[Federal Register: August 7, 2007 (Volume 72, Number 151)]
[Notices]
[Page 44122-44126]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07au07-27]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-570-913]
Certain New Pneumatic Off-the-Road Tires From the People's
Republic of China: Initiation of Countervailing Duty Investigation
AGENCY: Import Administration, International Trade Administration,
Department of Commerce
EFFECTIVE DATES: August 7, 2007.
FOR FURTHER INFORMATION CONTACT: Mark Hoadley or Toni Page, AD/CVD
Operations, Office 6, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
3148 and (202) 482-1398, respectively.
Initiation of Investigation
The Petition
On June 18, 2007, the Department of Commerce (the Department)
received a petition filed in proper form by Titan Tire Corporation and
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy Allied
Industrial and Service Workers International Union, ALF-CIO-CLC
(petitioners). On June 22, 2007 and July 3, 2007, the Department issued
requests for additional information and clarification of certain areas
of the petition involving general issues concerning the countervailing
duty (CVD) allegations. Based on the Department's requests, the
petitioners filed additional information concerning the petition on
June 27, 2007 and July 5, 2007.
In accordance with section 702(b)(1) of the Tariff Act of 1930, as
amended (the Act), petitioners allege that manufacturers, producers, or
exporters of certain new pneumatic off-the-road tires (OTR tires) in
the People's Republic of China (the PRC) received countervailable
subsidies within the meaning of section 701 of the Act and that such
imports are materially injuring an industry in the United States.
The Department finds that petitioners filed this petition on behalf
of the domestic industry because they are interested parties as defined
in sections 771(9)(C) and (D) of the Act and petitioners have
demonstrated sufficient industry support with respect to the
countervailing duty investigation that they are requesting the
Department to initiate (see, infra, ``Determination of Industry Support
for the Petition'').
Scope of Investigation
The merchandise covered by this investigation is certain new
pneumatic off-the-road tires from the PRC. See Attachment to this
notice for a complete description of the merchandise covered by this
investigation.
Comments on Scope of Investigation
During our review of the petition, we discussed the scope with
petitioners 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 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 within 20 calendar days of the
publication of this notice. Comments should be addressed to
[[Page 44123]]
Import Administration's Central Records Unit (CRU), Room 1870, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230. The period of scope 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.
Consultations
Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department
invited representatives of the Government of the People's Republic of
China (hereinafter, the GOC) for consultations with respect to the
countervailing duty petition. The Department held these consultations
in Beijing, China with representatives of the GOC on July 16, 2007. See
the Memorandum to The File, entitled, ``Consultations with Officials
from the Government of the People's Republic of China'' (July 16, 2007)
(public document on file in the CRU of the Department of Commerce, Room
B-099).
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 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 (CIT 2001), citing Algoma Steel Corp. Ltd. v. United
States, 688 F. Supp. 639, 644 (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 subtitle.'' 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, the petitioners do 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 certain OTR tires 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 the Countervailing Duty
Investigation Initiation Checklist: Certain New Pneumatic Off-The-Road
Tires from the People's Republic of China (PRC) (OTR Tires CVD
Initiation Checklist), Industry Support at Attachment II, on file in
the Central Records Unit (CRU), Room B-099 of the main Department of
Commerce building.
On July 6, 2007, the Department extended the initiation deadline by
20 days to poll the domestic industry in accordance with section
702(c)(4)D) of the Act, because it was ``not clear from the petitions
whether the industry support criteria have been met * * *'' See
Extension of the Deadline for Determining the Adequacy of the
Antidumping Duty and Countervailing Duty Petitions: New Pneumatic Off-
the-Road Tires from the People's Republic of China, 72 FR 38816 (July
16, 2007). On July 16, 2007, we issued polling questionnaires to all
known domestic producers of certain OTR tires identified in the
petition and by the Department's research. The questionnaires are on
file in the CRU. For a detailed discussion of the responses received,
see OTR Tires CVD Initiation Checklist at Attachment II.
Based on an analysis of the data collected, we determine that the
petitioners have demonstrated industry support representing over 50
percent of the total production of the domestic like product.
Therefore, the domestic producers or workers who support the petition
account for at least 25 percent of the total production of the domestic
like product, and the requirements of section 702(c)(4)(A)(i) of the
Act are met. Furthermore, given that the petitioners represent more
than 50 percent of the total production of the domestic like product,
the requirements of section 702(c)(4)(A)(ii) of the Act are also met.
Accordingly, we determine that this petition is filed on behalf of the
domestic industry within the meaning of section 702(b)(1) of the Act.
See OTR Tires CVD Initiation Checklist at Attachment II.
The Department finds that the petitioners filed the petition on
behalf of the domestic industry because they are interested parties as
defined in sections 771(9)(C) and (D) of the Act and they have
demonstrated sufficient industry support with respect to the
countervailing duty investigation that they are requesting the
Department initiate. See OTR Tires CVD Initiation Checklist at
Attachment II.
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 the subject merchandise from the PRC materially
injure, or threaten material injury to, a U.S. industry.
Allegations and Evidence of Material Iniury and Causation
Petitioners allege that the U.S. industry producing the domestic
like product is being materially injured by reason of the imports of
the subject merchandise sold at less than NV. Petitioners contend that
the industry's injured condition is illustrated by the reduced market
share, lost sales, reduced production and capacity utilization rate,
reduced shipments, underselling and price depressing and suppressing
effects, lost revenue and sales, reduced employment, decline in
financial performance, decrease in capital expenditure, and increase in
import penetration. We have assessed
[[Page 44124]]
the allegations and supporting evidence regarding 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 OTR Tires CVD Initiation Checklist at Attachment III.
Subsidy Allegations
Section 702(b) of the Act requires the Department to initiate a
countervailing duty 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
petitioners supporting the allegations. The Department has examined the
countervailing duty petition on OTR tires from the PRC and found 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 countervailing duty investigation to determine whether
manufacturers, producers, or exporters of OTR tires in the PRC receive
countervailable subsidies. For a discussion of evidence supporting our
initiation determination, see OTR Tires CVD 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:
GOC Loan Programs
1. Discounted Loans for Export-Oriented Enterprises
2. Loan Forgiveness for State Owned Enterprises (SOEs)
3. Preferential Lending to SOEs
GOC Currency Program
4. Foreign Currency Retention Scheme
GOC Grant Programs
5. Grants to the Tire Industry for Electricity
6. The State Key Technologies Renovation Project Fund
GOC Provision of Goods or Services for Less Than Adequate Remuneration
7. Provision of Land and Utilities to SOEs for Less than Adequate
Remuneration
8. Provision of Land and Utilities to Foreign Invested Enterprises
(FIEs) for Less than Adequate Remuneration
GOC Income Tax Programs
9. Preferential Tax Policies for Enterprises with Foreign Investment
(Two Free, Three Half Income Program)
10. Preferential Tax Policies for Export-Oriented FIEs
11. Corporate Income Tax Refund Program for Reinvestment of FIE Profits
in Export-Oriented Enterprises
12. Tax Benefits for FIEs in Encouraged Industries that Purchase
Domestic Origin Machinery
13. Tax Subsidies to FIEs Based in Specially Designated Geographic
Areas
GOC Indirect Tax Programs and Import Tariff Programs
14. Value Added Tax (VAT) Rebate for FIE Purchases of Domestically
Produced Equipment
15. VAT and Tariff Exemptions for FIEs and Certain Domestic Enterprises
Using Imported Equipment in Encouraged Industries
16. VAT Export Rebates
17. Exemption from Payment of Staff and Worker Benefit Taxes for
Export-Oriented Enterprises
Provincial Grant Programs
18. Funds for Outward Expansion of Industries in Guangdong Province
19. Export Interest Subsidy Funds for Enterprises Located in Guangdong
and Zhejiang Provinces
Provincial Provision of Goods and Services for Less Than Adequate
Remuneration
20. Provision of Land and Utilities at Less Than Adequate Remuneration
to Export-Oriented Enterprises and FIEs by Provincial Governments
Provincial and Local Tax Programs for FIEs
21. Local Income Tax Exemption and Reduction Programs for
``Productive'' FIEs
For further information explaining why the Department is
investigating these programs, see the OTR Tires CVD Initiation
Checklist.
We are not including in our investigation the following programs
alleged to benefit producers and exporters of the subject merchandise
in the PRC:
1. Managed Exchange Rate Export Subsidy (Currency Manipulation)
Petitioners allege that the GOC's manipulates its currency to
maintain an undervalued RMB. According to petitioners, the undervalued
RMB benefits PRC exporters. Petitioners have not sufficiently alleged
the elements necessary for the imposition of a countervailing duty and
did not support the allegation with reasonably available information.
Therefore, we do not plan to investigate the currency manipulation
program.
2. Preferential Lending to the Tire Industry
Petitioners allege that state-owned commercial banks must be under
directives from the GOC to give preferential loans to the tire
industry. Petitioners failed to demonstrate that such loans could be
specific to the tire industry.
3. Grants to the Tire Industry for Land-Usage Fees
Petitioners allege that the GOC offers grants to Chinese tire
manufacturers to cover land-usage fees. Petitioners did not provide any
evidence of grants to cover land usage fees specific to the tire
industry.
4. VAT Export Rebate of Prior-Stage, Cumulative Taxes
Petitioners allege that the VAT levied on capital goods in the PRC
actually constitutes a prior stage cumulative tax. Paragraph (h) of the
Illustrative List of Export Subsidies in Annex I to the WTO Subsidies
and Countervailing Measures Agreement applies to prior stage indirect
taxes and VAT systems are expressly excluded from consideration under
paragraph (h).
5. Lower VAT Rebates for Downstream Products
Petitioners allege that the GOC provides lower rebates for exports
of major inputs to tire production than it provides to exports of
tires; thus, benefitting tire production by suppressing the market for
inputs. Petitioners were unable to demonstrate that the price of inputs
(e.g., rubber) had been affected by the alleged lower export rebate.
Application of the Countervailing Duty Law to the PRC
The Department has treated the PRC as an NME country in all past
antidumping duty investigations and administrative reviews. In
accordance with section 771(18)(C)(i) of the Act, any determination
that a country is an NME country shall remain in effect until revoked
by the administering authority. See e.g., Tapered Roller Bearings and
Parts Thereof, Finished and 10 Unfinished, (TRBs) From the People's
Republic of China: Preliminary Results of 2001-2002 Administrative
Review and Partial Rescission of Review, 68 FR 7500, 7500-1 (February
14, 2003), unchanged in TRBs from the People's Republic of China: Final
Results of 2001-2002 Administrative Review, 68
[[Page 44125]]
FR 70488, 70488-89 (December 18, 2003).
In the amended preliminary determination in the investigation of
coated free sheet paper from the PRC, the Department preliminarily
determined that the current nature of the PRC economy does not create
obstacles to applying the necessary criteria in the CVD law. See Coated
Free Sheet Paper from the People's Republic of China: Amended
Preliminary Affirmative Countervailing Duty Determination, 72 FR 17484,
17486 (April 9, 2007) (CFS Preliminary Determination), and Memorandum
for David M. Spooner, Assistant Secretary for Import Administration,
``Countervailing Duty Investigation of Coated Free Sheet Paper from The
People's Republic of China--Whether the Analytic Elements of the
Georgetown Steel Opinion are Applicable to China's Present-Day
Economy,'' (March 29,2007), on file in the CRU. Therefore, because the
petitioners have provided sufficient allegations and support of their
allegations to meet the statutory criteria for initiating a
countervailing duty investigation of OTR tires from the PRC, initiation
of a CVD investigation is warranted in this case.
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 GOC. 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, as
provided for under 19 CFR 351.203(c)(2).
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 this initiation, whether there is a
reasonable indication that imports of subsidized OTR tires from the PRC
are materially injuring, or threatening 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.
Dated: July 30, 2007.
Stephen J. Claeys,
Acting Assistant Secretary for Import Administration.
Attachment--Scope of the Investigation for the Petitions Covering
Certain New Pneumatic Off-the-Road Tires From the People's Republic of
China
The products covered by the scope are new pneumatic tires designed
for off-the-road (OTR) and off-highway use, subject to exceptions
identified below. Certain OTR tires are generally designed,
manufactured and offered for sale for use on off-road or off-highway
surfaces, including but not limited to, agricultural fields, forests,
construction sites, factory and warehouse interiors, airport tarmacs,
ports and harbors, mines, quarries, gravel yards, and steel mills. The
vehicles and equipment for which certain OTR tires are designed for use
include, but are not limited to: (1) Agricultural and forestry vehicles
and equipment, including agricultural tractors,\1\ combine
harvesters,\2\ agricultural high clearance sprayers,\3\ industrial
tractors,\4\ log-skidders,\5\ agricultural implements, highway-towed
implements, agricultural logging, and agricultural, industrial, skid-
steers/mini-loaders; \6\ (2) construction vehicles and equipment,
including earthmover articulated dump products, rigid frame haul
trucks,\7\ front end loaders,\8\ dozers,\9\ lift trucks, straddle
carriers,\10\ graders,\11\ mobile cranes, compactors; and (3)
industrial vehicles and equipment, including smooth floor, industrial,
mining, counterbalanced lift trucks, industrial and mining vehicles
other than smooth floor, skid-steers/mini-loaders, and smooth floor
off-the-road counterbalanced lift trucks.\12\ The foregoing list of
vehicles and equipment generally have in common that they are used for
hauling, towing, lifting, and/or loading a wide variety of equipment
and materials in agricultural, construction and industrial settings.
The foregoing descriptions are illustrative of the types of vehicles
and equipment that use certain OTR tires, but are not necessarily all-
inclusive. While the physical characteristics of certain OTR tires will
vary depending on the specific applications and conditions for which
the tires are designed (e.g., tread pattern and depth), all of the
tires within the scope have in common that they are designed for off-
road and off-highway use. Except as discussed below, OTR tires included
in the scope of the petitions range in size (rim diameter) generally
but not exclusively from 8 inches to 54 inches. The tires may be either
tube-type or tubeless, radial or non-radial, and intended for sale
either to original equipment manufacturers or the replacement market.
The subject merchandise is currently classifiable under Harmonized
Tariff Schedule of the United States (``HTSUS'') subheadings:
4011.20.10.25, 4011.20.10.35, 4011.20.50.30, 4011.20.50.50,
4011.61.00.00, 4011.62.00.00, 4011.63.00.00, 4011.69.00.00,
4011.92.00.00, 4011.93.40.00, 4011.93.80.00, 4011.94.40.00, and
4011.94.80.00. While HTSUS subheadings are provided for convenience and
Customs purposes, our written description of the scope is dispositive.
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\1\ Agricultural tractors are four-wheeled vehicles usually with
large rear tires and small front tires that are used to tow farming
equipment.
\2\ Combine harvesters are used to harvest crops such as corn or
wheat.
\3\ Agricultural sprayers are used to irrigate agricultural
fields.
\4\ Industrial tractors are four-wheeled vehicles usually with
large rear tires and small front tires that are used to tow
industrial equipment.
\5\ A log skidder has a grappling lift arm that is used to
grasp, lift and move trees that have been cut down to a truck or
trailer for transport to a mill or other destination.
\6\ Skid-steer loaders are four-wheel drive vehicles with the
left-side drive wheels irIdependent of the right-side drive wheels
and lift arms that lie alongside the driver with the major pivot
points behind the driver's shoulders. Skid-steer loaders are used in
agricultural, construction and industrial settings.
\7\ Haul trucks, which may be either rigid frame or articulated
(i.e., able to bend in the middle) are typically used in mines,
quarries and construction sites to haul soil, aggregate, mined ore,
or debris.
\8\ Front loaders have lift arms in front of the vehicle. It can
scrape material from one location to another, carry material in its
bucket or load material into a truck or trailer.
\9\ A dozer is a large four-wheeled vehicle with a dozer blade
that is used to push large quantities of soil, sand, rubble, etc.,
typically around construction sites. They can also be used to
perform ``rough grading'' in road construction.
\10\ A straddle carrier is a rigid frame, engine-powered machine
that is used to load and offload containers from container vessels
and load them onto (or off of) tractor trailers.
\11\ A grader is a vehicle with a large blade used to create a
flat surface. Graders are typically used to perform ``finish
grading.'' Graders are commonly used in maintenance of unpaved roads
and road construction to prepare the base course onto which asphalt
or other paving material will be laid.
\12\ A counterbalanced lift truck is a rigid frame, engine-
powered machine with lift arms that has additional weight
incorporated into the back of the machine to offset or
counterbalance the weight of loads that it lifts so as to prevent
the vehicle from overturning. An example of a counterbalanced lift
truck is a counterbalanced fork lift truck. Counterbalanced lift
trucks may be designed for use on smooth floor surfaces, such as a
factory or warehouse, or other surfaces, such as construction sites,
mines, etc.
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Specifically excluded from the scope are new pneumatic tires
designed,
[[Page 44126]]
manufactured and offered for sale primarily for on-highway or on-road
use, including passenger cars, race cars, station wagons, sport utility
vehicles, minivans, mobile homes, motorcycles, bicycles, on-road or on-
highway trailers, light trucks, and trucks and buses. Such tires
generally have in common that the symbol ``DOT'' must appear on the
sidewall, certifying that the tire conforms to applicable motor vehicle
safety standards. Such excluded tires may also have the following
designations that are used by the Tire and Rim Association:
Prefix letter designations:
P--Identifies a tire intended primarily for service on
passenger cars;
LT--Identifies a tire intended primarily for service on
light trucks; and,
ST--Identifies a special tire for trailers in highway
service.
Suffix letter designations:
TR--Identifies a tire for service on trucks, buses, and
other vehicles with rims having specified rim diameter of nominal plus
0.156'' or plus 0.250'';
MH--Identifies tires for Mobile Homes;
HC--Identifies a heavy duty tire designated for use on
``HC'' 15'' tapered rims used on trucks, buses, and other vehicles.
This suffix is intended to differentiate among tires for light trucks,
and other vehicles or other services, which use a similar designation.
Example: 8R17.5 LT, 8R17.5 HC;
LT--Identifies light truck tires for service on trucks,
buses, trailers, and multipurpose passenger vehicles used in nominal
highway service; and
MC--Identifies tires and rims for motorcycles.
The following types of tires are also excluded from the scope:
Pneumatic tires that are not new, including recycled or retreaded tires
and used tires; non-pneumatic tires, including solid rubber tires;
tires of a kind used on aircraft, all-terrain vehicles, and vehicles
for turf, lawn and garden, golf and trailer applications; and, tires of
a kind used for mining and construction vehicles and equipment that
have a rim diameter equal to or exceeding 39 inches. Such tires may be
distinguished from other tires of similar size by the number of plies
that the construction and mining tires contain (minimum of 16) and the
weight of such tires (minimum 1500 pounds).
[FR Doc. 07-3833 Filed 8-6-07; 8:45 am]
BILLING CODE 3510-DS-M