[Federal Register Volume 62, Number 56 (Monday, March 24, 1997)]
[Notices]
[Pages 13866-13869]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-7356]


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DEPARTMENT OF COMMERCE
[C-428-823, C-274-803, C-122-827, and C-307-814]


Notice of Initiation of Countervailing Duty Investigations: Steel 
Wire Rod from Germany, Trinidad and Tobago, Canada and Venezuela

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

EFFECTIVE DATE: March 24, 1997.

FOR FURTHER INFORMATION CONTACT: Roy A. Malmrose (Germany), Vince Kane 
(Trinidad and Tobago), Robert Bolling (Canada) and Chris Cassel 
(Venezuela), Import Administration, U.S. Department of Commerce, Room 
3099, 14th Street and Constitution Avenue, NW., Washington, DC 20230; 
telephone (202) 482-5414, 482-2815, 482-1386 and 482-4847, 
respectively.

Initiation of Investigations

The Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions of the Tariff Act of 1930, as amended by 
the Uruguay Round Agreements Act effective January 1, 1995 (the Act).

The Petition

    On February 26, 1997, the Department of Commerce (the Department) 
received a petition filed in proper form by Connecticut Steel Corp., 
Co-Steel Raritan, GS Industries, Inc., Keystone Steel & Wire Co., North 
Star Steel Texas, Inc. and Northwestern Steel and Wire Co. (the 
petitioners), six U.S. producers of wire rod. Supplements to the 
petitions were filed on March 4, 10, 11, 12, 13, 14, 17, and 18, 1997.
    In accordance with section 701(a) of the Act, petitioners allege 
that manufacturers, producers, or exporters of the subject merchandise 
in Germany, Trinidad and Tobago, Canada and Venezuela receive 
countervailable subsidies.
    The petitioners state that they have standing to file the petition 
because they are interested parties, as defined under section 771(9)(C) 
of the Act.

Determination of Industry Support for the Petition

    Section 702(b)(1)of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (1) at least 
25 percent of the total production of the domestic like product; and 
(2) more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who account for production 
of the domestic like product. The International Trade Commission (ITC), 
which is responsible for determining whether ``the domestic industry'' 
has been injured, must also determine what constitutes a domestic like 
product in order to define the industry. However, while both the 
Department and the ITC must apply the same statutory definition of 
domestic like product, they do so for different purposes and pursuant 
to separate and distinct authority. In addition, the Department's 
determination is subject to limitations of time and information. 
Although this may result in different definitions of the like product, 
such differences do not render the decision of either agency contrary 
to the law.1
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    \1\ See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp. 
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays 
and Display Glass Therefor from Japan: Final Determination; 
Rescission of Investigation and Partial Dismissal of Petition, 56 FR 
32376, 32380-81 (July 16, 1991).
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    Section 771(10) of the Act defines domestic like product as ``a 
product that is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the like 
product analysis begins is ``the article subject to an investigation,'' 
i.e., the class or kind of merchandise to be investigated, which 
normally will be the scope as defined in the petition.
    The petition refers to the single domestic like product defined in 
the ``Scope of Investigation'' section, above. The Department has no 
basis on the record to find the petition's definition of the domestic 
like product clearly inaccurate. In this regard, we have found no basis 
on which to reject petitioners' representations that there are clear 
dividing lines, in terms of characteristics or uses, between the 
product under investigation on the one hand and, on the other hand, 
other carbon and alloy coiled steel products. The Department has, 
therefore, adopted the like product definition set forth in the 
petition. In this case, petitioners established industry support 
representing approximately 75 percent of the production of the domestic 
like product.

[[Page 13867]]

    On March 12, 1997, the Department held consultations with 
representatives of the Government of Canada (GOC) and the Government of 
Quebec (GOQ) pursuant to 702(b)(4)(ii), during which they submitted 
certain information with respect to industry support for the petition 
(See March 18, 1997 memos to the file regarding these consultations and 
Consultations section, below). On March 13, 1997, Stelco Inc. (Stelco), 
a producer of wire rod in Canada, alleged that the petition covering 
imports from Canada did not contain information concerning support from 
domestic coiled bar producers. Stelco argued that domestic bar 
producers' support was necessary because petitioners' March 4, 1997, 
submission specifically included ``other coiled products known in the 
industry as `bar.' '' Accordingly, Stelco argued that the Department 
should poll the industry in order to evaluate the question of industry 
support.
    The Department has determined that the petition contained adequate 
evidence of sufficient industry support and that polling is therefore 
unnecessary. Petitioners established industry support representing 
approximately 75 percent of the production of the domestic like 
product, which percentage includes the coiled bar. The GOC, GOQ and 
Stelco did not allege and have not demonstrated that coiled bar is a 
separate domestic like product requiring a separate determination as to 
industry support. Further, we note that both the American Iron and 
Steel Institute and HTSUS statistics treat coiled bars and coiled rods 
as one category. Because it is reasonable to find a single domestic 
like product for purposes of evaluating industry support in these 
circumstances, petitioners are well within the statutory requirements 
for industry support--both among all producers and among producers 
expressing an opinion--for the single like product covered by the 
petition. Finally, the Department notes that the inclusion or exclusion 
in industry support calculations of ``tire cord'' wire rod--which is 
excluded from the scope of these proceedings--does not materially 
affect petitioners' approximate support level of 75 percent (see 
Antidumping Initiation Checklist, dated March 18, 1997, and found in 
the official file in Room B-099). Accordingly, the Department 
determines that the petition is filed on behalf of the domestic 
industry within the meaning of section 732(b)(1) of the Act.

Injury Test

    Because Germany, Trinidad and Tobago, Canada and Venezuela are 
``Subsidies Agreement Countries'' within the meaning of section 701(b) 
of the Act, Title VII of the Act applies to this investigation. 
Accordingly, the U.S. International Trade Commission (ITC) must 
determine whether imports of the subject merchandise from Germany, 
Trinidad and Tobago, Canada and Venezuela materially injure, or 
threaten material injury to, a U.S. industry.

Consultations

    Pursuant to Section 702(b)(4)(A)(ii) of the Act, the Department 
invited representatives of the relevant foreign governments for 
consultations with respect to the petitions filed. On March 12, 13 and 
17, consultations were held with representatives from Canada; Trinidad 
and Tobago; and the European Commission (EC) and Germany, respectively. 
On March 14 and 17, 1997, we received submissions from the GOQ and the 
GOC.

Scope of the Investigation

    The products covered by these investigations are certain hot-rolled 
carbon steel and alloy steel products, in coils, of approximately round 
cross section, between 5.00 mm (0.20 inch) and 19.0 mm (0.75 inch), 
inclusive, in solid cross-sectional diameter. Specifically excluded are 
steel products possessing the above noted physical characteristics and 
meeting the Harmonized Tariff Schedule of the United States (HTSUS) 
definitions for (a) Stainless steel; (b) tool steel; (c) high nickel 
steel; (d) ball bearing steel; (e) free machining steel that contains 
by weight 0.03 percent or more of lead, 0.05 percent or more of 
bismuth, 0.08 percent or more of sulfur, more than 0.4 percent of 
phosphorus, more than 0.05 percent of selenium, and/or more than 0.01 
percent of tellurium; or (f) concrete reinforcing bars and rods.
    The following products are also excluded from the scope of these 
investigations:
     Coiled products 5.50 mm or less in true diameter with an 
average partial decarburization per coil of no more than 70 microns in 
depth, no inclusions greater than 20 microns, containing by weight the 
following: Carbon greater than or equal to 0.68 percent; aluminum less 
than or equal to 0.005 percent; phosphorous plus sulfur less than or 
equal to 0.040 percent; maximum combined copper, nickel and chromium 
content of 0.13 percent; and nitrogen less than or equal to 0.006 
percent. This product is commonly referred to as ``Tire Cord Wire 
Rod.''
     Coiled products 7.9 to 18 mm in diameter, with a partial 
decarburization of 75 microns or less in depth and seams no more than 
75 microns in depth; containing 0.48 to 0.73 percent carbon by weight. 
This product is commonly referred to as ``Valve Spring Quality Wire 
Rod.''
    The products under investigation are currently classifiable under 
subheadings 7213.91.3000, 7213.91.4500, 7213.91.6000, 7213.99.0030, 
7213.99.0090, 7227.20.0000, and 7227.90.6050 of the HTSUS. Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
our written description of the scope of these investigations is 
dispositive.

Allegation of Subsidies

    Section 702(b) of the Act requires the Department to initiate a 
countervailing duty proceeding whenever an interested party files a 
petition, on behalf of an industry, that (1) alleges the elements 
necessary for an imposition of a duty under section 701(a), and (2) is 
accompanied by information reasonably available to petitioners 
supporting the allegations.

Initiation of Countervailing Duty Investigations

    The Department has examined the petitions on wire rod from Germany, 
Trinidad and Tobago, Canada and Venezuela and found that it complies 
with the requirements of section 702(b) of the Act. Therefore, in 
accordance with section 702(b) of the Act, we are initiating 
countervailing duty investigations to determine whether manufacturers, 
producers, or exporters of wire rod from these countries receive 
subsidies.
A. Germany
    Petitioners have made specific subsidy allegations with respect to 
two German wire rod producers: Saarstahl and Hamburger Stahlwerke 
(HSW). We are including in our investigation the following programs 
alleged in the petition to have provided subsidies to producers of the 
subject merchandise in Germany:

1. Saarstahl Debt Forgiveness
2. Assumption of Saarstahl's Guaranteed Debt
3. Saarstahl's Private Bank Debt Forgiveness/Assurances of Liquidity 
Provided to Private Banks
4. Post-Bankuptcy Assistance to Saarstahl
5. Worker Assistance under Article 56 of the European Coal and Steel 
Community 
6. 1984 Assistance to HSW
7. 1984 State Aid to HSW 

[[Page 13868]]

8. 1984 Loan Guarantee to HSW
9. 1994 Assistance to HSW

    We note that the EC has ordered repayment of the 1994 assistance to 
HSW. Consultations with representatives of the EC indicate that the 
assistance is being repaid, regardless of the fact that the EC decision 
is under appeal. We intend to look into this possibility.
    Petitioners allege that Saarstahl was uncreditworthy from 1986 to 
present, and in prior years if the Department should deem such years 
relevant. However, petitioners only allege non-recurring 
countervailable subsidies in 1989 and 1993-1996. Therefore, we will 
only examine Saarstahl's creditworthiness in these years.
    Petitioners also allege that Saarstahl was unequityworthy from 1986 
to present, and in prior years if the Department should deem such years 
relevant. However, petitioners provide no information that Saarstahl 
received equity infusions in the relevant years. Therefore, we will not 
examine Saarstahl's equityworthiness in our investigation.
    Petitioners allege that HSW was uncreditworthy and unequityworthy 
from 1984 to 1994. However, petitioners only allege non-recurring 
countervailable subsidies in 1984 and 1994. For those years in which 
non-recurring subsidies were not alleged we will not examine HSW's 
creditworthiness and equityworthiness.
B. Trinidad and Tobago
    We are including in our investigation the following programs 
alleged in the petition to have provided subsidies to producers of the 
subject merchandise in Trinidad and Tobago:

1. Government Equity Infusions in the Iron and Steel Corporation of 
Trinidad and Tobago (ISCOTT) over the Period 1983 though 1990 for 
Investment in Plant, Loss Coverage, Debt Service, or Other Purposes
2. Ongoing Government Support of ISCOTT from 1989-1994

    During this period ISCOTT's assets were leased by a private 
company, Caribbean Ispat, Ltd. (Ispat). Information provided by 
petitioners indicates that the government of Trinidad and Tobago 
assumed the debt incurred by ISCOTT prior to the lease. We intend to 
investigate the assumption of debt and any other ongoing support to the 
production of wire rod during the leasing period.

3. Preferential Natural Gas Prices
4. Preferential Electricity Rates
5. Loan Guarantee from the Trinidad and Tobago Electric Commission
6. Preferential Terms for the Point Lisas Lease
7. Tax Credits for Exports
8. Export Promotion Allowance for Tax Purposes
9. Corporate Tax Exemption under the Fiscal Incentives Act 
10. Import Duty Concessions under Section 56 of the Customs Act

    Petitioners have alleged that ISCOTT was uncreditworthy and 
unequityworthy during the years 1980-1995. We are not investigating 
creditworthiness or equityworthiness in the years prior to 1983. In 
Carbon Steel Wire Rod From Trinidad and Tobago: Final Affirmative 
Countervailing Duty Determination and Countervailing Duty Order (49 FR 
480, January 4, 1984) (1984 final), we determined that investments in, 
and loans to the company were on terms consistent with commercial 
considerations. Petitioners have not provided any new evidence to lead 
us to change our previous determination. With respect to the period 
1983 to 1990, we will investigate whether ISCOTT was creditworthy or 
equityworthy during the years in which petitioners have alleged non-
recurring countervailable subsidies.
    We are not including in our investigation the following programs 
alleged to be benefitting the production of the subject merchandise in 
Trinidad and Tobago:

1. ISCOTT's Rent-Free Use of a Dock Facility

    In 1984, the Department determined that ISCOTT's rent-free use of a 
dock facility was countervailable. Press reports filed with the 
petition indicate that Ispat has been paying a rental fee for this 
facility. (See petition Exhibit 9 B-7.) Petitioners assume that this 
rental fee is preferential but offer no support for their assumption. 
Therefore, we are not including this program in our investigation.

2. Exemption From the Value Added Tax (VAT)

    Petitioners allege that companies exporting at least 80 percent of 
production may receive an exemption from the VAT on manufacturing 
inputs. Because exemptions from VAT or rebates of VAT paid on inputs 
used to produce for export are regarded as permissible, we are not 
including this program in our investigation.

3. Trinidad and Tobago Free Trade Zones

    The petition documents the existence of free trade zones in 
Trinidad and Tobago established under the Free Trade Zones (Amendment) 
Act of 1995. Certain of the benefits available to companies within the 
zones appear to be countervailable. However, as described in the 
petition, Ispat's plant is adjacent to, and not within, the designated 
free zone; therefore petitioners have not demonstrated that it is 
eligible for these benefits.
C. Canada
    Petitioners have made specific subsidy allegations with respect to 
only one Canadian wire rod producer: Sidbec-Dosco, Inc. We are 
including in our investigation the following programs alleged in the 
petition to have provided subsidies to producers of the subject 
merchandise in Canada:

1. 1982 Assistance to Sidbec-Dosco
2. Assistance to Reduce Sidbec-Dosco's Accumulated Deficit during the 
period 1984 to 1986
3. Sidbec-Dosco Debt-to-Equity Conversion in 1987
4. Sidbec Dosco Debt-to-Equity Conversion in 1988
5. 1987 Grant to Sidbec-Dosco

    Petitioners allege that Sidbec-Dosco was uncreditworthy during the 
years 1977-1988. We will investigate the creditworthiness of Sidbec-
Dosco in 1982 and 1984-1988. These are the years in which we will be 
investigating the receipt of non-recurring subsidies.
    We are not including in our investigation at this time the 
following program alleged to be benefitting producers of the subject 
merchandise in Canada:

Assistance Prior to 1982

    Petitioners allege that Sidbec-Dosco received some form of 
assistance prior to 1982. In addition, petitioners allege that Sidbec-
Dosco was uncreditworthy and unequityworthy during this period. 
Although we found sufficient evidence to investigate whether Sidbec-
Dosco was subsidized in 1982 (see the program listed under item (1) 
above), for assistance which may have been provided earlier, 
petitioners only cite to a 1982 news article which states that Sidbec-
Dosco had been provided a certain amount of funds from either the GOC 
or GOQ since Sidbec-Dosco's inception. Sidbec-Dosco was founded in 
1964, and petitioners provided no evidence or indication of when during 
the 1964 to 1982 period these other funds may have been provided to the 
company. In particular, petitioners provided no evidence that any of 
these funds--whatever their precise nature might be--were provided to 
Sidbec-Dosco during or after 1977, i.e., the allocation period captured 
by petitioners' allegation of a company-

[[Page 13869]]

 specific 20 years average useful life of assets for Sidbec-Dosco. 
Consequently, we do not have sufficient information to initiate an 
investigation of a specific program based on this allegation of 
assistance.
D. Venezuela
    We are including in our investigation the following programs 
alleged in the petition to have provided subsidies to producers of the 
subject merchandise in Venezuela:

1. Government Equity Infusions in SIDOR in 1977, 1978, 1981, 1982 and 
1983
2. Government Conversion of SIDOR's Debt to Equity in 1981, 1986, 1989 
and 1992
3. Government Guarantees of SIDOR's Private Debt in 1987 and 1988
4. 1990 Government Loan to SIDOR
5. Government Provision of Iron Ore for less than Adequate Remuneration
6. Preferential Tax Incentives Under Decree 1477

    Petitioners also allege that SIDOR was uncreditworthy in the 
following years: 1977, 1978, 1981-1983, 1986-1990 and 1992. We will 
investigate SIDOR's creditworthiness in each of these years because 
these are the years in which we will be investigating either government 
equity infusions, loans or loan guarantees.

Distribution of Copies of the Petition

    In accordance with section 702(b)(4)(A)(i) of the Act, copies of 
the public version of the petitions have been provided to the 
representatives of Germany, Trinidad and Tobago, Canada and Venezuela. 
We will attempt to provide copies of the public version of the 
petitions to all the exporters named in the petition.

ITC Notification

    Pursuant to section 702(d) of the Act, we have notified the ITC of 
these initiations.

Preliminary Determination by the ITC

    The ITC will determine by April 14, 1997, whether there is a 
reasonable indication that an industry in the United States is being 
materially injured, or is threatened with material injury, by reason of 
imports from Germany, Trinidad and Tobago, Canada and Venezuela of wire 
rod. Any ITC determination which is negative will result in the 
investigations being terminated; otherwise, the investigations will 
proceed according to statutory and regulatory time limits.
    This notice is published pursuant to Section 702(c)(2) of the Act.

    Dated: March 18, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-7356 Filed 3-21-97; 8:45 am]
BILLING CODE 3510-DS-P