[Federal Register: December 14, 2009 (Volume 74, Number 238)]
[Notices]
[Page 66090-66096]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14de09-27]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-570-953]
Narrow Woven Ribbons with Woven Selvedge from the People's
Republic of China: Preliminary Affirmative Countervailing Duty
Determination and Alignment of Final Countervailing Duty Determination
with Final Antidumping Duty Determination
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce preliminarily determines that
countervailable subsidies are being provided to producers and exporters
of narrow woven ribbons with woven selvedge from the People's Republic
of China. For information on the estimated subsidy rates, see the
``Suspension of Liquidation'' section of this notice.
EFFECTIVE DATE: December 14, 2009.
FOR FURTHER INFORMATION CONTACT: Scott Holland or Anna Flaaten, 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-
1279 or (202) 482-5156, respectively.
SUPPLEMENTARY INFORMATION:
[[Page 66091]]
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 Narrow Woven Ribbons With Woven Selvedge From the
People's Republic of China: Initiation of Countervailing Duty
Investigation, 74 FR 39298 (August 6, 2009) (``Initiation Notice''),
and the accompanying Initiation Checklist.\1\
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\1\ A public version of this and all public Department memoranda
referenced herein are on file in the Central Records Unit (``CRU'')
in Room 1117 of the main Department building.
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On August 25, 2009, the Department selected two Chinese producers/
exporters of narrow woven ribbons with woven selvedge (``Woven
Ribbons'') as mandatory respondents, Yama Ribbons and Bows Co., Ltd.
(``Yama'') and Changtai Rongshu Textile Co., Ltd. (``Changtai''). See
Memorandum to Edward C. Yang, Senior Enforcement Coordinator for the
China NME Unit for Import Administration, ``Respondent Selection Memo''
(August 25, 2009). This memorandum is on file in the Department's CRU.
On September 8, 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
threatened with material injury by reason of allegedly subsidized
imports of Woven Ribbons from the People's Republic of China (``PRC'').
See Narrow Woven Ribbons With Woven Selvedge From China and Taiwan,
Investigation Nos. 701-TA-467 and 731-TA-1164-1165, 74 FR 46224
(September 8, 2009).
On August 26, 2009, we issued the countervailing duty (``CVD'')
questionnaires to the Government of the People's Republic of China
(``GOC''), Yama, and Changtai.
On September 14, 2009, the Department postponed the deadline for
the preliminary determination in this investigation until December 7,
2009. See Narrow Woven Ribbons With Woven Selvedge From the People's
Republic of China: Postponement of Preliminary Determination in the
Countervailing Duty Investigation, 74 FR 46978 (September 14, 2009). On
September 15, 2009, consultants for Changtai notified the Department
that the company would not participate further in the investigation.
We received responses to our questionnaire from the GOC and Yama on
October 19, 2009. See GOC's Original Questionnaire Response (October
19, 2009) (``GQR'') and Yama's Original Questionnaire Response (October
19, 2009). We sent supplemental questionnaires to the GOC and Yama, on
October 30 and November 19, 2009. We received responses to the
supplemental questionnaires from Yama on November 13, 2009 and November
23, 2009. See Yama's 1st Supplemental Questionnaire Response (November
13, 2009) (``YSQR1'') and Yama's 2nd Supplemental Questionnaire
Response (November 23, 2009) (``YSQR2''). We received a response from
the GOC to the October 30, 2009, supplemental questionnaire on November
9, 2009. See GOC's 1st Supplemental Questionnaire Response (November 9,
2009). On November 25, 2009, the GOC requested an extension of seven
days to respond to the Department's November 19, 2009, supplemental
questionnaire, originally due December 1, 2009. The Department granted
the GOC's request in full. Therefore, the GOC's response is due
December 8, 2009.
On October 30, 2009, Berwick Offray LLC and its wholly-owned
subsidiary Lion Ribbon Company Inc. (collectively, ``Petitioner'')
requested that the final determination of this CVD investigation be
aligned with the final determination in the companion antidumping duty
(``AD'') investigation in accordance with section 705(a)(1) of the
Tariff Act of 1930, as amended (the ``Act'').
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 39299.
On August 18, 2009, interested parties Costco Wholesale
Corporation, Hobby Lobby Stores, Inc., Jo-Ann Stores, Inc., Michaels
Stores, Inc. and Target Corporation (collectively, ``Ribbon
Retailers''), Papillion Ribbon and Bow, Inc. (``Papillion''), and
Essential Ribbons, Inc. (``Essential Ribbons'') submitted timely
comments concerning the scope of the Woven Ribbons AD and CVD
investigations. Ribbons Retailers urged that the scope definition be
modified to clarify certain scope exclusions and otherwise exclude
certain merchandise from the scope. Papillion requested that the
Department exclude formed rosettes from the scope of the
investigations. Finally, Essential Ribbons requested that pre-cut,
hand-finished ribbons for retail packaging, be excluded from the scope.
The Department is currently evaluating the comments submitted by
the interested parties and will issue its decision regarding the scope
of the investigations prior to the preliminary determinations in the
companion AD investigations due on February 4, 2010.
Scope of the Investigation
The merchandise subject to the investigation is narrow woven
ribbons with woven selvedge, in any length, but with a width (measured
at the narrowest span of the ribbon) less than or equal to 12
centimeters, composed of, in whole or in part, man-made fibers (whether
artificial or synthetic, including but not limited to nylon, polyester,
rayon, polypropylene, and polyethylene teraphthalate), metal threads
and/or metalized yarns, or any combination thereof. Narrow woven
ribbons subject to the investigation may:
also include natural or other non-man-made fibers;
be of any color, style, pattern, or weave construction,
including but not limited to single-faced satin, double-faced satin,
grosgrain, sheer, taffeta, twill, jacquard, or a combination of two or
more colors, styles, patterns, and/or weave constructions;
have been subjected to, or composed of materials that have
been subjected to, various treatments, including but not limited to
dyeing, printing, foil stamping, embossing, flocking, coating, and/or
sizing;
have embellishments, including but not limited to
appliqu[eacute], fringes, embroidery, buttons, glitter, sequins,
laminates, and/or adhesive backing;
have wire and/or monofilament in, on, or along the
longitudinal edges of the ribbon;
have ends of any shape or dimension, including but not
limited to straight ends that are perpendicular to the longitudinal
edges of the ribbon, tapered ends, flared ends or shaped ends, and the
ends of such woven ribbons may or may not be hemmed;
have longitudinal edges that are straight or of any shape,
and the longitudinal edges of such woven ribbon may or may not be
parallel to each other;
consist of such ribbons affixed to like ribbon and/or cut-
edge woven ribbon, a configuration also known as an ``ornamental
trimming;''
be wound on spools; attached to a card; hanked (i.e.,
coiled or bundled); packaged in boxes, trays or bags; or configured as
skeins, balls, bateaus or folds; and/or
[[Page 66092]]
be included within a kit or set such as when packaged with
other products, including but not limited to gift bags, gift boxes and/
or other types of ribbon.
Narrow woven ribbons subject to the investigation include all
narrow woven fabrics, tapes, and labels that fall within this written
description of the scope of this investigation.
Excluded from the scope of the investigation are the following:
(1) formed bows composed of narrow woven ribbons with woven selvedge;
(2) ``pull-bows'' (i.e., an assemblage of ribbons connected to one
another, folded flat and equipped with a means to form such ribbons
into the shape of a bow by pulling on a length of material affixed to
such assemblage) composed of narrow woven ribbons;
(3) narrow woven ribbons comprised at least 20 percent by weight of
elastomeric yarn (i.e., filament yarn, including monofilament, of
synthetic textile material, other than textured yarn, which does not
break on being extended to three times its original length and which
returns, after being extended to twice its original length, within a
period of five minutes, to a length not greater than one and a half
times its original length as defined in the Harmonized Tariff Schedule
of the United States (``HTSUS''), Section XI, Note 13) or rubber
thread;
(4) narrow woven ribbons of a kind used for the manufacture of
typewriter or printer ribbons;
(5) narrow woven labels and apparel tapes, cut-to-length or cut-to-
shape, having a length (when measured across the longest edge-to-edge
span) not exceeding eight centimeters;
(6) narrow woven ribbons with woven selvedge attached to and forming
the handle of a gift bag;
(7) cut-edge narrow woven ribbons formed by cutting broad woven fabric
into strips of ribbon, with or without treatments to prevent the
longitudinal edges of the ribbon from fraying (such as by merrowing,
lamination, sono-bonding, fusing, gumming or waxing), and with or
without wire running lengthwise along the longitudinal edges of the
ribbon;
(8) narrow woven ribbons comprised at least 85 percent by weight of
threads having a denier of 225 or higher;
(9) narrow woven ribbons constructed from pile fabrics (i.e., fabrics
with a surface effect formed by tufts or loops of yarn that stand up
from the body of the fabric) ;
(10) narrow woven ribbon affixed (including by tying) as a decorative
detail to non-subject merchandise, such as a gift bag, gift box, gift
tin, greeting card or plush toy, or affixed (including by tying) as a
decorative detail to packaging containing non-subject merchandise;
(11) narrow woven ribbon affixed to non-subject merchandise as a
working component of such non-subject merchandise, such as where narrow
woven ribbon comprises an apparel trimming, book marker, bag cinch, or
part of an identity card holder; and
(12) narrow woven ribbon(s) comprising a belt attached to and imported
with an item of wearing apparel, whether or not such belt is removable
from such item of wearing apparel.
The merchandise subject to this investigation is classifiable under
the HTSUS statistical categories 5806.32.1020; 5806.32.1030;
5806.32.1050 and 5806.32.1060. Subject merchandise also may enter under
subheadings 5806.31.00; 5806.32.20; 5806.39.20; 5806.39.30; 5808.90.00;
5810.91.00; 5810.99.90; 5903.90.10; 5903.90.25; 5907.00.60; and
5907.00.80 and under statistical categories 5806.32.1080; 5810.92.9080;
5903.90.3090; and 6307.90.9889. The HTSUS statistical categories and
subheadings are provided for convenience and customs purposes; however,
the written description of the merchandise under 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.
Alignment of Final Countervailing Duty Determination with Final
Antidumping Duty Determination
On August 6, 2009, the Department initiated the CVD and AD
investigations of Woven Ribbons from the PRC. See Initiation Notice and
Narrow Woven Ribbons with Woven Selvedge from the People's Republic of
China and Taiwan: Initiation of Antidumping Duty Investigations, 74 FR
39291 (August 6, 2009). The CVD investigation and the AD investigation
have the same scope with regard to the merchandise covered.
As noted above, on October 30, 2009, Petitioner submitted a letter
requesting alignment of the final CVD determination with the final
determination in the companion AD investigation of Woven Ribbons from
the PRC. Therefore, in accordance with section 705(a)(1) of the Act and
19 CFR 351.210(b)(4), we are aligning these final determinations such
that the final CVD determination will be issued on the same date as the
final AD determination, which is currently scheduled to be issued no
later than April 19, 2010.
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(d) 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
[[Page 66093]]
the best of its ability to comply with a request for information.
As noted above, Changtai was selected as a mandatory respondent.
Changtai, however, did not provide the requested information necessary
to determine a CVD rate for this preliminary determination and failed
to provide information within the deadlines established by the
Department. Specifically, Changtai did not respond to the Department's
August 26, 2009 CVD questionnaire. Thus, in reaching our preliminary
determination, pursuant to section 776(a)(2)(A) and (C) of the Act, we
have based the CVD rate for Changtai on facts otherwise available.
We determine that an adverse inference is warranted, pursuant to
section 776(b) of the Act. On September 15, 2009, consultants for
Changtai notified the Department that Changtai would not participate in
the investigation. By electing not to participate, Changtai has not
cooperated to the best of its ability in this investigation.
In deciding which facts to use as adverse facts available
(``AFA''), section 776(b) of the Act and 19 CFR 351.308(c)(1) authorize
the Department to rely on information derived from: (1) the petition;
(2) a final determination in the investigation; (3) any previous review
or determination; or (4) any other information placed on the record.
The Department's practice when selecting an adverse rate from among the
possible sources of information is to ensure that the rate 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, e.g., 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.R. Rep. No. 103-316, Vol. I, at 870 (1994), reprinted
at 1994 U.S.C.C.A.N 4040, 4199.
It is the Department's practice to select, as AFA, the highest
calculated rate in any segment of the proceeding. See, e.g., 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
from the PRC''), and the accompanying Issues and Decision Memorandum at
``Selection of the Adverse Facts Available'' (``LWS Decision
Memorandum''). In previous CVD investigations into products from the
PRC, we have adapted this practice to use the highest rate calculated
for the same or similar programs in other PRC CVD investigations. See,
e.g., id. Consistent with the Department's recent practice, we are
preliminarily computing a total AFA rate for Changtai, generally using
program-specific rates determined for the cooperating respondent or in
past cases. Specifically, for programs other than those involving
income tax exemptions and reductions, we will apply the highest
calculated rate for the identical program in this investigation if a
responding company used the identical program. If there is no identical
program match within the investigation, we will use the highest non-de
minimis rate calculated for the same or similar program in another PRC
CVD investigation. Absent an above-de minimis subsidy rate calculated
for the same or similar program, we will apply the highest calculated
subsidy rate for any program otherwise listed that could conceivably be
used by Changtai. See, e.g., Certain Kitchen Shelving and Racks from
the People's Republic of China: Final Affirmative Countervailing Duty
Determination, 74 FR 37012 (July 27, 2009) (``Kitchen Racks from the
PRC''), and the accompanying Issues and Decision Memorandum at ``Use of
Facts Available and Adverse Facts Available.''
Further, where the GOC can demonstrate through complete,
verifiable, positive evidence that Changtai (including all its
facilities and cross-owned affiliates) is not located in particular
provinces whose subsidies are being investigated, the Department does
not intend to include those provincial programs in determining the
countervailable subsidy rate for Changtai. See Certain Tow-Behind Lawn
Groomers and Certain Parts Thereof from the People's Republic of China:
Initiation of Countervailing Duty Investigation, 73 FR 42324 (July 21,
2008), and the accompanying Initiation Checklist. In supplemental
questionnaire responses received to date, the GOC has failed to provide
verifiable information demonstrating that Changtai is located in Fujian
Province and has no facilities or cross-owned affiliates in any other
province in the PRC, as requested. Therefore, the Department
preliminarily makes the adverse inference that Changtai has facilities
and/or cross-owned affiliates that received subsidies under all of the
sub-national programs alleged prior to the selection of mandatory
respondents.
Loans
For the ``Policy Loans to Narrow Woven Ribbons Producers from
SOCBs'' program, we have applied the highest non-de minimis subsidy
rate for any loan program in a prior PRC CVD investigation. This rate
was 8.31 percent for the ``Government Policy Lending Program.'' See
Lightweight Thermal Paper from the People's Republic of China: Notice
of Amended Final Affirmative Countervailing Duty Determination and
Notice of Countervailing Duty Order, 73 FR 70958 (November 24, 2008).
Grants
For grant programs, Yama did not use ``State Key Technology Program
Fund,'' ``Famous Brands,'' ``Export Assistance Grants,'' ``Export
Interest Subsidy Funds for Enterprises Located in Zhejiang Province,''
and ``Technology Development Grants for Enterprises Located in Zhejiang
Province'' programs. The Department has not calculated above de minimis
rates for any of these programs in prior investigations and, moreover,
all previously calculated rates for grant programs from prior PRC CVD
investigations have been de minimis. Therefore, for each of these
programs, we have determined to use the highest calculated subsidy rate
for any program otherwise listed, which could conceivably have been
used by Changtai. This rate was 13.36 percent for the ``Government
Provision of Land for Less Than Adequate Remuneration.'' See LWS
Decision Memorandum at 14-18.
Indirect Tax Credits and VAT/Tariff Reductions and Exemptions
For the seven indirect tax credit and rebate programs,\2\ which
Yama did not use, we have preliminarily determined to use the highest
non-de minimis rate for any indirect tax program from a PRC CVD
investigation. The rate we selected is 1.51 percent, which was the rate
calculated for respondent Gold East
[[Page 66094]]
Paper (Jiangsu) Co., Ltd. (GE) for the ``Value-added Tax and Tariff
Exemptions on Imported Equipment,'' program. See CFS Decision
Memorandum at 13-14.
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\2\ ``Corporate Income Tax Refund Program for Reinvestment of
FIE Profits in Export-Oriented Enterprises;'' ``Preferential Tax
Policies for Township Enterprises;'' ``Preferential Tax Policies for
Research and Development for FIEs;'' ``Tax Benefits for FIEs in
Encouraged Industries that Purchase Domestic Equipment;'' ``Import
Tariff and VAT Exemptions for FIEs Using Imported Technology and
Equipment;'' ``Import Tariff and VAT Exemptions for Certain Domestic
Enterprises Using Imported Technology and Equipment;'' ``VAT Rebate
for FIE Purchases of Domestically Produced Equipment.''
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Foreign-Invested Enterprise (``FIE'') Income Tax Rate Reduction and
Exemption Programs
For the five income tax rate reduction or exemption programs,\3\ we
have applied an adverse inference that Changtai paid no income tax
during the POI (i.e., calendar year 2008). The standard income tax rate
for corporations in the PRC is 30 percent, plus a three percent
provincial income tax rate. Therefore, the highest possible benefit for
these five income tax programs is 33 percent. We are applying the 33
percent AFA rate on a combined basis (i.e., the five programs combined
provided a 33 percent benefit). This 33 percent AFA rate does not apply
to tax credit and refund programs.
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\3\ Preferential Tax Policies for Enterprises with Foreign
Investment (``Two Free, Three Half'' Program''); ``Tax Subsidies to
FIEs in Specially Designated Areas;'' ``Preferential Tax Policies
for Export-Oriented FIEs;'' ``Tax Program for High or New Technology
FIEs'', and ``Local Income Tax Exemption or Reduction Program for
``Productive'' FIEs.''
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For further explanation of the derivation of the AFA rates, see
Memorandum to the File, ``Adverse Facts Available Rate'' (December 7,
2009) (``AFA Calculation Memo'').
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, 1994 U.S.C.C.A.N. at 4199. 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, 1994 U.S.C.C.A.N. at
4199.
With regard to the reliability aspect of corroboration, we note
that these rates were calculated in recent final CVD determinations.
Further, the calculated rates were based upon verified information
about the same or similar programs. Moreover, no information has been
presented that calls into question the reliability of these calculated
rates that we are applying as AFA. Finally, unlike other types of
information, such as publicly available data on the national inflation
rate of a given country or national average interest rates, there
typically are no independent sources for data on company-specific
benefits resulting from countervailable subsidy programs.
With respect to the relevance aspect of corroborating the rates
selected, the Department will consider information reasonably at its
disposal in considering the relevance of information used to calculate
a countervailable subsidy benefit. Where circumstances indicate that
the information is not appropriate as AFA, the Department will not use
it. See Fresh Cut Flowers From Mexico; Final Results of Antidumping
Duty Administrative Review, 61 FR 6812 (February 22, 1996).
In the absence of record evidence concerning these programs due to
Changtai's decision not to participate in the investigation, the
Department has reviewed the information concerning PRC subsidy programs
in this and other cases. For those programs for which the Department
has found a program-type match, we find that, because these are the
same or similar programs, they are relevant to the programs of this
case. For the programs for which there is no program-type match, the
Department has selected the highest calculated subsidy rate for any PRC
program from which Changtai could receive a benefit to use as AFA. The
relevance of this rate is that it is an actual calculated CVD rate for
a PRC program from which Changtai could actually receive a benefit.
Further, this rate was calculated for a period close to the POI in the
instant case. Moreover, Changtai's failure to respond to requests for
information has ``resulted in an egregious lack of evidence on the
record to suggest an alternative rate.'' Shanghai Taoen Int'l Trading
Co., Ltd. v. United States, 360 F. Supp. 2d 1339, 1348 (Ct. Int'l Trade
2005). Due to the lack of participation by Changtai and the resulting
lack of record information concerning these programs, the Department
has corroborated the rates it selected to the extent practicable.
On this basis, we preliminarily determine that the AFA
countervailable subsidy rate for Changtai is 118.68 percent ad valorem.
See AFA Calculation Memo.
Subsidies Valuation Information
Allocation Period
The average useful life (``AUL'') period in this proceeding, as
described in 19 CFR 351.524(d)(2), is 10 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 (2007), 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) direct that the Department will attribute
subsidies received by certain other companies to the combined sales of
those companies if (1) cross-ownership exists between the companies,
and (2) the cross-owned companies produce the subject merchandise, are
a holding or parent company of the subject company, produce an input
that is primarily dedicated to the production of the downstream
product, or transfer a subsidy to a cross-owned company. The Court of
International Trade 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, SA v.
United States, 166 F. Supp. 2d 593, 604 (Ct. Int'l Trade 2001).
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.
Yama responded to the Department's questionnaire on behalf of
itself, a Hong Kong-owned foreign invested enterprise, and an
affiliated trading company, Xiamen Yama Import and Export Co., Ltd.
(``Yama Trading''). Based on information reported by Yama, we
preliminarily determine that cross-ownership exists between Yama and
Yama Trading as both companies have the same owners. However, according
to the company's responses, Yama Trading
[[Page 66095]]
did not benefit from any countervailable subsidies during the POI.
In its questionnaire responses, Yama also acknowledged that it has
several other affiliated companies in addition to Yama Trading.
However, Yama reported that these affiliates do not produce the subject
merchandise and do not provide inputs to Yama. 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 Yama are cross-owned
within the meaning of 19 CFR 351.525(b)(6)(iii)-(vi).
Analysis of Programs
Based upon our analysis of the petition and the responses to our
questionnaires, we determine the following:
I. Programs Preliminarily Determined To Be Countervailable
A. Tax Subsidies to FIEs in Specially Designated Areas
To promote economic development and attract foreign investment,
``productive'' FIEs located in coastal economic zones, special economic
zones or economic and technical development zones in the PRC receive
preferential tax rates of 15 percent or 24 percent, depending on the
zone, under Article 7 of the Foreign Investment Enterprise Tax Law
(``FIE Tax Law''). See GQR, at Exhibit G-1.
The Department has previously found this program to be
countervailable. See CFS from the PRC and CFS Decision Memorandum at 12
(Analysis of Programs, I. Programs Determined to be Countervailable for
GE, C. Reduced Income Tax Rates for FIEs Based on Location),
Lightweight Thermal Paper From the People's Republic of China: Final
Affirmative Countervailing Duty Determination, 73 FR 57323 (October 2,
2008), and the accompanying Issues and Decision Memorandum at 15
(Analysis of Programs, I. Programs Determined to be Countervailable, D.
Reduced Income Tax Rates for FIEs Based on Location) and Kitchen Racks
from the PRC and the accompanying Issues and Decision Memorandum at 11
(Analysis of Programs, I. Programs Determined to be Countervailable, A.
Income Tax Reduction for FIEs Based on Geographic Location).
Yama is located in Xiamen city, a special economic zone, and was
subject to the reduced income tax rate of 15 percent for the tax
returned filed during the POI. See YSQR2 at 1.
We preliminarily determine that the reduced income tax rate paid by
productive FIEs under this program confers a countervailable subsidy.
The reduced rate 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 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 treated Yama's income tax savings 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 company's
total sales during that period. To compute the amount of the tax
savings, we compared the income tax rate Yama would have paid in the
absence of the program (30 percent) with the rate it paid (15 percent).
On this basis, we preliminarily determine that Yama received a
countervailable subsidy of 0.24 percent ad valorem under this program.
B. 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 G-1. The Department has previously found
this program to be countervailable. See, e.g., CFS Decision Memorandum
at 12-13 and Citric Acid and Certain Citrate Salts From the People's
Republic of China: Final Affirmative Countervailing Duty Determination,
74 FR 16836 (April 13, 2009), and accompanying Issues and Decision
Memorandum at 21.
In Yama's tax return filed for 2007, it reported not paying any
local income tax during the POI. See YSQR 1 at Exhibit S-1.
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 Yama, we treated the income tax
savings enjoyed by the company 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 company actually paid.
For Yama, we divided the company's tax savings received during the
POI by its total sales. On this basis, we preliminarily determine that
Yama received a countervailable subsidy of 0.05 percent ad valorem
under this program.
II. Programs For Which More Information Is Required
Other Subsidies
Section 775 of the Act, requires the Department to investigate any
other potential subsidies it discovers during the course of this
investigation that pertain to the manufacture, production, or
exportation of the subject merchandise. In its supplemental
questionnaire response, Yama reported that it received eleven subsidies
under programs that were not alleged by Petitioner in this
investigation. See YSQR1 at 6.
As indicated in the Case History section above, on November 19,
2009, the Department requested additional information on these subsidy
programs which is still outstanding. We plan to issue a post-
preliminary analysis so that parties will have an opportunity to
comment on our findings prior to our final determination.
III. Programs Preliminarily Determined To Be Not Used By Yama or To Not
Provide Benefits During the POI
Based upon responses and factual information submitted by the GOC
and Yama, we preliminarily determine that Yama did not apply for or
receive benefits during the POI under the programs listed below.
A. Loan Programs
1. Policy Loans to Narrow Woven Ribbon Producers from State-Owned
Commercial Banks
B. Grant Programs
2. The State Key Technology Renovation Project Fund
3. Famous Brands Program
4. Export Assistance Grants
5. Export Interest Subsidy Funds for Enterprises Located in
Zhejiang Province
6. Technology Grants for Enterprises
[[Page 66096]]
Located in Zhejiang Province
C. Indirect Tax Credits and VAT/Tariff Reductions and Exemptions
7. Import Tariff and VAT Exemptions for FIEs Using Imported
Technology and Equipment
8. Import Tariff and VAT Exemptions for Certain Domestic
Enterprises Using Imported Technology and Equipment
9. VAT Rebate for FIE Purchases of Domestically Produced Equipment
10. Corporate Income Tax Refund Program for Reinvestment of FIE
Profits in Export-Oriented Enterprises
11. Preferential Tax Policies for Township Enterprises
D. Foreign-Invested Enterprise (FIE) Income Tax Rate Reduction and
Exemption Programs
12. Preferential Tax Policies for Enterprises with Foreign
Investment (``Two Free, Three Half'') Program
13. Preferential Tax Policies for Export-Oriented FIEs
14. Tax Program for High or New Technology FIEs
15. Preferential Tax Policies for Research and Development for FIEs
16. Tax Benefits for FIEs in Encouraged Industries that Purchase
Domestic Equipment
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:
------------------------------------------------------------------------
Net Subsidy
Exporter/Manufacturer Rate
([percnt])
------------------------------------------------------------------------
Yama Ribbons and Bows Co., Ltd.......................... 0.29 (de
minimis)
Changtai Rongshu Textile Co., Ltd....................... 118.68
All-Others.............................................. 59.49
------------------------------------------------------------------------
Sections 703(d) and 705(c)(5)(A) of the Act states that for
companies not investigated, we will determine 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 normally does not include zero
and de minimis rates or any rates based solely on the facts available.
In this investigation, the net subsidy rate calculated for the two
investigated companies are either de minimis or based entirely on AFA
under section 776 of the Act. There is no information on the record
upon which we could determine an all-others rate. As a result, we have
calculated the all-others rate as a simple average of Changtai's AFA
rate and Yama's de minimis rate. See, e.g., LWS from the PRC and LWS
Decision Memorandum at Comment 21.
In accordance with sections 703(d)(1)(B) and (2) of the Act, we are
directing U.S. Customs and Border Protection to suspend liquidation of
all entries of Woven Ribbons 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. However, because the estimated CVD rate for Yama is de
minimis, liquidation will not be suspended and no cash deposits or
bonds are required for merchandise produced and exported by that
company.
ITC Notification
In accordance with section 703(f) of the Act, we will notify the
ITC of our determination. In addition, we are making available to the
ITC all non-privileged and non-proprietary information relating to this
investigation. We will allow the ITC access to all privileged and
business proprietary information in our files, provided the ITC
confirms that it will not disclose such information, either publicly or
under an administrative protective order, without the written consent
of the Assistant Secretary for Import Administration.
In accordance with section 705(b)(2) of the Act, if our final
determination is affirmative, the ITC will make its final determination
within 45 days after the Department makes its final determination.
Disclosure and Public Comment
In accordance with 19 CFR 351.224(b), 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, N.W., 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 Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
1870, 14th Street and Constitution Avenue, N.W., 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: December 4, 2009.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. E9-29725 Filed 12-11-09; 8:45 am]
BILLING CODE 3510-DS-S