Citric Acid and Certain Citrate Salts from the People's Republic of China: Preliminary Results of Countervailing Duty Administrative Review, 33219-33239 [2011-14027]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 76, Number 110 (Wednesday, June 8, 2011)]
[Notices]
[Pages 33219-33239]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-14027]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-570-938]


Citric Acid and Certain Citrate Salts from the People's Republic 
of China: Preliminary Results of Countervailing Duty Administrative 
Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce is conducting an administrative 
review of the countervailing duty order on citric acid and certain 
citrate salts from the People's Republic of China for the period 
September 19, 2008, through December 31, 2009. We preliminarily find 
that RZBC Co., Ltd. (``RZBC Co.''); RZBC Import & Export Co., Ltd. 
(``RZBC I&E''); RZBC (Juxian) Co., Ltd. (``RZBC Juxian''); and RZBC 
Group Co., Ltd. (``RZBC Group'') (collectively, ``RZBC''), and Yixing 
Union Biochemical Co., Ltd. (``Yixing Union Co.) and Yixing Union 
Cogeneration Co., Ltd. (``Cogeneration'') (collectively, ``Yixing 
Union'') received countervailable subsidies during the period of 
review. If these preliminary results are adopted in our final results 
of this review, we will instruct U.S.

[[Page 33220]]

Customs and Border Protection to assess countervailing duties as 
detailed in the ``Preliminary Results of Review'' section of this 
notice. Interested parties are invited to comment on these preliminary 
results.

DATES: Effective Date: June 8, 2011.

FOR FURTHER INFORMATION CONTACT: David Layton, Seth Isenberg, or Austin 
Redington, Office of AD/CVD Operations, Office 1, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, Room 3069, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-0371, (202) 482-0588, and 
(202) 482-1664, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On May 29, 2009, the Department of Commerce (``the Department'') 
published a countervailing duty order on citric acid and certain 
citrate salts (``citric acid'') from the People's Republic of China 
(``PRC''). See Citric Acid and Certain Citrate Salts From the People's 
Republic of China: Notice of Countervailing Duty Order, 74 FR 25705 
(May 29, 2009) (``CVD Order''). On May 3, 2010, we published a notice 
of ``Opportunity to Request Administrative Review'' for this 
countervailing duty order. See Antidumping or Countervailing Duty 
Order, Finding, or Suspended Investigation; Opportunity To Request 
Administrative Review, 75 FR 23236 (May 3, 2010). On May 18, 2010, we 
received a request for administrative review from the RZBC; on May 24, 
2010, we received a request for administrative review from Yixing 
Union. On June 1, 2010, we received a request from Archer Daniels 
Midland Company; Cargill, Incorporated; and Tate & Lyle Americas 
(collectively, ``Petitioners'') to conduct an administrative review of 
56 companies, including RZBC and Yixing Union. In accordance with 19 
CFR 351.221(c)(1)(i), we published a notice of initiation of the review 
on June 30, 2010. See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Requests for Revocation in Part, 75 FR 37759 
(June 30, 2010). On August 17, 2010, the Department issued a respondent 
selection memorandum selecting RZBC and Yixing Union as mandatory 
respondents. See Memorandum to Susan H. Kuhbach from Patricia M. Tran, 
regarding Respondent Selection: Countervailing Duty Administrative 
Review-Citric Acid and Certain Citrate Salts (August 17, 2010).
    On September 27, 2010, Petitioners timely withdrew their request 
for an administrative review for 54 companies. On November 22, 2010, 
the Department published a partial rescission of review for these 54 
companies, continuing the review with respect to RZBC and Yixing Union. 
See Citric Acid and Certain Citrate Salts From People's Republic of 
China: Partial Rescission of Countervailing Duty Administrative Review, 
75 FR 71078 (November 22, 2010).
    On September 17, 2010, we issued countervailing duty questionnaires 
to the Government of the PRC (``GOC''), RZBC, and Yixing Union. We 
received responses to these questionnaires from RZBC and Yixing Union 
on November 9, 2010, and from the GOC on November 15, 2010. On February 
28, 2011, we issued supplemental questionnaires to the GOC, RZBC, and 
Yixing Union. We received responses to the first supplemental 
questionnaires from each of the three respondents on March 28, 2011. On 
April 21, 2011, we issued second supplemental questionnaires, which 
also included some questions concerning the new subsidy allegations 
discussed below, to the GOC, RZBC, and Yixing Union. We received 
responses to the second supplemental questionnaire from the GOC on May 
5, May 9, and May 10, 2011. We received responses to the second 
supplemental questionnaire from RZBC on May 9, and May 10, 2011, and 
from Yixing Union on May 9, 2011. The Department issued a third 
supplemental questionnaire to Yixing Union and RZBC on May 11, and May 
16, 2011, respectively. Yixing Union responded to the third 
supplemental questionnaire on May 17, 2011, and RZBC responded to this 
questionnaire on May 19, 2011.
    On August 16, 2010, Petitioners submitted new subsidy allegations 
requesting the Department examine two alleged subsidy programs that it 
had deferred examining in the investigation and one additional program, 
national policy lending. On December 2, 2010, Petitioners requested 
that the Department extend the deadline to submit new subsidy 
allegations. In response to Petitioners' request, the Department 
extended the deadline to submit new subsidy allegations until December 
10, 2010. See Department's Letter to Petitioners granting their 
extension request (December 3, 2010), which is on file in the Central 
Records Unit (``CRU'') in room 7046 in the main Department building. On 
December 10, 2010, Petitioners submitted new subsidy allegations 
requesting the Department expand its countervailing duty administrative 
review to include five additional subsidy programs, and separately 
requesting that the Department investigate Yixing Union's 
creditworthiness. The Department rejected the new subsidy allegations 
because the Petitioners failed to adequately identify the originators 
of the business proprietary information included in the submission, and 
it provided Petitioners with the opportunity to resubmit these 
allegations by December 15, 2010. The Petitioners resubmitted the 
allegations on December 15, 2010.
    In response to Petitioners' new subsidy allegations, RZBC, the GOC, 
and Yixing Union (collectively, ``Respondents'') submitted comments on 
December 27, December 28, and December 30, 2010, respectively. 
Petitioners submitted a rebuttal to these comments on January 25, 2011. 
The Department removed the Petitioners' January 25 rebuttal submission 
from the record on February 17, 2011, because it contained untimely new 
factual information. Petitioners submitted a revised rebuttal to 
Respondents' comments on the new subsidy allegation on February 18, 
2011, which excluded the untimely new factual information. On February 
22, 2011, the Department issued a memorandum recommending investigating 
four of the five new subsidy allegations, as well as investigating 
Yixing Union's creditworthiness for long-term loans outstanding during 
the POR that originated between 2004 and 2009 and non-recurring 
subsidies for which we need to calculate a discount rate. See 
Memorandum to Susan H. Kuhbach, Director, Office 1 from David Layton 
and Seth Isenberg, International Trade Compliance Analysts, Office 1, 
``Analysis of New Subsidy Allegations'' (February 10, 2011) (``NSA 
Memorandum''). On February 22, 2011, we issued questionnaires on the 
new subsidy allegations to the GOC, RZBC, and Yixing Union. We received 
responses to these new subsidy allegation questionnaires from the GOC, 
Yixing Union and RZBC on March 18, 2011. The Department issued first 
supplemental questionnaires on the new subsidy allegations to RZBC and 
Yixing Union on March 28, 2011, and to the GOC on April 14, 2011. RZBC 
and Yixing Union responded to the first supplemental questionnaires on 
April 4, 2011. We received responses to the first new subsidy 
allegation supplemental questionnaire from the GOC on April 27 and May 
4, 2011. The Department issued second supplemental questionnaires on 
the new subsidy allegations to RZBC and Yixing Union

[[Page 33221]]

on April 14, 2011, and to the GOC on May 3, 2011. RZBC responded to its 
second new subsidy allegation supplemental questionnaire on May 3, 
2011, and Yixing Union responded to its second new subsidy allegation 
supplemental questionnaire on May 3 and May 6, 2011.
    On January 14, 2011, we published a postponement of the preliminary 
results in this review until May 31, 2011. See Citric Acid and Certain 
Citrate Salts from People's Republic of China: Extension of Time Limit 
for the Preliminary Results of the Countervailing Duty Administrative 
Review, 76 FR 2648 (January 14, 2011).
    On April 27, 2011, Petitioners filed an allegation that RZBC Co., 
RZBC I&E, and RZBC Juxian were uncreditworthy from 2006 to 2009. We 
intend to address this allegation after issuance of these preliminary 
results.
    On May 18, 2011, the GOC filed information to supplement its May 
17, 2011, response to the Department's second new subsidy allegation 
supplemental questionnaire. The GOC did not request an extension for 
the deadline to submit this information. Therefore, in accordance with 
19 CFR 351.302(d), the Department will return the May 18, 2011, filing 
to the GOC as untimely filed.
    On May 13, 2011, Petitioners submitted information to rebut RZBC's 
May 3, 2011, new subsidy allegation supplemental questionnaire 
response. This submission included an alternate financial statement 
that RZBC allegedly filed with the Chinese Administrative Bureau of 
Industry and Commerce (``AIC''), as well as a sworn statement from a 
chemical expert that disputes RZBC's reported sulfuric acid 
consumption. On May 19, 2011, Petitioners submitted information to 
rebut Yixing Union's May 9, 2011, supplemental questionnaire response. 
This submission included an alternate financial statement that Yixing 
Union allegedly filed with the AIC. On May 24, 2011, Petitioners 
submitted comments arguing that the Department should apply total 
adverse facts available (``AFA'') to both RZBC and Yixing Union due to 
the alleged existence of alternate financial statements. Further, 
Petitioners' submission argued that the Department should find the 
provision of steam coal for less than adequate remuneration (``LTAR'') 
to be a countervailable subsidy and that a tier-two benchmark should be 
used to calculate the subsidy rate.
    On May 24, 2011, Yixing Union requested that the Department reject 
Petitioners' May 19, 2011 comments as containing untimely filed new 
factual information or deny Petitioners' request for proprietary 
treatment of certain foreign market research included in the May 19, 
2011, comments. Further, Yixing Union noted that it is unable to 
comment on the substance of Petitioners' allegations because of Yixing 
Union's inability to view the May 19, 2011, comments. Yixing Union 
asserts that the information contained in Petitioners' May 19, 2011, 
comments is not authentic.
    These comments submitted by Petitioners and Yixing Union in May 
2011, were filed too late for the Department's consideration in these 
preliminary results.

Scope of the Order

    The scope of the order includes all grades and granulation sizes of 
citric acid, sodium citrate, and potassium citrate in their unblended 
forms, whether dry or in solution, and regardless of packaging type. 
The scope also includes blends of citric acid, sodium citrate, and 
potassium citrate; as well as blends with other ingredients, such as 
sugar, where the unblended form(s) of citric acid, sodium citrate, and 
potassium citrate constitute 40 percent or more, by weight, of the 
blend. The scope of the order also includes all forms of crude calcium 
citrate, including dicalcium citrate monohydrate, and tricalcium 
citrate tetrahydrate, which are intermediate products in the production 
of citric acid, sodium citrate, and potassium citrate. The scope of the 
order does not include calcium citrate that satisfies the standards set 
forth in the United States Pharmacopeia and has been mixed with a 
functional excipient, such as dextrose or starch, where the excipient 
constitutes at least 2 percent, by weight, of the product. The scope of 
the order includes the hydrous and anhydrous forms of citric acid, the 
dihydrate and anhydrous forms of sodium citrate, otherwise known as 
citric acid sodium salt, and the monohydrate and monopotassium forms of 
potassium citrate. Sodium citrate also includes both trisodium citrate 
and monosodium citrate, which are also known as citric acid trisodium 
salt and citric acid monosodium salt, respectively. Citric acid and 
sodium citrate are classifiable under 2918.14.0000 and 2918.15.1000 of 
the Harmonized Tariff Schedule of the United States (HTSUS), 
respectively. Potassium citrate and crude calcium citrate are 
classifiable under 2918.15.5000 and 3824.90.9290 of the HTSUS, 
respectively. Blends that include citric acid, sodium citrate, and 
potassium citrate are classifiable under 3824.90.9290 of the HTSUS. 
Although the HTSUS subheadings are provided for convenience and customs 
purposes, the written description of the merchandise is dispositive.

Scope Rulings

    On November 2, 2010, Aceto Corporation (``Aceto'') requested that 
the Department find its calcium citrate USP to be outside the scope of 
the CVD Order and the antidumping duty orders on citric acid and 
certain citrate salts from the PRC and Canada. See Citric Acid and 
Certain Citrate Salts from Canada and the People's Republic of China: 
Antidumping Duty Orders, 74 FR 25703 (May 29, 2009). On February 14, 
2011, the Department issued a final scope ruling, finding that Aceto's 
product is within the scope of those orders. See Memorandum from 
Christopher Siepmann, International Trade Analyst, to Christian Marsh, 
Deputy Assistant Secretary for Antidumping and Countervailing Duty 
Operations, ``Citric Acid and Certain Citrate Salts: Scope Ruling for 
Calcium Citrate USP'' (February 14, 2011).
    On July 26, 2010, Global Commodity Group LLC (``GCG'') requested 
that the Department find a blend of citric acid it imports containing 
35 percent citric acid from the PRC and 65 percent citric acid from 
other countries is outside the scope of the CVD Order and the 
antidumping duty order on citric acid and certain citrate salts from 
the PRC. On May 2, 2011, the Department issued a final scope ruling, 
finding that GCG's product is within the scope of those orders. See 
Memorandum from Christopher Siepmann, International Trade Analyst, to 
Christian Marsh, Deputy Assistant Secretary for Antidumping and 
Countervailing Duty Operations, ``Citric Acid and Certain Citrate 
Salts: Final Determination on Scope Inquiry for Blended Citrate Acid 
from the People's Republic of China and Other Countries (May 2, 2011). 
Pursuant to this ruling, we have instructed U.S. Customs and Border 
Protection (``CBP'') that the quantity of citric acid from the PRC in 
the commingled merchandise is subject to the CVD and AD orders. We have 
also instructed the CBP that if the quantity of citric acid from the 
PRC in a commingled shipment cannot be accurately determined, then the 
entire commingled quantity is subject to the orders.

Period of Review

    The period for which we are measuring subsidies, i.e., the period 
of review (``POR''), is September 19, 2008,

[[Page 33222]]

through December 31, 2009.\1\ Because the POR spans two calendar years, 
we are calculating separate countervailing duty rates for September 19, 
2008, through December 31, 2008; and January 1, 2009, through December 
31, 2009.
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    \1\ For the purposes of the final results, we intend to analyze 
data for the period January 1, 2008, through December 31, 2008, to 
determine the subsidy rate for exports of subject merchandise made 
during the period in 2008 when liquidation of entries was suspended. 
In addition, we have analyzed data for the period January 1, 2009, 
through December 31, 2009, to determine the subsidy rate for exports 
during that period. The 2009 subsidy rate will serve as the cash 
deposit rate for exports of subject merchandise subsequent to the 
publication of the final results of this administrative review. See 
``Programs for Which More Information Is Required,'' below.
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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 the accompanying Issues and Decision 
Memorandum (``CFS Decision Memorandum''). In CFS from the PRC, the 
Department found that

    given the substantial difference between the Soviet-style 
economies and China'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{time}  bar to proceeding with a CVD 
investigation involving products from China.

    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 Decision 
Memorandum''), at Comment 1.
    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. See CWP Decision Memorandum, at Comment 
2.

Use of Facts Otherwise Available and Adverse Inferences

    Sections 776(a)(1) and (2) of the Tariff Act of 1930, as amended 
(``the Act''), provide that the Department shall apply ``facts 
otherwise available'' if necessary information is not on the record or 
an interested party or any other person: (A) Withholds information that 
has been requested; (B) fails to provide information within the 
deadlines established, or in the form and manner requested by the 
Department, subject to subsections (c)(1) and (e) of section 782 of the 
Act; (C) significantly impedes a proceeding; or (D) provides 
information that cannot be verified as provided by section 782(i) of 
the Act.
    Section 776(b) of the Act further provides that the Department may 
use an adverse inference in applying the facts otherwise available when 
a party has failed to cooperate by not acting to the best of its 
ability to comply with a request for information.
    The Department's practice when selecting an adverse rate from among 
the possible sources of information is to ensure that the result is 
sufficiently adverse ``as to effectuate the statutory purposes of the 
adverse facts available rule to induce respondents to provide the 
Department with complete and accurate information in a timely manner.'' 
See Notice of Final Determination of Sales at Less than Fair Value: 
Static Random Access Memory Semiconductors From Taiwan, 63 FR 8909, 
8932 (February 23, 1998). The Department's practice also ensures ``that 
the party does not obtain a more favorable result by failing to 
cooperate than if it had cooperated fully.'' See Statement of 
Administrative Action (``SAA'') accompanying the Uruguay Round 
Agreements Act, H.R. Doc. No. 103-316, vol. 1 at 870 (1994)

RZBC--Sulfuric Acid

    We requested the respondent companies to provide detailed 
information on all of their purchases of sulfuric acid during the POR, 
including the identities of the producers of the sulfuric acid. See, 
e.g., RZBC new subsidy questionnaire issued by the Department on 
February 22, 2011, and again in a supplemental questionnaire issued on 
April 14, 2011. RZBC identified certain producers of the sulfuric acid 
it purchased. However, for some sulfuric acid purchases, RZBC failed to 
provide the requested producer information.
    We preliminarily determine that RZBC withheld necessary information 
that was requested of it and, thus, that the Department must rely on 
``facts available'' for these preliminary results. See section 
776(a)(2)(A) of the Act. Moreover, we preliminarily determine that RZBC 
failed to cooperate by not acting to the best of its ability to comply 
with our request for information. Consequently, an adverse inference is 
warranted in the application of facts available. See section 776(b) of 
the Act.
    Due to RZBC's failure to identify the producers of certain sulfuric 
acid it purchased, we are assuming adversely that these suppliers of 
sulfuric acid are ``authorities'' within the meaning of section 
771(5)(B) of the Act.

GOC--Sulfuric Acid

    On February 22, April 14, and May 3, 2011, we requested information 
from the GOC about the specific companies that produced the sulfuric 
acid purchased by the mandatory respondents. Specifically, we asked the 
GOC to provide particular ownership information for these producers so 
that we could determine whether the producers are ``authorities'' 
within the meaning of section 771(5)(B) of the Act. Although the GOC 
provided some of the requested information, it failed to provide 
certain necessary information. In particular, for certain suppliers, no 
information was submitted; for certain other suppliers that had some 
direct corporate ownership, the GOC failed to provide articles of 
association for each level of ownership, information as to whether any 
of the owners, members of the boards of directors or managers were also 
government officials or Chinese Communist Party (``CCP'') officials, or 
whether operational and strategic decisions made by the management or 
boards of directors are subject to government review or approval; and 
for other suppliers that were directly owned by individuals, the GOC 
generally failed to address whether any of the owners, members or the 
boards of directors or managers were also government officials or CCP 
officials, or whether operational and strategic decisions made by the 
management or boards of directors are subject to government review or 
approval.
    We preliminarily determine that the GOC has withheld necessary 
information that was requested of it and, thus, that the Department 
must rely on ``facts available'' for these preliminary results. See 
section 776(a)(2)(A) of the Act. Moreover, we preliminarily determine 
that the GOC has failed to cooperate by not acting to the best of its 
ability to comply with our request for information. The GOC is well 
aware of the Department's reporting requirements by now, yet, despite 
being given multiple opportunities, it either stated that it had 
contacted local authorities for the information or it simply did not 
submit requested information. Consequently, an adverse inference is 
warranted in the application of facts available. See section 776(b) of 
the Act.

[[Page 33223]]

    Due to the GOC's failure to provide the requested ownership 
information about the producers of the sulfuric acid purchased by the 
respondents, we are assuming adversely that all of the respondents' 
suppliers of sulfuric acid are ``authorities.''

GOC--Steam Coal

    On February 22, April 14, and May 3, 2011, we requested information 
from the GOC about the specific companies that produced the steam coal 
purchased by Yixing Union Co.'s parent, Cogeneration. Specifically, we 
asked the GOC to provide particular ownership information for these 
producers so that we could determine whether the producers are 
``authorities'' within the meaning of section 771(5)(B) of the Act. 
Although the GOC provided some of the requested information, it failed 
to provide certain necessary information. In particular, for certain 
suppliers, no information was submitted; for certain other suppliers 
that had some direct corporate ownership, the GOC failed to provide 
articles of association for each level of ownership, information as to 
whether any of the owners, members of the boards of directors or 
managers were also government officials or CCP officials, or whether 
operational and strategic decisions made by the management or boards of 
directors are subject to government review or approval; and for other 
suppliers that were directly owned by individuals, the GOC generally 
failed to address whether any of the owners, members or the boards of 
directors or managers were also government officials or CCP officials, 
or whether operational and strategic decisions made by the management 
or boards of directors are subject to government review or approval. 
For one coal supplier directly owned by individuals, the GOC responded 
that none of the owners was a government or CCP official, but did not 
address whether managers or board members were.
    We preliminarily determine that the GOC has withheld necessary 
information that was requested of it and, thus, that the Department 
must rely on ``facts available'' for these preliminary results. See 
section 776(a)(2)(A) of the Act. Moreover, we preliminarily determine 
that the GOC has failed to cooperate by not acting to the best of its 
ability to comply with our request for information. The GOC is well 
aware of the Department's reporting requirements by now, yet, despite 
being given multiple opportunities, it simply did not submit requested 
information. Consequently, an adverse inference is warranted in the 
application of facts available. See section 776(b) of the Act.
    Due to the GOC's failure to provide the requested ownership 
information about the producers of the steam coal purchased by 
Cogeneration, we are assuming adversely that all of that company's 
suppliers of steam coal are ``authorities.''

GOC--RZBC's and Yixing Union's ``Other Subsidies''

    The financial statements and tax returns submitted by the 
responding companies indicated that they received potentially 
countervailable subsidies in the form of grants. Consequently, we 
sought further information from the responding companies about these 
grants, and also asked the GOC to provide information about the 
programs under which these grants were given. See, e.g., supplemental 
questionnaires issued to Respondents on February 28, 2011, and the 
supplemental questionnaire issued to the GOC on April 21, 2011.
    For certain programs identified below under ``Programs 
Preliminarily Determined to be Countervailable: Other Subsidies,'' 
information submitted by the GOC and/or the company respondents showed 
that the grants were specific and countervailable. We normally rely on 
information from the government to assess program specificity, however, 
the GOC did not submit this information in all instances. Where Yixing 
Union or RZBC have submitted information about the specificity of 
programs included in ``other subsidies,'' we have relied upon this 
information to make our determinations. However, for the remaining 
grants, addressed under ``Programs Preliminarily Determined to 
Countervailable: Other Subsidies'', the GOC did not provide the 
requested information about the programs under which they were given 
and the company-provided information was limited to the amount given, 
the date of the grant, and the granting authority. Where none of the 
Respondents has provided information that would allow us to determine 
the specificity of the ``other subsidies'' we have relied upon AFA for 
our determination.
    For certain additional programs identified below under ``Programs 
Preliminarily Determined Not to Confer a Measurable Benefit During the 
POR,'' the subsidy did not result in a measurable benefit, or the 
benefit was expensed prior to the POR (see 19 CFR 351.524(a)(2)).
    We preliminarily determine that the GOC has withheld necessary 
information that was requested of it and, thus, that the Department 
must rely on ``facts available'' for these preliminary results. See 
section 776(a)(2)(A) of the Act. Moreover, we preliminarily determine 
that the GOC has failed to cooperate by not acting to the best of its 
ability to comply with our request for information. Consequently, an 
adverse inference is warranted in the application of facts available. 
See section 776(b) of the Act.
    Due to the GOC's failure to provide the requested information about 
the programs under which the grants received by RZBC and Yixing Union 
were provided, we are assuming adversely that these grants are being 
provided to a specific enterprise or industry, or group of enterprises 
or industries. See section 771(5A) of the Act.
Subsidies Valuation Information

Allocation Period

    The average useful life (``AUL'') period in this proceeding, as 
described in 19 CFR 351.524(d)(2), is 9.5 years according to the U.S. 
Internal Revenue Service's 1977 Class Life Asset Depreciation Range 
System for assets used to manufacture the subject merchandise. 
Consistent with the Department's practice, we have rounded the 9.5 
years up to 10 years for purposes of setting the AUL. See Polyethylene 
Terephthalate Film, Sheet, and Strip From India: Preliminary Results 
and Rescission, in Part, of Countervailing Duty Administrative Review, 
72 FR 43607, 43608 (August 6, 2007), unchanged in final, 72 FR at 
43608.

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)-(iv) direct the Department to attribute subsidies 
received by certain other companies to the combined sales of those 
companies if (1) cross-ownership exists between the companies, and (2) 
the cross-owned companies produce the subject merchandise, are a 
holding or parent company of the subject company, or produce an input 
that is primarily dedicated to the production of the downstream 
product. In the case of a transfer of a subsidy between cross-owned 
companies, 19 CFR 351.525(b)(6)(v) directs the Department to attribute 
the subsidy to the sales of the company that receives the transferred 
subsidy.
    According to 19 CFR 351.525(b)(6)(vi), cross-ownership exists

[[Page 33224]]

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.
    The Court of International Trade (``CIT'') has upheld the 
Department's authority to attribute subsidies based on whether a 
company could use or direct the subsidy benefits of another company in 
essentially the same way it could use its own subsidy benefits. See 
Fabrique de Fer de Charleroi v. United States, 166 F. Supp. 2d 593, 
600-604 (CIT 2001).

RZBC

    RZBC Co. responded to the Department's original and supplemental 
questionnaires on behalf of itself, RZBC Group, RZBC Juxian and RZBC 
I&E. RZBC Co., RZBC Juxian, and RZBC I&E are wholly owned by RZBC Group 
and, hence, are cross-owned within the meaning of 19 CFR 
351.525(b)(6)(vi). RZBC Co. and RZBC Juxian are both producers of 
subject merchandise; RZBC I&E is an exporter of subject merchandise; 
and RZBC Group is a headquarters company and does not produce any 
merchandise. Consequently, the subsidies received by these companies 
are being attributed according to the rules established in 19 CFR 
351.525(b)(6)(ii), (c), and (b)(6)(iii), respectively. Moreover, 
different cross-owned affiliates among RZBC Co., RZBC Juxian, and RZBC 
I&E sell merchandise produced by RZBC Co. and RZBC Juxian to 
unaffiliated parties for both export and domestic sales. Therefore, to 
attribute properly the benefit from subsidies to RZBC Co. or RZBC 
Juxian we are preliminarily using the sales of RZBC Co.--or RZBC 
Juxian--produced merchandise by any of the three cross-owned affiliates 
to unaffiliated companies.
    In its questionnaire responses, RZBC also identified prior owners 
of the company, i.e., companies that owned RZBC Co. prior to the POR, 
but since the cut-off date of December 11, 2001. Given the level of 
these companies' ownership in RZBC Co., we asked that RZBC also respond 
on their behalf. These responses were submitted on May 10, 2011.
    Based on the information provided by RZBC, we preliminarily 
determine that these prior owners are ``cross-owned'' with the RZBC 
companies (see 19 CFR 351.525(b)(6)(vi)). However, for these 
preliminary results we do not have the correct sales data to attribute 
certain subsidies the prior owners may have received. Moreover, we will 
provide the GOC an opportunity to submit information on the programs 
under which possible subsidies may have been granted. Therefore, with 
the exception of Shandong Province Policy Loans (for which no further 
information is required), we intend to address assistance to RZBC's 
prior owners in a post-preliminary analysis.
    Also, RZBC I&E reported that it exports subject merchandise 
produced by other, unaffiliated companies, but that this merchandise 
was not exported to the United States during the POR. Although any 
subsidies to the unaffiliated producers would normally be cumulated 
with those of the trading company that sold their merchandise pursuant 
to 19 CFR 351.525(c), the Department has, in some instances, limited 
the number of producers it examines where their merchandise was not 
exported to the United States during the POR or accounted for a very 
small share of respondent's exports to the United States. See, e.g., 
Certain Pasta from Italy: Final Results of the Fourth Countervailing 
Duty Administrative Review, 66 FR 64214 (December 12, 2001), and 
accompanying Issues and Decision Memorandum at ``Attribution.'' In this 
review, we have not sent CVD questionnaires to the unaffiliated 
producers of citric acid whose merchandise was exported by RZBC I&E 
because their merchandise was not exported to the United States during 
the POR. Also, we have removed the sales of these products from RZBC 
I&E's sales for purposes of calculating countervailable subsidy rates 
for RZBC.

Yixing Union

    Yixing Union Co. responded to the Department's original and 
supplemental questionnaires on behalf of itself and its parent and 
electricity supplier, Cogeneration. Yixing Union Co. and Cogeneration 
were found to be cross-owned in the investigation. See Citric Acid and 
Certain Citrate Salts From the People's Republic of China: Final 
Affirmative Countervailing Duty Determination, 74 FR 16836 (April 9, 
2009) (``Citric Acid from the PRC'' or ``Investigation''), and 
accompanying Issues and Decision Memorandum (``Citric Acid Decision 
Memorandum'') at 9-10 and Comment 27.
    We continue to find that Yixing Union Co. and Cogeneration are 
cross-owned within the meaning of 19 CFR 351.525(b)(6)(vi). Further, 
because Cogeneration is the parent of Yixing Union Co., we are 
attributing the subsidies received by Cogeneration according to the 
rule established in 19 CFR 351.525(b)(6)(iii).

Benchmarks and Discount Rates

    The Department is investigating loans received by RZBC and Yixing 
Union from Chinese policy banks and state-owned commercial banks 
(``SOCBs''), as well as non-recurring, allocable subsidies (see 19 CFR 
351.524(b)(1)). The derivation of the benchmark and discount rates used 
to value these subsidies is discussed below. Benchmark for Short-Term 
Renminbi (``RMB'') Denominated Loans: 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. However, 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 
Decision Memorandum at Comment 10. Because of this, any loans received 
by respondents from private Chinese or foreign-owned banks in the PRC 
would be unsuitable for use as benchmarks under 19 CFR 
351.505(a)(2)(i). Similarly, because of the Chinese government's 
significant presence in the banking sector, 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

[[Page 33225]]

Canada''), and accompanying Issues and Decision Memorandum (``Softwood 
Lumber 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 Decision Memorandum at Comment 
10; Lightweight Thermal Paper from the People's Republic of China: 
Final Affirmative Countervailing Duty Determination, 73 FR 57323 
(October 2, 2008) (``LWTP from the PRC''), and accompanying Issues and 
Decision Memorandum (``LWTP Decision Memorandum''). See also LWTP 
Decision Memorandum at ``Benchmarks and Discount Rates.'' This 
benchmark interest rate is based on the inflation-adjusted interest 
rates of countries with per capita gross national incomes (``GNIs'') 
similar to the PRC. The benchmark interest rate takes into account a 
key factor involved in interest rate formation (i.e., the quality of a 
country's institutions), which 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 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.\2\ As explained in CFS from the PRC, this pool of countries 
captures the broad inverse relationship between income and interest 
rates.
---------------------------------------------------------------------------

    \2\ See The World Bank Country Classification, https://econ.worldbank.org/.
---------------------------------------------------------------------------

    Many of these countries reported lending and inflation rates to the 
International Monetary Fund 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 non-market economies for antidumping duty purposes for 
any part of the years in question, for example: Armenia, Azerbaijan, 
Belarus, Georgia, Moldova, and 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. For example, 
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 the calculation of the inflation-adjusted short-term 
benchmark rate, we also excluded any countries with aberrational or 
negative real interest rates for the year in question.
    Because these are inflation-adjusted benchmarks, it is necessary to 
adjust the respondent's interest payments for inflation. This was done 
using the PRC inflation rate as reported in the IFS.
    Benchmark for Long-Term RMB Denominated Loans: The lending rates 
reported in the IFS represent short- and medium-term lending, and there 
are no sufficient publicly available long-term interest rate data upon 
which to base a robust long-term benchmark. 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 LWTP Decision Memorandum at 
``Benchmarks and Discount Rates.'' 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 Decision 
Memorandum at Comment 14. Finally, because these long-term rates are 
net of inflation as noted above, we adjusted the benchmark to include 
an inflation component.
    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 LIBOR, plus the 
average spread between LIBOR and the one-year corporate bond rates for 
companies with a BB rating. See LWTP Decision Memorandum at 10. 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.
    Uncreditworthiness Benchmark: As discussed below, the Department is 
preliminarily finding that Yixing Union was uncreditworthy in 2009. To 
construct the uncreditworthy benchmark rate for those years, we used 
the long-term rates described above as the ``long-term interest rate 
that would be paid by a creditworthy company'' in the formula presented 
in 19 CFR 351.505(a)(3)(iii).
    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.
    For the calculated benchmark and discount rates, see Memorandum to 
the File from Shane Subler, International Trade Compliance Analyst, 
Office 1, AD/CVD Operations, regarding ``Benchmark Interest Rates'' 
(March 28, 2011).

Creditworthiness

    The examination of creditworthiness is an attempt to determine if 
the company in question could obtain long-term financing from 
conventional commercial sources. See 19 CFR 351.505(a)(4). According to 
19 CFR 351.505(a)(4)(i), the Department will generally consider a firm 
to be uncreditworthy if, based on information available at the time of 
the government-provided loan, the firm could not have obtained long-
term loans from conventional commercial sources. In making this 
determination, according to 19 CFR 351.505(a)(4)(i)(A)-(D), the 
Department normally examines the following four types of information: 
(1) Receipt by the firm of comparable commercial long-term loans; (2) 
present and past indicators of the firm's financial health; (3) present 
and past indicators of the firm's ability to meet its costs and fixed 
financial obligations with its cash flow; and (4) evidence of the 
firm's future financial position. If a firm has taken out long-term 
loans from commercial sources, this will normally be dispositive of the 
firm's creditworthiness. However, if the firm is government-owned, the 
existence of commercial borrowings is not dispositive of the firm's 
creditworthiness. This is because, in the case of a government-owned 
firm, a bank is likely to consider that the government will repay the 
loan in the event of a default. See Countervailing Duties; Final Rule, 
63 FR 65348, 65367 (November 25, 1998). For government-owned firms, we 
will make our creditworthiness determination by examining receipt by 
the firm of comparable commercial long-term loans

[[Page 33226]]

and the other factors listed in 19 CFR 351.505 (a)(4)(i).

Yixing Union

    Petitioners alleged that Yixing Union was uncreditworthy for the 
period 2004 through 2009. For purposes of these preliminary results, we 
have limited our analysis to 2009. As discussed below, the Department 
has preliminarily determined that Yixing Union received countervailable 
national policy loans in that year. During the years 2006--2008, 
neither Yixing Union Co. nor Cogeneration received countervailable 
loans or allocable subsidies. For 2004 and 2005, as discussed below in 
the ``Programs for Which More Information is Required'' section, the 
Department requires additional information related to Cogeneration in 
order to complete its creditworthiness analysis.
    Based on our analysis of the information described in 19 CFR 
351.505(a)(4)(i)(A)-(D), we preliminarily determine that Yixing Union 
Co. was uncreditworthy in 2009. Yixing Union Co. did not receive 
commercial long-term loans in that year; its financial information 
indicated that the company could have problems meeting its costs and 
financial obligations with its cash flow, making it a significant 
credit risk to lenders; and there was no record evidence to suggest 
that the health of the citric acid industry or Yixing Union was due to 
improve in the near future. For further analysis, see Memorandum from 
Austin Redington, International Trade Compliance Analyst, through 
Yasmin Nair, Program Manager, to Susan Kuhbach, Senior Office Director, 
``Preliminary Creditworthiness Determination for Yixing-Union 
Biochemical Co., Ltd. and Yixing-Union Cogeneration Co., Ltd.,'' dated 
May 31, 2011.

RZBC

    As noted above in the ``Background'' section, Petitioners filed an 
allegation that RZBC Co., RZBC I&E, and RZBC Juxian were uncreditworthy 
in years 2006 through 2009. We intend to address this allegation 
following the issuance of these preliminary results and will provide 
the parties with an opportunity to comment on our finding.

I. Programs Preliminarily Determined To Be Countervailable

A. Government Policy Lending
    In the Investigation, the Department found that the Shandong 
Provincial government supported its citric acid industry with policy 
loans, i.e., that loans made by policy banks and SOCBs in Shandong 
province conferred a subsidy on citric acid producers in Shandong. We 
also found that there was not a national program or a Jiangsu Province 
program of policy lending to citric acid producers. See Citric Acid 
Decision Memorandum at Comment 5. In this review, Petitioners provided 
new evidence that caused the Department to examine again allegations of 
national and Jiangsu provincial policy lending programs. See NSA 
Memorandum (February 10, 2011).
    As explained below, we preliminarily determine that a national 
level policy lending program exists for citric acid as part of China's 
``light industry'' and that there is not a Jiangsu Province policy 
lending program for citric acid. Because no information has been 
provided that would cause us to reach a different determination from 
the Investigation for Shandong Province, we preliminarily determine 
that the Shandong government's policy lending program continues.
National Policy Lending
    In the Investigation, the Department concluded that there was not 
substantial evidence of policy lending to the citric acid industry at 
the national level because record evidence indicated that citric acid 
was not considered to be a ``new biochemical product'' targeted for 
support in the Decision No. 40 and the Catalogue on Readjustment of 
Industrial Structural Adjustment. See Citric Acid Decision Memorandum 
at Comment 5, pages 52-53. In their new subsidy allegations for this 
administrative review, Petitioners provided evidence in the form of the 
USDA report concerning GOC support of industrial corn processors and 
GOC key product and high and new technology enterprise certificates 
held by a citric acid respondent company. Petitioners argue that the 
USDA report identifies industrial corn processors, including citric 
acid producers as a ``key industry'' for government support in 2000 and 
also indicates that ``the industry was singled out for support in 
China's five-year plans for 2000-05 and 2009-10.'' Petitioners also 
argue that the special certificates held by RZBC that recognize it as a 
producer of a national key new product and recognize RZBC as a high and 
new technology enterprise reinforce the Petitioners' arguments from the 
investigation that citric acid is part of the encouraged new 
biochemical and food additive product categories. See Petitioners' 
Additional Subsidy Allegation (December 15, 2010) (``PNSA2'') at 18-19.
    In its initial new subsidy allegation questionnaire response, dated 
March 18, 2011 (``GNSAQR''), the GOC states that citric acid is not 
considered a ``new biochemical product'' in the PRC, but instead ``is 
classified as light industry product as most citric acid is consumed by 
the food and beverage industry with``{o{time} nly 10% of citric acid 
produced is used in the chemical industry''.\3\ See GNSAQR at 17. In 
response to further questions on what constitutes a ``new biochemical 
product,'' the GOC stated that there are no official criteria that the 
National Development and Reform Commission (``NDRC'') uses to determine 
what constitutes a, ``new biochemical product,'' other than it is not 
citric acid. The GOC provided a letter from the NDRC reiterating the 
preceding points and stating that ``citric acid does not constitute a 
`new biochemical product.' '' See GOC New Subsidy Allegation First 
Supplemental Questionnaire Response (Part 1), (April 27, 2011) 
(``GNSASQR1, Part 1'') at 6-7 and Exhibit 1. The NDRC letter also 
stated that ``{g{time} iven that China's citric acid manufacturing 
technology is well-developed and the production capacity is redundant, 
relevant government agencies have placed constraints on the development 
of the industry since 2005.''
---------------------------------------------------------------------------

    \3\ We have requested that GOC clarify what is included in the 
10% portion of citric acid used by the chemical industry, but to 
date the GOC has not responded to this.
---------------------------------------------------------------------------

    The GOC also dismissed Petitioners' claims regarding the responding 
company's certificates, stating that RZBC's ``national key new 
product'' certificate was specific to the production of a specialized 
medical grade citric acid, and that it expired at the end of 2008. See 
GOC Comments on Petitioners' Additional New Subsidy Allegation, 
(December 27, 2010) (``GOC NSA Comments'') at 11-12. With regard to 
RZBC's high and new technology designation, the GOC has reported that 
this certificate was provided under the auspices of the program for 
``Reduced Income Tax Rate for High or New Technology Enterprises,'' 
also addressed in the GOC's responses. See GOC Questionnaire Response 
(November 15, 2010) (``GQR''), at 16-24 and Exhibits I-8 and I-9; GOC 
Supplemental Questionnaire Response (February 28, 2011) (``GSQR''), at 
6.
    To document citric acid's classification as a light industry, the 
GOC provided a copy of the Notice of the State Council on Light 
Industry Adjustment and Revitalization Plan (``Light Industry Plan'') 
and the Guiding Category for Phasing-out outdated manufacturing devices 
and Products of Certain Industries (2010 edition) (``2010 Phase-out 
Plan''). See GNSAQR (March

[[Page 33227]]

18, 2011) at Exhibits 11 and 12. The GOC argues that Chinese government 
planners consider citric acid to be a developed industry with redundant 
and outdated production capacity and, thus, it is counterintuitive that 
it would also be included with the encouraged industry categories in 
the plans and catalogues. The GOC points to specific statements in the 
Light Industry Plan, the 2010 Phase-out Plan, the 2007 On Healthy 
Development of the Corn Industrial Processing Industry (``Corn 
Processor Plan''), at GNSAQR (March 18, 2011) at Exhibit 8, and 2006 
Urgent Strengthening the Administration of Corn Deep Processing 
Projects, which note overcapacity in citric acid production and which 
mandate the elimination of outdated citric acid operations and the 
reduction of citric acid development projects.
    As in the Investigation, we do not have any government plans or 
other policy directives on the record that lay out objectives or goals 
for developing the citric acid industry per se. In particular, while 
the GOC reports that citric acid production is a light industry, that 
product is not specifically named in the Light Industry Plan. 
Nonetheless, the evidence on the record supports the GOC's statement.
    A central guideline of the Light Industry Plan, which reflects 
general objectives from the national 11th Five Year Plan for Economic 
and Social Development,\4\ is to ``focus on promoting structural 
adjustment and industrial upgrading by accelerating self-directed 
innovation implementing technological reform, building our own brand 
and eliminating the backward productions.'' See GNSAQR (March 18, 2011) 
at Exhibit 11 (Light Industry Plan at Section 2.A). As a basic 
principle, the Light Industry Plan states that it will ``focus on key 
industries'' and ``nurture key enterprises''. See Light Industry Plan 
at 2(B)b. Under the section outlining the ``main tasks'' of the plan, 
the GOC states it will ``promote technological innovation and 
industrialization'' by establishing a ``public service platform for 
technological innovation of key sectors'' including ``the technology 
innovation alliance of paper, fermentation, wine, sugar and leather 
industries.'' (emphasis added)
---------------------------------------------------------------------------

    \4\ See Guidelines of the 11th Five Year Plan for Economic and 
Social Development at Chapter 3, ``Major Objectives of Economic and 
Social Development. These major objectives include 
``{o{time} ptimization and upgrading of industrial structure.'' See 
Memorandum To File from David Layton: Placement of Guidelines of the 
11th Five Year Plan for Economic and Social Development on the 
Record, (May 26, 2011), attached English translation of the 
guidelines at 4-5.
---------------------------------------------------------------------------

    We know from the Corn Processor Plan that the GOC considers citric 
acid producers to be part of the fermentation industry. See GNSAQR 
(March 18, 2011) at Exhibit 8 (hereafter citations are to the page 
numbers of the English translation in Exhibit 8). The Corn Processor 
Plan includes two different tables in which citric acid is specifically 
referenced as one of several ``fermented goods'' or as part of the 
``fermentation'' industry. See Corn Processor Plan at 14, ``Box2''; 16, 
``Box3.''; and 22 at item 2 of ``Notes of related terms.''
    To accomplish the objectives of the Light Industry Plan, the GOC 
states in the ``Policies and Measures'' section that it will 
``{i{time} ncrease financial support,'' and ``encourage financial 
institutions to increase credit support for light industry 
enterprises.'' See Light Industry Plan at 4(F). It will also 
``encourage guarantee institutions to provide credit guarantee and 
financing services for small and medium sized light industry 
enterprises and ``help light industry enterprises to facilitate trade 
finance * * *.'' Id.
    Finally, the Light Industry Plan states that it will 
``{s{time} trengthen guidance of industrial policy. Develop industrial 
policy and access condition of fermentation, grain, oil, leather, 
batteries, lighting appliances, household glass, plastic sheeting and 
others as soon as possible'' and ``{a{time} djust the `Guiding 
Catalogue of Industrial Structural Adjustment' and `Catalogue for the 
Guidance of Foreign Investment Industries' at appropriate times.'' The 
Department reviewed the 2005 edition of Structural Adjustment Catalogue 
in force during the POR and found no pre-existing specific reference to 
the fermentation industry. However, this section of the Light Industry 
Plan suggests that the GOC would consider adjustment of the Structural 
Adjustment Catalogue to recognize industries encouraged by that 
plan.\5\
---------------------------------------------------------------------------

    \5\ We understand that a new edition of the Structural 
Adjustment Catalogue was published in March 2011. See GNSASQR1, Part 
1 at 6.
---------------------------------------------------------------------------

    In response to our request for additional ``Light Industry Plans'' 
that cover the periods before 2009-2011 (the period covered by the 
Light Industry Plan submitted on this record), the GOC stated that no 
previous light industry plans exist. Accordingly, we have examined the 
2007 Corn Processor Plan to determine whether it lays out objectives or 
goals for developing the citric acid industry and calls for lending to 
support these objectives or goals in the period prior to 2009. We found 
that while the Corn Processor Plan clearly articulates national 
government support for the measured development of industrial corn 
processors (or the ``corn deep processing industry'' as it is 
translated), and is equally clear that citric acid producers are part 
of this group, the plan does not provide a mandate for lending to 
support these objectives. Without a directive to support the plan's 
objectives through credit or loans, this document does not provide a 
basis for finding a program of national policy lending to the citric 
acid industry.
    Therefore, we preliminarily determine that the GOC has a policy in 
place to encourage and support the restructuring and updating of the 
fermentation industry, as one of a limited number of selected key 
sectors of light industry specifically identified in the Light Industry 
Plan. The Light Industry Plan expressly outlines a number of measures 
to support the fermentation industry, including the encouragement of 
financial institutions to provide credit. Moreover, consistent with CFS 
from the PRC, we preliminarily determine that loans from policy banks 
and SOCBs in the PRC constitute a direct financial contribution from 
the government under section 771(5)(D)(i) of the Act and that 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 
commercials loans. Finally, we preliminarily determine that the loans 
are de jure specific because of the GOC's policy, as illustrated in the 
Light Industry Plan, to encourage and support the restructuring and 
updating of the fermentation industry of which citric acid is a part. 
As the Light Industry Plan became effective in 2009, the Department 
will only consider loans provided on or after January 1, 2009, to be 
provided pursuant to the GOC's national policy lending program.
    To calculate the benefit, we used the benchmarks described in the 
``Benchmarks and Discount Rates'' section above and the methodology 
described in 19 CFR 351.505(c)(1) and (2). We divided the benefit by 
Yixing Union Co.'s total sales and Yixing Union's consolidated sales, 
in accordance with 19 CFR 351.525(b)(6)(iii).
    On this basis, we preliminarily determine that Yixing Union 
received a countervailable subsidy of 1.65 percent ad valorem in 2009. 
We are treating RZBC's loans as having been given under the Shandong 
Policy Loan Program discussed next.
Shandong Province Policy Loans Program
    As explained in the Investigation, the Shandong Province 
Development Plan

[[Page 33228]]

of Chemical Industry during ``Tenth Five-Year Plan'' Period (``Shandong 
Province Tenth Five-Year Chemical Plan'') identifies objectives and 
goals for development of the citric acid industry and calls for lending 
to support these objectives and goals. Moreover, loan documents 
reviewed by the Department stated that because the food-use citric acid 
industry ``has characteristics of capital and technology concentration 
and belongs to high and new technology * * * the State always takes 
positive policy to encourage its development.'' See Memorandum to File: 
Placing Government of China Verification Reports from the CVD 
Investigation of Citric Acid and Certain Citrate Salts from People's 
Republic of China into the Record of the First Administrative Review, 
(February 28, 2011) and attached ``Government of the People's Republic 
of China, Anqiu City and Shandong Province Verification Report, at 8.
    In this administrative review, the GOC claims that no policy loan 
program was in effect in Shandong Province during the POR. See GQR 
(November 15, 2010) at 8. Specifically, the GOC argues that the 
Shandong Province Tenth Five-Year Chemical Plan has been replaced by 
the Shandong Province Eleventh Five-Year Petro-Chemical Plan 
(``Shandong Eleventh Five-Year Chemical Plan''). Additionally, the GOC 
maintains that the Shandong Eleventh Five-Year Chemical Plan is not 
government policy because it was compiled by the Shandong Province 
Petro-Chemical Industry Association, which the GOC identifies as a 
``non-governmental organization.'' Id. at 9.
    The Shandong Eleventh Five-Year Chemical Plan (covering the period 
2006-2010) was on the Investigation record. Despite the fact that the 
period covered by the Investigation (2007), fell within the time span 
covered by the Shandong Eleventh Five-Year Chemical Plan, the 
Department concluded that actual loan documentation supported a finding 
of a policy lending program in Shandong Province.\6\ Accordingly, the 
GOC has not provided us with new evidence on the record of this review 
that demonstrates that the Shandong Policy Loan Program has changed.
---------------------------------------------------------------------------

    \6\ Id. at 2-7.
---------------------------------------------------------------------------

    Consistent with the Investigation, we preliminarily determine that 
the Shandong Province policy loans constitute a direct financial 
contribution from the government under section 771(5)(D)(i) of the Act 
and that 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. We also preliminarily determine that 
the loans are de jure specific because of the Government of Shandong's 
policy to develop the citric acid industry.
    To calculate the benefit, we used the benchmarks described in the 
``Benchmarks and Discount Rates'' section above and the methodology 
described in 19 CFR 351.505(c)(1) and (2). Because of the manner in 
which the RZBC companies reported their loans, we are not able to 
calculate separate rates for the periods September 19, 2008, through 
December 31, 2008, and January 1, 2009, through December 31, 2009, 
except for the loans received by RZBC Co.'s prior ow