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[Federal Register Volume 86, Number 130 (Monday, July 12, 2021)]
[Notices]
[Pages 36526-36529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-14755]

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DEPARTMENT OF COMMERCE

International Trade Administration

[C-570-138]

Pentafluoroethane (R-125) From the People's Republic of China: 
Preliminary Affirmative Determination of Critical Circumstances, in 
Part, in the Countervailing Duty Investigation

AGENCY: Enforcement and Compliance, International Trade Administration, 
Department of Commerce.

[[Page 36527]]

SUMMARY: The Department of Commerce (Commerce) preliminarily determines 
that critical circumstances exist, in part, with respect to imports of 
pentafluoroethane (R-125) from certain producers and exporters from the 
People's Republic of China (China).

DATES: Applicable July 12, 2021.

FOR FURTHER INFORMATION CONTACT: Joshua Tucker or Adam Simons, AD/CVD 
Operations, Office II, Enforcement and Compliance, International Trade 
Administration, U.S. Department of Commerce, 1401 Constitution Avenue 
NW, Washington, DC 20230; telephone: (202) 482-2044 or (202) 482-6172, 
respectively.

SUPPLEMENTARY INFORMATION:

Background

    On January 11, 2021, Commerce received a countervailing duty (CVD) 
petition concerning imports of R-125 from China filed in proper form on 
behalf of the petitioner, Honeywell International, Inc.\1\ On February 
1, 2021, we initiated this investigation,\2\ and on June 25, 2021, we 
published an affirmative Preliminary Determination.\3\
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    \1\ See Petitioner's Letter, ``Petition for the Imposition of 
Antidumping and Countervailing Duties Pursuant to sections 701 and 
731 of the Tariff Act of 1930, as Amended, on Behalf of Honeywell 
International, Inc.,'' dated January 11, 2021 (Petition).
    \2\ See Pentafluoroethane (R-125) from the People's Republic of 
China: Initiation of Countervailing Duty Investigation, 86 FR 8589 
(February 8, 2021) (Initiation Notice).
    \3\ See Pentafluoroethane (R-125) from the People's Republic of 
China: Preliminary Affirmative Countervailing Duty Determination and 
Alignment of Final Determination with Final Antidumping 
Determination, 86 FR 33648 (June 25, 2020) (Preliminary 
Determination), and accompanying Preliminary Decision Memorandum 
(PDM).
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    Commerce selected Zhejiang Quzhou Juxin Fluorine Chemical Co., Ltd. 
(Juxin) and Zhejiang Sanmei Chemical Ind. Co., Ltd. (Sanmei) as the 
individually-examined respondents in this investigation.
    On June 4, 2021, the petitioner alleged that critical circumstances 
exist with respect to imports of R-125 from China, pursuant to section 
703(e)(1) of the Tariff Act of 1930, as amended (the Act), and 19 CFR 
351.206.\4\ On June 10, 2021, Commerce requested monthly shipment data 
from Juxin and Sanmei for subject merchandise for the period August 
2020 to May 2021, which Commerce received on June 17, 2021.\5\
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    \4\ See Petitioner's Letter, ``Petitioner's Critical 
Circumstances Allegation,'' dated June 4, 2021 (Critical 
Circumstances Allegation).
    \5\ See Juxin's Letter, ``Juxin Critical Circumstances 
Response,'' dated June 17, 2021 (Juxin Critical Circumstances Data); 
and Sanmei's Letter, ``Submission of Zhejiang Sanmei's Critical 
Circumstances Information,'' dated June 17, 2021 (Sanmei Critical 
Circumstances Data).
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    In accordance with section 703(e)(1) of the Act and 19 CFR 
351.206(c)(1), because the petitioner submitted its critical 
circumstance allegation more than 30 days before the scheduled date of 
the final determination,\6\ Commerce will make a preliminary finding as 
to whether there is a reasonable basis to believe or suspect that 
critical circumstances exist. Commerce will issue its preliminary 
finding of critical circumstances within 30 days after the petitioner 
submits the allegation.\7\
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    \6\ The final determination for this CVD investigation is 
currently due no later than October 21, 2021.
    \7\ See 19 CFR 351.206(c)(2)(ii). In this case, 30 days after 
the petitioner submitted the allegation would place the deadline on 
Sunday, July 4, 2021. Commerce's practice dictates that where a 
deadline falls on a weekend or federal holiday, the appropriate 
deadline is the next business day. See Notice of Clarification: 
Application of ``Next Business Day'' Rule for Administrative 
Determination Deadlines Pursuant to the Tariff Act of 1930, As 
Amended, 70 FR 24533 (May 10, 2005).
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Period of Investigation (POI)

    The POI is January 1, 2020, through December 31, 2020.

Critical Circumstances Allegation

    The petitioner alleges that there was a massive increase of imports 
of R-125 from China and provided monthly import data for the period 
October 2020 through March 2021.\8\ The petitioner states that a 
comparison of total imports, by quantity, for the base period October 
2020 through December 2020 to the comparison period January 2021 
through March 2021, shows that imports of R-125 from China increased by 
45.5 percent,\9\ which is ``massive'' under 19 CFR 351.206(h)(2). The 
petitioner also alleges that there is a reasonable basis to believe 
that there are subsidies in this investigation which are inconsistent 
with the Subsidies and Countervailing Measures Agreement of the World 
Trade Organization (SCM Agreement).\10\
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    \8\ See Critical Circumstances Allegation at 8 and Exhibit 1.
    \9\ Id.
    \10\ Id. at 4-5.
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Critical Circumstances Analysis

    Section 703(e)(1) of the Act provides that Commerce will 
preliminarily determine that critical circumstances exist in a CVD 
investigation if there is a reasonable basis to believe or suspect 
that: (A) The alleged countervailable subsidy is inconsistent with the 
SCM Agreement; \11\ and (B) there have been massive imports of the 
subject merchandise over a relatively short period.
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    \11\ Commerce limits its critical circumstances findings to 
those subsidies contingent upon export performance or use of 
domestic over imported goods (i.e., those prohibited under Article 3 
of the SCM Agreement). See, e.g., Final Affirmative Countervailing 
Duty Determination and Final Negative Critical Circumstances 
Determination: Carbon and Certain Alloy Steel Wire from Germany, 67 
FR 55808, 55809-10 (August 30, 2002).
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    In determining whether there are ``massive imports'' over a 
``relatively short period,'' pursuant to section 703(e)(1)(B) of the 
Act and 19 CFR 351.206(h) and (i), Commerce normally compares the 
import volumes of the subject merchandise for at least three months 
immediately preceding the filing of the petition (i.e., the base 
period) to a comparable period of at least three months following the 
filing of the petition (i.e., the comparison period). However, the 
regulations also provide that if Commerce 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, Commerce 
may consider a period of not less than three months from the earlier 
time.\12\ Imports must increase by at least 15 percent during the 
comparison period to be considered massive.\13\
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    \12\ See 19 CFR 351.206(i).
    \13\ See 19 CFR 351.206(h)(2).
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Alleged Countervailable Subsidies Are Inconsistent With the SCM 
Agreement

Juxin, Sanmei, and All Other Companies

    On May 3, 2021, the petitioner filed a New Subsidies Allegation, 
alleging that Chinese producers of subject merchandise benefited from 
additional subsidies provided by the Government of China, including the 
Export Buyer's Credit Program and the Export Seller's Credit 
Program.\14\ To determine whether there exists a reasonable basis to 
believe or suspect that an alleged countervailable subsidy is 
inconsistent with the SCM Agreement, in accordance with section 
703(e)(1)(A) of the Act, Commerce considered the evidence on the record 
pertaining to the petitioner's allegation that the Export Buyer's 
Credit Program and the Export Seller's Credit Program are inconsistent 
with the SCM Agreement. Specifically, with regard to these programs, 
the petitioner has alleged the elements of a subsidy,\15\ supported 
with information reasonably available to the petitioner,\16\ that 
appear to be export contingent, which would render them inconsistent 
with the SCM Agreement. Therefore, Commerce preliminarily determines 
that there is a

[[Page 36528]]

reasonable basis to believe or suspect that alleged subsidies in the 
New Subsidies Allegation are inconsistent with the SCM Agreement. As a 
result, we preliminarily find that the criterion under section 
703(e)(1)(A) of the Act has been met for Juxin, Sanmei, and all other 
exporters or producers not individually examined.
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    \14\ See Petitioner's Letter, ``New Subsidies Allegation,'' 
dated May 3, 2021 (New Subsidies Allegation).
    \15\ See New Subsidies Allegation at 2-5.
    \16\ Id. see also Petitioner's Letter, ``New Subsidies 
Allegation Supplemental Response,'' dated May 17, 2021.
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Non-Responsive Companies

    As explained in our Preliminary Determination, we preliminarily 
applied total adverse facts available (AFA) to Arkema Daikin Advanced 
Fluorochemicals (Changsu) Co., Ltd. (Arkema); Daikin Fluorochemicals 
(China) Co., Ltd. (Daikin); Hongkong Richmax Ltd. (Hongkong); and 
Weitron International Refrigeration Equipment (Kunshan) Co., Ltd. 
(Weitron), pursuant to section 776(b) of the Act. In applying total AFA 
to these four companies, we preliminarily determined that each 
benefited from countervailable subsidies under the ``Export Loans from 
Chinese State-Owned Commercial Banks (SOCBs)'' program.\17\ Although we 
did not make a preliminary finding as to whether the ``Export Loans 
from SOCBs'' program was inconsistent with the SCM Agreement in the 
Preliminary Determination, we now preliminarily find, pursuant to 
section 776(b) of the Act, that there is a reasonable basis to believe 
or suspect that the program, as alleged in the Petition and supported 
by information reasonably available to the petitioner, is export-
contingent within the meaning of section 771(5A)(B) of the Act and, 
thus, inconsistent with the SCM Agreement.\18\ We are making the 
inconsistency determination with regard to this program, which is the 
only program which we countervailed in the Preliminary Determination 
alleged to be inconsistent with the SCM Agreement. In so doing, we 
intend to limit the corresponding offset to the dumping margin (if one 
is found) in the companion antidumping duty investigation, which best 
fulfills our statutory mandate ``to ensure that the party does not 
obtain a more favorable result by failing to cooperate than if it had 
cooperated fully,'' \19\ and induce future cooperation by companies in 
investigations where the petitioners allege the existence of programs 
potentially inconsistent with the SCM Agreement.
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    \17\ See Preliminary Determination PDM at ``Application of AFA: 
Non-Responsive Q&V Questionnaire Recipients.''
    \18\ See Countervailing Duty Investigation Initiation Checklist: 
Pentafluoroethane (R-125) from the People's Republic of China, dated 
February 1, 2021.
    \19\ See Statement of Administrative Action accompanying the 
Uruguay Round Agreements Act, H.R. Doc. 103-316, Vol.1 (1994) at 
870, reprinted in 1994 U.S.C.C.A.N. 4040, 4199.
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    Thus, because we preliminarily find that the ``Export Loans from 
Chinese SOCBs'' program is export-contingent, we preliminarily find 
that the criterion under section 703(e)(1)(A) of the Act has been met 
for Arkema, Daikin, Hongkong, and Weitron.

Massive Imports

    Commerce compared the import volumes of Juxin's and Sanmei's 
reported shipments of subject merchandise for the five months 
immediately preceding and following the filing of the petition. Because 
the petition was filed on January 11, 2021, and in order to determine 
whether there was a massive surge in imports for the mandatory 
respondents, Commerce compared the total volume of shipments during the 
period of August 2020 through December 2020 (the base period) with the 
volume of shipments during the period of January 2021 through May 2021 
(the comparison period).\20\ We preliminarily determine that imports 
from both Juxin and Sanmei increased by more than 15 percent between 
the base and comparison periods.\21\
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    \20\ See Juxin Critical Circumstances Data; see also Sanmei 
Critical Circumstances Data.
    \21\ See Memorandum, ``Critical Circumstances Analysis,'' dated 
July 6, 2021.
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    However, for purposes of our ``massive imports'' determination, we 
received information on the record about seasonality with respect to 
Sanmei's imports which we considered as part of our analysis. Sanmei 
stated that, while it did experience a massive surge of imports of R-
125 between the base and comparison periods, this surge was seasonal in 
nature. Sanmei also provided its shipment data for comparable periods 
in 2018-2019 and 2019-2020.\22\ Based on our analysis of Sanmei's 
shipment data reported for 2018 through 2021, we find that there is a 
consistent pattern of seasonality evidenced by a significant increase 
in shipments during the months of January through May (in 2019, 2020, 
and 2021), when compared to August through December (in 2018, 2019, and 
2020) . As a result, we preliminarily find that the record reflects 
that any surge in Sanmei's imports between the base and comparison 
periods in this investigation can be explained by seasonal trends. 
Therefore, we preliminarily determine that, although the surge in 
imports of R-125 from Sanmei during the comparison period was massive, 
the import surge was massive as a result of seasonal trends and, 
therefore, critical circumstances do not exist for Sanmei, in 
accordance with section 733(e)(1)(B) of the Act.\23\
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    \22\ See Sanmei Critical Circumstances Data. Juxin did not argue 
that its surge in imports between the base and comparison periods 
was due to seasonal trends nor did it provide data to permit 
Commerce to perform a seasonality analysis.
    \23\ Id.
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    To determine whether imports were massive for all other exporters 
or producers, Commerce's normal practice is to subtract shipments 
reported by the cooperating mandatory respondents from shipment data 
for subject merchandise from Global Trade Atlas.\24\ However, as 
discussed in the Initiation Notice,\25\ the Harmonized Tariff Schedule 
of the United States number under which the subject merchandise enters 
is a basket category under which non-subject merchandise may enter. 
Therefore, consistent with our practice, we preliminarily relied on the 
data of the mandatory respondents as ``facts available,'' in accordance 
with section 776(a)(1) of the Act, to determine whether imports from 
all other exporters or producers were massive.\26\ Because we 
preliminary determine that imports from both Juxin and Sanmei increased 
by more than 15 percent between the base and comparison periods, we 
also preliminarily determine that imports from all other exporters or 
producers were massive.
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    \24\ See, e.g., Antidumping Duty Investigation on Refillable 
Stainless Steel Kegs from Mexico: Preliminary Affirmative 
Determination of Critical Circumstances, 84 FR 18796, 18798 (May 2, 
2019) (Kegs from Mexico Preliminary Critical Circumstances 
Determination).
    \25\ See Checklist, ``Countervailing Duty Investigation 
Initiation Checklist: Pentafluoroethane (R-125) from the People's 
Republic of China,'' dated February 3, 2021 (Initiation Checklist); 
see also Initiation Notice.
    \26\ See, e.g., Kegs from Mexico Preliminary Critical 
Circumstances Determination, 84 FR at 18798.
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    Finally, for Arkema, Daikin, Hongkong, and Weitron, we 
preliminarily determine, pursuant to section 776(b) of the Act, that 
there was a massive surge in imports between the base and comparison 
periods.
    Accordingly, consistent with section 703(e)(1) of the Act, we 
preliminarily determine that critical circumstances exist with respect 
to Arkema, Daikin, Hongkong, Juxin, Weitron, and all other exporters 
and producers not individually examined.

Final Determination

    We will make a final determination concerning critical 
circumstances in the final determination of this investigation, which 
is currently scheduled for October 25, 2021.

[[Page 36529]]

Public Comment

    Case briefs or other written comments may be submitted to the 
Assistant Secretary for Enforcement and Compliance. Interested parties 
will be notified of the timeline for the submission of case briefs and 
written comments at a later date. Rebuttal briefs, limited to issues 
raised in case briefs, may be submitted no later than seven days after 
the deadline date for case briefs.\27\ Pursuant to 19 CFR 351.309(c)(2) 
and (d)(2), parties who submit case briefs or rebuttal briefs in this 
investigation are encouraged to submit with each argument: (1) A 
statement of the issue; (2) a brief summary of the argument; and (3) a 
table of authorities.
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    \27\ See 19 CFR 351.309(d)(1).
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Suspension of Liquidation

    In accordance with section 703(e)(2)(A) of the Act, for Arkema, 
Daikin, Hongkong, Juxin, Weitron, and all other exporters and 
producers, we intend to direct U.S. Customs and Border Protection (CBP) 
to suspend liquidation of any unliquidated entries of subject 
merchandise from China entered, or withdrawn from warehouse for 
consumption, on or after March 27, 2021, which is 90 days prior to the 
date of publication of the Preliminary Determination in the Federal 
Register. For such entries, CBP shall require a cash deposit equal to 
the estimated preliminary subsidy rates established in the Preliminary 
Determination. This suspension of liquidation will remain in effect 
until further notice.

U.S. International Trade Commission (ITC) Notification

    In accordance with section 703(f) of the Act, we intend to notify 
the ITC of this preliminary determination of critical circumstances.
    This determination is issued and published pursuant to sections 
703(f) and 777(i)(1) of the Act.

    Dated: July 6, 2021.
James Maeder,
Deputy Assistant Secretary for Antidumping and Countervailing Duty 
Operations.
[FR Doc. 2021-14755 Filed 7-9-21; 8:45 am]
BILLING CODE 3510-DS-P
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