2023-10779. Certain Freight Rail Couplers and Parts Thereof From the People's Republic of China: Final Affirmative Countervailing Duty Determination and Final Affirmative Critical Circumstances Determination, In Part

AGENCY:

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

SUMMARY:

The U.S. Department of Commerce (Commerce) determines that countervailable subsidies are being provided to producers and exporters of certain freight rail couplers and parts thereof (freight rail couplers) from the People's Republic of China (China) during the period of investigation January 1, 2021, through December 31, 2021.

DATES:

Applicable May 19, 2023.

FOR FURTHER INFORMATION CONTACT:

Terre Keaton Stefanova or Paul Gill, AD/CVD Operations, Office IX, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: [phone] or (202) 482–5673, respectively.

SUPPLEMENTARY INFORMATION:

Background

On March 3, 2023, Commerce published the Preliminary Determination of this investigation in the Federal Register .^[1] We invited interested parties to comment on the Preliminary Determination. In March 2023, we received comments from Strato Inc. (Strato) and Wabtec Corporation (Wabtec), U.S. importers of freight rail couplers from China.^[2] On April 6, 2023, we received rebuttal comments from the Coalition of Freight Coupler Producers (the petitioner).^[3] For a complete description of the events that followed the Preliminary Determination, see the Issues and Decision Memorandum.^[4] 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 https://access.trade.gov. In addition, a complete version of the Issues and Decision Memorandum can be accessed directly at https://access.trade.gov/​public/​FRNoticesListLayout.aspx.

Period of Investigation

The period of investigation is January 1, 2021, through December 31, 2021.

Scope of the Investigation

The products covered by this investigation are freight rail couplers from China. For a complete description of the scope of this investigation, see Appendix I.

Scope Comments

During the course of this investigation and the concurrent less-than-fair value investigations of freight rail couplers from China and Mexico, Commerce received scope comments from interested parties. Commerce issued a Preliminary Scope Memorandum to address these comments and set aside a period of time for parties to address scope issues in scope case and rebuttal briefs.^[5] We received comments from interested parties on the Preliminary Scope Memorandum, which we address in the Final Scope Memorandum.^[6] As a result of these comments, we made certain changes to the scope of these investigations from that published in the Preliminary Determination. See Appendix I.

Final Affirmative Determination of Critical Circumstances, In Part

In the Preliminary Determination, Commerce preliminarily determined, pursuant to section 703(e)(c)(1) of the Tariff Act of 1930, as amended (the Act), that critical circumstances exist for Chongqing Tongyao Transportation Equipment Co. (Chongqing Tongyao), Qingdao Sanheshan Precision Casting Co., Ltd. (Qingdao Sanheshan), the non-responsive companies,^[7] and all other producers and/or exporters.^[8] For this final determination, we continue to find that critical circumstances exist for Chongqing Tongyao, Qingdao Sanheshan, and the non-responsive companies, in accordance with section 705(a)(2) of the Act. However, for all other producers and/or exporters, we now find that we are unable to make a determination of whether there were massive imports of the subject merchandise over a relatively short period. Therefore, we do not find that critical circumstances exist with respect to all other producers and/or exporters. For the analysis of critical circumstances for the final determination, see Issues and Decision Memorandum at Comment 1.

Analysis of Comments Received

The issues raised in comments that were submitted by parties in this investigation are addressed in the Issues and Decision Memorandum. A list of the issues addressed in the Issues and Decision Memorandum is attached to this notice at Appendix II.

Changes Since the Preliminary Determination

Based on our analysis of the comments received from interested parties, we made certain changes to our preliminary critical circumstances determination, as noted above. For a discussion of these changes, see the Issues and Decision Memorandum. However, as no interested party submitted comments on the subsidy rates selected in the Preliminary Determination, we made no changes to the subsidy rates assigned to Chongqing Tongyao, Qingdao Sanheshan, and the non-responsive companies.

Analysis of Subsidy Programs—Adverse Facts Available (AFA)

For the purposes of this final determination, Commerce relied solely on facts available pursuant to section 776 of the Act, because neither the Government of China nor the mandatory respondents, Chongqing Tongyao and Qingdao Sanheshan, participated in this investigation. Furthermore, as stated in our Preliminary Determination, the non-responsive companies also withheld necessary information that Commerce requested from them, failed to provide information within the deadlines established, and significantly impeded this proceeding by failing to respond to Commerce's quantity and value questionnaire.^[9] Therefore, because the mandatory respondents, the non-responsive companies, and the Government of China did not cooperate to the best of their abilities in responding to our requests for information in this investigation, we drew adverse inferences in selecting from among the facts otherwise available, in accordance with sections 776(a)–(b) of the Act. We received no comments from interested parties regarding our application of AFA to determine the countervailability of, and rates for, the subsidy programs at issue in this investigation. Consistent with the Preliminary Determination, we continue to apply AFA to determine the appropriate subsidy rates for this investigation. A detailed discussion of our application of AFA is provided in the Preliminary Determination.^[10]

All-Others Rate

As discussed in the Preliminary Determination, Commerce based the selection of the all-others rate on the countervailable subsidy rate established for the mandatory respondents, in accordance with 703(d) of the Act.^[11] Consistent with section 705(c)(5)(A)(ii) of the Act, we made no changes to the selection of the all-others rate for the final determination.

Final Determination

Commerce determines that the following estimated countervailable subsidy rates exist:

Company	Subsidy Rate (percent ad valorem)
Chongqing Changzheng Heavy Industry Co., Ltd	265.99
Chongqing Tongyao Transportation Equipment Co	265.99
CRRC Qiqihar Co., Ltd	265.99
NanJing Zhongsheng Rolling Stock Components Co. Ltd	265.99
Ningbo Minghui Metal Technology Co., Ltd	265.99
Qingdao Lianshan Casting Co., Ltd	265.99
Qingdao Sanheshan Precision Casting Co., Ltd	265.99
Shaanxi Haiduo Railway Technology Development Co., Ltd	265.99
Shanghai Voith Xiagujin Chuang Coupler Technology Co., Ltd	265.99
All Others	265.99

Continuation of Suspension of Liquidation

In accordance with section 705(c)(4)(A) of the Act, Commerce intends to instruct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of entries of subject merchandise, as described in Appendix I of this notice, for Chongqing Tongyao, Qingdao Sanheshan, and the non-responsive companies, entered, or withdrawn from warehouse, for consumption on or after December 3, 2022, which is 90 days prior to the date of publication of the Preliminary Determination in the Federal Register . However, for all other producers and/or exporters, Commerce intends to instruct CBP to continue to suspend liquidation of entries of subject merchandise, as described in Appendix I of this notice, entered, or withdrawn from warehouse, for consumption on or after March 3, 2023, which is the date of publication of the Preliminary Determination in the Federal Register , at the all-others rate indicated above. These suspension of liquidation instructions will remain in effect until further notice.

Because we now find that critical circumstances do not exist for all other producers and/or exporters, we will direct CBP to terminate the retroactive suspension of liquidation ordered at the Preliminary Determination and release any cash deposits that were required prior to March 3, 2022, the date of publication of the Preliminary Determination in the Federal Register , consistent with section 705(c)(3) of the Act.

If the U.S. International Trade Commission (ITC) issues a final affirmative injury determination, we intend to issue a countervailing duty order and continue to require a case deposit of estimated countervailing duties for such entries of subject merchandise in the amounts indicated above, in accordance with 706(a) of the Act. If the ITC issues a final affirmative injury determination but a final negative determination of critical circumstances, we will instruct CBP to liquidate entries prior to the date of publication of the Preliminary Determination without regard to duties, and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or canceled. If the ITC determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated, and all estimated duties deposited as a result of the suspension of liquidation will be refunded or canceled.

ITC Notification

In accordance with section 705(d) of the Act, we intend to notify the ITC of our final affirmative determination that countervailable subsidies are being provided to producers and exporters of freight rail couplers from China. Because the final determination in this proceeding is affirmative, in accordance with section 705(b) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of freight rail couplers from China no later than 45 days after our final determination.

If the ITC determines that material injury or threat of material injury does not exist, this proceeding will be terminated and all cash deposits will be refunded or canceled, as Commerce determines to be appropriate. If the ITC determines that such injury does exist, Commerce intends to issue a countervailing duty order directing CBP to assess, upon further instruction by Commerce, countervailing duties on all imports of the subject merchandise that are entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation, as discussed above in the “Continuation of Suspension of Liquidation” section.

Notification Regarding Administrative Protective Order (APO)

In the event that 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 destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return/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 which is subject to sanction.

Notification to Interested Parties

This determination is issued and published pursuant to sections 705(d) and 777(i) of the Act, and 19 CFR 351.205(c).

Dated: May 15, 2023.

Lisa W. Wang,

Assistant Secretary for Enforcement and Compliance.

Appendix I

Scope of the Investigation

The scope of this investigation covers certain freight railcar couplers (also known as “fits” or “assemblies”) and parts thereof. Freight railcar couplers are composed of two main parts, namely knuckles and coupler bodies but may also include other items ( e.g., coupler locks, lock lift assemblies, knuckle pins, knuckle throwers, and rotors). The parts of couplers that are covered by the investigation include: (1) E coupler bodies, (2) E/F coupler bodies, (3) F coupler bodies, (4) E knuckles, and (5) F knuckles, as set forth by the Association of American Railroads (AAR). The freight rail coupler parts ( i.e., knuckles and coupler bodies) are included within the scope of the investigation when imported separately. Coupler locks, lock lift assemblies, knuckle pins, knuckle throwers, and rotors are covered merchandise when imported in an assembly but are not covered by the scope when imported separately.

Subject freight railcar couplers and parts are included within the scope whether finished or unfinished, whether imported individually or with other subject or nonsubject parts, whether assembled or unassembled, whether mounted or unmounted, or if joined with nonsubject merchandise, such as other nonsubject parts or a completed railcar. Finishing includes, but is not limited to, arc washing, welding, grinding, shot blasting, heat treatment, machining, and assembly of various parts. When a subject coupler or subject parts are mounted on or to other nonsubject merchandise, such as a railcar, only the coupler or subject parts are covered by the scope.

The finished products covered by the scope of this investigation meet or exceed the AAR specifications of M–211, “Foundry and Product Approval Requirements for the Manufacture of Couplers, Coupler Yokes, Knuckles, Follower Blocks, and Coupler Parts” and/or AAR M–215 “Coupling Systems,” or other equivalent domestic or international standards (including any revisions to the standard(s)).

The country of origin for subject couplers and parts thereof, whether fully assembled, unfinished or finished, or attached to a railcar, is the country where the subject coupler parts were cast or forged. Subject merchandise includes coupler parts as defined above that have been further processed or further assembled, including those coupler parts attached to a railcar in third countries. Further processing includes, but is not limited to, arc washing, welding, grinding, shot blasting, heat treatment, painting, coating, priming, machining, and assembly of various parts. The inclusion, attachment, joining, or assembly of nonsubject parts with subject parts or couplers either in the country of manufacture of the in-scope product or in a third country does not remove the subject parts or couplers from the scope.

The couplers that are the subject of this investigation are currently classifiable in the Harmonized Tariff Schedule of the United States (HTSUS) statistical reporting number 8607.30.1000. Unfinished subject merchandise may also enter under HTSUS statistical reporting number 7326.90.8688. Subject merchandise attached to finished railcars may also enter under HTSUS statistical reporting numbers 8606.10.0000, 8606.30.0000, 8606.91.0000, 8606.92.0000, 8606.99.0130, 8606.99.0160, or under subheading 9803.00.50. Subject merchandise may also be imported under HTSUS statistical reporting number 7325.99.5000. These HTSUS subheadings are provided for convenience and customs purposes only; the written description of the scope of this investigation is dispositive.

Appendix II

List of Topics Discussed in the Issues and Decision Memorandum

I. Summary

II. Background

III. Final Critical Circumstances Determination

IV. Analysis of Comments

Comment 1: Whether Commerce Should Reverse its Preliminary Affirmative Critical Circumstances Determinations

Comment 2: Whether Commerce Should Terminate the Investigation

V. Recommendation

Footnotes

1.   See Certain Freight Rail Couplers and Parts Thereof from the People's Republic of China: Preliminary Affirmative Countervailing Duty Determination and Preliminary Affirmative Critical Circumstances Determination,88 FR 13425 (March 3, 2023) ( Preliminary Determination), and accompanying Preliminary Decision Memorandum (PDM).

2.   See Strato's Letter, “Strato Administrative Case Brief,” date March 23, 2023; and Wabtec's Letter, “Case Brief for Final Negative Countervailing Duty Determination and Final Negative Critical Circumstances Determination,” dated March 23, 2023.

3.   See Petitioner's Letter, “Petitioner's Rebuttal Brief,” dated April 6, 2023.

4.   See Memorandum, “Issues and Decision Memorandum for the Final Determination in the Countervailing Duty Investigation of Certain Freight Rail Couplers and Parts Thereof from the People's Republic of China,” dated concurrently with, and hereby adopted by, this notice (Issues and Decision Memorandum).

5.   See Memorandum, “Preliminary Scope Decision Memorandum,” dated March 28, 2023 (Preliminary Scope Memorandum).

6.   See Memorandum, “Final Scope Decision Memorandum,” dated concurrently with this notice (Final Scope Memorandum).

7.  The non-responsive companies are: (1) Chongqing Changzheng Heavy Industry Co., Ltd.; (2) CRRC Qiqihar Co., Ltd.; (3) NanJing Zhongsheng Rolling Stock Components Co. Ltd.; (4) Ningbo Minghui Metal Technology Co., Ltd.; (5) Qingdao Lianshan Casting Co., Ltd.; (6) Shaanxi Haiduo Railway Technology Development Co., Ltd.; and (7) Shanghai Voith Xiagujin Chuang Coupler Technology Co., Ltd.

8.   See Preliminary Determination, 88 FR at 13426.

9.   See Preliminary Determination PDM at 7.

10.   See Preliminary Determination PDM at 4–14.

11.   See Preliminary Determination, 88 FR at 13426.