47210 Federal Register / Vol. 74, No. 177 / Tuesday, September 15, 2009 / Notices 

1See the petitioners’ Submission of New Subsidy 

Allegations (May 13, 2009). 

2The petitioners, collectively, alleged that the 

GOC confers a subsidy on OCTG through its export 

restrictions on steel rounds. Maverick Tube 

Corporation made allegations regarding subsidies to 

respondent Jianli. United States Steel Corporation 

made allegations regarding subsidies to respondents 

Any party having a substantial 

interest in these proceedings may 

request a public hearing on the matter. 

A written request for a hearing must be 

submitted to the Office of Performance 

Evaluation, Room 7009, Economic 

Development Administration, U.S. 

Department of Commerce, Washington, 

DC 20230, no later than ten (10) 

calendar days following publication of 

this notice. Please follow the procedures 

set forth in Section 315.9 of EDA’s final 

rule (71 FR 56704) for procedures for 

requesting a public hearing. The Catalog 

of Federal Domestic Assistance official 

program number and title of the 

program under which these petitions are 

submitted is 11.313, Trade Adjustment 

Assistance. 

William P. Kittredge, 

Program Officer for TAA. 

[FR Doc. E9–22148 Filed 9–14–09; 8:45 am] 

BILLING CODE 3510–24–P 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[C–570–944] 

Certain Oil Country Tubular Goods 

From the People’s Republic of China: 

Preliminary Affirmative Countervailing 

Duty Determination, Preliminary 

Negative Critical Circumstances 

Determination 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

SUMMARY: The Department of Commerce 

preliminarily determines that 

countervailable subsidies are being 

provided to producers and exporters of 

certain oil country tubular goods from 

the People’s Republic of China. For 

information on the estimated subsidy 

rates, see the ‘‘Suspension of 

Liquidation’’ section of this notice. 

DATES: Effective Date: September 15, 

2009. 

FOR FURTHER INFORMATION CONTACT: 

David Neubacher, Shane Subler, Magd 

Zalok, Maryanne Burke, and Henry 

Almond, AD/CVD Operations, Office 1, 

Import Administration, International 

Trade Administration, U.S. Department 

of Commerce, 14th Street and 

Constitution Avenue, NW., Washington, 

DC 20230; telephone: (202) 482–5823, 

(202) 482–0189, (202) 482–4162, (202) 

482–5604, and (202) 482–0049, 

respectively. 

SUPPLEMENTARY INFORMATION: 

Case History 

The following events have occurred 

since the publication of the Department 

of Commerce’s (‘‘Department’’) notice of 

initiation in the Federal Register. See 

Certain Oil Country Tubular Goods from 

the People’s Republic of China: 

Initiation of Countervailing Duty 

Investigation, 74 FR 20678 (May 5, 

2009) (‘‘Initiation Notice’’), and the 

accompanying Initiation Checklist. 

On May 13, 2009, Maverick Tube 

Corporation, United States Steel 

Corporation, TMK IPSCO, V&M Star LP, 

Wheatland Tube Corporation, Evraz 

Rocky Mountain Steel, and United 

Steel, Paper and Forestry, Rubber, 

Manufacturing, Energy, Allied 

Industrial and Service Workers 

International Union, AFL–CIO–CLC 

(‘‘United Steelworkers’’) (collectively, 

the ‘‘petitioners’’) submitted new 

subsidy allegations requesting the 

Department to expand its countervailing 

duty (‘‘CVD’’) investigation to include 

additional subsidy programs.1 On June 

4, 2009, the Department declined to 

investigate these allegations as the 

petitioners did not allege the elements 

necessary for the imposition of CVDs or 

failed to support these allegations with 

reasonably available evidence. See 

Memorandum to Susan Kuhbach, 

Director, AD/CVD Operations, Office 1, 

‘‘Analysis of Petitioners’ New Subsidy 

Allegations’’ (June 4, 2009). 

On June 3, 2009, the Department 

selected four Chinese producers/ 

exporters of certain oil country tubular 

goods (‘‘OCTG’’) as mandatory 

respondents, Jiangsu Changbao Steel 

Tube Co., Ltd. (‘‘Changbao’’), Tianjin 

Pipe (Group) Co. (‘‘TPCO’’), Wuxi 

Seamless Oil Pipe Co., Ltd. (‘‘Wuxi’’), 

and Zhejiang Jianli Enterprise Co., Ltd. 

(‘‘Jianli’’). See Memorandum to John M. 

Andersen, Acting Deputy Assistant 

Secretary for Antidumping and 

Countervailing Duty Operations, 

‘‘Respondent Selection Memo’’ (June 3, 

2009). This memorandum is on file in 

the Department’s Central Records Unit 

in Room 1117 of the main Department 

building (‘‘CRU’’). On the same date, we 

issued the CVD questionnaires to the 

Government of the People’s Republic of 

China (‘‘GOC’’), Changbao, TPCO, Wuxi, 

and Jianli. 

On June 10, 2009, the U.S. 

International Trade Commission (‘‘ITC’’) 

issued its affirmative preliminary 

determination that there is a reasonable 

indication that an industry in the 

United States is materially injured by 

reason of allegedly subsidized imports 

of certain oil country tubular goods from 

the People’s Republic of China (‘‘PRC’’). 

See Certain Oil Country Tubular Goods 

from China; Determinations, 

Investigation Nos. 701–TA–463 and 

731–TA–1159, 74 FR 27559 (June 10, 

2009). 

On June 15, 2009, the Department 

postponed the deadline for the 

preliminary determination in this 

investigation until September 8, 2009. 

See Certain Oil Country Tubular Goods 

from the People’s Republic of China: 

Postponement of Preliminary 

Determination in the Countervailing 

Duty Investigation, 74 FR 28220 (June 

15, 2009). 

We received responses to our 

questionnaire from the GOC, Changbao, 

TPCO, Wuxi, and Jianli on July 20, 

2009. See the GOC’s Original 

Questionnaire Response (July 20, 2009) 

(‘‘GQR’’), Changbao’s Original 

Questionnaire Response (July 20, 2009) 

(‘‘CQR’’), TPCO’s Original 

Questionnaire Response (July 20, 2009) 

(‘‘TQR’’), Wuxi’s Original Questionnaire 

Response (July 20, 2009) (‘‘WQR’’), and 

Jianli’s Original Questionnaire Response 

(July 20, 2009) (‘‘JQR’’). On August 26, 

2009, TPCO provided a response on 

behalf of TPCO Charging Development 

Co., Ltd. (‘‘TCQR’’). On September 1, 

2009, TPCO provided a response on 

behalf of Tianjin Pipe Investment 

Holding Co., Ltd. (‘‘TPCO Holding QR’’). 

We sent supplemental questionnaires 

to Changbao, TPCO, Wuxi, and Jianli on 

August 7, 2009 and to the GOC on July 

27, 2009, August 11, 2009 and August 

28, 2009. We received responses to 

these supplemental questionnaires as 

follows: Changbao’s First Supplemental 

Response on August 21, 2009; Jianli’s 

First Supplemental Response on August 

21, 2009; TPCO’s First Supplemental 

Response, part 1 on August 21, 2009, 

and part 2 on August 26, 2009; Wuxi’s 

First Supplemental response (‘‘W1SR’’) 

on August 24, 2009; the GOC’s CrossOwned Affiliates Supplemental on 

August 3, 2009; GOC’s First 

Supplemental Response (‘‘G1SR’’) on 

August 26, 2009; and GOC’s Second 

Supplemental Response (‘‘G2SR’’) on 

September 1, 2009. 

On July 23, 2009, Maverick Tube 

Corporation requested that the 

Department extend the deadline for the 

submission of new subsidy allegations 

beyond the July 30, 2009 deadline 

established by the Department’s 

regulations. On July 24, 2009, we 

declined to extend the deadline. On July 

30, 2009, the petitioners submitted 

additional new subsidy allegations to 

the Department.2 Jianli and the GOC 


sroberts on DSKD5P82C1PROD with NOTICES
Federal Register / Vol. 74, No. 177 / Tuesday, September 15, 2009 / Notices 47211 

TPCO and Wuxi. TMK IPSCO, V&M Star L.P., 

Wheatland Tube, Evraz Rocky Mountain Steel and 

the United Steelworkers made allegations regarding 

subsidies to respondent Changbao. 

3Maverick Tube Corporation submitted 

comments on the JQR and GQR. United States Steel 

Corporation submitted comments on the TQR and 

WQR. TMK IPSCO, V&M Star L.P., Wheatland 

Tube, Evraz Rocky Mountain Steel and the United 

Steelworkers submitted comments on the CQR. 

4Maverick Tube Corporation, TMK IPSCO, V&M 

Star L.P., Wheatland Tube, Evraz Rocky Mountain 

Steel and the United Steelworkers submitted 

comments relations related to the GOC. Maverick 

Tube Corporation submitted comments on issues 

relating to Jianli and the GOC. United States Steel 

Corporation submitted comments on the provision 

of steel rounds and coke, TPCO, and Wuxi. TMK 

IPSCO, V&M Star L.P., Wheatland Tube, Evraz 

Rocky Mountain Steel and the United Steelworkers 

submitted comments on Changbao. 

filed comments on the new subsidy 

allegations on August 3 and 5, 2009, 

respectively. The Department is 

currently reviewing these new subsidy 

allegations. 

On July 29, 2009, the petitioners 

submitted comments on the 

questionnaire responses filed by the 

GOC and the respondents.3 The 

petitioners provided comments on 

August 25, 26, 28 and 31, regarding 

certain issues for the preliminary 

determination.4 Jianli provided 

comments on September 1, 2009. The 

GOC provided comments on August 31, 

2009, and September 4, 2009. 

Scope Comments 

In accordance with the preamble to 

the Department’s regulations, we set 

aside a period of time in our Initiation 

Notice for parties to raise issues 

regarding product coverage, and 

encouraged all parties to submit 

comments within 20 calendar days of 

publication of that notice. See 

Antidumping Duties; Countervailing 

Duties, 62 FR 27296, 27323 (May 19, 

1997), and Initiation Notice, 74 FR at 

20678. We did not receive comments 

concerning the scope of the 

antidumping duty (‘‘AD’’) and CVD 

investigations of OCTG from the PRC. 

Scope of the Investigation 

The scope of this investigation 

consists of OCTG, which are hollow 

steel products of circular cross-section, 

including oil well casing and tubing, of 

iron (other than cast iron) or steel (both 

carbon and alloy), whether seamless or 

welded, regardless of end finish (e.g., 

whether or not plain end, threaded, or 

threaded and coupled) whether or not 

conforming to American Petroleum 

Institute (‘‘API’’) or non-API 

specifications, whether finished 

(including limited service OCTG 

products) or unfinished (including 

green tubes and limited service OCTG 

products), whether or not thread 

protectors are attached. The scope of the 

investigation also covers OCTG 

coupling stock. Excluded from the scope 

of the investigation are: casing or tubing 

containing 10.5 percent or more by 

weight of chromium; drill pipe; 

unattached couplings; and unattached 

thread protectors. 

The merchandise subject to this 

investigation is currently classified in 

the Harmonized Tariff Schedule of the 

United States (‘‘HTSUS’’) under item 

numbers: 7304.29.10.10, 7304.29.10.20, 

7304.29.10.30, 7304.29.10.40, 

7304.29.10.50, 7304.29.10.60, 

7304.29.10.80, 7304.29.20.10, 

7304.29.20.20, 7304.29.20.30, 

7304.29.20.40, 7304.29.20.50, 

7304.29.20.60, 7304.29.20.80, 

7304.29.31.10, 7304.29.31.20, 

7304.29.31.30, 7304.29.31.40, 

7304.29.31.50, 7304.29.31.60, 

7304.29.31.80, 7304.29.41.10, 

7304.29.41.20, 7304.29.41.30, 

7304.29.41.40, 7304.29.41.50, 

7304.29.41.60, 7304.29.41.80, 

7304.29.50.15, 7304.29.50.30, 

7304.29.50.45, 7304.29.50.60, 

7304.29.50.75, 7304.29.61.15, 

7304.29.61.30, 7304.29.61.45, 

7304.29.61.60, 7304.29.61.75, 

7305.20.20.00, 7305.20.40.00, 

7305.20.60.00, 7305.20.80.00, 

7306.29.10.30, 7306.29.10.90, 

7306.29.20.00, 7306.29.31.00, 

7306.29.41.00, 7306.29.60.10, 

7306.29.60.50, 7306.29.81.10, and 

7306.29.81.50. 

The OCTG coupling stock covered by 

the investigation may also enter under 

the following HTSUS item numbers: 

7304.39.00.24, 7304.39.00.28, 

7304.39.00.32, 7304.39.00.36, 

7304.39.00.40, 7304.39.00.44, 

7304.39.00.48, 7304.39.00.52, 

7304.39.00.56, 7304.39.00.62, 

7304.39.00.68, 7304.39.00.72, 

7304.39.00.76, 7304.39.00.80, 

7304.59.60.00, 7304.59.80.15, 

7304.59.80.20, 7304.59.80.25, 

7304.59.80.30, 7304.59.80.35, 

7304.59.80.40, 7304.59.80.45, 

7304.59.80.50, 7304.59.80.55, 

7304.59.80.60, 7304.59.80.65, 

7304.59.80.70, and 7304.59.80.80. 

The HTSUS subheadings are provided 

for convenience and customs purposes 

only, the written description of the 

scope of this investigation is dispositive. 

Period of Investigation 

The period for which we are 

measuring subsidies, i.e., the period of 

investigation (‘‘POI’’), is January 1, 

2008, through December 31, 2008. 

Critical Circumstances 

In their April 8, 2009, petition, the 

petitioners requested that the 

Department make an expedited finding 

that critical circumstances exist with 

respect to imports of OCTG from the 

PRC. Section 703(e)(1) of the Act states 

that if the petitioner alleges critical 

circumstances, the Department will 

determine, on the basis of information 

available to it at the time, if there is a 

reason to believe or suspect the alleged 

countervailable subsidy is inconsistent 

with the WTO Agreement on Subsidies 

and Countervailing Measures and 

whether there have been massive 

imports of the subject merchandise over 

a relatively short period. 

In accordance with 19 CFR 

351.206(c)(2)(i), because the petitioners 

submitted a critical circumstances 

allegation more than 20 days before the 

scheduled date of the preliminary 

determination, the Department must 

issue a preliminary critical 

circumstances determination not later 

than the date of the preliminary 

determination. See, e.g., Change in 

Policy Regarding Timing of Issuance of 

Critical Circumstances Determinations, 

63 FR 55364 (October 15, 1998). 

However, due to resource constraints 

and the complex issues involved in this 

case, we were unable to accommodate 

the petitioners’ request that the 

Department make our determination on 

an expedited basis. 

In determining whether there are 

‘‘massive imports’’ over a ‘‘relatively 

short period,’’ pursuant to section 

703(e)(1)(B) of the Act, the Department 

normally compares the import volume 

of the subject merchandise for three 

months immediately preceding the 

filing of the petition (i.e., the base 

period) with the three months following 

the filing of the petition (i.e., the 

comparison period). See 19 CFR 

351.206(i). However, this regulation 

further provides that ‘‘if the Secretary 

finds that importers, or exporters or 

producers, had reason to believe, at 

some time prior to the beginning of the 

proceeding that a proceeding was likely, 

then the Secretary may consider a 

period of not less than three months 

from that earlier time.’’ In their critical 

circumstances allegation, the petitioners 

allege that exporters and producers had 

reason to believe a proceeding covering 

OCTG from the PRC would likely be 

instituted as of July 2008. Consequently, 

the petitioners request that the 

Department use January through July 

2008 as the base period and July 

through December 2008 as the 

comparison period. 

In this allegation, the petitioners 

assert that producers and exporters had 

reason to believe a proceeding was 

likely well in advance to the ultimate 

filing of the petition based on the 


sroberts on DSKD5P82C1PROD with NOTICES
47212 Federal Register / Vol. 74, No. 177 / Tuesday, September 15, 2009 / Notices 

5See Volume IV of the petition at 4 and page 15 

of Exhibit V, which states, in relevant part: ‘‘Those 

who believe that OCTG prices could spike also 

argue that a trade case could soon be filed against 

Chinese OCTG producers. But that case may be 

hard to argue with imports in general declining and 

mills reporting strong profits.’’ 

6We note that although the petitioners 

characterize this Canadian proceeding as one 

covering OCTG, Canada did not initiate proceedings 

against OCTG until August 24, 2009. See http:// 

www.cbsa-asfc.gc.ca/sima-lmsi/i-e/ad1385/ad1385- 

i09-ni-eng.html 

7See, e.g., Notice of Final Antidumping Duty 

Determination of Sales at Less Than Fair Value and 

Affirmative Critical Circumstances: Certain Frozen 

Fish Fillets from the Socialist Republic of Vietnam, 

68 FR 37116 (June 23, 2003), and accompanying 

Issues and Decision Memorandum at Comment 7 

(finding reason to believe a case was likely based 

upon widely disseminated newspaper articles 

stating: ‘‘America’s catfish industry, stung by 

dropping prices triggered by a flood of cheaper fish 

from Vietnam, is gearing up for a possible 

antidumping campaign’’ and ‘‘Vietnamese seafood 

exporters are entering a new war on the U.S. 

market, as American rivals are lobbying on an antidumping taxation’’); and Notice of Final 

Determination of Sales at Less Than Fair Value: 

Carbon and Certain Alloy Steel Wire Rod From 

Germany, 67 FR 55802 (August 30, 2002) and 

accompanying Issues and Decision Memorandum at 

Comment 6 (finding reason to believe a case was 

likely based upon trade publication which ‘‘alerted 

steel wire rod importers, exporters, and producers 

the proceedings concerning the subject 

merchandise were likely in a number of countries’’). 

following events: An October 2007 

conference presentation alluding to a 

possible ‘‘trade case;’’ 5 the 

Department’s November 2007 CVD 

determinations covering carbon quality 

steel pipe and light-walled rectangular 

pipe and tube; Canada’s March 2008 

imposition of AD and CVD on ‘‘seamless 

carbon or alloy steel oil and gas well 

casings;’’ 6 a March 2008 statement from 

a PRC distributor of OCTG that ‘‘only 

the issuing of anti-dumping duties will 

be able to cut imports from China;’’ the 

Department’s initiation of AD and CVD 

proceedings on certain circular welded 

carbon quality steel line pipe from the 

Republic of Korea and the PRC; the May 

and June affirmative findings by the ITC 

and the Department regarding the 

above-mentioned pipe cases; a June 

2008 Associated Press article which 

states that the other pipe rulings ‘‘could 

be the first of a wave of victories by U.S. 

companies battling Chinese imports;’’ 

and, in July 2008, the European Union 

(‘‘EU’’) initiated AD investigations of 

seamless tubular products from the PRC. 

See Volume IV of the Petition (‘‘Critical 

Circumstances Allegation’’) at 3–7 and 

Exhibits IV–1 through IV–7. The 

petitioners allege that these events 

culminated in the July 21, 2008, 

warning by Hou Yin of China Iron & 

Steel Association that ‘‘the U.S. may 

start an anti-dumping investigation on 

Chinese seamless pipes soon.’’ See 

Critical Circumstances Allegation at 6– 

7 and Exhibit IV–8. 

Although the Department has found 

producers and exporters had reason to 

believe that a proceeding was likely 

prior to a petition being filed in prior 

cases,7 the evidence put forth by the 

petitioners in this case does not indicate 

that producers and exporters here had 

reason to believe that a proceeding was 

likely as of July 2008. The petitioners 

point to a litany of events dating back 

to October 2007 to indicate that the 

industry was on notice of a potential 

case. However, the bulk of those events 

occurred in what the petitioners would 

have the Department use as the ‘‘base 

period’’—the period where we are to 

assume the industry did not have reason 

to believe a proceeding was likely. The 

petitioners point primarily to a reported 

statement by a representative of the 

China Iron & Steel Association that ‘‘the 

U.S. may start an anti-dumping 

investigation on Chinese seamless pipes 

soon, following the EU.’’ This statement, 

taken in the context of the other events 

cited by the petitioners, is not enough 

to demonstrate that producers, 

exporters, and importers of OCTG from 

the PRC had, or should have had, reason 

to believe the filing of a petition was 

likely as of July 2008. The events cited 

by the petitioners, unlike the events the 

Department has relied on in similar 

cases, are very speculative. Therefore, 

we find that the petitioners have not 

demonstrated that importers, exporters, 

or producers, had reason to believe, at 

some time prior to the beginning of the 

proceeding that a proceeding covering 

OCTG from the PRC was likely. 

Consequently, in accordance with 19 

CFR 351.206(i), we are using the three 

months preceding the filing of the 

petition as the base period (i.e., January 

to March 2009) and the three months 

following the filing of the petition as the 

comparison period (i.e., April to June 

2009). The data provided by the 

respondents and the data for shipments 

by other exporters from the ITC’s 

Dataweb (adjusted to remove shipments 

made by the four respondents 

participating in this investigation) show 

there were no massive increases in 

shipments, as required by 19 CFR 

351.206(h). For further discussion, see 

the Memorandum to the File Re 

‘‘Critical Circumstances Analysis’’ 

(September 8, 2009), on file in the 

Department’s CRU. Notwithstanding 

whether any respondents received any 

subsidies inconsistent with the WTO 

Agreement on Subsidies and 

Countervailing Measures, because we 

find that there was no massive increase 

in shipments from the base period to the 

comparison period, we preliminarily 

find that critical circumstances do not 

exist with regard to OCTG from the PRC. 

Application of the Countervailing Duty 

Law to Imports From the PRC 

On October 25, 2007, the Department 

published Coated Free Sheet Paper from 

the People’s Republic of China: Final 

Affirmative Countervailing Duty 

Determination, 72 FR 60645 (October 

25, 2007) (‘‘CFS from the PRC’’), and the 

accompanying Issues and Decision 

Memorandum (‘‘CFS Decision 

Memorandum’’). In CFS from the PRC, 

the Department found that: 

given the substantial differences between the 

Soviet-style economies and China’s economy 

in recent years, the Department’s previous 

decision not to apply the CVD law to these 

Soviet-style economies does not act as a bar 

to proceeding with a CVD investigation 

involving products from China. 

See CFS Decision Memorandum, at 

Comment 6. The Department has 

affirmed its decision to apply the CVD 

law to the PRC in subsequent final 

determinations. See, e.g., Circular 

Welded Carbon Quality Steel Pipe from 

the People’s Republic of China: Final 

Affirmative Countervailing Duty 

Determination and Final Affirmative 

Determination of Critical 

Circumstances, 73 FR 31966 (June 5, 

2008), and accompanying Issues and 

Decision Memorandum (‘‘CWP Decision 

Memorandum’’), at Comment 1. 

Additionally, for the reasons stated in 

the CWP Decision Memorandum, we are 

using the date of December 11, 2001, the 

date on which the PRC became a 

member of the World Trade 

Organization, as the date from which 

the Department will identify and 

measure subsidies in the PRC. See CWP 

Decision Memorandum, at Comment 2. 

Use of Facts Otherwise Available and 

Adverse Inferences 

Sections 776(a)(1) and (2) of the Act 

provide that the Department shall apply 

‘‘facts otherwise available’’ if, inter alia, 

necessary information is not on the 

record or an interested party or any 

other person: (A) withholds information 

that has been requested; (B) fails to 

provide information within the 

deadlines established, or in the form 

and manner requested by the 

Department, subject to subsections (c)(1) 

and (e) of section 782 of the Act; (C) 

significantly impedes a proceeding; or 

(D) provides information that cannot be 

verified as provided by section 782(i) of 

the Act. 

Section 776(b) of the Act further 

provides that the Department may use 

an adverse inference in applying the 

facts otherwise available when a party 

has failed to cooperate by not acting to 


sroberts on DSKD5P82C1PROD with NOTICES
Federal Register / Vol. 74, No. 177 / Tuesday, September 15, 2009 / Notices 47213 

the best of its ability to comply with a 

request for information. 

GOC 

The Department is investigating the 

alleged provision of steel rounds for less 

than adequate remuneration by the GOC 

and we requested information from the 

GOC about the PRC’s steel rounds 

industry in general, and about the 

specific companies that produced the 

steel rounds purchased by the 

mandatory respondents. In both 

respects, the GOC has failed to provide 

the requested information within the 

established deadlines. 

Regarding the PRC’s steel rounds 

industry in general, the GOC responded 

in its July 20, 2009, initial questionnaire 

response that the term ‘‘steel rounds’’ 

was not clearly defined, but that it 

understood the term to refer to steel 

billets in a round shape that can be used 

to produce OCTG. Based on that 

definition, the GOC went on to state that 

there are no official statistics readily 

available regarding the production and 

consumption of this product in the PRC 

and that the GOC was working to gather 

the requested information. In its August 

26, 2009, supplemental questionnaire 

response, the GOC reported that it had 

not identified any additional 

information regarding the steel rounds 

industry in large part because steel 

rounds are an input product and the 

National Statistics Bureau does not 

maintain data on inputs. On August 28, 

2009, the Department sent a second 

supplemental questionnaire on this 

issue, asking the GOC to provide the 

production and consumption generally 

of the broader category of products, 

‘‘steel billets.’’ The GOC responded on 

September 1, 2009, that the data 

requested by the Department are not 

available because the National Statistics 

Bureau also does not keep data on this 

product. 

Regarding the second aspect of our 

investigation of this alleged subsidy, the 

specific companies that produced the 

steel rounds purchased by the 

mandatory respondents, the Department 

asked the GOC to provide particular 

ownership information for these 

producers so that we could determine 

whether the producers are ‘‘authorities’’ 

within the meaning of section 771(5)(B) 

of the Act. Specifically, we stated in our 

questionnaire that the Department 

normally treats producers that are 

majority owned by the government or a 

government entity as ‘‘authorities.’’ 

Thus, for any steel rounds producers 

that were majority government-owned, 

the GOC only needed to provide the 

additional ownership information 

described below if it wished to argue 

that those producers were not 

‘‘authorities.’’ For each of the steel 

rounds producers that were not 

majority-owned by the government, the 

Department requested the following 

information: translations of the 2007 

and 2008 annual reports (if the 2008 

report was not yet available, the 2006 

and 2007 annual reports); translation of 

the most recent capital verification 

report; translation of the most recent 

articles of association; the names of the 

ten largest shareholders and the total 

number of shareholders, indicating any 

affiliations between these shareholders 

and the government; the total level 

(percentage) of government ownership 

of the company’s shares, the names of 

all government entities that own shares 

in the company, and the amount of 

shares held by each; a statement of 

whether any of the shares held by 

government entities have any special 

rights, priorities, or privileges, e.g., with 

regard to voting rights or other 

management or decision-making for the 

company, or whether there are any 

restrictions on conducting, or acting 

through, extraordinary meetings of 

shareholders, or whether there any 

restrictions on the shares held by 

private shareholders; a description of 

the nature of the private shareholders’ 

interest in the company, e.g., 

operational, strategic, or investmentrelated, etc.; whether any members of 

the board of directors, or other senior 

company officials, were appointed by 

the government or by the government 

entities that hold shares in the 

company; whether any directors on the 

company’s board of directors are 

government officials or otherwise 

affiliated with a government agency or 

other government-owned companies; 

the extent to which the company has 

pursued government industrial policies 

or interests; the extent to which 

operational or strategic decisions that 

are made by the management or board 

of directors subject to government 

review or approval; whether the 

company was created pursuant to 

specific Chinese statutes; other means 

through which the government exercises 

influence over this company; and, if the 

company has a foreign strategic 

investor(s), the role of this shareholder 

and the rights of this shareholder with 

respect to the number of board members 

it may nominate and select, and 

whether the foreign investor nominated 

the president or CEO of the company. 

In its initial questionnaire response, 

the GOC provided a partial response 

addressing the creation of steel rounds 

producers by statute and stating that it 

does not exercise influence over the 

steel rounds producers in which it has 

an ownership interest. In its 

supplemental questionnaire responses, 

the GOC provided a list of the 

companies that produced the steel 

rounds purchased by the mandatory 

respondents and classified each 

according to one of three ownership 

types: SOE (have 50 percent or more 

government ownership); privately held, 

or FIE (foreign invested enterprise). 

None of the requested documentation 

was provided for any of these 

producers. Instead, the GOC stated that 

‘‘the data gathered and supplied by the 

GOC and the respondents already in this 

investigation should accomplish the 

Department’s purpose.’’ 

On August 28, 2009, the petitioners 

submitted comments that included 

information indicating that numerous 

steel rounds producers designated by 

the GOC as being privately held or as 

foreign invested enterprises (‘‘FIEs’’) 

are, in fact, majority-government owned. 

Thus, the GOC not only failed to 

provide the requested documentation 

regarding the ownership of the steel 

rounds producers, but record 

information indicates that the GOC’s 

designation of certain producers was 

incorrect. On this basis, we 

preliminarily determine that the GOC 

has not acted to the best of its ability to 

provide the information needed for this 

investigation and, hence, has failed to 

cooperate. Consequently, an adverse 

inference is warranted in the 

application of facts available. As 

adverse facts available (‘‘AFA’’), we are 

treating all but one of the producers of 

steel rounds supplied to the mandatory 

respondents as authorities. The one 

exception is Tuoketuo County Mengfeng 

Special Steel Company, Ltd. 

(‘‘Mengfeng’’), which was owned by 

respondent, Wuxi, at the time Mengfeng 

began producing billets in 2008. As 

explained below under ‘‘Subsidies 

Valuation Information—Attribution of 

Subsidies’’ subsidies to this supplier are 

being attributed to OCTG produced and 

sold by Wuxi. Record evidence makes 

clear that Mengfeng was majority owned 

and controlled by Wuxi, a privately 

owned company. 

As noted above, the GOC also failed 

to provide requested information about 

the production and consumption of 

steel rounds or billets generally. In light 

of this, we preliminarily determine that 

the GOC has not acted to the best of its 

ability to provide the information 

needed for this investigation and, hence, 

has failed to cooperate. Consequently, 

an adverse inference is warranted in the 

application of facts available. As AFA, 

we are assuming that the GOC’s 

dominance of the market in the PRC for 


sroberts on DSKD5P82C1PROD with NOTICES
47214 Federal Register / Vol. 74, No. 177 / Tuesday, September 15, 2009 / Notices 

this input results in significant 

distortion of the prices and, hence, that 

use of an external benchmark is 

warranted. 

The Department’s practice when 

selecting an adverse rate from among 

the possible sources of information is to 

ensure that the result is sufficiently 

adverse ‘‘as to effectuate the statutory 

purposes of the adverse facts available 

rule to induce respondents to provide 

the Department with complete and 

accurate information in a timely 

manner.’’ See Notice of Final 

Determination of Sales at Less than Fair 

Value: Static Random Access Memory 

Semiconductors From Taiwan, 63 FR 

8909, 8932 (February 23, 1998). The 

Department’s practice also ensures ‘‘that 

the party does not obtain a more 

favorable result by failing to cooperate 

than if it had cooperated fully.’’ See 

Statement of Administrative Action 

(‘‘SAA’’) accompanying the Uruguay 

Round Agreements Act, H. Doc. No. 

316, 103d Cong., 2d Session (1994), at 

870. 

Section 776(c) of the Act provides 

that, when the Department relies on 

secondary information rather than on 

information obtained in the course of an 

investigation or review, it shall, to the 

extent practicable, corroborate that 

information from independent sources 

that are reasonably at its disposal. 

Secondary information is ‘‘information 

derived from the petition that gave rise 

to the investigation or review, the final 

determination concerning the subject 

merchandise, or any previous review 

under section 751 concerning the 

subject merchandise.’’ See e.g., SAA, at 

870. The Department considers 

information to be corroborated if it has 

probative value. See id. To corroborate 

secondary information, the Department 

will, to the extent practicable, examine 

the reliability and relevance of the 

information to be used. The SAA 

emphasizes, however, that the 

Department need not prove that the 

selected facts available are the best 

alternative information. See SAA, at 

869. 

To corroborate the Department’s 

treatment of the companies that 

produced the steel rounds and billets 

purchased by the mandatory 

respondents as authorities and our 

finding that the GOC dominates the 

domestic market for this input, we are 

relying on Circular Welded Carbon 

Quality Steel Line Pipe from the 

People’s Republic of China: Final 

Affirmative Countervailing Duty 

Determination, 73 FR 70961 (November 

24, 2008) (‘‘Line Pipe from the PRC’’). In 

that case, the Department determined 

that the GOC owned or controlled the 

entire hot-rolled steel industry in the 

PRC. See Line Pipe from the PRC and 

accompanying Issues and Decision 

Memorandum at Comment 1. Evidence 

on the record of this investigation shows 

that many steel producers in the PRC 

are integrated, producing both long 

products (rounds and billets) and flat 

products (hot-rolled steel). (See 

Memorandum to the File, ‘‘Additional 

Information on Steel Rounds,’’ dated 

September 8, 2009). Consequently, 

government ownership in the hot-rolled 

steel industry is a reasonable proxy for 

government ownership in the steel 

rounds and billets industry. 

Subsidies Valuation Information 

Allocation Period 

The average useful life (‘‘AUL’’) 

period in this proceeding, as described 

in 19 CFR 351.524(d)(2), is 15 years 

according to the U.S. Internal Revenue 

Service’s 1977 Class Life Asset 

Depreciation Range System. See U.S. 

Internal Revenue Service Publication 

946 (2008), How to Depreciate Property, 

at Table B–2: Table of Class Lives and 

Recovery Periods. 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)–(v) 

directs that the Department will 

attribute subsidies received by certain 

other companies to the combined sales 

of those companies if (1) crossownership 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 

majority voting interest between two 

corporations or through common 

ownership of two (or more) 

corporations. The Court of International 

Trade (‘‘CIT’’) has upheld the 

Department’s authority to attribute 

subsidies based on whether a company 

could use or direct the subsidy benefits 

of another company in essentially the 

same way it could use its own subsidy 

benefits. See Fabrique de Fer de 

Charleroi v. United States, 166 F. Supp. 

2d 593, 600–604 (CIT 2001). 

Changbao 

Changbao responded on behalf of 

itself and one affiliate, Jiangsu Changbao 

Precision Steel Tube Co., Ltd. 

(‘‘Precision’’), a producer of subject 

merchandise. The nature of the 

affiliation is proprietary, but based on 

19 CFR 351.525(b)(vi), we preliminarily 

determine that these companies are 

‘‘cross-owned.’’ See CQR at 3. Therefore, 

pursuant to 19 CFR 351.525(b)(6)(ii), we 

are attributing the subsidies received by 

either Changbao and/or Precision to the 

combined sales of both companies. 

Changbao identified several other 

affiliated companies, but reported that 

these affiliates do not produce the 

subject merchandise or provide inputs. 

Id. Therefore, because these companies 

do not produce subject merchandise or 

otherwise fall within the situations 

described in 19 CFR 351.525(b)(6)(iii)- 

(v), we do not reach the issue of whether 

these companies and Changbao are 

cross-owned within the meaning of 19 

CFR 351.525(b)(6)(vi) and we are not 

including these companies in our 

subsidy calculations. 

Jianli 

Jianli responded on behalf of itself 

and three affiliates: Zhejiang Jianli Steel 

Tube Co., Ltd, (‘‘Jianli Steel Tube’’), 

Zhuji Jiansheng Machinery Co., Ltd. 

(formerly Zhejiang Jianli OCTG 

Seamless Pipe Co., Ltd.) (‘‘Jiansheng’’), 

and Zhejiang Jianli Industry Group Co., 

Ltd. (‘‘Jianli Industry’’) (collectively, the 

‘‘Jianli Group’’). These companies are 

cross-owned within the meaning of 19 

CFR 351.525(b)(6)(vi) by virtue of high 

levels of common ownership. Jianli 

reported that Jianli Steel Tube produced 

OCTG for sale to Jianli and Jiansheng for 

further processing. See JQR at 6. Jianli 

also reported that Jiansheng purchased 

OCTG from Jianli and Jianli Steel Tube 

for further processing and to sell both 

domestically and in the export market. 

Id. Therefore, pursuant to 19 CFR 

351.525(b)(6)(ii), we are attributing the 

subsidies received by Jianli, Jianli Steel 

Tube, or Jiansheng to the combined 

sales of these companies, excluding the 

sales between them. 

Regarding Jianli Industry, Jianli 

reported that this company is the 

holding company for the Jianli Group. 

See JQR at 4. Therefore, pursuant to 19 

CFR 351.525(b)(6)(iii), we are attributing 

the subsidies received by Jianli Industry 

to the combined sales of the Jianli 


sroberts on DSKD5P82C1PROD with NOTICES
Federal Register / Vol. 74, No. 177 / Tuesday, September 15, 2009 / Notices 47215 

8See TQR at 5. 9See TCQR at 4 and 5. 

Group, excluding sales between the 

group companies. 

In its questionnaire response, Jianli 

also acknowledged that it has several 

other affiliated parties in addition to the 

three companies named above. See JQR 

at 5. However, Jianli reported that these 

affiliates do not produce the subject 

merchandise and do not provide inputs 

to Jianli. Therefore, because these 

companies do not produce subject 

merchandise or otherwise fall within 

the situations outlined in 19 CFR 

351.525(b)(6)(iii)-(v), we do not reach 

the issue of whether these companies 

and Jianli are cross-owned within the 

meaning of 19 CFR 351.525(b)(6)(vi) and 

we are not including these companies in 

our subsidy calculations. 

TPCO 

As of this preliminary determination, 

TPCO has responded to the 

Department’s original and supplemental 

questionnaires on behalf of itself; 

Tianjin Pipe Iron Manufacturing Co., 

Ltd. (‘‘TPCO Iron’’); Tianguan Yuantong 

Pipe Product Co., Ltd. (‘‘Yuantong’’); 

Tianjin Pipe International Economic 

and Trading Co., Ltd. (‘‘IETC’’); and 

TPCO Charging Development Co., Ltd. 

(‘‘Charging’’). These companies are 

cross-owned within the meaning 19 CFR 

351.525(b)(6)(vi) because of TPCO’s 

substantial ownership position in each 

of them. 

TPCO stated that TPCO Iron provides 

‘‘molten and direct reduced iron’’ to 

TPCO and that Yuantong provides 

‘‘threading and other finishing processes 

to TPCO Group’s OCTG production.’’ 8

Because TPCO Iron produced an input 

to TPCO’s production of subject 

merchandise during the POI, we are 

preliminarily attributing subsidies 

received by TPCO Iron to TPCO, in 

accordance with 19 CFR 

351.525(b)(6)(iv). Yuantong had direct 

involvement in the production of 

subject merchandise during the POI. 

Thus, we are preliminarily attributing 

subsidies received by Yuantong to 

TPCO, in accordance with 19 CFR 

351.525(b)(6)(ii). 

Regarding IETC, TPCO stated, 

‘‘{IETC} is the trading company through 

which TPCO Group exports all subject 

merchandise.’’ Because IETC exported 

subject merchandise during the POI, we 

are preliminarily cumulating the benefit 

from subsidies received by IETC with 

subsidies provided to TPCO, in 

accordance with 19 CFR 351.525(c). 

With regard to Charging, TPCO stated 

that Charging acts as a trading company 

and does not produce any 

merchandise.9 Instead, Charging 

purchased and provided steel rounds to 

TPCO during the POI. Because Charging 

is not an input producer, we are not 

treating Charging as an input supplier as 

described in 19 CFR 351.525(b)(6)(iv) 

(which refers to subsidies received by 

the input producer). Instead, for the 

preliminary determination, we are 

treating any subsidies conferred by the 

government’s provision of steel rounds 

for less than adequate remuneration as 

having been transferred to TPCO 

through Charging’s transfer of the steel 

rounds to TPCO, consistent with 19 CFR 

351.525(b)(6)(v). 

During the period December 11, 2003, 

through September 8, 2004, TPCO 

Holding held a majority interest in 

TPCO. Under 19 CFR 351.525(b)(6)(iii), 

we would normally attribute subsidies 

received by TPCO Holding during the 

period December 11, 2003, through 

September 8, 2004, to TPCO. TPCO 

Holding’s questionnaire response dated 

September 1, 2009, however, indicated 

that TPCO Holding received no nonrecurring subsidies during the period 

December 11, 2003, through September 

8, 2004. 

TPCO reported that it intended to 

provide a response on behalf of Tianjin 

TEDA Investment Holding Co., Ltd. 

(‘‘TEDA’’). TPCO explained that TEDA 

maintains a majority equity stake in 

TPCO. As of this preliminary 

determination, TPCO has not provided 

a questionnaire response. 

In a supplemental questionnaire dated 

August 7, 2009, we asked TPCO 

questions about certain affiliates that 

may have met the cross-ownership 

standard under 19 CFR 351.525(b)(6)(vi) 

and one or more of the attribution 

standards under 19 CFR 

351.525(b)(6)(ii-v). TPCO provided 

responses to these questions in its 

August 21, 2009, response at 1–15. 

Based on TPCO’s responses, we 

preliminarily determine that none of 

these affiliates met both the crossownership standard of 19 CFR 

351.525(b)(6)(vi) and one or more of the 

attribution standards under 19 CFR 

351.525(b)(6)(ii-v). Thus, we have not 

included any subsidies to these 

companies in the subsidy calculation. 

For other affiliated companies that 

TPCO identified in Exhibits 1 and 2 of 

the TQR, TPCO either held a small 

ownership share during the POI or 

identified the companies as having no 

involvement with subject merchandise. 

Thus, we have not included any 

subsidies to these companies in the 

subsidy calculation. 

In their August 28, 2009 submission, 

the petitioners requested that the 

Department use the unconsolidated 

sales value of TPCO and its cross-owned 

affiliates (net of intercompany sales) to 

calculate the subsidy rate for each 

program. Under 19 CFR 

351.525(b)(6)(iii), the Department will 

attribute subsidies bestowed on a parent 

or holding company to the consolidated 

sales of the parent or holding company 

and its subsidiaries. TPCO was a parent 

company to other companies during the 

POI. On page 13 of the TQR, TPCO 

stated, ‘‘TPCO Group consolidates those 

entities it holds more than 50% equity 

shares and also those indirectly owned 

subsidiaries it owns more than 50% 

equity shares.’’ In accordance with 19 

CFR 351.525(b)(6)(iii), we are 

preliminarily attributing subsidies to 

TPCO to the consolidated sales of TPCO 

and its subsidiaries. 

Therefore, based on information 

currently on the record, we 

preliminarily determine that crossownership within the meaning of 19 

CFR 351.525(b)(6)(vi) exists between 

TPCO, TPCO Iron, Yuantong, IETC, and 

Charging. We are preliminarily 

attributing subsidies received by TPCO 

to the consolidated sales of TPCO and 

its subsidiaries. See 19 CFR 

351.525(b)(6)(iii). TPCO Iron, Yuantong, 

and Charging are consolidated into 

TPCO’s sales; thus, we are preliminarily 

attributing subsidies received by TPCO 

Iron, Yuantong, and Charging to TPCO’s 

consolidated sales (excluding sales 

between TPCO and these three 

affiliates). For IETC, we preliminarily 

have cumulated IETC’s subsidy benefits 

with TPCO’s subsidy benefits. See 19 

CFR 351.525(c). 

Wuxi 

Wuxi identified numerous companies 

with which it is affiliated and 

responded on behalf of itself, a 

‘‘productive’’ FIE and a producer of 

subject merchandise, as well as affiliates 

Jiangsu Fanli Steel Pipe Co., Ltd. 

(‘‘Fanli’’), a producer of subject 

merchandise, and Tuoketuo County 

Mengfeng Special Steel Co., Ltd. 

(‘‘Mengfeng’’), an affiliated input 

supplier. Based on Wuxi’s high level of 

ownership in Fanli and Mengfeng, we 

preliminarily determine that Wuxi is 

cross-owned with Fanli and Mengfeng 

within the meaning of 19 CFR 

351.525(b)(6)(vi). Fanli is a producer of 

subject merchandise and provided 

‘‘green pipe’’ to Wuxi during the POI. 

See WQR, at 2. Thus, we are 

preliminarily attributing subsidies 

received by Wuxi and Fanli to their 

combined sales, excluding the sales 

between them, in accordance with 19 


sroberts on DSKD5P82C1PROD with NOTICES
47216 Federal Register / Vol. 74, No. 177 / Tuesday, September 15, 2009 / Notices 

10See 19 CFR 351.505(a)(3)(i). 

11See 19 CFR 351.505(a)(3)(ii). 

12See CFS from the PRC at Comment 10. 

13See Notice of Final Affirmative Countervailing 

Duty Determination and Final Negative Critical 

Circumstances Determination: Certain Softwood 

Lumber Products From Canada, 67 FR 15545 (April 

2, 2002) (‘‘Softwood Lumber from Canada’’) and 

accompanying Issues and Decision Memorandum at 

‘‘Analysis of Programs, Provincial Stumpage 

Programs Determined to Confer Subsidies, Benefit.’’ 14See CFS from the PRC at Comment 10. 15See Lightweight Thermal Paper From the 

People’s Republic of China: Final Affirmative 

Countervailing Duty Determination, 73 FR 57323 

(October 2, 2008) (‘‘LWTP from the PRC’’) and 

accompanying Issues and Decision Memorandum 

(‘‘LWTP Decision Memo’’) at 20–25. 

CFR 351.525(b)(6)(ii). Wuxi’s affiliate 

Mengfeng produces steel billets and 

provided a small amount to Wuxi 

during the POI. See WQR, at 2 and 3. 

Record evidence supports that billets 

are dedicated to Wuxi’s production of 

the downstream product, OCTG. 

Therefore, for purposes of this 

preliminary determination, subsidies 

received by Mengfeng would be 

attributed to Wuxi in accordance with 

19 CFR 351.525(b)(6)(iv). However, for 

this preliminary determination, we are 

finding no subsidies to Mengfeng. 

In a supplemental questionnaire dated 

August 7, 2009, we asked Wuxi about 

certain other affiliates. Wuxi provided 

responses to these questions in its 

supplemental questionnaire response. 

See W1SR, at 1–7. With respect to 

Wuxi’s affiliate, Wuxi Longhua Steel 

Pipe Co., Ltd. (‘‘Wuxi Longhua’’), which 

had been involved in the sales and 

processing of oil pipes prior to the POI, 

Wuxi did not provide a questionnaire 

response. Rather, Wuxi claims the 

conditions of 19 CFR 351.525(b)(6)(ii) 

through (v) do not apply to Wuxi 

Longhua because it did not produce 

subject merchandise, is not a holding 

company or a parent company of Wuxi 

and has not received a subsidy and 

transferred it to Wuxi. Wuxi also 

reported that while Wuxi Longhua had 

previously resold inputs to Wuxi, it did 

not produce or resell inputs to Wuxi 

during the POI. See W1SR, at 2 and 3. 

We received Wuxi’s supplemental 

response shortly before the deadline for 

this preliminary determination and have 

not been able to fully analyze Wuxi 

Longhua’s relationship with Wuxi and 

its involvement in the production of 

subject merchandise in accordance with 

19 CFR 351.525(b)(6). Consequently, for 

this preliminary determination, we are 

excluding Wuxi Longhua from the 

subsidy calculation, but will continue to 

examine this issue for the final 

determination. 

Wuxi also corrected certain 

information in its W1SR with respect to 

affiliate Wuxi Huayi Investment 

Company (‘‘Wuxi Huayi’’). See Wuxi’s 

correction letter, dated August 24, 2009. 

Details of Wuxi Huayi’s relationship are 

proprietary and, therefore, are addressed 

separately. See Preliminary 

Determination Calculation 

Memorandum for Wuxi, dated 

September 8, 2009. We received Wuxi’s 

correction letter shortly before the 

deadline for this preliminary 

determination and have not been able to 

fully analyze Wuxi Huayi’s relationship 

with Wuxi and its involvement in the 

production of subject merchandise in 

accordance with 19 CFR 351.525(b)(6). 

Consequently, for this preliminary 

determination, we are excluding Wuxi 

Huayi from the subsidy calculation, but 

will continue to examine this issue for 

the final determination. 

After examining additional 

information from Wuxi’s responses, we 

find the remaining affiliates do not 

produce subject merchandise, or 

otherwise fall within the situations 

described in 19 CFR 351.525(b)(6)(iii) to 

(v). As such, we have preliminarily 

excluded these companies from the 

subsidy calculations. 

Benchmarks and Discount Rates 

Benchmarks for Short-Term RMB 

Denominated Loans 

Section 771(5)(E)(ii) of the Act 

explains that the benefit for loans is the 

‘‘difference between the amount the 

recipient of the loan pays on the loan 

and the amount the recipient would pay 

on a comparable commercial loan that 

the recipient could actually obtain on 

the market.’’ Normally, the Department 

uses comparable commercial loans 

reported by the company for 

benchmarking purposes.10 If the firm 

did not have any comparable 

commercial loans during the period, the 

Department’s regulations provide that 

we ‘‘may use a national interest rate for 

comparable commercial loans.’’ 11

As noted above, section 771(5)(E)(ii) 

of the Act indicates that the benchmark 

should be a market-based rate. For the 

reasons explained in CFS from the 

PRC,12 loans provided by Chinese banks 

reflect significant government 

intervention in the banking sector and 

do not reflect rates that would be found 

in a functioning market. Because of this, 

any loans received by respondents from 

private Chinese or foreign-owned banks 

would be unsuitable for use as 

benchmarks under 19 CFR 

351.505(a)(2)(i). Similarly, we cannot 

use a national interest rate for 

commercial loans as envisaged by 19 

CFR 351.505(a)(3)(ii). Therefore, 

because of the special difficulties 

inherent in using a Chinese benchmark 

for loans, the Department is selecting an 

external market-based benchmark 

interest rate. The use of an external 

benchmark is consistent with the 

Department’s practice. For example, in 

Softwood Lumber from Canada, the 

Department used U.S. timber prices to 

measure the benefit for governmentprovided timber in Canada.13

We are calculating the external 

benchmark using the regression-based 

methodology first developed in CFS 

from the PRC14 and more recently 

updated in LWTP from the PRC.15 This 

benchmark interest rate is based on the 

inflation-adjusted interest rates of 

countries with per capita GNIs similar 

to the PRC, and takes into account a key 

factor involved in interest rate 

formation, that of the quality of a 

country’s institutions, that is not 

directly tied to the state-imposed 

distortions in the banking sector 

discussed above. 

Following the methodology 

developed in CFS from the PRC, we first 

determined which countries are similar 

to the PRC in terms of gross national 

income (‘‘GNI’’), based on the World 

Bank’s classification of countries as: low 

income; lower-middle income; uppermiddle income; and high income. The 

PRC falls in the lower-middle income 

category, a group that includes 55 

countries as of July 2007. As explained 

in CFS from the PRC, this pool of 

countries captures the broad inverse 

relationship between income and 

interest rates. 

Many of these countries reported 

lending and inflation rates to the 

International Monetary Fund and they 

are included in that agency’s 

international financial statistics (‘‘IFS’’). 

With the exceptions noted below, we 

have used the interest and inflation 

rates reported in the IFS for the 

countries identified as ‘‘low middle 

income’’ by the World Bank. First, we 

did not include those economies that 

the Department considered to be nonmarket economies for AD purposes for 

any part of the years in question, for 

example: Armenia, Azerbaijan, Belarus, 

Georgia, Moldova, Turkmenistan. 

Second, the pool necessarily excludes 

any country that did not report both 

lending and inflation rates to IFS for 

those years. Third, we removed any 

country that reported a rate that was not 

a lending rate or that based its lending 

rate on foreign-currency denominated 

instruments. For example, Jordan 

reported a deposit rate, not a lending 

rate, and the rates reported by Ecuador 

and Timor L’Este are dollardenominated rates; therefore, the rates 

for these three countries have been 


sroberts on DSKD5P82C1PROD with NOTICES
Federal Register / Vol. 74, No. 177 / Tuesday, September 15, 2009 / Notices 47217 

excluded. Finally, for each year the 

Department calculated an inflationadjusted short-term benchmark rate, we 

have also excluded any countries with 

aberrational or negative real interest 

rates for the year in question. 

The resulting inflation-adjusted 

benchmark lending rates are provided in 

the respondents’ preliminary 

calculation memoranda. See e.g., 

Preliminary Determination Calculation 

Memoranda for, Jiangsu Changbao Steel 

Tube Co., Ltd., Tianjin Pipe (Group) Co., 

Wuxi Seamless Oil Pipe Co., Ltd., and 

Zhejiang Jianli Enterprise Co., Ltd. 

(September 8, 2009). Because these are 

inflation-adjusted benchmarks, it is 

necessary to adjust the respondents’ 

interest payments for inflation. This was 

done using the PRC inflation figure as 

reported in the IFS. Id. 

Benchmarks for Long-Term Loans 

The lending rates reported in the IFS 

represent short- and medium-term 

lending, and there are not sufficient 

publicly available long-term interest rate 

data upon which to base a robust 

benchmark for long-term loans. To 

address this problem, the Department 

has developed an adjustment to the 

short- and medium-term rates to convert 

them to long-term rates using Bloomberg 

U.S. corporate BB-rated bond rates. See 

Light-Walled Rectangular Pipe and Tube 

From the People’s Republic of China: 

Final Affirmative Countervailing Duty 

Investigation Determination, 73 FR 

35642 (June 24, 2008) and 

accompanying Issues and Decision 

Memorandum (‘‘LWRP Decision 

Memo’’) at 8. In Citric Acid from the 

PRC, this methodology was revised by 

switching from a long-term mark-up 

based on the ratio of the rates of BBrated bonds to applying a spread which 

is calculated as the difference between 

the two-year BB bond rate and the nyear BB bond rate, where n equals or 

approximates the number of years of the 

term of the loan in question. See Citric 

Acid and Certain Citrate Salts From the 

People’s Republic of China: Final 

Affirmative Countervailing Duty 

Determination, 74 FR 16836 (April 13, 

2009) (‘‘Citric Acid from the PRC’’) and 

accompanying Issues and Decision 

Memorandum (‘‘Citric Acid Decision 

Memo’’) at Comment 14. Finally, 

because these long-term rates are net of 

inflation as noted above, we adjusted 

the PRC respondents’ payments to 

remove inflation. 

Benchmarks for Foreign CurrencyDenominated Loans 

For foreign currency-denominated 

short-term loans, the Department used 

as a benchmark the one-year dollar 

interest rates for the London Interbank 

Offering Rate (‘‘LIBOR’’), plus the 

average spread between LIBOR and the 

one-year corporate bond rates for 

companies with a BB rating. See LWTP 

Decision Memo at 10. For long-term 

foreign currency-denominated loans, the 

Department added the applicable shortterm LIBOR rate to a spread which is 

calculated as the difference between the 

one-year BB bond rate and the n-year BB 

bond rate, where n equals or 

approximates the number of years of the 

term of the loan in question. 

Discount Rates 

Consistent with 19 CFR 

351.524(d)(3)(i)(A), we have used, as our 

discount rate, the long-term interest rate 

calculated according to the methodology 

described above for the year in which 

the government agreed to provide the 

subsidy. 

Analysis of Programs 

Based upon our analysis of the 

petition and the responses to our 

questionnaires, we preliminarily 

determine the following: 

I. Programs Preliminarily Determined 

To Be Countervailable 

A. Policy Loans 

The Department is examining whether 

OCTG producers receive preferential 

lending through state-owned 

commercial or policy banks. According 

to the allegation, preferential lending to 

the OCTG industry is supported by the 

GOC through the issuance of national 

and provincial five-year plans; 

industrial plans for the steel sector; 

catalogues of encouraged industries, and 

other government laws and regulations. 

The GOC has responded that policy 

guidance documents do not require 

banks to provide preferential, 

discounted, or policy loans to specific 

enterprises. Moreover, banking laws in 

the PRC require commercial banks to 

operate independently of the 

government and in accordance with 

commercial norms. Thus, the GOC 

claims that there is no policy lending in 

regard to the OCTG industry as alleged 

by the petitioners. 

Based on our review of the 

information and responses of the GOC 

and mandatory respondents, we 

preliminarily determine that loans 

received by the OCTG industry from 

state-owned commercial banks 

(‘‘SOCBs’’) were made pursuant to 

government directives. 

Record evidence demonstrates that 

the GOC, through its directives, has 

highlighted and advocated the 

development of the OCTG industry. At 

the national level, the GOC has placed 

an emphasis on the development of 

high-end, value-added steel products 

through foreign investment as well as 

through technological research, 

development, and innovation. In laying 

out this strategy, the GOC has identified 

the specific products it has in mind. For 

example, an ‘‘objective’’ of The 10th 

Five-Year Plan for the Metallurgical 

Industry was to develop key steel types 

that were mainly imported; high 

strength, anticrushing and corrosion 

resistant petroleum pipe was among the 

listed products. Moreover, among the 

‘‘Policy Measures’’ set out in the plan 

for achieving its objectives was the 

encouragement of enterprises to 

cooperate with foreign enterprises, 

particularly in the production and 

development of high value-added 

products and high-tech products. See 

GQR at Exhibit GOC–A–1. 

Similarly, in the Development Policies 

for the Iron and Steel Industry (July 

2005) at Article 16, the GOC states that 

it will ‘‘ * * * enhance the R&D, design, 

and manufacture level in relation to the 

key technology, equipment and facilities 

for the Chinese steel industry.’’ To 

accomplish this, the GOC states it will 

provide support to key steel projects 

relying on domestically produced and 

newly developed equipment and 

facilities, through tax and interest 

assistance, and scientific research 

expenditures. See GQR at Exhibit GOC– 

A–21. Later in 2005, the GOC 

implemented the Decision of the State 

Council on Promulgating the ‘‘Interim 

Provisions on Promoting Industrial 

Structure Adjustment’’ for 

Implementation (No. 40 (2005)) 

(‘‘Decision 40’’) in order to achieve the 

objectives of the Eleventh Five-Year 

Plan. See Memorandum to File from 

David Neubacher, Analyst regarding 

‘‘Additional Documents Placed on the 

Record’’ (September 8, 2009). Decision 

40 references the Directory Catalogue on 

Readjustment of Industrial Structure 

(‘‘Industrial Catalogue’’), which outlines 

the projects which the GOC deems 

‘‘encouraged,’’ ‘‘restricted,’’ and 

‘‘eliminated,’’ and describes how these 

projects will be considered under 

government policies. OCTG was named 

in the Industrial Catalogue as an 

‘‘encouraged project.’’ See Petition at 

Exhibit III–14. For the ‘‘encouraged’’ 

projects, Decision 40 outlines several 

support options available to the 

government, including financing. 

Turning to the provincial and 

municipal plans, the Department has 

described the inter-relatedness of 

national level plans and directives with 

those at the sub-national level. See 

LWTP Decision Memo at Comment 6. 


sroberts on DSKD5P82C1PROD with NOTICES
47218 Federal Register / Vol. 74, No. 177 / Tuesday, September 15, 2009 / Notices 

16See Citric Acid from the PRC, 74 FR 16836 and 

Citric Acid Decision Memo, at Comment 5. 

17See CFS Decision Memorandum, at 49; and 

LWTP Decision Memo, at 98. 

18See CFS Decision Memorandum, at Comment 

8. 

19See OTR Tires from the PRC IDM, at 15; and 

LWTP Decision Memo, at 11. 

Based on our review of the sub-national 

plans submitted by the GOC in this 

investigation, we find that they mirror 

the national government’s objective of 

supporting and promoting the 

production of innovative and high-value 

added products, including OCTG. 

Examples from the five-year plans of the 

provinces and/or municipalities where 

each of the respondents is located 

follow: 

Outline of the 10th Five-Year Plan for the 

National Economic and Social Development 

of Tianjin City: ‘‘For metallurgical industry, 

we attach importance to the development of 

high quality and efficiency steel products 

and high grade metal products, such as 

seamless steel tube and cold rolled sheet, and 

carry out the oil steel pipe extension and 

east-movement project of steel.’’ See GQR at 

Exhibit GOC–A–15. 

Outline of the 11th Five-Year Program for 

the Development of the Industrial Economy 

of Tianjin: ‘‘We shall also focus on those steel 

tube industries mainly engaged in oil country 

tubular goods and high grade furnace tubular 

goods through careful thorough efforts and 

build a new specialized oil country tubular 

goods production base placing oil casing first 

and high added value products such as oil 

pipes and drill pipes second.’’ See GQR at 

Exhibit GOC–A–16. 

Notice of Tianjin Municipal People’s 

Government Concerning the Printing and 

Distribution of the Outline for the 11th FiveYear Program for the National Economic and 

Social Development in Tianjin Binhai New 

Area: ‘‘4. Constructing deep processing base 

of petroleum steel pipe and high quality steel 

material—We shall quicken technology 

innovation and structural adjustment, extend 

industrial link, enhance the concentration 

effort, strive the commanding point of the 

industry, consolidate and develop the 

leading position of deep processing of 

petroleum steel pipe and high quality steel 

material.’’ See G1SR at Exhibit GOC–SUPP– 

18. 

An Outline of Adjustment and 

Development Plan for Industrial Structure of 

Jiangsu Province During the 11th Five-Year 

Plan: ‘‘Emphasize on the development of 

high-quality steel products with high added 

value and high technological content such as 

motor plates, shipbuilding steel plates, * * * 

pinion steel, oil well billet, special pipes and 

sticks, and highly qualified high-carbon hard 

wires.’’ See G1SR at Exhibit GOC–SUPP–15. 

The Outline of the 11th Five-Year Program 

for the National Economic and Social 

Development in Xuyi County: ‘‘Cultivating 

large-scale enterprises—Adopting the way of 

developing large-scale enterprises and 

expanding existing enterprises and 

conglomerates. We should encourage and 

assist the enterprises, such as * * * Fanli 

Steel Pipes.’’ See G1SR at Exhibit GOC– 

SUPP–9. 

Outline of the 11th Five-Year Program for 

the National Economic and Social 

Development of Wuxi: ‘‘New Material 

Industry. We will take such industries as 

metallurgy, chemical industry and so on as 

the foundation, prioritize products of several 

domains such as new composition material 

and high polymer * * * special steel and 

product, * * * and so on,’’ See GQR at 

Exhibit GOC–A–12. 

The Outline of the Tenth Five-Year Plan 

for the National Economy and Social 

Development of Zhejiang Province: ‘‘make 

great efforts to improve the industrial level, 

product grade and the international 

competitiveness’’ (with regard to the 

province’s goal of adjusting and optimizing 

the industrial structure). See GQR at Exhibit 

GOC–A–5. 

The Outline of the 11th Five-Year Program 

for the National Economy and Social 

Development in Zhejiang Province: ‘‘We will 

change the economic growth pattern. We will 

speed up the pace of independent 

innovation, strengthen the supporting role of 

talented persons and science and technology 

in economic growth, insist on taking an 

industrialized path, and push forward the 

strategic readjustment of economic 

structure.’’ See GQR at Exhibit GOC–A–6. 

The 11th Five-Year Plan for National 

Economic and Social Development of Zhuji: 

‘‘Improving input mechanism and 

constructing ‘modern industrial highland.’ 

We will help enterprises to put projects into 

places in accordance with industry guiding 

directory of the state, forcefully renovate and 

upgrade traditional industries, and specially 

foster and develop high-tech industries and 

more potent new industries.’’ See GQR at 

Exhibit GOC–A–8. 

Finally, we examined the loan 

documentation provided by the GOC 

and noted language for certain loans 

which also reflects the GOC’s directives 

to support the OCTG industry. As this 

information is business proprietary, it is 

discussed in a separate memorandum. 

See Memorandum to the File from 

David Neubacher regarding ‘‘BPI Loan 

Memo’’ (September 8, 2009). 

In addition to its claim that policy 

guidance documents do not provide for 

preferential, discounted, or policy loans 

to specific enterprises, the GOC has 

cited to the Circular on Improving the 

Administration of Special Loans 

(YINFA {1999} No. 228) (‘‘Circular’’) 

and Articles 4 and 7 of the Law of the 

People’s Republic of China on 

Commercial Banks (‘‘Banking Law’’) to 

argue that policy loans are prohibited 

and that commercial banks in the PRC 

operate independently from the 

government and base their decisions on 

market norms. See G1SR at 7. First, we 

note that the Circular was written 

expressly to four specific banks 

(Agricultural Bank of China, Industrial 

Bank of China, Bank of China, and 

China Construction Bank), and not to 

commercial banks in general. Moreover, 

we note that the Banking Law, at Article 

34, also states that banks shall ‘‘carry 

out their loan business upon the needs 

of the national economy and the social 

development and under the guidance of 

the State industrial policies.’’ See G1SR 

at GOC–SUPP–19. Thus, the Banking 

Law, in some measure, stipulates that 

lending procedures be based on the 

guidance of government industrial 

policy. 

As noted in Citric Acid from the 

PRC: 16

In general, the Department looks to 

whether government plans or other policy 

directives lay out objectives or goals for 

developing the industry and call for lending 

to support those objectives or goals. Where 

such plans or policy directives exist, then we 

will find a policy lending program that is 

specific to the named industry (or producers 

that fall under that industry).17 Once that 

finding is made, the Department relies upon 

the analysis undertaken in CFS from the 

PRC18 to further conclude that national and 

local government control over the SOCBs 

results in the loans being a financial 

contribution by the GOC. 19

Therefore, on the basis of the record 

information described above, we 

preliminarily determine that the GOC 

has a policy in place to encourage the 

development of production of OCTG 

through policy lending. Therefore, the 

loans to OCTG producers from Policy 

Banks and SOCBs in the PRC constitute 

a direct financial contribution from the 

government, pursuant to section 

771(5)(D)(i) of the Act, and they provide 

a benefit equal to the difference between 

what the recipients paid on their loans 

and the amount they would have paid 

on comparable commercial loans (see 

section 771(5)(e)(2)). Finally, we 

determine that the loans are de jure 

specific because of the GOC’s policy, as 

illustrated in the government plans and 

directives, to encourage and support the 

growth and development of the OCTG 

industry. 

To calculate the benefit under the 

policy lending program, we used the 

benchmarks described under ‘‘Subsidies 

Valuation—Benchmarks and Discount 

Rates’’ above. See also 19 CFR 

351.505(c). On this basis, we determine 

that Changbao received a 

countervailable subsidy of 0.30 percent 

ad valorem, Jianli received a 

countervailable subsidy of 0.02 percent 

ad valorem, TPCO received a 

countervailable subsidy of 1.59 percent 

ad valorem, and Wuxi received a 

countervailable subsidy of 1.35 percent 

ad valorem under this program. 


sroberts on DSKD5P82C1PROD with NOTICES
Federal Register / Vol. 74, No. 177 / Tuesday, September 15, 2009 / Notices 47219 

B. Export Loans From the Export-Import 

Bank of China 

On page 17 of the GQR, the GOC 

reported that the Export-Import Bank of 

China (‘‘EIBC’’) provided TPCO with 

three loans that were outstanding during 

the POI. The GOC claimed that two of 

the loans related to non-export business, 

and that the third loan did not relate to 

TPCO’s production of OCTG. 

Based on the proprietary description 

of these loans at page 17 of the GOC’s 

response, however, we preliminarily 

find that one of the loans is a 

countervailable export loan from the 

EIBC. As a loan from a government 

policy bank, this loan constitutes a 

direct financial contribution from the 

government, pursuant to section 

771(5)(D)(i) of the Act. We further 

determine that the export loan is 

specific under section 771(5A)(B) of the 

Act because receipt of the financing is 

contingent upon export. Also, we 

determine that the export loan confers a 

benefit within the meaning of section 

771(5)(E)(ii) of the Act. 

To calculate the benefit under this 

program, we compared the amount of 

interest paid against the export loan to 

the amount of interest that would have 

been paid on a comparable commercial 

loan. As our benchmark, we used the 

short-term interest rates discussed above 

in the ‘‘Benchmarks and Discount 

Rates’’ section. To calculate the net 

countervailable subsidy rate, we divided 

the benefit by TPCO’s export sales value 

for the POI. On this basis, we determine 

the net countervailable subsidy rate to 

be 0.08 percent ad valorem. 

C. Provision of Steel Rounds for Less 

Than Adequate Remuneration 

As discussed under ‘‘Use of Facts 

Otherwise Available and Adverse 

Inferences,’’ above, we are preliminarily 

relying on ‘‘adverse facts available’’ for 

our analysis regarding the GOC’s 

provision of steel rounds and billets to 

OCTG producers. First, as a result of the 

GOC’s failure to provide requested 

ownership information for the 

companies that produced the steel 

rounds and billets purchased by the 

mandatory respondents in this 

investigation, we are treating all of the 

steel rounds and billets, except those 

supplied by one cross-owned supplier 

to Wuxi, as having been provided by an 

‘‘authority,’’ within the meaning of 

section 771(5)(B). Therefore, we 

preliminarily determine that the OCTG 

producers have received a financial 

contribution in the form of the provision 

of a good. See section 771(5)(D)(iii). 

To determine whether this financial 

contribution results in a subsidy to the 

OCTG producers, we followed 19 CFR 

351.511(a)(2) for identifying an 

appropriate market-based benchmark for 

measuring the adequacy of the 

remuneration for the steel rounds and 

billets. The potential benchmarks listed 

in this regulation, in order of preference 

are: (1) Market prices from actual 

transactions within the country under 

investigation for the governmentprovided good (e.g., actual sales, actual 

imports, or competitively run 

government auctions) (‘‘tier one’’ 

benchmarks); (2) world market prices 

that would be available to purchasers in 

the country under investigation (‘‘tier 

two’’ benchmarks); or (3) prices 

consistent with market principles based 

on an assessment by the Department of 

the government-set price (‘‘tier three’’ 

benchmarks). As we explained in 

Softwood Lumber from Canada, the 

preferred benchmark in the hierarchy is 

an observed market price from actual 

transactions within the country under 

investigation because such prices 

generally would be expected to reflect 

most closely the prevailing market 

conditions of the purchaser under 

investigation. See Softwood Lumber 

from Canada and accompanying Issues 

and Decision Memorandum at 

‘‘Analysis of Programs, Provincial 

Stumpage Programs Determined to 

Confer Subsidies, Benefit.’’ 

Beginning with tier one, we must 

determine whether the prices from 

actual sales transactions involving 

Chinese buyers and sellers are 

significantly distorted. As explained in 

the CVD Preamble: ‘‘Where it is 

reasonable to conclude that actual 

transaction prices are significantly 

distorted as a result of the government’s 

involvement in the market, we will 

resort to the next alternative {tier two} 

in the hierarchy.’’ See Countervailing 

Duties; Final Rule, 63 FR 65348, 65377 

(November 25, 1998) (‘‘CVD Preamble’’). 

The CVD Preamble further recognizes 

that distortion can occur when the 

government provider constitutes a 

majority, or in certain circumstances, a 

substantial portion of the market. 

As explained under ‘‘Use of Facts 

Otherwise Available and Adverse 

Inferences,’’ above, we are preliminarily 

relying on ‘‘adverse facts available’’ to 

determine that GOC authorities play a 

significant role in the PRC market for 

steel rounds and billets. Because of the 

dominant role played by GOC 

authorities in the production of steel 

rounds and billets, we preliminarily 

determine that the prices actually paid 

in the PRC for steel rounds and billets 

during the POI are not appropriate tier 

one benchmarks under our regulations. 

Turning to tier two benchmarks, i.e., 

world market prices available to 

purchasers in the PRC, the petitioners 

have put on the record data from the 

Steel Business Briefing (‘‘SBB’’) 

regarding monthly export prices for 

billet from Latin America, Turkey, and 

the Black Sea/Baltic. See the petitioners’ 

April 20, 2009, submission, ‘‘Response 

to the Department Questionnaire 

Concerning the Imposition of 

Countervailing Duties,’’ at Exhibit 22, 

Attachments A–C. 

We preliminarily determine that the 

SBB data should be used to derive a 

world market price for steel rounds and 

billets that would be available to 

purchasers in the PRC. We note that the 

Department has relied on pricing data 

from industry publications such as SBB 

in recent CVD proceedings involving the 

PRC. See CWP Decision Memorandum 

at 11 and LWRP Decision Memo at 9. 

Also, 19 CFR 351.511(a)(2)(ii), states 

that where there is more than one 

commercially available world market 

price, the Department will average the 

prices to the extent practicable. 

Therefore, we first derived a world 

market SBB price by averaging the 

monthly prices for Latin America, 

Turkey and the Black Sea/Baltic. 

Under 19 CFR 351.511(a)(2)(iv), when 

measuring the adequacy of 

remuneration under tier one or tier two, 

the Department will adjust the 

benchmark price to reflect the price that 

a firm actually paid or would pay if it 

imported the product, including 

delivery charges and import duties. 

Regarding delivery charges, we have 

included the freight costs that would be 

incurred in shipping wire rod from 

Latin America, Turkey and the Black 

Sea/Baltic to the PRC. We have also 

added import duties, as reported by the 

GOC, and the VAT applicable to imports 

of steel rounds and billet into the PRC. 

Comparing the adjusted benchmark 

prices to the prices paid by the 

respondents for their steel rounds and 

billet, we preliminarily determine that 

steel rounds and billet were provided 

for less than adequate remuneration and 

that a subsidy exists in the amount of 

the difference between the benchmark 

and what the respondents paid. See 19 

CFR 351.511(a). 

Finally, with respect to specificity, 

the GOC has stated that steel rounds are 

used by the OCTG industry. Therefore, 

we preliminarily determine that this 

subsidy is specific because the 

recipients are limited in number. See 

section 771(5A)(D)(iii)(I) of the Act. 

Therefore, we preliminarily determine 

that the GOC conferred a 

countervailable subsidy on Changbao, 

Jianli, TPCO, and Wuxi through the 


sroberts on DSKD5P82C1PROD with NOTICES
47220 Federal Register / Vol. 74, No. 177 / Tuesday, September 15, 2009 / Notices 

provision of steel rounds for less than 

adequate remuneration. To calculate the 

subsidy, we took the difference between 

the delivered world market price and 

what each respondent paid for steel 

rounds during the POI. On this basis, we 

preliminarily calculated a net 

countervailable ad valorem subsidy rate 

of 24.03 percent for Changbao, 30.45 

percent for Jianli, 5.89 percent for 

TPCO, and 21.45 percent for Wuxi. 

D. The State Key Technology Project 

Fund 

TPCO reported that it received funds 

from the State Key Technology 

Renovation Fund in 2003. In Exhibit V– 

1 of the GQR, the GOC provided the 

notice for implementation of the fund. 

The notice states that the purpose of the 

program is to ‘‘support the technological 

renovation of key industries, key 

enterprises and key products. * * * The 

notice also states, ‘‘The enterprises shall 

be mainly selected from large-sized 

state-owned enterprises and large-sized 

state holding enterprises among the 512 

key enterprises, 120 pilot enterprise 

groups and the leading enterprises of 

the industries.’’ 

The Department has previously found 

this program to be countervailable. See 

Certain New Pneumatic Off-the-Road 

Tires From the People’s Republic of 

China: Final Affirmative Countervailing 

Duty Determination and Final Negative 

Determination of Critical 

Circumstances, 73 FR 40480 (July 15, 

2008) and accompanying Issues and 

Decision Memorandum. 

We preliminarily determine that 

TPCO received a countervailable 

subsidy under the State Key Technology 

Renovation Fund. We find that this 

grant is a direct transfer of funds within 

the meaning of section 771(5)(D)(i) of 

the Act, providing a benefit in the 

amount of the grant. See 19 CFR 

351.504(a). Further, we preliminarily 

determine that the grant provided under 

this program is limited as a matter of 

law to certain enterprises; i.e., largesized state-owned enterprises and largesized state holding enterprises among 

the 512 key enterprises. Hence, we 

preliminarily find that the subsidy is 

specific under section 771(5A)(D)(i) of 

the Act. 

To calculate the countervailable 

subsidy, we used our standard 

methodology for non-recurring grants. 

See 19 CFR 351.524(b). Because the 

grant exceeded 0.5 percent of TPCO’s 

sales in the year the grant was approved 

(i.e., 2003), we have allocated the 

benefit over the 15-year AUL using the 

discount rate described under the 

‘‘Benchmarks and Discount Rates’’ 

section above. We attributed the subsidy 

amount for the POI to TPCO’s 

consolidated sales. On this basis, we 

preliminarily determine the 

countervailable subsidy to be 0.01 

percent ad valorem for TPCO. 

E. ‘‘Two Free, Three Half’’ Program 

Under Article 8 of the FIE Tax Law, 

an FIE that is ‘‘productive’’ and is 

scheduled to operate for more than ten 

years may be exempted from income tax 

in the first two years of profitability and 

pay income taxes at half the standard 

rate for the next three years. See GQR 

at Exhibit GOC–FF–3. The Department 

has previously found this program 

countervailable. See, e.g., CFS Decision 

Memorandum at 11–12 (Analysis of 

Programs, I. Programs Determined to be 

Countervailable for GE, B. The ‘‘TwoFree/Three Half’’ Program) and Citric 

Acid Decision Memo at 15–16 (Analysis 

of Programs. I. Programs Determined to 

be Countervailable, D. The ‘‘Two-Free, 

Three Half’’ Program). 

Jianli Steel Tube and Jiansheng 

reported using this program during the 

POI. See JQR at 30. 

We preliminarily determine that the 

exemption or reduction of the income 

tax paid by productive FIEs under this 

program confers a countervailable 

subsidy. The exemption/reduction is a 

financial contribution in the form of 

revenue forgone by the GOC and it 

provides a benefit to the recipient in the 

amount of the tax savings. See section 

771(5)(D)(ii) of the Act and 19 CFR 

351.509(a)(1). We also preliminarily 

determine that the exemption/reduction 

afforded by this program is limited as a 

matter of law to certain enterprises, i.e., 

‘‘productive’’ FIEs and, hence, is 

specific under section 771(5A)(D)(i) of 

the Act. See CFS Decision 

Memorandum, at Comment 14. 

To calculate the benefit, we treated 

the income tax savings enjoyed by Jianli 

Steel Tube, and Jiansheng as a recurring 

benefit, consistent with 19 CFR 

351.524(c)(1). To compute the amount 

of the tax savings, we compared the 

income tax rate the above companies 

would have paid in the absence of the 

program (30 percent) with the income 

tax rate the company actually paid (15 

or 0 percent). We divided Jianli Steel 

Tube’s and Jiansheng’s tax savings 

received during the POI by the 

combined sales of Jianli, Jinali Steel 

Tube, and Jiansheng, minus intercompany sales during the POI. On this 

basis, we preliminarily determine that 

Jianli received a countervailable subsidy 

of 0.20 percent ad valorem under this 

program. 

F. Preferential Tax Program for ForeignInvested Enterprises Recognized as High 

or New Technology Enterprises 

According to the Circular of the State 

Council Concerning the Approval of the 

National Development Zones for New 

and High Technology Industries and the 

Relevant Policies and Provisions at 

Article 2 and 4 of Appendix III 

(‘‘Regulations on the Tax Policy for the 

National New and High Technology 

Industries Parks’’), new and high 

technology enterprises located in new 

and high technology parks shall pay a 

reduced income tax rate of 15 percent. 

See GQR at Exhibit GOC–FF–1. The 

GOC noted that a similar rule is 

provided at Article 7.3 of the FIE 

Income Tax Law and Article 73(5) of the 

Implementing Rules of the Foreign 

Investment Enterprise and Foreign 

Enterprise Income Tax Law. See GQR at 

96. 

Wuxi reported that it used the 

program during the POI. See WQR at 26. 

We preliminarily determine that the 

reduction in the income tax paid by 

high or new technology FIEs under this 

program confers a countervailable 

subsidy. The exemption/reduction is a 

financial contribution in the form of 

revenue forgone by the government and 

it provides a benefit to the recipient in 

the amount of the tax savings. See 

section 771(5)(D)(ii) of the Act and 19 

CFR 351.509(a)(1). We also 

preliminarily determine that the 

reduction afforded by this program is 

limited as a matter of law to certain 

enterprises, i.e., new and high 

technology FIEs, and, hence, is specific 

under section 771(5A)(D)(i) of the Act. 

The program is also specific pursuant to 

771(5A)(D)(iv) as only ratified new and 

high technology enterprises located in 

new and high technology parks 

approved by the State Council can pay 

the reduced tax rate. 

To calculate the benefit for Wuxi, we 

treated the income tax savings enjoyed 

by the company as a recurring benefit, 

consistent with 19 CFR 351.524(c)(1), 

and divided the company’s tax savings 

received during the POI by the 

combined sales of Wuxi and Fanli. To 

compute the amount of the tax savings, 

we compared the rate Wuxi would have 

paid in the absence of the program (30 

percent) with the rate the company paid 

(15 percent). On this basis, we 

preliminarily determine the 

countervailable subsidy attributable to 

Wuxi to be 1.63 percent ad valorem 

under this program. 


sroberts on DSKD5P82C1PROD with NOTICES
Federal Register / Vol. 74, No. 177 / Tuesday, September 15, 2009 / Notices 47221 

G. Local Income Tax Exemption and 

Reduction Programs for ‘‘Productive’’ 

Foreign-Invested Enterprises 

Under Article 9 of the FIE Tax Law, 

the provincial governments have the 

authority to exempt FIEs from the local 

income tax of three percent. See GQR at 

Exhibit GOC–FF–3. According to the 

Regulations on Exemption and 

Reduction of Local Income Tax of FIEs 

in Jiangsu Province, a ‘‘productive’’ FIE 

in Jiangsu Province may be exempted 

from the three percent local income tax 

during the ‘‘Two Free, Three Half’’ 

period. Additionally, according to 

Article 6, FIEs eligible for the reduced 

income tax rate of 15 percent can also 

be exempted from paying local income 

tax. See GQR at Exhibit GOC–HH–3. 

According to the Provisional Rules on 

Exemption of Local Income Tax for FIEs 

and Foreign Enterprises (Decree 14 of 

Zhejiang Government, 1991) at Article 

4, productive FIES in Zhejiang Province 

are exempted from paying the local 

income tax for the first two years after 

their first profitable year, and pay at a 

reduced (half) rate for the next three 

consecutive years. See G1SR at Exhibit 

GOC–SUPP–35. The Department has 

previously found this program to be 

countervailable. See, e.g., CFS Decision 

Memorandum at 12–13 (Analysis of 

Programs, I. Programs Determined to be 

Countervailable for GE, D. Local Income 

Tax Exemption and Reduction Program 

for ‘‘Productive’’ FIEs) and Citric Acid 

Decision Memo at 21 (Analysis of 

Programs, I. Programs Determined to be 

Countervailable, I. Local Income Tax 

Exemption and Reduction Program for 

‘‘Productive’’ FIEs). 

Jianli Steel Tube, Jiansheng, and Wuxi 

reported using this program during the 

POI. See JQR at 33 and WQR at 26. 

We preliminarily determine that the 

exemption from or reduction in the 

local income tax received by 

‘‘productive’’ FIEs under this program 

confers a countervailable subsidy. The 

exemption or reduction is a financial 

contribution in the form of revenue 

forgone by the government and it 

provides a benefit to the recipient in the 

amount of the tax savings. See section 

771(5)(D)(ii) of the Act and 19 CFR 

351.509(a)(1). We also preliminarily 

determine that the exemption or 

reduction afforded by this program is 

limited as a matter of law to certain 

enterprises, i.e., ‘‘productive’’ FIEs, and, 

hence, is specific under section 

771(5A)(D)(i) of the Act. 

To calculate the benefit for Jianli Steel 

Tube, Jiansheng, and Wuxi, we treated 

the income tax savings enjoyed by the 

companies as a recurring benefit, 

consistent with 19 CFR 351.524(c)(1). 

To compute the amount of the tax 

savings, we compared the local income 

tax rate that the companies would have 

paid in the absence of the program (i.e., 

three percent) with the income tax rate 

the companies actually paid. 

For Jianli Steel Tube and Jiansheng, 

we divided the companies’ tax savings 

received during the POI by the 

combined sales of Jianli, Jinali Steel 

Tube, and Jiansheng minus intercompany sales during the POI. 

For Wuxi, we divided the company’s 

tax savings received during the POI by 

the combined sales of Wuxi and Fanli. 

On this basis, we preliminarily 

determine that Jianli received a 

countervailable subsidy of 0.02 percent 

ad valorem and Wuxi received a 

countervailable subsidy of 0.33 percent 

ad valorem under this program. 

H. Income Tax Credits for Domestically 

Owned Companies Purchasing 

Domestically Produced Equipment 

According to the Provisional 

Measures on Enterprise Income Tax 

Credit for Investment in Domestically 

Produced Equipment for Technology 

Renovation Projects (CAI SHU ZI {290} 

No. 290), a domestically invested 

company may claim tax credits on the 

purchase of domestic equipment if the 

project is compatible with the industrial 

policies of the GOC. Specifically, a tax 

credit up to 40 percent of the purchase 

price of the domestic equipment may 

apply to the incremental increase in tax 

liability from the previous year. See 

G2SR at 12. The Department has 

previously found this program 

countervailable. See, e.g., Circular 

Welded Carbon Quality Steel Line Pipe 

from the People’s Republic of China: 

Final Affirmative Countervailing Duty 

Determination, 73 FR 70961, (November 

24, 2008) and accompanying Issues and 

Decision Memorandum at 25–26 (V. 

Analysis of Programs, A. Programs 

Determined to be Countervailable, 8. 

Income Tax Credits on Purchases of 

Domestically-Produced Equipment by 

Domestically Owned Companies). 

Fanli reported using this program 

during the POI. See WQR at 15. 

We preliminarily determine that 

income tax credits for the purchase of 

domestically produced equipment are 

countervailable subsidies. The tax 

credits are a financial contribution in 

the form of revenue forgone by the 

government and provide a benefit to the 

recipients in the amount of the tax 

savings. See section 771(5)(D)(ii) of the 

Act and 19 CFR 351.509(a)(1). We 

further preliminarily determine that 

these tax credits are contingent upon 

use of domestic over imported goods 

and, hence, are specific under section 

771(5A)(C) of the Act. 

To calculate the benefit, we treated 

the income tax savings enjoyed by Fanli 

as a recurring benefit, consistent with 19 

CFR 351.524(c)(1), and divided the 

company’s tax savings by the combined 

total sales of Wuxi and Fanli, minus 

inter-company sales, during the POI. On 

this basis, we preliminarily determine 

that a countervailable subsidy of 0.16 

percent ad valorem exists for Wuxi 

under this program. 

I. Subsidies Provided in the Tianjin 

Binhai New Area and the Tianjin 

Economic and Technological 

Development Area 

TPCO reported that it used two 

programs for companies in the Tianjin 

Binhai New Area (TBNA): the Science 

and Technology Fund Program and the 

Accelerated Depreciation Program. 

TPCO received a grant under the 

Science and Technology Fund Program 

and paid reduced income taxes under 

the Accelerated Depreciation Program. 

TPCO also reported that it purchased 

land-use rights and rented land-use 

rights for different plots of land within 

the TBNA during the POI and prior to 

the POI. 

Science and Technology Fund 

The GOC’s measures for the Science 

and Technology Fund, which the GOC 

provided at Exhibit GOC–DD–4 of the 

GQR, describe the fund’s purpose as 

follows: (1) Promote the construction of 

the science-technology infrastructure in 

TBNA; (2) enhance science-technology 

renovation and service abilities; (3) 

improve the business environment of 

renovation entrepreneurship; and (4) 

construct a new science-technology 

renovation system. On page 84 of the 

GQR, the GOC stated that eligibility for 

the program is limited to enterprises 

within the TBNA Administrative 

Committee’s jurisdiction. 

We preliminarily determine that 

TPCO received a countervailable 

subsidy during the POI under the TBNA 

Science and Technology Fund Program. 

We find that this grant is a direct 

transfer of funds within the meaning of 

section 771(5)(D)(i) of the Act, providing 

a benefit in the amount of the grant. See 

19 CFR 351.504(a). We further 

determine preliminarily that grants 

under this program are limited to 

enterprises located in a designated 

geographic region (i.e., the TBNA). 

Hence, the grants are specific under 

section 771(5A)(D)(iv) of the Act. 

To calculate the countervailable 

subsidy, we used our standard 

methodology for non-recurring grants. 

See 19 CFR 351.524(b). Because the 


sroberts on DSKD5P82C1PROD with NOTICES
47222 Federal Register / Vol. 74, No. 177 / Tuesday, September 15, 2009 / Notices 

20See Laminated Woven Sacks from the People’s 

Republic of China: Final Affirmative Countervailing 

Duty Determination and Final Affirmative 

Determination, in Part, of Critical Circumstances, 

73 FR 35639 (June 24, 2008) (‘‘LWS’’), and 

accompanying Issues and Decision Memorandum at 

Comment 8. 

21 Id. at Comment 9. 

22 Id. at Comment 10. 

23 Id. at section IV.A.1, ‘‘Analysis of Programs— 

Government Provision of Land for Less Than 

Adequate Remuneration.’’ 24 Id. at Comment 10. 

benefit was less than 0.5 percent of 

TPCO’s consolidated sales during the 

POI, we have preliminarily expensed 

the entire amount to the POI. See 19 

CFR 351.524(b)(2). On this basis, we 

preliminarily determine the 

countervailable subsidy to be 0.03 

percent ad valorem for TPCO. 

Accelerated Depreciation Program 

Regarding the Accelerated 

Depreciation program, the GOC circular 

for the program (submitted at Exhibit 

DD–9 of the GOC’s July 21, 2009, 

response) stipulates that enterprises in 

the TBNA may shorten the depreciation 

period of certain fixed assets by a 

maximum of 40 percent of the present 

depreciation period. On page 91 of the 

response, the GOC stated that eligibility 

for the program is limited to enterprises 

within the TBNA. 

We preliminarily determine that 

TPCO received a countervailable 

subsidy during the POI under the 

Accelerated Depreciation program. The 

Accelerated Depreciation program 

constitutes a financial contribution in 

the form of revenue forgone within the 

meaning of section 771(5)(D)(ii) of the 

Act, with the benefit equaling the 

income tax savings (see 19 CFR 

351.510(a)). The program affected 

TPCO’s income taxes for the 2007 tax 

year. Thus, under the normal standard 

in 19 CFR 351.509(b), TPCO received a 

benefit from this program in 2008, when 

it filed its 2007 annual tax return. 

Further, we further determine 

preliminarily that the reduction 

afforded by this program is limited to 

enterprises located in designated 

geographic regions and, hence, is 

specific under section 771(5A)(D)(iv) of 

the Act. 

To calculate the benefit, we divided 

the reduction in TPCO’s income taxes 

resulting from the program by TPCO’s 

consolidated sales, in accordance with 

19 CFR 351.524(c)(1) and 19 CFR 

351.525(b)(6)(iii). On this basis, we 

preliminarily determine the 

countervailable subsidy to be 0.51 

percent ad valorem for TPCO. 

Land 

Regarding land, TPCO and its 

reporting cross-owned affiliates are all 

located in the TBNA, and TPCO, TPCO 

Iron, and Yuantong have purchased 

‘‘granted’’ land-use rights within the 

TBNA. At page 41 of the GQR, the GOC 

reported that TPCO obtained its landuse rights in accordance with Article 11 

of Decree 21 of the Ministry of Land and 

Resources. Article 11, at Exhibit P–2 of 

the GQR, establishes provisions for the 

‘‘agreement-based assignment of the 

right to use State-owned land.’’ Article 

11 States that the ‘‘agreement-based 

assignment of the right to use Stateowned land’’ refers to the land user’s 

right to use State-owned land for a 

certain period, and to the land user’s 

payment of a fee to the state for the 

land-use right. TPCO and TPCO Iron 

purchased their land-use rights from the 

Dongli District Land and Resource 

Administration Bureau, and Yuantong 

purchased its land-use rights from the 

Tianjin Port Bonded Zone Land and 

Resource Administration Bureau. 

The Department determined in LWS 

that the provision of land-use rights 

constitutes the provision of a good 

within the meaning of section 

771(5)(D)(iii) of the Act.20 The 

Department also found that when the 

land is in an industrial park located 

within the seller’s (e.g., county’s or 

municipality’s) jurisdiction, the 

provision of the land-use rights is 

regionally specific (see section 

771(5A)(D)(iv) of the Act).21 In the 

instant investigation, the TBNA is a 

designated area that includes the 

jurisdictions that provided land-use 

rights to TPCO and its cross-owned 

affiliates during the POI. Therefore, 

consistent with LWS, we preliminarily 

find that TPCO’s purchases of granted 

land-use rights give rise to 

countervailable subsidies to the extent 

that the purchases conferred a benefit. 

To determine whether TPCO received 

a benefit, we have analyzed potential 

benchmarks in accordance with 19 CFR 

351.511(a). First, we look to whether 

there are market-determined prices 

within the country. See 19 CFR 

351.511(a)(2)(i). In LWS, the Department 

determined that ‘‘Chinese land prices 

are distorted by the significant 

government role in the market’’ and, 

hence, that tier one benchmarks do not 

exist.22 The Department also found that 

tier two benchmarks (world market 

prices that would be available to 

purchasers in China) are not 

appropriate.23 See 19 CFR 

351.511(a)(2)(ii). Therefore, the 

Department determined the adequacy of 

remuneration by reference to tier 3 and 

found that the sale of land-use rights in 

China was not consistent with market 

principles because of the overwhelming 

presence of the government in the landuse rights market and the widespread 

and documented deviation from the 

authorized methods of pricing and 

allocating land.24 See 19 CFR 

351.511(a)(2)(iii). There is insufficient 

new information on the record of this 

investigation to warrant a change from 

the findings in LWS. 

For these reasons, we are not able to 

use Chinese or world market prices as 

a benchmark. Therefore, we are 

preliminarily comparing the price that 

TPCO paid for its granted land-use 

rights with comparable market-based 

prices for land purchases in a country 

at a comparable level of economic 

development that is reasonably 

proximate to, but outside of, China. 

Specifically, we are preliminarily 

comparing the price TPCO paid to sales 

of certain industrial land in industrial 

estates, parks, and zones in Thailand, 

consistent with LWS. 

To calculate the benefit, we computed 

the amount that TPCO would have paid 

for its granted land-use rights and 

subtracted the amount TPCO actually 

paid for each purchase. For purchases in 

which the subsidy amount exceeded 0.5 

percent of TPCO’s sales in the year of 

purchase, we have used the discount 

rate described under the Benchmarks 

and Discount Rates section above to 

allocate the benefit over the life of the 

land-use rights contract. For these 

purchases, we divided the amount 

allocated to the POI by TPCO’s 

consolidated sales during the POI. For 

purchases in which the benefit was less 

than 0.5 percent of TPCO’s consolidated 

sales in the year of the purchase, we 

have preliminarily expensed the entire 

amount to the year in which TPCO 

purchased the land-use rights. See 19 

CFR 351.524(b)(2). On this basis, we 

preliminarily determine the total 

countervailable subsidy for all of 

TPCO’s land-use rights purchases to be 

0.11 percent ad valorem during the POI. 

TPCO also reported that it rented 

certain land parcels within the TBNA 

from TPCO Holding during the POI. 

Specifically, TPCO reported that it 

operates on the largest of these three 

parcels under a lease agreement that it 

signed with TPCO Holding in 2005. 

TPCO also stated that it will compensate 

TPCO Holding for the lease of two other 

parcels under terms that TPCO and 

TPCO Holding will memorialize in 

2009. 

On page 4 of the TPCO Holding QR, 

TPCO stated that TPCO Holding ‘‘has 

been continuously wholly-owned by the 

Tianjin State-owned Assets Supervision 

and Administration Commission.’’ 

Thus, we preliminarily determine that 


sroberts on DSKD5P82C1PROD with NOTICES
Federal Register / Vol. 74, No. 177 / Tuesday, September 15, 2009 / Notices 47223 

25See Certain New Pneumatic Off-The-Road Tires 

from the People’s Republic of China: Final 

Affirmative Determination of Sales at Less Than 

Fair Value and Partial Affirmative Determination of 

Critical Circumstances, 73 FR 40485 (July 15, 2008) 

(‘‘OTR Tires’’), and the accompanying Issues and 

Decision Memorandum at Comment F.12. 

TPCO Holding was an authority within 

the meaning of section 771(5)(B) of the 

Act at the time of the lease agreement 

and throughout the POI. Moreover, 

because the leased properties are all 

within the TBNA, the subsidy is specific 

(section 771(5A)(D)(iv) of the Act). 

Therefore, consistent with OTR Tires, 

we preliminarily find that TPCO’s lease 

of land under the 2005 lease gives rise 

to a countervailable subsidy to the 

extent that the lease conferred a 

benefit.25

To determine whether TPCO received 

a benefit, we are following the same 

steps outlined above for the purchase of 

land-use rights. Specifically, we are 

preliminarily comparing the rent TPCO 

paid to industrial rental rates for factory 

space in Thailand during the POI. We 

are preliminarily attributing the subsidy 

to TPCO’s consolidated sales, in 

accordance with 19 CFR 

351.525(b)(6)(iii). 

On this basis, we preliminarily 

determine the countervailable subsidy 

to be 2.55 percent ad valorem for TPCO. 

TPCO also reported that IETC 

purchased office space from a real estate 

company. We do not have sufficient 

information to determine whether 

IETC’s purchase gave rise to a 

countervailable subsidy. We intend to 

seek additional information on this 

issue after the preliminary 

determination. 

J. Loan and Interest Forgiveness for 

SOEs 

On pages 8–9 of TPCO’s September 1, 

2009, correction submission, TPCO 

reported that in 2006 and 2008 it settled 

claims related to loans that were part of 

a debt-to-equity transaction occurring in 

2001. Two asset management companies 

held the claims against TPCO. 

We preliminarily determine that 

through this settlement the GOC forgave 

debt owed by TPCO and, thus, provided 

a financial contribution to TPCO in the 

form of a direct transfer of funds 

(section 771(5)(D)(i) of the Act). The 

benefit to TPCO is the amount of the 

debt forgiven (section 771(5)(D)(i) of the 

Act and 19 CFR 351.508(a)). 

Additionally, we preliminarily 

determine that this subsidy is de facto 

specific because it is limited to TPCO 

(section 771(5A)(D)(iii)(I) of the Act). 

Approval for forgiveness of part of the 

debt occurred in 2006, and approval for 

forgiveness of the remainder of the debt 

occurred in 2008. To calculate the 

countervailable subsidy for the debt 

forgiveness approved in each year, we 

used our standard methodology for nonrecurring benefits. See 19 CFR 

351.524(b). Because the amount of the 

2006 portion of the debt forgiveness 

exceeded 0.5 percent of TPCO’s sales in 

2006, we have allocated the benefit over 

the 15-year AUL using the discount rate 

described under the Benchmarks and 

Discount Rates section above. We 

attributed the subsidy amount for the 

POI to TPCO’s consolidated sales. On 

this basis, we preliminarily determine 

the countervailable subsidy to be 0.07 

percent ad valorem for TPCO. 

For the debt forgiveness approved in 

2008, the benefit was less than 0.5 

percent of TPCO’s consolidated sales 

during the POI. Thus, we have 

preliminarily expensed the entire 

amount to the POI. See 19 CFR 

351.524(b)(2). On this basis, we 

preliminarily determine the 

countervailable subsidy to be 0.07 

percent ad valorem for TPCO. 

II. Programs Preliminarily Determined 

To Be Not Used by Respondents or To 

Not Provide Benefits During the POI 

A. Other Loans to Jianli 

We requested and received loan 

documentation from the GOC 

concerning certain loans provided to 

Jianli. Based upon our examination of 

these loans, we preliminary determine 

that these loans are countervailable for 

reasons other than those described 

above under ‘‘Policy Lending.’’ As all of 

the information relating to these loans is 

business proprietary, we have discussed 

our analysis in a separate memorandum. 

See BPI Loan Memo. 

However, based on our analysis, the 

benefit to Jianli under this program is 

less than 0.005 percent ad valorem. As 

such, consistent with our past practice, 

we would not include this program in 

our preliminary net countervailing duty 

rate. See, e.g., CFS from the PRC at 

‘‘Analysis of Programs, Programs 

Determined Not To Have Been Used or 

Not To Have Provided Benefits During 

the POI for GE,’’ and Final Results of 

Countervailing Duty Administrative 

Review: Low Enriched Uranium from 

France, 70 FR 39998 (July 12, 2005), and 

accompanying Issues and Decision 

Memorandum at ‘‘Purchases at Prices 

that Constitute ‘More than Adequate 

Remuneration,’’’ (‘‘Uranium from 

France’’) (citing Notice of Final Results 

of Countervailing Duty Administrative 

Review and Rescission of Certain 

Company-Specific Reviews: Certain 

Softwood Lumber Products From 

Canada, 69 FR 75917 (December 20, 

2004), and accompanying Issues and 

Decision Memorandum at ‘‘Other 

Programs Determined to Confer 

Subsidies’’). 

B. Sub-Central Government Programs 

To Promote Famous Export Brands and 

China World Top Brands 

TPCO reported that it received a grant 

under this program in 2007. On page 50 

of the TQR, TPCO stated that the 

program relates to TPCO’s trademark 

and does not relate to any specific 

merchandise. 

We preliminarily determine that the 

total amount of the grant was less than 

0.5 percent of TPCO’s consolidated and 

unconsolidated sales in 2007. Thus, 

without prejudice to whether this is a 

countervailable subsidy, we 

preliminarily have allocated the benefit 

exclusively to 2007 pursuant to 19 CFR 

351.524(b)(2). As a result, we 

preliminarily determine that TPCO 

received no benefit from this program 

during the POI. 

C. Jiangsu Province Famous Brands 

Wuxi reported that it received a grant 

under this program. See WQR at 26 and 

W1SR at 24–25. The GOC also provided 

information on the program. See G1SR 

at 39–45. 

Based on our analysis, any potential 

benefit to Wuxi under this program is 

less than 0.005 percent ad valorem. As 

such, consistent with our past practice, 

we would not include this program in 

our preliminary net countervailing duty 

rate. See, e.g., CFS from the PRC at 

‘‘Analysis of Programs, Programs 

Determined Not To Have Been Used or 

Not To Have Provided Benefits During 

the POI for GE,’’ and Uranium from 

France. Therefore, without prejudice to 

whether this is a countervailable 

subsidy, we preliminarily determine 

that Wuxi received no benefit from this 

program during the POI. 

D. Export Incentive Payments 

Characterized as ‘‘VAT Rebates’’ 

The Department’s regulations state 

that in the case of an exemption upon 

export of indirect taxes, a benefit exists 

only to the extent that the Department 

determines that the amount exempted 

‘‘exceeds the amount levied with 

respect to the production and 

distribution of like products when sold 

for domestic consumption.’’ See 19 CFR 

351.517(a); see also 19 CFR 351.102 (for 

a definition of ‘‘indirect tax’’). 

To determine whether the GOC 

provided a benefit under this program, 

we compared the VAT exemption upon 

export to the VAT levied with respect to 

the production and distribution of like 

products when sold for domestic 


sroberts on DSKD5P82C1PROD with NOTICES
47224 Federal Register / Vol. 74, No. 177 / Tuesday, September 15, 2009 / Notices 

26See Final Affirmative Countervailing Duty 

Determination and Countervailing Duty Order; 

Leather from Argentina; Final Affirmative 

Countervailing Duty Determination and 

Countervailing Duty Order, 55 FR 40212 (October 

2, 1990) (‘‘Leather from Argentina’’). 

27See Coated Free Sheet Paper from Indonesia: 

Final Affirmative Countervailing Duty 

Determination, 72 FR 60642 (October 25, 2007) 

(‘‘CFS from Indonesia’’) and accompanying Issues 

and Decision Memorandum, at Comment 22. 

consumption. On page 39 of the GQR, 

the GOC reported that the VAT levied 

on OCTG sales in the domestic market 

(17 percent) exceeded the amount of 

VAT exempted upon the export of 

OCTG (13 percent). Thus, we 

preliminarily determine that the VAT 

exempted upon the export of OCTG 

does not confer a countervailable 

benefit. 

Based upon responses by the GOC, 

Changbao, TPCO, Wuxi, and Jianli, we 

preliminarily determine that the above 

companies did not apply for or receive 

benefits during the POI under the 

programs listed below. 

A. Preferential Loan Programs 

1. Treasury Bond Loans to Northeast 

2. Preferential Loans for State-Owned 

Enterprises 

3. Preferential Loans for Key Projects 

and Technologies 

4. Loans and Interest Subsidies 

Provided Pursuant to the Northeast 

Revitalization Program 

B. Equity Programs 

1. Debt-to-Equity Swap for Pangang 

2. Equity Infusions 

C. Tax Benefit Programs 

1. Preferential Income Tax Policy for 

Enterprises in the Northeast Region 

2. Forgiveness of Tax Arrears For 

Enterprises in the Old Industrial 

Bases of Northeast China 

D. Tariff and Indirect Tax Programs 

1. Stamp Exemption on Share 

Transfers Under Non-Tradable 

Share Reform 

2. Value Added Tax (‘‘VAT’’) and 

Tariff Exemptions for Purchases of 

Fixed Assets Under the Foreign 

Trade Development Fund 

E. Land Grants and Discounts 

1. Provision of Land Use Rights for 

Less Than Adequate Remuneration 

to Huludao 

2. Provision of Land to SOEs for Less 

Than Adequate Remuneration 

F. Provision of Inputs for Less than 

Adequate Remuneration 

1. Provision of Hot-Rolled Steel (flat 

products) for Less than Adequate 

Remuneration 

2. Provision of Coking Coal for Less 

than Adequate Remuneration 

G. Grant Programs 

1. Foreign Trade Development Fund 

(Northeast Revitalization Program) 

2. Export Assistance Grants 

3. Program to Rebate Antidumping 

Fees 

4. Subsidies for Development of 

Famous Export Brands and China 

World Top Brands 

5. Grants to Loss-Making SOEs 

6. Export Interest Subsidies 

H. Other Regional Programs 

1. Five Points, One Line Program 

2. High-Tech Industrial Development 

Zones 

I. Subsidies for Foreign-Invested 

Enterprises 

1. Reduced Income Tax Rates for 

Export-Oriented FIEs 

III. Program Preliminarily Determined 

Not Countervailable 

Provision of Low-cost Coke Through the 

Imposition of Export Restraints 

Petitioners alleged that the GOC 

imposed export restrictions on coke in 

the form of export quotas, related export 

licensing and export duties. Petitioners 

maintain that such export restraints had 

a direct and discernable effect on the 

Chinese domestic prices of coke, 

thereby, artificially lowering them 

compared to world market prices. 

Accordingly, petitioners asserted that 

the GOC’s export restraints on coke 

provided a countervailable subsidy to 

Chinese OCTG producers during the 

POI. 

The Department has countervailed 

export restraint allegations in only a 

limited number of cases. In Leather from 

Argentina, we found an embargo on 

hide exports to provide a 

countervailable subsidy to Argentine 

leather producers based on a long-term 

historical price comparison that 

demonstrated a clear link between the 

imposition of the embargo and the 

divergence of prices.26 In Coated Free 

Sheet Paper from Indonesia: Final 

Affirmative Countervailing Duty 

Determination, 72 FR 60642 (October 

25, 2007) (‘‘CFS from Indonesia’’), we 

found that a log embargo provided a 

countervailable benefit to paper 

producers, in part, based upon 

independent studies that stated that the 

log embargo provided a subsidy to 

downstream producers.27 The 

information on the record with respect 

to coke does not support such a finding. 

Therefore, we preliminary determine 

that this program is not countervailable. 

IV. Programs for Which More 

Information Is Required 

A. Exemptions for SOEs From 

Distributing Dividends to the State 

In TSR1a at Exhibit S1–10, TPCO 

provided the amount of dividends that 

it distributed to its owners during the 

POI. Based on proprietary information 

in this exhibit, we intend to seek 

additional information on this program 

after the preliminary determination. 

B. Government Provision of Electricity 

for Less than Adequate Remuneration 

Recently, the Department found that 

‘‘that the provision of electricity in the 

PRC confers a countervailable subsidy.’’ 

See Certain Kitchen Shelving and Racks 

from the People’s Republic of China: 

Final Affirmative Countervailing Duty 

Determination, 74 FR 37012 (July 27, 

2009), and accompanying Issues and 

Decision Memorandum (‘‘Kitchen Racks 

Issues and Decision Memorandum’’) at 

Comment 11. That finding was based on 

facts available. See Kitchen Racks 

Decision Memorandum at pages 5–6 and 

Comment 11. Id. 

In the instant investigation, the GOC 

has provided certain requested 

information regarding the provision of 

electricity. However, the Department 

has requested additional information on 

this program which is still outstanding 

and we intend to seek further 

information regarding the GOC’s 

electricity rate-setting policy after the 

preliminary determination. 

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 calculated 

an individual rate for each producer/ 

exporter of the subject merchandise 

individually investigated. We 

preliminarily determine the total 

estimated net countervailable subsidy 

rates to be: 


sroberts on DSKD5P82C1PROD with NOTICES
Federal Register / Vol. 74, No. 177 / Tuesday, September 15, 2009 / Notices 47225 

Exporter/Manufacturer Net subsidy 

rate 

Jiangsu Changbao Steel Tube Co. and Jiangsu Changbao Precision Steel Tube Co., Ltd ................................................................ 24.33 

Tianjin Pipe (Group) Co., Tianjin Pipe Iron Manufacturing Co., Ltd., Tianguan Yuantong Pipe Product Co., Ltd., Tianjin Pipe International Economic and Trading Co., Ltd., and TPCO Charging Development Co., Ltd ................................................................... 10.90 

Wuxi Seamless Pipe Co, Ltd., Jiangsu Fanli Steel Pipe Co, Ltd, Tuoketuo County Mengfeng Special Steel Co., Ltd ...................... 24.92 

Zhejiang Jianli Enterprise Co., Ltd., Zhejiang Jianli Steel Steel Tube Co., Ltd., Zhuji Jiansheng Machinery Co., Ltd., and Zhejiang 

Jianli Industry Group Co., Ltd ............................................................................................................................................................ 30.69 

All Others ............................................................................................................................................................................................... 21.33 

In accordance with sections 703(d) 

and 705(c)(5)(A) of the Act, for 

companies not investigated, we 

determined an ‘‘all others’’ rate by 

weighting the individual company 

subsidy rate of each of the companies 

investigated by the company’s exports 

of the subject merchandise to the United 

States. The ‘‘all others’’ rate does not 

include zero and de minimis rates or 

any rates based solely on the facts 

available. In accordance with sections 

703(d)(1)(B) and (2) of the Act, we are 

directing U.S. Customs and Border 

Protection (‘‘CBP’’) to suspend 

liquidation of all entries of OCTG from 

the PRC that are entered, or withdrawn 

from warehouse, for consumption on or 

after the date of the publication of this 

notice in the Federal Register, and to 

require a cash deposit or bond for such 

entries of merchandise in the amounts 

indicated above. 

ITC Notification 

In accordance with section 703(f) of 

the Act, we will notify the ITC of our 

determination. In addition, we are 

making available to the ITC all nonprivileged and non-proprietary 

information relating to this 

investigation. We will allow the ITC 

access to all privileged and business 

proprietary information in our files, 

provided the ITC confirms that it will 

not disclose such information, either 

publicly or under an administrative 

protective order, without the written 

consent of the Assistant Secretary for 

Import Administration. 

In accordance with section 705(b)(2) 

of the Act, if our final determination is 

affirmative, the ITC will make its final 

determination within 45 days after the 

Department makes its final 

determination. 

Disclosure and Public Comment 

In accordance with 19 CFR 

351.224(b), we will disclose to the 

parties the calculations for this 

preliminary determination within five 

days of its announcement. Due to the 

anticipated timing of verification and 

issuance of verification reports, 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)(i) (for a 

further discussion of case briefs). 

Rebuttal briefs must be filed within five 

days after the deadline for submission of 

case briefs, pursuant to 19 CFR 

351.309(d)(1). A list of authorities relied 

upon, a table of contents, and an 

executive summary of issues should 

accompany any briefs submitted to the 

Department. Executive summaries 

should be limited to five pages total, 

including footnotes. See 19 CFR 

351.309(c)(2) and (d)(2). 

Section 774 of the Act provides that 

the Department will hold a public 

hearing to afford interested parties an 

opportunity to comment on arguments 

raised in case or rebuttal briefs, 

provided that such a hearing is 

requested by an interested party. If a 

request for a hearing is made in this 

investigation, the hearing will be held 

two days after the deadline for 

submission of the rebuttal briefs, 

pursuant to 19 CFR 351.310(d), at the 

U.S. Department of Commerce, 14th 

Street and Constitution Avenue, NW., 

Washington, DC 20230. Parties should 

confirm by telephone the time, date, and 

place of the hearing 48 hours before the 

scheduled time. 

Interested parties who wish to request 

a hearing, or to participate if one is 

requested, must submit a written 

request to the Acting Assistant Secretary 

for Import Administration, U.S. 

Department of Commerce, Room 1870, 

14th Street and Constitution Avenue, 

NW., Washington, DC 20230, within 30 

days of the publication of this notice, 

pursuant to 19 CFR 351.310(c). Requests 

should contain: (1) The party’s name, 

address, and telephone; (2) the number 

of participants; and (3) a list of the 

issues to be discussed. Oral 

presentations will be limited to issues 

raised in the briefs. See id. 

This determination is published 

pursuant to sections 703(f) and 777(i) of 

the Act. 

Dated: September 8, 2009. 

Ronald K. Lorentzen, 

Acting Assistant Secretary for Import 

Administration. 

[FR Doc. E9–22187 Filed 9–14–09; 8:45 am] 

BILLING CODE 3510–DS–P 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[C–489–806] 

Certain Pasta From Turkey: 

Preliminary Results of Countervailing 

Duty Changed Circumstances Review 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

SUMMARY: On January 28, 2009, the 

Department of Commerce (‘‘the 

Department’’) published a notice of 

initiation of a changed circumstances 

review (‘‘CCR’’) of the countervailing 

duty (‘‘CVD’’) order on certain pasta 

from Turkey as requested by Marsan 

Gida Sanayi ve Ticret A.S. (‘‘Marsan’’) 

See Notice of Initiation of 

Countervailing Duty Changed 

Circumstances Review: Certain Pasta 

from Turkey, 74 FR 4938 (January 28, 

2009) (‘‘Initiation Notice’’). As stated in 

the Initiation Notice, we are not 

applying the antidumping (‘‘AD’’) 

successor-in-interest methodology to 

determine whether Marsan is the 

successor to Gidasa Sabanci Gida Sanayi 

ve Ticaret A.S. (‘‘Gidasa’’) for CVD 

purposes. Id. at 4939. After receiving 

additional information regarding the 

circumstances which warranted the CCR 

of Gidasa, pursuant to the new criteria 

outlined in the ‘‘Preliminary Results of 

Changed Circumstances Review’’ 

section below, we preliminarily find 

that Marsan is not the successor to 

Gidasa, for purposes of the CVD cash 

deposit rates, and therefore its 

merchandise should continue to enter 

under the ‘‘all others’’ cash deposit rate. 

Interested parties are invited to 

comment on these preliminary results. 

DATES: Effective Date: September 15, 

2009. 


sroberts on DSKD5P82C1PROD with NOTICES