Drill Pipe from the People's Republic of China: Initiation of Countervailing Duty Investigation, 4345-4348 [2010-1629]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 75, Number 17 (Wednesday, January 27, 2010)]
[Notices]
[Pages 4345-4348]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-1629]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-570-966]


Drill Pipe from the People's Republic of China: Initiation of 
Countervailing Duty Investigation

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

DATES: Effective Date:
    January 27, 2010.

FOR FURTHER INFORMATION CONTACT: John Conniff and Eric B. Greynolds, 
AD/CVD Operations, Office 3, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Room 4014, Washington, DC 20230; telephone: 
(202) 482-1009, (202) 482-6071, respectively.

SUPPLEMENTARY INFORMATION:

The Petition

    On December 31, 2009,\1\ the Department of Commerce (the 
Department) received a petition concerning imports of drill pipe from 
the People's Republic of China (PRC) filed in proper form by VAM 
Drilling USA, Inc., Texas Steel Conversions, Inc., Rotary Drilling 
Tools, TMK IPSCO, and United Steel, Paper and Forestry, Rubber, 
Manufacturing, Energy, Allied Industrial and Service Workers 
International Union, AFL-CIO-CLC (collectively, the petitioners). See 
Petitions for the Imposition of Antidumping and Countervailing Duties: 
Drill Pipe from the People's Republic of China, dated December 31, 2009 
(Petition). On January 6, 2010, the Department issued additional 
requests for information and clarification of certain areas of the 
Petition. Petitioners filed timely additional information pertaining to 
general issues on January 11, 2010. See Petition for the Imposition of 
Antidumping Duties on Drill Pipe from the PRC: Response to Department's 
Letter of January 6, 2010 (Supplement to the AD/CVD Petitions). On 
January 8, 2010, the Department issued a request for additional 
information pertaining to countervailing duty (CVD) issues. Petitioners 
filed timely information regarding countervailing issues on January 13, 
2010. See Petitions for the Imposition of Antidumping and 
Countervailing Duties: Drill Pipe from the PRC: Response to Pre-
initiation CVD questions (Supplement to the CVD Petition). On January 
14, 2010, the Department issued an additional request for information 
and clarification regarding general issues and dumping. Petitioners 
filed a response containing additional information related to both 
general issues and dumping on January 15, 2010. See Petitions for the 
Imposition of Antidumping and Countervailing Duties: Drill Pipe from 
the PRC: Response to the Department's Letter of January 14, 2010 
(Second Supplement to the AD/CVD Petitions). Petitioners also filed 
additional information pertaining to general issues on January 15, 
2010. See Petitions for the Imposition of Antidumping and 
Countervailing Duties: Drill Pipe from the PRC: Response to 
Department's Letter of January 14, 2010: Additional Affidavit (Third 
Supplement to the AD/CVD Petitions). On January 19, 2010, petitioners 
filed further clarifications related to general issues. See Petitions 
for the Imposition of Antidumping and Countervailing Duties: Drill Pipe 
from the PRC: Response to Department's Letter of January 14, 2010: 
Additional Affidavit: (Fourth Supplement to the AD/CVD Petitions). In 
addition, on both January 15, and January 19, 2010, we received 
comments filed by Lehnardt & Lehnardt, LLC, on behalf of Downhole Pipe 
& Equipment, LP (Downhole Pipe) and Command Energy Services 
International (Command Energy), U.S. importers of drill pipe from 
China. Downhole Pipe and Command Energy are interested parties per 
section 771(9)(A) of the Act.
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    \1\ Petitioners filed the Petition at the International Trade 
Commission (ITC) after 12:00 noon on December 30, 2009, therefore, 
pursuant to 19 CFR 207.10(a), the ITC deemed the Petition to have 
been filed on the next business day, December 31, 2009. Section 
702(b)(2) of the Tariff Act of 1930, as amended (the Act) requires 
simultaneous filings of countervailing duty petitions with the 
Department of Commerce and the ITC, therefore, we deem the Petition 
to have been filed with Commerce on December 31, 2009. This file 
date will change the initiation date from January 19, 2009, to 
January 20, 2009. See Memorandum to Ronald K. Lorentzen, entitled 
``Decision Memorandum Concerning Petitions Filing Date,'' dated 
concurrently with this checklist.
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    In accordance with section 702(b)(1) of the Act, petitioners allege 
that manufacturers, producers, or exporters of drill pipe in the PRC 
receive countervailable subsidies within the meaning of section 701 of 
the Act, and that such imports are materially injuring, or threatening 
material injury to, an industry in the United States.
    The Department finds that petitioners filed the Petition on behalf 
of the domestic industry because they are interested parties as defined 
in section 771(9)(C) and (D) of the Act, and petitioners have 
demonstrated sufficient industry support with respect to the CVD 
investigation (see ``Determination of Industry Support for the 
Petition'' section below).

Period of Investigation

    The proposed period of investigation (POI) is January 1, 2009, 
through December 31, 2009.

Scope of Investigation

    The products covered by this investigation are drill pipe from the 
PRC. For a full description of the scope of the investigation, see the 
``Scope of the Investigation'' in Appendix I of this notice.

Comments on Scope of Investigation

    During our review of the Petition, we discussed the scope with 
petitioners to ensure that it is an accurate reflection of the products 
for which the domestic industry is seeking relief. Moreover, as 
discussed in the preamble to the Department's regulations (Antidumping 
Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 
1997)), we are setting aside a period for interested parties to raise 
issues regarding product coverage. The Department encourages all 
interested parties to submit such comments by Wednesday, February 10, 
2010, twenty calendar days from the signature date of this notice. 
Comments should be addressed to Import Administration's APO/Dockets 
Unit, Room 1870, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230. The period for scope 
consultations is intended to provide the Department with ample

[[Page 4346]]

opportunity to consider all comments and to consult with parties prior 
to the issuance of the preliminary determination.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, on January 8, 
2010, the Department invited representatives of the Government of the 
PRC (GOC) for consultations with respect to the CVD petition. On 
January 15, 2010, the Department held consultations with 
representatives of the GOC in Beijing.

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (i) at least 
25 percent of the total production of the domestic like product; and 
(ii) more than 50 percent of the production of the domestic like 
product produced by that portion of the industry expressing support 
for, or opposition to, the petition. Moreover, section 702(c)(4)(D) of 
the Act provides that, if the petition does not establish support of 
domestic producers or workers accounting for more than 50 percent of 
the total production of the domestic like product, the Department 
shall: (i) poll the industry or rely on other information in order to 
determine if there is support for the petition, as required by 
subparagraph (A), or (ii) determine industry support using a 
statistically valid sampling method to poll the industry.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers as a whole of a domestic like product. Thus, to determine 
whether a petition has the requisite industry support, the statute 
directs the Department to look to producers and workers who produce the 
domestic like product. The ITC, which is responsible for determining 
whether ``the domestic industry'' has been injured, must also determine 
what constitutes a domestic like product in order to define the 
industry. While both the Department and the ITC must apply the same 
statutory definition regarding the domestic like product (section 
771(10) of the Act), they do so for different purposes and pursuant to 
a separate and distinct authority. In addition, the Department's 
determination is subject to limitations of time and information. 
Although this may result in different definitions of the like product, 
such differences do not render the decision of either agency contrary 
to law. See USEC, Inc. v. United States, 132 F. Supp. 2d 1, 8 (Ct. 
Int'l Trade 2001), citing Algoma Steel Corp., Ltd. v. United States, 
688 F. Supp. 639, 644 (Ct. Int'l Trade 1988), aff'd 865 F.2d 240 (Fed. 
Cir. 1989), cert. denied 492 U.S. 919 (1989).
    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation'' (i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition).
    With regard to the domestic like product, petitioners do not offer 
a definition of domestic like product distinct from the scope of the 
investigation. Based on our analysis of the information submitted on 
the record, we have determined that drill pipe constitutes a single 
domestic like product and we have analyzed industry support in terms of 
that domestic like product. For a discussion of the domestic like 
product analysis in this case, see ``Countervailing Duty Investigation 
Initiation Checklist: Drill Pipe from the People's Republic of China'' 
(Initiation Checklist), at Attachment II, Analysis of Industry Support 
for the Petitions Covering Drill Pipe from the People's Republic of 
China, on file in the Central Records Unit (CRU), Room 1117 of the main 
Department of Commerce building.
    In determining whether petitioners have standing under section 
702(C)(4)(A) of the Act, we considered the industry support data 
contained in the Petition with reference to the domestic like product. 
To establish industry support, petitioners provided their production of 
the domestic like product in 2008, and compared this to the estimated 
total production of the domestic like product for the entire domestic 
industry. See Volume I of the Petition, at 2-3; see also Supplement to 
the AD/CVD Petitions at 6-13 and Exhibit 3; Second Supplement to the 
AD/CVD Petitions at 1-4 and Exhibits 1-3; Third Supplement to the AD/
CVD Petitions at Exhibit 1, and Fourth Supplement to the AD/CVD 
Petitions at Exhibit I. To estimate 2008 production of the domestic 
like product, petitioners used their own data and industry specific 
knowledge. See Second Supplement to the AD/CVD Petitions at 1-4 and 
Exhibits 1-3; see also Initiation Checklist at Attachment II. We have 
relied upon data petitioners provided for purposes of measuring 
industry support. For further discussion, see Initiation Checklist at 
Attachment II.
    Based on information provided in the Petition, supplemental 
submissions, and other information readily available to the Department, 
we determine that the domestic producers and workers have met the 
statutory criteria for industry support under section 702(c)(4)(A)(i) 
of the Act because the domestic producers (or workers) who support the 
Petition account for at least 25 percent of the total production of the 
domestic like product. Because the Petition and supplemental 
submissions did not establish support from domestic producers (or 
workers) accounting for more than 50 percent of the total production of 
the domestic like product, the Department was required to take further 
action in order to evaluate industry support. See section 702(c)(4)(D) 
of the Act. In this case, the Department was able to rely on other 
information, in accordance with section 702(c)(4)(D)(i) of the Act, to 
determine industry support. See Initiation Checklist at Attachment II. 
Based on information provided in the Petition and other submissions, 
the domestic producers and workers have met the statutory criteria for 
industry support under section 702(c)(4)(A)(ii) of the Act because the 
domestic producers (or workers) who support the Petition account for 
more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the Petition. Accordingly, the Department determines 
that the Petition was filed on behalf of the domestic industry within 
the meaning of section 702(b)(1) of the Act. See Initiation Checklist 
at Attachment II.
    The Department finds that petitioners filed the Petition on behalf 
of the domestic industry because they are an interested party as 
defined in sections 771(9)(C) and 771(9)(D) of the Act and has 
demonstrated sufficient industry support with respect to the CVD 
investigation that it is requesting the Department initiate. See 
Initiation Checklist at Attachment II.

Injury Test

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

[[Page 4347]]

Allegations and Evidence of Material Injury and Causation

    Petitioners allege that imports of drill pipe from the PRC are 
benefitting from countervailable subsidies and that such imports are 
causing, or threaten to cause, material injury to the domestic industry 
producing drill pipe. In addition, petitioners allege that subsidized 
imports exceed the negligibility threshold provided for under section 
771(24)(A) of the Act.
    Petitioners contend that the industry's injured condition is 
illustrated by reduced market share, reduced production, reduced 
shipments, reduced capacity and capacity utilization, underselling and 
price depression or suppression, reduced employment, hours worked, and 
wages paid, decline in financial performance, lost sales and revenue, 
and increase in import penetration. We have assessed the allegations 
and supporting evidence regarding material injury, threat of material 
injury, and causation, and we have determined that these allegations 
are properly supported by adequate evidence and meet the statutory 
requirements for initiation. See Initiation Checklist at Attachment III 
(Analysis of Injury Allegations and Evidence of Material Injury and 
Causation).

Initiation of Countervailing Duty Investigation

    Section 702(b) of the Act requires the Department to initiate a CVD 
proceeding whenever an interested party files a petition on behalf of 
an industry that: (1) alleges the elements necessary for an imposition 
of a duty under section 701(a) of the Act; and (2) is accompanied by 
information reasonably available to the petitioner(s) supporting the 
allegations.
    The Department has examined the CVD Petition on drill pipe from the 
PRC and finds that it complies with the requirements of section 702(b) 
of the Act. Therefore, in accordance with section 702(b) of the Act, we 
are initiating a CVD investigation to determine whether manufacturers, 
producers, or exporters of drill pipe in the PRC receive 
countervailable subsidies. For a discussion of evidence supporting our 
initiation determination, see Initiation Checklist.
    We are including in our investigation the following programs 
alleged in the Petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in the PRC:

A. Preferential Loans and Interest Rates

    1. Policy Loans To The Drill Pipe (DP) Industry
    2. Export Loans from Policy Banks and State-Owned Commercial Banks 
(SOCBs)
    3. Treasury Bond Loans
    4. Preferential Loans for State-Owned Enterprises (SOEs)
    5. Preferential Loans for Key Projects and Technologies
    6. Preferential Lending to DP Producers and Exporters Classified as 
``Honorable Enterprises''

B. Debt-To-Equity Swaps and Loan Forgiveness

    1. Debt-to-Equity Swaps
    2. Loan and Interest Forgiveness for SOEs

C. Income Tax and Other Direct Tax Benefit Programs

    1. Income Tax Credits for Domestically-Owned Companies Purchasing 
Domestically Produced Equipment
    2. Reduction In Or Exemption From Fixed Assets Investment 
Orientation Regulatory Tax

D. Subsidies for Foreign Invested Enterprises (FIES)

    1. ``Two Free, Three Half'' Program
    2. Local Income Tax Exemption and Reduction Programs for 
``Productive'' FIEs
    3. Preferential Tax Programs for FIEs Recognized as High or New 
Technology Enterprises
    4. Income Tax Reductions For Export-Oriented FIEs

B. Indirect Tax and Tariff Exemption Programs

    1. Indirect Tax And Tariff And Vat Exemptions For FIEs And Certain 
Domestic Enterprises Using Imported Equipment In Encourage Industries
    2. Deed Tax Exemption for SOEs Undergoing Mergers or Restructuring
    3. Export Subsidies Characterized as ``VAT Rebates''

F. Government Provision of Goods and Services for Less Than Adequate 
Remuneration (LTAR)

    1. Provision of Land to SOEs for LTAR
    2. Provision of Land Use Rights Within Designated Geographical 
Areas for LTAR
    3. Provision of Steel Rounds for LTAR
    4. Provision of Hot-Rolled Steel (HRS) for LTAR
    5. Provision of Green Tube for LTAR
    6. Provision of Electricity for LTAR
    7. Provision of Electricity and Water at LTAR to DP Producers 
Located in Jiangsu Province
    8. Provision of Coking Coal for LTAR

G. Grant Programs

    1. State Key Technology Project Fund
    2. Export Assistance Grants
    3. Programs to Rebate Antidumping Legal Fees
    4. GOC and Sub-Central Government Grants, Loans, and Other 
Incentives for Development of Famous Brands and China World Top Brands
    5. Grants and Tax Benefits to Loss-Making SOEs at National and 
Local Level

H. Subsidies To DP Producers Located in Economic Development Zones

    1. Economic and Technological Development Zones (ETDZ) Located in 
Tianjin Binhai New Area (TBNA)
    2. ETDZs Located in Tianjin Economic and Technological Development 
Area (TEDA)
    3. ETDZs Located in Yangtze Riverside Economic Development Zone 
(YREDZ)
    4. High-Tech Industrial Development Zones (HTDZ)
    For further information explaining why the Department is 
investigating these programs, see the Initiation Checklist.

Respondent Selection

    For this investigation, the Department expects to select 
respondents based on U.S. Customs and Border Protection (CBP) data for 
U.S. imports during the POI. We intend to release the CBP data under 
Administrative Protective Order (APO) to all parties with access to 
information protected by APO within five days of the announcement of 
the initiation of this investigation. Interested parties may submit 
comments regarding the CBP data and respondent selection within seven 
calendar days of publication of this notice. We intend to make our 
decision regarding respondent selection within 20 days of publication 
of this Federal Register notice. Interested parties must submit 
applications for disclosure under APO in accordance with 19 CFR 
351.305(b). Instructions for filing such applications may be found on 
the Department's website at https://ia.ita.doc.gov/apo.

Distribution of Copies of the Petition

    In accordance with section 702(b)(3)(A) of the Act and 19 CFR 
351.202(f), copies of the public versions of the Petition have been 
provided to the representatives of the GOC. Because of the large number 
of producers/exporters identified in the Petition, the Department 
considers the service of the public version of the Petition to the

[[Page 4348]]

foreign producers/exporters satisfied by the delivery of the public 
version to the Government of the PRC, consistent with 19 CFR 
351.203(c)(2).

ITC Notification

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

Preliminary Determination by the ITC

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

    Dated: January 20, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.

Appendix I

Scope of the Investigation

    The products covered by this investigation are steel drill pipe, 
and steel drill collars, whether or not conforming to American 
Petroleum Institute (API) or non-API specifications, whether 
finished or unfinished (including green tubes suitable for drill 
pipe), without regard to the specific chemistry of the steel (i.e., 
carbon, stainless steel, or other alloy steel), and without regard 
to length or outer diameter. The scope does not include tool joints 
not attached to the drill pipe, nor does it include unfinished tubes 
for casing or tubing covered by any other antidumping or 
countervailing duty order.
    The subject products are currently classified in the following 
Harmonized Tariff Schedule of the United States (HTSUS) categories: 
7304.22.0030, 7304.22.0045, 7304.22.0060, 7304.23.3000, 
7304.23.6030, 7304.23.6045, 7304.23.6060, 8431.43.8040 and may also 
enter under 8431.43.8060, 8431.43.4000, 7304.39.0028, 7304.39.0032, 
7304.39.0036, 7304.39.0040, 7304.39.0044, 7304.39.0048, 
7304.39.0052, 7304.39.0056, 7304.49.0015, 7304.49.0060, 
7304.59.8020, 7304.59.8025, 7304.59.8030, 7304.59.8035, 
7304.59.8040, 7304.59.8045, 7304.59.8050, and 7304.59.8055.\2\
    While HTSUS subheadings are provided for convenience and Customs 
purposes, the written description of the scope of these 
investigations is dispositive.
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    \2\ Prior to February 2, 2007, these imports entered under 
different tariff classifications, including 7304.21.3000, 
7304.21.6030, 7304.21.6045, and 7304.21.6060.
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[FR Doc. 2010-1629 Filed 1-26-10; 8:45 am]
BILLING CODE 3510-DS-S