Galvanized Steel Wire From the People's Republic of China: Preliminary Affirmative Countervailing Duty Determination and Alignment of Final Determination With Final Antidumping Determination, 55031-55044 [2011-22715]
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Federal Register / Vol. 76, No. 172 / Tuesday, September 6, 2011 / Notices
DEPARTMENT OF COMMERCE
International Trade Administration
[C–570–976]
Galvanized Steel Wire From the
People’s Republic of China:
Preliminary Affirmative Countervailing
Duty Determination and Alignment of
Final Determination With Final
Antidumping Determination
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 galvanized
steel wire (galvanized wire) from the
People’s Republic of China (PRC). For
information on the estimated subsidy
rates, see the ‘‘Suspension of
Liquidation’’ section of this notice.
DATES: Effective Date: September 6,
2011.
FOR FURTHER INFORMATION CONTACT:
Nicholas Czajkowski or David Lindgren,
AD/CVD Operations, Office 6, Import
Administration, U.S. Department of
Commerce, Room 7866, 14th Street and
Constitution Avenue, NW., Washington,
DC 20230; telephone: 202–482–1395 or
202–482–3870, respectively.
SUPPLEMENTARY INFORMATION:
AGENCY:
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Case History
On March 31, 2011, the Department
received a countervailing duty (CVD)
petition, filed in proper form,
concerning imports of galvanized wire
from the PRC.1 The Department
initiated a CVD investigation on April
20, 2011.2
As stated in the Initiation Notice, the
Department released U.S. Customs and
Border Protection (CBP) entry data for
U.S. imports of galvanized wire from the
PRC between January 1, 2010, and
December 31, 2010, to be used as the
basis for respondent selection.3 The CBP
entry data covered products included in
1 The petitioners are Davis Wire Corporation,
Johnstown Wire Technologies, Inc., Mid-South
Wire Company, Inc., National Standard, LLC, and
Oklahoma Steel & Wire Company, Inc. (Petitioners).
2 See Galvanized Steel Wire From the People’s
Republic of China: Initiation of Countervailing Duty
Investigation, 76 FR 23564 (April 27, 2011)
(Initiation Notice), and accompanying Initiation
Checklist. Public documents and public versions of
proprietary Departmental memoranda referenced in
this notice are on file in the Central Records Unit
(CRU), Room 7046 in the main building of the
Commerce Department.
3 See Memorandum regarding ‘‘Countervailing
Duty Investigation of Galvanized Steel Wire from
the People’s Republic of China: Entry Data’’ (Entry
Data Memorandum), dated April 21, 2011.
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this investigation which entered under
Harmonized Tariff Schedule of the
United States (HTSUS) numbers:
7217.20.3000; 7217.20.4510;
7217.20.4520; 7217.20.4530;
7217.20.4540; 7217.20.4550;
7217.20.4560; 7217.20.4570; and
7217.20.4580. In the Entry Data
Memorandum, the Department noted
that the scope also indicated that subject
merchandise might also enter under
HTSUS numbers: 7229.20.0015;
7229.90.5008; 7229.90.5016;
7229.90.5031; and 7229.90.5051. Parties
were given seven days from the
publication of the Initiation Notice to
submit comments on the CBP data and
respondent selection.
On May 3, 2011, Shanghai Bao Zhang
Industry Co. Ltd. (SBZ) requested to be
selected as a mandatory respondent in
the CVD investigation.4 Alternatively,
SBZ requested that, if it were not
selected as a mandatory respondent, the
Department consider it as a voluntary
respondent should a mandatory
respondent fail to participate.
Additionally, on May 4, 2011, SBZ,
Anhui Bao Zhang Metal Products Co.,
Ltd. (ABZ) and B&Z Galvanized Wire
Industry filed comments on respondent
selection, arguing that the Department
should treat all Bao Zhang companies as
a single entity for respondent selection
and should ensure that trading
companies are not selected as
mandatory respondents.5 On May 18,
2011, the Department completed its
respondent selection analysis.
Specifically, the Department selected
the following companies, in
alphabetical order, as mandatory
respondents in this CVD investigation:
M&M Industries Co. Ltd. (M&M);
Shandong Hualing Hardware and Tool
Co., Ltd. (Shandong Hualing); and
Tianjin Huayuan Metal Wire Products
Co., Ltd. (HYW).6 These companies
accounted for the largest volume of
exports of merchandise under
consideration to the United States that
the Department determined could be
reasonably examined. The Department
issued a CVD questionnaire to the
Government of the PRC (GOC) and the
4 See Letter from SBZ to the Department,
‘‘Antidumping Duty Investigation of Galvanized
Wire from the People’s Republic of China: Request
for Mandatory Status or Alternatively for Voluntary
Status,’’ dated May 3, 2011.
5 See Letter from SBZ, et al. to the Department,
‘‘Comments on Respondent Selection: Investigation
of the Galvanized Steel Wire from the People’s
Republic of China,’’ dated May 4, 2011.
6 See Memorandum to Christian Marsh, Deputy
Assistant Secretary for Antidumping and
Countervailing Duty Operations, from Mark
Hoadley, Program Manager, Office 6, ‘‘Galvanized
Steel Wire from the People’s Republic of China
Countervailing Duty Investigation: Respondent
Selection,’’ dated May 18, 2011.
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55031
mandatory respondents on May 19,
2011. Responses to this questionnaire
were originally due on June 27, 2011.
On June 27, 2011, SBZ and its
reported cross-owned affiliates (ABZ)
and Shanghai Li Chao Industry Co., Ltd.
(Li Chao) (collectively, the Bao Zhang
Companies) submitted a questionnaire
response.7 The questionnaire response
provided information that the Bao
Zhang Companies were involved in the
production and exportation of subject
merchandise during the period of
investigation (POI).
The GOC, HYW and M&M submitted
requests on June 20, 2011, June 22,
2011, and June 24, 2011, respectively,
for extensions to the deadline for their
questionnaire responses. The
Department extended the deadline for
submission of these responses until July
5, 2011. On June 29, 2011, the GOC
requested a second extension to the
deadline for filing its questionnaire
response. On July 1, 2011, HYW and
M&M also requested a second extension
to the deadline for filing questionnaire
responses. The Department extended
the deadline for submission of the
questionnaire responses, a second time,
until July 7, 2011. On July 7, 2011,
questionnaire responses were filed by
the GOC, HYW,8 and M&M.9 On July 7,
2011, the GOC requested an extension
for submitting ownership information
related to the producers from which the
Huayuan Companies and the Bao Zhang
Companies purchased wire rod and zinc
inputs. On July 14, 2011, the
Department granted the GOC an
extension until July 19, 2011. On July
19, 2011, the GOC filed additional
information pertaining to the ownership
of some producers of wire rod inputs
purchased by the respondents.10
7 Bao Zhang Companies June 27, 2011
Questionnaire Response. As discussed in more
detail in the ‘‘Cross-Ownership’’ section below, we
preliminarily determine that these three companies
are cross-owned.
8 HYW filed its responses as Attachment 1 and
then included responses for its reported crossowned affiliates Tianjin Tianxin Metal Products
Co., Ltd. (Tianxin) as Attachment 2, Tianjin
Huayuan Times Metal Products Co., Ltd. (Times) as
Attachment 3 and Tianjin Mei Jia Hua Trade Co.,
Ltd. (MJH) as Attachment 4. As discussed in more
detail in the ‘‘Cross-Ownership’’ section below, we
preliminarily determine that HYW, Tianxin and
MJH (collectively, the Huayuan Companies), are
cross-owned. We also preliminarily determine that
Times is not cross-owned with the Huayuan
Companies.
9 GOC July 7, 2011 Questionnaire Response;
Huayuan Companies July 7, 2011 Questionnaire
Response; and M&M July 7, 2011 Questionnaire
Response.
10 See Letter from the GOC to the Department,
‘‘Countervailing Duty Investigation of Galvanized
Steel Wire from the People’s Republic of China, Inv.
No. C–570–976; Questionnaire Response,’’ dated
July 19, 2011.
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Shandong Hualing, one of the
mandatory respondents, did not submit
a questionnaire response by the original
June 27, 2011 deadline, nor did it
request an extension to file its
questionnaire response. In fact, the
GOC, in its questionnaire response,
stated that Shandong Hualing informed
the GOC that the company did not plan
to cooperate with the Department’s
investigation.11 Because Shandong
Hualing chose not to participate in this
investigation, on July 22, 2011, the
Department selected SBZ as an
additional mandatory respondent in this
investigation.12 On June 8, 2011, the
Department postponed the deadline for
the preliminary determination until
August 29, 2011.13
On July 26, 2011, the Department
issued supplemental questionnaires to
the Huayuan Companies, M&M and the
Bao Zhang Companies. On July 28,
2011, the Department also issued a
supplemental questionnaire to the GOC.
The Bao Zhang Companies submitted an
extension request on August 1, 2011,
and the GOC, the Huayuan Companies
and M&M submitted extension requests
on August 2, 2011.
On August 4, 2011, Department
officials met with counsel for the GOC
and the Huayuan Companies, regarding
the Department’s July 26, 2011
supplemental questionnaire issued to
the Huayuan Companies.14 The GOC
and the Huayuan Companies expressed
concern about the potential burden of
obtaining information from trading
companies that are the Huayuan
Companies’ customers. The Department
noted the language in the questionnaire
regarding trading companies and
indicated that when a company is aware
that its sales to trading companies were
exported to the United States, it should
provide the information requested in the
questionnaire for exports of subject
merchandise to the United States.
On August 4, 2011, the Department
extended the deadline for submission of
11 See
GOC July 7, 2011 Questionnaire Response
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at 1.
12 See Memorandum to Christian Marsh, Deputy
Assistant Secretary for Antidumping and
Countervailing Duty Operations, from Barbara E.
Tillman, Director, Antidumping and Countervailing
Duty Operations, Office 6, ‘‘Countervailing Duty
Investigation of Galvanized Steel Wire from the
People’s Republic of China: Selection of an
Additional Mandatory Respondent,’’ dated July 22,
2011.
13 See Galvanized Steel Wire From the People’s
Republic of China: Postponement of Preliminary
Determination in the Countervailing Duty
Investigation, 76 FR 33242 (June 8, 2011).
14 See Memorandum regarding ‘‘Ex-Parte Meeting
with Counsel for the Government of China and for
Tianjin Huayuan Wire Metal Products Co., Ltd.:
Countervailing Duty Investigation of Galvanized
Steel Wire from the People’s Republic of China,’’
dated August 5, 2011.
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the supplemental questionnaire
responses, granting the Huayuan
Companies, M&M, and the Bao Zhang
Companies an extension for part of their
questionnaire response until August 9,
2011, with the remainder due on August
19, 2011. On August 5, 2011, the
Department also extended the deadline
for the GOC’s response, with one
portion due on August 11, 2011, and the
remainder due on August 22, 2011. The
Huayuan Companies, M&M, and the Bao
Zhang Companies each filed their
supplemental questionnaire responses
on August 9, 2011, and August 19,
2011.15
The GOC filed its supplemental
questionnaire response on August 11,
2011, and August 22, 2011.16 On August
12, 2011, the Department issued a
second supplemental questionnaire to
the Huayuan Companies and M&M. The
Huayuan Companies and M&M filed
responses to these second supplemental
questionnaires on August 17, 2011.17
Finally, on August 25, 2011, the
Petitioners filed pre-preliminary
determination comments.18
determination with the final AD
determination of galvanized wire from
the PRC.20 Therefore, in accordance
with section 705(a)(1) of the Act and 19
CFR 351.210(b)(4), we are aligning the
final CVD determination with the final
AD determination. Consequently, the
final CVD determination will be issued
on the same date as the final AD
determination, which is currently
scheduled to be issued no later than
January 10, 2012, unless postponed.
Scope of the Investigation
The scope of the investigation covers
galvanized steel wire which is a colddrawn carbon quality steel product in
coils, of solid, circular cross section
with an actual diameter of 0.5842 mm
(0.0230 inch) or more, plated or coated
with zinc (whether by hot-dipping or
electroplating).
Steel products to be included in the
scope of the investigation, regardless of
Harmonized Tariff Schedule of the
United States (‘‘HTSUS’’) definitions,
are products in which: (1) Iron
predominates, by weight, over each of
the other contained elements; (2) the
Alignment of Final CVD Determination
carbon content is two percent or less, by
With Final Antidumping Duty
weight; and (3) none of the elements
Determination
listed below exceeds the quantity, by
In addition to the CVD investigation
weight, respectively indicated:
on galvanized wire, the Department also
• 1.80 percent of manganese, or
initiated antidumping duty (AD)
• 1.50 percent of silicon, or
investigations of galvanized wire from
• 1.00 percent of copper, or
the PRC and Mexico.19 The CVD and AD
• 0.50 percent of aluminum, or
investigations have the same scope with
• 1.25 percent of chromium, or
• 0.30 percent of cobalt, or
regard to the merchandise covered.
On August 19, 2011, Petitioners
• 0.40 percent of lead, or
• 1.25 percent of nickel, or
submitted a letter, in accordance with
• 0.30 percent of tungsten, or
section 705(a)(1) of the Tariff Act of
• 0.02 percent of boron, or
1930, as amended (the Act), requesting
• 0.10 percent of molybdenum, or
alignment of the final CVD
• 0.10 percent of niobium, or
• 0.41 percent of titanium, or
15 Bao Zhang Companies August 9, 2011
• 0.15 percent of vanadium, or
Supplemental Questionnaire Response; Huayuan
Companies August 9, 2011 Supplemental
• 0.15 percent of zirconium.
Questionnaire Response; M&M August 9, 2011
The products subject to the
Supplemental Questionnaire Response; Bao Zhang
investigation are currently classified in
Companies August 19, 2011 Supplemental
Questionnaire Response; HYW August 19, 2011
subheadings 7217.20.30 and 7217.20.45
Supplemental Questionnaire Response; Tianxin
of the HTSUS which cover galvanized
August 19, 2011 Supplemental Questionnaire
wire of all diameters and all carbon
Response; Times August 19, 2011 Supplemental
content. Galvanized wire is reported
Questionnaire Response; MJH August 19, 2011
Supplemental Questionnaire Response; and M&M
under statistical reporting numbers
August 19, 2011 Supplemental Questionnaire
7217.20.3000, 7217.20.4510,
Response.
7217.20.4520, 7217.20.4530,
16 GOC August 11, 2011 Supplemental
7217.20.4540, 7217.20.4550,
Questionnaire Response and GOC August 22, 2011
7217.20.4560, 7217.20.4570, and
Supplemental Questionnaire Response.
17 MJH August 17, 2011 Supplemental
7217.20.4580. These products may also
Questionnaire Response and M&M August 17, 2011
enter under HTSUS subheadings
Supplemental Questionnaire Response.
7229.20.0015, 7229.90.5008,
18 See Letter from Petitioners to the Department,
7229.90.5016, 7229.90.5031, and
‘‘Countervailing Duty Investigation of Galvanized
Steel Wire from the People ’s Republic of China:
Petitioners’ Pre-Preliminary Determination
Comments,’’ dated August 25, 2011.
19 See Galvanized Steel Wire From the People’s
Republic of China and Mexico: Initiation of
Antidumping Duty Investigations, 76 FR 23548
(April 27, 2011).
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20 See Letter from Petitioners to the Department
‘‘Countervailing Duty Investigation of Galvanized
Steel Wire from the People’s Republic of China—
Request to Align Final Determination with
Antidumping Investigation,’’ dated August 19,
2011.
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7229.90.5051. Although the HTSUS
subheadings are provided for
convenience and customs purposes, the
written description of the merchandise
is dispositive.
Scope Comments
In accordance with the preamble to
the Department’s regulations, we set
aside a period of time in our Initiation
Notice for parties to raise issues
regarding product coverage, and
encouraged all parties to submit
comments within 20 calendar days of
publication of that notice.21 Between
May 5, 2011, and May 19, 2011, we
received numerous comments
concerning the scope of the AD
investigations of galvanized wire from
the PRC and Mexico and the CVD
investigation of galvanized wire from
the PRC.
Because of the timing of the scope
comments and Petitioners’ response to
the comments, we did not have time to
analyze the issues raised by parties prior
to this preliminary determination. The
Department is currently evaluating these
scope comments, and will issue its
decision regarding the scope of the
investigation no later than the date of
the preliminary determination in the
companion AD investigation. That
decision will be placed on the record of
this CVD investigation, and all parties
will have the opportunity to comment.
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
May 20, 2011, the ITC published its
preliminary determination finding that
there is a reasonable indication that an
industry in the United States is
materially injured by reason of imports
of galvanized wire from the PRC.22
Application of the Countervailing Duty
Law to Imports From the PRC
On October 25, 2007, the Department
published its final determination on
coated free sheet paper from the PRC.23
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21 See
Antidumping Duties; Countervailing
Duties, 62 FR 27296, 27323 (May 19, 1997); see also
Initiation Notice, 75 FR at 70719.
22 See Galvanized Steel Wire From China and
Mexico, 76 FR 29266 (May 20, 2011).
23 See 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).
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55033
In CFS from the PRC, the Department
found that
Application of AFA: Non-Cooperative
Respondent
* * * given the substantial differences
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 bar to proceeding with a
CVD investigation involving products from
China. 24
As explained above in the ‘‘Case
History’’ section, the Department
selected Shandong Hualing as a
mandatory respondent. As a result of
Shandong Hualing’s failure to submit
responses to the Department’s initial
questionnaire, we find the company to
be a non-cooperative, mandatory
respondent. By not responding to the
Department’s initial questionnaire,
Shandong Hualing withheld requested
information and significantly impeded
this proceeding. Thus, in reaching our
preliminary determination, pursuant to
sections 776(a)(1), (2)(A) and (C) of the
Act, we are basing the CVD rate for
Shandong Hualing on facts otherwise
available.
We further preliminarily determine
that an adverse inference is warranted,
pursuant to section 776(b) of the Act. By
failing to submit a response to the
Department’s initial questionnaire,
Shandong Hualing did not cooperate to
the best of its ability in this
investigation. Accordingly, we
preliminarily find that AFA is
warranted to ensure that the company
does not obtain a more favorable result
than had it fully complied with our
request for information.
In deciding which facts to use as
AFA, section 776(b) of the Act and 19
CFR 351.308(c)(1) and (2) authorize the
Department to rely on information
derived from: (1) The petition; (2) a final
determination in the investigation; (3)
any previous review or determination;
or (4) any other information placed on
the record. The Department’s practice
when selecting an adverse rate from
among the possible sources of
information is to ensure that the rate 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.’’ 28 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.’’ 29
It is the Department’s practice in CVD
proceedings to select, as AFA, the
highest calculated rate in any segment
The Department has affirmed its
decision to apply the CVD law to the
PRC in subsequent final
determinations.25
Additionally, for the reasons stated in
the CWP from the PRC 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 investigation.26
Period of Investigation
The POI for which we are measuring
subsidies is January 1, 2010, through
December 31, 2010.27
Use of Facts Otherwise Available and
Adverse Inferences
Sections 776(a)(1) and (2) of the Act
provide that the Department shall apply
‘‘facts otherwise available’’ if, inter alia,
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. For purposes of
this preliminary determination, we find
it necessary to apply adverse facts
available (AFA) in the following
circumstances.
24 See CFS from the PRC Decision Memorandum
at Comment 6.
25 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), and
accompanying Issues and Decision Memorandum
(CWP from the PRC Decision Memorandum) at
Comment 1.
26 See CWP from the PRC Decision Memorandum
at Comment 2.
27 See 19 CFR 351.204(b)(2).
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28 See, e.g., 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).
29 See Statement of Administrative Action
accompanying the Uruguay Round Agreements Act,
H.R. Rep. No. 103–316, Vol. I, at 870 (1994),
reprinted at 1994 U.S.C.C.A.N. 4040, 4199.
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of the proceeding.30 In previous CVD
investigations of products from the PRC,
we adapted the practice to use the
highest rate calculated for the same or
similar program in the instant
proceeding or, if not available, in other
PRC CVD proceedings.31 Thus, under
this practice, for investigations
involving the PRC, the Department
computes the total AFA rate for noncooperating companies generally using
program-specific rates calculated for the
cooperating respondents in the instant
investigation or calculated in prior PRC
CVD cases. Specifically, for programs
other than those involving income tax
exemptions and reductions, the
Department applies the highest
calculated rate for the identical program
in the investigation if a responding
company used the identical program,
and the rate is not zero. If there is no
identical program match within the
investigation, the Department uses the
highest non-de minimis rate calculated
for the same or similar program (based
on treatment of the benefit) in another
PRC CVD proceeding. Absent an abovede minimis subsidy rate calculated for
the same or similar program, the
Department applies the highest
calculated subsidy rate for any program
otherwise listed that could conceivably
be used by the non-cooperating
companies.32
30 See, e.g., 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 at ‘‘Selection of the Adverse
Facts Available’’; see also Aluminum Extrusions
From the People’s Republic of China: Final
Affirmative Countervailing Duty Determination, 76
FR 18521 (April 4, 2011) (Aluminum Extrusions
From the PRC), and accompanying Issues and
Decision Memorandum (Aluminum Extrusions
from the PRC Decision Memorandum) at
‘‘Application of Adverse Inferences: NonCooperative Companies.’’
31 See supra, note 28; see also LWS From the PRC;
see also Certain Tow-Behind Lawn Groomers and
Certain Parts Thereof From the People’s Republic of
China: Preliminary Affirmative Countervailing Duty
Determination and Alignment of Final
Countervailing Duty Determination With Final
Antidumping Duty Determination, 73 FR 70971,
70975 (November 24, 2008) (unchanged in the
Certain Tow-Behind Lawn Groomers and Certain
Parts Thereof From the People’s Republic of China:
Final Affirmative Countervailing Duty
Determination, 74 FR 29180 (June 19, 2009), and
accompanying Issues and Decision Memorandum at
‘‘Application of Facts Available, Including the
Application of Adverse Inferences’’).
32 See Aluminum Extrusions from the PRC
Decision Memorandum at ‘‘Application of Adverse
Inferences: Non-Cooperative Companies’’; see also,
e.g., 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 from the PRC
Decision Memorandum) at ‘‘Selection of the
Adverse Facts Available Rate.’’
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On this basis, we preliminarily
determine the AFA subsidy rate for
Shandong Hualing to be 253.07 percent
ad valorem. For a detailed discussion of
the AFA rates selected for each program
under investigation, see Application of
Adverse Facts Memorandum.33
Application of AFA: Finding Wire Rod
and Zinc Input Producers To Be
Government Authorities Under the
Provision of Wire Rod and Zinc for Less
Than Adequate Remuneration Program
The Department is investigating the
alleged provision of wire rod and zinc
for less than adequate remuneration
(LTAR) by the GOC. We requested
information from the GOC regarding the
specific companies that produced these
input products that the Huayuan
Companies and the Bao Zhang
Companies purchased during the POI.
With respect to the specific
companies that produced the input
products purchased by the Huayuan
Companies and the Bao Zhang
Companies, we were seeking
information that would allow us to
determine whether the producers are
‘‘authorities’’ within the meaning of
section 771(5)(B) of the Act. In our
original and supplemental
questionnaires, we requested detailed
information from the GOC that would be
needed for this analysis. We informed
the GOC that, if it disputed that
producers that are majority-owned by
the government are ‘‘authorities,’’ the
GOC needed to provide the requested
information on those disputed
producers as well. Thus, for any
producers of wire rod or zinc that were
identified by the Huayuan Companies
and the Bao Zhang Companies as
majority government-owned, the GOC
needed to provide the requested
information only if it wished to argue
that those producers were not
authorities. For any of these input
producers that the GOC claimed were
privately owned by individuals and/or
companies during the POI, we requested
the following:
• Translated copies of source
documents that demonstrate the
producer’s ownership during the POI,
such as capital verification reports,
articles of association, share transfer
agreements, or financial statements.
• Identification of the owners,
members of the board of directors, or
managers of the producers who were
also government or Chinese Communist
Party (CCP) officials or representatives
during the POI.
33 See Memorandum regarding, ‘‘Application of
Adverse Facts Available Rates for Preliminary
Determination,’’ dated August 29, 2011
(Application of Adverse Facts Memorandum).
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• A discussion of whether and how
operational or strategic decisions made
by the management or board of directors
are subject to government review or
approval.
Finally, for input producers owned by
other corporations (whether in whole or
in part) or with less-than-majority state
ownership during the POI, we requested
information in order to trace back the
ownership to the ultimate individual or
state owners. For these suppliers, we
requested the following:
• The identification of any state
ownership of the company’s shares; the
names of all government entities that
own shares, either directly or indirectly,
in the company; whether any of the
owners are considered ‘‘state-owned
enterprises’’ by the government; and the
amount of shares held by each
government owner.
• For each level of ownership, a
translated copy of the section(s) of the
articles of association showing the rights
and responsibilities of the shareholders
and, where appropriate, the board of
directors, including all decision making
(voting) rules for the operation of the
company.
• For each level of ownership,
identification of the owners, members of
the board of directors, or managers of
the producers who were also
government or CCP officials during the
POI.
• A discussion of whether and how
operational or strategic decisions made
by the management or board of directors
are subject to government review or
approval.
• A statement of whether any of the
shares held by government entities have
any special rights, priorities, or
privileges, e.g., with regard to voting
rights or other management or decisionmaking for the company; a statement of
whether there are any restrictions on
conducting, or acting through,
extraordinary meetings of shareholders;
whether there are any restrictions on the
shares held by private shareholders; and
the nature of the private shareholders’
interest in the company, e.g.,
operational, strategic, or investmentrelated, etc.
In its questionnaire response on July
7, 2011, the GOC provided some
ownership information but reported that
it was unable to obtain the complete
ownership information for all of the
companies that produced wire rod and
zinc purchased by the Huayuan
Companies and the Bao Zhang
Companies. The GOC further stated that
it expected to provide such information
to the Department as soon as it received
it from the local industry and commerce
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administration bureaus.34 On July 19,
2011, the GOC submitted additional
ownership information pertaining to
certain wire rod producers, but reported
that it was still not able to complete the
ownership information for all wire rod
and zinc producers named by
respondents.
On July 28, 2011, we issued a
supplemental questionnaire to the GOC
requesting that it complete the
remaining ownership information for
the wire rod and zinc producers, as well
as respond to questions regarding the
role, if any, of GOC and CCP officials in
the input producers (e.g., through
management or the board of directors)
and in their owners, including any
corporate owners.35 In response to the
GOC’s request for an extension, the
Department allowed the GOC to file part
of its response on August 11, 2011, and
the remainder on August 22, 2011.
In the August 11, 2011 response, the
GOC provided some additional
ownership information; it also stated
that certain companies that own some
portion of wire rod producers did not
have any GOC or CCP officials or
representatives involved in their
ownership, boards of directors or
management.36 However, the GOC did
not provide complete information
requested with respect to whether GOC
or CCP officials were involved in the
ownership, board of directors or
management of all of these wire rod
producers. The GOC also explained that
it was unable to obtain some of the
company-specific ownership
information for zinc producers and that
it was not able to collect information on
whether companies holding some share
of zinc producers have any GOC or CCP
officials involved in their ownership,
boards of directors or management.37
In addition to not providing all of the
requested information regarding
whether government and CCP officials
were owners, members of the boards of
directors, or managers of the input
producers who produced the wire rod
and zinc purchased by the respondents
during the POI, the GOC also declined
to answer questions about the CCP’s
structure and functions that are relevant
to our determination of whether the
producers of wire rod and zinc are
government authorities within the
meaning of section 771(5)(B) of the Act.
34 See GOC July 7, 2011 Questionnaire Response
at 16.
35 See Letter from the Department to the GOC
‘‘Countervailing Duty Investigation of Galvanized
Steel Wire from the People’s Republic of China:
Supplemental Questionnaire,’’ dated July 28, 2011.
36 See GOC August 11, 2011 Supplemental
Questionnaire Response at I–13–14, I–16.
37 See id. at I–23.
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On August 22, 2011, the GOC filed the
remainder of its supplemental
questionnaire response but it did not
include any additional information
regarding whether there were GOC or
CCP officials involved in the
management, board of directors or
ownership of the wire rod or zinc input
producers. Rather, the GOC stated that
the CCP, along with other organizations,
is not a government organization and
that CCP officials’ involvement in input
producer companies ‘‘does not lead to
interference by the Chinese government
in the management and operation of the
input suppliers.’’ 38 Additionally, the
GOC explained that Chinese law
prohibits GOC officials from taking
positions in private companies.39
Furthermore, the GOC explained that
‘‘there is no central database to search
the requested information and the
industry and commerce administration
does not require the companies to
provide such information.’’ 40 As such,
the GOC stated it was unable to respond
to the questions regarding GOC and CCP
officials’ involvement in the wire rod
and zinc input producers themselves
and in the input producers’ ownership
and management.41
Regarding the GOC’s objection to the
Department’s questions about the role of
CCP officials in the management and
operations of the wire rod and zinc
input producers, we have explained our
understanding of the CCP’s involvement
in the PRC’s economic and political
structure in a past proceeding.42 The
Department considers the information
regarding the CCP’s involvement in the
PRC’s economic and political structure
to be important because public
information suggests that the CCP exerts
significant control over activities in the
PRC.43 This is supported by, among
other documents, a publicly available
background report from the U.S.
Department of State.44 With regard to
the GOC’s claim that Chinese law
prohibits GOC officials from taking
38 See GOC August 22, 2011 Supplemental
Questionnaire Response at I–7–10.
39 See id.
40 See id.
41 See id.
42 See Memorandum regarding ‘‘Galvanized Steel
Wire from the People’s Republic of China:
Preliminary Countervailing Duty Determination:
Additional Documents,’’ dated August 29, 2011 at
Attachment 1.
43 See id. at Attachment 2.
44 See id.; see also Certain Seamless Carbon and
Alloy Steel Standard, Line, and Pressure Pipe from
the People’s Republic of China: Final Affirmative
Countervailing Duty Determination, Final
Affirmative Critical Circumstances Determination,
75 FR 57444 (September 21, 2010), and
accompanying Issues and Decision Memorandum
(Seamless Pipe from the PRC Decision
Memorandum) at Comment 7.
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55035
positions in private companies, we have
previously found that this particular law
does not pertain to CCP officials.45
Because the GOC did not respond to
our requests for information on this
issue, we have no further basis for
evaluating the GOC’s claim that the role
of the CCP is irrelevant. Thus, we
continue to find that the information on
the role of CCP officials in the
management and operations of the wire
rod and zinc input producers, and in the
management and operations of the input
producers’ owners is necessary to our
determination of whether these input
producers are authorities within the
meaning of section 771(5)(B) of the Act.
Furthermore, we find that this is
information that could be obtained by
the GOC and further, the GOC did not
provide any information regarding what
attempts it undertook to obtain this
information. Therefore, we determine
that the GOC’s statement that it is
unable to provide this information is
insufficient to find that the GOC has
cooperated to the best of its ability.
Based on the above, we preliminarily
determine that the GOC has withheld
necessary information that was
requested of it and, thus, that the
Department must rely on ‘‘facts
otherwise available’’ in making our
preliminary determination.46 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.47 Therefore, based on AFA,
we are finding that that all of the input
producers of the wire rod and zinc
purchased by the respondents during
the POI are ‘‘authorities’’ within the
meaning of section 771(5)(B) of the Act.
Application of AFA: Provision of
Electricity for Less Than Adequate
Remuneration
The GOC did not provide complete
responses to the Department’s questions
regarding the alleged provision of
electricity for LTAR. These questions
requested information to determine
whether the provision of electricity
constituted a financial contribution
within the meaning of Section 771(5)(D)
of the Act, whether such a provision
provided a benefit within the meaning
of Section 771(5)(E) of the Act and
whether such a provision was specific
with the meaning of Section 771(5A) of
the Act. In the both the Department’s
45 See Seamless Pipe from the PRC Decision
Memorandum at 16.
46 See sections 776(a)(1) and (a)(2)(A) of the Act.
47 See section 776(b) of the Act.
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May 19, 2011 original questionnaire and
the July 28, 2011 supplemental
questionnaire, for each province in
which a respondent is located, the
Department asked the GOC to provide a
detailed explanation of: (1) How
increases in the cost elements in the
price proposals led to retail price
increases for electricity; (2) how
increases in labor costs, capital
expenses and transmission, and
distribution costs are factored into the
price proposals for increases in
electricity rates; and (3) how the cost
element increases in the price proposals
and the final price increases were
allocated across the province and across
tariff end-user categories. The GOC
provided no provincial-specific data in
its August 11, 2011 supplemental
response.
Consequently, 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’’ in making our preliminary
determination.48 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. In this regard,
the GOC did not explain why it was
unable to provide the requested
information, nor did the GOC ask for
additional time to gather and provide
such information. Consequently, an
adverse inference is warranted in the
application of facts available.49 In
drawing an adverse inference, we find
that the GOC’s provision of electricity
constitutes a financial contribution
within the meaning of section 771(5)(D)
of the Act and is specific within the
meaning of section 771(5A) of the Act.
We have also relied on an adverse
inference in selecting the benchmark for
determining the existence and amount
of the benefit.50 The benchmark rates we
have selected are derived from
information from the record of the
instant investigation and are the highest
electricity rates on this record for the
applicable rate and user categories.
For details on the calculation of the
subsidy rate for the respondents, see the
‘‘Provision of Electricity for LTAR’’
section below.
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Subsidy Valuation Information
Allocation Period
Under 19 CFR 351.524(d)(2), we
presume the allocation period for nonrecurring subsidies to be the average
useful life (AUL) prescribed by the
48 See
sections 776(a)(1)–(a)(2)(A) of the Act.
section 776(b) of the Act.
50 See id. at 776(b)(4).
49 See
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Internal Revenue Service (IRS) for
renewable physical assets of the
industry under consideration (as listed
in the IRS’s 1977 Class Life Asset
Depreciation Range System, and as
updated by the U.S. Department of the
Treasury). This presumption will apply
unless a party claims and establishes
that these tables do not reasonably
reflect the AUL of the renewable
physical assets of the company or
industry under investigation. According
to the IRS’ 1977 Class Life Asset
Depreciation Range System, the AUL
period for assets for galvanized wire is
12 years. No party in this proceeding
has disputed this allocation period.
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.
As discussed above, in accordance
with the Department’s practice, we
identify and measure subsidies in the
PRC beginning on the date of the
country’s accession to the WTO, i.e.
December 11, 2001.51
Attribution of Subsidies
In accordance with 19 CFR
351.525(b)(6)(i), the Department
normally attributes a subsidy to the
products produced by the corporation
that received the subsidy. However, 19
CFR 351.525(b)(6)(ii)–(v) sets forth
additional attribution rules for
corporations with cross-ownership. The
following types of cross-ownership are
covered in these additional attribution
rules: (ii) Two or more corporations
with cross-ownership produce the
subject merchandise; (iii) a firm that
received a subsidy is a holding or parent
company of the subject company; (iv) a
firm that produces an input that is
primarily dedicated to the production of
the downstream product; or (v) a
corporation producing non-subject
merchandise received a subsidy and
transferred the subsidy to a corporation
with cross-ownership with the subject
company.
51 See, e.g., Certain Magnesia Carbon Bricks From
the People’s Republic of China: Final Affirmative
Countervailing Duty Determination, 75 FR 45472
(August 2, 2010), and accompanying Issues and
Decision Memorandum at ‘‘Subsidies Valuation
Information.’’
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1. Cross-Ownership
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. 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.52
Based on information on the record,
we preliminarily determine that crossownership exists, in accordance with 19
CFR 351.525(b)(6)(vi), among and across
the following companies involved in the
production and sale of the subject
merchandise.
The Huayuan Companies
We preliminarily determine that
cross-ownership exists within the
Huayuan Companies among and across
the following companies involved in the
production and sale of the subject
merchandise: HYW, Tianxin and MJH.
Further, we preliminarily determine
that cross-ownership does not exist
between Times and the other companies
in the Huayuan Companies. Because
much of the information upon which
this decision is based is business
proprietary, a full discussion is set forth
in the Huayuan Companies Preliminary
Cross-Ownership Memorandum.53
The Bao Zhang Companies
We preliminarily determine that
cross-ownership exists within the Bao
Zhang Companies, in accordance with
19 CFR 351.525(b)(6)(vi), among and
across the following companies
involved in the production and sale of
the subject merchandise: SBZ, ABZ and
Li Chao. Because much of the
information upon which this decision is
based is business proprietary, a full
discussion is set forth in the Bao Zhang
52 See Fabrique de Fer de Charleroi v. United
States, 166 F. Supp. 2d 593, 600–604 (CIT 2001).
53 See Memorandum to Barbara E. Tillman,
Director, AD/CVD Operations, Office 6, from
Nicholas Czajkowski and David Lindgren,
International Trade Compliance Analysts regarding
‘‘Galvanized Steel Wire from the People’s Republic
of China: Preliminary Countervailing Duty
Determination, Cross-Ownership: Huayuan
Companies,’’ dated August 29, 2011 (Huayuan
Companies Preliminary Cross-Ownership
Memorandum).
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Companies Preliminary CrossOwnership Memorandum.54
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2. Trading Company Attribution
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 producing subject merchandise that
is sold through the trading company,
regardless of whether the trading
company and the producing company
are affiliated. M&M reported that it is a
trading company and that it purchased
galvanized wire to the United States
during the POI from various
producers,55 including the cross-owned
producers of galvanized wire within the
Huayuan Companies (HYW and
Tianxin).56 M&M reported that it is not
cross-owned with any of the producers
from which it purchased galvanized
wire, and there is no information on the
record on the record that would cause
the Department to conclude that M&M
is cross-owned with any of its suppliers.
When investigating or reviewing
trading companies, the Department, has,
in some instances, limited the number
of producers it examines under 19 CFR
351.525(c).57 In determining a subsidy
rate for M&M, we preliminarily
determine that it is appropriate to limit
our examination of the producers,
which supplied M&M during the POI, to
the cross-owned producers within the
Huayuan Companies.58 Since this
decision is based on business
proprietary information, our analysis is
54 See Memorandum to Barbara E. Tillman,
Director, AD/CVD Operations, Office 6, from
Nicholas Czajkowski and David Lindgren,
International Trade Compliance Analysts regarding
‘‘Galvanized Steel Wire from the People’s Republic
of China: Preliminary Countervailing Duty
Determination, Cross-Ownership: Bao Zhang
Companies,’’ dated August 29, 2011(Bao Zhang
Companies Preliminary Cross-Ownership
Memorandum).
55 See M&M July 7, 2011 Questionnaire Response
at III–2.
56 See ‘‘Cross-Ownership’’ section above.
57 See 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
(Pasta from Italy Decision Memorandum) at
‘‘Attribution’’; see also Pre-Stressed Concrete Steel
Wire Strand from the People’s Republic of China:
Preliminary Affirmative Countervailing Duty
Determination, 74 FR 56576, 56577–79 (November
2, 2009) (PC Strand from the PRC) (unchanged in
the Pre-Stressed Concrete Steel Wire Strand from
the People’s Republic of China: Final Affirmative
Countervailing Duty Determination, 75 FR 28557
(May 21, 2010), and accompanying Issues and
Decision Memorandum (PC Strand from the PRC
Decision Memorandum) at ‘‘Attribution of
Subsidies’’).
58 See Pasta from Italy Decision Memorandum at
‘‘Attribution’’; see also PC Strand from the PRC
Decision Memorandum at ‘‘Attribution of
Subsidies.’’
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set forth in M&M’s preliminary
calculation memorandum.59
Pursuant to the Department’s trading
company regulation at 19 CFR
351.525(c), we find that any subsidies
provided to the cross-owned producers
within the Huayuan Companies are
attributable to the subject merchandise
exported by M&M. In accordance with
19 CFR 351.525(c), we cumulated the
subsidies received by the cross-owned
producers within the Huayuan
Companies with the subsidies received
by M&M. Specifically, for each
countervailable subsidy received by the
cross-owned producers within the
Huayuan Companies, we derived the
benefit and calculated a program
subsidy rate, and cumulated those rates
with the rates calculated for subsidies
received directly by M&M.
Denominators
When selecting an appropriate
denominator for use in calculating the
ad valorem subsidy rate, the Department
considers the basis for the respondent’s
receipt of benefits under each program
at issue. As discussed in further detail
below in the ‘‘Programs Preliminarily
Determined To Be Countervailable’’
section, where the program has been
found to be an export subsidy, we used
the recipient’s total exports as the
denominator. For cross-owned
producers, we used total exports net of
sales between the cross-owned
producers, and where appropriate and
possible, made adjustments for the
value of the producers’ sales sold
through a cross-owned trading
company.60
Where the program has been found to
be countervailable as a domestic
subsidy, we used the following
denominators. If the subsidy was
provided to one or more of the crossowned producers of subject
merchandise, we used the total sales of
those producers net of any sales
between the cross-owned producers.
Where appropriate and possible, we
made adjustments for the value of the
cross-owned producers’ sales sold
through a cross-owned trading
company. Where the subsidy was
provided to a cross-owned input
supplier, we used the total sales of the
cross-owned producers of subject
merchandise plus the sales of the cross59 See Memorandum to Thomas Gilgunn, Program
Manager, AD/CVD Operations, Office 6, from
Nicholas Czajkowski and David Lindgren,
International Trade Compliance Analysts regarding
‘‘Countervailing Duty Investigation of Galvanized
Steel Wire from the People’s Republic of China:
M&M Preliminary Calculation Memorandum,’’
dated August 29, 2011 (M&M Preliminary
Calculation Memorandum).
60 See 19 CFR 351.525(b)(2), (b)(6), and (c).
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55037
owned input supplier net of any sales
between these companies (i.e., we used
only external sales as the denominator).
Where the subsidy was provided
directly to a trading company, we used
the trading company’s total sales as the
denominator.61 For a further discussion
of the denominators used, see the
Preliminary Calculation Memoranda.62
Discount Rates for Allocating NonRecurring Subsidies
Consistent with 19 CFR
351.524(d)(3)(i)(C), we have used, as our
discount rate, the long-term interest rate
calculated according to the methodology
described below for the year in which
the government agreed to provide the
subsidy.
1. Short-Term Interest Rate
The Department’s regulations at 19
CFR 351.524(d)(3) state that Department
will use as a discount rate the following,
in order of preference: (A) The cost of
long-term, fixed-rate loans of the firm in
question, excluding any loans that the
Department has determined to be
countervailable subsidies; (B) the
average cost of long-term, fixed-rate
loans in the country in question; or (C)
a rate that the Department considers to
be most appropriate. 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.63 Because of this,
any loans received by respondents from
private Chinese or foreign-owned banks
would be unsuitable for use as a
discount rate under 19 CFR
351.524(d)(3)(i)(A). Similarly, we cannot
use a national interest rate for
commercial loans as envisaged by 19
CFR 351.524(d)(3)(i)(A).
Therefore, because of the special
difficulties inherent in using a Chinese
benchmark for loans, the Department is
selecting an external market-based
61 See
generally, 19 CFR 351.525(b).
Memorandum to Thomas Gilgunn, Program
Manager, AD/CVD Operations, Office 6, from
Nicholas Czajkowski and David Lindgren,
International Trade Compliance Analysts regarding
‘‘Countervailing Duty Investigation of Galvanized
Steel Wire from the People’s Republic of China: Bao
Zhang Companies Preliminary Calculation
Memorandum,’’ dated August 29, 2011; see also
Memorandum to Thomas Gilgunn, Program
Manager, AD/CVD Operations, Office 6, from
Nicholas Czajkowski and David Lindgren,
International Trade Compliance Analysts regarding
‘‘Countervailing Duty Investigation of Galvanized
Steel Wire from the People’s Republic of China:
Huayuan Companies Preliminary Calculation
Memorandum,’’ dated August 29, 2011; see also
M&M Preliminary Calculation Memorandum
(collectively, Preliminary Calculation Memoranda).
63 See CFS from the PRC Decision Memorandum
at Comment 10.
62 See
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benchmark interest rate. The use of an
external benchmark is consistent with
the Department’s practice. For example,
in lumber from Canada, the Department
used U.S. timber prices to measure the
benefit for government-provided timber
in Canada.64
We are calculating the external
benchmark using the regression-based
methodology first developed in CFS
from the PRC and updated in LWTP
from the PRC.65 This benchmark
interest rate is based on the inflationadjusted interest rates of countries with
per capita gross national incomes (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 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.66 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
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 AD 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
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64 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) and accompanying Issues and Decision
Memorandum (Softwood Lumber from Canada
Decision Memorandum) at ‘‘Analysis of Programs,
Provincial Stumpage Programs Determined to
Confer Subsidies, Benefit.’’
65 See CFS Decision Memorandum at Comment
10; see also LWTP from the PRC Decision
Memorandum at 8–10.
66 See The World Bank Country Classification,
https://econ.worldbank.org/.
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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 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.67
2. Long-Term Interest Rate
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
developed an adjustment to the shortand medium-term rates to convert them
to long-term rates using Bloomberg U.S.
corporate BB-rated bond rates.68 In
subsequent investigations, 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.69
The resulting inflation-adjusted
lending rates that we are using as
discount rates are provided in the
Preliminary Benchmark
Memorandum.70 Based on this
methodology, we calculated the
discount rates to use in allocating nonrecurring subsidies for this preliminary
determination.
Analysis of Programs
Based upon our analysis of the
petition and the responses to our
questionnaires, we preliminarily
determine the following:
67 See Memorandum regarding ‘‘Preliminary
Affirmative Countervailing Duty Determination:
Galvanized Steel Wire form the People’s Republic
of China, Benchmark Memorandum,’’ dated August
29, 2011 (Preliminary Benchmark Memorandum).
68 See, e.g., Light-Walled Rectangular Pipe and
Tube From People’s Republic of China: Final
Affirmative Countervailing Duty Investigation
Determination, 73 FR 35642 (June 24, 2008) and
accompanying Issues and Decision Memorandum at
8.
69 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) and accompanying Issues and
Decision Memorandum at Comment 14.
70 See Preliminary Benchmark Memorandum at
Attachment 8.
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Programs Preliminarily Determined To
Be Countervailable
1. Provision of Wire Rod for LTAR
The Department is investigating
whether input producers, acting as
Chinese government authorities, sold
wire rod to the respondents for LTAR.
Both the Huayuan Companies and the
Bao Zhang Companies reported
purchasing wire rod during the POI.71
As discussed in detail above in the
section ‘‘Use of Facts Otherwise
Available and Adverse Inferences,’’ we
are finding all of the wire rod input
producers, which produced the wire rod
purchased during the POI by both the
Huayuan Companies and the Bao Zhang
Companies, to be government
authorities based on AFA. As a result,
we preliminarily determine that the
wire rod sold by these input producers
that was purchased by the respondents
during the POI constitutes a financial
contribution in the form of a
governmental provision of a good.72
Having dealt with financial
contribution, we now turn to specificity,
one of the three required subsidy
elements under the Act.73 In our initial
questionnaire, we asked the GOC to
provide a list of industries in the PRC
that purchase wire rod directly, using a
consistent level of industrial
classification.74 In response, the GOC
simply stated that wire rod is used by
a wide variety of steel-consuming
industries.75 In our supplemental
questionnaire, we again asked the GOC
to provide the information in the form
requested, but the GOC provided the
same response.76 While the GOC did not
provide the information in the form
requested, we have considered the
GOC’s response in light of the statutory
standard for de facto specificity and,
based on our review, we find the
information is sufficient to reach a
finding of specificity pursuant to section
771(5A)(D)(iii)(I) of the Act. This
determination is consistent with wire
decking from the PRC and PC Strand
from the PRC in which the Department
found the provision of wire rod to be
specific, based on virtually the same
facts.77
71 See Bao Zhang Companies June 27, 2011
Questionnaire Response at III–14; see also Huayuan
Companies July 7, 2011 Questionnaire Response at
I–16, II–16.
72 See section 771(5)(D)(iii) of the Act.
73 See section 771(5A) of the Act.
74 See May 19, 2011 Original Questionnaire at II–
7.
75 See GOC July 7, 2011 Questionnaire Response
at 34.
76 See GOC August 22, 2011 Supplemental
Questionnaire Response at I–14.
77 See Wire Decking from the People’s Republic of
China: Final Affirmative Countervailing Duty
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With regard to benefit, the third
required subsidy element, we
preliminarily determine that the
respondents received a benefit to the
extent that the purchased wire rod was
provided for LTAR.78 The criteria for
identifying appropriate marketdetermined benchmarks for measuring
whether the government-provided goods
were provided for LTAR are set forth at
19 CFR 351.511(a)(2). 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 the
Department has previously explained,
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.79
In evaluating whether there are
market prices for actual transactions
within the country under investigation
(i.e., tier one prices), we must first
determine whether the prices from
actual sales transactions involving PRC
buyers and sellers are significantly
distorted. As explained in the preamble
to the regulations:
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.80
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.81
In the original questionnaire, we
asked the GOC to provide production
figures of wire rod by state-owned
enterprises (SOEs) during 2008, 2009
and 2010. The GOC provided
information regarding government
Determination, 75 FR 32902 (June 10, 2010) (Wire
Decking from the PRC), and accompanying Issues
and Decision Memorandum (Wire Decking from the
PRC Decision Memorandum) at ‘‘Provision of Wire
Rod for LTAR’’; see also PC Strand from the PRC
Decision Memorandum at Comment 12.
78 See section 771(5)(E)(iv) of the Act.
79 See Softwood Lumber from Canada Decision
Memorandum at ‘‘Market-Based Benchmark.’’
80 See Countervailing Duties, 63 FR 65348, 65377
(November 25, 1998).
81 See id.
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ownership of wire rod producers during
2008 only. The GOC stated that
gathering such information for 2009 and
2010 would ‘‘take months to achieve’’
and, thus, it did not provide these
figures.82 We note that the only
information relevant to the POI that the
GOC provided were statements to the
effect that certain pre-existing export
restraints (i.e., export licenses and
export taxes) for wire rod were not
present during the POI. Therefore, the
GOC has not provided the necessary or
requested information for the
Department to undertake a complete
analysis regarding the government’s role
in the market for wire rod during the
POI, and it is necessary to resort to the
facts otherwise available pursuant to
section 776(a) of the Act. As facts
become available, we find that PRC
prices of wire rod are significantly
distorted as a result of the GOC’s
involvement in the market.83
Consequently, we determine that
there are no appropriate tier one
benchmark prices available for wire rod.
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. For purposes of the
preliminary determination, we find that
the Japanese and Black Sea FOB export
price data from the World Bank and
Steel Business Briefing (SBB),
respectively, 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.84 We find that, for
purposes of the preliminary
determination, prices from the World
Bank and SBB to be sufficiently reliable
and representative. Both sources
identify that the prices reported are
export prices and that they are on an
FOB basis. Such prices would be
available to purchasers in the PRC. We
adjusted these FOB export prices to
reflect, as closely as possible, the price
that the respondent firm would pay if it
82 See GOC July 7, 2011 Questionnaire Response
at 29.
83 See 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’’; see also Wire Decking from the PRC
at ‘‘Provision of Wire Rod for LTAR.’’ The POI for
Wire Decking from the PRC was 2008. The
ownership/production for wire rod which the GOC
submitted in the instant case is consistent with
what it submitted in Wire Decking from the PRC.
Because the GOC submitted ownership/production
information from 2008 in this investigation and
statements about wire rod exports during 2010, the
Department was prevented from being able to
conduct a full analysis.
84 See Preliminary Benchmark Memorandum.
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55039
imported the product, including import
duties and valued added tax (VAT),
ocean freight and domestic inland
freight as stipulated in 19 CFR
351.511(a)(2)(iv). Where necessary, we
converted the variables in the
benchmark calculation to the same
currency and unit of measure as
reported by the mandatory respondents
for their purchases of wire rod.
Some of the respondents have
reported acquiring wire rod from trading
companies or non-producing suppliers
with which they were not cross-owned.
In prior CVD proceedings involving the
PRC, the Department has determined
that when a respondent purchases an
input from a trading company or nonproducing supplier, but the producer of
the input is an ‘‘authority’’ within the
meaning of section 771(5)(B) of the Act,
we must evaluate whether the input has
been provided for LTAR by comparing
the price paid by the respondent to the
trading company to the benchmark
price.85 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 the
respondents during the POI and to
provide information that would allow
the Department to determine whether
those producers were government
authorities. As stated previously, the
Department has preliminarily
determined all input producers of wire
rod purchased by the respondents
during the POI are authorities.
To determine whether the respondent
producers purchased wire rod for LTAR,
we compared the unit prices each
respondent paid for its wire rod to our
wire rod benchmark price. Where the
purchase was made from a nonproducing cross-owned supplier, we
used the price paid by the cross-owned
supplier for comparison purposes. We
conducted our comparison on a
monthly basis. Based on this
comparison, we preliminarily determine
that wire rod was provided for LTAR
and that a benefit exists in the total
amount of the difference between the
benchmark and the price paid.86
85 See Racks from the PRC Decision
Memorandum at ‘‘Provision of Wire Rod for Less
than Adequate Remuneration’’ section; see also
Circular Welded Austenitic Stainless Pressure Pipe
from the People’s Republic of China: Final
Affirmative Countervailing Duty Determination, 74
FR 4936 (January 28, 2009), and accompanying
Issues and Decision Memorandum (CWASPP from
the PRC Decision Memorandum) at ‘‘Provision of
SSC for LTAR.’’
86 See section 771(5)(E)(iv) of the Act and 19 CFR
351.511(a).
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To calculate the subsidy rate, we
divided the total benefit to each
respondent by the appropriate
denominator discussed above in the
‘‘Subsidy Valuation Information’’
section, and in the Preliminary
Calculation Memoranda. On this basis,
we calculated a subsidy of 45.94 percent
ad valorem for the Huayuan Companies,
19.04 percent ad valorem for the Bao
Zhang Companies, and 45.94 percent ad
valorem for M&M.
mstockstill on DSK4VPTVN1PROD with NOTICES
2. Provision of Zinc for LTAR
The Department is investigating
whether input producers, acting as
Chinese government authorities, sold
zinc to the respondents for LTAR. Both
the Huayuan Companies and the Bao
Zhang Companies reported purchasing
zinc during the POI.87
As discussed in detail above in the
section ‘‘Use of Facts Otherwise
Available and Adverse Inferences,’’ we
are finding all of the zinc input
producers that produced the zinc the
Huayuan Companies and the Bao Zhang
Companies purchased during the POI to
be government authorities based on
AFA. As a result, we preliminarily
determine that the zinc sold by these
input producers that was purchased by
the respondents during the POI
constitutes a financial contribution in
the form of a governmental provision of
a good.88
Having dealt with financial
contribution, we now turn to specificity,
one of the three required subsidy
elements under the Act.89 In our initial
questionnaire, we asked the GOC to
provide a list of industries in the PRC
that purchase zinc directly, using a
consistent level of industrial
classification.90 In response, the GOC
stated that zinc had a wide range of uses
(e.g., galvanized steel products, alkaline
batteries, various metal alloys, etc.) and
that ‘‘a comprehensive list of industries
that purchase zinc directly is not
available to be provided.’’ 91 While the
GOC did not provide the information in
the form requested, we have considered
the GOC’s response in light of the
statutory standard for de facto
specificity and, based on our review, we
find the information is sufficient to
reach a finding of specificity pursuant to
section 771(5A)(D)(iii)(I) of the Act. This
87 See Bao Zhang Companies June 27, 2011
Questionnaire Response at III–15; see also Huayuan
Companies July 7, 2011 Questionnaire Response at
I–17.
88 See section 771(5)(D)(iii) of the Act.
89 See section 771(5A) of the Act.
90 See May 19, 2011 Original Questionnaire at II–
7.
91 See GOC July 7, 2011 Questionnaire Response
at 43.
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determination is consistent with Wire
Decking from the PRC, in which the
Department found the provision of zinc
to be specific, based on virtually the
same facts.92
With regard to benefit, the third
required subsidy element, we
preliminarily determine that the
respondents received a benefit to the
extent that the zinc purchased was
provided for LTAR.93 The criteria for
identifying appropriate marketdetermined benchmarks for measuring
whether the government-provided goods
were provided for LTAR are set forth at
19 CFR 351.511(a)(2) and discussed
above in the ‘‘Provision of Wire Rod for
LTAR’’ section.
In the original questionnaire, we
asked the GOC to provide production
figures of zinc by SOEs during 2008,
2009 and 2010. The GOC provided
information regarding government
ownership of zinc producers during
2008 only. The GOC stated that
gathering such information for 2009 and
2010 would ‘‘take months to achieve’’
and, thus, it did not provide these
figures. We note that the only
information relevant to the POI that the
GOC provided were statements to the
effect that exports of zinc were subject
to export licenses and that there is no
‘‘quantitative restriction.’’ 94 Therefore,
the GOC has not provided the necessary
or requested information for the
Department to undertake a complete
analysis, regarding the government’s
role in the market for zinc during the
POI, and it is necessary to resort to the
facts otherwise available pursuant to
section 776(a) of the Act. As facts
become available, we find that the zinc
industry is significantly distorted as a
result of the GOC’s involvement in the
market.95
Consequently, we determine that
there are no appropriate tier one
benchmark prices available for zinc.
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. For purposes of the
preliminary determination, we find that
92 See Wire Decking from the PRC Decision
Memorandum at ‘‘Provision of Zinc for LTAR.’’
93 See section 771(5)(E)(iv) of the Act.
94 See GOC July 7, 2011 Questionnaire Response
at 41.
95 See Wire Decking from the PRC at ‘‘Provision
of Zinc for LTAR.’’ The POI for Wire Decking from
the PRC was 2008. The ownership/production for
zinc which the GOC submitted in the instant case
is consistent with what it submitted in Wire
Decking from the PRC. The Department is unable
to undertake a complete analysis based on
ownership/production information from 2008 and
the GOC’s statements about zinc exports during
2010.
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the data from the World Bank, the
International Monetary Fund (IMF) and
SBB should be used to derive a tier two
world market price for zinc that would
be available to purchasers of zinc in the
PRC.96 We find that, for purposes of the
preliminary determination, prices from
the World Bank, IMF and SBB to be
sufficiently reliable and representative.
All three sources report London Metal
Exchange world market zinc prices.
Such prices would be available to
purchasers in the PRC. We adjusted
these prices to reflect, as closely as
possible, the price that the respondent
firm would pay if it imported the
product, including import duties and
VAT, ocean freight and domestic inland
freight as stipulated in 19 CFR
351.511(a)(2)(iv). Where necessary, we
converted the variables in the
benchmark calculation to the same
currency and unit of measure as
reported by the mandatory respondents
for their purchases of zinc.
Some of the respondents have
reported acquiring zinc from trading
companies or non-producing suppliers
with which they were not cross-owned.
In prior CVD proceedings involving the
PRC, the Department has determined
that when a respondent purchases an
input from a trading company or nonproducing supplier, but the producer of
the input is an ‘‘authority’’ within the
meaning of section 771(5)(B) of the Act,
we must evaluate whether the input has
been provided for LTAR by comparing
the price paid by the respondent to the
trading company to the benchmark
price.97 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 zinc that was
subsequently sold to the respondents
during the POI and to provide
information that would allow the
Department to determine whether those
producers were government authorities.
As stated previously, the Department
has preliminarily determined all zinc
producers to be government authorities.
To determine whether the respondent
producers purchased zinc for LTAR, we
compared the unit prices each
respondent paid for its zinc to our zinc
benchmark price. We conducted our
comparison on a monthly basis. Based
on this comparison, we preliminarily
determine that zinc was provided for
LTAR and that a benefit exists in the
96 See
Preliminary Benchmark Memorandum.
Racks from the PRC Decision
Memorandum at ‘‘Provision of Wire Rod for LTAR’’
section; see also CWASPP from the PRC Decision
Memorandum at ‘‘Provision of SSC for LTAR.’’
97 See
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total amount of the difference between
the benchmark and the price paid.98
To calculate the subsidy rate, we
divided the total benefit to each
respondent by the appropriate
denominator discussed above in the
‘‘Subsidy Valuation Information’’
section, and in the Preliminary
Calculation Memoranda. On this basis,
we calculated a subsidy of 1.68 percent
ad valorem for the Huayuan Companies,
0.08 percent ad valorem for the Bao
Zhang Companies, and 1.68 percent ad
valorem for M&M.
mstockstill on DSK4VPTVN1PROD with NOTICES
3. Provision of Electricity for LTAR
For the reasons explained in the ‘‘Use
of Facts Otherwise Available and
Adverse Inferences’’ section above, we
are basing our determination regarding
the government’s provision of
electricity, in part, on AFA.
In a CVD case, the Department
requires information from both the
government of the country whose
merchandise is under investigation 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. However, where possible, the
Department will 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. The
Huayuan Companies, M&M, and the Bao
Zhang Companies provided data on the
electricity the companies consumed and
the electricity rates paid during the
POI.99
As noted 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 deciding not
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 sections
771(5)(D)(iii) and 771(5A)(D) of the Act.
To determine the existence and amount
98 See section 771(5)(E)(iv) of the Act and 19 CFR
351.511(a).
99 See Bao Zhang Companies August 9, 2011
Supplemental Questionnaire Response at Exhibit
14; see also Huayuan Companies August 9, 2011
Supplemental Questionnaire Response at Exhibit I–
S–10, II–S–7; see also MJH August 17, 2011
Supplemental Questionnaire Response at 2; see also
M&M August 17, 2011 Supplemental Questionnaire
Response at Exhibit 1.
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of any benefit from this program, we
relied on the respondents’ reported
information on the amounts of
electricity used during the POI. We
compared the rates paid by the
respondents for their electricity to the
highest rates that they could have paid
in the PRC during the POI.
To calculate the benchmark, we
selected the highest rates in the PRC for
the type of user (e.g., ‘‘large industrial
users’’) for the general or peak, normal,
and valley ranges, as provided by the
GOC.100 The electricity rate benchmark
chart is included in the Preliminary
Benchmark Memorandum. This
benchmark reflects an adverse
inference, which we have drawn as a
result of the GOC’s failure to act to the
best of its ability in providing requested
information about its provision of
electricity in this investigation.
To measure whether the respondents
received a benefit under this program,
we first calculated the electricity prices
the respondents paid by multiplying the
monthly kilowatt hours or kilovolt
amperes consumed for each price
category (e.g., great industry peak, basic
electricity, etc.) by the corresponding
electricity rates charged for each price
category. Next, we calculated the
benchmark electricity cost by
multiplying the monthly consumption
reported by the respondents for each
price category (e.g., great industry peak,
basic electricity) by the highest
electricity rate charged for each price
category, as reflected in the electricity
rate benchmark chart. To calculate the
benefit for each month, we subtracted
the amount paid by the respondents for
electricity during each month of the POI
from the monthly benchmark electricity
price. We then calculated the total
benefit for each company during the POI
by summing the monthly benefits for
each company.
Certain respondents also reported
receiving electricity adjustments, but
did not provide any explanation for
these adjustments. Absent an
explanation, the Department has no
basis to consider including these
adjustments in our preliminary
calculations. The Department will
request additional information from
respondents regarding these
adjustments and, for the final
determination, will evaluate whether
and how they should be allocated to
electricity consumption.
To calculate the subsidy rate
pertaining to electricity payments made
by the respondents, we divided the
benefit amount by the appropriate total
100 See GOC July 7, 2011 Questionnaire Response
at Exhibit 17.
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55041
sales denominator, as discussed in the
‘‘Subsidy Valuation Information’’
section above, and in the Preliminary
Calculation Memoranda. On this basis,
we preliminarily determine a
countervailable subsidy of 1.04 percent
ad valorem for the Huayuan Companies,
2.37 percent ad valorem for the Bao
Zhang Companies, and 1.04 percent ad
valorem for M&M.
4. Export Grants From Local
Governments
We initiated on a program entitled
‘‘Export Assistance Grants.’’ 101 In their
questionnaire responses, two of the
respondents reported that they had
received export assistance grants from
local governments, and another reported
that it had received grants provided by
the local government to assist in the
development of export markets or to
recognize export performance.
Specifically, the Bao Zhang Companies
reported that ABZ received: 1) an
‘‘Export Award;’’ 2) a ‘‘Foreign Trade
Promotion Award;’’ and 3) financial
assistance for an overseas market survey
visit, all from the local Commerce
Bureau.102 The Huayuan Companies
reported that MJH received
‘‘international market development’’
export assistance grants from the Tianjin
Treasure Bureau prior to and during the
POI.103 M&M also reported receiving
‘‘international market development’’
export assistance grants from the Beijing
Municipal Commission of Commerce
during the POI.104
All three of ABZ’s grants were
reported to have been received for
activities related to exporting. Regarding
MJH’s and M&M’s grants, both reported
that a company that is legally entitled to
export may apply for the international
market development grant for expenses
incurred for visiting overseas clients or
participating in overseas exhibitions.105
Based on information on the record, we
find that these grants constitute a
financial contribution within the
meaning of section 771(5)(D)(i) of the
Act. A benefit is received equal to the
amount of the grants, in accordance
with 19 CFR 351.504(a). Because the
grants were reportedly provided for
promoting exports or were otherwise
export-related, we preliminarily
101 See
Initiation Notice.
Bao Zhang August 19, 2011 Supplemental
Questionnaire Response at I–7.
103 See Huayuan Companies July 7, 2011
Questionnaire Response at IV–III–22–25; see also
Huayuan Companies August 9, 2011 Supplemental
Questionnaire Response at IV–12.
104 See M&M July 7, 2011 Questionnaire Response
at III–23 to III–26.
105 See Huayuan Companies July 7, 2011
Questionnaire Response at IV–III–23; see also M&M
July 7, 2011 Questionnaire Response at III–24.
102 See
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determine that the grants are specific as
export subsidies within the meaning of
section 771(5A)(B) of the Act. We intend
to further investigate these programs
during the remainder of the
investigation.
In accordance with 19 CFR 351.504(c)
and 19 CFR 351.524(b)(2), we have
performed the ‘‘0.5 percent test,’’ for
each year in which a grant was provided
to ABZ, MJH and M&M. Specifically, for
each year in which a grant was received,
we divided the total amount of the
grants received by each company by the
relevant sales values. For those years in
which the total amount of the grants
exceeded 0.5 percent of the relevant
sales in that year, we allocated the
grants over time in accordance with 19
CFR 351.524. Otherwise, they were
expensed in the year of receipt. To
allocate the grants over time, we applied
the calculation methodology set forth in
19 CFR 351.524(d), and used the AUL
and the discount rates described above
in the ‘‘Subsidies Valuation
Information’’ section. To determine each
company’s total benefit, we summed the
amount of the benefits from each of
these grants attributable to the POI.
To calculate the subsidy rate
pertaining to these export grants, we
divided the total benefit amount by the
appropriate export sales denominator,
as discussed in the ‘‘Subsidy Valuation
Information’’ section above, and in the
Preliminary Calculation Memoranda.
On this basis, we preliminarily
determine a countervailable subsidy of
0.15 percent ad valorem for the
Huayuan Companies, 0.09 percent ad
valorem for the Bao Zhang Companies,
and 0.24 percent ad valorem for M&M.
mstockstill on DSK4VPTVN1PROD with NOTICES
5. Exemption From City Construction
Tax and Education Tax for Foreign
Invested Enterprises
The Bao Zhang Companies reported
that ABZ received benefits under the
‘‘Exemption from City Construction Tax
and Education Tax for Foreign Invested
Enterprises (FIEs)’’ program. According
to the Bao Zhang Companies, ABZ
received an exemption from paying the
Urban Maintenance and Construction
Tax and Additional Education Fees
which are based on the VAT payable by
a company every month. The Bao Zhang
Companies stated that ABZ qualified for
this benefit because it is an FIE.
Consistent with our findings in
Aluminum Extrusions from the PRC and
Racks from the PRC, we preliminarily
determine that the exemptions from the
city construction tax and education
surcharge under this program confer a
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countervailable subsidy.106 The tax
exemptions are financial contributions
in the form of revenue forgone by the
government and provide a benefit to the
recipient in the amount of the tax
savings.107 We also preliminarily
determine that the exemptions afforded
by this program are limited as a matter
of law to certain enterprises (i.e. FIEs)
and, hence, are specific under section
771(5A)(D)(i) of the Act. To calculate
the benefit, we treated ABZ’s tax
exemptions as recurring benefits,
consistent with 19 CFR 351.524(c)(1), as
the exemptions are based on the VAT
payable by companies every year.
To compute the amount of the benefit
under these exemptions, we first
determined the rate the companies
would have paid in the absence of the
program. According to the Bao Zhang
Companies, non-FIEs would have to pay
one percent of their VAT payable every
year for the Urban Maintenance and
Construction Tax and three percent of
their VAT payable every year for
Additional Education Fees.108
Therefore, we preliminarily determine
that, absent these exemptions, ABZ
should have paid four percent of its
VAT payable for these taxes. Next, we
compared the amount the companies
would have paid in the absence of the
program (four percent of VAT payable
during the POI) with the rate the
companies paid (zero), because they are
FIEs.
To calculate the subsidy rate, we
divided the sum of all tax savings,
during the POI, by the appropriate sales
denominator as discussed above in the
‘‘Subsidy Valuation Information’’
section and the Preliminary Calculation
Memoranda. On this basis, we
preliminarily determine the
countervailable subsidy to be 0.01
percent ad valorem for the Bao Zhang
Companies.
According to the GOC, this program
was terminated effective December 1,
2010.109 While there is sufficient
evidence on the record demonstrating
that a countervailable subsidy was
conferred during the POI, we are unable
to determine whether a program-wide
change, in accordance with 19 CFR
351.526, with respect to this program
has occurred. Specifically, the GOC has
106 See Aluminum Extrusions from the PRC
Decision Memorandum at ‘‘Exemption from City
Construction Tax and Education Tax for FIEs;’’ see
also Racks from the PRC Decision Memorandum at
‘‘Exemption from City Construction Tax and
Education Tax for FIEs in Guangdong Province.’’
107 See section 771(5)(D)(ii) of the Act and 19 CFR
351.509(a)(1).
108 See Bao Zhang Companies August 9, 2011
Supplemental Questionnaire Response at I–17–18.
109 See GOC July 7, 2011 Questionnaire Response
at 74.
PO 00000
Frm 00045
Fmt 4703
Sfmt 4703
not provided information clarifying
whether a substitute program has been
established to replace this program in
accordance with 19 CFR 351.526(d)(2).
Therefore, we will request from the GOC
additional information necessary to
determine whether this program has
been terminated. If we find that this
program was terminated in accordance
with the provisions of 19 CFR
351.526(d), we will adjust the cash
deposit rate accordingly for the final
determination.
Program Preliminarily Determined Not
To Confer a Countervailable Benefit
During the POI
Export Subsidies 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.’’ 110 To
determine whether the GOC provided a
benefit under this program, we
compared the VAT rebate upon export
to the VAT levied with respect to the
production and distribution of like
products when sold for domestic
consumption. The GOC reported that,
during the POI, the VAT levied on both
wire rod and zinc sales in the domestic
market was 17 percent and that the VAT
exemption upon the export of
galvanized wire was nine percent.111
Therefore, we find that the VAT
exempted upon the export of galvanized
wire did not confer a countervailable
benefit during the POI because the
amount of the VAT rebated on export is
lower than the amount paid in the
domestic market.
Programs Preliminarily Determined To
Be Not Used By Respondents 112
We preliminarily determine that the
participating respondents did not apply
for or receive any benefits during the
POI under the following programs:
1. Provision of Land Use Rights for
LTAR within the Jinzhou District within
the City of Dalian.
2. Provision of Land Use Rights for
LTAR to Enterprises within the
Zhaoqing High-Tech Industry
Development Zone in Guangdong
Province.
110 See 19 CFR 351.517(a); see also 19 CFR
351.102(a)(28).
111 See, e.g., GOC August 22, 2011 Supplemental
Questionnaire Response at I–22.
112 In this section we refer to programs
preliminarily determined to be not used by the
three participating respondent companies.
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Federal Register / Vol. 76, No. 172 / Tuesday, September 6, 2011 / Notices
3. Provision of Land Use Rights for
LTAR to Enterprises within the South
Sanshui Science and Technology
Industrial Park of Foshan City.
4. Income Tax Credits for
Domestically-Owned Companies
Purchasing Domestically-Produced
Equipment.
5. Income Tax Exemption for
Investment in Domestic Technological
Renovation.
6. Accelerated Depreciation for
Enterprises Located in the Northeast
Region.
7. Forgiveness of Tax Arrears for
Enterprises in the Old Industrial Bases
of Northeast China.
8. Income Tax Exemption for
Investors in Designated Geographical
Regions within Liaoning Province.
9. VAT Deduction on Fixed Assets.
10. Import Tariff and VAT
Exemptions for FIEs and Certain
Domestic Enterprises Using Imported
Equipment in Encouraged Industries.
11. Reduction in or Exemption from
Fixed Assets Investment Orientation
Regulatory Tax.
12. ‘‘Five Points, One Line’’ Program
of Liaoning Province.
13. Provincial Export Interest
Subsidies.
14. State Key Technology Project
Fund.
15. Subsidies for Development of
Famous Export Brands and China World
Top Brands.
16. Sub-Central Government Programs
to Promote Famous Export Brands and
China World Top Brands.
17. Zhejiang Province Program to
Rebate Antidumping Legal Fees.
18. Technology to Improve Trade
Research and Development Fund of
Jiangsu Province.
19. Outstanding Growth Private
Enterprise and Small and MediumSized Enterprises Development in
Jiangyin Fund of Jiangyin City.
20. Grants for Programs Under the
2007 Science and Technology
Development Plan in Shandong
Province.
21. Special Funds for Encouraging
Foreign Economic and Trade
Development and for Drawing
Significant Foreign Investment Projects
in Shandong Province.
22. ‘‘Two Free, Three Half’’ Tax
Exemptions for ‘‘Productive’’ FIEs.
23. Income Tax Exemption Program
for Export-Oriented FIEs.
24. Local Income Tax Exemption and
Reduction Programs for ‘‘Productive’’
FIEs.
113 See
Initiation Notice, 76 FR at 23567.
Bao Zhang Companies July 7, 2011
Questionnaire Response at III–10.
114 See
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25. Preferential Tax Programs for FIEs
Recognized as High or New Technology
Enterprises.
26. Income Tax Subsidies for FIEs
Based on Geographic Location.
27. VAT Refunds for FIEs Purchasing
Domestically-Produced Equipment.
28. Income Tax Credits for FIEs
Purchasing Domestically-Produced
Equipment.
Programs for Which Additional
Information Is Needed
The Department finds that additional
information is needed in order to
determine whether the following
programs are countervailable. After
gathering and analyzing the additional
information, the Department intends to
issue a post-preliminary analysis
regarding whether these programs are
countervailable.
1. Policy Loans to the Galvanized Wire
Industry
The Department initiated on five
‘‘preferential loans and interest rates’’
programs: (1) Policy Loans to the
Galvanized Steel Wire Industry; (2)
Preferential Loans for Key Projects and
Technologies; (3) Preferential Loans and
Directed Credit; (4) Preferential Lending
to galvanized wire Producers and
Exporters Classified as ‘‘Honorable
Enterprises;’’ and (5) Loans and Interest
Subsidies Provided Pursuant to the
Northeast Revitalization Program.113
Only the Bao Zhang Companies
reported outstanding loans from banks
during the POI. The Bao Zhang
Companies reported that SBZ received
loans from banks that were outstanding
during the POI, but that neither of these
banks are state-owned commercial
banks.114 In the supplemental
questionnaire, we requested that the
GOC provide information regarding the
ownership of these two banks. In its
August 22, 2011 supplemental
questionnaire response, the GOC states
that, for one of the banks, state
ownership accounted for less than one
percent of the total shares of the bank.
For the other bank, the GOC states that
a ‘‘state-owned legal person’’ accounted
for over 70 percent of the ownership of
the bank during the POI.115 Because the
fact that these loans may be from
government-owned or controlled banks
was provided only in the August 22,
2011 supplemental questionnaire
response, the Department has not had
sufficient time to request additional
information about the nature of these
loans nor to assess whether these loans
115 See GOC August 22, 2011 Supplemental
Questionnaire Response at I–3.
PO 00000
Frm 00046
Fmt 4703
Sfmt 4703
55043
are countervailable. Therefore, the
Department needs additional
information to determine whether the
loans received by SBZ constitute a
countervailable subsidy.
2. Zhabei District ‘‘Save Energy Reduce
Emission Team’’ Award
In response to questions in our
supplemental questionnaires to the
respondent companies regarding income
items listed in their financial
statements, the Bao Zhang Companies
reported, in their August 19, 2011
supplemental questionnaire response,
that SBZ received a ‘‘Save Energy
Reduce Emission Team’’ award in
2010.116 The Bao Zhang Companies
stated that the financial award was
given by the Zhabei District to SBZ for
successfully renovating its coal burning
oven into a vacant (vacuum) oven,
saving energy and reducing
emissions.117 This information was
provided too late for the Department to
issue questions to both the GOC and the
Bao Zhang Companies concerning this
program. As such, we are unable to
reach a preliminary determination
regarding the countervailability of this
program for the preliminary
determination.
Verification
In accordance with section 782(i)(1) of
the Act, the Department will verify the
information submitted by the Huayuan
Companies, M&M, the Bao Zhang
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 an individual rate for subject
merchandise produced and exported by
the entities individually investigated.
We have also calculated an all-others
rate. 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.
However, the all-others rate may not
include zero and de minimis rates or
any rates based solely on the facts
available. In this investigation, the three
calculated rates can be used to calculate
the all-others rate. Therefore, we have
assigned the weighted-average of these
three calculated rates as the all-others
rate. We preliminarily determine the
116 See Bao Zhang Companies August 19, 2011
Supplemental Questionnaire Response at I–10.
117 See id.
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Federal Register / Vol. 76, No. 172 / Tuesday, September 6, 2011 / Notices
total estimated countervailable subsidy
rates to be:
Company
Subsidy rate
Tianjin Huayuan Metal Wire Products Co., Ltd.; Tianjin Tianxin Metal Products Co., Ltd.; and Tianjin Mei Jia
Hua Trade Co., Ltd. (collectively, the Huayuan Companies).
M&M Industries Co., Ltd. .......................................................................................................................................
Shanghai Bao Zhang Industry Co., Ltd.; Anhui Bao Zhang Metal Products Co., Ltd.; and Shanghai Li Chao
Industry Co., Ltd. (collectively, the Bao Zhang Companies).
Shandong Hualing Hardware and Tool Co., Ltd. ..................................................................................................
All Others Rate ......................................................................................................................................................
In accordance with sections
703(d)(1)(B) and (2) of the Act, we are
directing CBP to suspend liquidation of
all 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.
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.
mstockstill on DSK4VPTVN1PROD with NOTICES
Disclosure and Public Comment
In accordance with 19 CFR
351.224(b), we will disclose to the
parties the calculations for this
preliminary determination within five
days of its announcement. We will
notify parties of the schedule for
submitting case briefs and rebuttal
briefs, in accordance with 19 CFR
351.309(c) and 19 CFR 351.309(d)(1),
respectively. 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. Section 774 of the
Act provides that the Department will
hold a public hearing to afford
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18:00 Sep 02, 2011
Jkt 223001
interested parties an opportunity to
comment on arguments raised in case or
rebuttal briefs, provided that such a
hearing is requested by an interested
party. If a request for a hearing is made
in this investigation, we intend to hold
the hearing two days after the deadline
for submission of the rebuttal briefs,
pursuant to 19 CFR 351.310(d). Any
such hearing will be held at the U.S.
Department of Commerce, 14th Street
and Constitution Avenue, NW.,
Washington, DC 20230. Parties should
confirm, by telephone, the date, time,
and place of the hearing 48 hours before
the scheduled time.
Interested parties who wish to request
a hearing, or to participate if one is
requested, must submit a written
request to the Assistant Secretary for
Import Administration, U.S. Department
of Commerce, Room 1870, within 30
days of the publication of this notice,
pursuant to 19 CFR 351.310(c). Requests
should contain: (1) The party’s name,
address, and telephone number; (2) the
number of participants; and (3) a list of
the issues to be discussed. Oral
presentations will be limited to issues
raised in the briefs.
This determination is issued and
published pursuant to sections 703(f)
and 777(i) of the Act.
Dated: August 29, 2011.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import
Administration.
[FR Doc. 2011–22715 Filed 9–2–11; 8:45 am]
BILLING CODE 3510–DS–P
PO 00000
48.81 percent ad valorem.
48.90 percent ad valorem.
21.59 percent ad valorem.
253.07 percent ad valorem.
44.46 percent ad valorem.
DEPARTMENT OF COMMERCE
International Trade Administration
[C–580–866]
Bottom Mount Combination
Refrigerator-Freezers From the
Republic of Korea: Preliminary
Negative Countervailing Duty
Determination and Alignment of Final
Determination With Final Antidumping
Determination
Import Administration,
International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce
(the Department) preliminarily
determines that countervailable
subsidies are not being provided to
producers and exporters of bottom
mount combination refrigerator-freezers
(bottom mount refrigerators) from the
Republic of Korea (Korea).
DATES: Effective Date: September 6,
2011.
FOR FURTHER INFORMATION CONTACT:
Justin M. Neuman or Myrna L. Lobo,
AD/CVD Operations, Office 6, Import
Administration, International Trade
Administration, U.S. Department of
Commerce, 14th Street and Constitution
Avenue, NW., Washington, DC 20230;
telephone: (202) 482–0486 and (202)
482–2371, respectively.
SUPPLEMENTARY INFORMATION:
AGENCY:
Case History
On April 19, 2011, the Department
initiated a countervailing duty (CVD)
investigation of bottom mount
refrigerators from Korea.1 In the
Initiation Notice, the Department set
aside a period for all interested parties
to raise issues regarding product
coverage. The comments we received
are discussed in the ‘‘Scope Comments’’
section below.
In the Initiation Notice, the
Department identified Samsung
1 See Bottom Mount Combination RefrigeratorFreezers From the Republic of Korea: Initiation of
Countervailing Duty Investigation, 76 FR 23298
(April 26, 2011) (Initiation Notice). The petitioner
in this investigation is Whirlpool Corporation.
Frm 00047
Fmt 4703
Sfmt 4703
E:\FR\FM\06SEN1.SGM
06SEN1
]]>Agencies
[Federal Register Volume 76, Number 172 (Tuesday, September 6, 2011)]
[Notices]
[Pages 55031-55044]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-22715]
[[Page 55031]]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-570-976]
Galvanized Steel Wire From the People's Republic of China:
Preliminary Affirmative Countervailing Duty Determination and Alignment
of Final Determination With Final Antidumping 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 galvanized steel wire (galvanized wire) from
the People's Republic of China (PRC). For information on the estimated
subsidy rates, see the ``Suspension of Liquidation'' section of this
notice.
DATES: Effective Date: September 6, 2011.
FOR FURTHER INFORMATION CONTACT: Nicholas Czajkowski or David Lindgren,
AD/CVD Operations, Office 6, Import Administration, U.S. Department of
Commerce, Room 7866, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230; telephone: 202-482-1395 or 202-482-3870,
respectively.
SUPPLEMENTARY INFORMATION:
Case History
On March 31, 2011, the Department received a countervailing duty
(CVD) petition, filed in proper form, concerning imports of galvanized
wire from the PRC.\1\ The Department initiated a CVD investigation on
April 20, 2011.\2\
---------------------------------------------------------------------------
\1\ The petitioners are Davis Wire Corporation, Johnstown Wire
Technologies, Inc., Mid-South Wire Company, Inc., National Standard,
LLC, and Oklahoma Steel & Wire Company, Inc. (Petitioners).
\2\ See Galvanized Steel Wire From the People's Republic of
China: Initiation of Countervailing Duty Investigation, 76 FR 23564
(April 27, 2011) (Initiation Notice), and accompanying Initiation
Checklist. Public documents and public versions of proprietary
Departmental memoranda referenced in this notice are on file in the
Central Records Unit (CRU), Room 7046 in the main building of the
Commerce Department.
---------------------------------------------------------------------------
As stated in the Initiation Notice, the Department released U.S.
Customs and Border Protection (CBP) entry data for U.S. imports of
galvanized wire from the PRC between January 1, 2010, and December 31,
2010, to be used as the basis for respondent selection.\3\ The CBP
entry data covered products included in this investigation which
entered under Harmonized Tariff Schedule of the United States (HTSUS)
numbers: 7217.20.3000; 7217.20.4510; 7217.20.4520; 7217.20.4530;
7217.20.4540; 7217.20.4550; 7217.20.4560; 7217.20.4570; and
7217.20.4580. In the Entry Data Memorandum, the Department noted that
the scope also indicated that subject merchandise might also enter
under HTSUS numbers: 7229.20.0015; 7229.90.5008; 7229.90.5016;
7229.90.5031; and 7229.90.5051. Parties were given seven days from the
publication of the Initiation Notice to submit comments on the CBP data
and respondent selection.
---------------------------------------------------------------------------
\3\ See Memorandum regarding ``Countervailing Duty Investigation
of Galvanized Steel Wire from the People's Republic of China: Entry
Data'' (Entry Data Memorandum), dated April 21, 2011.
---------------------------------------------------------------------------
On May 3, 2011, Shanghai Bao Zhang Industry Co. Ltd. (SBZ)
requested to be selected as a mandatory respondent in the CVD
investigation.\4\ Alternatively, SBZ requested that, if it were not
selected as a mandatory respondent, the Department consider it as a
voluntary respondent should a mandatory respondent fail to participate.
Additionally, on May 4, 2011, SBZ, Anhui Bao Zhang Metal Products Co.,
Ltd. (ABZ) and B&Z Galvanized Wire Industry filed comments on
respondent selection, arguing that the Department should treat all Bao
Zhang companies as a single entity for respondent selection and should
ensure that trading companies are not selected as mandatory
respondents.\5\ On May 18, 2011, the Department completed its
respondent selection analysis. Specifically, the Department selected
the following companies, in alphabetical order, as mandatory
respondents in this CVD investigation: M&M Industries Co. Ltd. (M&M);
Shandong Hualing Hardware and Tool Co., Ltd. (Shandong Hualing); and
Tianjin Huayuan Metal Wire Products Co., Ltd. (HYW).\6\ These companies
accounted for the largest volume of exports of merchandise under
consideration to the United States that the Department determined could
be reasonably examined. The Department issued a CVD questionnaire to
the Government of the PRC (GOC) and the mandatory respondents on May
19, 2011. Responses to this questionnaire were originally due on June
27, 2011.
---------------------------------------------------------------------------
\4\ See Letter from SBZ to the Department, ``Antidumping Duty
Investigation of Galvanized Wire from the People's Republic of
China: Request for Mandatory Status or Alternatively for Voluntary
Status,'' dated May 3, 2011.
\5\ See Letter from SBZ, et al. to the Department, ``Comments on
Respondent Selection: Investigation of the Galvanized Steel Wire
from the People's Republic of China,'' dated May 4, 2011.
\6\ See Memorandum to Christian Marsh, Deputy Assistant
Secretary for Antidumping and Countervailing Duty Operations, from
Mark Hoadley, Program Manager, Office 6, ``Galvanized Steel Wire
from the People's Republic of China Countervailing Duty
Investigation: Respondent Selection,'' dated May 18, 2011.
---------------------------------------------------------------------------
On June 27, 2011, SBZ and its reported cross-owned affiliates (ABZ)
and Shanghai Li Chao Industry Co., Ltd. (Li Chao) (collectively, the
Bao Zhang Companies) submitted a questionnaire response.\7\ The
questionnaire response provided information that the Bao Zhang
Companies were involved in the production and exportation of subject
merchandise during the period of investigation (POI).
---------------------------------------------------------------------------
\7\ Bao Zhang Companies June 27, 2011 Questionnaire Response. As
discussed in more detail in the ``Cross-Ownership'' section below,
we preliminarily determine that these three companies are cross-
owned.
---------------------------------------------------------------------------
The GOC, HYW and M&M submitted requests on June 20, 2011, June 22,
2011, and June 24, 2011, respectively, for extensions to the deadline
for their questionnaire responses. The Department extended the deadline
for submission of these responses until July 5, 2011. On June 29, 2011,
the GOC requested a second extension to the deadline for filing its
questionnaire response. On July 1, 2011, HYW and M&M also requested a
second extension to the deadline for filing questionnaire responses.
The Department extended the deadline for submission of the
questionnaire responses, a second time, until July 7, 2011. On July 7,
2011, questionnaire responses were filed by the GOC, HYW,\8\ and
M&M.\9\ On July 7, 2011, the GOC requested an extension for submitting
ownership information related to the producers from which the Huayuan
Companies and the Bao Zhang Companies purchased wire rod and zinc
inputs. On July 14, 2011, the Department granted the GOC an extension
until July 19, 2011. On July 19, 2011, the GOC filed additional
information pertaining to the ownership of some producers of wire rod
inputs purchased by the respondents.\10\
---------------------------------------------------------------------------
\8\ HYW filed its responses as Attachment 1 and then included
responses for its reported cross-owned affiliates Tianjin Tianxin
Metal Products Co., Ltd. (Tianxin) as Attachment 2, Tianjin Huayuan
Times Metal Products Co., Ltd. (Times) as Attachment 3 and Tianjin
Mei Jia Hua Trade Co., Ltd. (MJH) as Attachment 4. As discussed in
more detail in the ``Cross-Ownership'' section below, we
preliminarily determine that HYW, Tianxin and MJH (collectively, the
Huayuan Companies), are cross-owned. We also preliminarily determine
that Times is not cross-owned with the Huayuan Companies.
\9\ GOC July 7, 2011 Questionnaire Response; Huayuan Companies
July 7, 2011 Questionnaire Response; and M&M July 7, 2011
Questionnaire Response.
\10\ See Letter from the GOC to the Department, ``Countervailing
Duty Investigation of Galvanized Steel Wire from the People's
Republic of China, Inv. No. C-570-976; Questionnaire Response,''
dated July 19, 2011.
---------------------------------------------------------------------------
[[Page 55032]]
Shandong Hualing, one of the mandatory respondents, did not submit
a questionnaire response by the original June 27, 2011 deadline, nor
did it request an extension to file its questionnaire response. In
fact, the GOC, in its questionnaire response, stated that Shandong
Hualing informed the GOC that the company did not plan to cooperate
with the Department's investigation.\11\ Because Shandong Hualing chose
not to participate in this investigation, on July 22, 2011, the
Department selected SBZ as an additional mandatory respondent in this
investigation.\12\ On June 8, 2011, the Department postponed the
deadline for the preliminary determination until August 29, 2011.\13\
---------------------------------------------------------------------------
\11\ See GOC July 7, 2011 Questionnaire Response at 1.
\12\ See Memorandum to Christian Marsh, Deputy Assistant
Secretary for Antidumping and Countervailing Duty Operations, from
Barbara E. Tillman, Director, Antidumping and Countervailing Duty
Operations, Office 6, ``Countervailing Duty Investigation of
Galvanized Steel Wire from the People's Republic of China: Selection
of an Additional Mandatory Respondent,'' dated July 22, 2011.
\13\ See Galvanized Steel Wire From the People's Republic of
China: Postponement of Preliminary Determination in the
Countervailing Duty Investigation, 76 FR 33242 (June 8, 2011).
---------------------------------------------------------------------------
On July 26, 2011, the Department issued supplemental questionnaires
to the Huayuan Companies, M&M and the Bao Zhang Companies. On July 28,
2011, the Department also issued a supplemental questionnaire to the
GOC. The Bao Zhang Companies submitted an extension request on August
1, 2011, and the GOC, the Huayuan Companies and M&M submitted extension
requests on August 2, 2011.
On August 4, 2011, Department officials met with counsel for the
GOC and the Huayuan Companies, regarding the Department's July 26, 2011
supplemental questionnaire issued to the Huayuan Companies.\14\ The GOC
and the Huayuan Companies expressed concern about the potential burden
of obtaining information from trading companies that are the Huayuan
Companies' customers. The Department noted the language in the
questionnaire regarding trading companies and indicated that when a
company is aware that its sales to trading companies were exported to
the United States, it should provide the information requested in the
questionnaire for exports of subject merchandise to the United States.
---------------------------------------------------------------------------
\14\ See Memorandum regarding ``Ex-Parte Meeting with Counsel
for the Government of China and for Tianjin Huayuan Wire Metal
Products Co., Ltd.: Countervailing Duty Investigation of Galvanized
Steel Wire from the People's Republic of China,'' dated August 5,
2011.
---------------------------------------------------------------------------
On August 4, 2011, the Department extended the deadline for
submission of the supplemental questionnaire responses, granting the
Huayuan Companies, M&M, and the Bao Zhang Companies an extension for
part of their questionnaire response until August 9, 2011, with the
remainder due on August 19, 2011. On August 5, 2011, the Department
also extended the deadline for the GOC's response, with one portion due
on August 11, 2011, and the remainder due on August 22, 2011. The
Huayuan Companies, M&M, and the Bao Zhang Companies each filed their
supplemental questionnaire responses on August 9, 2011, and August 19,
2011.\15\
---------------------------------------------------------------------------
\15\ Bao Zhang Companies August 9, 2011 Supplemental
Questionnaire Response; Huayuan Companies August 9, 2011
Supplemental Questionnaire Response; M&M August 9, 2011 Supplemental
Questionnaire Response; Bao Zhang Companies August 19, 2011
Supplemental Questionnaire Response; HYW August 19, 2011
Supplemental Questionnaire Response; Tianxin August 19, 2011
Supplemental Questionnaire Response; Times August 19, 2011
Supplemental Questionnaire Response; MJH August 19, 2011
Supplemental Questionnaire Response; and M&M August 19, 2011
Supplemental Questionnaire Response.
---------------------------------------------------------------------------
The GOC filed its supplemental questionnaire response on August 11,
2011, and August 22, 2011.\16\ On August 12, 2011, the Department
issued a second supplemental questionnaire to the Huayuan Companies and
M&M. The Huayuan Companies and M&M filed responses to these second
supplemental questionnaires on August 17, 2011.\17\ Finally, on August
25, 2011, the Petitioners filed pre-preliminary determination
comments.\18\
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\16\ GOC August 11, 2011 Supplemental Questionnaire Response and
GOC August 22, 2011 Supplemental Questionnaire Response.
\17\ MJH August 17, 2011 Supplemental Questionnaire Response and
M&M August 17, 2011 Supplemental Questionnaire Response.
\18\ See Letter from Petitioners to the Department,
``Countervailing Duty Investigation of Galvanized Steel Wire from
the People 's Republic of China: Petitioners' Pre-Preliminary
Determination Comments,'' dated August 25, 2011.
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Alignment of Final CVD Determination With Final Antidumping Duty
Determination
In addition to the CVD investigation on galvanized wire, the
Department also initiated antidumping duty (AD) investigations of
galvanized wire from the PRC and Mexico.\19\ The CVD and AD
investigations have the same scope with regard to the merchandise
covered.
---------------------------------------------------------------------------
\19\ See Galvanized Steel Wire From the People's Republic of
China and Mexico: Initiation of Antidumping Duty Investigations, 76
FR 23548 (April 27, 2011).
---------------------------------------------------------------------------
On August 19, 2011, Petitioners submitted a letter, in accordance
with section 705(a)(1) of the Tariff Act of 1930, as amended (the Act),
requesting alignment of the final CVD determination with the final AD
determination of galvanized wire from the PRC.\20\ Therefore, in
accordance with section 705(a)(1) of the Act and 19 CFR 351.210(b)(4),
we are aligning the final CVD determination with the final AD
determination. Consequently, the final CVD determination will be issued
on the same date as the final AD determination, which is currently
scheduled to be issued no later than January 10, 2012, unless
postponed.
---------------------------------------------------------------------------
\20\ See Letter from Petitioners to the Department
``Countervailing Duty Investigation of Galvanized Steel Wire from
the People's Republic of China-- Request to Align Final
Determination with Antidumping Investigation,'' dated August 19,
2011.
---------------------------------------------------------------------------
Scope of the Investigation
The scope of the investigation covers galvanized steel wire which
is a cold-drawn carbon quality steel product in coils, of solid,
circular cross section with an actual diameter of 0.5842 mm (0.0230
inch) or more, plated or coated with zinc (whether by hot-dipping or
electroplating).
Steel products to be included in the scope of the investigation,
regardless of Harmonized Tariff Schedule of the United States
(``HTSUS'') definitions, are products in which: (1) Iron predominates,
by weight, over each of the other contained elements; (2) the carbon
content is two percent or less, by weight; and (3) none of the elements
listed below exceeds the quantity, by weight, respectively indicated:
1.80 percent of manganese, or
1.50 percent of silicon, or
1.00 percent of copper, or
0.50 percent of aluminum, or
1.25 percent of chromium, or
0.30 percent of cobalt, or
0.40 percent of lead, or
1.25 percent of nickel, or
0.30 percent of tungsten, or
0.02 percent of boron, or
0.10 percent of molybdenum, or
0.10 percent of niobium, or
0.41 percent of titanium, or
0.15 percent of vanadium, or
0.15 percent of zirconium.
The products subject to the investigation are currently classified in
subheadings 7217.20.30 and 7217.20.45 of the HTSUS which cover
galvanized wire of all diameters and all carbon content. Galvanized
wire is reported under statistical reporting numbers 7217.20.3000,
7217.20.4510, 7217.20.4520, 7217.20.4530, 7217.20.4540, 7217.20.4550,
7217.20.4560, 7217.20.4570, and 7217.20.4580. These products may also
enter under HTSUS subheadings 7229.20.0015, 7229.90.5008, 7229.90.5016,
7229.90.5031, and
[[Page 55033]]
7229.90.5051. Although the HTSUS subheadings are provided for
convenience and customs purposes, the written description of the
merchandise is dispositive.
Scope Comments
In accordance with the preamble to the Department's regulations, we
set aside a period of time in our Initiation Notice for parties to
raise issues regarding product coverage, and encouraged all parties to
submit comments within 20 calendar days of publication of that
notice.\21\ Between May 5, 2011, and May 19, 2011, we received numerous
comments concerning the scope of the AD investigations of galvanized
wire from the PRC and Mexico and the CVD investigation of galvanized
wire from the PRC.
---------------------------------------------------------------------------
\21\ See Antidumping Duties; Countervailing Duties, 62 FR 27296,
27323 (May 19, 1997); see also Initiation Notice, 75 FR at 70719.
---------------------------------------------------------------------------
Because of the timing of the scope comments and Petitioners'
response to the comments, we did not have time to analyze the issues
raised by parties prior to this preliminary determination. The
Department is currently evaluating these scope comments, and will issue
its decision regarding the scope of the investigation no later than the
date of the preliminary determination in the companion AD
investigation. That decision will be placed on the record of this CVD
investigation, and all parties will have the opportunity to comment.
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 May 20, 2011, the ITC published
its preliminary determination finding that there is a reasonable
indication that an industry in the United States is materially injured
by reason of imports of galvanized wire from the PRC.\22\
---------------------------------------------------------------------------
\22\ See Galvanized Steel Wire From China and Mexico, 76 FR
29266 (May 20, 2011).
---------------------------------------------------------------------------
Application of the Countervailing Duty Law to Imports From the PRC
On October 25, 2007, the Department published its final
determination on coated free sheet paper from the PRC.\23\ In CFS from
the PRC, the Department found that
\23\ See 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).
* * * given the substantial differences 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 bar to proceeding with a CVD
---------------------------------------------------------------------------
investigation involving products from China. \24\
\24\ See CFS from the PRC Decision Memorandum at Comment 6.
---------------------------------------------------------------------------
The Department has affirmed its decision to apply the CVD law to the
PRC in subsequent final determinations.\25\
---------------------------------------------------------------------------
\25\ 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), and accompanying Issues
and Decision Memorandum (CWP from the PRC Decision Memorandum) at
Comment 1.
Additionally, for the reasons stated in the CWP from the PRC
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 investigation.\26\
---------------------------------------------------------------------------
\26\ See CWP from the PRC Decision Memorandum at Comment 2.
---------------------------------------------------------------------------
Period of Investigation
The POI for which we are measuring subsidies is January 1, 2010,
through December 31, 2010.\27\
---------------------------------------------------------------------------
\27\ See 19 CFR 351.204(b)(2).
---------------------------------------------------------------------------
Use of Facts Otherwise Available and Adverse Inferences
Sections 776(a)(1) and (2) of the Act provide that the Department
shall apply ``facts otherwise available'' if, inter alia, 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. For purposes of this
preliminary determination, we find it necessary to apply adverse facts
available (AFA) in the following circumstances.
Application of AFA: Non-Cooperative Respondent
As explained above in the ``Case History'' section, the Department
selected Shandong Hualing as a mandatory respondent. As a result of
Shandong Hualing's failure to submit responses to the Department's
initial questionnaire, we find the company to be a non-cooperative,
mandatory respondent. By not responding to the Department's initial
questionnaire, Shandong Hualing withheld requested information and
significantly impeded this proceeding. Thus, in reaching our
preliminary determination, pursuant to sections 776(a)(1), (2)(A) and
(C) of the Act, we are basing the CVD rate for Shandong Hualing on
facts otherwise available.
We further preliminarily determine that an adverse inference is
warranted, pursuant to section 776(b) of the Act. By failing to submit
a response to the Department's initial questionnaire, Shandong Hualing
did not cooperate to the best of its ability in this investigation.
Accordingly, we preliminarily find that AFA is warranted to ensure that
the company does not obtain a more favorable result than had it fully
complied with our request for information.
In deciding which facts to use as AFA, section 776(b) of the Act
and 19 CFR 351.308(c)(1) and (2) authorize the Department to rely on
information derived from: (1) The petition; (2) a final determination
in the investigation; (3) any previous review or determination; or (4)
any other information placed on the record. The Department's practice
when selecting an adverse rate from among the possible sources of
information is to ensure that the rate 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.'' \28\ 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.'' \29\
---------------------------------------------------------------------------
\28\ See, e.g., 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).
\29\ See Statement of Administrative Action accompanying the
Uruguay Round Agreements Act, H.R. Rep. No. 103-316, Vol. I, at 870
(1994), reprinted at 1994 U.S.C.C.A.N. 4040, 4199.
---------------------------------------------------------------------------
It is the Department's practice in CVD proceedings to select, as
AFA, the highest calculated rate in any segment
[[Page 55034]]
of the proceeding.\30\ In previous CVD investigations of products from
the PRC, we adapted the practice to use the highest rate calculated for
the same or similar program in the instant proceeding or, if not
available, in other PRC CVD proceedings.\31\ Thus, under this practice,
for investigations involving the PRC, the Department computes the total
AFA rate for non-cooperating companies generally using program-specific
rates calculated for the cooperating respondents in the instant
investigation or calculated in prior PRC CVD cases. Specifically, for
programs other than those involving income tax exemptions and
reductions, the Department applies the highest calculated rate for the
identical program in the investigation if a responding company used the
identical program, and the rate is not zero. If there is no identical
program match within the investigation, the Department uses the highest
non-de minimis rate calculated for the same or similar program (based
on treatment of the benefit) in another PRC CVD proceeding. Absent an
above-de minimis subsidy rate calculated for the same or similar
program, the Department applies the highest calculated subsidy rate for
any program otherwise listed that could conceivably be used by the non-
cooperating companies.\32\
---------------------------------------------------------------------------
\30\ See, e.g., 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 at ``Selection of the Adverse Facts
Available''; see also Aluminum Extrusions From the People's Republic
of China: Final Affirmative Countervailing Duty Determination, 76 FR
18521 (April 4, 2011) (Aluminum Extrusions From the PRC), and
accompanying Issues and Decision Memorandum (Aluminum Extrusions
from the PRC Decision Memorandum) at ``Application of Adverse
Inferences: Non-Cooperative Companies.''
\31\ See supra, note 28; see also LWS From the PRC; see also
Certain Tow-Behind Lawn Groomers and Certain Parts Thereof From the
People's Republic of China: Preliminary Affirmative Countervailing
Duty Determination and Alignment of Final Countervailing Duty
Determination With Final Antidumping Duty Determination, 73 FR
70971, 70975 (November 24, 2008) (unchanged in the Certain Tow-
Behind Lawn Groomers and Certain Parts Thereof From the People's
Republic of China: Final Affirmative Countervailing Duty
Determination, 74 FR 29180 (June 19, 2009), and accompanying Issues
and Decision Memorandum at ``Application of Facts Available,
Including the Application of Adverse Inferences'').
\32\ See Aluminum Extrusions from the PRC Decision Memorandum at
``Application of Adverse Inferences: Non-Cooperative Companies'';
see also, e.g., 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 from the PRC Decision Memorandum) at
``Selection of the Adverse Facts Available Rate.''
---------------------------------------------------------------------------
On this basis, we preliminarily determine the AFA subsidy rate for
Shandong Hualing to be 253.07 percent ad valorem. For a detailed
discussion of the AFA rates selected for each program under
investigation, see Application of Adverse Facts Memorandum.\33\
---------------------------------------------------------------------------
\33\ See Memorandum regarding, ``Application of Adverse Facts
Available Rates for Preliminary Determination,'' dated August 29,
2011 (Application of Adverse Facts Memorandum).
---------------------------------------------------------------------------
Application of AFA: Finding Wire Rod and Zinc Input Producers To Be
Government Authorities Under the Provision of Wire Rod and Zinc for
Less Than Adequate Remuneration Program
The Department is investigating the alleged provision of wire rod
and zinc for less than adequate remuneration (LTAR) by the GOC. We
requested information from the GOC regarding the specific companies
that produced these input products that the Huayuan Companies and the
Bao Zhang Companies purchased during the POI.
With respect to the specific companies that produced the input
products purchased by the Huayuan Companies and the Bao Zhang
Companies, we were seeking information that would allow us to determine
whether the producers are ``authorities'' within the meaning of section
771(5)(B) of the Act. In our original and supplemental questionnaires,
we requested detailed information from the GOC that would be needed for
this analysis. We informed the GOC that, if it disputed that producers
that are majority-owned by the government are ``authorities,'' the GOC
needed to provide the requested information on those disputed producers
as well. Thus, for any producers of wire rod or zinc that were
identified by the Huayuan Companies and the Bao Zhang Companies as
majority government-owned, the GOC needed to provide the requested
information only if it wished to argue that those producers were not
authorities. For any of these input producers that the GOC claimed were
privately owned by individuals and/or companies during the POI, we
requested the following:
Translated copies of source documents that demonstrate the
producer's ownership during the POI, such as capital verification
reports, articles of association, share transfer agreements, or
financial statements.
Identification of the owners, members of the board of
directors, or managers of the producers who were also government or
Chinese Communist Party (CCP) officials or representatives during the
POI.
A discussion of whether and how operational or strategic
decisions made by the management or board of directors are subject to
government review or approval.
Finally, for input producers owned by other corporations (whether
in whole or in part) or with less-than-majority state ownership during
the POI, we requested information in order to trace back the ownership
to the ultimate individual or state owners. For these suppliers, we
requested the following:
The identification of any state ownership of the company's
shares; the names of all government entities that own shares, either
directly or indirectly, in the company; whether any of the owners are
considered ``state-owned enterprises'' by the government; and the
amount of shares held by each government owner.
For each level of ownership, a translated copy of the
section(s) of the articles of association showing the rights and
responsibilities of the shareholders and, where appropriate, the board
of directors, including all decision making (voting) rules for the
operation of the company.
For each level of ownership, identification of the owners,
members of the board of directors, or managers of the producers who
were also government or CCP officials during the POI.
A discussion of whether and how operational or strategic
decisions made by the management or board of directors are subject to
government review or approval.
A statement of whether any of the shares held by
government entities have any special rights, priorities, or privileges,
e.g., with regard to voting rights or other management or decision-
making for the company; a statement of whether there are any
restrictions on conducting, or acting through, extraordinary meetings
of shareholders; whether there are any restrictions on the shares held
by private shareholders; and the nature of the private shareholders'
interest in the company, e.g., operational, strategic, or investment-
related, etc.
In its questionnaire response on July 7, 2011, the GOC provided
some ownership information but reported that it was unable to obtain
the complete ownership information for all of the companies that
produced wire rod and zinc purchased by the Huayuan Companies and the
Bao Zhang Companies. The GOC further stated that it expected to provide
such information to the Department as soon as it received it from the
local industry and commerce
[[Page 55035]]
administration bureaus.\34\ On July 19, 2011, the GOC submitted
additional ownership information pertaining to certain wire rod
producers, but reported that it was still not able to complete the
ownership information for all wire rod and zinc producers named by
respondents.
---------------------------------------------------------------------------
\34\ See GOC July 7, 2011 Questionnaire Response at 16.
---------------------------------------------------------------------------
On July 28, 2011, we issued a supplemental questionnaire to the GOC
requesting that it complete the remaining ownership information for the
wire rod and zinc producers, as well as respond to questions regarding
the role, if any, of GOC and CCP officials in the input producers
(e.g., through management or the board of directors) and in their
owners, including any corporate owners.\35\ In response to the GOC's
request for an extension, the Department allowed the GOC to file part
of its response on August 11, 2011, and the remainder on August 22,
2011.
---------------------------------------------------------------------------
\35\ See Letter from the Department to the GOC ``Countervailing
Duty Investigation of Galvanized Steel Wire from the People's
Republic of China: Supplemental Questionnaire,'' dated July 28,
2011.
---------------------------------------------------------------------------
In the August 11, 2011 response, the GOC provided some additional
ownership information; it also stated that certain companies that own
some portion of wire rod producers did not have any GOC or CCP
officials or representatives involved in their ownership, boards of
directors or management.\36\ However, the GOC did not provide complete
information requested with respect to whether GOC or CCP officials were
involved in the ownership, board of directors or management of all of
these wire rod producers. The GOC also explained that it was unable to
obtain some of the company-specific ownership information for zinc
producers and that it was not able to collect information on whether
companies holding some share of zinc producers have any GOC or CCP
officials involved in their ownership, boards of directors or
management.\37\
---------------------------------------------------------------------------
\36\ See GOC August 11, 2011 Supplemental Questionnaire Response
at I-13-14, I-16.
\37\ See id. at I-23.
---------------------------------------------------------------------------
In addition to not providing all of the requested information
regarding whether government and CCP officials were owners, members of
the boards of directors, or managers of the input producers who
produced the wire rod and zinc purchased by the respondents during the
POI, the GOC also declined to answer questions about the CCP's
structure and functions that are relevant to our determination of
whether the producers of wire rod and zinc are government authorities
within the meaning of section 771(5)(B) of the Act. On August 22, 2011,
the GOC filed the remainder of its supplemental questionnaire response
but it did not include any additional information regarding whether
there were GOC or CCP officials involved in the management, board of
directors or ownership of the wire rod or zinc input producers. Rather,
the GOC stated that the CCP, along with other organizations, is not a
government organization and that CCP officials' involvement in input
producer companies ``does not lead to interference by the Chinese
government in the management and operation of the input suppliers.''
\38\ Additionally, the GOC explained that Chinese law prohibits GOC
officials from taking positions in private companies.\39\ Furthermore,
the GOC explained that ``there is no central database to search the
requested information and the industry and commerce administration does
not require the companies to provide such information.'' \40\ As such,
the GOC stated it was unable to respond to the questions regarding GOC
and CCP officials' involvement in the wire rod and zinc input producers
themselves and in the input producers' ownership and management.\41\
---------------------------------------------------------------------------
\38\ See GOC August 22, 2011 Supplemental Questionnaire Response
at I-7-10.
\39\ See id.
\40\ See id.
\41\ See id.
---------------------------------------------------------------------------
Regarding the GOC's objection to the Department's questions about
the role of CCP officials in the management and operations of the wire
rod and zinc input producers, we have explained our understanding of
the CCP's involvement in the PRC's economic and political structure in
a past proceeding.\42\ The Department considers the information
regarding the CCP's involvement in the PRC's economic and political
structure to be important because public information suggests that the
CCP exerts significant control over activities in the PRC.\43\ This is
supported by, among other documents, a publicly available background
report from the U.S. Department of State.\44\ With regard to the GOC's
claim that Chinese law prohibits GOC officials from taking positions in
private companies, we have previously found that this particular law
does not pertain to CCP officials.\45\
---------------------------------------------------------------------------
\42\ See Memorandum regarding ``Galvanized Steel Wire from the
People's Republic of China: Preliminary Countervailing Duty
Determination: Additional Documents,'' dated August 29, 2011 at
Attachment 1.
\43\ See id. at Attachment 2.
\44\ See id.; see also Certain Seamless Carbon and Alloy Steel
Standard, Line, and Pressure Pipe from the People's Republic of
China: Final Affirmative Countervailing Duty Determination, Final
Affirmative Critical Circumstances Determination, 75 FR 57444
(September 21, 2010), and accompanying Issues and Decision
Memorandum (Seamless Pipe from the PRC Decision Memorandum) at
Comment 7.
\45\ See Seamless Pipe from the PRC Decision Memorandum at 16.
---------------------------------------------------------------------------
Because the GOC did not respond to our requests for information on
this issue, we have no further basis for evaluating the GOC's claim
that the role of the CCP is irrelevant. Thus, we continue to find that
the information on the role of CCP officials in the management and
operations of the wire rod and zinc input producers, and in the
management and operations of the input producers' owners is necessary
to our determination of whether these input producers are authorities
within the meaning of section 771(5)(B) of the Act. Furthermore, we
find that this is information that could be obtained by the GOC and
further, the GOC did not provide any information regarding what
attempts it undertook to obtain this information. Therefore, we
determine that the GOC's statement that it is unable to provide this
information is insufficient to find that the GOC has cooperated to the
best of its ability.
Based on the above, we preliminarily determine that the GOC has
withheld necessary information that was requested of it and, thus, that
the Department must rely on ``facts otherwise available'' in making our
preliminary determination.\46\ 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.\47\ Therefore, based on AFA, we are finding that that all of
the input producers of the wire rod and zinc purchased by the
respondents during the POI are ``authorities'' within the meaning of
section 771(5)(B) of the Act.
---------------------------------------------------------------------------
\46\ See sections 776(a)(1) and (a)(2)(A) of the Act.
\47\ See section 776(b) of the Act.
---------------------------------------------------------------------------
Application of AFA: Provision of Electricity for Less Than Adequate
Remuneration
The GOC did not provide complete responses to the Department's
questions regarding the alleged provision of electricity for LTAR.
These questions requested information to determine whether the
provision of electricity constituted a financial contribution within
the meaning of Section 771(5)(D) of the Act, whether such a provision
provided a benefit within the meaning of Section 771(5)(E) of the Act
and whether such a provision was specific with the meaning of Section
771(5A) of the Act. In the both the Department's
[[Page 55036]]
May 19, 2011 original questionnaire and the July 28, 2011 supplemental
questionnaire, for each province in which a respondent is located, the
Department asked the GOC to provide a detailed explanation of: (1) How
increases in the cost elements in the price proposals led to retail
price increases for electricity; (2) how increases in labor costs,
capital expenses and transmission, and distribution costs are factored
into the price proposals for increases in electricity rates; and (3)
how the cost element increases in the price proposals and the final
price increases were allocated across the province and across tariff
end-user categories. The GOC provided no provincial-specific data in
its August 11, 2011 supplemental response.
Consequently, 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'' in making our preliminary
determination.\48\ 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. In this regard, the GOC did
not explain why it was unable to provide the requested information, nor
did the GOC ask for additional time to gather and provide such
information. Consequently, an adverse inference is warranted in the
application of facts available.\49\ In drawing an adverse inference, we
find that the GOC's provision of electricity constitutes a financial
contribution within the meaning of section 771(5)(D) of the Act and is
specific within the meaning of section 771(5A) of the Act. We have also
relied on an adverse inference in selecting the benchmark for
determining the existence and amount of the benefit.\50\ The benchmark
rates we have selected are derived from information from the record of
the instant investigation and are the highest electricity rates on this
record for the applicable rate and user categories.
---------------------------------------------------------------------------
\48\ See sections 776(a)(1)-(a)(2)(A) of the Act.
\49\ See section 776(b) of the Act.
\50\ See id. at 776(b)(4).
---------------------------------------------------------------------------
For details on the calculation of the subsidy rate for the
respondents, see the ``Provision of Electricity for LTAR'' section
below.
Subsidy Valuation Information
Allocation Period
Under 19 CFR 351.524(d)(2), we presume the allocation period for
non-recurring subsidies to be the average useful life (AUL) prescribed
by the Internal Revenue Service (IRS) for renewable physical assets of
the industry under consideration (as listed in the IRS's 1977 Class
Life Asset Depreciation Range System, and as updated by the U.S.
Department of the Treasury). This presumption will apply unless a party
claims and establishes that these tables do not reasonably reflect the
AUL of the renewable physical assets of the company or industry under
investigation. According to the IRS' 1977 Class Life Asset Depreciation
Range System, the AUL period for assets for galvanized wire is 12
years. No party in this proceeding has disputed this allocation period.
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.
As discussed above, in accordance with the Department's practice,
we identify and measure subsidies in the PRC beginning on the date of
the country's accession to the WTO, i.e. December 11, 2001.\51\
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\51\ See, e.g., Certain Magnesia Carbon Bricks From the People's
Republic of China: Final Affirmative Countervailing Duty
Determination, 75 FR 45472 (August 2, 2010), and accompanying Issues
and Decision Memorandum at ``Subsidies Valuation Information.''
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Attribution of Subsidies
In accordance with 19 CFR 351.525(b)(6)(i), the Department normally
attributes a subsidy to the products produced by the corporation that
received the subsidy. However, 19 CFR 351.525(b)(6)(ii)-(v) sets forth
additional attribution rules for corporations with cross-ownership. The
following types of cross-ownership are covered in these additional
attribution rules: (ii) Two or more corporations with cross-ownership
produce the subject merchandise; (iii) a firm that received a subsidy
is a holding or parent company of the subject company; (iv) a firm that
produces an input that is primarily dedicated to the production of the
downstream product; or (v) a corporation producing non-subject
merchandise received a subsidy and transferred the subsidy to a
corporation with cross-ownership with the subject company.
1. Cross-Ownership
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. 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.\52\
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\52\ See Fabrique de Fer de Charleroi v. United States, 166 F.
Supp. 2d 593, 600-604 (CIT 2001).
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Based on information on the record, we preliminarily determine that
cross-ownership exists, in accordance with 19 CFR 351.525(b)(6)(vi),
among and across the following companies involved in the production and
sale of the subject merchandise.
The Huayuan Companies
We preliminarily determine that cross-ownership exists within the
Huayuan Companies among and across the following companies involved in
the production and sale of the subject merchandise: HYW, Tianxin and
MJH. Further, we preliminarily determine that cross-ownership does not
exist between Times and the other companies in the Huayuan Companies.
Because much of the information upon which this decision is based is
business proprietary, a full discussion is set forth in the Huayuan
Companies Preliminary Cross-Ownership Memorandum.\53\
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\53\ See Memorandum to Barbara E. Tillman, Director, AD/CVD
Operations, Office 6, from Nicholas Czajkowski and David Lindgren,
International Trade Compliance Analysts regarding ``Galvanized Steel
Wire from the People's Republic of China: Preliminary Countervailing
Duty Determination, Cross-Ownership: Huayuan Companies,'' dated
August 29, 2011 (Huayuan Companies Preliminary Cross-Ownership
Memorandum).
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The Bao Zhang Companies
We preliminarily determine that cross-ownership exists within the
Bao Zhang Companies, in accordance with 19 CFR 351.525(b)(6)(vi), among
and across the following companies involved in the production and sale
of the subject merchandise: SBZ, ABZ and Li Chao. Because much of the
information upon which this decision is based is business proprietary,
a full discussion is set forth in the Bao Zhang
[[Page 55037]]
Companies Preliminary Cross-Ownership Memorandum.\54\
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\54\ See Memorandum to Barbara E. Tillman, Director, AD/CVD
Operations, Office 6, from Nicholas Czajkowski and David Lindgren,
International Trade Compliance Analysts regarding ``Galvanized Steel
Wire from the People's Republic of China: Preliminary Countervailing
Duty Determination, Cross-Ownership: Bao Zhang Companies,'' dated
August 29, 2011(Bao Zhang Companies Preliminary Cross-Ownership
Memorandum).
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2. Trading Company Attribution
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 producing subject
merchandise that is sold through the trading company, regardless of
whether the trading company and the producing company are affiliated.
M&M reported that it is a trading company and that it purchased
galvanized wire to the United States during the POI from various
producers,\55\ including the cross-owned producers of galvanized wire
within the Huayuan Companies (HYW and Tianxin).\56\ M&M reported that
it is not cross-owned with any of the producers from which it purchased
galvanized wire, and there is no information on the record on the
record that would cause the Department to conclude that M&M is cross-
owned with any of its suppliers.
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\55\ See M&M July 7, 2011 Questionnaire Response at III-2.
\56\ See ``Cross-Ownership'' section above.
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When investigating or reviewing trading companies, the Department,
has, in some instances, limited the number of producers it examines
under 19 CFR 351.525(c).\57\ In determining a subsidy rate for M&M, we
preliminarily determine that it is appropriate to limit our examination
of the producers, which supplied M&M during the POI, to the cross-owned
producers within the Huayuan Companies.\58\ Since this decision is
based on business proprietary information, our analysis is set forth in
M&M's preliminary calculation memorandum.\59\
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\57\ See 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 (Pasta from
Italy Decision Memorandum) at ``Attribution''; see also Pre-Stressed
Concrete Steel Wire Strand from the People's Republic of China:
Preliminary Affirmative Countervailing Duty Determination, 74 FR
56576, 56577-79 (November 2, 2009) (PC Strand from the PRC)
(unchanged in the Pre-Stressed Concrete Steel Wire Strand from the
People's Republic of China: Final Affirmative Countervailing Duty
Determination, 75 FR 28557 (May 21, 2010), and accompanying Issues
and Decision Memorandum (PC Strand from the PRC Decision Memorandum)
at ``Attribution of Subsidies'').
\58\ See Pasta from Italy Decision Memorandum at
``Attribution''; see also PC Strand from the PRC Decision Memorandum
at ``Attribution of Subsidies.''
\59\ See Memorandum to Thomas Gilgunn, Program Manager, AD/CVD
Operations, Office 6, from Nicholas Czajkowski and David Lindgren,
International Trade Compliance Analysts regarding ``Countervailing
Duty Investigation of Galvanized Steel Wire from the People's
Republic of China: M&M Preliminary Calculation Memorandum,'' dated
August 29, 2011 (M&M Preliminary Calculation Memorandum).
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Pursuant to the Department's trading company regulation at 19 CFR
351.525(c), we find that any subsidies provided to the cross-owned
producers within the Huayuan Companies are attributable to the subject
merchandise exported by M&M. In accordance with 19 CFR 351.525(c), we
cumulated the subsidies received by the cross-owned producers within
the Huayuan Companies with the subsidies received by M&M. Specifically,
for each countervailable subsidy received by the cross-owned producers
within the Huayuan Companies, we derived the benefit and calculated a
program subsidy rate, and cumulated those rates with the rates
calculated for subsidies received directly by M&M.
Denominators
When selecting an appropriate denominator for use in calculating
the ad valorem subsidy rate, the Department considers the basis for the
respondent's receipt of benefits under each program at issue. As
discussed in further detail below in the ``Programs Preliminarily
Determined To Be Countervailable'' section, where the program has been
found to be an export subsidy, we used the recipient's total exports as
the denominator. For cross-owned producers, we used total exports net
of sales between the cross-owned producers, and where appropriate and
possible, made adjustments for the value of the producers' sales sold
through a cross-owned trading company.\60\
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\60\ See 19 CFR 351.525(b)(2), (b)(6), and (c).
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Where the program has been found to be countervailable as a
domestic subsidy, we used the following denominators. If the subsidy
was provided to one or more of the cross-owned producers of subject
merchandise, we used the total sales of those producers net of any
sales between the cross-owned producers. Where appropriate and
possible, we made adjustments for the value of the cross-owned
producers' sales sold through a cross-owned trading company. Where the
subsidy was provided to a cross-owned input supplier, we used the total
sales of the cross-owned producers of subject merchandise plus the
sales of the cross-owned input supplier net of any sales between these
companies (i.e., we used only external sales as the denominator). Where
the subsidy was provided directly to a trading company, we used the
trading company's total sales as the denominator.\61\ For a further
discussion of the denominators used, see the Preliminary Calculation
Memoranda.\62\
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\61\ See generally, 19 CFR 351.525(b).
\62\ See Memorandum to Thomas Gilgunn, Program Manager, AD/CVD
Operations, Office 6, from Nicholas Czajkowski and David Lindgren,
International Trade Compliance Analysts regarding ``Countervailing
Duty Investigation of Galvanized Steel Wire from the People's
Republic of China: Bao Zhang Companies Preliminary Calculation
Memorandum,'' dated August 29, 2011; see also Memorandum to Thomas
Gilgunn, Program Manager, AD/CVD Operations, Office 6, from Nicholas
Czajkowski and David Lindgren, International Trade Compliance
Analysts regarding ``Countervailing Duty Investigation of Galvanized
Steel Wire from the People's Republic of China: Huayuan Companies
Preliminary Calculation Memorandum,'' dated August 29, 2011; see
also M&M Preliminary Calculation Memorandum (collectively,
Preliminary Calculation Memoranda).
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Discount Rates for Allocating Non-Recurring Subsidies
Consistent with 19 CFR 351.524(d)(3)(i)(C), we have used, as our
discount rate, the long-term interest rate calculated according to the
methodology described below for the year in which the government agreed
to provide the subsidy.
1. Short-Term Interest Rate
The Department's regulations at 19 CFR 351.524(d)(3) state that
Department will use as a discount rate the following, in order of
preference: (A) The cost of long-term, fixed-rate loans of the firm in
question, excluding any loans that the Department has determined to be
countervailable subsidies; (B) the average cost of long-term, fixed-
rate loans in the country in question; or (C) a rate that the
Department considers to be most appropriate. 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.\63\ Because
of this, any loans received by respondents from private Chinese or
foreign-owned banks would be unsuitable for use as a discount rate
under 19 CFR 351.524(d)(3)(i)(A). Similarly, we cannot use a national
interest rate for commercial loans as envisaged by 19 CFR
351.524(d)(3)(i)(A).
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\63\ See CFS from the PRC Decision Memorandum at Comment 10.
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Therefore, because of the special difficulties inherent in using a
Chinese benchmark for loans, the Department is selecting an external
market-based
[[Page 55038]]
benchmark interest rate. The use of an external benchmark is consistent
with the Department's practice. For example, in lumber from Canada, the
Department used U.S. timber prices to measure the benefit for
government-provided timber in Canada.\64\
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\64\ 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) and accompanying Issues and Decision
Memorandum (Softwood Lumber from Canada Decision Memorandum) at
``Analysis of Programs, Provincial Stumpage Programs Determined to
Confer Subsidies, Benefit.''
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We are calculating the external benchmark using the regression-
based methodology first developed in CFS from the PRC and updated in
LWTP from the PRC.\65\ 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, 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.
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\65\ See CFS Decision Memorandum at Comment 10; see also LWTP
from the PRC Decision Memorandum at 8-10.
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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.\66\ As explained in CFS from the PRC, this pool of countries
captures the broad inverse relationship between income and interest
rates.
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\66\ See The World Bank Country Classification, https://econ.worldbank.org/.
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Many of these countries reported lending and inflation rates to the
International Monetary Fund, and they 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 AD 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 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.\67\
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\67\ See Memorandum regarding ``Preliminary Affirmative
Countervailing Duty Determination: Galvanized Steel Wire form the
People's Republic of China, Benchmark Memorandum,'' dated August 29,
2011 (Preliminary Benchmark Memorandum).
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2. Long-Term Interest Rate
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 developed an adjustment
to the short- and medium-term rates to convert them to long-term rates
using Bloomber
