[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