Antidumping Duty Investigation of Certain Passenger Vehicle and Light Truck Tires From the People's Republic of China: Final Determination of Sales at Less Than Fair Value and Final Affirmative Determination of Critical Circumstances, In Part

AGENCY:

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

DATES:

Effective date June 18, 2015.

SUMMARY:

The Department of Commerce (the Department) determines that imports of certain passenger vehicle and light truck tires (passenger tires) from the People's Republic of China (PRC) are being, or are likely to be, sold in the United States at less than fair value (LTFV), as provided in section 735 of the Tariff Act of 1930, as amended (the Act). The final weighted-average dumping margins for the investigation on passenger tires from the PRC are listed below in the “Final Determination” section of this notice.

FOR FURTHER INFORMATION CONTACT:

Toni Page, Lingjun Wang, or Jun Jack Zhao, AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-1398, (202) 482-2316, or (202) 482-1396, respectively.

SUPPLEMENTARY INFORMATION:

Background

On January 27, 2015, the Department published its affirmative preliminary determination that passenger tires from the PRC are being, or are likely to be, sold in the United States at less than fair value, as provided by section 733 of the Act. The following events occurred since the preliminary determination. On March 26, 2015, we published an amended preliminary determination in the Federal Register. From February 2, 2015 to February 13, 2015, and March 9, 2015 to March 13, 2015, the Department conducted sales and factors-of-production verifications of the two mandatory respondents: Giti Tire Global Trading Pte. Ltd., and its affiliates, Giti Tire (USA) Ltd., Giti Radial Tire (Anhui) Company Ltd., Giti Tire (Fujian) Company Ltd., Giti Tire (Hualin) Company Ltd. (collectively, the GITI companies); and Sailun Group Co. and its affiliates, Sailun Tire International Corp., Shandong Jinyu Industrial Co., Ltd., Jinyu International Holding Co., Limited, Seatex International Inc., Dynamic Tire Corp., Husky Tire Corp., Seatex PTE. Ltd., (collectively, the Sailun Group). The Department issued verification reports for the GITI companies on March 20, and March 27, 2015; and for Sailun Group on March 20, and March 30, 2015, respectively. On April 10, 2015, Petitioner, the GITI companies, Sailun Group, and a number of separate rate applicants filed case briefs. On April 20, 2015, parties filed rebuttal briefs. On April 28, 2015, the Department held a hearing with respect to this investigation. Interested parties also filed case briefs and rebuttal briefs on the scope related issues on April 6, and April 13, respectively. On May 14, 2015, the Department held a separate hearing on scope related issues to this investigation.

Period of Investigation

The period of investigation (POI) is October 1, 2013, through March 31, 2014.

Scope of the Investigation and Scope Comments

The products covered by this investigation are certain passenger tires from the PRC. The products covered by the investigation are currently classified under the following Harmonized Tariff Schedule of the United States (HTSUS) subheadings: 4011.10.10.10, 4011.10.10.20, 4011.10.10.30, 4011.10.10.40, 4011.10.10.50, 4011.10.10.60, 4011.10.10.70, 4011.10.50.00, 4011.20.10.05, and 4011.20.50.10. Tires meeting the scope description may also enter under the following HTSUS subheadings: 4011.99.45.10, 4011.99.45.50, 4011.99.85.10, 4011.99.85.50, 8708.70.45.45, 8708.70.45.60, 8708.70.60.30, 8708.70.60.45, and 8708.70.60.60. While HTSUS subheadings are provided for convenience and for customs purposes, the written description of the subject merchandise is dispositive.

The Department received comments regarding the scope of this investigation from numerous interested parties, which we have summarized and addressed in the accompanying Issues and Decision Memorandum. As explained in the Issues and Decision Memorandum, to facilitate the scope's administrability and enforcement, we have clarified the scope language such that “N” speed-rated specialty trailer tires that meet certain requirements are excluded from the scope. For a complete description of the scope of the investigation, see Appendix II to this notice.

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to this investigation are addressed in the Issues and Decision Memorandum accompanying this notice, which is hereby adopted by this notice. A list of the issues which the parties raised and to which the Department responded in the memorandum appears in Appendix I of this notice. The Issues and Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at http://access.trade.gov and is available to all parties in the Central Records Unit, Room B8024 of the main Department of Commerce building. In addition, a complete version of the Issues and Decision Memorandum can be accessed directly at http://enforcement.trade.gov/frn/. The signed and electronic versions of the memorandum are identical in content.

Changes Since the Amended Preliminary Determination

Based on our review and analysis of the comments received from parties, and minor corrections presented at verification, we made certain changes to the GITI companies' and the Sailun Group's margin calculations since the Amended Preliminary Determination. For a discussion of these changes, see the Issues and Decision Memorandum and the Final Analysis Memoranda, all dated concurrently with this notice.

Combination Rates

In the Initiation Notice, the Department stated that it would calculate combination rates for the respondents that are eligible for a separate rate in this investigation. Policy Bulletin 05.1 sets forth this practice.

Final Determination

The Department determines that the estimated final weighted-average dumping margins are as follows:

Disclosure

We intend to disclose to parties the calculations performed in this proceeding within five days of any public announcement of this notice in accordance with 19 CFR 351.224(b).

Final Affirmative Determination of Critical Circumstances, In Part

We continue to find that critical circumstances do not exist for the GITI companies and the Sailun Group. In addition, we found that critical circumstances do not exist for the separate rate companies, while they do exist for the PRC-wide entity. A discussion of our determination can be found in the Issues and Decision Memorandum at the section, “Critical Circumstances.”

Continuation of Suspension of Liquidation

As noted above, for this final determination, the Department found that critical circumstances exist with respect to imports of the subject merchandise from the PRC-wide entity. Therefore, in accordance with section 735(c)(4)(A) of the Act, we will instruct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all imports of the merchandise subject to the investigation from the PRC-wide entity, that were entered or withdrawn from warehouse, for consumption on or after October 29, 2014, 90 days prior to publication of the Preliminary Determination in the Federal Register, and require a cash deposit for such entries as noted below.

Because we did not find that critical circumstances exist with respect to the GITI companies, the Sailun Group, and the separate rate companies, in accordance with section 735(c)(1)(B) of the Act, we will instruct CBP to continue to suspend liquidation of all appropriate entries of passenger tires from the PRC, as described in the “Scope of the Investigation and Scope Comments” section of this notice and which were entered, or withdrawn from warehouse, for consumption on or after January 27, 2015, the date of publication of the Preliminary Determination in the Federal Register.

Pursuant to 19 CFR 351.205(d), we will instruct CBP to require a cash deposit for all suspended entries at an ad valorem rate equal to the weighted-average amount by which normal value exceeds U.S. price, as follows: (1) The cash deposit rate for the exporter/producer combination listed in the table above will be the rate identified for that combination in the table adjusted where appropriate for export subsidies and estimated domestic subsidy pass-through; (2) for all combinations of PRC exporters/producers of merchandise under consideration that have not received their own separate rate above, the cash-deposit rate will be the cash deposit rate established for the PRC-wide entity, 87.99 percent, adjusted where appropriate for export subsidies and estimated domestic subsidy pass-through; and (3) for all non-PRC exporters of the merchandise under consideration which have not received their own separate rate above, the cash-deposit rate will be the cash deposit rate applicable to the PRC exporter/producer combination that supplied that non-PRC exporter. These suspension of liquidation and cash deposit instructions will remain in effect until further notice.

As stated previously, we will adjust cash deposit rates by the amount of export subsidies, where appropriate. In the companion CVD investigation, GITI companies received a calculated export subsidy rate of 15.03 percent while the all-others companies received a calculated export subsidy rate of 13.53 percent. Therefore, we will offset GITI companies' cash deposit rate of 29.97 percent by 15.03 percent, while the Sailun Group's and the separate rate companies' cash deposit rates of 14.35 percent and 25.30 percent, respectively, will be reduced by 13.53 percent as these companies were considered “all-others” companies in the companion CVD case. For Cooper Tire & Rubber Company, Cooper (Kunshan) Tire Co., Ltd., and Cooper Chengshan (Shandong) Tire Co., Ltd. (collectively, Cooper), another mandatory respondent in the companion CVD investigation, we will offset its cash deposit rate of 25.30 percent by its cacluated export subsidy rate of 11.13 percent. Finally, we are adjusting the cash deposit rate applicable to the PRC-wide entity for export subsidies, by the lowest export subsidy rate determined for any party in the companion CVD proceeding, which is 11.13 percent.

Pursuant to 777A(f) of the Act, we are also adjusting final cash deposit rates for estimated domestic subsidy pass-through, where appropriate. We will adjust the Sailun Group's, Cooper's and the separate rate companies' cash deposit rates by 3.59 percent to account for estimated domestic subsidy pass-through. We are also adjusting GITI companies' and the PRC-wide entity's cash deposit rate by 0.40 percent to account for estimated domestic subsidy pass-through.

International Trade Commission Notification

In accordance with section 735(d) of the Act, we will notify the International Trade Commission (ITC) of the final affirmative determination of sales at less than fair value. Because the final determination in this proceeding is affirmative, the ITC will make its final determination, in accordance with section 735(b)(2) of the Act, as to whether the domestic industry in the United States is materially injured, threatened with material injury, or the establishment of an industry in the United States is materially retarded by reason of imports of passenger tires from the PRC, no later than 45 days after our final determination. If the ITC determines that material injury, threat of material injury, or material retardation does not exist, this proceeding will be terminated and all securities posted will be refunded or canceled. If the ITC determines that such injury or material retardation does exist, then the Department will issue an antidumping duty order directing CBP to assess, upon further instruction by the Department, antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation.

Notification Regarding Administrative Protective Orders (APO)

In the event the ITC issues a final negative injury determination, this notice will serve as the only reminder to parties subject to an APO of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and terms of an APO is a violation subject to sanction.

This determination and notice are issued and published pursuant to sections 735(d) and 777(i)(1) of the Act.

Appendix I

Outline of the Issues and Decision Memorandum

I. Summary

II. Background

III. Scope of the Investigation

IV. Use of Adverse Facts Available

V. Critical Circumstances

VI. Margin Calculations

VII. Discussion of the Issues

VIII. Recommendation

List of Topics Discussed in the Issues and Decision Memorandum

Comment 1: Whether to Modify the Language of the Exclusion on Special Trailer (ST) Tires

Comment 2: Whether Slingshot Tires Are Included in the Scope

Comment 3: Critical Circumstances

Comment 4: Whether Sailun Group Should Receive a Double Remedy Adjustment

Comment 5: Whether the Department Applied the Appropriate Double Remedy Adjustment to Cooper

Comment 6: Whether GITI Companies Should Receive a Double Remedy Adjustment

Comment 7: Analysis of the Pass-through Rate of the Double Remedy Adjustment

Comment 8: Whether to Grant Sailun Group an Offset for By-Products

Comment 9: Whether to Include Goodyear Thailand's Financial Statements in the Calculation of the Financial Ratios

Comment 10: Whether to Include Export Expenses in the SG&A Ratios for SR Tyres and Hihero

Comment 11: Whether to Include All Labor Related Costs in the Denominator of the Financial Ratios Calculation

Comment 12: Selection of Surrogate Country

Comment 13: Valuation of Labor

Comment 14: Valuation of Market Economy Purchases

Comment 15: Valuation of Truck Freight

Comment 16: Calculation of Market Economy Purchases

Comment 17: Valuation of Brokerage & Handling

Comment 18: Valuation of GITI Companies' Steam

Comment 19: Valuation of Sailun Group's Steam

Comment 20: Valuation of GITI Companies' Ocean Freight

Comment 21: Valuation of Sailun Group's Ocean Freight

Comment 22: Valuation of Sailun Group's U.S. Inland Freight

Comment 23: Valuation of Sailun Group's Reclaimed Rubber

Comment 24: Sailun Group's Name Change

Comment 25: Cooper's Name Change

Comment 26: Shandong Yongtai Chemical Co., Ltd.'s (Yongtai) Name Change

Comment 27: Application of AFA to all Subject Merchandise Produced by Yongsheng

Comment 28: Whether the Department Properly Accounted for the Weighted-Average Price of Certain Market Economy Purchases

Comment 29: Whether the Department Made All Appropriate Adjustments in the Calculation of Sailun Group's U.S. Price

Comment 30: Whether the Department Should Apply AFA to GITI Companies' Unreported Sales Submitted as a Minor Correction at Verification

Comment 31: Whether the Department Should Use the GITI Companies' Revised Databases that Include All the Minor Corrections

Comment 32: Whether the Department Should Reduce the Sailun Group's U.S. Prices by the Amount of the Irrecoverable VAT

Comment 33: Whether the Irrecoverable VAT Percentage Should Be Applied to the FOB China Value

Comment 34: Whether the Department Correctly Reduced the U.S. Price by the Amount of the Irrecoverable VAT

Comment 35: The Department's Authority to Apply a PRC-Wide Rate

Comment 36: PRC Government Control of the Economy

Comment 37: Guangzhou Wanli Tire Trading Co. Ltd.'s (Wanli) Separate Rate Status

Comment 38: Guizhou Tyre Import and Export Co., Ltd.'s (GTCIE) Separate Rate Status

Comment 39: Double Coin Holdings' (Double Coin) Separate Rate Status

Comment 40: Shaanxi Yanchang Petroleum Group Rubber Co., Ltd.'s (Shaanxi) Separate Rate Status

Comment 41: Sichuan Tyre and Rubber Co. Ltd.'s (Sichuan Tyre) Separate Rate Status

Comment 42: Zhongce Rubber Group Company Limited's (Zhongce) Separate Rate Status

Comment 43: Shandong Anchi Tyres Co., Ltd.'s (Anchi) Separate Rate Status

Comment 44: America Business Co., Ltd.'s (America Business) Separate Rate Status

Comment 45: Highpoint Trading, Ltd., (Highpoint) and Federal Tire (Jiangxi), Ltd. (Jiangxi) Separate Rate Status

Comment 46: Qingdao Jinhaoyang International Co., Ltd.'s (Jinhaoyang) Separate Rate Status

Comment 47: Qingdao Au-Shine Group Co., Limited's (Au-Shine) Separate Rate Status

Comment 48: Qingdao Fuyingxiang Imp. & Exp. Co., Ltd.'s (Fuyingxiang) Separate Rate Status

Comment 49: Shandong Changfeng Tyres Co., Ltd.'s (Changfeng) Separate Rate Status

Comment 50: Shandong Fengyuan Tire Manufacturing Co., Ltd.'s (Fengyuan) Separate Rate Status

Comment 51: Longkou Xinglong Tyre Co., Ltd.'s (Longkou) Separate Rate Status

Comment 52: Liaoning Permanent Tyre Co., Ltd.'s (Permanent) Separate Rate Status

Comment 53: Qingdao Fullrun Tyre Corp. Ltd.'s (Fullrun) Separate Rate Status

Comment 54: Zhejiang Qingda Rubber Co., Ltd.'s (Qingda) Separate Rate Status

Appendix II

Scope of the Investigation

The scope of this investigation is passenger vehicle and light truck tires. Passenger vehicle and light truck tires are new pneumatic tires, of rubber, with a passenger vehicle or light truck size designation. Tires covered by this investigation may be tube-type, tubeless, radial, or non-radial, and they may be intended for sale to original equipment manufacturers or the replacement market.

Subject tires have, at the time of importation, the symbol “DOT” on the sidewall, certifying that the tire conforms to applicable motor vehicle safety standards. Subject tires may also have the following prefixes or suffix in their tire size designation, which also appears on the sidewall of the tire:

Prefix designations:

P—Identifies a tire intended primarily for service on passenger cars

LT—Identifies a tire intended primarily for service on light trucks

Suffix letter designations:

LT—Identifies light truck tires for service on trucks, buses, trailers, and multipurpose passenger vehicles used in nominal highway service.

All tires with a “P” or “LT” prefix, and all tires with an “LT” suffix in their sidewall markings are covered by this investigation regardless of their intended use.

In addition, all tires that lack a “P” or “LT” prefix or suffix in their sidewall markings, as well as all tires that include any other prefix or suffix in their sidewall markings, are included in the scope, regardless of their intended use, as long as the tire is of a size that is among the numerical size designations listed in the passenger car section or light truck section of the Tire and Rim Association Year Book, as updated annually, unless the tire falls within one of the specific exclusions set out below.

Passenger vehicle and light truck tires, whether or not attached to wheels or rims, are included in the scope. However, if a subject tire is imported attached to a wheel or rim, only the tire is covered by the scope.

Specifically excluded from the scope of this investigation are the following types of tires:

(1) Racing car tires; such tires do not bear the symbol “DOT” on the sidewall and may be marked with “ZR” in size designation;

(2) new pneumatic tires, of rubber, of a size that is not listed in the passenger car section or light truck section of the Tire and Rim Association Year Book;

(3) pneumatic tires, of rubber, that are not new, including recycled and retreaded tires;

(4) non-pneumatic tires, such as solid rubber tires;

(5) tires designed and marketed exclusively as temporary use spare tires for passenger vehicles which, in addition, exhibit each of the following physical characteristics:

(a) The size designation and load index combination molded on the tire's sidewall are listed in Table PCT-1B (“T” Type Spare Tires for Temporary Use on Passenger Vehicles) of the Tire and Rim Association Year Book,

(b) the designation “T” is molded into the tire's sidewall as part of the size designation, and,

(c) the tire's speed rating is molded on the sidewall, indicating the rated speed in MPH or a letter rating as listed by Tire and Rim Association Year Book, and the rated speed is 81 MPH or a “M” rating;

(6) tires designed and marketed exclusively for specialty tire (ST) use which, in addition, exhibit each of the following conditions:

(a) The size designation molded on the tire's sidewall is listed in the ST sections of the Tire and Rim Association Year Book,

(b) the designation “ST” is molded into the tire's sidewall as part of the size designation,

(c) the tire incorporates a warning, prominently molded on the sidewall, that the tire is “For Trailer Service Only” or “For Trailer Use Only”,

(d) the load index molded on the tire's sidewall meets or exceeds those load indexes listed in the Tire and Rim Association Year Book for the relevant ST tire size, and

(e) either

(i) the tire's speed rating is molded on the sidewall, indicating the rated speed in MPH or a letter rating as listed by Tire and Rim Association Year Book, and the rated speed does not exceed 81 MPH or an “M” rating; or

(ii) the tire's speed rating molded on the sidewall is 87 MPH or an “N” rating, and in either case the tire's maximum pressure and maximum load limit are molded on the sidewall and either

(1) both exceed the maximum pressure and maximum load limit for any tire of the same size designation in either the passenger car or light truck section of the Tire and Rim Association Year Book; or

(2) if the maximum cold inflation pressure molded on the tire is less than any cold inflation pressure listed for that size designation in either the passenger car or light truck section of the Tire and Rim Association Year Book, the maximum load limit molded on the tire is higher than the maximum load limit listed at that cold inflation pressure for that size designation in either the passenger car or light truck section of the Tire and Rim Association Year Book;

(7) tires designed and marketed exclusively for off-road use and which, in addition, exhibit each of the following physical characteristics:

(a) The size designation and load index combination molded on the tire's sidewall are listed in the off-the-road, agricultural, industrial or ATV section of the Tire and Rim Association Year Book,

(b) in addition to any size designation markings, the tire incorporates a warning, prominently molded on the sidewall, that the tire is “Not For Highway Service” or “Not for Highway Use”,

(c) the tire's speed rating is molded on the sidewall, indicating the rated speed in MPH or a letter rating as listed by the Tire and Rim Association Year Book, and the rated speed does not exceed 55 MPH or a “G” rating, and

(d) the tire features a recognizable off-road tread design.

The products covered by the investigation are currently classified under the following Harmonized Tariff Schedule of the United States (HTSUS) subheadings: 4011.10.10.10, 4011.10.10.20, 4011.10.10.30, 4011.10.10.40, 4011.10.10.50, 4011.10.10.60, 4011.10.10.70, 4011.10.50.00, 4011.20.10.05, and 4011.20.50.10. Tires meeting the scope description may also enter under the following HTSUS subheadings: 4011.99.45.10, 4011.99.45.50, 4011.99.85.10, 4011.99.85.50, 8708.70.45.45, 8708.70.45.60, 8708.70.60.30, 8708.70.60.45, and 8708.70.60.60. While HTSUS subheadings are provided for convenience and for customs purposes, the written description of the subject merchandise is dispositive.