Certain Steel Wheels From the People's Republic of China: Preliminary Affirmative Countervailing Duty Determination and Alignment of Final Countervailing Duty Determination With Final Antidumping Duty Determination, 55012-55030 [2011-22720]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 76, Number 172 (Tuesday, September 6, 2011)]
[Notices]
[Pages 55012-55030]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-22720]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-570-974]


Certain Steel Wheels From the People's Republic of China: 
Preliminary Affirmative Countervailing Duty Determination and Alignment 
of Final Countervailing Duty Determination With Final Antidumping Duty 
Determination

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) preliminarily 
determines that countervailable subsidies are being provided to 
producers and exporters of certain steel wheels (steel wheels) from the 
People's Republic of China (the 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: John Conniff (for the Centurion 
Companies) at 202-482-1009, Robert Copyak (for the Jingu Companies) at 
202-482-2209, and Kristen Johnson (for the Xingmin Companies) at 202-
482-4793, AD/CVD Operations, Office 3, Import Administration, U.S. 
Department of Commerce, Room 4014, 14th Street and Constitution Avenue, 
NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Case History

    On March 30, 2011, the Department received a countervailing duty 
(CVD) petition concerning imports of steel wheels from the PRC filed in 
proper form by Accuride Corporation (Accuride) and Hayes Lemmerz 
International, Inc. (collectively, petitioners).\1\ This investigation 
was initiated on April 19, 2011. See Certain Steel Wheels From the 
People's Republic of China: Initiation of Countervailing Duty 
Investigation, 76 FR 23302 (April 26, 2011) (Initiation Notice), and 
accompanying Initiation Checklist.
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    \1\ See Petition for the Imposition of Countervailing Duties 
(Petition). A public version of the Petition and all other public 
documents and public versions for this investigation are available 
on the public file in the Central Records Unit (CRU), Room 7046 of 
the main Department of Commerce building.
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    In the Initiation Notice, the Department stated that it intended to 
rely on data from U.S. Customs and Border Patrol (CBP) for purposes of 
selecting the mandatory respondents. See Initiation Notice, 76 FR at 
23304. On April 20, 2011, the Department released the results of a 
query performed on the CBP's database for calendar year 2010. See 
Memorandum to the File from Robert Copyak, Senior Financial Analyst, 
AD/CVD Operations, Office 3, regarding ``Release of Query Results of 
Customs and Border Patrol Database'' (April 20, 2011). Due to the large 
number of producers and exporters of steel wheels in the PRC, we 
determined that it was not practicable to individually investigate each 
producer and/or exporter. We, therefore, selected the following three 
producers and/or exporters of steel wheels to be mandatory respondents: 
Jiangsu Yuantong Auto Parts Co., Ltd. (Yuantong), Zhejiang Jinfei 
Machinery Group Co. Ltd. (Zhejiang Jinfei), and Zhejiang Jingu 
Automobile Components (Zhejiang Jingu),\2\ the largest publicly 
identifiable producers and/or exporters of the subject merchandise.\3\ 
See

[[Page 55013]]

Memorandum to Christian Marsh, Deputy Assistant Secretary for AD/CVD 
Operations, from Eric B. Greynolds, Program Manager, AD/CVD Operations, 
Office 3, and Robert Copyak, Senior Financial Analyst, AD/CVD 
Operations, Office 3, through Melissa G. Skinner, Director, AD/CVD 
Operations, Office 3, ``Respondent Selection'' (May 10, 2011). On May 
13, 2011, we issued the initial CVD questionnaire to the Government of 
the People's Republic of China (the GOC) and selected mandatory 
respondents. We also issued a confirmation of shipment questionnaire on 
the same date to Yuantong and Zhejiang Jinfei.
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    \2\ We use the term Jingu Companies to refer collectively to 
Zhejiang Jingu and its cross-owned affiliates under examination in 
this investigation.
    \3\ The companies are listed in alphabetical order and not 
listed based on export value/volume.
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    On May 20, 2011, the Department received Yuantong's and Zhejiang 
Jinfei's response to the shipment questionnaire in which each company 
certified that it did not export subject merchandise to the United 
States during the period of investigation (POI). See Yuantong's and 
Zhejiang Jinfei's Shipment Questionnaire Response (May 20, 2011).
    On May 25, 2011, the Department selected two other producers and/or 
exporters to be mandatory respondents in this investigation: Jining 
Centurion Wheel Manufacturing Co., Ltd. (Centurion) \4\ and Shandong 
Xingmin Wheel Co., Ltd. (Xingmin).\5\ See Memorandum to Christian 
Marsh, Deputy Assistant Secretary for AD/CVD Operations, from Eric B. 
Greynolds, Program Manager, AD/CVD Operations, Office 3, and Robert 
Copyak, Senior Financial Analyst, AD/CVD Operations, Office 3, through 
Melissa G. Skinner, Director, AD/CVD Operations, Office 3, ``Selection 
of Mandatory Respondents, Round Two'' (May 25, 2011). The Department 
provided copies of the initial questionnaire to the Centurion and 
Xingmin Companies on May 13, 2011, because they were on the public 
service list at the time the Department issued the initial 
questionnaire.\6\ The Department re-issued the questionnaire to the 
Centurion and Xingmin companies on May 25, 2011.
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    \4\ We use the term Centurion Companies to refer collectively to 
Centurion and its cross-owned affiliates under examination in this 
investigation.
    \5\ We use the term Xingmin Companies to refer collectively to 
Xingmin and its cross-owned affiliates under examination in this 
investigation.
    \6\ See section 782(a) of the Tariff Act of 1930, as amended 
(the Act). See also Centurion's April 29, 2011 submission, and 
Xingmin's May 4, 2011, submission.
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    On June 8, 2011, the Department postponed the deadline for the 
preliminary determination by 65 days to no later than August 29, 2011. 
See Certain Steel Wheels From the People's Republic of China: Notice of 
Postponement of Preliminary Determination in the Countervailing Duty 
Investigation, 76 FR 33242 (June 8, 2011).
    On June 20, 2011, Xiamen Sunrise Wheel Group Co., Ltd. (Sunrise), a 
Chinese producer of subject merchandise, submitted to the Department a 
response to the initial CVD questionnaire and requested that the 
Department designate it as a voluntary respondent. Because we 
previously determined that we only had the resources to investigate 
three companies, and because the Department received complete 
questionnaire responses from the three selected mandatory respondents, 
as discussed below, we did not designate Sunrise as a voluntary 
respondent in this investigation.
    The Department received the GOC's initial questionnaire response on 
July 5, 2011. The Department issued supplemental questionnaires to the 
GOC on July 25, 2011 (first), August 2, 2011 (second), and August 3, 
2011 (third), and received the GOC's response to the first and second 
supplemental questionnaires on August 10, 2011. The GOC's response to 
the third supplemental questionnaire is due on September 9, 2011.
    The Department received the Jingu Companies' initial questionnaire 
response on July 5, 2011. On July 14, 2011, the Department issued a 
supplemental questionnaire to the Jingu Companies. On July 18, 2011, 
the Department issued an addendum to the supplemental questionnaire in 
which it instructed the Jingu Companies to supply responses to the 
initial questionnaire with regard to two additional cross-owned 
companies. The Department issued an additional supplemental 
questionnaire on August 2, 2011. The Jingu Companies submitted their 
supplemental questionnaire responses on July 29, August 5, and August 
10, 2011.
    The Department received the initial questionnaire responses from 
the Centurion Companies on July 15, 2011. On July 21, 2011, the 
Department issued a supplemental questionnaire to the Centurion 
Companies in which it instructed the companies to supply a response to 
the initial questionnaire response with regard to an additional cross-
owned company. The Centurion Companies submitted their response to the 
supplemental questionnaire on August 8, 2011.
    On July 15, 2011, the Department received the Xingmin Companies' 
initial questionnaire response and issued to the Xingmin Companies a 
supplemental questionnaire on July 21, 2011. On July 25, 2011, the 
Department issued two addenda to the Xingmin Companies' July 21, 2011, 
supplemental questionnaire. We received the Xingmin Companies' 
supplemental questionnaire responses on August 10 and 12, 2011.
    On August 29, 2011, we placed on the record of this investigation 
our analysis of entry documentation obtained from CBP for the products 
that Yuantong and Zhejiang Jinfei exported to the United States during 
the POI.\7\ Based on our analysis of the entry packages, we find that 
the documentation supports the claims of non-shipment of subject 
merchandise to the United States during the POI by Yuantong and 
Zhejiang Jinfei.
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    \7\ See Memorandum to the File from John Conniff, Trade Analyst, 
AD/CVD Operations, Office 3, regarding ``Examination of Entry 
Documentation,'' (August 29, 2011).
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Period of Investigation

    The POI for which we are measuring subsidies is January 1, 2010 
through December 31, 2010, which corresponds to the most recently 
completed fiscal year. See 19 CFR 351.204(b)(2).

Scope of the Investigation

    The products covered by this investigation are steel wheels with a 
wheel diameter of 18 to 24.5 inches. Rims and discs for such wheels are 
included, whether imported as an assembly or separately. These products 
are used with both tubed and tubeless tires. Steel wheels, whether or 
not attached to tires or axles, are included. However, if the steel 
wheels are imported as an assembly attached to tires or axles, the tire 
or axle is not covered by the scope. The scope includes steel wheels, 
discs, and rims of carbon and/or alloy composition and clad wheels, 
discs, and rims when carbon or alloy steel represents more than fifty 
percent of the product by weight. The scope includes wheels, rims, and 
discs, whether coated or uncoated, regardless of the type of coating.
    Imports of the subject merchandise are provided for under the 
following categories of the Harmonized Tariff Schedule of the United 
States (HTSUS): 8708.70.05.00, 8708.70.25.00, 8708.70.45.30, and 
8708.70.60.30. These HTSUS numbers are provided for convenience and 
customs purposes only; the written description of the scope is 
dispositive.

Scope Comments

    In accordance with the Preamble to the Department's regulations 
(see Antidumping Duties; Countervailing Duties, 62 FR 27296, 27323 (May 
19,

[[Page 55014]]

1997)), in the Initiation Notice, we set aside a period of time for 
parties to raise issues regarding product coverage, and encouraged all 
parties to submit comments within 20 calendar days of publication of 
the Initiation Notice. On May 9, 2011, we received scope comments from 
Blackstone/OTR LLC and OTR Wheel Engineering, Inc. (collectively, OTR), 
a U.S. importer of the subject merchandise. On June 7, 2011, the 
Department released a memorandum to the file regarding additional HTSUS 
categories and language to include in the scope of the AD and CVD 
investigations as suggested by a National Import Specialist at CBP. See 
Memorandum to the File from Raquel Silva, International Trade 
Compliance Analyst, AD/CVD Operations, Office 8, through Erin Begnal, 
Program Manager, AD/CVD Operations, Office 8, regarding ``Suggested 
Additional Harmonized Tariff Schedule Categories'' (June 7, 2011) 
(HTSUS Memorandum).
    On June 14, 2011, we received comments on the HTSUS Memorandum from 
petitioners who agree with the suggestion of the CBP import specialist 
to include the additional HTSUS numbers within the scope language.\8\ 
Petitioners state that by including the additional HTSUS numbers for 
vehicles and machinery, they, however, do not intend to limit the 
coverage of the scope to steel wheels for just vehicles or machinery, 
but rather intend to include all steel wheels with a wheel diameter of 
18 to 24.5 inches regardless of use.\9\ Petitioners add, if the 
coverage of the scope was qualified based on use that could present 
customs classification problems as well as enable steel wheels of the 
sizes covered by the scope to evade coverage by being entered as wheels 
for machinery and then used as wheels for vehicles.\10\ Therefore, they 
assert that adding use language to the scope, as suggested by the CBP 
import specialist, is inappropriate.\11\
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    \8\ See Petitioners' submission regarding ``Request to Add 
Harmonized Tariff Schedule Categories to Scope Definition'' (June 
16, 2011). Also, when petitioners timely filed their comments to the 
Department on June 14, 2011, they inadvertently excluded the CVD 
case number. Therefore, petitioners filed a copy of their scope 
comments on the CVD record on June 16, 2011.
    \9\ Id.
    \10\ Id.
    \11\ Id.
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    On June 14 and 21, 2011, we received comments and rebuttal comments 
from the GOC on the HTSUS Memorandum. The GOC agrees with CBP's 
proposal to clarify the scope language to state that it is only 
intended to include steel wheels for vehicles.\12\ The GOC, however, 
states that it would be inappropriate for the Department to include the 
HTSUS numbers covering steel wheels for manufacturing machines because 
those HTSUS numbers cover products beyond the subject merchandise.\13\
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    \12\ See GOC's submission regarding ``CBP Proposal for 
Additional Harmonized Tariff Schedule Categories'' (June 14, 2011).
    \13\ Id.
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    The Department is evaluating the comments submitted by the parties 
and will issue its decision regarding the scope of the AD and CVD 
investigations in the preliminary determination of the companion AD 
investigation, which is due for signature on October 26, 2011.\14\ 
Scope decisions made in the AD investigation will be incorporated into 
the scope of the CVD investigation.
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    \14\ See Certain Steel Wheels From the People's Republic of 
China: Postponement of Preliminary Determination of Antidumping Duty 
Investigation, 76 FR 50995 (August 17, 2011).
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Injury Test

    Because the PRC is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, the International Trade 
Commission (the ITC) is required to determine whether imports of the 
subject merchandise from the PRC materially injure, or threaten 
material injury to, a U.S. industry. On 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 
or threatened with material injury by reason of imports from China of 
certain steel wheels. See Certain Steel Wheels From China, 
Investigation Nos. 701-TA-478 and 731-TA-1182 (Preliminary), 76 FR 
29265 (May 20, 2011).

Alignment of Final Countervailing Duty Determination With Final 
Antidumping Duty Determination

    On April 19, 2011, the Department initiated the AD and CVD 
investigations of steel wheels from the PRC. See Certain Steel Wheels 
From the People's Republic of China: Initiation of Antidumping Duty 
Investigation, 76 FR 23294 (April 26, 2011) and also Initiation Notice 
(for the PRC CVD investigation). The AD and CVD investigations have the 
same scope with regard to the merchandise covered.
    On August 22, 2011, petitioners submitted a letter, in accordance 
with section 705(a)(1) of the Act, requesting alignment of the final 
CVD determination with the final determination in the companion AD 
investigation of steel wheels from the PRC. 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 determination in 
the companion AD investigation of steel wheels from the PRC. The final 
CVD determination will be issued on the same date as the final AD 
determination, which is currently scheduled to be issued on or about 
January 9, 2012.

Application of the CVD Law to Imports From the PRC

    On October 25, 2007, the Department published Coated Free Sheet 
Paper From the People's Republic of China: Final Affirmative 
Countervailing Duty Determination, 72 FR 60645 (October 25, 2007) (CFS 
from the PRC), and accompanying Issues and Decision Memorandum (CFS 
from the PRC Decision Memorandum). In CFS from the PRC, the Department 
found that

given the substantial differences between the Soviet-style economies 
and 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.

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. See, e.g., Circular Welded Carbon Quality Steel 
Pipe From the People's Republic of China: Final Affirmative 
Countervailing Duty Determination and Final Affirmative Determination 
of Critical Circumstances, 73 FR 31966 (June 5, 2008) (CWP from the 
PRC), and accompanying Issues and Decision Memorandum (CWP from the PRC 
Decision Memorandum) 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. See CWP from 
the PRC Decision Memorandum at Comment 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

[[Page 55015]]

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.

GOC- Hot-Rolled Steel

    In our initial questionnaire, we asked the GOC to provide 
information concerning the firms that produced the hot-rolled steel 
(HRS) that respondents purchased during the POI. See the Department's 
May 13, 2011, questionnaire at 17. We explained in our questionnaire 
that the Department normally treats producers that are majority owned 
by the government or a government entity as ``authorities.'' Thus, for 
any producer of HRS that was 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 producer that the GOC claimed was directly, 100-percent 
owned by individual persons during the POI, we requested, among other 
items, 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 and identification of the owners, members of the 
board of directors, or managers of the suppliers who were also 
government or Chinese Communist Party (CCP) officials during the POI. 
See the Department's May 13, 2011, questionnaire at Appendix 5.
    For HRS producers with direct corporate ownership or less-than-
majority state ownership during the POI, we requested that the GOC 
provide ownership information, including among other items, the total 
level (percentage) of state ownership of the companies' shares; the 
names of all government entities that own shares, either directly or 
indirectly, in the company; information on whether any of the owners 
are considered ``state-owned enterprises'' by the government; and the 
amount of shares held by each government owner. We also asked a series 
of questions regarding whether the owners of the input producers were 
members of the CCP and the extent to which CCP officials influenced the 
manner in which they conducted their firms' operations. Id.
    In its questionnaire response, the GOC provided various source 
documents (e.g., business licenses, capital verification reports, and 
articles of associations) for the firms that supplied HRS to the 
respondents during the POI. However, in most cases the GOC did not 
provide the information requested in the Department's initial 
questionnaire regarding the firms that produced the HRS that 
respondents purchased during the POI. Moreover, in all cases the GOC 
did not respond to the Department's questions concerning the CCP. See 
the GOC's July 15, 2011, questionnaire response at 17-29 and Exhibits 
9-15.
    In our supplemental questionnaire, we requested that the GOC 
provide the information requested in the initial questionnaire as it 
applied to HRS producers that respondents claimed were privately-held 
entities. See the Department's July 25, 2011, supplemental 
questionnaire at 10. The GOC failed to provide the requested 
information in its supplemental questionnaire response. For example, in 
spite of the GOC's claims in the supplemental questionnaire, the GOC 
continued not to provide ownership information for several of the 
respondents' HRS producers that the respondents identified as being 
private entities. Further, for purportedly privately-owned HRS 
producers owned by individuals, the GOC, in all instances, did not 
provide information regarding whether the owners of the input producers 
were officials of the CCP and the extent to which CCP officials 
influenced the manner in which they conducted their firms' operations. 
See the GOC's August 10, 2011, questionnaire response.
    We, therefore, 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. See sections 776(a)(1) and (a)(2)(A) of the Act. 
Moreover, we preliminarily determine that the GOC has failed to 
cooperate by not acting to the best of its ability to comply with our 
request for information. Consequently, an adverse inference is 
warranted in the application of facts available. See section 776(b) of 
the Act. Therefore, in those instances in which the GOC failed to 
provide the requested ownership information, we are applying an adverse 
inference that the firms were government authorities that provided a 
financial contribution as described under section 771(5)(D)(iv) of the 
Act. In addition, for those instances in which the GOC provided the 
requested ownership documents (e.g., capital verification reports, 
business registration forms, and articles of association) but failed to 
provide information on whether individual owners of the input producers 
were officials of the CCP and the extent to which CCP officials 
influenced the manner in which they conducted their firms' operations, 
we are assuming, adversely, that the firms were government authorities 
that provided a financial contribution. Our approach in this regard is 
consistent with the Department's practice. See, e.g., Certain Coated 
Paper Suitable For High-Quality Print Graphics Using Sheet-Fed Presses 
from the People's Republic of China: Preliminary Affirmative 
Countervailing Duty Determination and Alignment of Final Countervailing 
Duty Determination with Final Antidumping Duty Determination, 75 FR 
10774, 10778 (March 9, 2010) (Coated Paper from the PRC Preliminary 
Determination); unchanged in Certain Coated Paper Suitable for High-
Quality Print Graphics Using Sheet-Fed Presses From the People's 
Republic of China: Final Affirmative Countervailing Duty Determination, 
75 FR 59212 (September 27, 2010) (Coated Paper from the PRC Final 
Determination) and accompanying Issues and Decision Memorandum (Coated 
Paper from the PRC Decision Memorandum).

GOC--Electricity

    The Department is also investigating the provision of electricity 
for LTAR to the respondents by the GOC. The GOC, however, did not 
provide a complete response to the Department's May 13, 2011, initial 
questionnaire regarding this program. In the questionnaire, the 
Department requested that the GOC provide the provincial price 
proposals for 2006 and 2008, for each province in which a mandatory 
respondent or any reported cross-owned company is located and to 
explain how electricity cost increases are reflected in retail price 
increases.\15\ In its July 5, 2011, questionnaire response, the GOC 
responded that it was unable to provide provincial price proposals for 
2006 and 2008, because they are working documents for the National 
Development and Reform Commission's (NDRC) review.\16\ The GOC's 
response also explained theoretically how the national price increases 
should be formulated but did not explain the

[[Page 55016]]

actual process that led to the price increases.\17\
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    \15\ See Department's Initial Questionnaire Issued to the GOC 
(May 13, 2011) at Appendix 6.
    \16\ See GOC's Initial Questionnaire Response (July 5, 2011) at 
62.
    \17\ Id. at 61-66.
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    As such, on August 2, 2011, the Department issued a supplemental 
questionnaire to the GOC reiterating its request for this information 
as well as information on the price adjustment in 2009, and the 2009 
provincial price proposal for Zhejiang, Shandong, and Sichuan, the 
provinces in which the respondents are located.\18\ The GOC, however, 
in its supplemental questionnaire response, did not provide the 
requested provincial price proposals asserting that the ``documents are 
not necessary to an understanding of the electricity pricing in 
China.'' \19\ The GOC also did not provide sufficient answers to the 
Department's supplemental questions. For example, we asked the GOC to 
explain how the NDRC developed the national price increase. In 
response, the GOC simply provided a copy of the ``Interim Rules on 
Sales Price of Electricity,'' but failed to provide an explanation on 
how the NDRC developed the national price increase.\20\ Similarly, we 
asked the GOC to explain the methodology used to calculate each of the 
cost element increases; however, in response, the GOC simply stated 
``the methodology used to calculate each of these cost element 
increases are mainly common practices of costing.'' \21\ We also asked 
the GOC to explain how all significant cost elements are accounted for 
within each province's price proposal. The GOC, however, stated that 
``significant cost elements will normally be accounted for within the 
province's price proposal in a manner consistent with the relevant 
rules on costing and pricing of electricity'' \22\ with no further 
explanation.
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    \18\ See Department's Second Supplemental Questionnaire Issued 
to the GOC (August 2, 2011).
    \19\ See GOC's Second Supplemental Questionnaire Response 
(August 10, 2011) at 1, 5.
    \20\ Id. at 2.
    \21\ Id. at 5.
    \22\ Id.
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    After reviewing the GOC's responses to the Department's electricity 
questions, we preliminarily determine that the GOC's answers were 
inadequate and did not provide the necessary information required by 
the Department to analyze the provision of electricity in the PRC. As 
such, the Department must rely on the facts otherwise available in 
making our preliminary determination. See sections 776(a)(1), 
776(a)(2)(A) and (B) of the Act. Moreover, we preliminarily determine 
that the GOC has failed to cooperate by not acting to the best of its 
ability to comply with our request for information as it did not 
adequately explain why it was unable to provide the requested 
information. Therefore, an adverse inference is warranted in the 
application of facts available. See section 776(b) of the Act. Drawing 
an adverse inference, we preliminarily 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 also preliminarily rely on an adverse inference by selecting the 
highest electricity rates that were in effect during the POI as our 
benchmarks for determining the existence and amount of any benefit 
under this program. See sections 776(b)(4) of the Act. The GOC reported 
that the provincial rate schedules of November 2009 were applicable 
during the POI.\23\ As such, we have used the November 2009 provincial 
electricity tariff schedules as a benchmark rate source for the period 
January 2010 through December 2010. Specifically, we have placed on the 
record of this investigation the November 2009 provincial electricity 
rate schedules, which were submitted to the Department by the GOC in 
the CVD investigation on Drill Pipe from the PRC, and which reflect the 
highest rates that the respondents would have paid in the PRC during 
the POI. See Drill Pipe From the People's Republic of China: Final 
Affirmative Countervailing Duty Determination, 76 FR 1971 (January 11, 
2011) (Drill Pipe from the PRC), and accompanying Issues and Decision 
Memorandum (Drill Pipe from the PRC Decision Memorandum) at ``Provision 
of Electricity for LTAR.'' See Memorandum to File from Kristen Johnson, 
Trade Analyst, AD/CVD Operations, Office 3, regarding ``Provincial 
Electricity Tariff Schedules,'' (August 29, 2011).
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    \23\ Id. at 6.
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    For details on the calculation of the subsidy rate for the 
respondents, see below at ``Provision of Electricity for LTAR.''

Subsidies Valuation Information

Allocation Period

    Under 19 CFR 351.524(b), non-recurring subsidies are allocated over 
a period corresponding to the average useful life (AUL) of the 
renewable physical assets used to produce the subject merchandise. 
Pursuant to 19 CFR 351.524(d)(2), there is a rebuttable presumption 
that the AUL will be taken from the U.S. Internal Revenue Service's 
1977 Class Life Asset Depreciation Range System (IRS Tables), as 
updated by the Department of Treasury. For the subject merchandise, the 
IRS Tables prescribe an AUL of 12 years. No interested party has 
claimed that the AUL of 12 years is unreasonable.
    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 compare the amount of subsidies approved under a given program 
in a particular year to 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.

Attribution of Subsidies

    The Department's regulations at 19 CFR 351.525(b)(6)(i) state that 
the Department will normally attribute a subsidy to the products 
produced by the corporation that received the subsidy. However, 19 CFR 
351.525(b)(6)(ii)-(v) provides that the Department will attribute 
subsidies received by certain other companies to the combined sales of 
those companies when: (1) Two or more corporations with cross-ownership 
produce the subject merchandise; (2) a firm that received a subsidy is 
a holding or parent company of the subject company; (3) a firm that 
produces an input that is primarily dedicated to the production of the 
downstream product; or (4) a corporation producing non-subject 
merchandise received a subsidy and transferred the subsidy to a 
corporation with cross-ownership with the subject company.
    According to 19 CFR 351.525(b)(6)(vi), cross-ownership exists 
between two or more corporations where one corporation can use or 
direct the individual assets of the other corporation(s) in essentially 
the same ways it can use its own assets. This regulation states that 
this standard will normally be met where there is a majority voting 
interest between two corporations or through common ownership of two 
(or more) corporations. The Court of International Trade (CIT) has 
upheld the Department's authority to attribute subsidies based on 
whether a company could use or direct the subsidy benefits of another 
company in essentially the same way it could use its own subsidy 
benefits. See Fabrique de Fer de Charleroi v. United States, 166 F. 
Supp. 2d 593, 600-604 (CIT 2001) (Fabrique).

The Jingu Companies

    Zhejiang Jingu, established in 1986, is a producer of subject 
merchandise.

[[Page 55017]]

Currently, Zhejiang Jingu is a publicly traded, domestically-owned 
enterprise which is listed on the Shenzhen Stock Exchange. Chengdu 
Jingu Wheel Co., Ltd. (Chengdu) is a domestically and one-hundred 
percent owned subsidiary of Zhejiang Jingu. Chengdu produces subject 
merchandise for sale in the domestic market. During the POI, Zhejiang 
Jingu exported subject merchandise through Shanghai Yata Industrial 
Co., Ltd. (Shanghai Yata), a wholly-owned, PRC-based trading company 
that has no production operations. Zhejiang Jingu also shipped a 
relatively small quantity of subject merchandise through Zhejiang Wheel 
World Industrial Co., Ltd. (Zhejiang Wheel World) during the POI. 
Zhejiang Wheel World is a foreign-invested joint venture operation in 
which Zhejiang Jingu owned a 75 percent shareholding interest during 
the POI. The Jingu Companies state that Zhejiang Wheel World did not 
produce in-scope steel wheels during the POI.
    In accordance with 19 CFR 351.525(b)(6)(vi), we preliminarily 
determine that Zhejiang Jingu, Chengdu, Shanghai Yata, and Zhejiang 
Wheel World are cross-owned companies. Concerning Zhejiang Wheel World, 
we acknowledge that the Jingu Companies have stated that the firm did 
not produce in-scope steel wheels during the POI. However, the Court 
has found that the Department may examine subsidies received by cross-
owned companies, including companies that did not produce subject 
merchandise during the POI, provided that the companies have the 
ability to produce subject merchandise. See Fabrique, 166 F. Supp. 2d 
at 602-603 (holding that actual production is not required and 
sustaining the attribution of subsidies where there is majority voting 
ownership of an entity and the entity possesses the ability to produce 
subject merchandise).
    In their questionnaire response, the Jingu Companies stated that 
Zhejiang Wheel World is unable to manufacture steel wheels that fall 
within the dimensional specifications of the scope of the investigation 
due to ``specification and capacity differences of certain key 
equipment.'' See the Jingu Companies' August 5, 2011, questionnaire 
response at 5-6. However, though requested, the Jingu Companies did not 
provide a description of the inputs and machinery used by Zhejiang 
Wheel World. Instead, the Jingu Companies stated that the production 
process of Zhejiang Wheel World is the ``same as Zhejiang Jingu's.'' 
Id. at 3. Furthermore, the product lists of Zhejiang Jingu, Chengdu, 
and Zhejiang Wheel World, indicate an overlap with regard to steel 
wheels whose dimensions fall within the scope of the investigation. Id. 
at Exhibits 2-4. Therefore, notwithstanding claims made by the Jingu 
Companies in the narrative of its questionnaire response that Zhejiang 
Wheel World cannot make subject merchandise, actual source documents 
concerning Zhejiang Wheel World's products lines and production process 
lead us to preliminarily determine otherwise. Therefore, we preliminary 
determine that subject merchandise could be produced by Zhejiang Wheel 
World, and consistent with Fabrique and 19 CFR 351.525(b)(6)(ii), we 
have attributed subsidies received by Zhejiang Wheel World to the 
consolidated sales of Zhejiang Jingu, Chengdu, and Zhejiang Wheel World 
(net of intra-company sales).
    Concerning Shanghai Yata, which exported subject merchandise during 
the POI, we note that 19 CFR 351.525(c) states that benefits from 
subsidies provided to a trading company which exports subject 
merchandise shall be cumulated with benefits from subsidies provided to 
the firm which is producing subject merchandise that is sold through 
the trading company, regardless of whether the trading company and the 
producing firm are affiliated. Therefore, we have attributed subsidies 
received by Shanghai Yata to the consolidated sales of Zhejiang Jingu, 
Chengdu, Zhejiang Wheel World, and Shanghai Yata (net of intra-company 
sales).
    In addition, in accordance with 19 CFR 351.525(b)(6)(ii) we have 
attributed subsidies received by Zhejiang Jingu and Chengdu, which are 
cross-owned producers of subject merchandise, to the consolidated sales 
of Zhejiang Jingu, Chengdu, and Zhejiang Wheel World (net of intra-
company sales).

The Centurion Companies

    Centurion was established on June 27, 2005. It produces a variety 
of steel wheels, including subject merchandise. During the POI, 
Centurion was owned by a Hong Kong-registered company and a private 
individual. Jining CII Wheel Manufacture Co., Ltd. (Jining CII) was 
formed on January 25, 2005, as a PRC-based foreign joint venture. In 
2008, Jining CII's shares changed hands and, as a result, it became a 
wholly-foreign owned enterprise. Jining CII also produces a variety of 
steel wheels, including subject merchandise. Proprietary information 
contained in the Centurion Companies' initial questionnaire response 
indicates that Centurion and Jining CII are majority owned by the same 
individual, Person A.\24\ Therefore, in accordance with 19 CFR 
351.525(b)(6)(vi), we preliminarily determine that Centurion and Jining 
CII are cross-owned.
---------------------------------------------------------------------------

    \24\ The names of the individuals that own Centurion and Jining 
CII are business proprietary. We refer to the principal owner of 
Centurion and Jining CII as Person A.
---------------------------------------------------------------------------

    Further, a sibling of Person A, hereinafter referred to as Person 
B, owns a minority share of Centurion. See the Centurion Companies' 
July 15, 2011, questionnaire response at Exhibit 1. The Centurion 
Companies also reported that another entity, Company A, provided steel 
cutting services related to disk production for Centurion. Id. at 
Exhibits 1 and 2.\25\ The Centurion Companies report that disk 
production is part of the production process for steel wheels. Id. at 
5. Company A is housed within Centurion's production facility, provided 
its cutting services exclusively to Centurion, and was Centurion's 
primary provider of such services during the POI. Id.; see also the 
Centurion Companies' August 8, 2011, questionnaire response at 1. 
Information in the Centurion Companies' questionnaire response 
indicates that Company A is wholly-owned by Person C, who is the spouse 
of Person B, Centurion's minority owner.
---------------------------------------------------------------------------

    \25\ The name of the company is proprietary. Therefore, we have 
referred to it as Company A in this notice.
---------------------------------------------------------------------------

    Section 351.525(b)(6)(vi) of the Department's regulations states 
that 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. 
While this standard will normally be met where there is a majority 
voting ownership interest between two corporations or through common 
ownership of two (or more) corporations, the Preamble states that ``the 
underlying rationale for attributing subsidies between two separate 
corporations is that the interests of those two corporations have 
merged to such a degree that one corporation can use or direct the 
individual assets (or subsidy benefits) of the other corporation in 
essentially the same ways it can use its own assets (or subsidy 
benefits).'' Countervailing Duty Regulations, 63 FR 65347, 65401 
(November 25, 1998) (Preamble). Hence, there may be situations where, 
due to a combination of other factors, the standard is met even where 
there is no majority voting ownership interest between, or common 
ownership of, the corporations. In this case, the record demonstrates 
that (a) The owners of Centurion and Company

[[Page 55018]]

A are closely related by primary family relations (husband/wife, 
siblings), and (b) Company A's operation is (1) Housed entirely within 
the facilities of Centurion, (2) devoted exclusively toward Centurion's 
production of subject merchandise, and (3) is the primary source for an 
essential step in Centurion's production of subject merchandise. Taking 
into consideration all of these factors combined, we find that the 
relationship between Centurion and Company A meets the cross-ownership 
standard under 19 CFR 351.525(b)(6)(vi) in that Centurion is in a 
position to use or direct the individual assets of Company A in 
essentially the same ways that it can use its own assets. Accordingly, 
we preliminarily determine that Company A is cross-owned with 
Centurion, and Jining CII under 19 CFR 351.525(b)(6)(vi). Further, we 
find that the co-production of subject merchandise between Centurion 
and Company A meets the attribution standard under 19 CFR 
351.525(b)(6)(ii). This is consistent with the Department's finding in 
a similar situation in OCTG from the PRC. See Certain Oil Country 
Tubular Goods From the People's Republic of China: Preliminary 
Affirmative Countervailing Duty Determination, Preliminary Negative 
Critical Circumstances Determination, 74 FR 47210, 47215 (September 15, 
2009) (OCTG from the PRC Preliminary Determination) (attributing 
subsidies received by Yuangtong to TCPO because Yuangtong had direct 
involvement in the production of the subject merchandise during the 
POI); unchanged in Certain Oil Country Tubular Goods From the People's 
Republic of China: Final Affirmative Countervailing Duty Determination, 
Final Negative Critical Circumstances Determination, 74 FR 64045 
(December 7, 2009) (OCTG from the PRC), and accompanying Issues and 
Decision Memorandum (OCTG from the PRC Decision Memorandum).
    Thus, based on the above, and in accordance with 19 CFR 
351.525(b)(6)(ii), we have attributed subsidies received by Centurion, 
Jining CII, and Company A to the three companies' consolidated sales 
(net of intra-company sales).

The Xingmin Companies \26\
---------------------------------------------------------------------------

    \26\ For source of information concerning the corporate 
structure of the Xingmin Companies, see Xingmin's Initial 
Questionnaire Response (July 15, 2011) at 1-4 and Exhibit 1.
---------------------------------------------------------------------------

    Xingmin, a domestically owned company established in December 1999, 
is a producer of subject merchandise and other steel wheels sold in 
both the PRC and overseas markets. Xingmin sells subject merchandise to 
the United States through its affiliated U.S. resellers. Xingmin's 
subsidiary, Sino-tex (Longkou) Wheel Manufacturers Inc. (Sino-tex), a 
foreign invested enterprise (FIE) established in January 2005, also 
produces subject merchandise, which is sold in the PRC market. Xingmin 
and Sino-tex are located in the Longkou Economic Development District 
in Shandong Province.
    Tangshan Xingmin Wheel Co., Ltd. (Tangshan) is a wholly-owned 
subsidiary of Xingmin that was established in October 2010. Tangshan, 
located in Hebei Province, did not produce any products during the POI 
because it was still under construction at that time.
    Xingmin, Sino-tex, and Tangshan are managed and controlled by the 
same individuals.\27\ We, thus, preliminarily determine that these 
firms can use each other's assets in essentially the same way they can 
use their own assets. Accordingly, pursuant to 19 CFR 
351.525(b)(6)(vi), we preliminarily determine that Xingmin, Sino-tex, 
and Tangshan are cross-owned companies.\28\ Therefore, in accordance 
with 19 CFR 351.525(b)(6)(ii), we have attributed subsidies received by 
Xingmin and Sino-tex by the consolidated sales of Xingmin and Sino-tex 
(net of intra-company sales).
---------------------------------------------------------------------------

    \27\ See Xingmin's Initial Questionnaire Response at 2.
    \28\ In this preliminary determination, we find that Tangshan 
received no subsidies and had no sales during the POI.
---------------------------------------------------------------------------

Benchmarks and Discount Rates

    The Department is investigating loans received by the Jingu 
Companies, Centurion Companies, and Xingmin Companies from Chinese 
policy banks, state-owned commercial banks (SOCBs), and other 
commercial banks which are alleged to have been granted on a 
preferential, non-commercial basis. The Department is also 
investigating various grants received by the Jingu Companies. As such, 
the derivation of the Department's benchmark and discount rates is 
discussed below.
    Benchmark for Short-Term RMB Denominated Loans: Section 
771(5)(E)(ii) of the Act explains that the benefit for loans is the 
``difference between the amount the recipient of the loan pays on the 
loan and the amount the recipient would pay on a comparable commercial 
loan that the recipient could actually obtain on the market.'' 
Normally, the Department uses comparable commercial loans reported by 
the company for benchmarking purposes. See 19 CFR 351.505(a)(3)(i). If 
the firm did not have any comparable commercial loans during the 
period, the Department's regulations provide that we ``may use a 
national interest rate for comparable commercial loans.'' See 19 CFR 
351.505(a)(3)(ii).
    As noted above, section 771(5)(E)(ii) of the Act indicates that the 
benchmark should be a market-based rate. However, for the reasons 
explained in CFS from the PRC, loans provided by Chinese banks reflect 
significant government intervention in the banking sector and do not 
reflect rates that would be found in a functioning market. See CFS from 
the PRC Decision Memorandum at Comment 10. Because of this, any loans 
received by respondents from private Chinese or foreign-owned banks 
would be unsuitable for use as benchmarks under 19 CFR 
351.505(a)(2)(i). Similarly, because Chinese banks reflect significant 
government intervention in the banking sector, we cannot use a national 
interest rate for commercial loans as envisaged by 19 CFR 
351.505(a)(3)(ii). Therefore, because of the special difficulties 
inherent in using a Chinese benchmark for loans, the Department is 
selecting an external market-based benchmark interest rate. The use of 
an external benchmark is consistent with the Department's practice. For 
example, in Softwood Lumber from Canada, the Department used U.S. 
timber prices to measure the benefit for government-provided timber in 
Canada. See Notice of Final Affirmative Countervailing Duty 
Determination and Final Negative Critical Circumstances Determination: 
Certain Softwood Lumber Products From Canada, 67 FR 15545 (April 2, 
2002) (Lumber from Canada), and accompanying Issues and Decision 
Memorandum (Lumber from Canada Decision Memorandum) at ``Analysis of 
Programs, Provincial Stumpage Programs Determined to Confer Subsidies, 
Benefit.''
    We are calculating the external benchmark using the regression-
based methodology first developed in CFS from the PRC and more recently 
updated in LWTP from the PRC. See CFS from the PRC Decision Memorandum 
at Comment 10; see also 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 ``Benchmarks and Discount Rates.'' This benchmark interest rate is 
based on the inflation-adjusted interest rates of countries with per 
capita gross national

[[Page 55019]]

incomes (GNIs) similar to the PRC. The benchmark interest rate takes 
into account a key factor involved in interest rate formation (i.e., 
the quality of a country's institutions), which is not directly tied to 
the state-imposed distortions in the banking sector discussed above.
    This methodology relies on data published by the World Bank and 
International Monetary Fund (see further discussion below). For the 
year 2010, the World Bank, however, has not yet published all the 
necessary data relied on by the Department to compute a short-term 
benchmark interest rate for the PRC. Specifically, the World Governance 
Indicators are not yet available. Therefore, for purposes of this 
preliminary determination, where the use of a short-term benchmark rate 
for 2010 is required, we have applied the 2009 short-term benchmark 
rate for the PRC, as calculated by the Department (see discussion 
below). The Department notes that the current 2009 loan benchmark may 
be updated, pending the release of all the necessary 2010 data, by the 
final determination.
    The 2009 short-term benchmark was computed following the 
methodology developed in CFS from the PRC. We first determined which 
countries were 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. For 2009, the PRC was in the 
lower-middle income category, a group that included 55 countries. See 
World Bank Country Classification, https://econ.worldbank.org/. As 
explained in CFS from the PRC, this pool of countries captures the 
broad inverse relationship between income and interest rates. See CFS 
from the PRC Decision Memorandum at ``Benchmarks'' and Comment 10.
    Many of these countries reported lending and inflation rates to the 
International Monetary Fund and are included in that agency's 
international financial statistics (IFS). With the exceptions noted 
below, we 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. Third, we removed any country that reported a rate that 
was not a lending rate or that based its lending rate on foreign-
currency denominated instruments. For example, Jordan reported a 
deposit rate, not a lending rate, and the rates reported by Ecuador and 
Timor L'Este are dollar-denominated rates; therefore, the rates for 
these three countries have been excluded. Finally, for the calculation 
of the inflation-adjusted short-term benchmark rate, we also excluded 
any countries with aberrational or negative real interest rates for the 
year in question.
    For the resulting inflation-adjusted benchmark lending rate, see 
Memorandum to the File from Kristen Johnson, Trade Analyst, AD/CVD 
Operations, Office 3, regarding ``2009 Short-Term Interest Rate 
Benchmark'' (August 29, 2011). Because these are inflation-adjusted 
benchmarks, it is necessary to adjust the respondents' interest 
payments for inflation. This was done using the PRC inflation rate as 
reported in the IFS.
    Benchmark for Long-Term RMB Denominated Loans: The lending rates 
reported in the IFS represent short- and medium-term lending, and there 
are no sufficient publicly available long-term interest rate data upon 
which to base a robust long-term benchmark. To address this problem, 
the Department has developed an adjustment to the short- and medium-
term rates to convert them to long-term rates using Bloomberg U.S. 
corporate BB-rated bond rates. See Light-Walled Rectangular Pipe and 
Tube From the People's Republic of China: Final Affirmative 
Countervailing Duty Investigation Determination, 73 FR 35642 (June 24, 
2008) (LWRP from the PRC), and accompanying Issues and Decision 
Memorandum (LWRP from the PRC Decision Memorandum) at ``Discount 
Rates.'' In Citric Acid from the PRC, this methodology was revised by 
switching from a long-term mark-up based on the ratio of the rates of 
BB-rated bonds to applying a spread which is calculated as the 
difference between the two-year BB bond rate and the n-year BB bond 
rate, where n equals or approximates the number of years of the term of 
the loan in question. See Citric Acid and Certain Citrate Salts From 
the People's Republic of China: Final Affirmative Countervailing Duty 
Determination, 74 FR 16836 (April 13, 2009) (Citric Acid from the PRC), 
and accompanying Issues and Decision Memorandum (Citric Acid from the 
PRC Decision Memorandum) at Comment 14.
    Discount Rates: Consistent with 19 CFR 351.524(d)(3)(i)(A), we have 
used, as our discount rate, the long-term interest rate calculated 
according to the methodology described above for the year in which the 
government provided the subsidy.

Analysis of Programs

I. Programs Preliminarily Determined To Be Countervailable

A. Policy Loans to the Steel Wheels Industry
    The Department examined whether steel wheels producers received 
preferential lending through SOCBs or policy banks. According to the 
allegation, preferential lending to the auto and steel wheels industry 
is supported by the GOC through the issuance of national and provincial 
five-year plans, industrial plans for the automotive and nonferrous 
metal sector, catalogues of encouraged industries, and other government 
laws and regulations. Based on our review of the responses and 
documents provided by the GOC, we preliminarily determine that loans 
received by the steel wheels industry from SOCBs and policy banks were 
made pursuant to government directives.
    Record evidence demonstrates that the GOC, through its directives, 
has highlighted and advocated the development of the automotive and 
steel wheels industry. At the national level, the GOC has placed an 
emphasis on the development of high-end, value-added automotive 
products through foreign investment as well as through technological 
research, development, and innovation. In laying out this strategy, the 
GOC has identified specific products selected for development. For 
example, the GOC implemented the Decision of the State Council on 
Promulgating the Interim Provisions on Promoting Industrial Structure 
Adjustment for Implementation (No. 40 (2005)) (Decision 40) in order to 
achieve the objectives of the 11th Five-Year Plan. Decision 40 
references the Directory Catalogue on Readjustment of Industrial 
Structure (Industrial Catalogue), which outlines the projects which the 
GOC deems ``encouraged,'' ``restricted,'' and ``eliminated,'' and 
describes how these projects will be considered under government 
policies. For the ``encouraged'' projects, Decision 40 outlines several 
support options available from the government, including financing. See 
Decision 40 at Articles 13 and 17, which was placed on the record of 
this investigation in the Department's August 29, 2011, Memorandum to 
the File, from Kristen Johnson, Trade Analyst, AD/CVD Operations, 
Office 3, regarding ``Decision of the State Council on Promulgating the 
Interim Provisions on Promoting Industrial Structure

[[Page 55020]]

Adjustment for Implementation (No. 40 (2005)) (Decision 40).'' The 
GOC's Industrial Catalogue includes as ``encouraged investment 
industries'' within the auto industry the ``design and development of 
auto, motorcycle, and their engines and key parts,'' ``manufacturing of 
such key auto parts and components as automatic transmission box, 
transmission box for heavy-duty cars and advanced and appropriate auto 
and engine with independent property rights,'' and ``precision forging, 
multiple workplace moulding and forging of key auto parts.'' See 
Exhibit III-9 of the Petition at ``(XIII) Auto.''
    Other industrial plans also discuss the development and 
encouragement of the PRC's automotive and auto parts industries. For 
example, the GOC's ``Catalogue of Industry, Product and Technology Key 
Supported by the State at Present'' (Key Industry Catalogue) lists, as 
investment projects, the ``development of key automotive parts,'' 
``precision forging, ferrous casting and nonferrous casting and rough 
blanks of important auto components,'' and ``development systems for 
complete vehicles, complete motorcycle and engines, components and 
parts.'' See Exhibit III-8 of the Petition at ``XXI. Vehicle.''
    The ``Formal Policy on the Development of the Automobile Industry'' 
(Formal Automobile Policy) similarly states that the GOC aims to make 
the PRC's automobile industry a ``pillar industry.'' See Memorandum to 
the File from Eric B. Greynolds, Program Manager, AD/CVD Operations, 
Office 3, regarding ``Placement of Formal Policy on the Development of 
the Automobile Industry on Record'' (July 26, 2011). The Formal 
Automobile Policy also states under Chapter III--Structure of the 
Industry, that auto parts manufacturers meeting certain production and 
technology development requirements shall enjoy the following benefits 
enumerated under Article 12:
    1. Zero rate of orientation regulation tax for its investment in 
fixed assets;
    2. Priority for it to issue and list its shares and debentures;
    3. Active support in bank loans;
    4. Priority for its use of overseas funds in the foreign funds use 
plan;
    5. Policy-based loans will be arranged for projects of economic 
cars, auto parts and components, die sets and casting and forging 
mills; and
    6. The financial company within an enterprise group may expand its 
business scale after approval of relevant State departments.

Id. Further, under Chapter V--Investment and Financial Policy for the 
Formal Automobile Policy--it states:

    Article 22: The State guides the enterprises or enterprise 
groups possessing technological and management advantages to coop 
with localities which have a good investment environment and an 
ample supply of fund to develop key products of automotive industry 
in accordance with the overall State plan.
    Article 24: The State will formulate the corresponding policy to 
encourage inter-regional or inter-department flow of investment and 
protect legal rights and interests of investors.
    Article 26: Under approval of the State Council, automobile 
enterprises may apply for pilot capitalization of the State debts.

Id. In addition, under Chapter XII--Industrial Policies, Program and 
Project Management Formal Automobile Policy states:

    Article 56: The State guides development of the automotive 
industry through the automotive industry policy and program. All the 
localities and departments should support development of the 
automotive industry in accordance with the automotive industry 
policy and program promulgated by the State Council.

Id. The GOC claims that it ceased its Formal Automobile Policy in 2004. 
See the GOC's July 5, 2011, questionnaire response at Exhibit 54. 
However, even accepting the GOC's claim, we preliminarily determine 
that the successor industrial policy for the PRC's automotive industry, 
the Policy on the Development of the Automotive Industry of 2004 
(Automotive Industry Policy), indicates the GOC's goal of targeting the 
PRC's automotive and auto parts industries for development. For 
example, Chapter I--Aim of Policy the Automotive Industrial Policy 
states:

    Article 1: The principle of combining the fundamental role of 
market allocation of resources with the macro-control of the 
government shall be adhered to so as to create a market environment 
of fair competition and unification, and improve the administrative 
system of rule by law on automotive industry. The functional 
departments of the governments shall, in accordance with the 
mandatory requirements of the administrative laws and regulations 
and the technical specification, implement administration on the 
enterprises undertaking the production of automobiles, farming 
transportation vehicles (low speed cargo trucks and tri-cars, the 
same hereinafter), motorcycles and components and parts, and the 
products thereof, and regulate market acts of various economic 
bodies in the field of automotive industry.

See the GOC's July 5, 2011, questionnaire response at Exhibit 54, 
emphasis added. Under Chapter VIII--Components and Parts and Relevant 
Industries of the policy states:

    Article 31: A special development plan for the components and 
parts shall be made to give guidance and support to the products of 
automobile components and parts through classification, and to guide 
the public funds to invest into the field of production of 
automobile components and parts, and impel the enterprises of 
components and parts that have comparative advantages to form the 
ability of specialization, large batch of production and 
modularization goods supply. For those enterprises undertaking the 
production of components and parts, which can support several 
independent enterprises that undertake the production of the whole 
vehicles and which enter into the international system of 
procurement of automobile components and parts, the state shall 
support them in priority in such aspects as the introduction of 
technology, technological transformation, financing and merger and 
reorganization, etc. The enterprises undertaking the production of 
the whole automobiles shall stock components and parts from the 
society by ways of electronic commerce, or net procurement step by 
step.

Id., emphasis added. The Automotive Industrial Policy also states under 
Chapter X--Investment administration that only ``approved'' projects 
shall receive financing from state-owned banks:

    Article 51: Where the investment projects subject to approval 
fail to obtain the notice of approval, the departments of land 
administration shall not handle land requisition, the state-owned 
banks shall not issue loans, the customs shall not handle tax 
exemption, the securities regulatory commission shall not approve 
the issuance of stocks and listing, and the administrative 
departments for industry and commerce shall not handle formalities 
for the registration of newly established enterprises. The relevant 
departments of the state shall not accept the admission application 
of the production enterprises and their products.

Id.

    In addition, the Restructuring and Revitalization Plan of Auto 
Industry (Restructuring and Revitalization Plan) also indicates that 
the GOC has targeted the PRC's automotive and auto parts industries for 
development support. See Memorandum to the File from Eric B. Greynolds, 
Program Manager, AD/CVD Operations, Office 3, regarding ``Placement of 
Restructurin