[Federal Register Volume 60, Number 164 (Thursday, August 24, 1995)]
[Notices]
[Pages 44014-44017]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21069]



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DEPARTMENT OF COMMERCE
[C-401-401]


Certain Carbon Steel Products From Sweden; Preliminary Results of 
Countervailing Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of preliminary results of countervailing duty 
administrative review.

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SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the countervailing duty order on certain 
carbon steel products from Sweden. We preliminarily determine the net 
subsidy to be 2.98 percent ad valorem for the period January 1, 1993 
through December 31, 1993. If the final results remain the same as 
these preliminary results of administrative review, we will instruct 
the U.S. Customs Service to assess countervailing duties as indicated 
above. Interested parties are invited to comment on these preliminary 
results.

EFFECTIVE DATE: August 24, 1995.

FOR FURTHER INFORMATION CONTACT: Stephanie Moore or Christopher 
Jimenez, Office of Countervailing Compliance, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; 
telephone: (202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

    On October 11, 1985, the Department published in the Federal 
Register (50 FR 41547) the countervailing duty order on certain carbon 
steel products from Sweden. On October 7, 1994, the Department 
published a notice of ``Opportunity to Request an Administrative 
Review'' (59 FR 5166) of this countervailing duty order. We received a 
timely request for review from SSAB Svenskt Stal AB (SSAB), the sole 
known producer/exporter of the subject merchandise during the period of 
review (POR).
    We initiated the review, covering the period January 1, 1993 
through December 31, 1993, on November 14, 1994 (59 FR 56459). We 
conducted verification of the questionnaire responses from March 27, 
1995 through March 31, 1995. The review covers SSAB and nine programs.

Applicable Statute and Regulations

    The Department is conducting this administrative review in 
accordance with section 751(a) of the Tariff Act of 1930, as amended 
(the Act). Unless otherwise indicated, all citations to the GATT 
Subsidies Code, the U.S. statute, and to the Department's regulations 
are in reference to the provisions as they existed on December 31, 
1994. References to the Department's Countervailing Duties; Notice of 
Proposed Rulemaking and Request for Public Comments, (54 FR 23366; May 
31, 1989) (Proposed Regulations), are provided solely for further 
explanation of the Department's countervailing duty practice. Although 
the Department has withdrawn the particular rulemaking proceeding 
pursuant to which the Proposed Regulations were issued, the subject 
matter of these regulations is being considered in connection with an 
ongoing rulemaking proceeding which, among other things, is intended to 
conform the Department's regulations to the Uruguay Round Agreements 
Act. See 60 FR 80; Jan. 3, 1995.

Scope of the Review

    Imports covered by this review are shipments of certain carbon 
steel products from Sweden. These products include cold-rolled carbon 
steel, flat-rolled products, whether or not corrugated or crimped: 
whether or not pickled, not cut, not pressed and not stamped to non-
rectangular shape; not coated or pleated with metal and not clad; over 
12 inches in width and of any thickness; whether or not in coils. 
During the review period, such merchandise was classifiable under the 
Harmonized Tariff Schedule (HTS) item numbers 7209.11.0000, 
7209.12.0000, 7209.13.0000, 7209.21.0000, 7209.22.0000, 7209.23.0000, 
7209.24.5000, 7209.31.0000, 7209.32.0000, 7209.33.0000, 7209.34.0000, 
7209.41.0000, 7209.43.0000, 7209.44.0000, 7209.90.0000, 7211.30.5000, 
7211.41.7000 and 7211.49.5000. 

[[Page 44015]]


Calculation Methodology for Assessment and Cash Deposit Purposes

    Because SSAB is the only manufacturer/exporter of the subject 
merchandise to the United States, SSAB's net subsidy rate is also the 
country-wide rate.
Privatization

    SSAB was partially privatized twice, in 1987 and in 1989. In the 
Final Affirmative Countervailing Duty Determinations: Certain Steel 
Products from Sweden (58 FR 37385; July 9, 1993) (Final Determination), 
the Department found that SSAB had received countervailable subsidies 
prior to these partial privatizations. Further, the Department found 
that a private party purchasing all or part of a government-owned 
company can repay prior subsidies on behalf of the company as part or 
all of the sales price (see the General Issues Appendix appended to the 
Final Countervailing Duty Determination; Certain Steel Products from 
Austria (58 FR 37262; July 9, 1993) (General Issues Appendix)). 
Therefore, to the extent that a portion of the sales price paid for a 
privatized company can be reasonably attributed to prior subsidies, 
that portion of those subsidies will be extinguished.
    To calculate the subsidies remaining with SSAB after each partial 
privatization, we performed the following calculations. We first 
calculated the net present value (NPV) of the future benefit stream of 
the subsidies at the time of the sale of the shares. We then multiplied 
the NPV by the percentage of shares the government retained after the 
sale to derive the amount of subsidies not affected by privatization. 
Next, we estimated the portion of the purchase price which represents 
repayment of prior subsidies in accordance with the methodology 
described in the ``Privatization'' section of the General Issues 
Appendix (58 FR 37259). This amount was then subtracted from the NPV, 
and the result was divided by the NPV to calculate the ratio 
representing the amount of subsidies remaining with SSAB after each 
partial privatization.
    With respect to sales of ``productive units'' by SSAB, we have 
followed the same methodology used in the Final Determination (58 FR 
37385). In accordance with that methodology, a portion of the price 
paid when a productive unit is sold is allocable to repayment of 
subsidies received in prior years by the seller of the productive unit. 
The subsidies allocated to the POR have been reduced for all of the 
programs, as described above. These subsidies were further adjusted by 
the asset value of the productive unit. For a further explanation of 
the Department's methodology regarding ``sales of productive units'' 
and these calculations, see the ``Restructuring'' section of the 
General Issues Appendix (58 FR 37265).
    To calculate the benefit provided to SSAB, we multiplied the 
benefit calculated for 1993, adjusted for sales of productive units, by 
the ratio representing the amount of subsidies remaining with SSAB 
after the partial privatization. We then divided the results by the 
company's total sales in 1993.

Analysis of Programs

I. Programs Preliminarily Found to Confer Subsidies

(1) Equity Infusion
    In 1981, the Government of Sweden (GOS) provided equity capital to 
SSAB totaling 1,125 million Swedish kronor (MSEK). Simultaneously, 
Granges, a private company and the only other shareholder at the time, 
contributed 375 MSEK. To persuade Granges to contribute this equity 
capital, the GOS guaranteed a specified sum to be paid to Granges in 
1991. Because of this arrangement, we determined that the 375 MSEK paid 
by Granges was an equity infusion provided indirectly by the GOS, 
through Granges, specifically to SSAB. See, Certain Carbon Steel 
Products from Sweden; Final Results of Countervailing Duty 
Administrative Review; (59 FR 6620; February 11, 1994) (Final Results 
Cold-Rolled) and Final Determination (58 FR 37385).
    In the Final Results Cold-Rolled (59 FR 6620) and in the Final 
Determination (58 FR 37385), we determined that SSAB was unequityworthy 
in 1981 when it received the equity infusions, and that the two equity 
infusions are therefore countervailable. There has been no new 
information or evidence of changed circumstances in this review to 
warrant reconsideration of this determination.
    In accordance with the ``Equity'' section of the General Issues 
Appendix, we treated the equity infusions as grants. To calculate the 
benefit from these equity infusions for the POR, we used the grant 
methodology as described in the ``Allocation'' section of the General 
Issues Appendix (58 FR 37226). Because the Department determined in the 
Final Determination that the infusions are non-recurring subsidies, we 
have allocated the subsidies over 15 years, the average useful life of 
assets in the steel industry, according to the asset classes guidelines 
of the Internal Revenue Service. As the discount rate, we have used 
SSAB's company-specific interest rate on fixed-rate long-term loans 
(see Sec. 355.49 of the Proposed Regulations).
    We reduced the benefit from these equity infusions attributable to 
the POR according to the methodology outlined in the ``Privatization'' 
section above. We then divided the result by SSAB's total sales for 
1993. On this basis, we preliminarily determine the net subsidy to be 
0.82 percent ad valorem.
(2) Structural Loans
    SSAB received structural loans under three separate pieces of 
legislation for investment in plant and equipment. The loans were 
disbursed in installments between 1978 and 1983. All three loans were 
outstanding during the POR.
    According to the terms of the loans, all three structural loans 
were interest-free for three years from the date of disbursement. After 
that time, one loan incurred interest at a fixed rate of five percent 
per annum while the other two loans incurred interest at a variable 
rate subject to change every five years. The variable interest rate on 
these two loans is set at the rate of the long-term government bonds 
plus a 0.25 percent margin. After a five-year grace period, the 
principal is repaid in 20 equal installments at the end of each 
calendar year.
    In the Final Results Cold-Rolled (59 FR 6620) and in the Final 
Determination (58 FR 37385), we determined that these loans are 
countervailable because they were provided specifically to SSAB on 
terms inconsistent with commercial considerations. There has been no 
new information or evidence of changed circumstances in this review to 
warrant reconsideration of this determination.
    To calculate the benefit from the fixed-rate structural loan, we 
employed the long-term loan methodology described in Sec. 355.49(c)(1) 
of the Proposed Regulations. To calculate the benefits from the two 
variable-rate loans, we used the variable-rate long-term loan 
methodology described in Sec. 355.49(d)(1) of the Proposed Regulations. 
As the discount rate, we used the same benchmark previously 
established. See, Final Results Cold-Rolled (59 FR 6620) and Final 
Determination (58 FR 37385).
    We reduced the benefit attributable to the POR from the fixed-rate 
structural loan according to the methodology outlined in the 
``Privatization'' section above. We then aggregated the benefits for 
the three loans (fixed interest rate and variable interest rate) and 
divided the results by SSAB's total sales for 

[[Page 44016]]
1993. On this basis, we preliminarily determine the net subsidy from 
the three structural loans to be 0.38 percent ad valorem.
(3) Forgiven Reconstruction Loans
    The GOS provided reconstruction loans to SSAB between 1979 and 1985 
to cover operating losses, investment in certain plants and equipment, 
and for employment promotion purposes. The loans were interest free for 
three years, after which a fixed interest rate was charged. According 
to the terms of the loans, up to half of the outstanding amount of the 
loan can be written off after the second calendar year following the 
disbursement. The remainder of the loan can be written off entirely at 
the end of the ninth calendar year after disbursement. Pursuant to the 
terms of the reconstruction loans, the GOS wrote off large portions of 
principal and accrued interest on these loans between 1980 and 1990.
    In the Final Results Cold-Rolled (59 FR 6620) and in the Final 
Determination (58 FR 37385), we determined that forgiveness of these 
loans is countervailable. There has been no new information or evidence 
of changed circumstances in this review to warrant reconsideration of 
this determination.
    To calculate the benefit, we treated the written-off portions of 
the reconstruction loans as countervailable grants received in the 
years the loans were forgiven and calculated the benefit using the 
grant methodology as described in the ``Allocation'' section of the 
General Issues Appendix (58 FR 37225). We reduced the benefits from 
these grants attributable to the POR according to the methodology 
outlined in the ``Privatization'' section above. We then divided the 
results by SSAB's total sales for 1993. On this basis, we preliminarily 
determine the net subsidy from the three structural loans to be 1.77 
percent ad valorem.
(4) Grants for Temporary Employment for Public Works
    The GOS provided temporary employment grants to companies and 
government agencies which hired individuals on a temporary basis to 
work on public works projects (e.g., construction, road building, 
repairs). SSAB received such grants between 1979 and 1988.
    In the Final Results Cold-Rolled (59 FR 6620) and in the Final 
Determination; (58 FR 37385), we determined that these grants are 
countervailable. There has been no new information or evidence of 
changed circumstances in this review to warrant reconsideration of this 
determination.
    We calculated the net subsidy of the grant received in 1979 using 
the grant methodology as described in the ``Allocation'' section of the 
General Issues Appendix. The amounts received by SSAB under this 
program in all other years were less than 0.5 percent of the value of 
the company's total sales in each year. Therefore, those amounts were 
allocated to the year of receipt. See, ``Allocation'' section of the 
General Issues Appendix (37226).
    To calculate the benefit for the POR, we reduced the benefit from 
the 1979 grant according to the methodology outlined in the 
``Privatization'' section above. We then divided the result by SSAB's 
total sales for 1993. On this basis, we preliminarily determine the net 
subsidy to be 0.01 percent ad valorem.
II. Programs Preliminarily Found Not to Confer Subsidies

    Research & Development (R&D) Loans and Grants
    The Swedish National Board for Industrial and Technical Development 
(NUTEK) provides research and development loans and grants to Swedish 
industries for R&D purposes. One type of R&D loan (industrial 
development loans) is mostly aimed at ``new'' industries such as the 
biotechnical, electronic, and medical industries. Another type of R&D 
loan (energy efficiency loans) is directed towards big energy 
consumers.
    The loans accrue interest equal to the official ``discount'' rate 
plus a premium of 3.75 percent. However, no interest or principal 
payments are due until the R&D project is completed. If upon completion 
of a project the company wishes to use the research results for 
commercial purposes, the loan must be repaid. On the other hand, if the 
company decides not to utilize the results and, therefore, does not 
claim proprietary treatment for the results, NUTEK will forgive the 
loan and the results of the research become publicly available.
    SSAB had several R&D loans outstanding during the POR on which it 
did not make either principal or interest payments. However, we cannot 
determine whether SSAB has received a countervailable benefit until the 
research is completed. It is only then that it is known (1) whether the 
loans are forgiven, and (2) if the loans were not forgiven, whether the 
accrued interest is less than what would have accrued had the loans 
been provided at commercial rates. See, Final Results Cold-Rolled (59 
FR 6620) and Final Determination (58 FR 37385). Therefore, we will 
continue to examine the R&D loans in future administrative reviews.
    As explained above, NUTEK may forgive R&D loans if the companies 
receiving them disseminate publicly the results of the research 
financed by the loans. Although the Department's practice is to treat 
forgiven R&D loans as grants, if the research results are publicly 
available, such assistance does not bestow a countervailable benefit. 
See, Final Results Cold-Rolled (59 FR 6620) and Final Determination (58 
FR 37385). During the POR, three loans were forgiven. At verification, 
we confirmed that the results of these research projects were publicly 
available. On this basis, we preliminarily determine that this R&D 
program did not confer countervailable benefits on the export of the 
subject merchandise to the United States during the POR.

III. Programs Preliminarily Found Not to be Used

    We also examined the following programs and preliminarily determine 
that SSAB did not apply for or receive benefits under them during the 
POR:
    (A) Regional Development Grants
    (B) Transportation Grants
    (C) Location-of-industry Loans

IV. Program Preliminarily Found to be Terminated

    We also examined the following program and preliminarily determine 
that the program has been officially terminated and there are no 
residual benefits. See, Memorandum to File dated June 23, 1995 
regarding termination of the program, which is on file in the Central 
Records Unit, Room B-099 of the Department of Commerce.
State Stockpiling Subsidies

Preliminary Results of Review

    For the period January 1, 1993 through December 31, 1993, we 
preliminarily determine the net subsidy to be 2.98 percent ad valorem.
    If the final results of this review remain the same as these 
preliminary results, the Department intends to instruct the U.S. 
Customs Service to assess the following countervailing duties:

    All Companies 2.98 percent ad valorem

    The Department also intends to instruct the U.S. Customs Service to 
collect a cash deposit of estimated countervailing duties of 2.98 
percent of the f.o.b. invoice price on all shipments of the subject 
merchandise from all manufacturers, producers, and exporters, entered 
or withdrawn from warehouse, for consumption on or after 

[[Page 44017]]
the date of publication of the final results of this review.
    Parties to the proceeding may request disclosure of the calculation 
methodology and interested parties may request a hearing not later than 
10 days after the date of publication of this notice. Interested 
parties may submit written arguments in case briefs on these 
preliminary results within 30 days of the date of publication. Rebuttal 
briefs, limited to arguments raised in case briefs, may be submitted 
seven days after the time limit for filing the case brief. Parties who 
submit written arguments in this proceeding are requested to submit 
with the argument (1) a statement of the issue and (2) a brief summary 
of the argument. Any hearing, if requested, will be held seven days 
after the scheduled date for submission of rebuttal briefs. Copies of 
case briefs and rebuttal briefs must be served on interested parties in 
accordance with 19 CFR 355.38(e).
    Representatives of parties to the proceeding may request disclosure 
of proprietary information under administrative protective order no 
later than 10 days after the representative's client or employer 
becomes a party to the proceeding, but in no event later than the date 
the case briefs, under Sec. 355.38(c) of the regulations, are due. The 
Department will publish the final results of this administrative review 
including the results of its analysis of issues raised in any case or 
rebuttal brief or at a hearing.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.

    Dated: August 16, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-21069 Filed 8-23-95; 8:45 am]
BILLING CODE 3510-DS-P