures program is
contingent on export performance.
Therefore, we find that the program is
specific under section 771(5A)(B) of the
Act.
The grant that Xinhua received during
the POI was less than 0.5 percent of its
total export sales during the POI.
Therefore, pursuant to 19 CFR
351.524(b)(2), we expensed the grant
amount to the POI. On this basis, we
calculated a total net subsidy rate of
0.06 percent ad valorem for the Xinhua
Companies.
F. Circular on Issuance of Management
Methods for Foreign Trade Development
Support Fund (Support Fund)
Under the Support Fund, firms with
an annual export value of $1,000,000 to
$5,000,000 are eligible to receive grants
from the Ministry of Foreign Trade and
Economic Cooperation. See Xinhua
12 As explained in the ‘‘Attribution’’ section, we
used the total consolidated export sales of Fasten
Corp. when conducting the 0.5 percent test
described under 19 CFR 351.524(b)(2).
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17:03 Oct 30, 2009
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Questionnaire response at page 112 and
Annex 18. Xinhua reported applying for
and receiving a grant pursuant to the
Support Fund during the POI.
Based on the information available on
the record of the investigation, we
preliminarily determine that the grant
Xinhua received from the GOC under
the Support Fund constitutes a financial
contribution and a benefit under
sections 771(5)(D)(i) and 771(5)(E) of the
Act, respectively. Regarding specificity,
section 771(5A)(B) of the Act states that
an export subsidy is a subsidy that is,
in law or in fact, contingent upon export
performance, alone or as one of two or
more conditions. We preliminarily
determine that the grant provided by the
GOC under the Support Fund is
contingent on export activity. Therefore,
we find that the program is specific
under section 771(5A)(B) of the Act.
The grant that Xinhua received during
the POI was less than 0.5 percent of its
total export sales during the POI.
Therefore, pursuant to 19 CFR
351.524(b)(2), we expensed the grant
amount to the POI. On this basis, we
calculated a total net subsidy rate of
0.05 percent ad valorem for the Xinhua
Companies.
G. Export Grants Under Regulations for
Export Product Research and
Development Fund Management
In its questionnaire response, Xinhua
indicated that in 2007 it received a grant
from the Ministry of Finance pursuant
to the Notice on Publishing
Management Fund Used in Research
and Development of Export Mechanical
and Electrical Products (WJMJCF (2007)
(Document Number 527). The
legislation indicates that receipt of the
grant was contingent upon export
performance.
We preliminarily determine that the
grant constitutes a financial
contribution in the form of a direct
transfer of funds and confers a benefit
under sections 771(5)(D)(i) and
771(5)(E) of the Act, respectively. We
further preliminarily determine that the
grant program is specific under section
771(5A)(B) of the Act because receipt of
the grant is contingent upon exports.
Because Xinhua received the grant in
2007, we conducted the ‘‘0.5 percent
expense test’’ as described under 19
CFR 351.524(b)(2). Because the grant
that Xinhua received in 2007 was
greater than 0.5 percent of its total
export sales for 2007, we have allocated
the grant over the AUL established for
this proceeding. See 19 CFR
351.524(b)(1). We allocated the grant to
the POI using the methodology
described under 19 CFR 351.524(d)(1).
We divided the benefit allocated to the
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POI by Xinhua’s total export sales for
the POI. On this basis, we calculated a
total net subsidy rate of 0.03 percent ad
valorem for the Xinhua Companies.
H. Rebates for Export and Credit
Insurance Fee
In its questionnaire response, Fasten
I&E reported that it received grants
during the POI from the GOC in
connection with export and credit
insurance fees it incurred.
We preliminary determine that the
grants received by Fasten I&E constitute
a financial contribution and a benefit
under sections 771(5)(D)(i) and
771(5)(E) of the Act, respectively.
Regarding specificity, we preliminarily
determine that the program is
contingent upon export activity and
therefore is specific under section
771(5A)(B) of the Act.
The grants that Fasten I&E received
under the program during the POI were
less than 0.5 percent of its total export
sales during the POI. Therefore,
pursuant to 19 CFR 351.524(b)(2), we
expensed the grant amount to the POI
(year of receipt). Specifically, we
divided the grants amounts received by
Fasten I&E by the company’s total
export sales during the POI. On this
basis, we calculated a total net subsidy
rate of 0.04 percent ad valorem for the
Fasten Companies.
I. Income Tax Benefits for FIEs Based on
Geographic Location
This program provides tax incentives
for enterprises located in special zones.
The GOC states that the program was
first enacted on June 15, 1988, pursuant
to the Provisional Rules on Exemption
and Reduction of Corporate Income Tax
and Business Tax of FIEs in Coastal
Economic Zones, as issued by the
Ministry of Finance. The GOC states
that the program was continued on July
1, 1991, pursuant to Article 30 of the
FIE Tax Law. Specifically, pursuant to
Article 7 of the FIE Tax Law for
productive FIEs established in a coastal
economic development zone, special
economic zone, or economic technology
development zone, the applicable
enterprise income tax rate is 15 or 24
percent, depending on the zones in
which productive FIE are located, as
opposed to the standard 30 percent
income tax rate.
We preliminarily determine that this
program constitutes a financial
contribution in the form of revenue
forgone and confers a benefit equal to
the amount of tax savings within the
meaning of sections 771(5)(D)(ii) and
771(5)(E) of the Act. Because eligibility
under this program is limited to firms
located within designated geographical
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regions, we preliminarily determine that
the program is specific within the
meaning of section 771(5A)(D)(iv) of the
Act. We note that the Department has
found this program countervailable in
previous CVD proceedings. See, e.g.,
CFS from the PRC Decision
Memorandum at ‘‘Reduced Income Tax
Rates for FIEs Based on Location.’’
Under 19 CFR 351.509(b), in the case
of an income tax reduction program, the
Department normally will consider the
benefit as having been received on the
date on which the recipient firm would
otherwise have had to pay the taxes
associated with the reduction.
Normally, this date is the date on which
the firm in question filed its tax return.
Fasten Steel, Walsin, and Hongyu
Metal received an income tax reduction
under the program with respect to the
tax returns they filed during the POI.
Therefore, we determine that these
companies received countervailable
benefits under this program during the
POI. No other mandatory respondent
reported receiving benefits under this
program during the POI.
In accordance with 19 CFR
351.509(a), to calculate the benefit, we
subtracted the income tax rates the
companies paid under the program from
the income tax rate that the firms would
have paid absent the program and
multiplied the difference by the firms’
taxable income.
To calculate the net subsidy rate for
Fasten Steel, we divided the benefit by
the combined total sales of Fasten Steel
and Fasten I&E for the POI. To calculate
the net subsidy rate for Walsin, we
divided the total benefit by Walsin’s
total sales for the POI. Next, as
explained in the ‘‘Attribution’’ section,
we multiplied the total subsidy rate for
Walsin by its respective share of PC
strand that was exported to the United
States during the POI by Fasten I&E. We
then added the resulting apportioned
rate to the total subsidy rate calculated
for Fasten I&E. Regarding Hongyu Metal,
we divided the benefit it received under
the program by the combined total sales
of Hongyu Metal and Fasten I&E. On
this basis, we calculated a total net
subsidy rate of 0.09 percent ad valorem
for the Fasten Companies.
The Fasten Companies claim in their
September 22, 2009 supplemental
questionnaire response that the GOC
terminated the Tax Benefits for FIEs
Based on Geographic Location program.
We find that we currently do not have
sufficient information to determination
whether this program was terminated.
We will continue to examine the Fasten
Companies’ claim that this program has
been terminated.
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J. Two Free, Three Half Tax Exemptions
for FIEs
The Foreign Invested Enterprise and
Foreign Enterprise Income Tax Law (FIE
Tax Law), enacted in 1991, established
the tax guidelines and regulations for
FIEs in the PRC. The intent of this law
is to attract foreign businesses to the
PRC. According to Article 8 of the FIE
Tax Law, FIEs that are ‘‘productive’’ and
scheduled to operate not less than 10
years are exempt from income tax in
their first two profitable years and pay
half of their applicable tax rate for the
following three years. FIEs are deemed
‘‘productive’’ if they qualify under
Article 72 of the Detailed
Implementation Rules of the Income
Tax Law of the People’s Republic of
China of Foreign Investment Enterprises
and Foreign Enterprises. Hongyu Metal
received benefits under this program
that are attributable to the POI.
We determine that the exemption or
reduction in the income tax paid by
‘‘productive’’ FIEs under this program
confers a countervailable subsidy. The
exemption/reduction is a financial
contribution in the form of revenue
forgone by the GOC and it provides a
benefit to the recipients in the amount
of the tax savings. See sections
771(5)(D)(ii) and 771(5)(E) of the Act
and 19 CFR 351.509(a)(1). We further
determine that the exemption/reduction
afforded by this program is limited as a
matter of law to certain enterprises,
‘‘productive’’ FIEs, and, hence, is
specific under section 71(5A)(D)(i) of
the Act. Our approach in this regard is
consistent with the Department’s
practice. See CFS from the PRC Decision
Memorandum at ‘‘Two Free/Free Half
Program.’’
To calculate the benefit from this
program, we compared the tax rate paid
to the rate that otherwise would have
been paid by Hongyu Metal and
multiplied the difference by Hongyu
Metal’s taxable income. We attributed
the benefit received to the combined
total sales of Hongyu Metal and Fasten
I&E. On this basis, we preliminarily
determine a countervailable subsidy of
0.03 percent ad valorem for the Fasten
Companies.
K. Local Tax Exemptions and Reduction
Programs for ‘‘Productive:’’ FIEs
Pursuant to Article 9 of the FIE Tax
Law and Article 71 of Decree 85 of the
Council of 1991, local provinces can
establish eligibility criteria and
administer the application process for
local income tax reductions or
exemptions for FIEs, effectively
extending the tax exemptions or
reductions that are allowed to FIEs by
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56587
the national Two Free, Three Half
program. In its questionnaire response,
Hongyu Metal indicated that it received
benefits under this program and its tax
return filed during the POI confirms it
benefitted from this program.
We preliminarily determine that the
exemption or reduction in the local
income tax paid by ‘‘productive’’ FIEs
under this program confers a
countervailable subsidy. The
exemption/reduction is a financial
contribution in the form of revenue
forgone by the government and it
provides a benefit to the recipients in
the amount of the tax savings. See
section 771(5)(D)(ii) of the Act and 19
CFR 351.509(a)(1). We also
preliminarily determine that the
exemption/reduction afforded by this
program is limited as a matter of law to
certain enterprises, ‘‘productive’’ FIEs,
and, hence, is specific under section
771(5A)(D)(i) of the Act. The
Department has also found this program
to be countervailable in prior CVD
proceedings involving the PRC. See
Tires from the PRC Decision
Memorandum at ‘‘Tax Subsidies to FIEs
in Specially Designated Geographic
Areas, and Local Income Tax Exemption
and Reduction Programs for Productive’
FIEs’’; see also CFS from the PRC
Decision Memorandum at ‘‘Local
Income Tax Exemption and Reduction
Program for ‘‘Productive’’ FIEs.’’
To calculate the benefit to Hongyu
Metal from this program, we treated the
income tax exemption claimed by
Hongyu Metal as a recurring benefit,
consistent with 19 CFR 351.524(c)(1).
To compute the amount of tax savings,
we compared the tax rate paid to the
rate that otherwise would have been
paid by Hongyu Metal (the standard
local rate is 3 percent) and multiplied
the difference by Hongyu Metal’s
taxable income. We attributed the
benefit received to the combined total
sales of Hongyu Metal and Fasten I&E.
On this basis, we preliminarily
determine a countervailable subsidy of
0.01 percent ad valorem for the Fasten
Companies.
L. Federal Provision of Electricity for
LTAR13
For the reasons explained, supra, at
‘‘Adverse Facts Available,’’ we are
basing our determination regarding the
government’s provision of electricity
programs on AFA. Section 776(b) of the
Act authorizes the Department to use as
AFA information derived from the
13 Our preliminary findings regarding the federal
provision of electricity for LTAR encompasses other
electricity for LTAR programs referenced in the
Initiation.
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petition, the final determination, a
previous administrative review, or other
information placed on the record. In a
CVD case, the Department requires
information from both the government
of the country whose merchandise is
under the order and the foreign
producers and exporters. When the
government fails to provide requested
information concerning alleged subsidy
programs, the Department, as AFA,
typically finds that a financial
contribution exists under the alleged
program and that the program is
specific. For example in CTL Plate from
Korea, the Department, relying on
adverse inferences, determined that the
Government of Korea directed credit to
the steel industry in a manner that
constituted a financial contribution and
was specific to the steel industry within
the meaning of sections 771(5)(D)(i) and
771(5A)(D)(iii) of the Act, respectively.
See Notice of Preliminary Results of
Countervailing Duty Administrative
Review: Certain Cut-to-Length CarbonQuality Steel Plate from the Republic of
Korea, 71 FR 11397, 11399 (March 7,
2006) (Preliminary Results of CTL Plate
from Korea) (unchanged in the Notice of
Final Results of Countervailing Duty
Administrative Review: Certain Cut-toLength Carbon-Quality Steel Plate from
the Republic of Korea, 71 FR 38861 (July
10, 2006) (CTL Plate from Korea).
Similarly, in this instance, because the
GOC failed to provide certain
information concerning the Provision of
Electricity for Less than Adequate
Remuneration program, the Department,
as AFA, determines that the program
confers a financial contribution and is
specific pursuant to sections 771(5)(D)
and 771(5A) of the Act, respectively.
Where possible, the Department will
normally rely on the responsive
producer’s or exporter’s records to
determine the existence and amount of
the benefit to the extent that those
records are useable and verifiable. For
example, in prior investigations
including LWTP from the PRC and
Racks from the PRC, the Department
determined the existence and amount of
the benefit attributable to the provision
of electricity for LTAR by comparing the
rates paid by the mandatory
respondents for electricity to the higher,
benchmark electricity rates. In this
investigation, however, while
respondents provided some information
with respect to their electricity usage
and payments, we do not have on the
record information that could
meaningfully be compared to the
appropriate benchmarks. Therefore, we
are relying on the highest subsidy rate
calculated for the same or similar
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17:03 Oct 30, 2009
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program in a China CVD investigation.
Specifically, we have determined that,
for the purposes of this preliminary
determination, the rate found for the
provision of electricity for LTAR in the
LWTP from the PRC of 0.07 percent ad
valorem is appropriate. We find that this
rate is both reliable and relevant as it
was calculated in prior final CVD
determination for a program of the same
type.
On this basis, we calculated a net
subsidy rate of 0.07 percent ad valorem
for the Xinhua Companies and a net
subsidy rate of 0.07 percent ad valorem
for the Fasten Companies.
M. Grants Under the Science and
Technology Program of Jiangsu Province
The Fasten Companies reported that
Fasten Corp. received a grant during the
POI under the science and technology
program of Jiangsu province. The
Jiangsu Department of Science and
Technology and the Jiangsu Science
Federation administer the program
pursuant to the Administrative
Measures on Jiangsu Sci-Tech Public
Service Platform (SUKEJI (2006) No.
102; SUCAIJIAO (2006) (No. 22)).
We find that the grant received by
Fasten Corp. constitutes a financial
contribution and a benefit under
sections 771(5)(D)(i) and 771(5)(E) of the
Act, respectively. The information in
the legislation indicates that the
program is not limited to a particular
enterprise or industry. Therefore, we
find that the program is not de jure
specific as described under section
771(5A)(D)(i) of the Act. We further find
that the legislation governing the
program does not make eligibility
contingent on export activity as
discussed under section 771(5A)(B) of
the Act. However, as discussed in the
‘‘Adverse Facts Available’’ section, the
GOC failed to provide information for
this program that is necessary for the
Department to conduct its subsidy
analysis as it pertains to the issue of de
facto specificity, as described under
section 771(5A)(D)(iii) of the Act.
Namely, the GOC failed to provide, as
requested, information concerning the
manner in which the various grants
were distributed across firms and
industries. Therefore, we are assuming
that the grant programs are specific
under section 771(5A)(D)(iii) of the Act.
We conducted the ‘‘0.5 percent
expense test’’ as described under 19
CFR 351.524(b)(2). Because the grant
amount was less than 0.5 percent of the
total consolidated sales of the Fasten
Corp., we expense the grant to the year
of receipt, which is the POI. On this
basis, we calculated a net subsidy rate
PO 00000
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Sfmt 4703
of 0.01 percent ad valorem for the
Fasten Companies.
N. Federal, Provincial, and Municipal
Level Policy Lending to Producers of PC
Strand
The Department is examining whether
PC strand producers receive preferential
lending through state-owned
commercial or policy banks. Record
evidence demonstrates that the GOC,
particularly at the provincial and
municipal levels of government, has
highlighted and advocated the
development of the PC strand industry
and the mandatory respondents in this
investigation. Moreover, GOC directives
in this regard include financing support.
Thus, we preliminarily determine that
loans received by the PC strand industry
from state-owned commercial banks
(SOCBs) and policy banks were made
pursuant to government directives. The
Fasten Companies and the Xinhua
Companies had loans outstanding
during the POI.
At the national level, in the Steel and
Iron Industry Development Policy (July
2005) at Article 16, the GOC states that
it will ‘‘ enhance the R&D, design, and
manufacture level in relation to the key
technology, equipment and facilities for
the Chinese steel industry.’’ To
accomplish this, the GOC states it will
provide support to key steel projects
relying on domestically produced and
newly developed equipment and
facilities, through tax and interest
assistance, and scientific research
expenditures. See GOC’s August 26,
2009, questionnaire response at Exhibit
5, page 6.
Turning to the provincial and
municipal levels, the excerpts below
demonstrate the support these
governments have shown for the PC
strand industry and the respondents in
this investigation.
Outline of Eleventh Five-year Program
(Guihua) for Industrial Structural
Adjustment in Jiangsu: ‘‘Emphasize the
development of fine metal products
such as high-strength pc strand,
automobile tire steel cords, and nonferrous deep processed products.’’ See
GOC’s August 26, 2009, questionnaire
response at Exhibit 16, page 9.
Outline of the Development Program
(Guihua) for Metallurgical Industries
within the Eleventh Five-year Period in
Jiangsu: ‘‘In the metal product industry
of our province, a large set of metal
products enterprises have been formed
with Fasten Group as vanguard and
with Jinyang Group Co. Ltd., Jiangsu
Xingda Steel Tyre Cord Co., Ltd., and
Nantong Steel Rope Factory etc. as
backbone enterprises.’’ See GOC’s
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August 26, 2009, questionnaire response
at Exhibit 22, at page 2.
Special Program (Guihua) on
Adjustment & Development of Iron and
Steel Industries during the Eleventh
Five-year Period in Jiangsu: ‘‘We shall
strengthen the guidance of industrial
policies, the support from credit policy
and the regulation by fiscal and taxation
policies to guide the direction of
investments.’’ See GOC’s August 26,
2009, questionnaire response at Exhibit
23 pages 4–5.
Special Program (Guihua) on
Adjustment & Development of Iron and
Steel Industries during the Eleventh
Five-year Period in Jiangsu: ‘‘Improve
the funding ability and enlarge the
capital accumulation by the ways of
enlarging credit granting, increasing
loans,...‘‘ See GOC’s August 26, 2009,
questionnaire response at Exhibit 23,
page 13.
Eleventh Five-year Plan (Guihua) for
Structural Adjustjment and
Development of the Jiangxi
Metallurgical (Iron & Steel) Industries:
‘‘We shall vigorously boost the
construction of competitive sheet
material and wire rod relied on Xinyu
Iron and Steel ‘‘ GOC’s August 26, 2009,
questionnaire response at Exhibit 18,
page 9.
Outline of the Tenth Five-year Plan
(Jihua) of Social and Economic
Development on Xinyu Municipality:
‘‘For the iron and steel industry, we
should, by taking Xinyu Iron & Steel
Co., Ltd., as the flagship, focus on
improving the conditions of key
equipments, optimizing the process and
technological structure, reinforcing the
basic management, adjusting the
product structure, and expanding the
production capacity.’’ See GOC’s August
26, 2009, questionnaire response at
Exhibit 14, page 14.
Development Program (Guihua) of
Xinyu Metallurgical (Iron & Steel)
Industries (2008–2012): ‘‘ exerting the
efforts to support Xinyu Iron & Steel
Co., Ltd. to increase capital stock and
raise funds for project construction ‘‘
See GOC’s August 26, 2009,
questionnaire response at Exhibit 20,
page 13.
Development Program (Guihua) of
Xinyu Metallurgical (Iron & Steel)
Industries (2008–2012): ‘‘ fourthly,
suggesting the provincial government to
carry out the favorable policies
concerning finance and tax revenue for
the metallurgy (steel and iron)
enterprises . . .’’ See GOC’s August 26,
2009, questionnaire response at Exhibit
20, page 16.
In addition, in Tires from the PRC and
the Preliminary Determination of OCTG
from the PRC, the Department found
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that in 2005, the GOC implemented the
Decision of the State Council on
Promulgating the ‘‘Interim Provisions on
Promoting Industrial Structure
Adjustment’’ for Implementation (No.
40 (2005)) (Decision 40) in order to
achieve the objectives of the Eleventh
Five-Year Plan. Decision 40 references
the Directory Catalogue on
Readjustment of Industrial Structure
(Industrial Catalogue), which outlines
the projects which the GOC deems
‘‘encouraged,’’ ‘‘restricted,’’ and
‘‘eliminated,’’ and describes how these
projects will be considered under
government policies. For ‘‘encouraged’’
projects, Decision 40 outlines several
support options available to the
government, including financing. See
Tires from the PRC Decision
Memorandum at Comment E.1; see also
Certain Oil Country Tubular Goods
From the People’s Republic of China:
Preliminary Affirmative Countervailing
Duty Determination, Preliminary
Negative Critical Circumstances
Determination, 74 FR 47210, 47217
(September 15, 2009) (Preliminary
Determination of OCTG from the PRC).
We are placing these additional
documents on the record of this
investigation for further consideration
and comment. Memorandum to File
from Eric B. Greynolds, Program
Manager, Office 3, Operations,
‘‘Additional Documents Placed on the
Record,’’ (October 26, 2009).
Finally, we examined the loan
documentation provided by the GOC
and noted language for certain loans
which also reflects the banks’
conclusions that lending to this industry
is consistent with the GOC’s industrial
policy goals. As this information is
business proprietary, it is discussed in
a separate memorandum. See
Memorandum to the File from Eric B.
Greynolds, Program Manager, Office 3,
Operations, ‘‘Excerpts from Internal
Loan Documents of Mandatory
Respondents,’’ (October 26, 2009), of
which the public version is on file in
the CRU of the Commerce Building.
In response to our questions about the
above-cited excerpts, the GOC has stated
that the language does not specify a
particular government action to achieve
the particular goal or that the statement
reflects only a proposal. However, taken
together, these plans clearly indicate
state support and, specifically, credit or
financing support for the producers of
PC strand. In these circumstances, it is
the Department’s policy to find a policy
lending program that is specific to the
industry and, moreover, based on the
analysis developed in CFS from the
PRC, that national and local government
control over the SOCBs results in the
PO 00000
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56589
loans being a financial contribution by
the GOC. See Citric Acid from the PRC
Decision Memorandum at Comment 5;
see also CFS from the PRC Decision
Memorandum at Comment 8.
Therefore, on the basis of the record
information described above, we
preliminarily determine that the GOC
has a policy in place to encourage the
development of production of PC strand
through policy lending. Therefore, the
loans to PC strand producers from
Policy Banks and SOCBs in the PRC
constitute a direct financial contribution
from the government, pursuant to
section 771(5)(D)(i) of the Act, and they
provide a benefit equal to the difference
between what the recipients paid on
their loans and the amount they would
have paid on comparable commercial
loans (see section 771(5)(e)(2)). Finally,
we determine that the loans are de jure
specific because of the GOC’s policy, as
illustrated in the government plans and
directives, to encourage and support the
growth and development of the PC
strand industry.
To calculate the benefit under the
policy lending program, we compared
the amount of interest the mandatory
respondents paid on their outstanding
loans to the amount they would have
paid on comparable commercial loans.
See 19 CFR 351.505(c). In conducting
this comparison, we used the interest
rates described in the ‘‘Subsidies
Valuation - Benchmarks and Discount
Rates’’ section above.
We have attributed benefits under this
program to total sales. In calculating the
net subsidy rate for the mandatory
respondents, we followed the
methodology described in the
attribution sections. Specifically, for the
Fasten Companies, we attributed
subsidies received by the Fasten Corp.
to its total consolidated sales. We
attributed subsidies received by Fasten
I&E to its total sales. We attributed
subsidies received by Hongsheng to the
combined total sales of Hongsheng,
Fasten Steel and Hongyu Metal. We
attributed subsidies received by Fasten
Steel to the combined total sales of
Fasten Steel and Fasten I&E. We
attributed subsidies received by Hongyu
Metal to the combined sales of Hongyu
Metal and Fasten I&E. We attributed
subsidies received by Walsin by its total
sales. We then apportioned the resulting
subsidy rate by Walsin’s share of PC
strand that was exported to the United
States during the POI by Fasten I&E.14
For the Xinhua Companies, we
14 In deriving the share of PC strand produced by
Fasten Steel and Walsin that was exported by
Fasten Steel I&E during the POI, we did not include
the sales volume of Company X.
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attributed subsidies received by Xingang
to its total consolidated sales. We
attributed subsidies received by Xinyu
to its total consolidated sales. We
attributed subsidies received by Xinhua
to its total sales. On this basis, we
calculated a total net subsidy rate of
1.26 percent ad valorem for the Fasten
Companies and 0.58 percent ad valorem
for the Xinhua Companies.
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O. Income Tax Credits for Purchases of
Domestically-Produced Equipment by
Domestically Owned Firms
Xingang reported receiving an income
tax deduction on the tax return it filed
during the POI under the Income Tax
Credits on Purchases of Domestically
Produced Equipment by Domestically
Owned Companies program. According
to the GOC, this program was
established on July 1, 1999 pursuant to
‘‘Provisional Measures on Enterprise
Income Tax Credit for Investment in
Domestically Produced Equipment for
Technology Renovation Projects.’’ The
GOC states that under the program a
domestically invested company may
claim tax credits on the purchase of
domestic equipment if the project is
compatible with the industrial policies
of the GOC. Specifically, a tax credit up
to 40 percent of the purchase price of
the domestic equipment may apply to
the incremental increase in tax liability
from the previous year. The GOC further
states that pursuant to the ‘‘Circular on
Relevant Issues with Respect to Ceasing
Implementing of Income Tax Credit to
Purchase of Domestically Produced
Equipment by Enterprises,’’ the program
was terminated effective January 1,
2008.
We determine that the income tax
deductions provided under the program
constitute a financial contribution, in
the form of revenue forgone, and a
benefit, in an amount equal to the tax
savings, under sections 771(5)(D)(i) and
771(5)(E) of the Act, respectively. We
further find that this program is specific
under section 771(5A)(A) of the Act
because the receipt of the tax savings is
contingent upon the use of domestic
over imported goods. We note that the
Department found this program
countervailable in Line Pipe from the
PRC. See Line Pipe from the PRC
Decision Memorandum at ‘‘Income Tax
Credits on Purchases of DomesticallyProduced Equipment by Domestically
Owned Companies.’’
To calculate the net subsidy rate, we
divided the benefit by the combined
2008 sales of Xingang. On this basis, we
calculated a net countervailable subsidy
rate of 0.41 percent ad valorem for the
Xingang Companies.
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II. Programs Preliminarily Determined
Not To Provide Benefits During the POI
Based on our analysis of the programs
listed below, the benefits to respondents
during the POI under the programs
listed below are less than 0.005 percent
ad valorem and are not considered
numerically significant, are not
allocable to the POI, or have been found
to be tied to non-subject merchandise.
Consistent with our past practice, we
therefore have not included these
programs in our preliminary net
countervailing duty rate calculations.
See, e.g., CFS from the PRC Decision
Memorandum at ‘‘Analysis of Programs,
Programs Determined Not To Have Been
Used or Not To Have Provided Benefits
During the POI for GE,’’ and Final
Results of Countervailing Duty
Administrative Review: Low Enriched
Uranium from France, 70 FR 39998
(July 12, 2005), and accompanying
Issues and Decision Memorandum at
‘‘Purchases at Prices that Constitute
More than Adequate Remuneration,’’
(‘‘Uranium from France’’) (citing Notice
of Final Results of Countervailing Duty
Administrative Review and Rescission
of Certain Company-Specific Reviews:
Certain Softwood Lumber Products
From Canada, 69 FR 75917 (December
20, 2004), and accompanying Issues and
Decision Memorandum at ‘‘Other
Programs Determined to Confer
Subsidies’’). For information concerning
the programs we have preliminarily
determined to be tied to non-subject
merchandise, see the Memorandum to
the File from Eric B. Greynolds, Program
Manager, Office 3, Operations (October
26, 2009), a public document on file in
the CRU of the Commerce building.
A. Programs Used by Xinyu
PO 00000
1. Jiangxi Provincial Special Science
Fund: Heavy Plate Production Line
& Research on Technical
Application
2. Jiangxi Provincial Special Science
Fund: Gas desulfurization of coke
oven, development and application
of tar purificaiton technology
3. Xinyu Municipal Science Planning
Program, 3-Items Funds: Research
and development of steel products,
process and technology
4. Xinyu Municipal Science Planning
Program, 3-Items Funds:
Development and application of
power generation process with
residual heat from boiler
5. Jiangxi Provincial Science and
Technology Awards: Technology
Advancement Award
6. Xinyu Municipal Science and
Technology Awards: Technology
Advancement Award
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7. Xinyu Municipal Science and
Technology Awards: Technology
Progress Award for BOF-quality
hard-line 35–75.65 steel
8. Xinyu City Intellectual Property
Research Program: Strategic
Research Council for Intellectual
Property of Xinyu Iron and Steel
Industry
9. 2008 National Science and
Technology Support Fund:
Research on Controlled Cooling
after Rolling Production
Technology of High-Strength
Electricity Power Use Special Angle
Steel
10. Jiangxi Provincial Science And
Technology Support Fund:
Development And Application For
The Comprehensive Utilization Of
Industrial Waste In Metallurgical
Industry
11. Jiangxi Provincial Wall Material
Renovation Special Fund: Special
Subsidies For New Wall Materials
l2. Jiangzi Provincial Bulk Cement
Special Fund: Transformation Of
Bulk Cement Facilities And
Equipment
13. Xinyu City ‘‘Final Battle to
Complete Industry GGP 50 Billion
Award’’
14. Jiangxi Provincial Environmental
Protection Special Fund:
Transformation Grant HPF Gas
Desulfurization System
15. Jiangxi Provincial Environmental
Protection Special Fund:
Reconstruction project grants for
transportation system of good mine
and tailings
16. Jiangxi Provincial Environmental
Protection Special Fund: Project
Grants For Desulfuration By Wet
Process Of HPF Coal Oven Gas
17. Jiangxi Provincial Environmental
Protection Special Fund: Grant To
Converter One-Time De-Dusting
18. Tertiary Technological Renovation
Grants For Discounts
19. Xinyu Municipal Environmental
Protection Special Fund: Grants For
Pollution Control Facilities And
Construction
20. National Environmental
Protection And Resource Saving
Program: Grants For The
Optimization Of Energy Systems
21. Jiangxi Provincial Energy Saving
Special Fund Program: Grants For
Energy-Saving And EmissionsReducing Coke Oven 1580mm
Sheet Items
22. Treasury Bond Fund Grant (Also
referred to as Resource Saving and
Environmental Protection Program)
23. Interest Subsidy Grant Under
Fund for Technology Renovation
Project Loans (Also referred to as
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Discount Fund Provided In
Accordance With Cai Qi (2006) No.
426 Decree Issued By The Ministry
Of Finance)
24. Measures Regarding the
Management of the Interest Subsidy
Fund for Technology Renovation
Project Loans
25. Fenyi County Government
Incentives
B. Programs Used by Xingang
1. Stamp Exemption on Share
Transfers Under Non-Tradable
Share Reform
2. Various Tax Benefits
3. Various VAT Deductions
C. Programs Used by Fasten Corp.
1. Assistance for Technology
Innovation - R&D Project
2. Assistance for Optimizing the
Structure of Import/Export of HighTech Products
3. Assistance for the Development of
Company Owned Brand
4. Wuxi Tengfei Award
5. Award for Provincial R&D Platform
- Famous Brands
6. Award for Provincial R&D Platform
7. National Science & Technology
Assistance Program
8. Award for Wuxi Municipal Level
R&D Center
9. Intellectual Property Fund of
Jiangsu Province
10. Natural Science Fund of Jiangsu
Province
11. Important Structural Adjustment
Program of Jiangsu Province
12. Technology Innovation Program of
Wuxi
D. Fasten I&E
1. Subsidy on VAT Tax Refund for
Exports
2. Rebates of Antidumping Legal fees
E. Various Firms
1. Provision of Water for LTAR
2. Export Incentive Payments
Characterized as ‘‘VAT Rebates’’
The Department’s regulations state
that in the case of an exemption upon
export of indirect taxes, a benefit exists
only to the extent that the Department
determines that the amount exempted
‘‘exceeds the amount levied with
respect to the production and
distribution of like products when sold
for domestic consumption.’’ See 19 CFR
351.517(a); see also 19 CFR 351.102 (for
a definition of ‘‘indirect tax’’). To
determine whether the GOC provided a
benefit under this program, we
compared the VAT exemption upon
export to the VAT levied with respect to
the production and distribution of like
products when sold for domestic
consumption. Information from the GOC
indicates that the VAT levied on PC
strand sales in the domestic market (17
percent) exceeded the amount of VAT
exempted upon the export of PC strand
(5 percent). Thus, we preliminarily
determine that the VAT exempted upon
the export of PC strand did not confer
a countervailable benefit.
III. Programs Preliminarily Determined
To Be Not Used
A. Treasury Bond Loans
B. Provision of Electricity and Water at
LTAR for FIEs and ‘‘Technologically
Advanced’’ Enterprises by Jiangsu
Province
C. Import Tariff and VAT Refunds to
Promote the Development of Equipment
Manufacturing in China
D. State Key Technology Fund
E. Exemptions for SOEs from
Distributing Dividends to the State
F. Grants to Loss-Making SOEs
G. Income Tax Exemptions for ExportOriented FIEs
H. Local Income Tax Exemption and
Reduction Programs for ‘‘Productive
FIEs
I. Preferential Tax Programs for ForeignInvested Enterprises Recognized as High
or New Technology Enterprises
J. VAT Refunds for FIE’s Purchasing
Domestically-Produced Equipment
K. Honorable Enterprise Program
L. Preferential Loans for Key Projects
and Technologies
M. Reduction in or exemption from
Fixed Assets Investment Orientation
Regulatory Tax
N. Preferential Loans for SOEs
IV. Programs Preliminarily Determined
Not To Exist
A. Income Tax Exemption for
Investment in Domestic Technological
Renovation
V. Programs for Which We Need More
Information
A. Deed Tax Exemption for SOEs
Undergoing Mergers or Restructurings
B. Elimination of Backward Production
Capacity Award Fund
C. Heavy and Middle Plate Project Loan
Program
D. Reward for Export Program
E. Pollution Charge Refund Program
F. Tax Revenue Return Program
Verification
In accordance with section 782(i)(1) of
the Act, we intend to verify the
information submitted by the Xinhua
and Fasten Companies, and the GOC
prior to making our final determination.
Suspension of Liquidation
In accordance with section
703(d)(1)(A)(i) of the Act, we have
calculated individual rates for subject
merchandise produced and exported by
the entities identified below. We
preliminarily determine the total
estimated net countervailable subsidy
rate to be:
Producer/Exporter
Net Subsidy Rate
srobinson on DSKHWCL6B1PROD with NOTICES
Xinhua Metal Products Company (Xinhua), Xinyu Iron and Steel Joint Stock Limited Company (Xinyu), and
Xinyu Iron and Steel Limited Liability Company (Xingang) (Collectively the Xinhua Companies) .....................
Fasten Group Corporation (Fasten Corp.), Fasten Group Import & Export Co., Ltd. (Fasten I&E), Jiangyin
Hongsheng Co. Ltd. (Hongsheng), Jiangyin Fasten Steel (Fasten Steel), Jiangyin Hongyu Metal Products
Co., Ltd. (Hongyu Metal), and Jiangyin Walsin Steel Cable Co., Ltd. (Walsin) (Collectively, the Fasten Companies) ..................................................................................................................................................................
All Others .................................................................................................................................................................
Sections 703(d) and 705(c)(5)(A) of
the Act state that for companies not
investigated, we will determine an allothers 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.
VerDate Nov<24>2008
17:03 Oct 30, 2009
Jkt 220001
However, the all-others rate may not
include zero and de minimis net
subsidy rates, or any rates based solely
on the facts available.
Notwithstanding the language of
section 705(c)(1)(B)(i)(I) of the Act, we
have not calculated the all-others rate by
weight averaging the rates of the Xinhua
and Fasten Companies because doing so
PO 00000
Frm 00022
Fmt 4703
Sfmt 4703
12.06 percent ad valorem
7.53 percent ad valorem
9.80 percent ad valorem
risks disclosure of proprietary
information. Therefore, for the all-others
rate, we have calculated a simple
average of the two responding firms’
rates.
In accordance with sections 703(d) (1)
(B) and (2) of the Act, we are directing
U.S. Customs and Border Protection
(CBP) to suspend liquidation of all
E:\FR\FM\02NON1.SGM
02NON1
56592
Federal Register / Vol. 74, No. 210 / Monday, November 2, 2009 / Notices
entries of the subject merchandise 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 the merchandise in the
amounts indicated above.
srobinson on DSKHWCL6B1PROD with NOTICES
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 nonprivileged 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), the Department 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, which must be limited to issues
raised in the case briefs, must be filed
within five days after the deadline for
submission of case briefs. See 19 CFR
351.309(d). 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.
In accordance with 19 CFR
351.310(c), we will hold a public
hearing, if requested, to afford interested
parties an opportunity to comment on
this preliminary determination.
Individuals who wish to request a
hearing must submit a written request
within 30 days of the publication of this
notice in the Federal Register to the
Assistant Secretary for Import
Administration, U.S. Department of
Commerce, Room 1870, 14th Street and
Constitution Avenue, NW, Washington,
DC 20230. Parties will be notified of the
schedule for the hearing and parties
VerDate Nov<24>2008
17:03 Oct 30, 2009
Jkt 220001
should confirm the time, date, and place
of the hearing 48 hours before the
scheduled time. Requests for a public
hearing should contain: (1) party’s
name, address, and telephone number;
(2) the number of participants; and (3)
to the extent practicable, an
identification of the arguments to be
raised at the hearing.
This determination is issued and
published pursuant to sections 703(f)
and 777(i) of the Act and 19 CFR
351.221(b)(4).
Dated: October 26, 2009.
John M. Andersen,
Acting Deputy Assistant Secretary for
Antidumping and Countervailing and Duty
Operations.
[FR Doc. E9–26322 Filed 10–30–09; 8:45 am]
BILLING CODE 3510–DS–S
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric
Administration
RIN 0648–XB47
Fishing Capacity Reduction Program
for the Longline Catcher Processor
Subsector of the Bering Sea and
Aleutian Islands Non-Pollock
Groundfish Fishery
AGENCY: National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration,
Commerce.
ACTION: Notice of fee rate adjustment.
SUMMARY: NMFS issues this notice to
decrease the fee rate for the non-pollock
groundfish fishery to repay the
$35,000,000 reduction loan to finance
the Non-Pollock groundfish fishing
capacity reduction program.
DATES: The non-pollock groundfish
program fee rate decrease will begin on
January 1, 2010.
ADDRESSES: Send questions about this
notice to Leo Erwin, Chief, Financial
Services Division, National Marine
Fisheries Service, 1315 East-West
Highway, Silver Spring, MD 20910–
3282.
FOR FURTHER INFORMATION CONTACT:
Leo
Erwin, (301) 713–2390.
SUPPLEMENTARY INFORMATION:
I. Background
Sections 312(b)–(e) of the MagnusonStevens Fishery Conservation and
Management Act (16 U.S.C.
1861a(b)through (e)) generally
authorizes fishing capacity reduction
programs. In particular, section 312(d)
authorizes industry fee systems for
PO 00000
Frm 00023
Fmt 4703
Sfmt 4703
repaying reduction loans which finance
reduction program costs.
Subpart L of 50 CFR part 600 is the
framework rule generally implementing
section 312(b)–(e).
Sections 1111 and 1112 of the
Merchant Marine Act, 1936 (46 App.
U.S.C. 1279f and 1279g) generally
authorizes reduction loans.
Enacted on December 8, 2004, section
219, Title II, of FY 2005 Appropriations
Act, Public Law 104–447 (Act)
authorizes a fishing capacity reduction
program implementing capacity
reduction plans submitted to NMFS by
catcher processor subsectors of the
Bering Sea and Aleutian Islands
(‘‘BSAI’’) non-pollock groundfish
fishery (‘‘reduction fishery’’)as set forth
in the Act.
The longline catcher processor
subsector (the ‘‘Longline Subsector’’) is
among the catcher processor subsectors
eligible to submit to NMFS a capacity
reduction plan under the terms of the
Act.
The longline subsector non-pollock
groundfish reduction program’s
objective was to reduce the number of
vessels and permits endorsed for
longline subsector of the non-pollock
groundfish fishery.
All post-reduction fish landings from
the reduction fishery are subject to the
longline subsector non-pollock
groundfish program’s fee.
NMFS proposed the implementing
notice on August 11, 2006 (71 FR
46364)and published the final notice on
September 29, 2006 (71 FR 57696).
NMFS allocated the $35,000,000
reduction loan to the reduction fishery
and is repayable by fees from the
fishery.
NMFS published in the Federal
Register on September 24, 2007 (72 FR
54219), the final rule to implement the
industry fee system for repaying the
non-pollock groundfish program’s
reduction loan and established October
24, 2007 as the effective date when fee
collection and loan repayment began.
The regulations implementing the
program are located at § 600.1012 of 50
CFR part 600’s subpart M.
II. Purpose
The purpose of this notice is to adjust,
in accordance with the framework rule’s
§ 600.1013(b), the fee rate for the
reduction fishery. Section 600.1013(b)
directs NMFS to recalculate the fee rate
that will be reasonably necessary to
ensure reduction loan repayment within
the specified 30 year term.
NMFS has determined for the
reduction fishery that the current fee
rate of $0.02 per pound is more than
needed to service the loan. Therefore,
E:\FR\FM\02NON1.SGM
02NON1
]]>Agencies
[Federal Register Volume 74, Number 210 (Monday, November 2, 2009)]
[Notices]
[Pages 56576-56592]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-26322]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
(C-570-946)
Pre-Stressed Concrete Steel Wire Strand from the People's
Republic of China: Preliminary Affirmative Countervailing Duty
Determination
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) preliminarily
determines that countervailable subsidies are being provided to
producers and exporters of pre-stressed concrete steel wire strand (PC
strand) from the People's Republic of China (PRC). For information on
the estimated subsidy rates, see the ``Suspension of Liquidation''
section of this notice.
EFFECTIVE DATE: November 2, 2009.
FOR FURTHER INFORMATION CONTACT: Robert Copyak or Jolanta Lawska, AD/
CVD Operations, Office 3, Operations, Import Administration, U.S.
Department of Commerce, Room 4014, 14th Street and Constitution Avenue,
NW, Washington, DC 20230; telephone: (202) 482-2209 and (202) 482-8362,
respectively.
SUPPLEMENTARY INFORMATION:
Case History
On May 27, 2009, the Department received a petition in proper form
by the petitioners.\1\ This investigation was initiated on June 16,
2009. See Pre-Stressed Concrete Steel Wire Strand From the People's
Republic of China: Initiation of Countervailing Duty Investigation, 74
FR 29670 (June 23, 2009) (Initiation), and accompanying Initiation
Checklist.\2\ On August 12, 2009, we postponed the deadline for the
preliminary determination by 65 days to no later than October 24,
2009.\3\ See Pre-Stressed Concrete Steel Wire Strand From the Peoples
Republic of China: Notice of Postponement of Preliminary Determination
in the Countervailing Duty Investigation, 74 FR 40567 (August 12,
2009).
---------------------------------------------------------------------------
\1\ Petitioners are American Spring Wire Corp., Insteel Wire
Products Company, and Sumiden Wire Products Corp.
\2\ A public version of this and all public Departmental
memoranda is on file in the Central Records Unit (CRU), room 1117 in
the main building of the Commerce Department.
\3\ October 24, 2009, falls on a weekend. Therefore the actual
signature date is October 26, 2009.
---------------------------------------------------------------------------
Due to the large number of producers and exporters of PC strand in
the PRC, we determined that it was not possible to investigate
individually each producer or exporter and, therefore, selected two
producers/exporters of PC strand to be mandatory respondents: Fasten
Group Import & Export Co., Ltd. (Fasten I&E) and Xinhua Metal Products
Company (Xinhua). See Memorandum through Melissa G. Skinner, Director,
Operations, Office 3, to John M. Andersen, Acting Deputy Assistant
Secretary for Antidumping and Countervailing Duty Operations, regarding
``Respondent Selection,'' (July 2, 2009).\4\
---------------------------------------------------------------------------
\4\ A public version of this memorandum is available in the CRU.
---------------------------------------------------------------------------
On July 2, 2009, we issued the initial countervailing duty (CVD)
questionnaire to the Government of the People's Republic of China (GOC)
and the mandatory respondents. On August 4, 2009, Xinhua submitted its
initial questionnaire response. On August 24, 2009, the GOC and Fasten
I&E submitted its initial questionnaire responses.\5\ Regarding the
GOC, we issued supplemental questionnaires on September 2, 8, 15, 18,
22, and 29, 2009, to which the GOC submitted responses on September 29,
2009, and October 13, 15, and 19. Regarding the Fasten Companies, we
issued supplemental questionnaires on September 11, and 14 2009, as
well as October 1, 2, 9, and 16, 2009, to which the Fasten Companies
responded on September 14, 22, 24, 2009, and October 13, 15, and 19,
2009. In the September 11, 2009, supplemental questionnaire the
Department instructed the Fasten
[[Page 56577]]
Companies to submit an initial questionnaire response on behalf of
Hongsheng, to which Hongsheng responded on October 6, 2009. Regarding
Xinhua, we issued a supplemental questionnaire on September 3 and 29,
2009, as well as October 6, 2009, to which Xinhua responded on
September 21, 2009, and October 15, 2009. On August 14, 2009, we issued
an initial CVD questionnaire to Xinhua's parent company, Xinyu Iron and
Steel Joint Stock Limited Company (Xinyu), to which Xinyu responded on
September 17, 2009. On September 1, 2009, we issued an initial CVD
questionnaire to the parent of Xinyu, Xinyu Iron and Steel Limited
Liability Company (Xingang), to which Xingang responded on September
17, 2009.
---------------------------------------------------------------------------
\5\ Included with the initial questionnaire of Fasten I&E were
questionnaire responses from the Fasten Group Corporation (Fasten
Corp.), Jiangyin Fasten Steel (Fasten Steel), Jiangyin Hongyu Metal
Products Co., Ltd. (Hongyu Metal), and Jiangyin Walsin Steel Cable
Co., Ltd. (Walsin). In this preliminary determination, we refer to
the aforementioned companies and Jiangyin Hongsheng Co., Ltd.
(Hongsheng) as the Fasten Companies.
---------------------------------------------------------------------------
Scope of the Investigation
For purposes of this investigation, PC strand is steel wire strand,
other than of stainless steel, which is suitable for use in, but not
limited to, pre-stressed concrete (both pre-tensioned and post-
tensioned) applications. The scope of this investigation encompasses
all types and diameters of PC strand whether uncoated (uncovered) or
coated (covered) by any substance, including but not limited to,
grease, plastic sheath, or epoxy. This merchandise includes, but is not
limited to, PC strand produced to the American Society for Testing and
Materials (ASTM) A-416 specification, or comparable domestic or foreign
specifications. PC strand made from galvanized wire is excluded from
the scope if the zinc and/or zinc oxide coating meets or exceeds the
0.40 oz./ft\2\ standard set forth in ASTM-A-475.
The PC strand subject to this investigation is currently
classifiable under subheadings 7312.10.3010 and 7312.10.3012 of the
Harmonized Tariff Schedule of the United States (HTSUS). Although the
HTSUS subheadings are provided for convenience and customs purposes,
the written description of the scope of this investigation is
dispositive.
Scope Comments
In accordance with the Preamble to the Department's regulations
(see Antidumping Duties; Countervailing Duties, 62 FR 27296, 27323 (May
19, 1997) (Preamble)), in the Initiation Notice, we set aside a period
of time for parties to raise issues regarding product coverage, and
encouraged all parties to submit comments within 20 calendar days of
publication of the Initiation Notice. The Department did not receive
scope comments from any interested party.
Injury Test
Because the PRC is a ``Subsidies Agreement Country'' within the
meaning of section 701(b) of the Act, the International Trade
Commission (the ITC) is required to determine whether imports of the
subject merchandise from the PRC materially injure, or threaten
material injury to, a U.S. industry. On June 3, 2008, the ITC published
its preliminary determination finding that there is a reasonable
indication that an industry in the United States is materially injured
or threatened with material injury by reason of imports from the PRC of
the subject merchandise. See Pre-Stressed Concrete Steel Wire Strand
from China, Investigation Nos. 701-TA-464 and 731-TA-1160
(Preliminary), 74 FR 34782 (July 17, 2009).
Period of Investigation
The period of investigation (the POI) for which we are measuring
subsidies is January 1, 2008, through December 31, 2008, which
corresponds to the PRC's most recently completed fiscal year. See 19
CFR 351.204(b)(2).
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), and accompanying Issues and Decision Memorandum (CFS
from the PRC Decision Memorandum). In CFS from the PRC, the Department
found that:
. . . 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 the PRC.
See CFS Decision Memorandum at Comment 6. The Department has affirmed
its decision to apply the CVD law to the PRC in subsequent final
determinations. See, e.g., Circular Welded Carbon Quality Steel Pipe
from the People's Republic of China: Final Affirmative Countervailing
Duty Determination and Final Affirmative Determination of Critical
Circumstances, 73 FR 31966 (June 5, 2008) (CWP from the PRC), and
accompanying Issues and Decision Memorandum (CWP from the PRC Decision
Memorandum).
Additionally, for the reasons stated in the CWP Decision
Memorandum, we are using the date of December 11, 2001, the date on
which the PRC became a member of the World Trade Organization (WTO), as
the date from which the Department will identify and measure subsidies
in the PRC for purposes of this preliminary determination. See CWP from
the PRC Decision Memorandum at Comment 2.
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) - (v) provides that the Department will attribute
subsidies received by certain other companies to the combined sales of
those companies when: (1) two or more corporations with cross-ownership
produce the subject merchandise; (2) a firm that received a subsidy is
a holding or parent company of the subject company; (3) a firm that
produces an input that is primarily dedicated to the production of the
downstream product; or (4) a corporation producing non-subject
merchandise received a subsidy and transferred the subsidy to a
corporation with cross-ownership with the subject company.
According to 19 CFR 351.525(b)(6)(vi), cross-ownership exists
between two or more corporations where one corporation can use or
direct the individual assets of the other corporation(s) in essentially
the same ways it can use its own assets. This regulation states that
this standard will normally be met where there is a majority voting
interest between two corporations or through common ownership of two
(or more) corporations. See also the Preamble to the Department's
regulations, which states ``{I{time} n certain circumstances, a large
minority voting interest (for example, 40 percent) or a `golden share'
may also result in cross-ownership.'' See Preamble, 63 FR at 65401. The
Court of International Trade (CIT) has further 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, 600-603 (CIT 2001)
(Fabrique).
The Fasten Companies
Based on the initial questionnaire responses of the Fasten
Companies, we have indentified Fasten Corp. as the parent of the Fasten
Companies, Fasten I&E as the trading company that
[[Page 56578]]
exported subject merchandise during the POI, and Hongsheng as an input
supplier. The Fasten Companies stated that Fasten Steel, Walsin, and
Company X produced PC strand that was exported to the United States
during the POI through Fasten I&E.\6\ According to the Fasten
Companies, Hongyu Metal, though it produced PC strand, did not supply
Fasten I&E with PC strand during the POI.
---------------------------------------------------------------------------
\6\ The identity of Company X is proprietary. See Preliminary
Calculation Memo for Fasten Companies.
---------------------------------------------------------------------------
Based on the ownership information contained in the Fasten
Companies' questionnaire responses, we find for purposes of this
preliminary determination that, in accordance with 19 CFR
351.525(b)(6)(vi), Fasten Corp. is cross-owned with Fasten I&E and
Hongsheng. Our finding in this regard is based on the fact that Fasten
I&E and Hongsheng are majority-owned by Fasten Corp.\7\ We further find
that pursuant to 19 CFR 351.525(b)(6)(vi), Hongyu Metal is cross-owned
with Fasten Corp., Fasten I&E, and Hongsheng by virtue of Hongsheng's
majority ownership of Hongyu Metal.
---------------------------------------------------------------------------
\7\ The exact level of ownership is proprietary.
---------------------------------------------------------------------------
In addition, we find that Fasten Steel and Walsin are affiliated
with Hongsheng and, thus Fasten Corp. and Fasten I&E as well, as
defined under section 771(33)(E) of the Act.\8\ As explained above,
under 19 CFR 351.525(b)(6)(vi), cross-ownership is normally found where
majority voting ownership interests between two corporations or through
common ownership of two (or more) corporations exists. The Preamble
goes on to explain that the Department may, nonetheless, find cross-
ownership where the level of ownership is less than 50 percent if the
Department finds that the interests of the firms in question have
merged to such a degree that one corporation can use or direct the
individual assets (or subsidy benefits) of the other firm in
essentially the same ways it can use its own assets (or subsidy
benefits). See Preamble, 63 FR at 65401.
---------------------------------------------------------------------------
\8\ The level of ownership of Fasten Steel and Walsin held by
Hongsheng is proprietary.
---------------------------------------------------------------------------
Based on Hongsheng's level of ownership of Fasten Steel, combined
with the information in the Fasten Companies October 15, 2009, we
preliminarily determine that Fasten Steel is cross-owned with Hongsheng
and, thus, is cross-owned with the Fasten Companies. The Fasten
Companies October 15, 2009, submission indicates that Hongsheng
possesses a significant ability to control the operations of Fasten
Steel. Hongsheng appointed three out of seven of directors in Fasten
Steel's board of directors. One of the individuals appointed to the
board of Fasten Steel serves as the board chairman. The other two board
members of appointed by Hongsheng serve Fasten Steel's as director and
general manager. See the Fasten Companies October 15, 2009, submission
at 1 through 4. In addition, the October 15, 2009, submission indicates
that Hongsheng served as the guarantor on several of Fasten Steel's
loans. Also, the October 15, 2009, submission indicates a degree of
cooperation with respect to the wire rod that Hongsheng acquired from
wire rod suppliers during the POI. As the Fasten Companies explain,
``during Hongsheng's negotiations with rod suppliers, Fasten Steel did
play an import role because, as a producer of the subject merchandise,
Fasten Steel had a better understanding of the wire rod market and
prices.'' See October 19, 2009, submission as 3. Lastly, information
supplied by Hongyu Metal indicates that during the POI, Hongyu Metal
paid its electricity expenses to Fasten Steel thereby further
indicating the degree to which Fasten Steel inter-connected with
subsidiaries of Hongsheng. See Hongyu Metal's August 26, 2009,
submission at 22. Therefore, based on this information, we
preliminarily determine that Fasten Steel is cross-owned with Hongsheng
as well as Fasten Corp., Hongyu Metal, and Fasten I&E. Consequently, as
explained further below, measurement of any subsidy benefits received
by Fasten I&E, Hongyu Metal or Fasten Steel are subject to the cross-
ownership regulations under 19 CFR 351.525(b), as applicable.
Regarding Walsin, we have not reached any conclusions with respect
to cross-ownership. However, as a producer of subject merchandise whose
goods were exported by Fasten I&E to the United States during the POI,
we find that any subsidies to Walsin are attributable to the subject
merchandise pursuant to the Department's trading company regulation at
19 CFR 351.525(c). Therefore, we find it unnecessary to reach any
conclusions with respect to cross-ownership.
Regarding Company X, we find that affiliation and cross-ownership
do not exist with regard to Fasten Corp., Fasten I&E, Hongsheng, Fasten
Steel, or Hongyu Metal. However, measurement of any subsidy benefits
received by Company X remains subject to our trading company regulation
within the meaning of 19 CFR 351.525(c).
Regardless of cross-ownership, under 19 CFR 351.525(c), benefits
from subsidies provided to a trading company which exports subject
merchandise shall be cumulated with benefits from subsidies provided to
the firm which is producing subject merchandise that is sold through
the trading company. However, when investigating or reviewing
companies, the Department, has, in some instances, limited the number
of producers it examines under 19 CFR 351.525(c). For example, in Pasta
from Italy, one of the mandatory respondents selected was a trading
company that exported pasta produced by multiple pasta manufacturers.
In accordance with 19 CFR 351.525(c), the Department cumulated the
benefits received by the trading company and its pasta producers, but,
limited its analysis to the two major pasta manufacturers that supplied
the trading company during the period of review (POR). See Certain
Pasta from Italy: Final Results of the Fourth Countervailing Duty
Administrative Review, 66 FR 64214 (December 12, 2001) (Pasta from
Italy), and accompanying Issues and Decision Memorandum (Pasta from
Italy Decision Memorandum) at ``Attribution.''
Similarly, in light of the circumstances of the instant case, we
preliminarily determine that it is appropriate to limit our examination
of possible subsidies to PC strand producers to the following
companies, all of whom are affiliated in some manner with the Fasten
Corp.: Fasten Steel, Hongyu Metal, and Walsin. We note that, when
compared with Company X, Walsin accounted for a larger share of PC
strand exported to the United States by Fasten I&E during the POI. See
the Memorandum to the File from Eric B. Greynolds, Program Manager,
Office 3, ``Analysis of Fasten Group Import & Export Co., Ltd.'s
(Fasten I&E) Suppliers of Subject Merchandise'' (October 26, 2009), of
which the public version is on file in the CRU of the Commerce
Building.
In consideration of the foregoing, in accordance with 19 CFR
351.525(b)(6)(iii), we have attributed subsidies received by the Fasten
Corp. to the consolidated sales of the Fasten Corp., which include
Fasten I&E. In accordance with 19 CFR 351.525(b)(6)(i), we have
attributed subsidies received by Fasten I&E to the sales of Fasten I&E.
In accordance with 19 CFR 351.525(c), we have cumulated the
subsidies received by Walsin with benefits from subsidies attributable
to Fasten I&E. Specifically, for each countervailable subsidy received
by Walsin, we derived the benefit and calculated a program subsidy
rate. We then multiplied the total subsidy rate
[[Page 56579]]
calculated for Walsin by Walsin's share of PC strand that was exported
to the United States during the POI by Fasten I&E.\9\ Lastly, we added
the apportioned subsidy rate to the other subsidy rates attributable to
Fasten I&E.
---------------------------------------------------------------------------
\9\ In deriving the share of PC strand produced by Fasten Steel
and Walsin that was exported by Fasten Steel I&E during the POI, we
did not include the sales volume of Company X.
---------------------------------------------------------------------------
Concerning Hongyu Metal and Fasten Steel, we are attributing
subsidies received those firms by the sum of the firms' respective
total sales and the sales of Fasten I&E. See 19 C.F.R.
351.525(b)(6)(ii). As noted above, Hongyu Metal did not produce PC
strand that was exported to the United States by Fasten I&E during the
POI. Nonetheless, our decision to examine subsidies received by Hongyu
Metal is consistent with the Department's prior practice, which was
affirmed by the Court of International Trade. See Cut-to-Length Carbon
Steel Plate From Belgium; Final Results of Countervailing Duty
Administrative Review, 64 FR 12982, 12984 (March 16, 1999); see also
Fabrique, 166 F. Supp. 2d 593, 603-604.
As explained in the ``Analysis of Programs'' section below, we are
examining whether Hongsheng purchased wire rod for LTAR.\10\ Hongsheng
did not produce the wire rod that it sold to Fasten Steel and Hongyu
Metal during the POI. Rather, Hongsheng acquired the inputs from other
producers. Therefore, in conducting our subsidy analysis of the
provision of wire rod for LTAR program, we limited our benefit
calculations to Hongsheng's wire rod suppliers that we have determined
are government authorities capable of providing a financial
contribution as described under 771(5)(D)(iv) of the Act. In accordance
with 19 CFR 351.525(b)(6)(iii), we are attributing subsidies received
by Hongsheng to sales of Hongsheng, Hongyu Metal, Fasten Steel, and
Fasten I&E.
---------------------------------------------------------------------------
\10\ Concerning Walsin, during the POI it purchased its wire rod
inputs from suppliers other than Hongsheng.
---------------------------------------------------------------------------
Further, we are attributing any benefits received by Walsin in
connection with the purchase of wire rod for LTAR produced by
government authorities to the total sales of Walsin. In addition, we
are cumulating the subsidies received by Walsin with those subsidies
received by Fasten I&E in the manner described above.
Xinhua, Xinyu, and Xingang (Collectively the Xinhua Companies)
In its initial questionnaire response, Xinhua reported that it is
wholly-owned by Xinyu and that Xinyu, in turn, is wholly-owned by
Xingang. In accordance with 19 CFR 351.525(b)(6)(vi), we preliminarily
determine that Xinhua, Xinyu, and Xingang are cross-owned. Further,
pursuant to 19 CFR 351.525(b)(6)(iii), we are attributing the subsidies
received by Xingang to the consolidated sales of Xingang, which include
Xinyu and Xinhua. Similarly, we are attributing the subsidies received
by Xinyu to the consolidated sales of Xinyu, which include Xinhua. And,
in accordance with 19 CFR 351.525(b)(6)(i), we are attributing
subsidies received by Xinhua to the sales of Xinhua. Lastly, pursuant
to 19 CFR 351.525(b)(6)(v), we are attributing subsidies transferred to
Xinhua from a cross-owned firm to the sales of Xinhua.
Xinhua reported that it acquired a relatively small quantity of
wire rod inputs from Xinyu during the POI. For purposes of the
preliminary determination, we are treating Xinhua's purchases of wire
rod from Xinyu as an internal transaction that does not constitute a
financial contribution from a government authority. Therefore, we have
not included such transactions in our subsidy analysis.
Allocation Period
Under 19 CFR 351.524(b), non-recurring subsidies are allocated over
a period corresponding to the average useful life (AUL) of the
renewable physical assets used to produce the subject merchandise.
Pursuant to 19 CFR 351.524(d)(2), there is a rebuttable presumption
that the AUL will be taken from the U.S. Internal Revenue Service's
1977 Class Life Asset Depreciation Range System (IRS Tables), as
updated by the Department of Treasury. For the subject merchandise, the
IRS Tables prescribe an AUL of 12 years. As no interested party has
claimed that the AUL of 12 years is unreasonable, we will allocate non-
recurring subsidies over a period of 12 years.
Further, for non-recurring subsidies, we have applied the ``0.5
percent expense test'' described in 19 CFR 351.524(b)(2). Under this
test, we divide the amount of subsidies approved under a given program
in a particular year by the sales (total sales or total export sales,
as appropriate) for the same year. If the amount of subsidies is less
than 0.5 percent of the relevant sales, then the benefits are allocated
to the year of receipt rather than allocated over the AUL period.
Additionally, in accordance with the Department's practice we have
determined that we will identify and measure subsidies in China
beginning on the date of the country's accession to the World Trade
Organization (WTO), December 11, 2001. See, e.g., Circular Welded
Carbon Quality Steel Line Pipe from the People's Republic of China:
Final Affirmative Countervailing Duty Determination, 73 FR 70961
(November 24, 2008) (Line Pipe from the PRC), and accompanying Issues
and Decision Memorandum (Line Pipe from the PRC Decision Memorandum) at
``Allocation Period'' section and Comment 18.
Adverse Facts Available
Provision of Electricity for LTAR
On July 2, 2009, the Department issued its initial questionnaire to
the GOC. In the questionnaire, the Department asked the GOC several
questions regarding its alleged provision of electricity to the
mandatory respondents for LTAR. See Appendix 7 of the Department's
initial questionnaire. The GOC failed to respond to these questions.
See the GOC's August 24, 2009, questionnaire response at 52 through 55.
The Department issued a supplemental questionnaire in which it asked
the GOC once again to submit the requested information concerning the
provision of electricity for LTAR program. See the Department's
September 2, 2009, supplemental questionnaire. Again, the GOC failed to
provide all of the requested information with regard to several of the
Department's questions. See the GOC's September 29, 2009, supplemental
questionnaire response at 12 through 14.
Section 776(a)(2)(A) of the Act states that the Department shall
use facts available when a party withholds information that has been
requested by the Department. Further, section 776(b) of the Act states
that if the Department finds that an interested party fails to
cooperate by not acting to the best of its ability to comply with a
request for information, the Department may use an inference that is
adverse to the interests of that party in selecting from the facts
otherwise available.
As summarized above, the GOC did not provide the information
requested by the Department as it pertains to the provision of
electricity for LTAR program. We find that in failing to provide the
requested information the GOC did not act to the best of its ability.
Accordingly, in selecting from among the facts available, we are
drawing an adverse inference with respect to the provision of
electricity in the PRC and determine that the GOC is providing a
financial contribution that is specific within the meaning of section
771(5A)(D)(iv) of the Act. See the ``Federal Provision of Electricity
for
[[Page 56580]]
LTAR'' section of this preliminary determination for a discussion of
the Department's derivation of the benefit.
Various Grant Programs
The Fasten Companies and the Xinhua Companies reported receiving
grants under various central, provincial, and municipal level programs.
We sent out supplemental questionnaires to the GOC regarding these
grant programs. In certain instances, the GOC failed to provide the
information necessary for the Department to conduct its subsidy
analysis as it pertains to the issue of de facto specificity, as
described under section 771(5A)(D)(iii) of the Act. Namely, the GOC
failed to provide, as requested, information concerning the manner in
which the various grants were distributed across firms and industries.
We preliminarily determine that by failing to provide the requested
information, the use of facts available, as described under
776(a)(2)(A) of the Act, is warranted. We further preliminarily
determine that the GOC has failed to act to the best of its ability
concerning these grant programs and that the application of AFA,
described under section 776(b) of the Act, is warranted. Therefore, we
are finding that the grant programs are specific under section
771(5A)(D)(iii) of the Act. The grant programs for which we are
applying AFA in this regard are discussed below in the ``Analysis of
Programs'' section.
Status of Wire Rod Suppliers
The Department is investigating the extent to which firms, acting
as government authorities, sold wire rod to the respondents for LTAR.
As discussed in further detail below in the ``Provision of Wire Rod for
LTAR'' section, the Department sought information from the mandatory
respondents and the GOC concerning the identity of the firms that
produced the wire rod ultimately sold to the mandatory respondents
during the POI. In other words, the Department sought information that
would enable it to determine whether the input suppliers acted either
as producers of the input or as trading companies that resold the input
that was produced by other firms. Without being able to confirm the
identity of the ultimate producer of the wire rod, the Department is
unable to determine whether the wire rod was supplied by government
authorities. In some instances, the GOC and the mandatory respondents
failed to provide the requested information. We preliminarily determine
that the GOC and the mandatory respondents have not provided the
requested information and that the use of facts available, as described
under section 776(a)(2)(A) of the Act is warranted. We further
preliminarily determine that the GOC and the mandatory respondents did
not act to the best of their ability, as described under section 776(b)
of the Act, when failing to respond to the Department's requests for
information concerning the status of the mandatory respondents' input
suppliers. Therefore, as AFA in this preliminary determination, we are
making the following assumptions:
1. In instances in which a mandatory respondent identified an input
supplier as a private company but failed to indicate whether the
supplier was an input producer or a trading company, we are assuming
that the supplier acted as a trading company, and;
2. In instances in which the mandatory respondent indentified an
input supplier as a state-owned company but failed to indicate whether
the supplier was an input producer or a trading company, we are
assuming that the supplier acted as a producer.
These adverse assumptions have the effect of increasing the amount of
benefits attributed to the mandatory respondent in question.
Subsidies Valuation Information
Benchmarks and Discount Rates
Benchmarks for Short-Term RMB Denominated Loan
Section 771(5)(E)(ii) of the Act explains that the benefit for
loans is the ``difference between the amount the recipient of the loan
pays on the loan and the amount the recipient would pay on a comparable
commercial loan that the recipient could actually obtain on the
market.'' Normally, the Department uses comparable commercial loans
reported by the company for benchmarking purposes. See 19 CFR
351.505(a)(3)(i). If the firm did not have any comparable commercial
loans during the period, the Department's regulations provide that we
``may use a national interest rate for comparable commercial loans.''
See 19 CFR 351.505(a)(3)(ii).
As noted above, section 771(5)(E)(ii) of the Act indicates that the
benchmark should be a market-based rate. For the reasons explained in
CFS from the PRC, loans provided by Chinese banks reflect significant
government intervention in the banking sector and do not reflect rates
that would be found in a functioning market. See CFS from the PRC
Decision Memorandum at Comment 10. Because of this, any loans received
by respondents from private Chinese or foreign-owned banks would be
unsuitable for use as benchmarks under 19 CFR 351.505(a)(2)(i).
Similarly, we cannot use a national interest rate for commercial loans
as envisaged by 19 CFR 351.505(a)(3)(ii). Therefore, because of the
special difficulties inherent in using a Chinese benchmark for loans,
the Department is selecting an external market-based benchmark interest
rate. The use of an external benchmark is consistent with the
Department's practice. For example, in Softwood Lumber from Canada, the
Department used U.S. timber prices to measure the benefit for
government-provided timber in Canada. See Notice of Final Affirmative
Countervailing Duty Determination and Final Negative Critical
Circumstances Determination: Certain Softwood Lumber Products From
Canada, 67 FR 15545 (April 2, 2002) (Softwood Lumber from Canada), and
accompanying Issues and Decision Memorandum (Softwood Lumber from
Canada Decision Memorandum) at ``Analysis of Programs, Provincial
Stumpage Programs Determined to Confer Subsidies, Benefit.''
We are calculating the external benchmark using the regression-
based methodology first developed in CFS from the PRC and more recently
updated in LWTP from the PRC. See CFS from the PRC Decision Memorandum
at Comment 10; see also LWTP from the PRC Decision Memorandum at
``Benchmarks and Discount Rates'' section. This benchmark interest rate
is based on the inflation-adjusted interest rates of countries with per
capita GNIs similar to the PRC, and takes into account a key factor
involved in interest rate formation, that of the quality of a country's
institutions, that is not directly tied to the state-imposed
distortions in the banking sector discussed above.
Following the methodology developed in CFS from the PRC, we first
determined which countries are similar to the PRC in terms of gross
national income (GNI), based on the World Bank's classification of
countries as: low income; lower-middle income; upper-middle income; and
high income. The PRC falls in the lower-middle income category, a group
that includes 55 countries as of July 2007. As explained in CFS from
the PRC, this pool of countries captures the broad inverse relationship
between income and interest rates.
Many of these countries reported lending and inflation rates to the
International Monetary Fund and they
[[Page 56581]]
are included in that agency's international financial statistics (IFS).
With the exceptions noted below, we have used the interest and
inflation rates reported in the IFS for the countries identified as
``low middle income'' by the World Bank. First, we did not include
those economies that the Department considered to be non-market
economies for antidumping (AD) purposes for any part of the years in
question (Armenia, Azerbaijan, Belarus, Georgia, Moldova,
Turkmenistan). Second, the pool necessarily excludes any country that
did not report both lending and inflation rates to IFS for those years.
Third, we removed any country that reported a rate that was not a
lending rate or that based its lending rate on foreign-currency
denominated instruments. Specifically, Jordan reported a deposit rate,
not a lending rate, and the rates reported by Ecuador and Timor L'Este
are dollar-denominated rates; therefore, the rates for these three
countries have been excluded. Finally, for each year the Department
calculated an inflation-adjusted short-term benchmark rate, we have
also excluded any countries with aberrational or negative real interest
rates for the year in question.
The resulting inflation-adjusted benchmark lending rates are
provided in the respondents' preliminary calculation memoranda. Because
these are inflation-adjusted benchmarks, it is necessary to adjust the
respondents' interest payments for inflation. This was done using the
PRC inflation figure as reported in the IFS.
Benchmarks for Long-Term Loans
The lending rates reported in the IFS represent short- and medium-
term lending, and there are not sufficient publicly available long-term
interest rate data upon which to base a robust benchmark for long-term
loans. To address this problem, the Department has developed an
adjustment to the short- and medium-term rates to convert them to long-
term rates using Bloomberg U.S. corporate BB-rated bond rates. See
Light-Walled Rectangular Pipe and Tube From the People's Republic of
China: Final Affirmative Countervailing Duty Investigation
Determination, 73 FR 35642 (June 24, 2008) (LWRP from the PRC), and
accompanying Issues and Decision Memorandum (LWRP from the PRC Decision
Memorandum) at ``Discount Rates'' section. In Citric Acid from the PRC,
this methodology was revised by switching from a long-term mark-up
based on the ratio of the rates of BB-rated bonds to applying a spread
which is calculated as the difference between the two-year BB bond rate
and the n-year BB bond rate, where n equals or approximates the number
of years of the term of the loan in question. See Citric Acid and
Certain Citrate Salts From the People's Republic of China: Final
Affirmative Countervailing Duty Determination, 74 FR 16836 (April 13,
2009) (Citric Acid from the PRC), and accompanying Issues and Decision
Memorandum (Citric Acid from the PRC Decision Memorandum) at Comment
14. Finally, because these long-term rates are net of inflation as
noted above, we adjusted the PRC respondents' payments to remove
inflation.
Benchmarks for Foreign Currency-Denominated Loans
For foreign currency-denominated short-term loans, the Department
used as a benchmark the one-year dollar interest rates for the London
Interbank Offering Rate (LIBOR), plus the average spread between LIBOR
and the one-year corporate bond rates for companies with a BB rating.
See LWTP from the PRC Decision Memorandum at ``Benchmarks and Discount
Rates'' section. For long-term foreign currency-denominated loans, the
Department added the applicable short-;term LIBOR rate to a spread
which is calculated as the difference between the one-year BB bond rate
and the n-year BB bond rate, where n equals or approximates the number
of years of the term of the loan in question.
Discount Rates
Consistent with 19 CFR 351.524(d)(3)(i)(A), we have used as our
discount rate the long-term interest rate calculated according to the
methodology described above for the year in which the government agreed
to provide the subsidy.
Analysis of Programs
I. Programs Preliminarily Determined To Be Countervailable
A. Provision of Wire Rod from LTAR
The Department is investigating whether producers and suppliers,
acting as Chinese government authorities, sold wire rod to the
mandatory respondents for LTAR. The Xinhua Companies and the Fasten
Companies reported obtaining wire rod during the POI from trading
companies as well as directly from wire rod producers.
In Tires from the PRC, the Department determined that majority
government ownership of an input producer is sufficient to qualify it
as an ``authority.'' See Certain New Pneumatic Off-the-Road Tires From
the People's Republic of China: Final Affirmative Countervailing Duty
Determination and Final Negative Determination of Critical
Circumstances, 73 FR 40480 (July 15, 2008) (Tires from the PRC), and
accompanying Issues and Decision Memorandum (Tires from the PRC
Decision Memorandum) at ``Government Provision of Rubber for Less than
Adequate Remuneration.'' Based on the record in the instant
investigation, we determine that wire rod producers that supply
respondents and that are majority-government owned are ``authorities.''
As a result, we determine that wire rod supplied by companies deemed to
be government authorities constitute a financial contribution to
respondents in the form of a governmental provision of a good and that
the respondents received a subsidy to the extent that the price they
paid for wire rod produced by these suppliers was sold for LTAR. See
sections 771(5)(D)(iv) and 771(5)(E)(iv) of the Act.
The Fasten Companies and the Xinhua Companies reported acquiring
certain quantities of wire rod from trading companies. In prior CVD
proceedings involving the PRC, the Department has determined that when
a respondent purchases an input from a trading company or non-producing
supplier, a subsidy is conferred if the producer of the input is an
``authority'' within the meaning of section 771(5)(B) of the Act and
the price paid by the respondent for the input was sold for LTAR. See
CWP from the PRC Decision Memorandum at ``Hot-Rolled Steel for Less
Than Adequate Remuneration'' section; see also Certain Kitchen Shelving
and Racks from the People's Republic of China: Final Affirmative
Countervailing Duty Determination, 74 FR 37012 (July 27, 2009) (Racks
from the PRC), and accompanying Issues and Decision Memorandum (Racks
from the PRC Decision Memorandum) at ``Provision of Wire Rod for Less
than Adequate Remuneration'' section, and CWASPP from the PRC Decision
Memorandum at ``Provision of SSC for LTAR.'' Therefore, in our initial
questionnaire, we requested that the respondent companies and the GOC
work together in order to identify the producers from whom the trading
companies acquired the wire rod that was subsequently sold to
respondents during the POI and to provide information that would allow
the Department to determine whether those producers were government
authorities. In several instances, the GOC and the mandatory
respondents were able to supply the requested information.
However, in some instances, although the GOC and the mandatory
respondents properly indicated whether
[[Page 56582]]
the wire rod suppliers were trading companies in the business of
reselling wire rod they were, nonetheless, unable to identify the
producers that supplied the trading companies. Because the respondent
companies and the GOC have not been able to supply the requested
information, we find that the necessary information is not on the
record and, as a result, we are resorting to the use of facts available
(FA) within the meaning of sections 776(a)(1) and (2) of the Act. In
its response, the GOC provided information on the amount of wire rod
produced by state-owned enterprises (SOEs) and private producers in the
PRC. Using these data, we derived the ratio of wire rod produced by
SOEs during the POI. Thus, pursuant to sections 776(a)(1) and (2) of
the Act, we have resorted to the use of FA with regard to the wire rod
sold to the Fasten Companies and Xinhua Companies by certain domestic
trading companies. Specifically, we assumed that the percentage of wire
rod supplied by these domestic trading companies that is produced by
government authorities is equal to the ratio of wire rod produced by
SOEs during the POI.\11\ See Preliminary Calculation Memoranda for the
Fasten Companies and the Xinhua Companies. The approach is consistent
with the Department's practice. See, e.g., CWP from the PRC Decision
Memorandum at ``Hot-Rolled Steel for Less Than Adequate Remuneration;''
see also LWRP from the PRC Decision Memorandum at ``Hot-Rolled Steel
for Less Than Adequate Remuneration.''
---------------------------------------------------------------------------
\11\ In other words, in instances where we are applying FA, we
are assuming that the percentage of wire rod purchased by domestic
trading companies during the POI was equal to the ratio of wire rod
produced by SOEs during the POI, as indicated by the aggregate data
supplied in the questionnaire responses of the GOC.
---------------------------------------------------------------------------
In other instances, the GOC and the mandatory respondents failed to
indicate, as instructed, whether their wire rod suppliers were
producers or trading companies. This lack of information impedes our
ability to determine whether the wire sold by these wire rod suppliers
was, in fact, produced by a government authority. See section
776(a)(2)(A) and (C) of the Act. Therefore, as discussed in the
``Adverse Facts Available'' section, we are resorting to the use of AFA
as described under section 776(b) of the Act. Specifically, we are
making the following adverse assumptions:
1. In instances in which a mandatory respondent identified an input
supplier as a private company but failed to indicate whether the
supplier was an input producer or a trading company, we are assuming
that the supplier acted as a trading company, and;
2. In instances in which the mandatory respondent indentified an
input supplier as a state-owned company but failed to indicate whether
the supplier was an input producer or a trading company, we are
assuming that the supplier acted as a producer.
These adverse assumptions have the effect of increasing the amount of
benefits attributed to the mandatory respondent in question.
Having addressed the issue of financial contribution, we must next
analyze whether the sale of wire rod to the mandatory respondents by
suppliers designated as government authorities conferred a benefit
within the meaning of section 771(5)(iv) of the Act. The Department's
regulations at 19 CFR 351.511(a)(2) set forth the basis for identifying
appropriate market-determined benchmarks for measuring the adequacy of
remuneration for government-provided goods or services. These potential
benchmarks are listed in hierarchical order by preference: (1) market
prices from actual transactions within the country under investigation
(e.g., actual sales, actual imports or competitively run government
auctions) (tier one); (2) world market prices that would be available
to purchasers in the country under investigation (tier two); or (3) an
assessment of whether the government price is consistent with market
principles (tier three). As we explained in Softwood Lumber from
Canada, the preferred benchmark in the hierarchy is an observed market
price from actual transactions within the country under investigation
because such prices generally would be expected to reflect most closely
the prevailing market conditions of the purchaser under investigation.
See Softwood Lumber from Canada Decision Memorandum at ``Market-Based
Benchmark'' section.
Beginning with tier-one, we must determine whether the prices from
actual sales transactions involving Chinese buyers and sellers are
significantly distorted. As explained in the Preamble:
Where it is reasonable to conclude that actual transaction prices
are significantly distorted as a result of the government's involvement
in the market, we will resort to the next alternative {tier two{time}
in the hierarchy.
See Preamble to Countervailing Duty Regulations, 63 FR 65377,
(November 25, 1998) (Preamble). The Preamble further recognizes that
distortion can occur when the government provider constitutes a
majority or, in certain circumstances, a substantial portion of the
market. Id.
In the instant investigation, the GOC reported the total wire rod
production by state-owned entities during the POI. The number of these
state-owned entities (SOEs and COEs) accounted for approximately the
same percentage of the wire rod production in the PRC as was recently
found in Shelving and Racks from the PRC, in which the Department
determined that the GOC had direct ownership or control of wire rod
production. See Shelving and Racks Decision Memorandum, at Comment 4.
Because the GOC has not provided any information that would lead the
Department to reconsider the determination in Shelving and Racks from
the PRC, we find that the substantial market share held by SOEs shows
that the government plays a predominant role in the this market. See
Shelving and Racks Decision Memorandum at 15. The government's
predominant position is further demonstrated by the low level of
imports, which accounted for only 0.91 percent of the volume of wire
rod available in the Chinese market during the POI. See GOC's September
15, 2009, questionnaire response at 23. Because the share of imports of
wire rod into the PRC is small relative to Chinese domestic production
of wire rod, it would be inappropriate to use import values to
calculate a benchmark. This is consistent with the Department's
approach discussed in LWRP Decision Memorandum, at Comment 7.
In addition to the government's predominant role in the market, we
found in Shelving and Racks from the PRC that the 10 percent export
tariff and export licensing requirement instituted by the GOC
contributed to the distortion of the domestic market in the PRC for
wire rod. Such export restraints can discourage exports and increase
the supply of wire rod in the domestic market, with the result that
domestic prices are lower than they would otherwise be. See Shelving
and Racks Decision Memorandum at 15. Consequently, we determine that
there are no appropriate tier one benchmark prices available for wire
rod.
We note that Fasten I&E reported that it imported wire rod during
the POI. See Exhibit 1 of Fasten I&E's September 22, 2009, supplemental
questionnaire response. As noted above, imports of wire rod accounted
for a small percent of the volume of wire rod available in the Chinese
market during the POI. As explained above, we have determined that
there are no appropriate tier-one
[[Page 56583]]
benchmark prices on the record, including import prices. This is
consistent with the Department's approach in prior CVD proceedings
involving the PRC. See LWRP from the PRC Decision Memorandum at Comment
7; see also Racks from the PRC Decision Memorandum at ``Provision of
Wire Rod for Less Than Adequate Remuneration'' section. Consequently,
because we determine that there are no available tier-one benchmark
prices, we have turned to tier-two, i.e., world market prices available
to purchasers in the PRC.
We next examined whether the record contained data that could be
used as a tier-two wire rod benchmark under 19 CFR 351.511(a)(2)(ii).
The Department has on the record of the investigation prices for SWRH
82B wire rod (or high carbon wire rod), as sourced from the American
Metals Market (AMA). See petitioners' October 6, 2009, submission at
Exhibit 4. The benchmark prices are reported on a monthly basis in U.S.
dollars per metric ton (MT). Petitioners provide information indicating
that one of the producers of subject merchandise, Walsin, uses SWRH 82B
to produce subject merchandise. No other interested party submitted
tier-two wire prices on the record of the investigation.
Therefore, for purposes of the preliminary determination, we find
that the data from AMA should be used to derive a tier-two, world
market price for wire rod that would be available to purchasers of wire
rod in the PRC. We note that the Department has relied on pricing data
from industry publications in recent CVD proceedings involving the PRC.
See, e.g., CWP from the PRC Decision Memorandum at ``Hot-Rolled Steel
for Less Than Adequate Remuneration'' section; see also LWRP from the
PRC Decision Memorandum at ``Hot-Rolled Steel for Less Than Adequate
Remuneration'' section. We find that, for purposes of the preliminary
determination, prices from the AMA to be sufficiently reliable and
representative.
To determine whether wire rod suppliers, acting as government
authorities, sold wire rod to respondents for LTAR, we compared the
prices the respondents paid to the suppliers to our wire rod benchmark
price. We conducted our comparison on a monthly basis. When conducting
the price comparison, we converted the benchmark to the same currency
and unit of measure as reported by the mandatory respondents for their
purchases of wire rod.
Under 19 CFR 351.511(a)(2)(iv), when measuring the adequacy of
remuneration under tier one or tier two, the Department will adjust the
benchmark price to reflect the price that a firm actually paid or would
pay if it imported the product, including delivery charges and import
duties. Regarding delivery charges, at this time we lack information
and, therefore, have not adjusted the benchmark in this regard, but
will continue to seek the relevant information for the final
determination. However, we have added import duties, as reported by the
GOC, and the VAT applicable to imports of wire rod into the PRC. With
respect to the three percent insurance charge on imports noted by the
petitioner, consistent with Racks from the PRC, while the Department
will consider in future determinations the propriety of including
insurance as a delivery charge, the existing record of this
investigation does not support such an adjustment. See Racks from the
PRC Decision Memorandum.
Comparing the benchmark unit prices to the unit prices paid by
respondents for wire rod, we determine that wire rod was provided for
LTAR and that a benefit exists in the amount of the difference between
the benchmark and what the respondent paid. See section 771(5)(E)(iv)
of the Act and 19 CFR 351.511(a). In the case of the Xinhua Companies,
we compared the wire rod benchmarks prices to the prices the Xinhua
Companies paid to their wire rod suppliers. Xinhua purchased some of
its wire rod from Xinyu. As explained in the ``Attribution'' section
above, we are not including Xinhua's purchases of wire rod from Xinyu
in our subsidy calculations. In the case of Hongsheng, we compared the
wire rod benchmark prices to the prices Hongsheng paid to its wire rod
suppliers. In the case of Walsin, it purchased its wire rod from
suppliers other than Hongsheng. Thus, we compared the wire rod
benchmark prices to the prices Walsin paid to its suppliers.
Finally, with respect to specificity, the third subsidy element
specified under the Act, the GOC has provided information on end uses
for wire rod. See Exhibit 58 of the GOC's August 26, 2009,
questionnaire response. The GOC stated that the end uses of wire rod
relate to the type of industry involved as a direct purchaser of the
input. The GOC further stated that the consumption of wire rod occurs
across a broad range of industries. While numerous companies may
comprise the listed industries, section 771(5A)(D)(iii)(I) of the Act
clearly directs the Department to conduct its analysis on an industry
or enterprise basis. Based on our review of the data and consistent
with our past practice, we determine that the industries named by the
GOC are limited in number and, hence, the subsidy is specific. See
section 771(5A)(D)(iii)(I) of the Act. See LWRP from the PRC Decision
Memorandum at Comment 7; see also Racks from the PRC Decision
Memorandum at ``Provision of Wire Rod from Less Than Adequate
Remuneration.''
We find that the GOC's provision of wire rod for LTAR to be a
domestic subsidy as described under 19 CFR 351.525(b)(3). Therefore, to
calculate the net subsidy rate, we divided the benefit by a denominator
comprised of total sales. Regarding the Xinhua companies, for wire rod
sold to Xinhua for LTAR, we divided Xinhua's benefit by Xinhua's total
sales. Regarding the Fasten Companies, for wire rod sold to Hongsheng
for LTAR, we divided Hongsheng's benefit by combined total sales of
Hongsheng, Fasten Steel, Hongyu Metal, and Fasten I&E. Regarding wire
rod sold to Walsin for LTAR, we divided Walsin's benefit by its total
sales. We then cumulated the benefits Walsin received under the program
using the methodology described in the ``Attribution'' section of this
preliminary determination. Specifically, we multiplied the total
subsidy rate for Walsin by its share of PC strand that was exported to
the United States during the POI by Fasten I&E. We then added the
resulting apportioned rate to the total subsidy rate calculated for
Fasten I&E. On this basis, we calculated a total net subsidy rate of
9.78 percent ad valorem for the Xinhua Companies and 5.57 percent ad
valorem for the Fasten Companies.
B. Provision of Land Use Rights for LTAR to FIEs in Jiangxi and the
City of Xinyu
As explained in the Initiation Checklist that accompanied the
Initiation, we are investigating the extent to which Jiangxi Province
has industrial plans in place that support the provision of land to the
members of the steel industry for LTAR and whether the City of Xinyu
provides land to FIEs for LTAR. See Initiation Checklist at 13, of
which a public version is available in room 1117 of the CRU of the
Commerce Building. The Xinhua Companies are located in Jiangxi Province
and the City of Xinyu. The Fasten Companies are not located in Jiangxi
Province or the City of Xinyu. Therefore, we are not examining the
Fasten Companies under this program. On this basis, we preliminarily
determine that the Fasten Companies did not use this program during the
POI.
[[Page 56584]]
The Xinhua Companies reported that Xinyu acquired three parcels of
land from government authorities located in the City of Xinyu. Two
purchases occurred in 1996. The other purchase occurred in 2004. As
explained above, we are limiting our analysis of subsidies beginning
after December 11, 2001, which is the date of the PRC's accession to
the WTO. Thus, we are not examining the land Xinyu acquired from
government authorities in 1996. Regarding the land Xinyu acquired in
2004, information supplied by the Xinhua Companies indicates that Xinyu
acquired the land from the Xinyu Hi-Tech Economic Development Zone
Committee, which we find is controlled by City of Xinyu, and that the
land purchased is located in a development zone.
The Department determined in LWS from the PRC that the provision of
land-use rights constitutes the provision of a good within the meaning
of section 771(5)(D)(iii) of the Act. See Laminated Woven Sacks from
the People's Republic of China: Final Affirmative Countervailing Duty
Determination and Final Affirmative Determination, in Part, of Critical
Circumstances, 73 FR 35639 (June 24, 2008) (LWS from the PRC), and
accompanying Issues and Decision Memorandum (LWS from the PRC Decision
Memorandum) at Comment 8. The Department also found that when the
provision of land-use rights in an industrial park is limited to a
designated geographical region within the seller's (e.g., county's or
municipality's) jurisdiction, the provision of the land-use rights is
regionally specific under section 771(5A)(D)(iv) of the Act. Id. at
Comment 9. In the instant investigation, the Xinyu Hi-Tech Economic
Development Zone is a designated area within the area under the
jurisdiction of the City of Xinyu. Therefore, consistent with LWS from
the PRC, we preliminarily determine that Xinyu's purchase of granted
land-use rights located within the Xinyu Hi-Tech Economic Development
Zone in 2004 gives rise to countervailable subsidies to the extent that
the purchases conferred a benefit.
To determine whether the Xinhua Companies received a benefit, we
have analyzed potential benchmarks in accordance with 19 CFR
351.511(a). First, we look to whether there are market-determined
prices (referred to as tier-one prices in the LTAR regulation) within
the country. See 19 CFR 351.511(a)(2)(i). In LWS from the PRC, the
Department determined that ``Chinese land prices are distorted by the
significant government role in the market'' and, hence, that tier-one
benchmarks do not exist. See LWS from the PRC Decision Memorandum at
Comment 10. The Department also found that tier-two benchmarks (world
market prices that would be available to purchasers in China) are not
appropriate. Id. at ``Analysis of Programs-Government Provision of Land
for Less Than Adequate Remuneration''; see also 19 CFR
351.511(a)(2)(ii). Therefore, the Department determined the adequacy of
remuneration by reference to tier-three and found that the sale of
land-use rights in China was not consistent with market principles
because of the overwhelming presence of the government in the land-use
rights market and the widespread and documented deviation from the
authorized methods of pricing and allocating land. See LWS from the PRC
Decision Memorandum at Comment 10; see also 19 CFR 351.511(a)(2)(iii).
We preliminarily determine that in the instant investigation the GOC
has not submitted any information that rebuts the conclusions reached
by the Department in LWS from the PRC.
For these reasons, we are not able to use Chinese or world market
prices as a benchmark. Therefore, we are preliminarily comparing the
price that the Xinyu paid for its granted land-use rights with
comparable market-based prices for land purchases in a country at a
comparable level of economic development that is reasonably proximate
to, but outside of, China. Specifically, we are preliminarily comparing
the price Xinyu paid to the City of Xinyu in 2004 to the price of
certain industrial land in industrial estates, parks, and zones in
Thailand in 2004. See LWS from the PRC Decision Memorandum at
``Analysis of Programs Government Provision of Land for Less Than
Adequate Remuneration.''
To calculate the benefit, we computed the amount that Xinyu would
have paid for its granted land-use rights and subtracted the amount
Xinyu actually paid for its 2004 purchase. Our comparison indicates
that the price Xinyu paid to the government authority in 2004 was less
than our land benchmark price and, thus, that Xinyu received a benefit
under section 771(5)(E)(iv) of the Act. Next, in accordance with 19 CFR
351.524(b)(2), we examined whether the subsidy amount exceeded 0.5
percent of Xinyu's total consolidated sales in the year of purchase.
Our analysis indicates that the subsidy amount exceeded the 0.5 percent
threshold. Therefore, we used the discount rate described under the
``Benchmarks and Discount Rates'' section of this preliminary
determination to allocate the benefit over the life of the land-use
rights contract, which is 50 years.
To calculate the net subsidy rate, we divided the benefit by
Xinyu's consolidated sales for the POI. On this basis, we calculated a
net subsidy rate of 0.01 percent ad valorem.
C. Import Tariff and Value Added Tax Exemptions for FIES and Certain
Domestic Enterprises Using Imported Equipment in Encouraged Industries
Enacted in 1997, the State Council's Circular on Adjusting Tax
Policies on Imported Equipment (Guofa No. 37) (Circular No. 37) exempts
both foreign invested enterprises (FIEs) and certain domestic
enterprises from the value-added tax (VAT) and tariffs on imported
equipment used in their production. The National Development and Reform
Commission (NDRC) and the General Administration of Customs are the
government agencies responsible for administering this program. The
objective of the program is to encourage foreign investment and to
introduce foreign advanced technology equipment and industry technology
upgrades. Under the program, companies are authorized to receive the
exemptions based on their FIE status and the list of assets approved by
the GOC at the time their FIE status was approved. Domestic enterprises
eligible for the VAT and duty exemptions must have government-approved
projects that are in line with the current ``Catalog of Key Industries,
Products, and Technologies the Development of Which is Encouraged by
the State.'' Whether an FIE or domestic enterprise, only equipment that
is not listed in the Catalog on Non-Duty Exemptible Article for
Importation is eligible for the VAT and duty exemptions. Different
catalogs are prepared for FIEs and domestic enterprises. To receive the
exemptions, a qualified enterprise has to show a certificate provided
by the NDRC, or its provincial branch, to the customs officials upon
importation of the equipment.
Xinhua, Xinyu, and Xingang reported receiving VAT and duty
exemptions under this program due to its status as a qualified domestic
enterprise. Walsin and Hongyu Metal also reported using this program
due to their status as FIEs.
We preliminarily determine that the VAT and duty exemptions
received under the program constitute a financial contribution in the
form of revenue forgone by the GOC, which provide a benefit to the
recipients in the amount of the VAT and tariff savings. See
[[Page 56585]]
sections 771(5)(D)(ii) and 771(5)(E) of the Act, as well as 19 CFR
351.510(a)(1).
We acknowledge that the pool of companies eligible for benefits is
larger than FIEs because some domestic companies may also quali
