[Federal Register Volume 62, Number 66 (Monday, April 7, 1997)]
[Notices]
[Pages 16551-16554]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8843]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-401-804]
Certain Cut-to-Length Carbon Steel Plate from Sweden; 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 October 3, 1996, the Department of Commerce (``the
Department'') published in the Federal Register its preliminary results
of administrative review of the countervailing duty order on certain
cut-to-length carbon steel plate from Sweden for the period January 1,
1994 through December 31, 1994 (61 FR 51683). The Department has now
completed this administrative review in accordance with section 751(a)
of the Tariff Act of 1930, as amended. For information on the net
subsidy for the reviewed company, and for all non-reviewed companies,
please see the Final Results of Review section of this notice. We will
instruct the U.S. Customs Service to assess countervailing duties as
detailed in the Final Results of Review section of this notice.
EFFECTIVE DATE: April 7, 1997.
FOR FURTHER INFORMATION CONTACT: Gayle Longest or Lorenza Olivas,
Office of CVD/AD Enforcement VI, 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.
[[Page 16552]]
SUPPLEMENTARY INFORMATION:
Background
Pursuant to 19 C.F.R. 355.22(a), this review covers only those
producers or exporters of the subject merchandise for which a review
was specifically requested. Accordingly, this review covers SSAB
Svenskt Stal AB (``SSAB''), the sole known producer/exporter of the
subject merchandise during the review period. This review also covers
the period January 1, 1994 through December 31, 1994, and 10 programs.
On May 29, 1996, the Department extended the time limit for the
preliminary and final results of this administrative review (61 FR
26878). The time for completion of the final results of this review was
extended from a 120-day period to not later than a 180-day period.
Since the publication of the preliminary results on October 3, 1996
(61 FR 51683), the following events have occurred. We invited
interested parties to comment on the preliminary results. On November
4, 1996, a case brief was submitted by the petitioners. On November 8,
1996, a rebuttal brief was submitted by SSAB, the respondent.
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 (``URAA'') effective January 1, 1995
(``the Act''). The Department is conducting this administrative review
in accordance with section 751(a) of the Act.
Scope of the Review
Imports covered by this review are shipments of certain cut-to-
length carbon steel plate from Sweden. These products include hot-
rolled carbon steel universal mill plates (i.e., flat-rolled products
rolled on four faces or in a closed box pass, of a width exceeding 150
millimeters but not exceeding 1,250 millimeters and of a thickness of
not less than 4 millimeters, not in coils and without pattern in
relief), of rectangular shape, neither clad, plated nor coated with
metal, whether or not painted, varnished, or coated with plastics or
other nonmetallic substances, 4.75 millimeter or more in thickness and
of a width which exceeds 150 millimeters and measures at least twice
the thickness. During the review period, such merchandise was
classifiable under the Harmonized Tariff Schedule (HTS) item numbers
7208.31.0000, 7208.32.0000, 7208.33.1000, 7208.33.5000, 7208.41.0000,
7208.42.0000, 7208.43.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000,
7211.11.0000, 7211.12.0000, 7211.21.0000, 7211.22.0045, 7211.90.0000,
7212.40.1000, 7212.40.5000 and 7212.50.5000. Included in this order are
flat-rolled products of non-rectangular cross-section where cross-
section is achieved subsequent to the rolling process (i.e., products
which have been ``worked after rolling'')--for example, products which
have been beveled or rounded at the edges. Excluded from this order is
grade X-70 plate. The HTS item numbers are provided for convenience and
customs purposes. The written description remains dispositive.
Allocation Methodology
In the past, the Department has relied upon information from the
U.S. Internal Revenue Service on the industry-specific average useful
life (``AUL'') of assets in determining the allocation period for
nonrecurring grant benefits. See General Issues Appendix appended to
Final Countervailing Duty Determination; Certain Steel Products from
Austria, 58 FR 37217, 37226 (July 9, 1993) (General Issues Appendix).
However, in British Steel plc. v. United States, 879 F. Supp. 1254 (CIT
1995) (British Steel), the U.S. Court of International Trade (the
Court) ruled against this allocation methodology. In accordance with
the Court's remand order, the Department calculated a company-specific
allocation period for nonrecurring subsidies based on the AUL of non-
renewable physical assets. This remand determination was affirmed by
the Court on June 4, 1996. British Steel, 929 F. Supp. 426, 439 (CIT
1996).
The Department has decided to acquiesce to the Court's decision
and, as such, we intend to determine the allocation period for
nonrecurring subsidies using company-specific AUL data where reasonable
and practicable. In the preliminary results (61 FR 51683), the
Department preliminarily determined that it is reasonable and
practicable to allocate new nonrecurring subsidies (i.e., subsidies
that have not yet been assigned an allocation period) based on a
company-specific AUL. However, if a subsidy has already been
countervailed based on an allocation period established in an earlier
segment of the proceeding, it does not appear reasonable or practicable
to reallocate that subsidy over a different period of time. In other
words, since the countervailing duty rate in earlier segments of the
proceeding was calculated based on a certain allocation period and
resulting benefit stream, redefining the allocation period in later
segments of the proceeding would entail taking the original grant
amount and creating an entirely new benefit stream for that grant. Such
a practice may lead to an increase or decrease in the total amount
countervailed and, thus, would result in the possibility of over-
countervailing or under-countervailing the actual benefit. The
Department preliminarily determined that a more reasonable and accurate
approach is to continue using the allocation period first assigned to
the subsidy. We invited the parties to comment on the selection of this
methodology and to provide any other reasonable and practicable
approaches for complying with the Court's ruling. We received no
comments on this issue.
In the current review, there are no new subsidies. All of the
nonrecurring subsidies currently under review were provided prior to
the period of review (POR); allocation periods for these grants were
established during prior segments of this proceeding. Therefore, for
purposes of these final results, the Department is using the original
allocation period assigned to each nonrecurring subsidy.
Privatization and Sale of Productive Units
SSAB has sold several productive units and the company was
partially privatized twice, in 1987 and in 1989. During the review
period, SSAB was completely privatized.
In 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 the sale of the productive units and
the two 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 General Issues Appendix, 58 FR at 37262 (July 9,
1993)). 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 a rate for the subsidies that were allocated to the
spin-offs, (i.e., productive units that were sold), we first determined
the amount of the subsidies attributable to each productive unit by
dividing the asset value of that productive unit by the total asset
value of SSAB in the year of the spin-off. We then applied this ratio
to the net present value (``NPV''), in the year of the spin-
[[Page 16553]]
off, of the future benefit streams from all of SSAB's prior subsidies
allocable to the POR. The future benefit streams at the time of the
sale of each productive unit reflect the Department's allocation over
time of prior subsidies to SSAB in accordance with the declining
balance methodology (see e.g., Final Affirmative Countervailing Duty
Determination; Fresh and Chilled Salmon from Norway, 56 FR 7678; 7679
(February 25, 1991)), and reflect also the prior spin-offs of SSAB
productive units.
We next estimated the portion of the purchase price which
represents repayment of prior subsidies by determining the portion of
SSAB's net worth that was accounted for by subsidies. To do that, we
divided the face value of the allocable subsidies received by SSAB in
each year from fiscal year 1979 through fiscal year 1993 by SSAB's net
worth in the same year. We calculated a simple average of these ratios,
which was then multiplied by the purchase price of the productive unit.
Thus, we determined the amount of the purchase price which represents
repayment of prior subsidies. This amount was subtracted from the
subsidies attributed to the productive unit at the time of sale to
arrive at the amount of subsidies allocated to the productive unit
being spun-off.
To calculate the subsidies remaining with SSAB after privatization,
we performed the following calculations. We first calculated the NPV of
the future benefit stream of the subsidies at the time of the sale of
the shares taking into account the spin-offs. 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 at
37259). This amount was then subtracted from the amount of the NPV
eligible for repayment, and the result was divided by the NPV to
calculate the ratio representing the amount of subsidies remaining with
SSAB.
To calculate the benefit provided to SSAB in the POR, where
appropriate, we multiplied the benefit calculated for 1994, adjusted
for sales of productive units, by the ratio representing the amount of
subsidies remaining with SSAB after privatization. We then divided the
results by the company's total sales in 1994.
Analysis of Programs
Based upon the responses to our questionnaire and written comments
from the interested parties we determine the following:
I. Programs Previously Determined to Confer Subsidies
We did not receive any comments on the following programs from the
interested parties; however, our review of the record uncovered a
clerical error in our preliminary calculations. In our calculation of
the subsidies remaining with SSAB after its privatization, we
inadvertently calculated the future benefit stream from the
nonrecurring subsidies at the time of the sale at their face value
without calculating their net present value. As stated above, in order
to determine the amount of subsidies remaining with SSAB and the amount
of subsidies repaid, we must calculate the net present value of the
remaining stream of benefits of the nonrecurring subsidies at the time
of the sale. Accordingly, for these final results, we have adjusted our
calculations to reflect the net present value at the time of the sale
of the remaining stream of benefits from the nonrecurring subsidies
listed below.
1. Equity Infusions
In the preliminary results, we found that this program conferred
countervailable subsidies on the subject merchandise. We did not
receive any comments on this program from interested parties; however,
due to the clerical error explained above, the net subsidy for this
program has changed from 0.53 percent ad valorem to 0.51 percent ad
valorem for SSAB.
2. Structural Loans
In the preliminary results, we found that this program conferred
countervailable subsidies on the subject merchandise. We did not
receive any comments on this program from interested parties; however,
due to the clerical error explained above, the net subsidy for this
program has changed from 0.27 percent ad valorem to 0.26 percent ad
valorem for SSAB.
3. Forgiven Reconstruction Loans
In the preliminary results, we found that this program conferred
countervailable subsidies on the subject merchandise. We did not
receive any comments on this program from interested parties; however,
due to the clerical error explained above, the net subsidy for this
program has changed from 1.18 percent ad valorem to 1.14 percent ad
valorem for SSAB.
II. Programs Found Not to Confer Subsidies
A. Research & Development (R&D) Loans and Grants.
B. Fund for Industry and New Business R&D.
In the preliminary results, we found these programs did not confer
subsidies during the POR. Our analysis of the comments submitted by the
interested parties, summarized below, has not led us to change our
findings from the preliminary results.
III. Program Found to be Not Used
In the preliminary results, we found that the producer/exporter of
the subject merchandise did not apply for or receive benefits under the
following programs:
A. Regional Development Grants.
B. Transportation Grants.
C. Location-of Industry Loans.
Our analysis of the comments submitted by the interested parties,
summarized below, has not led us to change our findings from the
preliminary results.
IV. Program Found to be Terminated
In the preliminary results, we found the following program to be
terminated and that no residual benefits were being provided:
Mining Exploration Grants
Our analysis of the comments submitted by the interested parties,
summarized below, has not led us to change our findings from the
preliminary results.
Analysis of Comments
Comment: Petitioners argue that the Department's privatization
methodology is contrary to economic reality, and is inconsistent with
the countervailing duty statute. Petitioners claim that the
Department's determination that privatization ``repays'' a portion of
the subsidies received before privatization is contrary to economic
reality because resources provided to SSAB by the Government of Sweden
(GOS) still remain with the company after privatization. According to
petitioners, these resources, which ``represented a flow of resources
into SSAB that the market would not have provided,'' continue to
benefit the subject merchandise. No resources were transferred from
SSAB back to the GOS. Furthermore, petitioners argue that the
Department's privatization methodology is contrary to the
countervailing duty statute because 19 U.S.C. 1671(a) requires that
subsidies bestowed upon the production, manufacture, or exportation of
merchandise imported into the United States be countervailed.
Petitioners maintain that the subsidies received by SSAB continue to
benefit the production of the subject merchandise after privatization.
Thus,
[[Page 16554]]
these subsidies continue to be fully countervailable.
The respondent claims in its rebuttal that the same arguments
against the Department's privatization methodology were raised by the
petitioners in the first administrative review. Respondents argue that
petitioners have provided no new arguments that would warrant the
Department to reconsider its privatization methodology. Therefore, the
Department should continue to apply its privatization methodology in
the final results of this administrative review.
Department's Position: Petitioners' claim that the Department's
privatization methodology is contrary to economic reality and
inconsistent with the countervailing duty statute is erroneous. On the
contrary, the application of this methodology is well within the
Department's discretion. The countervailing duty law instructs Commerce
to identify, measure and allocate subsidies. The law is intended to
provide remedial relief in the form of countervailing duties. See,
e.g., Chaparral Steel Co. v. United States, 901 F. 2d 1097, 1103-1104
(Fed. Cir. 1990). As we explained in the General Issues Appendix, the
Department interprets the law as allowing for the repayment or
reallocation of prior subsidies. See also, Certain Hot-Rolled Lead and
Bismuth Carbon Steel Products From the United Kingdom; Final Results of
Countervailing Duty Administrative Review, 61 FR 58377; 58381 (November
14, 1996). In the context of the sale of a government-owned company,
the Department found that a portion of the price paid for a privatized
company can go toward a partial repayment of prior subsidies. General
Issues Appendix, 58 at 37262-37263.
The General Issues Appendix is not inconsistent with the URAA with
regard to this issue. The URAA purposely leaves discretion to the
Department. It provides the Department with the flexibility to
determine both whether, and to what extent, a change in ownership
affects the countervailability of past subsidies. See, e.g., section
771(5)(F) of the Act and Final Affirmative Countervailing Duty
Determination: Certain Pasta from Italy, 61 FR at 30298. This clearly
was Congress' intent when it stated that ``[t]he Commerce Department
should continue to have the discretion to determine whether, and to
what extent (if any), actions such as the `privatization' of a
government-owned company actually serve to eliminate such subsidies.''
S. Rep. No. 412, 103d Cong., 2nd Sess. 92 (1994) (emphasis added).
Accordingly, as in the preliminary results, we continue to find
that because SSAB was a subsidized government-owned company, a portion
of the price paid for the privatized company represents partial
repayment of subsidies which were received prior to privatization. See,
Final Affirmative Countervailing Duty Determinations: Certain Steel
Products from Sweden (58 FR 37385, July 9, 1993).
Final Results of Review
In accordance with 19 CRF 355.22(c)(7)(ii), we calculated a subsidy
rate for the producer/exporter subject to this administrative review.
As a result of correcting the clerical errors in the preliminary
results, we determine the net subsidy for SSAB to be 1.91 percent ad
valorem for the period January 1, 1994 through December 31, 1994.
We will instruct the U.S. Customs Service (``Customs'') to assess
countervailing duties as indicated above. The Department will also
instruct Customs to collect cash deposits of estimated countervailing
duties in the percentages detailed above of the f.o.b. invoice price on
all shipments of the subject merchandise from the reviewed company,
entered or withdrawn form warehouse, for consumption on or after the
date of publication of the final results of this administrative review.
Because the URAA replaced the general rule in favor of a country-
wide rate with a general rule in favor of individual rates for
investigated and reviewed companies, the procedures for establishing
countervailing duty rates, including those for non-reviewed companies,
are now essentially the same as those in antidumping cases, except as
provided for in section 777A(e)(2)(B) of the Act. The requested review
will normally cover only those companies specifically named. See 19
C.F.R. 355.22(a). Pursuant to 19 C.F.R. 355.22(g), for all companies
for which a review was not requested, duties must be assessed at the
cash deposit rate, and cash deposits must continue to be collected at
the rate previously ordered. As such, the countervailing duty cash
deposit rate applicable to a company can no longer change, except
pursuant to a request for a review of that company. See Federal-Mogul
Corporation and The Torrington Company v. United States, 822 F.Supp.
782 (CIT 1993) and Floral Trade Council v. United States, 822 F.Supp.
766 (CIT 1993) (interpreting 19 C.F.R. 353.22(e), the antidumping
regulation on automatic assessment, which is identical to 19 C.F.R.
355.22(g), the countervailing duty regulation on automatic assessment.
Therefore, the cash deposit rates for all companies except SSAB will be
unchanged by the results of this review.
We will instruct Customs to continue to collect cash deposits for
non-reviewed companies at the most recent company-specific or country-
wide rate applicable to the company. Accordingly, the cash deposit
rates that will be applied to non-reviewed companies covered by this
order are those established in the most recently completed
administrative proceeding conducted pursuant to the statutory
provisions that were in effect prior to the URAA amendments. See
Certain Cut-to-Length Carbon Steel Plate from Sweden; Final Results of
Countervailing Duty Administrative Review, 61 FR 5381 (February 12,
1996). These rates shall apply to all non-reviewed companies until a
review of a company assigned these rates is requested. In addition, for
the period January 1, 1994 through December 31, 1994, the assessment
rates applicable to all non-reviewed companies covered by this order
are the cash deposit rates in effect at the time of entry.
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 C.F.R. 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(c)(8).
Dated: March 28, 1997.
Robert S. LaRussa
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-8843 Filed 4-4-97; 8:45 am]
BILLING CODE 3510-DS-P