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###### Department of Commerce

###### International Trade Administration

          - [C-570-961]

# AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

# DATES:

*Effective Date:*                         October 22, 2009.                    

# FOR FURTHER INFORMATION CONTACT:

Yasmin Nair and Joseph Shuler, 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) 482-3813 and (202) 482-1293, respectively.

# SUPPLEMENTARY INFORMATION:

## The Petition

                    On September 23, 2009, the Department of Commerce (“Department”) received a countervailing duty petition concerning imports of certain standard steel fasteners (“fasteners”) from the People's Republic of China (“PRC”). The petition was filed in proper form by Nucor Fastener (“Petitioner”), a domestic producer of fasteners.[1]                                          In response to the Department's requests, Petitioner provided timely information supplementing the Petition on October 6, 7, 8, and 9, 2009.                

In accordance with section 702(b)(1) of the Tariff Act of 1930, as amended (“the Act”), Petitioner alleges that manufacturers, producers, or exporters of standard steel fasteners in the PRC receive countervailable subsidies within the meaning of sections 701 and 771(5) of the Act, and that such imports are materially injuring, or threatening material injury to, an industry in the United States.

                    The Department finds that Petitioner filed the Petition on behalf of the domestic industry because it is an interested party as defined in section 771(9)(C) of the Act, and Petitioner has demonstrated sufficient industry support with respect to the countervailing duty (“CVD”) investigation (                    *see*                     “Determination of Industry Support for the Petition” section below).                

## Period of Investigation

The period of investigation (“POI”) is January 1, 2008, through December 31, 2008.

## Scope of Investigation

                    The products covered by the investigation are fasteners from the PRC and Taiwan. For a full description of the scope of the investigation, please                     *see*                     “Scope of Investigation,” in Appendix I of this notice. The Department, after consulting with Petitioner, made minor changes to the scope language submitted by Petitioner in the Third Supplement to the AD/CVD Petitions, dated October 9, 2009, at Attachment 1.                     *See*                     Memorandum to the file from Steve Bezirganian, Analyst, entitled “Certain Standard Steel Fasteners from the People's Republic of China (A-570-960 and C-570-961) and Taiwan (A-583-845): Revisions to Petitioner's Proposed October 9, 2009, Scope Language,” dated October 13, 2009.                

## Comments on Scope of Investigation

                    During our review of the Petition, we discussed the scope with Petitioner to ensure that it is an accurate reflection of the products for which the domestic industry is seeking relief. Moreover, as discussed in the preamble to the Department's regulations (                    *Antidumping Duties; Countervailing Duties; Final Rule,*62 FR 27296, 27323 (May 19, 1997)), we are setting aside a period for interested parties to raise issues regarding product coverage. The Department encourages all interested parties to submit such comments by November 2, 2009, twenty calendar days from the signature date of this notice. Comments should be addressed to Import Administration's APO/Dockets Unit, Room 1870, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. The period for scope consultations is intended to provide the Department with ample opportunity to consider all comments and to consult with parties prior to the issuance of the preliminary determination.                          ( print page 54544)    

## Consultations

Pursuant to section 702(b)(4)(A)(ii) of the Act, on September 23, 2009, the Department invited representatives of the Government of the PRC for consultations with respect to the CVD petition. On October 13, 2009, the GOC requested that the Department extend the deadline for consultations. The Department responded that it could not extend this deadline for pre-initiation consultations, but would consult with the GOC in the course of this proceeding if initiated, as required by Article 13.2 of the Agreement on Subsidies and Countervailing Measures.

## Determination of Industry Support for the Petition

Section 702(b)(1) of the Act requires that a petition be filed on behalf of the domestic industry. Section 702(c)(4)(A) of the Act provides that a petition meets this requirement if the domestic producers or workers who support the petition account for: (i) At least 25 percent of the total production of the domestic like product; and (ii) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition. Moreover, section 702(c)(4)(D) of the Act provides that, if the petition does not establish support of domestic producers or workers accounting for more than 50 percent of the total production of the domestic like product, the Department shall: (i) poll the industry or rely on other information in order to determine if there is support for the petition, as required by subparagraph (A), or (ii) determine industry support using a statistically valid sampling method.

                    Section 771(4)(A) of the Act defines the “industry” as the producers as a whole of a domestic like product. Thus, to determine whether a petition has the requisite industry support, the statute directs the Department to look to producers and workers who produce the domestic like product. The U.S. International Trade Commission (“ITC”), which is responsible for determining whether “the domestic industry” has been injured, must also determine what constitutes a domestic like product in order to define the industry. While both the Department and the ITC must apply the same statutory definition regarding the domestic like product (section 771(10) of the Act), they do so for different purposes and pursuant to a separate and distinct authority. In addition, the Department's determination is subject to limitations of time and information. Although this may result in different definitions of the like product, such differences do not render the decision of either agency contrary to law.                     *See USEC, Inc.*                     v.                     *United States,*                     132 F. Supp. 2d 1, 8 (Ct. Int'l Trade 2001),                     *citing Algoma Steel Corp. Ltd.*                     v.                     *United States,*                     688 F. Supp. 639, 644 (Ct. Int'l Trade 1988),                     *aff'd*                     865 F.2d 240 (Fed. Cir. 1989),                     *cert. denied*                     492 U.S. 919 (1989).                

                    Section 771(10) of the Act defines the domestic like product as “a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this title.” Thus, the reference point from which the domestic like product analysis begins is “the article subject to an investigation” (                    *i.e.,*                     the class or kind of merchandise to be investigated, which normally will be the scope as defined in the petition).                

                    With regard to the domestic like product, Petitioner does not offer a definition of domestic like product distinct from the scope of the investigation. Based on our analysis of the information submitted on the record, we have determined that fasteners constitute a single domestic like product and we have analyzed industry support in terms of that domestic like product. For a discussion of the domestic like product analysis in this case,                     *see*                     “Countervailing Duty Investigation Initiation Checklist: Certain Standard Steel Fasteners from the People's Republic of China” (“Initiation Checklist”), at Attachment II, Analysis of Industry Support for the Petitions Covering Certain Standard Steel Fasteners from the People's Republic of China, on file in the Central Records Unit (“CRU”), Room 1117 of the main Department of Commerce building.                

                    In determining whether Petitioner has standing (                    *i.e.,*                     the domestic workers and producers supporting the Petition account for (1) at least 25 percent of the total production of the domestic like product and (2) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the Petition), we considered the industry support data contained in the Petition with reference to the domestic like product. To establish industry support, Petitioner provided its production of the domestic like product for the year 2008, and compared this to the estimated total production of the domestic like product for the entire domestic industry.                     *See*                     Volume I of the Petition, at 2-3, Exhibit I-10, and Supplement to the AD/CVD Petitions, dated October 6, 2009, at 17-18, Exhibit I-Supp-6, and Industry Support Supplement, dated October 8, 2009 (“Industry Support Supplement”), at Attachment 1. To estimate 2008 production of the domestic like product, Petitioner used its own data and industry specific knowledge.                     *See*                     Industry Support Supplement, at Attachment 1. Petitioner calculated total domestic production based on its own production plus estimates regarding the other producers of the domestic like product in the United States.                     *Id.*                     We have relied upon data Petitioner provided for purposes of measuring industry support. For further discussion,                     *see*                     Initiation Checklist at Attachment II.                

                    The Department's review of the data provided in the Petition, supplemental submissions, and other information readily available to the Department indicates that Petitioner has established industry support. First, the Petition establishes support from domestic producers (or workers) accounting for more than 50 percent of the total production of the domestic like products and, as such, the Department is not required to take further action in order to evaluate industry support (                    *e.g.,*                     polling).                     *See*                     section 702(c)(4)(D) of the Act and Initiation Checklist at Attachment II. Second, the domestic producers (or workers) have met the statutory criteria for industry support under section 702(c)(4)(A)(i) of the Act because the domestic producers (or workers) who support the Petition account for at least 25 percent of the total production of the domestic like products.                     *See*                     Initiation Checklist at Attachment II. Finally, the domestic producers (or workers) have met the statutory criteria for industry support under section 702(c)(4)(A)(ii) of the Act because the domestic producers (or workers) who support the Petition account for more than 50 percent of the production of the domestic like products produced by that portion of the industry expressing support for, or opposition to, the Petitions. Accordingly, the Department determines that the Petition was filed on behalf of the domestic industry within the meaning of section 702(b)(1) of the Act.                     *See*                     Initiation Checklist at Attachment II.                

                    The Department finds that Petitioner filed the Petition on behalf of the domestic industry because it is an interested party as defined in section 771(9)(C) of the Act and has demonstrated sufficient industry support with respect to the CVD investigation that it is requesting the Department initiate.                     *See*                     Initiation Checklist at Attachment II.                          ( print page 54545)    

## Injury Test

Because the PRC is a “Subsidies Agreement Country” within the meaning of section 701(b) of the Act, section 701(a)(2) of the Act applies to this investigation. Accordingly, the ITC must determine whether imports of subject merchandise from the PRC materially injure, or threaten material injury to, a U.S. industry.

## Allegations and Evidence of Material Injury and Causation

Petitioner alleges that imports of standard steel fasteners from the PRC are benefitting from countervailable subsidies and that such imports are causing, or threaten to cause, material injury to the domestic industry producing certain standard steel fasteners. In addition, Petitioner alleges that subsidized imports exceed the negligibility threshold provided for under section 771(24)(A) of the Act.

                    Petitioner contends that the industry's injured condition is illustrated by reduced market share, underselling and price depressing and suppressing effects, increased import penetration, declining sales, reduced production, reduced capacity, increased raw material cost, abandoned product lines, reduced shipments, reduced wages and hours worked, and an overall decline in financial performance. We have assessed the allegations and supporting evidence regarding material injury, threat of material injury, and causation, and we have determined that these allegations are properly supported by adequate evidence and meet the statutory requirements for initiation.                     *See*                     Initiation Checklist at Attachment III (Analysis of Injury Allegations and Evidence of Material Injury and Causation).                

## Initiation of Countervailing Duty Investigation

Section 702(b) of the Act requires the Department to initiate a CVD proceeding whenever an interested party files a petition on behalf of an industry that: (1) Alleges the elements necessary for an imposition of a duty under section 701(a) of the Act; and (2) is accompanied by information reasonably available to the petitioner(s) supporting the allegations.

                    The Department has examined the CVD petition on standard steel fasteners from the PRC and finds that it complies with the requirements of section 702(b) of the Act. Therefore, in accordance with section 702(b) of the Act, we are initiating a CVD investigation to determine whether manufacturers, producers, or exporters of standard steel fasteners in the PRC receive countervailable subsidies. For a discussion of evidence supporting our initiation determination,                     *see*                     Initiation Checklist.                

We are including in our investigation the following programs alleged in the Petition to have provided countervailable subsidies to producers and exporters of the subject merchandise in the PRC:

A. Preferential Loans and Interest Rates

1. Policy Loans to Chinese Fasteners Producers

2. Export Loans

3. Preferential Lending to Fasteners Producers and Exporters Classified as “Honorable Enterprises”

4. Preferential Loans as Part of the Northeast Revitalization Program

B. Government Provision of Goods or Services for Less Than Adequate Remuneration (“LTAR”)

1. Wire Rod for LTAR

2. Hot-Rolled Steel for LTAR

3. Zinc for LTAR

4. Land-Use Rights for LTAR

C. Income and Other Direct Taxes

1. Income Tax Credits for Domestically Owned Companies Purchasing Domestically Produced Equipment

2. Preferential Income Tax Policy for Enterprises in the Northeast Region

3. Forgiveness of Tax Arrears for Enterprises in the Old Industrial Bases of Northeast China

D. Indirect Tax and Tariff Exemption Programs

1. Export Incentive Payments Characterized as “VAT Rebates”

2. Import Tariff and VAT Exemptions for Foreign Invested Enterprises (“FIEs”) and Certain Domestic Enterprises Using Imported Equipment in Encouraged Industries

E. Preferential Income Tax Subsidies for FIEs

1. “Two Free, Three Half” Tax Exemptions for FIEs

2. Income Tax Exemption Program for Export-Oriented FIEs

3. Local Income Tax Exemption and Reduction Programs for “Productive” FIEs

4. Preferential Tax Programs for FIEs Recognized as High or New Technology Enterprises

5. Income Tax Subsidies for FIEs Based on Geographic Location

6. VAT Refunds for FIEs Purchasing Domestically Produced Equipment

F. Direct Grants

1. “Five Points, One Line” Program

2. Export Interest Subsidies

3. The State Key Technology Renovation Project Fund

4. Export Assistance Grants in Zhejiang Province

5. Subsidies for Development of Famous Export Brands and China World Top Brands

6. Sub-Central Government Programs to Promote Famous Export Brands and China World Top Brands

7. Programs to Rebate Antidumping Legal Fees in Zhejiang and Shenzhen Province

                    For further information explaining why the Department is investigating these programs,                     *see*                     Initiation Checklist.                

We are not including in our investigation the following programs alleged to benefit producers and exporters of subject merchandise in the PRC:

### 1. Preferential Loans for Key Projects and Technologies

In its Petition, Petitioner asserted that some fasteners producers located in Northeastern China may benefit from preferential loans given to their steel suppliers. However, Petitioner did not file an adequate upstream subsidy allegation, nor did Petitioner allege that fasteners producers would be eligible to receive preferential loans under this program directly. Furthermore, in its October 7, 2009 supplemental response, Petitioner allows that it is unlikely that fasteners producers benefited from this program. Accordingly, we do not plan on investigating this program.

### 2. Electricity for LTAR

Petitioner alleges that the Government of the PRC (“GOC”) is providing a financial benefit of electricity for less than adequate remuneration to steel producers, and that fasteners producers receive an associated downstream benefit within the meaning of Section 771(5)(D)(iii) of the Act. The financial contribution as alleged by Petitioner is an upstream subsidy. Petitioner has not supported the allegation and, consequently, we do not plan to investigate this program.

### 3. Fixed Assets Investment Orientation Regulatory Tax

                    Petitioner claims that producers of fasteners in the PRC are exempted from or receive preferential income tax rates on investments in fixed assets. Petitioner has not provided information to demonstrate that fasteners producers would be covered by the relevant legislation. For example, the legislation relating to this program includes specific aspects of the iron and steel production process that are eligible for tax benefits, but it does not include any processes related to production of fasteners. Accordingly, we do not plan                           ( print page 54546)                        on investigating this program. However, if one of the mandatory respondents chosen in this investigation is part of a vertically integrated steel company, or cross-owned with a primary steel producer, Petitioner may re-allege this program under a timely filed new subsidy allegation, at which time the Department will reconsider the information provided. Accordingly, we do not plan on investigating this program.                

### 4. Tax Reduction for Enterprises Making Little Profit

                    According to the PRC's World Trade Organization subsidies notification, enterprises with annual taxable incomes between Renminbi (“RMB”) 30,000 and 100,000 are eligible for a three percent reduction in their annual income tax rate. Petitioner has not established with reasonably available information that “enterprises making little profit” are a                     *de jure*                     specific group because Petitioner has provided no explanation of why companies with access to this program comprise an enterprise or industry, or group of enterprises or industries within the meaning of Section 771(5A) of the Act. Consequently, we do not plan on investigating this program.                

### 5. Income Tax Exemption for Investment in Domestic “Technological Renovation”

                    Petitioner alleges that, pursuant to the Technological Renovation of Domestic Equipment Corporate Income Tax Exemption Notice, the State Tax Administration provides a tax credit to enterprises for a certain portion of investment in any domestically produced equipment that relates to technology updates. However, in the final determination of certain kitchen appliance shelving and racks from the PRC, the Department investigated this program and found that it does not exist.[2]                                          Consequently, we do not plan on investigating this program.                

### 6. China's Enforced Undervaluation of Its Currency

Petitioner alleges that the GOC-maintained exchange rate effectively prevents the appreciation of the Chinese currency (RMB) against the U.S. dollar. Therefore, when producers/exporters in the PRC sell their dollars at official foreign exchange banks, as required by law, the producers receive more RMB than they otherwise would if the value of the RMB were set by market mechanisms. Petitioner describes the benefit conferred as the excess of RMB received, over what would have been received at a market rate (“excess RMB”) and alleges specificity within the meaning of Section 771(5A)(B) of the Act by virtue of the fact that “* * * there is a direct and positive correlation between the export activity/export earnings and the amount of subsidy received.” Section 771(5A)(B) of the Act describes an export subsidy as “* * * a subsidy that is, in law or fact, contingent upon export performance, alone or as 1 of 2 or more conditions.” Petitioner has failed to sufficiently allege that the receipt of the excess RMB is contingent on export or export performance because receipt of the excess RMB is independent of the type of transaction or commercial activity for which the dollars are converted or of the particular company or individuals converting the dollars. Therefore, we do not plan on investigating this program because Petitioner has failed to properly allege the specificity element.

## Respondent Selection

                    For this investigation, the Department expects to select respondents based on U.S. Customs and Border Protection (“CBP”) data for U.S. imports during the POI. We intend to release the CBP data under Administrative Protective Order (“APO”) to all parties with access to information protected by APO within five days of the announcement of the initiation of this investigation. Interested parties may submit comments regarding the CBP data and respondent selection within seven calendar days of publication of this notice. We intend to make our decision regarding respondent selection within 20 days of publication of this                     **Federal Register**                     notice.                

                    Interested parties must submit applications for disclosure under APO in accordance with 19 CFR 351.305(b). Instructions for filing such applications may be found on the Department's Web site at                     *http://ia.ita.doc.gov/​apo.*

## Distribution of Copies of the Petition

In accordance with section 702(b)(4)(A)(i) of the Act, a copy of the public version of the Petition has been provided to the Government of the PRC. As soon as and to the extent practicable, we will attempt to provide a copy of the public version of the Petition to each exporter named in the Petition, consistent with section 351.203(c)(2) of the Department's regulations.

## ITC Notification

We have notified the ITC of our initiation, as required by section 702(d) of the Act.

## Preliminary Determination by the ITC

                    The ITC will preliminarily determine, within 25 days after the date on which it receives notice of the initiation, whether there is a reasonable indication that imports of subsidized standard steel fasteners from the PRC are causing material injury, or threatening to cause material injury, to a U.S. industry.                     *See*                     section 703(a)(2) of the Act. A negative ITC determination will result in the investigation being terminated; otherwise, the investigation will proceed according to statutory and regulatory time limits.                

This notice is issued and published pursuant to section 777(i) of the Act.

Ronald K. Lorentzen,

Acting Assistant Secretary for Import Administration.

# Appendix I—Scope of Investigation

                        The merchandise covered by the investigation consists of certain standard nuts, standard bolts, and standard cap screws, of steel other than stainless steel. Standard nuts, standard bolts, and standard cap screws covered by the investigation may have a variety of finishes, including but not limited to coating in paint, phosphates, and zinc. Standard bolts and standard cap screws covered by the investigation have a shank or thread with an actual and/or nominal diameter between 6 millimeters and 32 millimeters (inclusive). Standard bolts and standard cap screws covered by the investigation also possess a circular or hexagonal head, the surface of which may be flat or rounded (also known as “dome-shaped” or “button-headed”). Standard bolts covered by the investigation may have an attached washer face or the equivalent (                        *e.g.,*                         a flanged head or chamfered corners on the underside of a fastener with a hexagonal-shaped head). Standard cap screws covered by the investigation have a permanently-attached washer face. Standard nuts are covered by the investigation if they are suitable for attachment to bolts and/or cap screws covered by the investigation.                    

                        Standard bolts, standard cap screws, and standard nuts are covered by the investigation whether imported alone, attached to other subject and/or non-subject merchandise (                        *e.g.,*                         tension control assemblies), or unattached and in combination with other subject merchandise and/or non-subject merchandise.                    

                        Standard nuts, standard bolts, and standard cap screws meet the requirements of one or more nationally recognized consensus industry standard specifications (including but not limited to those referenced below). Subject merchandise is typically certified to the specifications published by one or more consensus standards organizations such as the following: the American Society for Testing and Materials (ASTM), the Society of Automotive Engineers (SAE), the International Organization for Standardization (ISO), and the Industrial Fasteners Institute. Common specifications to which subject merchandise is certified                               ( print page 54547)                            include, but are not limited to: ASTM A194, ASTM A307, ASTM A325, ASTM A325M, ASTM A354, ASTM A449, ASTM A490, ASTM A563, ASTM F568M, ASTM F1852, ASTM F2280, SAE J429, SAE J1199, ISO 898-1, ISO 898-2, ISO 4759-1, ISO 8992, and comparable foreign and domestic specifications (including, but not limited to, metric versions of specifications such as those listed above).                    

Excluded from the scope of the investigation are bolts, cap screws, and nuts produced for an original equipment manufacturer (OEM) part number specific to any “automobile” as defined in 49 U.S.C. Section 32901(a)(3), any “work truck” as defined in 49 U.S.C. Section 32901(a) (19), or any “medium-duty passenger vehicle” as defined in 40 C.F.R. Section 86.1803-01 (2009).

Also excluded from the scope of the investigation are bolts, cap screws, and nuts produced for an OEM part number specific to any “aircraft” as defined in 14 CFR 1.1 (2009).

                        Also excluded from the scope of the investigation are track bolts. Track bolts have a circular, rounded head and a shank which, immediately beneath the head, possesses an oval or elliptical shape, such that the non-round shape would restrict rotational movement of the bolt. Also excluded from the scope of the investigation are carriage bolts. Carriage bolts have a circular, rounded head and a shank which, immediately beneath the head, possesses a non-round shape (                        *e.g.,*                         square, finned), such that the non-round shape would restrict rotational movement of the bolt. Also excluded from the scope of the investigation are socket screws. Socket screws have a head with a recessed cavity into which a shaped bit may be inserted to turn and drive the fastener.                    

Unless explicitly excluded from the scope of the investigation, bolts, cap screws, and nuts meeting the description of subject merchandise are covered by the investigation.

Merchandise covered by the investigation is classified in the Harmonized Tariff Schedule of the United States (HTSUS) under subheadings: 7318.15.2030, 7318.15.2055, 7318.15.2065, 7318.15.8065, 7318.15.8085, and 7318.16.0085. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise under the investigation is dispositive.

# Footnotes

1.                                                     *See*                         Petition for the Imposition of Antidumping and Countervailing Duties Pursuant to Sections 701 and 731 of the Tariff Act of 1930, as Amended: Certain Standard Steel Fasteners from the People's Republic of China, dated September 23, 2009 (“Petition”).                    
        Back to Citation      

2.                                                     *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 at 18.                    
        Back to Citation      

[FR Doc. E9-25197 Filed 10-21-09; 8:45 am]

BILLING CODE 3510-DS-P