[Federal Register Volume 75, Number 157 (Monday, August 16, 2010)]
[Notices]
[Pages 49891-49893]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-20210]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
[C-570-966]
Drill Pipe from the People's Republic of China: Notice of
Preliminary Affirmative Determination of Critical Circumstances
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) has preliminarily
determined that critical circumstances exist with respect to imports of
drill pipe from the People's Republic of China (PRC).
EFFECTIVE DATE: August 16, 2010.
FOR FURTHER INFORMATION CONTACT: Kristen Johnson or Eric Greynolds, AD/
CVD Operations, Office 3, Import Administration, International Trade
Administration, U.S. Department of Commerce, Room 4014, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone: 202-482-4793
and 202-482-6071, respectively.
SUPPLEMENTARY INFORMATION:
Case History
On December 31, 2009, the Department received the petition filed in
proper form by the petitioners.\1\ This investigation was initiated on
January 20, 2010. See Drill Pipe From the People's Republic of China:
Initiation of Countervailing Duty Investigation, 75 FR 4345 (January
27, 2010). The affirmative preliminary determination was published on
June 11, 2010. See Drill Pipe From the People's Republic of China:
Preliminary Affirmative Countervailing Duty Determination, 75 FR 33245
(June 11, 2010) (Preliminary Determination). On July 8, 2010,
petitioners alleged that critical circumstances exist with respect to
imports of drill pipe from the PRC. See Petitioners' Critical
Circumstances Allegation (July 8, 2010).\2\ On July 12, 2010, the
Department requested from the DP Master Group,\3\ the respondent,
monthly shipment data of subject merchandise to the United States for
the period August 2009 through May 2010. See Department's Third
Supplemental Questionnaire issued to the DP Master Group (July 12,
2010) at 2. On July 13, 2010, petitioners submitted U.S. Census Data in
support of their allegation. See Petitioners' Census Bureau Data
submission (July 13, 2010). On July 21, 2010, the DP Master Group
submitted to the Department its monthly shipment data, which included
data covering the period January 2009 through July 2009. See DP Master
Group's Third Supplemental Questionnaire Response (July 21, 2010) at
Exhibit 68.
---------------------------------------------------------------------------
\1\ Petitioners are VAM Drilling USA, Inc., Texas Steel
Conversions, Inc., Rotary Drilling Tools, TMK IPSCO, and United
Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied
Industrial and Service Workers International Union, AFL-CIO-CLC.
\2\ This public document and all other public documents and
public versions are available on the public file located in the
Department's Central Records Unit (CRU), Room 1117 of the main
Commerce building.
\3\ The DP Master Group is DP Master Manufacturing Co., Ltd. (DP
Master), Jiangyin Sanliang Petroleum Machinery Co., Ltd. (SPM),
Jiangyin Liangda Drill Pipe Co., Ltd. (Liangda), Jiangyin Sanliang
Steel Pipe Trading Co., Ltd. (SSP), and Jiangyin Chuangxin Oil Pipe
Fittings Co., Ltd. (Chuangxin).
---------------------------------------------------------------------------
In accordance with 19 CFR 351.206(c)(1), if the petitioner submits
an allegation of critical circumstances 30 days or more before the
scheduled date of the final determination, the Department will make a
preliminary finding whether there is a reasonable basis to believe or
suspect that critical circumstances exist. The Department will issue
its preliminary finding of critical circumstances within 30 days after
the petitioner submits the allegation. See 19 CFR 351.206(c)(2)(ii).
Period of Investigation
The period for which we are measuring subsidies, or the period of
investigation (POI), is calendar year 2009.
Scope of Investigation
The products covered by this investigation are steel drill pipe,
and steel drill collars, whether or not conforming to American
Petroleum Institute (API) or non-API specifications, whether finished
or unfinished (including green tubes suitable for drill pipe), without
regard to the specific chemistry of the steel (i.e., carbon, stainless
steel, or other alloy steel), and without regard to length or outer
diameter. The scope does not include tool joints not attached to the
drill pipe, nor does it include unfinished tubes for casing or tubing
covered by any other antidumping or countervailing duty order.
The subject products are currently classified in the following
Harmonized Tariff Schedule of the United States (HTSUS) categories:
7304.22.0030, 7304.22.0045, 7304.22.0060, 7304.23.3000, 7304.23.6030,
7304.23.6045, 7304.23.6060, 8431.43.8040 and may also enter under
8431.43.8060, 8431.43.4000, 7304.39.0028, 7304.39.0032, 7304.39.0036,
7304.39.0040, 7304.39.0044, 7304.39.0048, 7304.39.0052, 7304.39.0056,
7304.49.0015, 7304.49.0060, 7304.59.8020, 7304.59.8025, 7304.59.8030,
7304.59.8035, 7304.59.8040, 7304.59.8045, 7304.59.8050, and
7304.59.8055.\4\
---------------------------------------------------------------------------
\4\ Prior to February 2, 2007, these imports entered under
different tariff classifications, including 7304.21.3000,
7304.21.6030, 7304.21.6045, and 7304.21.6060.
---------------------------------------------------------------------------
While HTSUS subheadings are provided for convenience and Customs
purposes, the written description of the scope of this investigation is
dispositive.
[[Page 49892]]
Comments of the Parties
In their critical circumstances allegation, petitioners claim that
there have been massive imports of drill pipe in the three months
following the filing of the petition on December 31, 2009. Petitioners
provided Census Bureau Data, which they contend demonstrate that
imports of subject merchandise increased by more than the 15 percent
required to be considered ``massive'' under section 351.206(h)(2) of
the Department's regulations. Petitioners submit that imports rose from
$5.4 million in the last quarter of 2009, to $20 million in the first
quarter of 2010, an increase of $14.6 million or 270 percent. See
Petitioners' Critical Circumstances Allegation at 3, and Petitioners'
Census Data submission.
Petitioners also allege that there is a reasonable basis to believe
that a subsidy in this investigation is inconsistent with the WTO
Agreement on Subsidies and Countervailing Measures (Subsidies
Agreement). With regard to the ``Technology to Improve Trade R&D Fund''
program, petitioners submit that the program is contingent on export
performance. Petitioners state that the DP Master Group, in its second
supplemental questionnaire response, reported that the program's
application form required the company to report export data from the
prior year. See Petitioners' Critical Circumstances Allegation at 2;
see also DP Master Group's Second Supplemental Questionnaire Response
(July 7, 2010) at 1. Petitioners contend that there is no reason that
an application form would request information regarding export
performance unless it was relevant for approval of the subsidy. As
such, petitioners argue that the DP Master Group received a subsidy
contingent upon export performance, which is inconsistent with Article
3 of the Subsidies Agreement.
In its July 21, 2010, questionnaire response, in addition to
monthly shipment data, the DP Master Group submitted information
attempting to show that importers, exporters, and producers had reason
to believe that a countervailing duty (CVD) proceeding was likely in
June 2009, and, therefore, the Department should use as its base period
the first half of 2009, and as its comparison period the second half of
2009, to determine whether there were massive imports. See 19 CFR
351.206(h)(2)(i). Specifically, the DP Master Group submitted a
declaration from the partner and owner of a company involved with drill
pipe, drill collar, and other drilling equipment. See DP Master Group's
Third Supplemental Questionnaire Response (July 21, 2010) at Exhibit
69. The declaration references conversations that this individual had
with others in the industry regarding fundraising in order to pay for
antidumping (AD) and CVD investigations.
Analysis
Section 703(e)(1) of the Tariff Act of 1930, as amended (the Act),
provides that the Department will preliminarily determine that critical
circumstances exist if there is a reasonable basis to believe or
suspect that: (A) the alleged countervailable subsidy is inconsistent
with the Subsidies Agreement, and (B) there have been massive imports
of the subject merchandise over a relatively short period.
When determining whether an alleged countervailable subsidy is
inconsistent with the Subsidies Agreement, the Department limits its
critical circumstances findings to those subsidies contingent on export
performance or use of domestic over imported goods (i.e., those
prohibited under Article 3 of the Subsidies Agreement).\5\ In the
Preliminary Determination, we stated that additional information was
required to fully analyze the ``Technology to Improve Trade R&D Fund''
program, under which the DP Master Group received assistance during the
POI. See 75 FR at 33261. In its July 7, 2010, supplemental
questionnaire response (at 1), the DP Master Group stated that the
application for assistance under the program required the company to
report information related to exports from the previous year. The
Government of China (GOC), in its July 9, 2010, second supplemental
response (at 1), reported that this program was established ``for the
purpose of inducing R&D activities relating to export products.''\6\
Based on this evidence, we determine that there is a reasonable basis
to believe or suspect that the assistance under the ``Technology to
Improve Trade R&D Fund'' is export contingent and, therefore is
inconsistent with the Subsidies Agreement.
---------------------------------------------------------------------------
\5\ See, e.g., Notice of Preliminary Negative Determination of
Critical Circumstances: Certain New Pneumatic Off-the-Road Tires
From the People's Republic of China, 73 FR 21588, 21589-90 (April
22, 2008), unchanged in Final Affirmative Countervailing Duty
Determination and Final Negative Critical Circumstances
Determination: Carbon and Certain Alloy Steel Wire Rod From Germany,
67 FR 55808, 55809 (August 30, 2002).
\6\ At Exhibit 1 of the July 9, 2010, second supplemental
questionnaire response, the Chinese government submitted a blank
copy of the application form which requires information on ``total
export of the last fiscal year'' and ``percentage of total export of
the last fiscal year.''
---------------------------------------------------------------------------
In determining whether imports of the subject merchandise have been
``massive,'' section 351.206(h)(1) of the Department's regulations
provides that the Department normally will examine: (i) the volume and
value of the imports; (ii) seasonal trends; and (iii) the share of
domestic consumption accounted for by the imports. In addition, the
Department will not consider imports to be massive unless imports
during the ``relatively short period'' (comparison period) have
increased by at least 15 percent compared to imports during an
``immediately preceding period of comparable duration'' (base period).
See 19 CFR 351.206(h)(2).
Section 351.206(i) of the Department's regulations defines
``relatively short period'' as normally being the period beginning on
the date the proceeding commences (i.e., the date the petition is
filed) and ending at least three months later. For consideration of
this allegation, we have used a five-month base (i.e., August 2009
through December 2009) and comparison period (i.e., January 2010
through May 2010), which is the maximum amount of data that can be
examined prior to the preliminary determination of this investigation.
Concerning the DP Master Group's suggestion to compare shipment
data of the first and second half of 2009, based on knowledge of the
petition, we find that the evidence put forth by the DP Master Group is
speculative and does not justify using that base and comparison period
to determine whether there were massive imports. The single declaration
submitted by the DP Master Group refers to fundraising that might
result in the event of an investigation and does not demonstrate that
any action was taken by the DP Master Group.
In determining whether there were massive imports, we analyzed the
evidence presented in the petitioners' Critical Circumstances
Allegation and the DP Master Group's monthly shipment data for the
period August 2009 through May 2010. The Department's examination of
these data demonstrates that there was a massive increase in shipments
of subject merchandise by the DP Master Group during the period
immediately following the filing of the petition on December 31, 2009.
Specifically, shipments of subject merchandise increased by 220.56
percent in terms of volume. See the Memorandum to the File from Kristen
Johnson, Trade Analyst, AD/CVD Operations Office 3, regarding
``Critical Circumstances Shipment Data Analysis,'' (Critical
[[Page 49893]]
Circumstances Memorandum) (August 9, 2010) at 2.
With regard to whether imports of subject merchandise by the ``all
other'' exporters of drill pipe in the PRC were massive, the Department
normally relies on data sourced from the International Trade
Commission's (ITC's) Dataweb, adjusted to remove shipments by the
respondents participating in the investigation.\7\ In this case,
however, use of data from the ITC's Dataweb is not meaningful, because
when the DP Master Group's monthly shipments are subtracted from the
monthly data generated by the ITC's Dataweb for the main HTSUS
categories (i.e., 7304.22 and 7304.23),\8\ the results for a number of
months are a negative amount. See Critical Circumstances Memorandum at
3. This indicates that some of the DP Master Group's shipments entered
under the ``may also enter under'' HTSUS categories listed in the
scope. We note that those numbers represent basket categories and,
therefore, would not provide accurate data for use in our analysis. As
such, we are basing our preliminary finding of critical circumstances
for ``all other'' exporters of drill pipe from the PRC on the shipping
experience of the DP Master Group.
---------------------------------------------------------------------------
\7\ See, e.g., Certain Oil Country Tubular Goods From the
People's Republic of China: Preliminary Affirmative Countervailing
Duty Determination, Preliminary Negative Critical Circumstances
Determination, 74 FR 47210,47212 (September 15, 2009), unchanged in
Certain Oil Country Tubular Goods From the People's Republic of
China: Final Affirmative Countervailing Duty Determination: Final
Negative Critical Circumstances Determination, 74 FR 64045 (December
7, 2009).
\8\ Query of the 7304.22 and 7304.23 HTSUS categories is in
keeping with the data analysis conducted for respondent selection
where the Department relied solely on Customs and Border Protection
data of 7304.22 and 7304.23 for selecting respondents. See
Memorandum to the File from Eric G. Greynolds, Program Manager, AD/
CVD Operations, Office 3, regarding ``Release of Initial Customs and
Border Protection Data,'' (January 22, 2010) (CBP Data Query
Memorandum).
---------------------------------------------------------------------------
Regarding the preliminary conclusion to base our finding of
critical circumstances for ``all other'' exporters of drill pipe from
the PRC on the shipping experience of the DP Master Group, we note that
the two firms initially identified by the Department in the Customs and
Border Protection (CBP) Data Query Memorandum as the two largest
shippers of drill pipe to the United States during the POI subsequently
claimed that their shipments do not, in fact, reflect subject
merchandise. Assuming that the non-shipment claims of these two firms
are valid,\9\ then the share of the DP Master Group's exports of drill
pipe to the United States during the POI is larger than is indicated in
the CBP Data Query Memorandum and, thus, constitutes an additional
basis for the Department to base its finding of critical circumstances
for ``all other'' exporters of drill pipe from the PRC on the shipping
experience of the DP Master Group.
---------------------------------------------------------------------------
\9\ The Department has requested entry documents from CBP to
verify the companies' claim of non-shipment of subject merchandise.
---------------------------------------------------------------------------
Conclusion
Based on the analysis above, we preliminarily determine critical
circumstances exist for imports of drill pipe from the DP Master Group.
We also preliminary determine, based on the shipment experience of the
DP Master Group, that critical circumstances exist as well for imports
of drill pipe from ``all other'' exporters from the PRC. We will make a
final determination concerning critical circumstances for drill pipe
from the PRC when we make our final countervailable subsidy
determination in this investigation.
Suspension of Liquidation
In accordance with section 703(e)(2)(A) of the Act, we are
directing CBP to suspend liquidation of any unliquidated entries of
subject merchandise from the PRC entered, or withdrawn from warehouse
for consumption, on or after March 13, 2010, which is 90 days prior to
the date of publication of the Preliminary Determination in the Federal
Register.
ITC Notification
In accordance with section 703(f) of the Act, we will notify the
ITC of our determination.
This determination is issued and published pursuant to sections
703(f) and 777(i)(1) of the Act.
Dated: August 9, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-20210 Filed 8-13-10; 8:45 am]
BILLING CODE 3510-DS-S