WORLD TRADE  
ORGANIZATION  G/SCM/Q5/USA/2 
17 September 2010 
 (10-4692) 
Committee on Subsidies  
and Countervailing Measures Original:   English 
 
 
 
COUNTERVAILING MEASURES  
 
SEMI-ANNUAL REPORT ON PRELIMINARY AND FINAL 
COUNTERVAILING ACTIONS 
 
Replies to Questions Posed by CHINA1 Regarding the   
Notification of the UNITED STATES2 
 
 
 The following communication, dated 15 Septembe r 2010, is being circulated at the request of 
the Delegation of the United States.  
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 Below please find responses to the four questi ons posed by China to the United States with 
respect to the U.S. International Trade Commission's determination in Certain Oil Country Tubular 
Goods from China , Inv. No. 701-TA-463 (Final), USITC Pub. 4124 (Jan.2010).  The ITC's 
determination and public staff report ar e available from the Commission's website: 
http://www.usitc.gov/publi cations/701_731/ pub4124.pdf
 
 
 For informational purposes, the United States notes that the ITC subsequently issued a 
determination in its para llel dumping investigation of the same imports, again finding that a domestic 
industry was threatened with material injury by reason of the subject imports from China in Certain 
Oil Country Tubular Goods from China , Inv. No. 731-TA-1159 (Final), USITC Pub. 4152 
(May 2010).  Question 1   China would like to know on what basis di d the US International Trade Commission 
(ITC) find that the capacity in China will come to  the United States.  Is this finding based on 
positive evidence?  If the answer is YES, please specify what positive evidence ITC has 
resorted to.    
Reply
 
 
 The ITC's affirmative finding of a threat of material injury by reason of the subject imports 
from China was based on positive evidence in the agency record.  In its an alysis of threat of material 
injury, the Commission found that the volume of subject imports of oil country tubular goods ("OCTG") from China was likely to be significant w ithin an imminent time frame, both in absolute 
terms and relative to U.S. consump tion and production, and that the increase in the market share held 
                                                     
 
1 G/SCM/Q5/USA/1. 
2 G/SCM/N/203/USA. G/SCM/Q5/USA/2 
Page 2  
 
  by subject imports would also likely be significant.  USITC Pub. 4124 at 22.  The Commission's 
discussion of the volume of subject imports during the three and three-quarter year period examined (January 2006 to September 2009) and the likely volume of subject imports in the imminent future appear at pages 16-22 of the determination.  USIT C Pub. 4124 at 16-22.  In its determination, the 
Commission set out the data supporting these findings and the citations to the various tables in the 
Commission's Staff Report where these data are compiled.  These data include official import 
statistics, information supplied in questionnaire responses and other information submitted by the 
parties at the Commission's hearing and in their briefs.   
Question 2 
 
 Even after finding no current adverse price effects and no current adverse impact, ITC, 
nevertheless, found that circumstances would chan ge without really explaining why.  China 
would like to know the ITC's reasons behind such finding.    
Reply
 
  The United States disagrees with China's statem ent that the ITC did not explain why it found 
that, while the domestic industry was not presently bei ng materially injured, it was threatened with 
material injury by reason of the subject imports from China.  
 With respect to likely adverse price effect s, the Commission concluded that the aggressive 
price competition demonstrated by subject imports during the bulk of the period examined would likely continue in the imminent future.  The Co mmission also found that, as subject imports cause 
domestic sales volumes and prices to deteriorate and domestic producers' per-unit costs to increase, 
the domestic industry will experience significant pr ice depression and suppression.  USITC Pub. 4124 
at 24.  The Commission's full analyses of the price effects of subject imports during the period 
examined and their likely effects in the imminent fu ture appear at pages 23-24 of the determination.  
USITC Pub. 4124 at 23-24.    Regarding the likely impact of subject imports, the Commission found that the industry had experienced declines in its performance indicators and was, therefore, in a weakened state and 
vulnerable to material injury.  USITC Pub. 4124 at 26.  The Commission also found that, as subject 
imports continue to take market share from the domestic industry and to have significant price 
depressing and suppressing effects, the domestic indus try will likely experience further declines in its 
trade and financial indicators.  USITC Pub. 4124 at 26.  The Commission therefore concluded that, unless a countervailing duty order were issued, signi ficant volumes of subsidized imports will gain 
additional U.S. market share in the imminent future and lead to material injury by reason of subject 
imports.  USITC Pub. 4124 at 27.  The Commission's full analyses of the impact of subject imports during the period examined and their likely impact in  the imminent future appear at pages 25-27 of 
the determination.  USITC Pub. 4124 at 25-27. 
 
Question 3 
 
 What factors has ITC examined in demonstrating the causal link between the imports and the injury to the domestic industry?  What's the role of declining demand?    
Reply
 
 
 Causation and the role of demand in the U.S. market are addressed as relevant throughout the 
Commission's analysis.  USITC Pub. 4124 at 11-27.   In  particular, the legal standard applicable to the 
Commission's analysis of whether the domestic industry is materially injured or threatened with material injury by reason of subject imports appe ars at pages 7-11 of the determination.  USITC  G/SCM/Q5/USA/2 
 Page 3 
 
 
  Pub. 4124 at 11-16.  The conditions of competiti on that informed the Commission's analysis of 
whether the domestic industry producing OCTG was ma terially injured or threatened with material 
injury by reason of subject imports appear at pa ges 11-16 of the determination.  USITC Pub. 4124 
at 11-16.  At pages 11-12 of the determinati on, the Commission explicitly discussed the demand 
conditions and the role of de mand in the domestic market. 
 
 The Commission discussed the causal link between subject imports and the domestic industry's likely material injury at pages 25-27 of the determination.  USITC Pub. 4124 at 25-27.  That discussion includes consideration of  the role of changes in demand.  
 Question 4   Please explain if imports from China did not cause current injury, why the alleged 
future imports from China would cause injury in the future when evidence showed that imports 
only increased when US demand pulled them into the market. 
 Reply
 
  The premise of this question is incorrect in light  of the factual record in the investigation.  
During the investigation, the Commission thoroughl y considered respondents' argument that subject 
imports merely followed demand conditions; the Commission expressly rejected this argument 
because the pattern asserted by respondents was not confirmed by the record.  USITC Pub. 4124 
at 17.  Rather, as the Commission explained, the market share held by subject imports increased 
regardless of whether demand increased or  decreased.  USITC Pub. 4124 at 17-18. 
  
 
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