Certain Steel Wire Garment Hangers From the Socialist Republic of Vietnam: Preliminary Affirmative Countervailing Duty Determination and Alignment of Final Countervailing Duty Determination With Final Antidumping Duty Determination, 32930-32938 [2012-13474]
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Federal Register / Vol. 77, No. 107 / Monday, June 4, 2012 / Notices
DEPARTMENT OF COMMERCE
Foreign-Trade Zones Board
[Order No. 1831]
Reorganization/Expansion of ForeignTrade Zone 74 Under Alternative Site
Framework Baltimore, MD
ebenthall on DSK5SPTVN1PROD with NOTICES
Pursuant to its authority under the ForeignTrade Zones Act of June 18, 1934, as
amended (19 U.S.C. 81a–81u), the ForeignTrade Zones Board (the Board) adopts the
following Order:
Whereas, the Board adopted the
alternative site framework (ASF) in
December 2008 (74 FR 1170–1173, 01/
12/09; correction 74 FR 3987, 01/22/09;
75 FR 71069–71070, 11/22/10) as an
option for the establishment or
reorganization of general-purpose zones;
Whereas, the Baltimore Development
Corporation on behalf of the City of
Baltimore, grantee of Foreign-Trade
Zone 74, submitted an application to the
Board (FTZ Docket 53–2011, filed 8/10/
2011; amended 3/13/2012) for authority
to reorganize and expand under the ASF
with a service area of the City of
Baltimore and the Counties of Anne
Arundel, Baltimore, Cecil and Harford,
Maryland, within and adjacent to the
Baltimore Customs and Border
Protection port of entry; FTZ 74’s
existing Sites 1, 3, 5, 10, 11 and 14
would be removed; the boundaries of
Sites 4, 16 and 17 would be expanded;
the boundaries of Sites 2, 6, 7, 8, 12 and
13 would be reduced; a portion of Site
8 would be redesignated as Site 25; Sites
2, 4 and 16 would be categorized as
magnet sites; Sites 6, 7, 8, 9, 12, 13, 15,
17, 18, 20, 21, 22, 23, 24 and 25 would
be categorized as usage-driven sites;
Temporary Sites 19 and 31 will
maintain their current zone designation;
and, the grantee proposes a new magnet
site (Site 26) and four new usage-driven
sites (Sites 27, 28, 29 and 30);
Whereas, notice inviting public
comment was given in the Federal
Register (76 FR 50717–50718, 8/16/
2011) and the application, as amended,
has been processed pursuant to the FTZ
Act and the Board’s regulations; and
Whereas, the Board adopts the
findings and recommendations of the
examiner’s report, and finds that the
requirements of the FTZ Act and
Board’s regulations are satisfied, and
that the proposal, as amended, is in the
public interest;
Now, therefore, the Board hereby
orders:
The application to reorganize and
expand FTZ 74 under the alternative
site framework is approved, subject to
the FTZ Act and the Board’s regulations,
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including Section 400.13, to the Board’s
standard 2,000-acre activation limit for
the overall general-purpose zone
project, to a five-year ASF sunset
provision for magnet sites that would
terminate authority for Sites 2, 4, 16 and
26 if not activated by May 31, 2017, and
to a three-year ASF sunset provision for
usage-driven sites that would terminate
authority for Sites 6, 7, 8, 9, 12, 13, 15,
17, 18, 20, 21, 22, 23, 24, 25, 26, 27, 28,
29 and 30 if no foreign-status
merchandise is admitted for a bona fide
customs purpose by May 31, 2015.
Signed at Washington, DC, this 24th day of
May 2012.
Paul Piquado,
Assistant Secretary of Commerce for Import
Administration, Alternate Chairman, ForeignTrade Zones Board.
Attest:
Andrew McGilvray,
Executive Secretary.
[FR Doc. 2012–13477 Filed 6–1–12; 8:45 am]
BILLING CODE 3510–DS–P
DEPARTMENT OF COMMERCE
International Trade Administration
[C–552–813]
Certain Steel Wire Garment Hangers
From the Socialist Republic of
Vietnam: Preliminary Affirmative
Countervailing Duty Determination and
Alignment of Final Countervailing Duty
Determination With Final Antidumping
Duty 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 certain steel
wire garment hangers (garment hangers)
from the Socialist Republic of Vietnam
(Vietnam). For information on the
estimated subsidy rates, see the
‘‘Suspension of Liquidation’’ section of
this notice.
DATES: Effective Date: June 4, 2012.
FOR FURTHER INFORMATION CONTACT: John
Conniff (for the Hamico Companies 1) at
202–482–1009, and Robert Copyak (for
the Infinite Companies 2) at 202–482–
2209, AD/CVD Operations, Office 3,
AGENCY:
1 The Hamico Companies are the South East Asia
Hamico Export Joint Stock Company (SEA Hamico),
Nam A Hamico Export Joint Stock Company (Nam
A), and Linh Sa Hamico Company Limited (Linh
Sa).
2 The Infinite Companies are Infinite Industrial
Hanger Limited (Infinite) and Supreme Hanger
Company Limited (Supreme).
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Import Administration, U.S. Department
of Commerce, Room 4014, 14th Street
and Constitution Avenue NW.,
Washington, DC 20230.
SUPPLEMENTARY INFORMATION:
Case History
On December 29, 2011, the
Department received a countervailing
duty (CVD) petition concerning imports
of garment hangers from Vietnam filed
in proper form by M&B Metal Products
Company, Inc., Innovative Fabrication
LLC/Indy Hanger, and US Hanger
Company, LLC (collectively,
petitioners).3 The Department initiated
an investigation on January 18, 2012.4 In
the Initiation, the Department stated
that it intended to rely on data from U.S.
Customs and Border Protection (CBP)
for purposes of selecting the mandatory
respondents.5 On January 18, 2012, the
Department released the results of a
query performed on the CBP’s database
for calendar year 2011.6 Due to the large
number of producers and exporters of
garment hangers in Vietnam, we
determined that it was not practicable to
individually investigate each producer
and/or exporter. We, therefore, selected
the following two producers and/or
exporters of garment hangers to be
mandatory respondents: Infinite and
SEA Hamico, the largest publicly
identifiable producers and/or exporters
of the subject merchandise.7 On
February 10, 2012, we issued the initial
CVD questionnaire to the Government of
the Vietnam (GOV) and the selected
mandatory respondents. We also issued
a confirmation of shipment
questionnaire on the same date to
Infinite and SEA Hamico.
On February 14, 2012, Infinite and
SEA Hamico confirmed that they
shipped subject merchandise to the
United States during the period of
investigation (POI). On March 2, 2012,
the Department postponed the deadline
3 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.
4 See Steel Wire Garment Hangers From the
Socialist Republic of Vietnam: Initiation of
Countervailing Duty Investigation, 77 FR 3737
(January 25, 2011) (Initiation), and accompanying
Initiation Checklist.
5 See Initiation, 77 FR at 3739.
6 See Memorandum to the File from Eric B.
Greynolds, Program Manager, AD/CVD Operations,
Office 3, regarding ‘‘Release of Customs and Border
Protection (CBP) Query Results’’ (January 18, 2012).
7 See Memorandum to Christian Marsh, Deputy
Assistant Secretary for AD/CVD Operations,
‘‘Respondent Selection’’ (February 10, 2012). The
companies are listed in alphabetical order and not
listed based on export value/volume.
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Federal Register / Vol. 77, No. 107 / Monday, June 4, 2012 / Notices
for the preliminary determination by 65
days to no later than May 29, 2012.8
On February 3, 2012, petitioners
submitted untimely new subsidy
allegations concerning electricity that
the GOV allegedly provided for less
than adequate remuneration (LTAR). On
March 29, 2012, the Department issued
a decision memorandum in which it
declined to initiate an investigation into
petitioners’ allegation.9
The GOV submitted its response to
the initial questionnaire on March 30,
2012. SEA Hamico submitted its
questionnaire response on behalf of the
Hamico Companies on April 2, 2012.
Infinite submitted its questionnaire
response on behalf of the Infinite
Companies on April 3, 2012. The
Department issued supplemental
questionnaires to GOV, the Hamico
Companies, and the Infinite Companies
from April 25 through May 14, 2012.
The Department received the
supplemental questionnaire responses
from May 4 through May 22, 2012.
Period of Investigation
The POI for which we are measuring
subsidies is January 1, 2011, through
December 31, 2011, which corresponds
to the most recently completed fiscal
year.10
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Scope of the Investigation
The merchandise subject to the
investigation is steel wire garment
hangers, fabricated from carbon steel
wire, whether or not galvanized or
painted, whether or not coated with
latex or epoxy or similar gripping
materials, and/or whether or not
fashioned with paper covers or capes
(with or without printing) and/or
nonslip features such as saddles or
tubes. These products may also be
referred to by a commercial designation,
such as shirt, suit, strut, caped, or latex
(industrial) hangers.
Specifically excluded from the scope
of the investigation are (a) wooden,
plastic, and other garment hangers that
are not made of steel wire; (b) steel wire
garment hangers with swivel hooks; (c)
steel wire garment hangers with clips
permanently affixed; and (d) chromeplated steel wire garment hangers with
a diameter of 3.4mm or greater.
The products subject to the
investigation are currently classified
8 See Steel Wire Garment Hangers from the
Socialist Republic of Vietnam: Notice of
Postponement of Preliminary Determination in the
Countervailing Duty Investigation, 77 FR 3737
(January 25, 2012).
9 See Memorandum to Melissa G. Skinner,
Director, Office 3, AD/CVD Operations, ‘‘Decision
Memorandum on a New Subsidy Allegation’’
(March 29, 2012).
10 See 19 CFR 351.204(b)(2).
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under U.S. Harmonized Tariff Schedule
(HTSUS) subheadings 7326.20.0020 and
7323.99.9080. Although the HTSUS
subheadings are provided for
convenience and customs purposes, the
written description of the merchandise
is dispositive.
Scope Comments
As discussed in the Initiation, we set
aside a period for interested parties to
raise issues regarding product
coverage.11 However, no parties
submitted scope comments on the
records of the AD or CVD investigations.
Injury Test
Because Vietnam is a ‘‘Subsidies
Agreement Country’’ within the
meaning of section 701(b) of the Tariff
Act of 1930, as amended (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
February 10, 2012, the ITC made a
preliminary determination finding that
there is a reasonable indication that an
industry in the United States is
threatened with material injury by
reason of imports of garment hangers
from Vietnam.12
Alignment of Final Countervailing Duty
Determination With Final Antidumping
Duty Determination
On May 9, 2012, 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 garment hangers from
Vietnam. 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 garment hangers from
Vietnam. 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 October 9, 2012.
Application of the CVD Law to Imports
From Vietnam
On April 1, 2010, the Department
published the Carrier Bags from
Vietnam Final Determination in which
we found the CVD law applicable to
11 See
Initiation, 77 FR at 3737.
Steel Wire Garment Hangers from Taiwan
and Vietnam (Investigation Nos. 701–TA–487 and
731–TA–1197–1198 (Preliminary), USITC
Publication 4305, February 2012).
12 See
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Vietnam.13 Furthermore, on March 13,
2012, the President signed into law HR
4105, which makes clear that the
Department has the authority to apply
the CVD law to non-market economies
such as Vietnam. The effective date of
the enacted legislation makes clear that
this provision applies to this
proceeding.14 Additionally, for reasons
stated in the Carrier Bags from Vietnam
Decision Memorandum at Comment 3,
we are using the date of January 11,
2007, the date on which Vietnam
became a member of the WTO, as the
date from which the Department will
identify and measure subsidies in
Vietnam for purposes of CVD
investigations.
Allocation Period
The average useful life (AUL) period
in this proceeding, as described in 19
CFR 351.524(d)(2), is 12 years according
to the U.S. Internal Revenue Service’s
1977 Class Life Asset Depreciation
Range System.15 No party in this
proceeding has disputed this allocation
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)
through (v) directs that the Department
will attribute subsidies received by
certain other companies to the
combined sales of those companies if (1)
cross-ownership exists between the
companies, and (2) the cross-owned
companies produce the subject
merchandise, are a holding or parent
company of the subject company,
produce an input that is primarily
dedicated to the production of the
downstream product, or transfer a
subsidy to a cross-owned 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
13 See Polyethylene Retail Carrier Bags from the
Socialist Republic of Vietnam: Final Affirmative
Countervailing Duty Determination, 75 FR 16428
(April 1, 2010) (Carrier Bags from Vietnam Final
Determination), and accompanying Issues and
Decision Memorandum (Carrier Bags from Vietnam
Decision Memorandum) at ‘‘Land Rent Reduction or
Exemption for Exporters.’’
14 See HR 4105, 112th Cong. 1(b) (2012) (enacted).
15 See U.S. Internal Revenue Service Publication
946 (2008), How to Depreciate Property, at Table B–
2: Table of Class Lives and Recovery Periods.
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Federal Register / Vol. 77, No. 107 / Monday, June 4, 2012 / Notices
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.16
The Hamico Companies
SEA Hamico, Nam A, and Linh Sa all
produce subject merchandise. SEA
Hamico owns a majority stake in Nam
A and Linh Sa. Therefore, in accordance
with 19 CFR 351.525(b)(6)(vi), we
preliminarily determine that SEA
Hamico, Nam A, and Linh Sa are crossowned companies. Further, because all
three firms produce subject
merchandise, in accordance with 19
CFR 351.525(b)(6)(ii), we have
attributed subsidies received by SEA
Hamico, Nam A, and Linh Sa to the
combined sales of the three firms, net of
intra-company sales.
The Infinite Companies
Infinite and Supreme are owned by
the same individual, Person A.17
Therefore, in accordance with 19 CFR
351.525(b)(6)(vi), we preliminarily
determine that Infinite and Supreme are
cross-owned. Because Infinite and
Supreme both produce subject
merchandise, in accordance with
19 CFR 351.525(b)(6)(ii), we have
attributed subsidies received by Infinite
and Supreme to the combined sales of
the two firms, net of intra-company
sales.
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Subsidy Valuation
Interest Rate Benchmark
For purposes of this preliminary
determine we require the use of a shortterm loan benchmark denominated in
U.S. dollars. 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,’’ indicating that a
benchmark must be a market-based rate.
Normally, the Department uses
comparable commercial loans reported
by the company for benchmarking
purposes.18 If the firm does not receive
16 See
Fabrique de Fer de Charleroi, SA v. United
States, 166 F. Supp. 2d 593, 600–604 (CIT 2001)
(Fabrique).
17 The name of the individuals that owns Infinite
and Supreme is business proprietary. We refer to
the principal owner of the two firms as Person A.
18 See 19 CFR 351.505(a)(3)(i).
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any comparable commercial loans
during the relevant periods, the
Department’s regulations provide that
we ‘‘may use a national average interest
rate for comparable commercial
loans.’’ 19 In the Carrier Bags from
Vietnam Preliminary Determination, the
Department determined that loans
provided by Vietnamese banks reflect
significant government intervention in
the banking sector and do not reflect
rates that would be found in a
functioning market.20 We preliminarily
determine that there is no information
on the record of the instant investigation
that warrants a reconsideration of this
finding. Therefore, we continue to find
that the benchmarks that are described
under 19 CFR 351.505(a)(3)(i) and (ii)
are not appropriate and that we must
use an external, market-based
benchmark interest rate.
For short-term U.S. dollar loans, we
have followed the methodology
developed over a number of successive
PRC investigations. Specifically, for U.S.
dollar loans, the Department used as a
benchmark the one-year dollar interest
rates from the London-Interbank Offered
Rate (LIBOR) indexes, plus the average
spread between LIBOR and the one-year
corporate bond rates for companies with
a BB rating.
Land Benchmark
Section 351.511(a)(2) of the
Department’s regulations sets forth the
basis for identifying comparative
benchmarks for determining whether a
government good or service is provided
for less than adequate remuneration
(LTAR). These potential benchmarks are
listed in hierarchical order by
preference: (1) Market prices from actual
transactions within the country under
investigation; (2) world market prices
that would be available to purchasers in
the country under investigation; or (3)
an assessment of whether the
government price is consistent with
market principles.
19 See
19 CFR 351.505(a)(3)(ii).
74 FR at 45814, which references a
Memorandum to Ronald K. Lorentzen, Acting
Assistant Secretary, Import Administration,
‘‘Countervailing Duty Investigation of Polyethylene
Retail Carrier Bags from the Socialist Republic of
Vietnam A Review of Vietnam’s Banking Sector’’
(August 28, 2009) (Vietnam Banking
Memorandum). We have placed the Banking
Memorandum on the record of the instant
investigation. See Memorandum to the File from
Eric B. Greynolds, Program Manager, Office 3,
Operations, ‘‘Placement of Banking Memorandum
on Record of Investigation,’’ (May 29, 2012). The
Department’s conclusions in the Vietnam Banking
Memorandum were not reversed as a result of the
Carrier Bags from Vietnam Final Determination. See
Carrier Bags from Vietnam Decision Memorandum
at ‘‘Application of Facts Otherwise Available and
AFA for API and Fotai.’’
20 See
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In Polyethylene Retail Carrier Bags
from the Socialist Republic of Vietnam:
Preliminary Affirmative Countervailing
Duty Determination and Alignment of
Final Countervailing Duty
Determination with Final Antidumping
Duty Determination, 74 FR 45811,
45815–16 (September 4, 2009) (Carrier
Bags from Vietnam Preliminary
Determination), the Department had
also examined land rent exemptions and
established a benchmark for land in
Vietnam. The Department explained
that it could not rely on the use of socalled ‘‘first-tier’’ and ‘‘second-tier
benchmarks’’ to assess the benefits from
the provision of land at LTAR in
Vietnam. It also determined that the
purchase of land-use rights in Vietnam
is not conducted in accordance with
market principles. Id. at 45815,
referencing the Memorandum to Ronald
K. Lorentzen, Acting Assistant
Secretary, Import Administration,
‘‘Countervailing Duty Investigation of
Polyethylene Retail Carrier Bags from
the Socialist Republic of Vietnam: Land
Markets in Vietnam’’ (August 28, 2009)
(Land Market Memorandum).21
Therefore, in selecting a benchmark for
land, the Department analyzed
comparable market-based prices in
another country at a comparable level of
economic development within the
geographic vicinity of Vietnam. As a
result of this analysis, the Department
selected the cities of Pune and
Bangalore in India as providing the
closest match among options on the
record to Vietnam in terms of per capita
GNI and population density, and
derived a simple average of all rental
rates for industrial property in both
cities to use as the appropriate land
benchmark for Vietnam. Id. at 45816.
In the final determination of retail
carrier bags, the Department retained
this land benchmark methodology
unchanged from the preliminary
determination.22
We find no information on the record
of the instant investigation that warrants
a revision to the land benchmark
methodology developed in Carrier Bags
from Vietnam Preliminary
Determination. Therefore, we continue
to find that we cannot rely on the use
of ‘‘first’’ and ‘‘second-tier’’ benchmarks
for purposes of the land for LTAR
benchmark because the GOV continues
21 We have placed the Land Market Memorandum
on the record of the instant investigation. See
Memorandum to the File from Eric B. Greynolds,
Program Manager, Office 3, Operations, ‘‘Placement
of Land Market Memorandum on Record of
Investigation,’’ (May 29, 2012).
22 See Carrier Bags from Vietnam Decision
Memorandum at ‘‘Land Rent Reduction or
Exemption for Exporters,’’ footnote 23.
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to retain land-use pricing authority
(including lease rates) for land leased
directly from the government,
restrictions are still in place with regard
to land that is sub-leased by private
parties, and the land-use contracts held
by private parties, that serve as the basis
for sub-leases, have been granted by
government agencies that have been set
under government decrees.23 For the
same reasons, we further continue to
find that that the purchase of land-use
rights in Vietnam is not conducted in
accordance with market principles.
Accordingly, to measure the benefit
for land for LTAR in this preliminary
determination, we are using a land
benchmark based on the rental rates for
industrial property in Pune and
Bangalore. Using the same data sources
used in Carrier Bags from Vietnam
Preliminary Determination, we sought
2011 data on those rental rates. We find
that the 2008 data from Carrier Bags
from Vietnam Preliminary
Determination remain the latest data
available. Therefore, we are using the
same simple average of all rental rates
for industrial property in the cities of
Pune and Bangalore that was calculated
in Carrier Bags from Vietnam
Preliminary Determination and adopted
in Carrier Bags from Vietnam Final
Determination, indexed forward to 2011
using consumer price index data for
India, as published by the International
Monetary Fund.
Analysis of Programs
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I. Programs Preliminary Determined To
Be Countervailable
A. Land Preferences for Enterprises in
Encouraged Industries or Industrial
Zones
Decree No. 142/2005/NC–CP (Decree
142) of November 14, 2005, provides for
the collection of land rents and water
surface rents in connection with land
leased by the GOV. See the GOV’s
March 30, 2012, Questionnaire
Response at Exhibit 34. Decree 142
states that land rent shall be reduced or
exempted under certain circumstances
enumerated under the law and also
where the Prime Minister determines it
is appropriate to do so, based on the
recommendation of the agency heads
and provincial and municipal
governments. Id. at Articles 13–15. For
example, Decree 142 provides for land
exemptions for firms located in certain
geographical areas facing socioeconomic difficulties. Id. at Article 14.
The Hamico Companies reported that
on January 12, 2004, the GOV’s
Department of Natural Resources and
23 See
Land Memorandum at 6.
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Environment granted SEA Hamico landuse rights for its facility in the Chau Son
Industrial Zone Area located in Phuong
Le Hong Phong, Phu Ly City of Ha Nam
Province. The Hamico Companies state
that SEA Hamico signed a ‘‘new land
lease contract’’ with the GOV with
regard to the same plot of land on
August 11, 2009. The lease contract in
effect during the POI establishes an
annual rent charged to SEA Hamico.
The lease contract further specifies that
the annual rent is subject to the
provisions of Decree 142. See the
Hamico Companies’ April 2, 2012,
Questionnaire Response, Exhibit 7 at 15.
However, the preferential investment
certificate issued to SEA Hamico
indicates that SEA Hamico is exempted
from paying the annual rent on the land
for ten years, a period that extends into
the POI, and shall enjoy a 50 percent
reduction in rent during the second ten
years of the lease. See The GOV’s March
30, 2012, Questionnaire Response at
Exhibit 43. Further, Decision No. 2459/
QD–CT, December 28, 2011, (Decision
No. 2459) issued by the GOV’s
Department of Taxation of Ha Nam
Province specifies the amount of rent
exemption that SEA Hamico received
during the POI. See The GOV’s March
30, 2012, Questionnaire Response at
Exhibit 47. Decision No. 2459 states that
the rent exemption was provided
pursuant to the ‘‘encouraged investment
provisions’’ of Article 14.4 of Decree
142, which deals with rent exemptions
provided to investment projects located
in geographic areas facing socioeconomic difficulties. See the GOV’s
March 30, 2012, Questionnaire
Response at Exhibit 34.
The Hamico Companies report that
Nam A also received exemptions on
annual lease payments in connection
with its land lease with People’s
Committee of Ha Nam Province during
the POI. See the Hamico Companies
May 16, 2012, supplemental
questionnaire response at 5 and Exhibit
3, which contains Nam A’s lease
contract. The Hamico Companies state
that Nam A’s benefit is ‘‘similar’’ to that
received by SEA Hamico in that the
GOV provided the lease exemption
contingent upon Nam A leasing land in
a geographically designated area. Id. at
5.
As explained above, we have adopted
January 11, 2007, the date on which
Vietnam became a member of the WTO,
as the date from which the Department
will identify and measure subsidies in
Vietnam. In the case of SEA Hamico, the
lease contract in question was signed
prior to the cut-off date. However, as
indicated by the Hamico Companies,
SEA Hamico signed a ‘‘new lease
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32933
contract’’ with the GOV concerning the
plot of land at issue on August 11, 2009,
which established the relevant terms of
the lease after the cut-off date.
Therefore, we find that it is appropriate
to consider the land rent exemptions
received by SEA Hamico during the POI
in connection with the lease contract for
purposes of our subsidy analysis.
Information on the record indicates
that SEA Hamico and Nam A received
the rent exemptions because the land
plots were located in designated
geographical areas and, thus, we
preliminarily determine that the
exemptions are specific under section
771(5A)(D)(iv) of the Act. We also
preliminarily determine that the leasing
of the land constitutes a financial
contribution, in the form of a provision
of a good, within the meaning of section
771(5)(D)(iii) of the Act. In addition, we
find that the rent exemptions confer a
benefit in accordance with section
771(5)(E) of the Act and 19 CFR
351.511(a).
The land contracts SEA Hamico and
Nam A signed with the GOV did not
require lump-sum payments at the time
the original leases were signed. Rather,
the contracts call for annual rent
payments, which the GOV subsequently
exempted. Thus, in accordance with 19
CFR 351.524(c)(1), we preliminarily
determine that the rent exemptions
received by SEA Hamico and Nam A
constitute recurring subsidies.
Therefore, pursuant to 19 CFR
351.524(a), we have allocated benefits
from the rent exemptions to the year in
which the exemptions were received.
See also 351.511(b). As a result, for
purposes of this preliminary
determination, the benefit calculations
for the rent exemptions are limited to
those SEA Hamico and Nam A received
during the POI.
As discussed above in the ‘‘Land
Benchmark’’ section, we continue to
find that land prices in Vietnam are not
based on market principles, consistent
with the findings in the Carrier Bags
from Vietnam Preliminary
Determination; unchanged in Carrier
Bags from Vietnam Decision
Memorandum at ‘‘Land Rent Reduction
or Exemption for Exporters.’’
Consequently, we continue to find
that we cannot rely on the use of ‘‘first’’
and ‘‘second-tier’’ benchmarks for
purposes of the land for LTAR
benchmark and, as was done in Carrier
Bags from Vietnam Preliminary
Determination, we must use a
benchmark based on comparable
market-based prices outside Vietnam.
Therefore, for purposes of the
preliminary determination, we have
used as our benchmark the calculated
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average of the rental rates for Pune and
Bangalore, which corresponds to $6.088
per square meter per month. See Land
Memorandum. This rate corresponds to
rental prices during calendar year 2008,
which we determine to be the latest
such data available. Therefore, in our
preliminary calculations, we indexed
the 2008 price into a 2011 price using
consumer price index data for India, as
published by the International Monetary
Fund.
To calculate the benefit, we
multiplied the land benchmark
discussed above by the total area of the
land plots at issue. In this manner, we
derived the benefit attributable to the
land lease exemptions enjoyed by SEA
Hamico and Nam A during the POI. To
calculate the net subsidy rate, we
converted the benefits into Vietnamese
Dong and divided the total benefit by
the total sales of the Hamico Companies,
net of intra-company sales. On this
basis, we determine the net
countervailable subsidy to be 18.59
percent ad valorem for the Hamico
Companies.
Regarding Linh Sa, the Hamico
Companies reported that it signed its
lease with cross-owned affiliate SEA
Hamico and not with a GOV entity. See
the Hamico Companies May 22, 2012,
Supplemental Questionnaire Response
at 6 and Exhibit 1, which contains the
lease Lihn Sa signed with SEA Hamico.
Based on this information, we
preliminarily determine that Lihn Sa’s
lease with SEA Hamico does not
constitute a government financial
contribution as described under section
771(5)(D)(iv) of the Act.
Similarly, the Infinite Companies
reported that Infinite leased land from
Vinh Hung Limited Liability (Vinh
Hung), which the Infinite Companies
claim is a private company. The Infinite
Companies also reported that Supreme
leased land from a private party. See the
Infinite Companies’ April 3, 2012,
initial questionnaire response at pages
21 through 24 and Exhibits 8–9. We
obtained ownership information from
the GOV regarding the party that leased
land to Infinite and Supreme. Our
review of this ownership information
leads us to preliminarily determine that
the lessors are private companies and,
as such, its leases of land to Infinite and
Supreme do not constitute a government
financial contribution as described
under section 771(5)(D)(iv) of the Act.
See the GOV’s May 22, 2012,
Supplemental Questionnaire Response
at 3–5 and Exhibit GOV S2–7.
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B. Corporate Income Tax Reductions for
Newly Established Investment Projects
We started an investigation of
corporate income tax exemptions and
reductions pursuant to alleged income
tax preferences in industrial zones, and
sought relevant information from the
GOV and the respondents. The Hamico
Companies reported that SEA Hamico
received a 50 percent reduction in
income taxes payable with regard to the
2010 tax return that it filed during the
POI. The 2010 tax returns of Nam A and
Linh Sa indicate that the firms were in
a tax-loss position and, therefore, had
no taxable income to exempt. The 2010
tax returns of the Infinite Companies
filed during the POI indicate that the
firms did not receive any income tax
deductions or exemptions.
Information from the Hamico
Companies and the GOV indicate that
SEA Hamico received the exemption
pursuant to the 1997 Law on Enterprise
Income Tax, No. 57/L–CTN (Law No.
57), Law on Domestic Investment
Encouragement, No. 03/1998/QH10
(Law No. 03) and the Implementing
Decree of Law on Domestic Investment
Encouragement of 1998, Decree No. 51/
1999/ND–CP (Decree No. 51). See the
GOV’s May 22, 2012, Supplemental
Questionnaire Response at 3; see also
the Hamico Companies’ May 14, 2012,
questionnaire response, Exhibit 1 at 9.
This income tax exemption is also
referenced in the certificate of
investment incentives issued to SEA
Hamico by the People’s Committee of
Ha Nam Province. Id. at Exhibit 4.
According to the GOV, SEA Hamico was
entitled to an income tax exemption for
two years and a 50 percent reduction in
income taxes for the subsequent four
years pursuant to Article 17, Clause 1,
Point b of Law No. 57; Articles 15.7 and
21.1 of Law No. 3; and List A of Decree
No. 51. See the GOV’s May 22, 2012,
Supplemental Questionnaire Response
at 3–4. Specifically, the GOV states that
this entitlement is based on Law No. 3,
Article 15.7, ‘‘Branches and trades that
should be given priority in each period
of socio-economic development.’’
The GOV submitted Hamico’s
Preferential Investment Certificate No.
1107/GCNUD (September 23, 2003) and
Certificate of Amendment to Investment
Certificate No. 06221000076 (February
5, 2010), which describe the incentives
applicable to Hamico’s investment
project. See the GOV’s May 22, 2012,
Third Supplemental Questionnaire
Response at Exhibit GOVS3–3. We note
that while these investment certificates
identify the applicable laws and
regulations, including Law No. 57, Law
No. 3, and Decree 51, they do not
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Fmt 4703
Sfmt 4703
identify the specific sections of the laws
or decree. Thus, while the GOV has
specified Article 15.7 of Law No. 3 as
defining the entitlement, we note that
Article 15 contains other investment
activities with equal entitlement to the
same incentives, e.g., Article 15.3,
investment projects related to ‘‘the
production of and trading in export
goods,’’ under which Hamico could
qualify for the same exemption and
reduction in income tax. Consequently,
we will continue to seek information to
clarify the precise basis on which
Hamico benefited from this program.
As noted above, we initially examined
the income tax exemption and reduction
program pursuant to alleged tax
preferences in industrial zones. As
discussed above, the facts on the record
thus far indicate the program provides
benefits based on investment activities
or certain enterprises, specifically
‘‘branches and trades that should be
given priority in each period of socioeconomic development’’ with regard to
Hamico. To the extent that this
constitutes a different program from
among those that we enumerated in our
initiation, 19 CFR 351.311(b) allows the
Department to investigate other possible
countervailable subsidies discovered
during the course of a proceeding. This
approach is consistent with the
Department’s practice.24
We preliminarily determine that the
tax reduction provided to SEA Hamico
under this program is specific to a group
of enterprises, namely ‘‘branches and
trades that should be given priority in
each period of socio-economic
development’’ specified under Article
15.7 of Law No. 3 within the meaning
of section 771(5A)(D)(i) of the Act. The
income tax reduction and exemption are
financial contributions in the form of
revenue forgone by the government
under section 771(5)(D)(ii) of the Act,
and provide a benefit to SEA Hamico in
the amount of tax savings pursuant to
section 771(5)(E) of the Act and 19 CFR
351.509(a)(1).
To calculate the net subsidy rate, we
divided the amount of SEA Hamico’s
tax savings, as indicated on the 2010 tax
return it filed during the POI, by the
combined total sales of SEA Hamico,
Nam A, and Linh Sa, net of intracompany sales. On this basis, we
preliminarily determine a net
countervailable subsidy rate of 0.93
percent ad valorem for the Hamico
Companies.
24 See Carrier Bags from Vietnam Preliminary
Determination, 74 FR 45818; unchanged in Carrier
Bags from Vietnam Decision Memorandum at
‘‘Income Tax Preferences for Encouraged
Industries.’’
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C. Import Duty Exemptions or
Reimbursements for Raw Materials
Duty exemptions on raw materials are
addressed in the Law on Import Duty
and Export Duty, Law No. 45/2005/QH–
11 (Law No. 45) and Decree No. 87/
2010/ND–CP (Decree 87). See the GOV’s
March 30, 2012, questionnaire response
at Exhibits 60. Specifically, under Law
No. 45, Chapter IV, import duty
exemption is provided for ‘‘raw
materials and supplies used for
manufacture of equipment and
machinery’’ (Article 16.6(d)) and ‘‘Raw
materials, supplies and accessories
imported for production activities of
investment projects on the list of
domains where investment is
particularly encouraged or the list of
geographical areas meeting with
exceptional socio-economic difficulties’’
(Article 16.9). Id. at Exhibit 60. We
believe raw materials may also be
imported duty-free under Article 16.4,
‘‘goods imported for processing for
foreign partners then exported or goods
exported to foreign countries for
processing for Vietnam then re-imported
under processing contracts.’’ Id.
Additionally, Article 19 provides for
reimbursement of duties on raw
materials or supplies imported for the
production of export goods, for which
import tax has been paid.’’ Id.
Decree No. 87, enacted in August
2010 reflects the implementation of Law
No. 45 that was in effect during the POI.
Id. at Exhibit 61. Article 12 of Decree 87
provides additional detail for the duty
exemptions on raw materials originally
provided under Law No. 45. Articles
12.6(d) and 12.14 specify that the
exemptions for ‘‘raw materials and
supplies used for manufacture of
equipment and machinery’’ and ‘‘raw
materials, supplies and accessories
imported for production activities of
investment projects on the list of
domains where investment is
particularly encouraged or the list of
geographical areas meeting with
exceptional socio-economic difficulties’’
will apply only where such raw
materials and supplies ‘‘cannot be
domestically produced yet.’’ Id. With
regard to ‘‘goods imported for
processing for foreign parties,’’ Article
12.4 leaves the import duty exemption
unchanged, but adds that the exported
processed products are also exempt
from export duty.
Infinite and the GOV state that
Infinite received exemptions on raw
material imports based the export
processing contracts it had with foreign
firms. SEA Hamico and Lihn Sa also
state that they received duty exemptions
on raw materials. The Hamico
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Companies reported that Nam A did not
import raw materials during the POI.
Most, if not all, of the sales of the
Infinite Companies and Hamico
Companies are devoted to exports.
For import duty exemptions on raw
materials for exported goods, the
exemptions cannot exceed the amount
of duty levied; otherwise, the excess
amounts exempted confer a
countervailable benefit under 19 CFR
351.519(a)(1)(i). Moreover, under 19
CFR 351.519(a)(4), the government must
have a system to confirm which inputs
are consumed in production and in
what amounts; otherwise, the
exemptions confer a benefit equal to the
total amount of duties exempted. In the
Retail Carrier Bags from Vietnam Final
Determination, the Department
concluded that the GOV does not have
in place a system to confirm which
inputs are consumed in the production
of the exported products and in what
amounts, including a normal allowance
for waste. See Carrier Bags from
Vietnam Decision Memorandum at
‘‘Import Duty Exemptions for Imported
Raw Materials for Exported Goods.’’ No
information on the record of the instant
proceeding warrants a reconsideration
of that finding; therefore, we find that
the import duty exemptions on raw
materials confer a benefit equal to the
total amount of the duties exempted, in
accordance with 19 CFR 351.519(a)(4).
Because the receipt of import duty
exemptions on raw materials was
contingent upon export performance as
one or more criteria, we preliminarily
determine that they are specific in
accordance with section 771(5A)(B) of
the Act. We further preliminarily
determine that the exemptions
constitute a financial contribution in the
form of revenue forgone, as described
under section 771(5)(D)(ii) of the Act.
To calculate the benefit, we summed
the amount of duties saved during the
POI. To calculate the net subsidy rate,
we divided the benefit by respondents’
total export sales, net of intra-company
sales. On this basis, we preliminarily
determine a net countervailable subsidy
rate of 1.34 percent ad valorem for the
Hamico Companies and 11.03 percent
ad valorem for the Infinite Companies.
D. Preferential Lending to Exporters
The Hamico Companies reported that
SEA Hamico and Linh SA had loans
outstanding during the POI that were
issued by the Vietnam Joint Stock
Commercial Bank for Industry and
Trade (Vietinbank) as well as an
additional lending institution.25 See the
25 The identity of this lending institution is
business proprietary.
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Sfmt 4703
32935
Hamico Companies’ April 2, 2012,
questionnaire response at Attachment 1;
see also the Hamico Companies May 22,
2012, Supplemental Questionnaire
Response at Attachment I, which
contains the loan information of the
additional lending institution. The GOV
states that SEA Hamico and Linh Sa
received these loans in connection with
an ‘‘export loan program’’ operated by
the respective lending institutions. See
the GOV’s March 30, 2012,
questionnaire response at 24. According
to the GOV, under this program, the
lending institutions offered ‘‘supported’’
interest rates to exporters, provided that
they use the proceeds of the loan in the
manner specified in the contract, follow
the payment schedule specified in the
contract, conduct payment for exporting
through the lending institution, and sell
the foreign exchange earned from the
export sale through the lending
institution. Id. Regarding the
Vietinbank, information from the GOV
specifically indicates that Vietinbank
offered the ‘‘preferential’’ interest rates
to exporters in an effort to implement its
‘‘Export Loan Program.’’ See the GOV’s
May 16, 2012, supplemental
questionnaire response at Exhibit 2. The
Hamico Companies reported that Nam A
did not have any loans outstanding
during the POI. The Infinite Companies
similarly reported that they did not have
any loans outstanding during the POI.
In past CVD proceedings involving
Vietnam, the Department has found
Vietinbank to be a state-owned
commercial bank (SOCB) and thus, a
government authority capable of
providing a financial contribution as
described under section 771(5)(D)(i) of
the Act. See Carrier Bags from Vietnam
Preliminary Determination, 74 FR at
45817.26 Information provided by the
GOV indicates that it owned
approximately 80 percent of Vietinbank
during the POI. See the GOV’s May 16,
2012, supplemental questionnaire
response at 4. Hence, we continue to
find that Vietinbank is a government
authority. Therefore, we preliminarily
determine that the loans issued to SEA
Hamico and Lihn Sa by Vietinbank
constitute a financial contribution by a
government authority within the
meaning of section 771(5)(D)(i) of the
Act. Regarding the additional lending
institution, because the Hamico
Companies identified loans outstanding
from this institution as financing offered
26 The Department’s finding that Vietinbank was
a government authority operating as a SOCB was
not reversed as a result of the Carrier Bags from
Vietnam Final Determination. See Carrier Bags from
Vietnam Decision Memorandum at ‘‘Application of
Facts Otherwise Available and AFA for API and
Fotai.’’
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‘‘under the export loan program’’ we
find, for purposes of the preliminary
determination, that such loans
constitute a financial contribution by a
government authority within the
meaning of section 771(5)(D)(i) of the
Act.
We further preliminarily determine
that, pursuant to section 771(5)(E)(ii) of
the Act, loans issued to SEA Hamico
and Lihn Sa under this program confer
a benefit equal to the difference between
what the recipients paid on the loans
from the lending institutions and the
amount they would have paid on
comparable, commercial loans. In
determining the amount SEA Hamico
and Lihn Sa would have paid on
comparable, commercial loans, we
employed the interest rate benchmark
discussed above in the ‘‘Interest Rate
Benchmark’’ section. Information from
the GOV indicates that receipt of the
Vietinbank loans are contingent, in part,
upon export activities and, thus, we
preliminarily determine that this
program is specific under section
771(5A)(B) of the Act.
Next, we summed the benefit
calculated on each loan the firms had
outstanding under the program during
the POI and divided the total benefit by
the combined total export sales of SEA
Hamico, Nam A, and Lihn Sa, net of
intra-company sales. On this basis, we
preliminarily determine a net
countervailable subsidy rate of 0.39
percent ad valorem for the Hamico
Companies.
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II. Program Preliminarily Determined
Not To Confer Benefits During the POI
A. Import Duty Exemptions on Imports
of Goods for Encouraged Projects
Article 12.6 of Decree 87 allows firms
with investment in encouraged projects
and/or located in certain geographical
areas (which includes industrial zones)
to receive duty exemptions on import of
goods to create fixed assets and
equipment. Infinite, SEA Hamico, and
Lihn Sa are located in industrial zones.
We preliminarily determine that
information from Infinite indicates that
it received duty exemptions under this
program. Regarding the Hamico
Companies, though they qualified for
duty exemptions under the program,
information provided thus far indicates
that, absent the program, the duty rates
on the equipment the Hamico
Companies imported were zero.
Because the receipt of import duty
exemptions on fixed assets was
contingent upon the firms’ location in a
designated geographic area, we
preliminarily determine that they are
regionally-specific in accordance with
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Jkt 226001
section 771(5A)(D)(iv) of the Act. We
further preliminarily determine that the
exemptions constitute a financial
contribution in the form of revenue
forgone, as described under section
771(5)(D)(ii) of the Act and confer a
benefit under section 771(5(E) and 19
CFR 351.519(a)(4).
Normally, we treat exemptions from
indirect taxes and import charges, such
as tariff exemptions, as recurring
benefits, consistent with 19 CFR
351.524(c)(1) and allocate these benefits
only in the year that they were received.
However, when an indirect tax or
import charge exemption is provided
for, or tied to, the capital structure or
capital assets of a firm, the Department
may treat it as a non-recurring benefit
and allocate the benefit to the firm over
the AUL. See 19 CFR 351.524(c)(2)(iii)
and 19 CFR 351.524(d)(1). Therefore,
because these exemptions are for goods
used in creating capital equipment, we
find that the duty exemptions are tied
to the company’s capital assets, and we
have examined the tariff exemptions
that respondents received under the
program throughout the period between
January 11, 2007, (the ‘‘cut-off’’ date for
Vietnam) and the POI.
To calculate the amount of import
duties exempted under the program, we
multiplied the value of the imported
equipment by the import duty rate that
would have been levied absent the
program. Next, we summed the amount
of duty exemptions received in each
year. Then we divided the total amount
of tariff exemptions by the
corresponding total sales for the year in
which the exemptions were received.
Those exemptions that were less than
0.5 percent of total sales were expensed
to the year of receipt. Those exemptions
that were greater than 0.5 percent of
total sales were allocated over the AUL
using the methodology described under
19 CFR 351.524(d)(2) and then divided
by respondents’ total sales during the
POI, net of intra-company sales. In the
case of Infinite, the benefits received
under the program were fully expensed
prior to the POI.
III. Programs Preliminarily Determined
To Be Not Used
A. Grants to Firms That Employ More
Than 50 Employees
The GOV self-reported the existence
of this program in which it provides
grants to firms that employ more than
50 employees. See the GOV’s March 30,
2012, questionnaire response at 101.
The GOV further reported that the
Hamico Companies may have received
benefits under the program given that
the investment certificate for Nam A
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Fmt 4703
Sfmt 4703
indicates that Nam A is eligible to
receive funds under the program. Id.;
see also the Hamico Companies’ May
14, 2012, questionnaire response at
Exhibit 5, which contains Nam A’s
investment certificate.
There is no evidence of the Infinite
Companies’ use of this program in its
questionnaire response, investment
certificate, or financial statements.
Regarding the Hamico Companies, they
explain that though they are eligible to
participate in the program, they have
not received any funds under the
program from the GOV. See the Hamico
Companies May 16, 2012, questionnaire
response at 7. On this basis, we
preliminarily determine that this
program was not used by the Hamico
and Infinite Companies.
B. Provision of Water for LTAR
The Infinite Companies reported that
they draw their water from their own
well located on site and, thus, do not
pay water fees to the GOV. See the
Infinite Companies May 11, 2012,
supplemental questionnaire response at
11. Regarding the Hamico Companies,
source documents for SEA Hamico
indicate that it paid water fees to the
GOV during the POI and that these fees
were equal to those fees charged to
businesses engaged in commercial and
production activities, as set by the
provincial government. See the Hamico
Companies’ April 2, 2012, questionnaire
response at 28 and Exhibits 11–13.
Concerning Nam A, its investment
certificate provides that it is eligible to
receive exemptions on its ‘‘water rent.’’
See the Hamico Companies’ May 14,
2012, questionnaire response at Exhibit
5. However, despite qualifying for such
an exemption, the Hamico Companies
state that Nam A did not use the
program because it did not use ‘‘surface
water’’ (i.e., water sources rented from
the GOV) in its production process. See
the Hamico Companies’ May 16, 2012,
questionnaire response at 6–7.
Notwithstanding the Hamico
Companies’ claims regarding Nam A,
information from the Hamico
Companies indicates that Nam A paid
water fees to the GOV during the POI
and that these fees were equal to those
fees charged to businesses engaged in
commercial and production activities,
as set by the provincial government. See
the Hamico Companies May 22, 2012,
Supplemental Questionnaire Response
at Exhibit 9. Similarly, information from
Lihn Sa and the GOV indicates that the
firm paid a water usage rate equal to the
rate charged to businesses engaged in
commercial and production activities.
See the GOV’s March 30, 2012,
Questionnaire response at Exhibit 3 and
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the Hamico Companies’ May 22, 2012,
Supplemental Questionnaire Response
at Exhibit 10. Therefore, we
preliminarily determine that the
provision of water is not specific to the
industrial zones in which the
respondents are located, and find that
the Infinite Companies and the Hamico
Companies did not use the program.
We note that, based on the record
information thus far, the level of
government at which the actual ratesetting authority rests remains unclear.
While the GOV issues a national pricing
framework for water supply,
distribution and consumption, the
actual published rate schedules are
issued at the provincial levels on
approval by the provincial governments.
See GOV’s March 30, 2012,
Questionnaire Response at Exhibit 6.
Hence, we will continue to examine the
price-setting regime for water in
Vietnam.
ebenthall on DSK5SPTVN1PROD with NOTICES
C. Provision of Wire Rod for LTAR
The Infinite Companies state that they
only purchased wire from foreign
sources during the POI. See the Infinite
Companies’ May 11, 2012, at 9 and
Attachment 3. The Hamico Companies
state that they did not purchase wire rod
from Vietnamese sources during the
POI. Instead, they report that they either
imported wire rod from foreign sources
or purchased wire from domestic
sources.
The allegation on which the
Department initiated its investigation
centers on the provision of wire rod not
drawn wire. We find that wire is a good
that is distinct from wire rod. On this
point, we note that the Hamico
Companies have submitted source
documents (e.g., invoices) which
indicate the specifications (e.g.,
diameter) of the wire they purchased
from domestic sources during the POI.
See the Hamico Companies’ May 16,
2012, supplemental questionnaire
response at Exhibits 1–4. Our review of
these source documents, confirms our
preliminary finding that the inputs the
Hamico Companies purchased from
domestic sources constitute wire
products and not wire rod. Thus, we
find that purchases of wire rod from
non-Vietnamese sources are not subject
to our subsidy analysis. On this basis,
we preliminarily determine that
respondents did not use the provision of
wire rod for LTAR program during the
POI.
In addition, we preliminarily
determine that respondents did not use
the programs listed below:
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D. Export Promotion Program
E. Land Rent Reduction/Exemption for
Exporters
F. Land-Rent Reduction or Exemption
for Foreign Invested Enterprises
(‘‘FIEs’’)
G. Income Tax Preferences for FIEs
H. Income Tax Refund for Reinvestment
by FIEs
I. Income Tax Preferences in Industrial
Zones
J. Import Duty Preferences for FIEs
Verification
In accordance with section 782(i)(1) of
the Act, we will verify the information
submitted by the respondents prior to
making our final determination.
Suspension of Liquidation
32937
of sections 705(c)(1)(B)(i)(I), and
705(c)(5)(A) of the Act, we have not
calculated the all others rate by weight
averaging the rates of the Hamico and
Infinite Companies because doing so
risks disclosure of proprietary
information. Therefore, for the all others
rate, we have calculated a simple
average of the respondents’ net subsidy
rates.
In accordance with sections
703(d)(1)(B) and (2) of the Act, we are
directing CBP to suspend liquidation of
all entries of steel wire garment hangers
from Vietnam 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 merchandise
in the amounts indicated above.28
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,
Net
provided the ITC confirms that it will
subsidy
not disclose such information, either
rate
(percent) 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
21.25 determination within 45 days after the
Department makes its final
determination.
In accordance with section
703(d)(1)(A)(i) of the Act, we have
calculated individual rates for the
respondents individually investigated,
the Hamico Companies and the Infinite
Companies. We preliminarily determine
the total estimated net countervailable
subsidy rates to be:
Exporter/manufacturer
South East Asia Hamico Export
Joint Stock Company (SEA
Hamico), Nam A Hamico Export
Joint Stock Company (Nam A),
and Linh Sa Hamico Company
Limited (Linh Sa) (collectively,
the Hamico Companies) ...........
Infinite Industrial Hanger Limited
(Infinite) and Supreme Hanger
Company Limited (Supreme)
(collectively the Infinite Companies) ..........................................
All Others ......................................
Sections 703(d), 705(c)(1)(B)(i)(I), and
705(c)(5)(A) of the Act state that for
companies not investigated, we will
determine an all-others rate by weightaveraging the individual subsidy rates
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.27 In this preliminary
determination, the calculated net
subsidy rate for the Hamico Companies
and the Infinite Companies are above de
minimis. Notwithstanding the language
Disclosure and Public Comment
In accordance with 19 CFR
351.224(b), the Department will disclose
to the parties the calculations for this
preliminary determination within five
days of its announcement. Case briefs
for this investigation must be submitted
no later than one week after the
issuance of the last verification report.
See 19 CFR 351.309(c) (for a further
discussion of case briefs). Rebuttal
briefs, which must be limited to issues
raised in the case briefs, must be filed
within five days after the deadline for
submission of case briefs. See 19 CFR
351.309(d). A list of authorities relied
upon, a table of contents, and an
executive summary of issues should
accompany any briefs submitted to the
27 Pursuant to 19 CFR 351.204(d)(3), the
Department must also exclude the countervailable
subsidy rate calculated for a voluntary respondent.
In this investigation, we had no producers or
exporters request to be voluntary respondents.
28 See Modification of Regulations Regarding the
Practice of Accepting Bonds During the Provisional
Measures Period in Antidumping and
Countervailing Duty Investigations, 76 FR 61042
(October 3, 2011).
PO 00000
Frm 00010
Fmt 4703
Sfmt 4703
11.03
16.14
E:\FR\FM\04JNN1.SGM
04JNN1
32938
Federal Register / Vol. 77, No. 107 / Monday, June 4, 2012 / Notices
Department. Executive summaries
should be limited to five pages total,
including footnotes.
In accordance with 19 CFR
351.310(c), we will hold a public
hearing, if requested, to afford interested
parties an opportunity to comment on
this preliminary determination.
Individuals who wish to request a
hearing must submit a request within 30
days of the publication of this notice in
the Federal Register to the Assistant
Secretary for Import Administration,
U.S. Department of Commerce. Parties
will be notified of the schedule for the
hearing, and parties should confirm the
time, date, and place of the hearing 48
hours before the scheduled time.
Requests for a public hearing should
contain: (1) Party’s name, address, and
telephone number; (2) the number of
participants; and (3) to the extent
practicable, an identification of the
arguments to be raised at the hearing.
This determination is issued and
published pursuant to sections 703(f)
and 777(i) of the Act.
Dated: May 29, 2012.
Paul Piquado,
Assistant Secretary for Import
Administration.
[FR Doc. 2012–13474 Filed 6–1–12; 8:45 am]
BILLING CODE 3510–DS–P
DEPARTMENT OF COMMERCE
International Trade Administration
[A–583–844]
Narrow Woven Ribbons With Woven
Selvedge From Taiwan: Preliminary
Results of Antidumping Duty
Administrative Review
Import Administration,
International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce
(Department) is conducting the first
administrative review of the
antidumping duty order on narrow
woven ribbons with woven selvedge
(narrow woven ribbons) from Taiwan.
The sole mandatory respondent in this
administrative review, Hubschercorp,
did not respond to the Department’s
questionnaire. As a result, we have
preliminarily assigned Hubschercorp a
margin based on adverse facts available
(AFA). The period of review (POR) is
September 1, 2010, through August 31,
2011.
If the preliminary results are adopted
in our final results of administrative
review, we will instruct U.S. Customs
and Border Protection (CBP) to assess
antidumping duties on all appropriate
ebenthall on DSK5SPTVN1PROD with NOTICES
AGENCY:
VerDate Mar<15>2010
16:10 Jun 01, 2012
Jkt 226001
entries. Interested parties are invited to
comment on the preliminary results.
DATES: Effective Date: June 4, 2012.
FOR FURTHER INFORMATION CONTACT:
Holly Phelps, AD/CVD Operations,
Office 2, Import Administration,
International Trade Administration,
U.S. Department of Commerce, 14th
Street and Constitution Avenue NW.,
Washington, DC 20230; telephone: (202)
482–0656.
SUPPLEMENTARY INFORMATION:
Background
In September 2010, the Department
published in the Federal Register an
antidumping duty order on narrow
woven ribbons from Taiwan.1 On
September 2, 2011, the Department
published in the Federal Register a
notice of opportunity to request an
administrative review of the
antidumping duty order on narrow
woven ribbons from Taiwan for the
period September 1, 2010, through
August 31, 2011.2 In response to a
timely request from the petitioner,
Berwick Offray LLC and its whollyowned subsidiary Lion Ribbon
Company, Inc., pursuant to 19 CFR
351.213(b)(1), the Department initiated
an administrative review for the
following ten companies: (1) Apex
Ribbon; (2) Apex Trimmings; (3)
FinerRibbon.com; (4) Hubschercorp; (5)
Intercontinental Skyline; (6) Multicolor
Inc.; (7) Pacific Imports; (8) Papillon
Ribbon & Bow (Canada); (9) Shienq
Huong Enterprise Co., Ltd./Hsien Chan
Enterprise Co., Ltd./Novelty Handicrafts
Co., Ltd.; and (10) Supreme Laces, Inc.3
In November 2011 and January 2012,
we requested that each company named
in the Initiation Notice provide data on
the quantity and value (Q&V) of its
exports of subject merchandise to the
United States during the POR. We
received responses to the Q&V
questionnaires during the period
November 2011 through January 2012.
On January 30, 2012, the petitioner
withdrew its request for an
1 See Narrow Woven Ribbons with Woven
Selvedge from Taiwan and the People’s Republic of
China: Antidumping Duty Orders, 75 FR 53632
(Sept. 1, 2010), as amended in Narrow Woven
Ribbons With Woven Selvedge From Taiwan and
the People’s Republic of China: Amended
Antidumping Duty Orders, 75 FR 56982 (Sept. 17,
2010).
2 See Antidumping or Countervailing Duty Order,
Finding, or Suspended Investigation; Opportunity
To Request Administrative Review, 76 FR 54735,
54736 (Sept. 2, 2011).
3 See Initiation of Antidumping and
Countervailing Duty Administrative Reviews and
Request for Revocation in Part, 76 FR 67133, 67138
(Oct. 31, 2011); and Correction to Initiation of 2010–
2011 Antidumping Duty Administrative Review:
Narrow Woven Ribbons With Woven Selvedge From
Taiwan, 77 FR 82 (Jan. 3, 2012) (Initiation Notice).
PO 00000
Frm 00011
Fmt 4703
Sfmt 4703
administrative review for all companies
named in the Initiation Notice except
Hubschercorp. On this same date, we
issued the antidumping duty
questionnaire to Hubschercorp.
On February 17, 2012, we rescinded
the review with respect to the following
companies: (1) Apex Ribbon; (2) Apex
Trimmings; (3) FinerRibbon.com; (4)
Intercontinental Skyline; (5) Multicolor
Inc.; (6) Pacific Imports; (7) Papillon
Ribbon & Bow (Canada); (8) Shienq
Huong Enterprise Co., Ltd./Hsien Chan
Enterprise Co., Ltd./Novelty Handicrafts
Co., Ltd.; and (9) Supreme Laces, Inc.4
Also on February 17, 2012,
Hubschercorp contacted the Department
to inform us that it was having difficulty
in responding to the Department’s
questionnaire and that it may not be
able to participate in this review. On
February 21, 2012 (i.e., the due date for
the first portion of the questionnaire
response), we followed up with
Hubschercorp to determine whether the
company intended to participate in the
administrative review. On February 24,
2012, Hubschercorp informed the
Department that it did not intend to
respond to the questionnaire or
participate in the administrative
review.5 Therefore, in accordance with
section 776(a)(2)(A), (B) and (C) of the
Tariff Act of 1930, as amended (the Act),
for these preliminary results, the
Department has applied facts otherwise
available with an adverse inference
when determining Hubschercorp’s rate.
See the section ‘‘Use of Facts Otherwise
Available and AFA,’’ below, for further
discussion.
Scope of the Order
The scope of this order covers narrow
woven ribbons with woven selvedge, in
any length, but with a width (measured
at the narrowest span of the ribbon) less
than or equal to 12 centimeters,
composed of, in whole or in part, manmade fibers (whether artificial or
synthetic, including but not limited to
nylon, polyester, rayon, polypropylene,
and polyethylene teraphthalate), metal
threads and/or metalized yarns, or any
combination thereof. Narrow woven
ribbons subject to the order may:
4 See Narrow Woven Ribbons With Woven
Selvedge From Taiwan: Rescission, in Part, of
Antidumping Duty Administrative Review, 77 FR
9624 (Feb. 17, 2012).
5 See the February 27, 2012, Memorandum to the
File From Elizabeth Eastwood, Senior Analyst, and
Holly Phelps, Analyst, entitled, ‘‘Phone
Conversation With Hubschercorp Regarding the
2010–2011 Antidumping Duty Administrative
Review of Narrow Woven Ribbons with Woven
Selvedge from Taiwan’’ (Hubschercorp Memo), for
further discussion of our correspondence with
Hubschercorp.
E:\FR\FM\04JNN1.SGM
04JNN1
]]>Agencies
[Federal Register Volume 77, Number 107 (Monday, June 4, 2012)]
[Notices]
[Pages 32930-32938]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-13474]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
[C-552-813]
Certain Steel Wire Garment Hangers From the Socialist Republic of
Vietnam: 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 wire garment hangers (garment
hangers) from the Socialist Republic of Vietnam (Vietnam). For
information on the estimated subsidy rates, see the ``Suspension of
Liquidation'' section of this notice.
DATES: Effective Date: June 4, 2012.
FOR FURTHER INFORMATION CONTACT: John Conniff (for the Hamico Companies
\1\) at 202-482-1009, and Robert Copyak (for the Infinite Companies
\2\) at 202-482-2209, AD/CVD Operations, Office 3, Import
Administration, U.S. Department of Commerce, Room 4014, 14th Street and
Constitution Avenue NW., Washington, DC 20230.
---------------------------------------------------------------------------
\1\ The Hamico Companies are the South East Asia Hamico Export
Joint Stock Company (SEA Hamico), Nam A Hamico Export Joint Stock
Company (Nam A), and Linh Sa Hamico Company Limited (Linh Sa).
\2\ The Infinite Companies are Infinite Industrial Hanger
Limited (Infinite) and Supreme Hanger Company Limited (Supreme).
SUPPLEMENTARY INFORMATION:
Case History
On December 29, 2011, the Department received a countervailing duty
(CVD) petition concerning imports of garment hangers from Vietnam filed
in proper form by M&B Metal Products Company, Inc., Innovative
Fabrication LLC/Indy Hanger, and US Hanger Company, LLC (collectively,
petitioners).\3\ The Department initiated an investigation on January
18, 2012.\4\ In the Initiation, the Department stated that it intended
to rely on data from U.S. Customs and Border Protection (CBP) for
purposes of selecting the mandatory respondents.\5\ On January 18,
2012, the Department released the results of a query performed on the
CBP's database for calendar year 2011.\6\ Due to the large number of
producers and exporters of garment hangers in Vietnam, we determined
that it was not practicable to individually investigate each producer
and/or exporter. We, therefore, selected the following two producers
and/or exporters of garment hangers to be mandatory respondents:
Infinite and SEA Hamico, the largest publicly identifiable producers
and/or exporters of the subject merchandise.\7\ On February 10, 2012,
we issued the initial CVD questionnaire to the Government of the
Vietnam (GOV) and the selected mandatory respondents. We also issued a
confirmation of shipment questionnaire on the same date to Infinite and
SEA Hamico.
---------------------------------------------------------------------------
\3\ 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.
\4\ See Steel Wire Garment Hangers From the Socialist Republic
of Vietnam: Initiation of Countervailing Duty Investigation, 77 FR
3737 (January 25, 2011) (Initiation), and accompanying Initiation
Checklist.
\5\ See Initiation, 77 FR at 3739.
\6\ See Memorandum to the File from Eric B. Greynolds, Program
Manager, AD/CVD Operations, Office 3, regarding ``Release of Customs
and Border Protection (CBP) Query Results'' (January 18, 2012).
\7\ See Memorandum to Christian Marsh, Deputy Assistant
Secretary for AD/CVD Operations, ``Respondent Selection'' (February
10, 2012). The companies are listed in alphabetical order and not
listed based on export value/volume.
---------------------------------------------------------------------------
On February 14, 2012, Infinite and SEA Hamico confirmed that they
shipped subject merchandise to the United States during the period of
investigation (POI). On March 2, 2012, the Department postponed the
deadline
[[Page 32931]]
for the preliminary determination by 65 days to no later than May 29,
2012.\8\
---------------------------------------------------------------------------
\8\ See Steel Wire Garment Hangers from the Socialist Republic
of Vietnam: Notice of Postponement of Preliminary Determination in
the Countervailing Duty Investigation, 77 FR 3737 (January 25,
2012).
---------------------------------------------------------------------------
On February 3, 2012, petitioners submitted untimely new subsidy
allegations concerning electricity that the GOV allegedly provided for
less than adequate remuneration (LTAR). On March 29, 2012, the
Department issued a decision memorandum in which it declined to
initiate an investigation into petitioners' allegation.\9\
---------------------------------------------------------------------------
\9\ See Memorandum to Melissa G. Skinner, Director, Office 3,
AD/CVD Operations, ``Decision Memorandum on a New Subsidy
Allegation'' (March 29, 2012).
---------------------------------------------------------------------------
The GOV submitted its response to the initial questionnaire on
March 30, 2012. SEA Hamico submitted its questionnaire response on
behalf of the Hamico Companies on April 2, 2012. Infinite submitted its
questionnaire response on behalf of the Infinite Companies on April 3,
2012. The Department issued supplemental questionnaires to GOV, the
Hamico Companies, and the Infinite Companies from April 25 through May
14, 2012. The Department received the supplemental questionnaire
responses from May 4 through May 22, 2012.
Period of Investigation
The POI for which we are measuring subsidies is January 1, 2011,
through December 31, 2011, which corresponds to the most recently
completed fiscal year.\10\
---------------------------------------------------------------------------
\10\ See 19 CFR 351.204(b)(2).
---------------------------------------------------------------------------
Scope of the Investigation
The merchandise subject to the investigation is steel wire garment
hangers, fabricated from carbon steel wire, whether or not galvanized
or painted, whether or not coated with latex or epoxy or similar
gripping materials, and/or whether or not fashioned with paper covers
or capes (with or without printing) and/or nonslip features such as
saddles or tubes. These products may also be referred to by a
commercial designation, such as shirt, suit, strut, caped, or latex
(industrial) hangers.
Specifically excluded from the scope of the investigation are (a)
wooden, plastic, and other garment hangers that are not made of steel
wire; (b) steel wire garment hangers with swivel hooks; (c) steel wire
garment hangers with clips permanently affixed; and (d) chrome-plated
steel wire garment hangers with a diameter of 3.4mm or greater.
The products subject to the investigation are currently classified
under U.S. Harmonized Tariff Schedule (HTSUS) subheadings 7326.20.0020
and 7323.99.9080. Although the HTSUS subheadings are provided for
convenience and customs purposes, the written description of the
merchandise is dispositive.
Scope Comments
As discussed in the Initiation, we set aside a period for
interested parties to raise issues regarding product coverage.\11\
However, no parties submitted scope comments on the records of the AD
or CVD investigations.
---------------------------------------------------------------------------
\11\ See Initiation, 77 FR at 3737.
---------------------------------------------------------------------------
Injury Test
Because Vietnam is a ``Subsidies Agreement Country'' within the
meaning of section 701(b) of the Tariff Act of 1930, as amended (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
February 10, 2012, the ITC made a preliminary determination finding
that there is a reasonable indication that an industry in the United
States is threatened with material injury by reason of imports of
garment hangers from Vietnam.\12\
---------------------------------------------------------------------------
\12\ See Steel Wire Garment Hangers from Taiwan and Vietnam
(Investigation Nos. 701-TA-487 and 731-TA-1197-1198 (Preliminary),
USITC Publication 4305, February 2012).
---------------------------------------------------------------------------
Alignment of Final Countervailing Duty Determination With Final
Antidumping Duty Determination
On May 9, 2012, 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 garment hangers from Vietnam. 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 garment hangers from Vietnam. 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
October 9, 2012.
Application of the CVD Law to Imports From Vietnam
On April 1, 2010, the Department published the Carrier Bags from
Vietnam Final Determination in which we found the CVD law applicable to
Vietnam.\13\ Furthermore, on March 13, 2012, the President signed into
law HR 4105, which makes clear that the Department has the authority to
apply the CVD law to non-market economies such as Vietnam. The
effective date of the enacted legislation makes clear that this
provision applies to this proceeding.\14\ Additionally, for reasons
stated in the Carrier Bags from Vietnam Decision Memorandum at Comment
3, we are using the date of January 11, 2007, the date on which Vietnam
became a member of the WTO, as the date from which the Department will
identify and measure subsidies in Vietnam for purposes of CVD
investigations.
---------------------------------------------------------------------------
\13\ See Polyethylene Retail Carrier Bags from the Socialist
Republic of Vietnam: Final Affirmative Countervailing Duty
Determination, 75 FR 16428 (April 1, 2010) (Carrier Bags from
Vietnam Final Determination), and accompanying Issues and Decision
Memorandum (Carrier Bags from Vietnam Decision Memorandum) at ``Land
Rent Reduction or Exemption for Exporters.''
\14\ See HR 4105, 112th Cong. 1(b) (2012) (enacted).
---------------------------------------------------------------------------
Allocation Period
The average useful life (AUL) period in this proceeding, as
described in 19 CFR 351.524(d)(2), is 12 years according to the U.S.
Internal Revenue Service's 1977 Class Life Asset Depreciation Range
System.\15\ No party in this proceeding has disputed this allocation
period.
---------------------------------------------------------------------------
\15\ See U.S. Internal Revenue Service Publication 946 (2008),
How to Depreciate Property, at Table B-2: Table of Class Lives and
Recovery Periods.
---------------------------------------------------------------------------
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) through (v) directs that the Department will
attribute subsidies received by certain other companies to the combined
sales of those companies if (1) cross-ownership exists between the
companies, and (2) the cross-owned companies produce the subject
merchandise, are a holding or parent company of the subject company,
produce an input that is primarily dedicated to the production of the
downstream product, or transfer a subsidy to a cross-owned 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
[[Page 32932]]
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.\16\
---------------------------------------------------------------------------
\16\ See Fabrique de Fer de Charleroi, SA v. United States, 166
F. Supp. 2d 593, 600-604 (CIT 2001) (Fabrique).
---------------------------------------------------------------------------
The Hamico Companies
SEA Hamico, Nam A, and Linh Sa all produce subject merchandise. SEA
Hamico owns a majority stake in Nam A and Linh Sa. Therefore, in
accordance with 19 CFR 351.525(b)(6)(vi), we preliminarily determine
that SEA Hamico, Nam A, and Linh Sa are cross-owned companies. Further,
because all three firms produce subject merchandise, in accordance with
19 CFR 351.525(b)(6)(ii), we have attributed subsidies received by SEA
Hamico, Nam A, and Linh Sa to the combined sales of the three firms,
net of intra-company sales.
The Infinite Companies
Infinite and Supreme are owned by the same individual, Person
A.\17\ Therefore, in accordance with 19 CFR 351.525(b)(6)(vi), we
preliminarily determine that Infinite and Supreme are cross-owned.
Because Infinite and Supreme both produce subject merchandise, in
accordance with 19 CFR 351.525(b)(6)(ii), we have attributed subsidies
received by Infinite and Supreme to the combined sales of the two
firms, net of intra-company sales.
---------------------------------------------------------------------------
\17\ The name of the individuals that owns Infinite and Supreme
is business proprietary. We refer to the principal owner of the two
firms as Person A.
---------------------------------------------------------------------------
Subsidy Valuation
Interest Rate Benchmark
For purposes of this preliminary determine we require the use of a
short-term loan benchmark denominated in U.S. dollars. 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,''
indicating that a benchmark must be a market-based rate. Normally, the
Department uses comparable commercial loans reported by the company for
benchmarking purposes.\18\ If the firm does not receive any comparable
commercial loans during the relevant periods, the Department's
regulations provide that we ``may use a national average interest rate
for comparable commercial loans.'' \19\ In the Carrier Bags from
Vietnam Preliminary Determination, the Department determined that loans
provided by Vietnamese banks reflect significant government
intervention in the banking sector and do not reflect rates that would
be found in a functioning market.\20\ We preliminarily determine that
there is no information on the record of the instant investigation that
warrants a reconsideration of this finding. Therefore, we continue to
find that the benchmarks that are described under 19 CFR
351.505(a)(3)(i) and (ii) are not appropriate and that we must use an
external, market-based benchmark interest rate.
---------------------------------------------------------------------------
\18\ See 19 CFR 351.505(a)(3)(i).
\19\ See 19 CFR 351.505(a)(3)(ii).
\20\ See 74 FR at 45814, which references a Memorandum to Ronald
K. Lorentzen, Acting Assistant Secretary, Import Administration,
``Countervailing Duty Investigation of Polyethylene Retail Carrier
Bags from the Socialist Republic of Vietnam A Review of Vietnam's
Banking Sector'' (August 28, 2009) (Vietnam Banking Memorandum). We
have placed the Banking Memorandum on the record of the instant
investigation. See Memorandum to the File from Eric B. Greynolds,
Program Manager, Office 3, Operations, ``Placement of Banking
Memorandum on Record of Investigation,'' (May 29, 2012). The
Department's conclusions in the Vietnam Banking Memorandum were not
reversed as a result of the Carrier Bags from Vietnam Final
Determination. See Carrier Bags from Vietnam Decision Memorandum at
``Application of Facts Otherwise Available and AFA for API and
Fotai.''
---------------------------------------------------------------------------
For short-term U.S. dollar loans, we have followed the methodology
developed over a number of successive PRC investigations. Specifically,
for U.S. dollar loans, the Department used as a benchmark the one-year
dollar interest rates from the London-Interbank Offered Rate (LIBOR)
indexes, plus the average spread between LIBOR and the one-year
corporate bond rates for companies with a BB rating.
Land Benchmark
Section 351.511(a)(2) of the Department's regulations sets forth
the basis for identifying comparative benchmarks for determining
whether a government good or service is provided for less than adequate
remuneration (LTAR). These potential benchmarks are listed in
hierarchical order by preference: (1) Market prices from actual
transactions within the country under investigation; (2) world market
prices that would be available to purchasers in the country under
investigation; or (3) an assessment of whether the government price is
consistent with market principles.
In Polyethylene Retail Carrier Bags from the Socialist Republic of
Vietnam: Preliminary Affirmative Countervailing Duty Determination and
Alignment of Final Countervailing Duty Determination with Final
Antidumping Duty Determination, 74 FR 45811, 45815-16 (September 4,
2009) (Carrier Bags from Vietnam Preliminary Determination), the
Department had also examined land rent exemptions and established a
benchmark for land in Vietnam. The Department explained that it could
not rely on the use of so-called ``first-tier'' and ``second-tier
benchmarks'' to assess the benefits from the provision of land at LTAR
in Vietnam. It also determined that the purchase of land-use rights in
Vietnam is not conducted in accordance with market principles. Id. at
45815, referencing the Memorandum to Ronald K. Lorentzen, Acting
Assistant Secretary, Import Administration, ``Countervailing Duty
Investigation of Polyethylene Retail Carrier Bags from the Socialist
Republic of Vietnam: Land Markets in Vietnam'' (August 28, 2009) (Land
Market Memorandum).\21\ Therefore, in selecting a benchmark for land,
the Department analyzed comparable market-based prices in another
country at a comparable level of economic development within the
geographic vicinity of Vietnam. As a result of this analysis, the
Department selected the cities of Pune and Bangalore in India as
providing the closest match among options on the record to Vietnam in
terms of per capita GNI and population density, and derived a simple
average of all rental rates for industrial property in both cities to
use as the appropriate land benchmark for Vietnam. Id. at 45816.
---------------------------------------------------------------------------
\21\ We have placed the Land Market Memorandum on the record of
the instant investigation. See Memorandum to the File from Eric B.
Greynolds, Program Manager, Office 3, Operations, ``Placement of
Land Market Memorandum on Record of Investigation,'' (May 29, 2012).
---------------------------------------------------------------------------
In the final determination of retail carrier bags, the Department
retained this land benchmark methodology unchanged from the preliminary
determination.\22\
---------------------------------------------------------------------------
\22\ See Carrier Bags from Vietnam Decision Memorandum at ``Land
Rent Reduction or Exemption for Exporters,'' footnote 23.
---------------------------------------------------------------------------
We find no information on the record of the instant investigation
that warrants a revision to the land benchmark methodology developed in
Carrier Bags from Vietnam Preliminary Determination. Therefore, we
continue to find that we cannot rely on the use of ``first'' and
``second-tier'' benchmarks for purposes of the land for LTAR benchmark
because the GOV continues
[[Page 32933]]
to retain land-use pricing authority (including lease rates) for land
leased directly from the government, restrictions are still in place
with regard to land that is sub-leased by private parties, and the
land-use contracts held by private parties, that serve as the basis for
sub-leases, have been granted by government agencies that have been set
under government decrees.\23\ For the same reasons, we further continue
to find that that the purchase of land-use rights in Vietnam is not
conducted in accordance with market principles.
---------------------------------------------------------------------------
\23\ See Land Memorandum at 6.
---------------------------------------------------------------------------
Accordingly, to measure the benefit for land for LTAR in this
preliminary determination, we are using a land benchmark based on the
rental rates for industrial property in Pune and Bangalore. Using the
same data sources used in Carrier Bags from Vietnam Preliminary
Determination, we sought 2011 data on those rental rates. We find that
the 2008 data from Carrier Bags from Vietnam Preliminary Determination
remain the latest data available. Therefore, we are using the same
simple average of all rental rates for industrial property in the
cities of Pune and Bangalore that was calculated in Carrier Bags from
Vietnam Preliminary Determination and adopted in Carrier Bags from
Vietnam Final Determination, indexed forward to 2011 using consumer
price index data for India, as published by the International Monetary
Fund.
Analysis of Programs
I. Programs Preliminary Determined To Be Countervailable
A. Land Preferences for Enterprises in Encouraged Industries or
Industrial Zones
Decree No. 142/2005/NC-CP (Decree 142) of November 14, 2005,
provides for the collection of land rents and water surface rents in
connection with land leased by the GOV. See the GOV's March 30, 2012,
Questionnaire Response at Exhibit 34. Decree 142 states that land rent
shall be reduced or exempted under certain circumstances enumerated
under the law and also where the Prime Minister determines it is
appropriate to do so, based on the recommendation of the agency heads
and provincial and municipal governments. Id. at Articles 13-15. For
example, Decree 142 provides for land exemptions for firms located in
certain geographical areas facing socio-economic difficulties. Id. at
Article 14.
The Hamico Companies reported that on January 12, 2004, the GOV's
Department of Natural Resources and Environment granted SEA Hamico
land-use rights for its facility in the Chau Son Industrial Zone Area
located in Phuong Le Hong Phong, Phu Ly City of Ha Nam Province. The
Hamico Companies state that SEA Hamico signed a ``new land lease
contract'' with the GOV with regard to the same plot of land on August
11, 2009. The lease contract in effect during the POI establishes an
annual rent charged to SEA Hamico. The lease contract further specifies
that the annual rent is subject to the provisions of Decree 142. See
the Hamico Companies' April 2, 2012, Questionnaire Response, Exhibit 7
at 15. However, the preferential investment certificate issued to SEA
Hamico indicates that SEA Hamico is exempted from paying the annual
rent on the land for ten years, a period that extends into the POI, and
shall enjoy a 50 percent reduction in rent during the second ten years
of the lease. See The GOV's March 30, 2012, Questionnaire Response at
Exhibit 43. Further, Decision No. 2459/QD-CT, December 28, 2011,
(Decision No. 2459) issued by the GOV's Department of Taxation of Ha
Nam Province specifies the amount of rent exemption that SEA Hamico
received during the POI. See The GOV's March 30, 2012, Questionnaire
Response at Exhibit 47. Decision No. 2459 states that the rent
exemption was provided pursuant to the ``encouraged investment
provisions'' of Article 14.4 of Decree 142, which deals with rent
exemptions provided to investment projects located in geographic areas
facing socio-economic difficulties. See the GOV's March 30, 2012,
Questionnaire Response at Exhibit 34.
The Hamico Companies report that Nam A also received exemptions on
annual lease payments in connection with its land lease with People's
Committee of Ha Nam Province during the POI. See the Hamico Companies
May 16, 2012, supplemental questionnaire response at 5 and Exhibit 3,
which contains Nam A's lease contract. The Hamico Companies state that
Nam A's benefit is ``similar'' to that received by SEA Hamico in that
the GOV provided the lease exemption contingent upon Nam A leasing land
in a geographically designated area. Id. at 5.
As explained above, we have adopted January 11, 2007, the date on
which Vietnam became a member of the WTO, as the date from which the
Department will identify and measure subsidies in Vietnam. In the case
of SEA Hamico, the lease contract in question was signed prior to the
cut-off date. However, as indicated by the Hamico Companies, SEA Hamico
signed a ``new lease contract'' with the GOV concerning the plot of
land at issue on August 11, 2009, which established the relevant terms
of the lease after the cut-off date. Therefore, we find that it is
appropriate to consider the land rent exemptions received by SEA Hamico
during the POI in connection with the lease contract for purposes of
our subsidy analysis.
Information on the record indicates that SEA Hamico and Nam A
received the rent exemptions because the land plots were located in
designated geographical areas and, thus, we preliminarily determine
that the exemptions are specific under section 771(5A)(D)(iv) of the
Act. We also preliminarily determine that the leasing of the land
constitutes a financial contribution, in the form of a provision of a
good, within the meaning of section 771(5)(D)(iii) of the Act. In
addition, we find that the rent exemptions confer a benefit in
accordance with section 771(5)(E) of the Act and 19 CFR 351.511(a).
The land contracts SEA Hamico and Nam A signed with the GOV did not
require lump-sum payments at the time the original leases were signed.
Rather, the contracts call for annual rent payments, which the GOV
subsequently exempted. Thus, in accordance with 19 CFR 351.524(c)(1),
we preliminarily determine that the rent exemptions received by SEA
Hamico and Nam A constitute recurring subsidies. Therefore, pursuant to
19 CFR 351.524(a), we have allocated benefits from the rent exemptions
to the year in which the exemptions were received. See also 351.511(b).
As a result, for purposes of this preliminary determination, the
benefit calculations for the rent exemptions are limited to those SEA
Hamico and Nam A received during the POI.
As discussed above in the ``Land Benchmark'' section, we continue
to find that land prices in Vietnam are not based on market principles,
consistent with the findings in the Carrier Bags from Vietnam
Preliminary Determination; unchanged in Carrier Bags from Vietnam
Decision Memorandum at ``Land Rent Reduction or Exemption for
Exporters.''
Consequently, we continue to find that we cannot rely on the use of
``first'' and ``second-tier'' benchmarks for purposes of the land for
LTAR benchmark and, as was done in Carrier Bags from Vietnam
Preliminary Determination, we must use a benchmark based on comparable
market-based prices outside Vietnam. Therefore, for purposes of the
preliminary determination, we have used as our benchmark the calculated
[[Page 32934]]
average of the rental rates for Pune and Bangalore, which corresponds
to $6.088 per square meter per month. See Land Memorandum. This rate
corresponds to rental prices during calendar year 2008, which we
determine to be the latest such data available. Therefore, in our
preliminary calculations, we indexed the 2008 price into a 2011 price
using consumer price index data for India, as published by the
International Monetary Fund.
To calculate the benefit, we multiplied the land benchmark
discussed above by the total area of the land plots at issue. In this
manner, we derived the benefit attributable to the land lease
exemptions enjoyed by SEA Hamico and Nam A during the POI. To calculate
the net subsidy rate, we converted the benefits into Vietnamese Dong
and divided the total benefit by the total sales of the Hamico
Companies, net of intra-company sales. On this basis, we determine the
net countervailable subsidy to be 18.59 percent ad valorem for the
Hamico Companies.
Regarding Linh Sa, the Hamico Companies reported that it signed its
lease with cross-owned affiliate SEA Hamico and not with a GOV entity.
See the Hamico Companies May 22, 2012, Supplemental Questionnaire
Response at 6 and Exhibit 1, which contains the lease Lihn Sa signed
with SEA Hamico. Based on this information, we preliminarily determine
that Lihn Sa's lease with SEA Hamico does not constitute a government
financial contribution as described under section 771(5)(D)(iv) of the
Act.
Similarly, the Infinite Companies reported that Infinite leased
land from Vinh Hung Limited Liability (Vinh Hung), which the Infinite
Companies claim is a private company. The Infinite Companies also
reported that Supreme leased land from a private party. See the
Infinite Companies' April 3, 2012, initial questionnaire response at
pages 21 through 24 and Exhibits 8-9. We obtained ownership information
from the GOV regarding the party that leased land to Infinite and
Supreme. Our review of this ownership information leads us to
preliminarily determine that the lessors are private companies and, as
such, its leases of land to Infinite and Supreme do not constitute a
government financial contribution as described under section
771(5)(D)(iv) of the Act. See the GOV's May 22, 2012, Supplemental
Questionnaire Response at 3-5 and Exhibit GOV S2-7.
B. Corporate Income Tax Reductions for Newly Established Investment
Projects
We started an investigation of corporate income tax exemptions and
reductions pursuant to alleged income tax preferences in industrial
zones, and sought relevant information from the GOV and the
respondents. The Hamico Companies reported that SEA Hamico received a
50 percent reduction in income taxes payable with regard to the 2010
tax return that it filed during the POI. The 2010 tax returns of Nam A
and Linh Sa indicate that the firms were in a tax-loss position and,
therefore, had no taxable income to exempt. The 2010 tax returns of the
Infinite Companies filed during the POI indicate that the firms did not
receive any income tax deductions or exemptions.
Information from the Hamico Companies and the GOV indicate that SEA
Hamico received the exemption pursuant to the 1997 Law on Enterprise
Income Tax, No. 57/L-CTN (Law No. 57), Law on Domestic Investment
Encouragement, No. 03/1998/QH10 (Law No. 03) and the Implementing
Decree of Law on Domestic Investment Encouragement of 1998, Decree No.
51/1999/ND-CP (Decree No. 51). See the GOV's May 22, 2012, Supplemental
Questionnaire Response at 3; see also the Hamico Companies' May 14,
2012, questionnaire response, Exhibit 1 at 9. This income tax exemption
is also referenced in the certificate of investment incentives issued
to SEA Hamico by the People's Committee of Ha Nam Province. Id. at
Exhibit 4. According to the GOV, SEA Hamico was entitled to an income
tax exemption for two years and a 50 percent reduction in income taxes
for the subsequent four years pursuant to Article 17, Clause 1, Point b
of Law No. 57; Articles 15.7 and 21.1 of Law No. 3; and List A of
Decree No. 51. See the GOV's May 22, 2012, Supplemental Questionnaire
Response at 3-4. Specifically, the GOV states that this entitlement is
based on Law No. 3, Article 15.7, ``Branches and trades that should be
given priority in each period of socio-economic development.''
The GOV submitted Hamico's Preferential Investment Certificate No.
1107/GCNUD (September 23, 2003) and Certificate of Amendment to
Investment Certificate No. 06221000076 (February 5, 2010), which
describe the incentives applicable to Hamico's investment project. See
the GOV's May 22, 2012, Third Supplemental Questionnaire Response at
Exhibit GOVS3-3. We note that while these investment certificates
identify the applicable laws and regulations, including Law No. 57, Law
No. 3, and Decree 51, they do not identify the specific sections of the
laws or decree. Thus, while the GOV has specified Article 15.7 of Law
No. 3 as defining the entitlement, we note that Article 15 contains
other investment activities with equal entitlement to the same
incentives, e.g., Article 15.3, investment projects related to ``the
production of and trading in export goods,'' under which Hamico could
qualify for the same exemption and reduction in income tax.
Consequently, we will continue to seek information to clarify the
precise basis on which Hamico benefited from this program.
As noted above, we initially examined the income tax exemption and
reduction program pursuant to alleged tax preferences in industrial
zones. As discussed above, the facts on the record thus far indicate
the program provides benefits based on investment activities or certain
enterprises, specifically ``branches and trades that should be given
priority in each period of socio-economic development'' with regard to
Hamico. To the extent that this constitutes a different program from
among those that we enumerated in our initiation, 19 CFR 351.311(b)
allows the Department to investigate other possible countervailable
subsidies discovered during the course of a proceeding. This approach
is consistent with the Department's practice.\24\
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\24\ See Carrier Bags from Vietnam Preliminary Determination, 74
FR 45818; unchanged in Carrier Bags from Vietnam Decision Memorandum
at ``Income Tax Preferences for Encouraged Industries.''
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We preliminarily determine that the tax reduction provided to SEA
Hamico under this program is specific to a group of enterprises, namely
``branches and trades that should be given priority in each period of
socio-economic development'' specified under Article 15.7 of Law No. 3
within the meaning of section 771(5A)(D)(i) of the Act. The income tax
reduction and exemption are financial contributions in the form of
revenue forgone by the government under section 771(5)(D)(ii) of the
Act, and provide a benefit to SEA Hamico in the amount of tax savings
pursuant to section 771(5)(E) of the Act and 19 CFR 351.509(a)(1).
To calculate the net subsidy rate, we divided the amount of SEA
Hamico's tax savings, as indicated on the 2010 tax return it filed
during the POI, by the combined total sales of SEA Hamico, Nam A, and
Linh Sa, net of intra-company sales. On this basis, we preliminarily
determine a net countervailable subsidy rate of 0.93 percent ad valorem
for the Hamico Companies.
[[Page 32935]]
C. Import Duty Exemptions or Reimbursements for Raw Materials
Duty exemptions on raw materials are addressed in the Law on Import
Duty and Export Duty, Law No. 45/2005/QH-11 (Law No. 45) and Decree No.
87/2010/ND-CP (Decree 87). See the GOV's March 30, 2012, questionnaire
response at Exhibits 60. Specifically, under Law No. 45, Chapter IV,
import duty exemption is provided for ``raw materials and supplies used
for manufacture of equipment and machinery'' (Article 16.6(d)) and
``Raw materials, supplies and accessories imported for production
activities of investment projects on the list of domains where
investment is particularly encouraged or the list of geographical areas
meeting with exceptional socio-economic difficulties'' (Article 16.9).
Id. at Exhibit 60. We believe raw materials may also be imported duty-
free under Article 16.4, ``goods imported for processing for foreign
partners then exported or goods exported to foreign countries for
processing for Vietnam then re-imported under processing contracts.''
Id. Additionally, Article 19 provides for reimbursement of duties on
raw materials or supplies imported for the production of export goods,
for which import tax has been paid.'' Id.
Decree No. 87, enacted in August 2010 reflects the implementation
of Law No. 45 that was in effect during the POI. Id. at Exhibit 61.
Article 12 of Decree 87 provides additional detail for the duty
exemptions on raw materials originally provided under Law No. 45.
Articles 12.6(d) and 12.14 specify that the exemptions for ``raw
materials and supplies used for manufacture of equipment and
machinery'' and ``raw materials, supplies and accessories imported for
production activities of investment projects on the list of domains
where investment is particularly encouraged or the list of geographical
areas meeting with exceptional socio-economic difficulties'' will apply
only where such raw materials and supplies ``cannot be domestically
produced yet.'' Id. With regard to ``goods imported for processing for
foreign parties,'' Article 12.4 leaves the import duty exemption
unchanged, but adds that the exported processed products are also
exempt from export duty.
Infinite and the GOV state that Infinite received exemptions on raw
material imports based the export processing contracts it had with
foreign firms. SEA Hamico and Lihn Sa also state that they received
duty exemptions on raw materials. The Hamico Companies reported that
Nam A did not import raw materials during the POI. Most, if not all, of
the sales of the Infinite Companies and Hamico Companies are devoted to
exports.
For import duty exemptions on raw materials for exported goods, the
exemptions cannot exceed the amount of duty levied; otherwise, the
excess amounts exempted confer a countervailable benefit under 19 CFR
351.519(a)(1)(i). Moreover, under 19 CFR 351.519(a)(4), the government
must have a system to confirm which inputs are consumed in production
and in what amounts; otherwise, the exemptions confer a benefit equal
to the total amount of duties exempted. In the Retail Carrier Bags from
Vietnam Final Determination, the Department concluded that the GOV does
not have in place a system to confirm which inputs are consumed in the
production of the exported products and in what amounts, including a
normal allowance for waste. See Carrier Bags from Vietnam Decision
Memorandum at ``Import Duty Exemptions for Imported Raw Materials for
Exported Goods.'' No information on the record of the instant
proceeding warrants a reconsideration of that finding; therefore, we
find that the import duty exemptions on raw materials confer a benefit
equal to the total amount of the duties exempted, in accordance with 19
CFR 351.519(a)(4).
Because the receipt of import duty exemptions on raw materials was
contingent upon export performance as one or more criteria, we
preliminarily determine that they are specific in accordance with
section 771(5A)(B) of the Act. We further preliminarily determine that
the exemptions constitute a financial contribution in the form of
revenue forgone, as described under section 771(5)(D)(ii) of the Act.
To calculate the benefit, we summed the amount of duties saved
during the POI. To calculate the net subsidy rate, we divided the
benefit by respondents' total export sales, net of intra-company sales.
On this basis, we preliminarily determine a net countervailable subsidy
rate of 1.34 percent ad valorem for the Hamico Companies and 11.03
percent ad valorem for the Infinite Companies.
D. Preferential Lending to Exporters
The Hamico Companies reported that SEA Hamico and Linh SA had loans
outstanding during the POI that were issued by the Vietnam Joint Stock
Commercial Bank for Industry and Trade (Vietinbank) as well as an
additional lending institution.\25\ See the Hamico Companies' April 2,
2012, questionnaire response at Attachment 1; see also the Hamico
Companies May 22, 2012, Supplemental Questionnaire Response at
Attachment I, which contains the loan information of the additional
lending institution. The GOV states that SEA Hamico and Linh Sa
received these loans in connection with an ``export loan program''
operated by the respective lending institutions. See the GOV's March
30, 2012, questionnaire response at 24. According to the GOV, under
this program, the lending institutions offered ``supported'' interest
rates to exporters, provided that they use the proceeds of the loan in
the manner specified in the contract, follow the payment schedule
specified in the contract, conduct payment for exporting through the
lending institution, and sell the foreign exchange earned from the
export sale through the lending institution. Id. Regarding the
Vietinbank, information from the GOV specifically indicates that
Vietinbank offered the ``preferential'' interest rates to exporters in
an effort to implement its ``Export Loan Program.'' See the GOV's May
16, 2012, supplemental questionnaire response at Exhibit 2. The Hamico
Companies reported that Nam A did not have any loans outstanding during
the POI. The Infinite Companies similarly reported that they did not
have any loans outstanding during the POI.
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\25\ The identity of this lending institution is business
proprietary.
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In past CVD proceedings involving Vietnam, the Department has found
Vietinbank to be a state-owned commercial bank (SOCB) and thus, a
government authority capable of providing a financial contribution as
described under section 771(5)(D)(i) of the Act. See Carrier Bags from
Vietnam Preliminary Determination, 74 FR at 45817.\26\ Information
provided by the GOV indicates that it owned approximately 80 percent of
Vietinbank during the POI. See the GOV's May 16, 2012, supplemental
questionnaire response at 4. Hence, we continue to find that Vietinbank
is a government authority. Therefore, we preliminarily determine that
the loans issued to SEA Hamico and Lihn Sa by Vietinbank constitute a
financial contribution by a government authority within the meaning of
section 771(5)(D)(i) of the Act. Regarding the additional lending
institution, because the Hamico Companies identified loans outstanding
from this institution as financing offered
[[Page 32936]]
``under the export loan program'' we find, for purposes of the
preliminary determination, that such loans constitute a financial
contribution by a government authority within the meaning of section
771(5)(D)(i) of the Act.
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\26\ The Department's finding that Vietinbank was a government
authority operating as a SOCB was not reversed as a result of the
Carrier Bags from Vietnam Final Determination. See Carrier Bags from
Vietnam Decision Memorandum at ``Application of Facts Otherwise
Available and AFA for API and Fotai.''
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We further preliminarily determine that, pursuant to section
771(5)(E)(ii) of the Act, loans issued to SEA Hamico and Lihn Sa under
this program confer a benefit equal to the difference between what the
recipients paid on the loans from the lending institutions and the
amount they would have paid on comparable, commercial loans. In
determining the amount SEA Hamico and Lihn Sa would have paid on
comparable, commercial loans, we employed the interest rate benchmark
discussed above in the ``Interest Rate Benchmark'' section. Information
from the GOV indicates that receipt of the Vietinbank loans are
contingent, in part, upon export activities and, thus, we preliminarily
determine that this program is specific under section 771(5A)(B) of the
Act.
Next, we summed the benefit calculated on each loan the firms had
outstanding under the program during the POI and divided the total
benefit by the combined total export sales of SEA Hamico, Nam A, and
Lihn Sa, net of intra-company sales. On this basis, we preliminarily
determine a net countervailable subsidy rate of 0.39 percent ad valorem
for the Hamico Companies.
II. Program Preliminarily Determined Not To Confer Benefits During the
POI
A. Import Duty Exemptions on Imports of Goods for Encouraged Projects
Article 12.6 of Decree 87 allows firms with investment in
encouraged projects and/or located in certain geographical areas (which
includes industrial zones) to receive duty exemptions on import of
goods to create fixed assets and equipment. Infinite, SEA Hamico, and
Lihn Sa are located in industrial zones. We preliminarily determine
that information from Infinite indicates that it received duty
exemptions under this program. Regarding the Hamico Companies, though
they qualified for duty exemptions under the program, information
provided thus far indicates that, absent the program, the duty rates on
the equipment the Hamico Companies imported were zero.
Because the receipt of import duty exemptions on fixed assets was
contingent upon the firms' location in a designated geographic area, we
preliminarily determine that they are regionally-specific in accordance
with section 771(5A)(D)(iv) of the Act. We further preliminarily
determine that the exemptions constitute a financial contribution in
the form of revenue forgone, as described under section 771(5)(D)(ii)
of the Act and confer a benefit under section 771(5(E) and 19 CFR
351.519(a)(4).
Normally, we treat exemptions from indirect taxes and import
charges, such as tariff exemptions, as recurring benefits, consistent
with 19 CFR 351.524(c)(1) and allocate these benefits only in the year
that they were received. However, when an indirect tax or import charge
exemption is provided for, or tied to, the capital structure or capital
assets of a firm, the Department may treat it as a non-recurring
benefit and allocate the benefit to the firm over the AUL. See 19 CFR
351.524(c)(2)(iii) and 19 CFR 351.524(d)(1). Therefore, because these
exemptions are for goods used in creating capital equipment, we find
that the duty exemptions are tied to the company's capital assets, and
we have examined the tariff exemptions that respondents received under
the program throughout the period between January 11, 2007, (the ``cut-
off'' date for Vietnam) and the POI.
To calculate the amount of import duties exempted under the
program, we multiplied the value of the imported equipment by the
import duty rate that would have been levied absent the program. Next,
we summed the amount of duty exemptions received in each year. Then we
divided the total amount of tariff exemptions by the corresponding
total sales for the year in which the exemptions were received. Those
exemptions that were less than 0.5 percent of total sales were expensed
to the year of receipt. Those exemptions that were greater than 0.5
percent of total sales were allocated over the AUL using the
methodology described under 19 CFR 351.524(d)(2) and then divided by
respondents' total sales during the POI, net of intra-company sales. In
the case of Infinite, the benefits received under the program were
fully expensed prior to the POI.
III. Programs Preliminarily Determined To Be Not Used
A. Grants to Firms That Employ More Than 50 Employees
The GOV self-reported the existence of this program in which it
provides grants to firms that employ more than 50 employees. See the
GOV's March 30, 2012, questionnaire response at 101. The GOV further
reported that the Hamico Companies may have received benefits under the
program given that the investment certificate for Nam A indicates that
Nam A is eligible to receive funds under the program. Id.; see also the
Hamico Companies' May 14, 2012, questionnaire response at Exhibit 5,
which contains Nam A's investment certificate.
There is no evidence of the Infinite Companies' use of this program
in its questionnaire response, investment certificate, or financial
statements. Regarding the Hamico Companies, they explain that though
they are eligible to participate in the program, they have not received
any funds under the program from the GOV. See the Hamico Companies May
16, 2012, questionnaire response at 7. On this basis, we preliminarily
determine that this program was not used by the Hamico and Infinite
Companies.
B. Provision of Water for LTAR
The Infinite Companies reported that they draw their water from
their own well located on site and, thus, do not pay water fees to the
GOV. See the Infinite Companies May 11, 2012, supplemental
questionnaire response at 11. Regarding the Hamico Companies, source
documents for SEA Hamico indicate that it paid water fees to the GOV
during the POI and that these fees were equal to those fees charged to
businesses engaged in commercial and production activities, as set by
the provincial government. See the Hamico Companies' April 2, 2012,
questionnaire response at 28 and Exhibits 11-13. Concerning Nam A, its
investment certificate provides that it is eligible to receive
exemptions on its ``water rent.'' See the Hamico Companies' May 14,
2012, questionnaire response at Exhibit 5. However, despite qualifying
for such an exemption, the Hamico Companies state that Nam A did not
use the program because it did not use ``surface water'' (i.e., water
sources rented from the GOV) in its production process. See the Hamico
Companies' May 16, 2012, questionnaire response at 6-7. Notwithstanding
the Hamico Companies' claims regarding Nam A, information from the
Hamico Companies indicates that Nam A paid water fees to the GOV during
the POI and that these fees were equal to those fees charged to
businesses engaged in commercial and production activities, as set by
the provincial government. See the Hamico Companies May 22, 2012,
Supplemental Questionnaire Response at Exhibit 9. Similarly,
information from Lihn Sa and the GOV indicates that the firm paid a
water usage rate equal to the rate charged to businesses engaged in
commercial and production activities. See the GOV's March 30, 2012,
Questionnaire response at Exhibit 3 and
[[Page 32937]]
the Hamico Companies' May 22, 2012, Supplemental Questionnaire Response
at Exhibit 10. Therefore, we preliminarily determine that the provision
of water is not specific to the industrial zones in which the
respondents are located, and find that the Infinite Companies and the
Hamico Companies did not use the program.
We note that, based on the record information thus far, the level
of government at which the actual rate-setting authority rests remains
unclear. While the GOV issues a national pricing framework for water
supply, distribution and consumption, the actual published rate
schedules are issued at the provincial levels on approval by the
provincial governments. See GOV's March 30, 2012, Questionnaire
Response at Exhibit 6. Hence, we will continue to examine the price-
setting regime for water in Vietnam.
C. Provision of Wire Rod for LTAR
The Infinite Companies state that they only purchased wire from
foreign sources during the POI. See the Infinite Companies' May 11,
2012, at 9 and Attachment 3. The Hamico Companies state that they did
not purchase wire rod from Vietnamese sources during the POI. Instead,
they report that they either imported wire rod from foreign sources or
purchased wire from domestic sources.
The allegation on which the Department initiated its investigation
centers on the provision of wire rod not drawn wire. We find that wire
is a good that is distinct from wire rod. On this point, we note that
the Hamico Companies have submitted source documents (e.g., invoices)
which indicate the specifications (e.g., diameter) of the wire they
purchased from domestic sources during the POI. See the Hamico
Companies' May 16, 2012, supplemental questionnaire response at
Exhibits 1-4. Our review of these source documents, confirms our
preliminary finding that the inputs the Hamico Companies purchased from
domestic sources constitute wire products and not wire rod. Thus, we
find that purchases of wire rod from non-Vietnamese sources are not
subject to our subsidy analysis. On this basis, we preliminarily
determine that respondents did not use the provision of wire rod for
LTAR program during the POI.
In addition, we preliminarily determine that respondents did not
use the programs listed below:
D. Export Promotion Program
E. Land Rent Reduction/Exemption for Exporters
F. Land-Rent Reduction or Exemption for Foreign Invested Enterprises
(``FIEs'')
G. Income Tax Preferences for FIEs
H. Income Tax Refund for Reinvestment by FIEs
I. Income Tax Preferences in Industrial Zones
J. Import Duty Preferences for FIEs
Verification
In accordance with section 782(i)(1) of the Act, we will verify the
information submitted by the respondents prior to making our final
determination.
Suspension of Liquidation
In accordance with section 703(d)(1)(A)(i) of the Act, we have
calculated individual rates for the respondents individually
investigated, the Hamico Companies and the Infinite Companies. We
preliminarily determine the total estimated net countervailable subsidy
rates to be:
------------------------------------------------------------------------
Net
subsidy
Exporter/manufacturer rate
(percent)
------------------------------------------------------------------------
South East Asia Hamico Export Joint Stock Company (SEA 21.25
Hamico), Nam A Hamico Export Joint Stock Company (Nam A),
and Linh Sa Hamico Company Limited (Linh Sa) (collectively,
the Hamico Companies).......................................
Infinite Industrial Hanger Limited (Infinite) and Supreme 11.03
Hanger Company Limited (Supreme) (collectively the Infinite
Companies)..................................................
All Others................................................... 16.14
------------------------------------------------------------------------
Sections 703(d), 705(c)(1)(B)(i)(I), and 705(c)(5)(A) of the Act
state that for companies not investigated, we will determine an all-
others rate by weight-averaging the individual subsidy rates 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.\27\ In this
preliminary determination, the calculated net subsidy rate for the
Hamico Companies and the Infinite Companies are above de minimis.
Notwithstanding the language of sections 705(c)(1)(B)(i)(I), and
705(c)(5)(A) of the Act, we have not calculated the all others rate by
weight averaging the rates of the Hamico and Infinite Companies because
doing so risks disclosure of proprietary information. Therefore, for
the all others rate, we have calculated a simple average of the
respondents' net subsidy rates.
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\27\ Pursuant to 19 CFR 351.204(d)(3), the Department must also
exclude the countervailable subsidy rate calculated for a voluntary
respondent. In this investigation, we had no producers or exporters
request to be voluntary respondents.
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In accordance with sections 703(d)(1)(B) and (2) of the Act, we are
directing CBP to suspend liquidation of all entries of steel wire
garment hangers from Vietnam 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 merchandise in the amounts indicated
above.\28\
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\28\ See Modification of Regulations Regarding the Practice of
Accepting Bonds During the Provisional Measures Period in
Antidumping and Countervailing Duty Investigations, 76 FR 61042
(October 3, 2011).
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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 non-privileged and non-proprietary information relating to this
investigation. We will allow the ITC access to all privileged and
business proprietary information in our files, provided the ITC
confirms that it will not disclose such information, either publicly,
or under an administrative protective order, without the written
consent of the Assistant Secretary for Import Administration.
In accordance with section 705(b)(2) of the Act, if our final
determination is affirmative, the ITC will make its final determination
within 45 days after the Department makes its final determination.
Disclosure and Public Comment
In accordance with 19 CFR 351.224(b), the Department will disclose
to the parties the calculations for this preliminary determination
within five days of its announcement. Case briefs for this
investigation must be submitted no later than one week after the
issuance of the last verification report. See 19 CFR 351.309(c) (for a
further discussion of case briefs). Rebuttal briefs, which must be
limited to issues raised in the case briefs, must be filed within five
days after the deadline for submission of case briefs. See 19 CFR
351.309(d). A list of authorities relied upon, a table of contents, and
an executive summary of issues should accompany any briefs submitted to
the
[[Page 32938]]
Department. Executive summaries should be limited to five pages total,
including footnotes.
In accordance with 19 CFR 351.310(c), we will hold a public
hearing, if requested, to afford interested parties an opportunity to
comment on this preliminary determination. Individuals who wish to
request a hearing must submit a request within 30 days of the
publication of this notice in the Federal Register to the Assistant
Secretary for Import Administration, U.S. Department of Commerce.
Parties will be notified of the schedule for the hearing, and parties
should confirm the time, date, and place of the hearing 48 hours before
the scheduled time. Requests for a public hearing should contain: (1)
Party's name, address, and telephone number; (2) the number of
participants; and (3) to the extent practicable, an identification of
the arguments to be raised at the hearing.
This determination is issued and published pursuant to sections
703(f) and 777(i) of the Act.
Dated: May 29, 2012.
Paul Piquado,
Assistant Secretary for Import Administration.
[FR Doc. 2012-13474 Filed 6-1-12; 8:45 am]
BILLING CODE 3510-DS-P
