[Federal Register Volume 60, Number 207 (Thursday, October 26, 1995)]
[Notices]
[Pages 54841-54847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-26629]



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DEPARTMENT OF COMMERCE
[C-412-811]


Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From 
the United Kingdom; Final Results of Countervailing Duty Administrative 
Review

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

ACTION: Notice of Final Results of Countervailing Duty Administrative 
Review.

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SUMMARY: On May 10, 1995, the Department of Commerce (the Department) 
published in the Federal Register its preliminary results of 
administrative review of the countervailing duty order on Certain Hot-
Rolled Lead and Bismuth Carbon Steel Products from the United Kingdom 
for the period September 17, 1992, through December 31, 1993. We have 
completed this review and determine the net subsidy to be 20.33 percent 
ad valorem for Allied Steel and Wire Limited (ASW Limited), and 7.03 
percent ad valorem for all other companies for the period September 17, 
1992, through December 31, 1992; we further determine the net subsidy 
to be 20.33 percent ad valorem for ASW Limited, 2.68 percent ad valorem 
for United Engineering Steels (UES), and 9.76 percent ad valorem for 
all other companies for the periods January 1, 1993, through January 
14, 1993, and March 22, 1993, through December 31, 1993. We will 
instruct the U.S. Customs Service to assess countervailing duties as 
indicated above.

EFFECTIVE DATE: October 26, 1995.

FOR FURTHER INFORMATION CONTACT: Melanie Brown or Christopher Cassel, 
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) 482-4406; (202) 482-4847.

SUPPLEMENTARY INFORMATION:

Background

    On May 10, 1995, the Department published in the Federal Register 
(60 FR 24833) the preliminary results of its administrative review of 
the countervailing duty order on Certain Hot-Rolled Lead and Bismuth 
Carbon Steel Products from the United Kingdom. The Department has now 
completed this administrative review in accordance with section 751 of 
the Tariff Act of 1930, as amended (the Act).
    We invited interested parties to comment on the preliminary 
results. On 

[[Page 54842]]
June 9, 1995, case briefs were submitted by the Government of the 
United Kingdom (UKG) and UES, a producer of the subject merchandise 
which exported hot-rolled lead and bismuth carbon steel products to the 
United States during the review period (respondents), and Inland Steel 
Bar Co. and USS/Kobe Steel Co. (petitioners). On June 16, 1995, 
rebuttal comments were submitted by UES and by petitioners.
    On July 28, 1995, UES presented an additional argument with respect 
to the preliminary results. Although it was made after the deadline for 
submission of briefs and rebuttal briefs in this review, UES' 
submission was prompted by an event which occurred after those 
deadlines, and' which according to UES, allegedly affects the results 
of this review. That event was the Department's remand determination, 
filed with the Court of International Trade (CIT) on July 17, 1995, in 
a related case. See Remand Determination on the General Issue of 
Privatization: Certain Carbon Steel Products from the United Kingdom 
(July 17, 1995) (Privatization Remand Determination). Thus, the 
Department determined that it was appropriate to consider UES' argument 
and allow interested parties to respond to it. Petitioners submitted 
their rebuttal argument on August 18, 1995.
    The review covers the period September 17, 1992, through December 
31, 1993. The review involves two companies accounting for virtually 
all shipments to the United States of the subject merchandise during 
the review period, and fifteen programs.

Applicable Statute and Regulations

    The Department is conducting this administrative review in 
accordance with section 751(a) of the Act. Unless otherwise indicated, 
all citations to the statute and to the Department's regulations are in 
reference to the provisions as they existed on December 31, 1994. 
However, 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 hot-rolled bars and rods of non-
alloy or other alloy steel, whether or not descaled, containing by 
weight 0.03 percent or more of lead or 0.05 percent or more of bismuth, 
in coils or cut lengths, and in numerous shapes and sizes. Excluded 
from the scope of this review are other alloy steels (as defined by the 
Harmonized Tariff Schedule of the United States (HTSUS) Chapter 72, 
note 1 (f)), except steels classified as other alloy steels by reason 
of containing by weight 0.4 percent or more of lead or 0.1 percent or 
more of bismuth, tellurium, or selenium. Also excluded are semi-
finished steels and flat-rolled products. Most of the products covered 
in this review are provided for under subheadings 7213.20.00.00 and 
7214.30.00.00 of the HTSUS. Small quantities of these products may also 
enter the United States under the following HTSUS subheadings: 
7213.31.30.00, 60.00; 7213.39.00.30, 00.60, 00.90; 7214.40.00.10, 
00.30, 00.50; 7214.50.00.10, 00.30, 00.50; 7214.60.00.10, 00.30, 00.50; 
and 7228.30.80. Although the HTSUS subheadings are provided for 
convenience and for Customs purposes, our written description of the 
scope of this proceeding is dispositive.

Best Information Available for ASW Limited

    Section 776(c) of the Act requires the Department to use best 
information available (BIA) ``whenever a party or any other person 
refuses or is unable to produce information requested in a timely 
manner and in the form required, or otherwise significantly impedes an 
investigation''.
    In determining what rate to use as BIA, the Department follows a 
two-tiered methodology. The Department normally assigns lower BIA rates 
for those respondents who cooperated in an administrative review and 
rates based on more adverse assumptions for respondents who did not. 
See Final Affirmative Countervailing Duty Determinations; Certain Steel 
Products from Mexico, 58 FR 37352, 37361 (July 9, 1993).
    In this review ASW Limited did not respond to the Department's two 
requests for information; therefore, we are assigning ASW Limited a 
rate based on BIA. The rate we are applying is 20.33 percent ad 
valorem. This rate reflects the rate ASW Limited received in the 
investigation (see Final Affirmative Countervailing Duty Determination: 
Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from the 
United Kingdom, 58 FR 6237, 6243 (January 27, 1993)) (Lead Bar). To 
this rate we added the weighted average rate calculated in this review 
for the Inner Urban Areas Act, since this program was not examined by 
the Department during the investigation.

Calculation Methodology for Assessment and Cash Deposit Purposes

    We calculated the net subsidy on a country-wide basis by first 
calculating the subsidy rate for each company subject to the 
administrative review. We then weight-averaged the rate received by 
each company using as the weight its share of total UK exports to the 
United States of subject merchandise. To determine the value of the 
exports of ASW Limited based on BIA (see Best Information Available for 
ASW Limited, above), we subtracted the value of UES' exports of subject 
merchandise to the United States from the total value of merchandise 
imported under the HTSUS numbers which cover the merchandise subject to 
this order, as reported in the U.S. IM-146 import statistics.
    We then summed the individual companies' weight-averaged rates to 
determine the subsidy rate from all programs benefitting exports of 
subject merchandise to the United States. Since the country-wide rate 
calculated using this methodology was above de minimis, as defined by 
19 CFR Sec. 355.7 (1994), for both 1992 and 1993, we proceeded to the 
next step, and examined the net subsidy rate calculated for each 
company to determine whether individual company rates differed 
significantly from the weighted-average country-wide rate, pursuant to 
19 CFR Sec. 355.22(d)(3).
    For 1992, ASW Limited had a significantly different net subsidy 
rate pursuant to 19 CFR Sec. 355.22(d)(3). This company is treated 
separately for assessment purposes for the 1992 period. All other 
companies are assigned the country-wide rate for this period. For 1993, 
both ASW Limited and UES had significantly different net subsidy rates 
pursuant to 19 CFR Sec. 355.22(d)(3). These companies are both treated 
separately for assessment and cash deposit purposes for the 1993 
period. All other companies are assigned the country-wide rate for this 
period.

Analysis of Programs

    Based upon analysis of the questionnaire responses, verification, 
and written comments from the interested parties we determine the 
following: 

[[Page 54843]]


I. Programs Conferring Subsidies

A. Allocation of Subsidies From British Steel Corporation to UES
    UES is a joint venture company formed in 1986 by British Steel 
Corporation (BSC) and Guest, Keen & Nettlefolds (GKN). In return for 
shares in UES, BSC contributed a major portion of its Special Steels 
Business and GKN contributed its Brymbo Steel Works and its forging 
business. BSC was wholly owned by the UKG at the time the joint venture 
was formed; BSC was privatized in 1988 and now bears the name British 
Steel plc (BS plc).
    In the preliminary results of this review, we allocated to UES a 
portion of the subsidies previously bestowed on BSC under the following 
programs:

1. Equity Infusions
2. Regional Development Grant Program
3. National Loan Finds Loan Cancellation
4. European Coal and Steel Community (ECSC) Article 54 Loans/Interest 
Rebates

    For a complete explanation of the methodology used to allocate 
subsidies from BSC to UES, see Preliminary Results of Administrative 
Review: Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from 
the United Kingdom, 60 FR 24833, 24834-35 (May 10, 1995). Our analysis 
of the comments submitted by the interested parties, summarized below, 
has not led us to change our findings in the preliminary results.
B. Inner Urban Areas Act
    In the preliminary results of this review, we found the Inner Urban 
Areas Act to be countervailable. Our analysis of the comments submitted 
by the interested parties, summarized below, has not led us to change 
this finding.

II. Program Found Not to Confer Subsidies

    In the preliminary results of this review, we found ECSC Article 55 
Assistance to be non-countervailable. Our analysis of the comments 
submitted by the interested parties, summarized below, has not led us 
to change these findings.

III. Programs Found Not to be Used

    In the preliminary results of this review, we found that 
respondents did not apply for or receive benefits under the following 
programs during the period of review:

A. New Community Instrument Loans
B. ECSC Article 54 Loan Guarantees
C. NLF Loans
D. ECSC Conversion Loans
E. European Regional Development Fund Aid
F. Article 56 Rebates
G. Regional Selective Assistance
H. ECSC Article 56(b)(2) Redeployment Aid
I. BRITE/EuRAM II

    Our analysis of the comments submitted by the interested parties, 
summarized below, has not led us to change our findings.

Analysis of Comments

    Comment 1: Petitioners argue that the Department should calculate 
the rate of cash deposit of estimated countervailing duties based on 
UES' current status as a wholly owned subsidiary of BS plc. Because BS 
plc purchased all shares in UES previously owned by GKN on March 6, 
1995, UES' cash deposit rate should be adjusted to reflect the purchase 
and should be applied to both UES and BS plc.
    Petitioners claim that revising the cash deposit rate as suggested 
is within the Department's authority. They claim that the Department 
could accurately estimate the cash deposit rate either by (1) 
allocating all of the subsidies given to BSC over the combined 
production of UES and BS plc, and using the result as the cash deposit 
rate for the BS plc-UES pairing; or, (2) setting the cash deposit rate 
for the BS plc-UES pairing at the rate found in the Final Affirmative 
Countervailing Duty Determination: Certain Steel Products From the 
United Kingdom, 58 FR 37393 (July 9, 1993); or, (3) estimating the 
countervailing duty rate by calculating the 1992 subsidy benefit and 
adding back the adjustment for repayment of subsidies.
    Petitioners argue that unlike antidumping duty reviews, the statute 
does not require use of the rate established in the review as the 
deposit rate. This suggests that the Department may adjust the deposit 
rate as necessary to estimate the countervailing duty most likely to be 
assessed in future periods. Petitioners further argue that the need for 
an accurate estimation of the 1995 deposit rate in this proceeding is 
not obviated by the fact that a subsequent administrative review will 
determine an exact assessment rate for 1995, taking into account the 
purchase in question.
    UES argues that the countervailing duty deposit rate for UES may 
not be increased over the net subsidy found in this administrative 
review. They maintain that the Department's practice (as specified in 
the Proposed Regulations) calls for establishing a different cash 
deposit rate only when ``program-wide changes'' have occurred 
subsequent to the review period and before the preliminary results of 
review are published. Moreover, UES argues, the Proposed Regulations 
specify that program-wide changes may not be limited to an individual 
firm or firms, and must be ``effectuated by an official act, such as 
the enactment of a statute, regulation or decree.'' BS plc's 
acquisition of GKN's shares does not meet any of these requirements, 
according to UES.
    UES also notes that in the investigation of lead and bismuth bar 
from Brazil, the Department specifically rejected arguments made by 
respondents that a change in the ownership of a company should be 
considered as a program-wide change that should affect the cash deposit 
rate. If the privatization of a company is not a program-wide change, 
then surely the purchase of shares also is not a program-wide change 
that requires the adjustment of the cash deposit rate. According to 
UES, petitioners fail to show that the mere acquisition of shares in 
UES by BS plc changes the liability for countervailing duties that 
would otherwise attach to the production of lead bar by UES. Finally, 
UES maintains that the Department cannot establish a cash deposit rate 
for BS plc because BS plc has not had the opportunity to participate in 
this proceeding or to submit comments on this issue as required by both 
U.S. international obligations and the Department's regulations.
    Department's Position: Contrary to petitioners' arguments, the 
Department has no basis in this review to adjust UES' cash deposit rate 
to account for BS plc's acquisition. First, because this event occurred 
well after the review period, the Department did not seek to examine it 
during the review. Thus, there is no information in the record from 
which the Department could determine whether or how to adjust the cash 
deposit rate. Second, while a cash deposit rate may differ from the 
assessment rate, the regulations provide for establishing a different 
cash deposit rate only in particular circumstances. Specifically, 
section 355.50(a) of the Department's Proposed Regulations mandates 
consideration only when a change is program-wide and measurable. 
Section 355.50(b) of the Proposed Regulations defines ``program-wide 
change'' as a change ``[n]ot limited to an individual firm or firms'' 
and ``[e]ffectuated by an official act, such as the enactment of a 
statute, regulation, or decree, or contained in the schedule of an 
existing statute, regulation or decree.'' BS plc's acquisition of GKN's 
shares in UES is limited to an individual firm or firms, namely BS plc, 
UES and GKN. 

[[Page 54844]]

    In the Final Affirmative Countervailing Duty Determination: Certain 
Hot-Rolled Lead and Bismuth Carbon Steel Products From Brazil, 58 FR 
6213, 6220 (January 27, 1995), the Department stated: ``[w]e do not 
consider that privatization, in and of itself constitutes a program-
wide change, or that a privatization program is the type of program 
contemplated for consideration under . . . the Proposed Regulations.'' 
BS plc's acquisition of GKN's shares in UES does not represent a 
privatization; it is only a sale of shares. Such a transaction does not 
constitute a program-wide change. Because the event in question does 
not constitute a program-wide change, the question of whether the 
change can be measured (the second criteria delineated in the Proposed 
Regulations) becomes a moot issue. Moreover, the position argued by 
petitioners that the new rate should apply to the UES and BS plc 
``pairing'' becomes moot as well.
    Comment 2: Petitioners argue that the Department should calculate 
the countervailing duty rate without adjusting for the repayment of 
subsidies. Petitioners take issue with the repayment methodology 
arguing that it leads to absurd results. Namely, because BSC (a 
subsidized company) and GKN (an unsubsidized company) contributed the 
same value of assets for each share of UES they received, it would be 
illogical to assert that the amount received by BSC includes repayment 
for past subsidies while the amount received by GKN for assets of the 
same value does not. Moreover, if the repayment is included, then BSC 
did overpay for its UES shares, and the overpayment constitutes a 
subsidy.
    Petitioners note that the only available alternative, to consider 
the subsidies as part of the value of the Special Steels division, has 
already been rejected by the Department in the Certain Steel cases. At 
that time, the Department stated that treating the assets themselves as 
the subsidy violates the longstanding principle that the subsidy is 
measured upon the receipt of the benefit, not upon the use of the 
benefit.
    UES argues that the Department has properly determined that a 
subsidy repayment occurred when UES acquired productive facilities from 
BSC. As the Department explained in its remand determination, ``the 
Department used the term `repayment' in Certain Steel in a broader 
context to include situations where subsidies are `allocated' between 
the seller and the entity being sold.'' Remand Determination: Certain 
Hot-Rolled Lead and Bismuth Carbon Steel Products from the United 
Kingdom (October 12, 1993) (Lead Bar Remand Determination) at 4-6.
    Department's Position: We disagree with petitioners' reasoning. 
Petitioners appear to imply that repayment of subsidies is in addition 
to the agreed-upon value of the assets. The Department has never stated 
or implied that. Instead, the Department's repayment methodology is 
intended to determine the portion of the sales price of the productive 
unit (in this case, the Specialty Steels Division) which represents 
repayment of prior subsidies bestowed on the seller of the productive 
unit (in this case, BSC), when that seller has been found to have 
received subsidies. See General Issues Appendix appended to the Final 
Countervailing Duty Determination: Certain Steel Products from Austria, 
58 FR 37217, 37259 (July 9, 1993) (General Issues Appendix).
    According to the Department's methodology, when the productive unit 
is sold, a portion of the sales price is deemed to repay a portion of 
the outstanding subsidies, which remain with the seller. This 
methodology is simply used to allocate the subsidies between the seller 
and the buyer. As the Department explained in its remand determination, 
``[w]hen a productive unit is sold by a company which continues to 
operate (such as BSC), the potentially allocable subsidies which could 
have traveled with the productive unit, but did not because they were 
accounted for as part of the purchase price, simply stay with the 
selling company.'' Lead Bar Remand Determination at 5. To the extent 
that GKN received the same ``payment'' for the assets it contributed to 
UES, the Department has not applied its repayment methodology because 
there were no allegations during the investigation or in this review 
that GKN had received subsidies prior to the formation of UES.
    Comment 3: Petitioners refer the Department to the arguments they 
made with respect to the underlying investigation of Lead Bar before 
the CIT in Inland Steel Bar Co. v. United States (Inland Steel) by 
submitting their December 6, 1993, Brief in Support of Plaintiffs' Rule 
56.2 Motion for Judgment on the Agency Record and their March 15, 1994, 
Reply Brief. Petitioners allege in these court briefs that the 
Department improperly reallocated back to BSC a portion of the 
subsidies properly chargeable to UES. The briefs also allege that the 
statute requires the use of sales ratios rather than asset ratios in 
allocating subsidies, and the Department's use of asset ratios was an 
improper exercise of Departmental discretion.
    Department's Position: The arguments presented in the briefs have 
already been considered and rejected by the Department in the Lead Bar 
Remand Determination. In this proceeding, petitioners have not 
submitted any new evidence or arguments which would warrant 
reconsideration of these issues.
    Comment 4: UES argues that since the Department has published 
notice of the CIT's decision in Inland Steel, 858 F. Supp. 179 (Ct. 
Int'l Trade 1994), the Department is legally prohibited from taking 
action inconsistent with that decision. In Inland Steel, the CIT found 
that ``[w]ith no countervailable benefit surviving the arm's length 
transaction between BSC and UES, there is no benefit conferred to UES 
and, therefore, no countervailable subsidy within the meaning of 19 
U.S.C. 1677(5).'' Therefore, UES argues that there is no basis for the 
Department's determination that UES, an independent company that paid 
fair market value for its assets, is subsidized as a result of funds 
provided to BSC. Moreover, the CIT found in Aimcor et al. v. United 
States, 871 F. Supp. 447, 451 (Ct. Intl. Trade 1994) (Aimcor) that in 
order for the Department to find a countervailable subsidy, it must be 
demonstrated that the bounty or grant ``went to the manufacture, 
production, or export of the merchandise in question.'' According to 
UES, this decision also makes it clear that the countervailing duty 
statute does not permit the Department simply to presume that one 
company's production benefits from funds received by another company, 
absent substantial evidence that the benefit was ``passed through'' to 
the company under investigation.
    Petitioners argue that Federal Circuit and CIT holdings support the 
Department's practice of waiting for a conclusive court decision before 
changing the rate of cash deposit of estimated duties. They note that 
Federal Circuit cases (e.g., Timken) have authorized the Department to 
wait until issuance of a ``conclusive'' decision (one that ends all 
chance of appeal, e.g., a final decision by the Federal Circuit or 
final decisions by the CIT that are not appealed) before liquidating 
entries or changing the rate of cash deposit of estimated 
countervailing duties.
    Moreover, petitioners argue that rather than supporting the CIT's 
decision in Inland Steel, Aimcor supports the Department's conclusion 
that changes in ownership do not affect countervailability. Petitioners 
further maintain that in this case, unlike the situation in Aimcor, at 
the time the 

[[Page 54845]]
subsidies were bestowed on BSC, the Specialty Steels Division was part 
of BSC, rather than a partially owned subsidiary.
    Department's Position: The Department is not required to follow a 
CIT opinion that is before the U.S. Court of Appeals for the Federal 
Circuit. According to the Federal Circuit's opinion in Timken Co. v 
United States, 893 F.2d 337, 339 (Fed. Cir. 1990) (Timken), an appealed 
CIT decision is not a ``final court decision'' within the meaning of 19 
U.S.C. 1516a(e). Further, under Melamine Chemicals, Inc. v. United 
States, 732 F. 2d 924 (Fed. Cir. 1984) and NTN Bearing Corp. v. United 
States, 892 F.2d 1004 (Fed. Cir. 1989), the administrative handling of 
entries (including collection of estimated duties), should not be 
altered by court decisions, except for suspension of liquidation, until 
the issuance of such a final court decision. Because the appeal of the 
final countervailing duty determination on certain hot-rolled lead and 
bismuth carbon steel products from the United Kingdom is still pending 
before the Federal Circuit, there is not yet a final court decision 
which the Department is required to follow.
    With respect to respondents'' privatization argument that there is 
no basis for determining that UES is subsidized as a result of funds 
provided to BSC, they have presented no new evidence that would warrant 
reconsideration of the Department's determination that past subsidies 
bestowed upon BSC passed-through to UES. The arguments presented by UES 
have been previously and thoroughly addressed by the Department. See 
e.g., Lead Bar 58 FR at 6238; General Issues Appendix 58 FR at 37259 
and Lead Bar Remand Determination. Thus, the Department's preliminary 
results remain unchanged with respect to this issue.
    Comment 5: UES argues that the Department has improperly allocated 
the benefit of alleged subsidies over a period representing the average 
useful life (AUL) of assets in the steel industry; the Department's 
amortization of subsidies using the AUL method is contrary to law and 
unsupported by substantial evidence. UES further argues that the CIT 
has found that the AUL methodology is arbitrary and bears no necessary 
relationship to the benefit from the subsidy funds (see British Steel 
plc v. United States, 879 F. Supp. 1254, 1293-99 (Ct. Int'l Trade 1995) 
British Steel)). Thus, the Department should abandon this approach.
    Petitioners note that British Steel is pending and that the 
Department should not decide the appropriate allocation period in this 
case until this issue has been resolved by the CIT. Moreover, 
petitioners note that UES suggests no alternative to the 15-year 
allocation period.
    Department's Position: The Department has already considered and 
rejected respondent's arguments in prior determinations. See e.g., Lead 
Bar 58 FR at 6245 and General Issues Appendix 58 FR at 37225. UES has 
not submitted new arguments or evidence that would lead us to 
reconsider the AUL method. It is the Department's position that 
although the actual duration of the benefit is not identifiable, the 
Department must nevertheless choose a reasonable period over which to 
allocate grants and equity infusions. The competitive position of any 
company ultimately depends upon its productive activity; without 
production, there are no other commercial and competitive factors that 
are relevant for a manufacturing enterprise. Further, the statute 
focuses on benefits to production of the subject merchandise. A 
company's renewable physical assets are absolutely essential to 
production; and renewable physical assets have a determinable average 
useful life. The AUL has competitive significance because the renewal 
of physical assets is essential to production. The Department therefore 
concludes that the AUL of the renewable physical assets provides a 
reasonable approximation of the commercial and competitive benefits for 
all non-recurring subsidies, not just subsidies spent on acquiring 
renewable physical assets.
    In addition, we agree with petitioners with respect to British 
Steel. There has not been a final and conclusive court ruling on the 
general issue of allocation. Therefore, absent new facts, the 
Department is applying the AUL methodology.
    Comment 6: The UKG argues that the Department should reverse its 
preliminary finding concerning the grants under the Inner Urban Areas 
Act (IUAA). The UKG argues that the aid granted under the IUAA is 
assistance ``to be used for environmental improvement (i.e., 
beautification of industrial areas).'' Thus, the UKG concludes, such 
assistance is not a subsidy ``provided with respect to the manufacture, 
production or exportation of merchandise,'' within the meaning of 
Aimcor, and therefore should not be treated as a countervailable 
subsidy. Moreover, according to the UKG, such assistance does not 
confer a benefit that gives rise to a competitive advantage as required 
by Cabot Corp. v. United States, 9 CIT 389, 494-495, 620 F. Supp. 722, 
729 (1985) (Cabot) and British Steel Corp. v. United States, 9 CIT 85, 
95, 605 F. Supp. 286, 194 (1985) (1985 British Steel).
    Department's Position: The statute and the Department's regulations 
require the Department to countervail a subsidy that is limited in law 
to an enterprise or industry or group thereof located in a particular 
region. In the case of a program conferring a grant, such as the IUAA, 
a countervailable benefit exists in the amount of the grant. See 
section 771(5) of the Act and sections 355.43(b)(3) and 355.44(a) of 
the Proposed Regulations. In the preliminary results of review, we 
determined that aid under the IUAA was limited to enterprises located 
in selected regions of the United Kingdom. We also determined that the 
grant was bestowed upon UES Ltd., a manufacturer and exporter of the 
subject merchandise.
    The UKG appears to be arguing that the assistance is tied 
specifically to beautification and not to the production or exportation 
of merchandise. We disagree with this analysis. The IUAA provides 
assistance for environmental improvement (i.e. beautification of 
industrial areas) and economic regeneration. In the grant approval 
notification documents to UES, the UKG specified that the 1988 funds 
were for recladding the Templeborough plant buildings and the 1992 
funds were for repairing, cleaning, and painting a service gantry which 
is part of the plant facility. Thus, the stated purpose of these grants 
was for maintenance of production facilities. The grants benefit the 
entire operation of the company and are appropriately allocated to 
total sales of the company. Just because a benefit is not tied directly 
to production does not mean that it does not provide a benefit to the 
company's operations and thus to all merchandise produced by that 
company, including subject merchandise. Accordingly, we disagree with 
the UKG's contention that the grant in question does not confer a 
benefit that gives rise to a competitive advantage per the court's 
decision in Cabot and 1985 British Steel.
    In addition, the fact that the grant received by UES Ltd. under 
this program was ``to be used for environmental beautification'' is not 
dispositive for purposes of our analysis. ``[T]he statute requires the 
Department to countervail an allocated share of the subsidies received 
by producers, regardless of their effect.'' General Issues Appendix 58 
FR at 37260. The statute does not direct the Department to consider the 
use to which subsidies are put or to measure their effect on the 
recipient's subsequent performance. See 

[[Page 54846]]
General Issues Appendix 58 FR at 37260-61.
    The UKG incorrectly relies on Aimcor in support of its proposition 
that the aid granted under the IUAA ``should not be treated as a 
countervailable subsidy.'' In Aimcor, the Department found, and the CIT 
affirmed, that the purchase of FESILVEN's stock by CVG, the parent 
company of FESILVEN, did not constitute a countervailable subsidy. 
FESILVEN was the sole producer and exporter of the subject merchandise, 
ferrosilicon. The Department found ``an insufficient identity of 
interests to warrant treating CVG and FESILVEN as a single entity,'' 
and thus determined that CVG's purchase of FESILVEN's stock ``did not 
result in a bounty or grant because no benefit inured to FESILVEN in 
the transaction.'' 871 F. Supp. at 450. Thus, the issue before the 
Court in Aimcor was not the purpose or use of the subsidy at hand, but 
whether any benefit was ``attributable'' (i.e., assigned or allotted) 
to a related producer/exporter of the subject merchandise. If so, the 
Department must countervail such subsidies.
    Comment 7: UES argues that the Department's preliminary 
determination is inconsistent with the Department's recent remand 
determination in British Steel. In the preliminary results, the 
Department determined that a portion of the countervailable subsidies 
previously bestowed on BSC traveled with its Specialty Steels Division 
when this division was spun-off to form UES. In the remand 
determination, the Department found that the Specialty Steels Division 
was not a corporate entity capable of receiving a subsidy and thus no 
subsidies could have followed it to UES. See Privatization Remand 
Determination at 41. Thus, UES argues, the Department is double-
counting these subsidies and countervailing them both with respect to 
the merchandise covered by the countervailing duty order on Certain 
Carbon Steel Products from the United Kingdom and the merchandise 
covered by the instant countervailing duty order.
    Petitioners argue that respondents misread the Department's remand 
determination, and note that the Department did not concede that UES 
received no subsidies, but rather the Department's findings were based 
on best information available. As explained in the Privatization Remand 
Determination, British Steel's failure to provide the information 
necessary to determine the portion of BSC's subsidies allocable to UES 
resulted in the Department's finding that all of BSC's subsidies 
remained with BSC. On the issue of double-counting of subsidies, 
petitioners argue that both British Steel and UES should properly 
deposit estimated countervailing duties until the courts decide which 
company is liable. Furthermore, petitioners note that the general issue 
of compliance with CIT decisions that are on appeal has been addressed 
and disposed of by the CIT in Inland Steel, and by the Federal Circuit, 
which has held that ``an appealed CIT decision is not a `final court 
decision' within the plain meaning of 19 U.S.C. 1516a(e).'' Timken.
    Department's Position: During the remand proceedings in British 
Steel, the Department noted that the Court's decision and its 
instructions for analyzing the spin-off of the Specialty Steels 
Division resulted in a remand determination which was inconsistent with 
other determinations in related cases, specifically, the instant case. 
The Department stated that ``[t]o the extent that the Department's 
implementation of the Court's opinion leads to ``inconsistent 
determinations,'' we note that we have registered our disagreement with 
the Court's opinion and that the general issue of privatization and 
pre-privatization spin-offs, including the UES spin-off, is on appeal 
to the United States Court of Appeal for the Federal Circuit.'' 
(Privatization Remand Determination at 41). The Privatization Remand 
Determination is currently pending before the CIT. Furthermore, the 
appeal of Inland Steel Bar Co. v. the United States is pending before 
the Court of Appeals for the Federal Circuit. In accordance with the 
Federal Circuit's reasoning in Timken, since there is no ``final'' 
court decision, we are not instituting any changes in the privatization 
and spin-off methodology.

Final Results of Review

    In accordance with 19 CFR 355.22(b)(1), an administrative review 
``normally will cover entries or exports of merchandise during the most 
recently completed reporting year of the government of the affected 
country.'' However, because this is the first administrative review of 
this countervailing duty order, in accordance with 19 CF 355.22(b)(2), 
it covers the period, and the corresponding entries, ``from the date of 
suspension of liquidation * * * to the end of the most recently 
completed reporting year of the government of the affected country.'' 
This period is September 17, 1992 through December 31, 1993. Because 
the reporting year of the UKG is the calendar year, we calculated a 
separate net subsidy for each year, 1992 and 1993.
    Further, during the 1993 calendar year, certain entries were not 
subject to suspension of liquidation. The Department issued its 
preliminary affirmative countervailing duty determination on September 
17, 1992 (57 FR 42974). Pursuant to section 705 of the Act and Article 
5.3 of the GATT Subsidies Code, the Department cannot require 
suspension of liquidation for more than 120 days without the issuance 
of a countervailing duty order. Accordingly, the Department instructed 
Customs to terminate the suspension of liquidation of the subject 
merchandise entered, or withdrawn from warehouse, for consumption on or 
after January 15, 1993. The Department reinstated suspension of 
liquidation and the cash deposit requirement for entries made on or 
after March 22, 1993, the date of publication of the countervailing 
duty order. Thus, merchandise entered on or after January 15, 1993, and 
before March 22, 1993, is to be liquidated without regard to 
countervailing duties.
    For the period September 17, 1992, through December 31, 1992, we 
determine the net subsidy to be 20.33 percent ad valorem for ASW 
Limited and 7.03 percent ad valorem for all other companies. For the 
periods January 1, 1993, through January 14, 1993, and March 22, 1993, 
through December 31, 1993, we determine the net subsidy to be 20.33 
percent ad valorem for ASW Limited, 2.68 percent ad valorem for UES, 
and 9.76 percent ad valorem for all other companies.
    Thus, the Department will instruct the U.S. Customs Service to 
assess the following countervailing duties:

----------------------------------------------------------------------------------------------------------------
                                                                                                         Rate   
                    Period                                     Manufacturer/exporter                  (percent) 
----------------------------------------------------------------------------------------------------------------
September 17, 1992-December 31, 1992..........  ASW Limited........................................        20.33
                                                All other companies................................         7.03

[[Page 54847]]
                                                                                                                
January 1, 1993-January 14, 1993..............  ASW Limited........................................        20.33
                                                UES................................................         2.68
                                                All other companies................................         9.76
March 22, 1993-December 31, 1993..............  ASW Limited........................................        20.33
                                                UES................................................         2.68
                                                All other companies................................         9.76
----------------------------------------------------------------------------------------------------------------


    The Department will also instruct the U.S. Customs Service to 
collect a cash deposit of estimated countervailing duties of 20.33 
percent of the f.o.b. invoice price on all shipments of the subject 
merchandise from ASW Limited, 2.68 percent of the f.o.b. invoice price 
on all shipments of the subject merchandise from UES, and 9.76 percent 
of the f.o.b. invoice price on all shipments of the subject merchandise 
from all other companies, except Glynwed (which was excluded from the 
order during the original investigation), entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of the 
final results of this review.
    This notice serves as a reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 355.34(d). Timely written notification of 
return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and the terms of an APO is a sanctionable violation.
    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: October 19, 1995.
Paul L. Joffe,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 95-26629 Filed 10-25-95; 8:45 am]
BILLING CODE 3510-DS-P