[Federal Register Volume 63, Number 172 (Friday, September 4, 1998)]
[Notices]
[Pages 47239-47246]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-23911]



[[Page 47239]]

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DEPARTMENT OF COMMERCE

International Trade Administration
[C-423-809]


Preliminary Affirmative Countervailing Duty Determination and 
Alignment of Final Countervailing Duty Determination With Final 
Antidumping Duty Determination: Stainless Steel Plate in Coils From 
Belgium

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

EFFECTIVE DATE: September 4, 1998.

FOR FURTHER INFORMATION CONTACT: Zak Smith, Stephanie Hoffman, or James 
Breeden, Office I, AD/CVD Enforcement, Import Administration, U.S. 
Department of Commerce, Room 3099, 14th Street and Constitution Avenue, 
N.W., Washington, D.C. 20230; telephone (202) 482-0189, (202) 482-4198, 
or (202) 482-1174, respectively.

Preliminary Determination

    The Department of Commerce preliminarily determines that 
countervailable subsidies are being provided to producers and exporters 
of stainless steel plate in coils from Belgium. For information on the 
estimated countervailing duty rates, please see the ``Suspension of 
Liquidation'' section of this notice.

Petitioners

    The petition in this investigation was filed on March 31, 1998. The 
petitioners are Allegheny Ludlum Corp., Armco, Inc., Lukens Inc., and, 
United Steelworkers of America, AFL-CIO/CLC (``the petitioners'').

Case History

    Since the publication of the notice of initiation in the Federal 
Register (see Notice of Initiation of Countervailing Duty 
Investigations: Stainless Steel Plate in Coils from Belgium, Italy, the 
Republic of Korea, and the Republic of South Africa, 63 FR 23272 (April 
28, 1998)), the following events have occurred. On April 30, 1998, we 
issued countervailing duty questionnaires to the Government of Belgium 
(``GOB''), the Government of Flanders (``GOF''), the European 
Commission (``EC''), and the producers/exporters of the subject 
merchandise. The GOB identified ALZ N.V. (``ALZ'') as the sole 
producer/exporter of subject merchandise from Belgium.
    On May 18, 1998, ALZ, filed a submission stating that the petition 
was inadequate in its allegations of certain programs. This allegation 
was repeated in several submissions. The petitioners responded with 
several submissions challenging these arguments. Following a review of 
the respondent's and petitioners' submissions, we determined not to 
continue investigating the Funding for Early Retirement program alleged 
in the petition. (See Memorandum to Richard Moreland, ``Initiation of 
Certain Programs Alleged to Benefit ALZ,'' June 18, 1998.)
    On June 8, 1998, we postponed the preliminary determination of this 
investigation until August 28, 1998 (see Notice of Postponement of Time 
Limit for Countervailing Duty Investigations: Stainless Steel Plate in 
Coils From Belgium, Italy, the Republic of Korea and the Republic of 
South Africa, 63 FR 31201 (June 8, 1998)).
    We received responses to our initial questionnaires from the GOB, 
the GOF, the EC, and ALZ on June 19, 1998. On July 14, 1998, we issued 
supplemental questionnaires to the GOB, GOF and ALZ. We received 
responses to these supplemental questionnaires on August 3, 1998.

Scope of Investigation

    For purposes of this investigation, the product covered is 
stainless steel plate in coils. Stainless steel is an alloy steel 
containing, by weight, 1.2 percent or less of carbon and 10.5 percent 
or more of chromium, with or without other elements. The subject plate 
products are flat-rolled products, 254 mm or over in width and 4.75 mm 
or more in thickness, in coils, and annealed or otherwise heat treated 
and pickled or otherwise descaled. The subject plate may also be 
further processed (e.g., cold-rolled, polished, etc.) provided that it 
maintains the specified dimensions of plate following such processing. 
Excluded from the scope of this petition are the following: (1) plate 
not in coils, (2) plate that is not annealed or otherwise heat treated 
and pickled or otherwise descaled, (3) sheet and strip, and (4) flat 
bars.
    The merchandise subject to this investigation is currently 
classifiable in the Harmonized Tariff Schedule of the United States 
(HTS) at subheadings: 7219.11.00.30, 7219.11.00.60, 7219.12.00.05, 
7219.12.00.20, 7219.12.00.25, 7219.12.00.50, 7219.12.00.55, 
7219.12.00.65, 7219.12.00.70, 7219.12.00.80, 7219.31.00.10, 
7219.90.00.10, 7219.90.00.20, 7219.90.00.25, 7219.90.00.60, 
7219.90.00.80, 7220.11.00.00, 7220.20.10.10, 7220.20.10.15, 
7220.20.10.60, 7220.20.10.80, 7220.20.60.05, 7220.20.60.10, 
7220.20.60.15, 7220.20.60.60, 7220.20.60.80, 7220.90.00.10, 
7220.90.00.15, 7220.90.00.60, and 7220.90.00.80. Although the HTS 
subheadings are provided for convenience and Customs purposes, the 
written description of the merchandise under investigation is 
dispositive.

The Applicable Statute and Regulations

    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''). In addition, unless otherwise indicated, all citations to the 
Department of Commerce's (``the Department's'') regulations are to the 
current regulations as codified at 19 CFR Part 351 and published in the 
Federal Register on May 19, 1997 (62 FR 27295).

Injury Test

    Because Belgium is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, the International Trade 
Commission (``ITC'') is required to determine whether imports of the 
subject merchandise from Belgium materially injure, or threaten 
material injury to, a U.S. industry. On May 28, 1998, the ITC published 
its preliminary determination finding that there is a reasonable 
indication that an industry in the United States is being materially 
injured, or threatened with material injury, by reason of imports from 
Belgium of the subject merchandise (see 63 FR 29251 (May 28, 1998)).

Alignment With Final Antidumping Duty Determination

    On May 27, 1998, the petitioners submitted a letter requesting 
alignment of the final determination in this investigation with the 
final determination in the companion antidumping duty investigations. 
See Initiation of Antidumping Duty Investigations: Stainless Steel 
Plate in Coils From Belgium, Canada, Italy, Republic of South Africa, 
South Korea and Taiwan, 63 FR 20580 (April 27, 1998). In accordance 
with section 705(a)(1) of the Act, we are aligning the final 
determination in this investigation with the final determinations in 
the antidumping investigations of stainless steel plate in coils.

Period of Investigation

    The period for which we are measuring subsidies (``the POI'') is 
calendar year 1997.

Company History

    The GOB identified one producer of the subject merchandise that 
exported to

[[Page 47240]]

the United States during the POI, ALZ. There are also two subsidiaries 
of ALZ which are involved in the production of the subject merchandise, 
ALBUFIN N.V. (``Albufin'') and AL-FIN N.V. (``Alfin''), and we have 
included any subsidies to these companies in the subsidy rate for ALZ. 
In 1987, the GOB sold its ownership interest in ALZ to SIDMAR N.V. 
(``Sidmar''). Normally, we would apply our privatization methodology 
under the circumstances presented. However, because the subsidies 
provided to ALZ prior to 1987 were extremely small, the amount of that 
could be considered as repayment would be insignificant. See, e.g., 
Industrial Phosphoric Acid from Israel; Final Results of Countervailing 
Duty Administrative Review, 61 FR 53351 (October 11, 1996), see also 
Industrial Phosphoric Acid from Israel; Preliminary Results of 
Countervailing Duty Administrative Review, 61 FR 28845 (June 6, 1996). 
Therefore, we did not apply our privatization methodology to the 1987 
transaction.

Subsidies Valuation Information

Allocation Period

    In the past, the Department has relied upon information from the 
U.S. Internal Revenue Service on the industry-specific average useful 
life of assets in determining the allocation period for non-recurring 
subsidies (see the General Issues Appendix (``GIA'') to the Final 
Affirmative Countervailing Duty Determination: Certain Steel Products 
from Austria, 58 FR 37217, at 37225 (July 9, 1993)). However, in 
British Steel plc v. United States, 879 F. Supp. 1254 (CIT 1995) 
(``British Steel I''), 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 non-recurring subsidies based on the average 
useful life (``AUL'') of non-renewable physical assets. This remand 
determination was affirmed by the Court on June 4, 1996. See British 
Steel plc v. United States, 929 F. Supp. 426, 439 (CIT 1996) (``British 
Steel II''). Thus, we intend to determine the allocation period for 
non-recurring subsidies using company-specific AUL data where 
reasonable and practicable. See, e.g., Certain Cut-to-Length Carbon 
Steel Plate from Sweden; Final Results of Countervailing Duty 
Administrative Review, 62 FR 16551 (April 7, 1997).
    In this investigation, the Department has followed the Court's 
decision in British Steel I, and examined information submitted by the 
respondent as to its average useful life of assets. Based on the 
information submitted by ALZ on the average useful life of its non-
renewable physical assets, we preliminarily determine that the AUL for 
ALZ is 15 years. Furthermore, for those subsidies received by Sidmar, 
which may be, in part, attributable to ALZ, we intend to seek 
information prior to the final determination regarding Sidmar's AUL. If 
necessary, for those years in which Sidmar was not consolidated with 
ALZ, we intend to use Sidmar's AUL for purposes of determining the 
allocation period for non-recurring subsidies received by Sidmar. For 
those years in which ALZ was consolidated with Sidmar, we intend to use 
a company-specific AUL, based on Sidmar's consolidated information, for 
purposes of determining the allocation period for non-recurring 
subsidies granted to Sidmar.

Equity Methodology

    Consistent with the Department's methodology, the first question in 
analyzing an equity infusion is whether, at the time of infusion, there 
was a market price for newly-issued equity (see GIA, 58 FR 37239). The 
Department will find an equity investment to be inconsistent with the 
usual practice of a private investor if the market-determined price for 
equity purchased from the firm is less than the price paid by the 
government for the same form of equity purchased directly from the 
firm. In this investigation, for those years in which market prices do 
not exist, the Department has conducted an equityworthiness analysis of 
the firm as described in the GIA, 58 FR at 37239. See ``1985 Debt to 
Equity Conversion and Purchase of ALZ Shares'' section, below.

Benchmarks for Long-Term Loans and Discount Rates

    ALZ reported that it obtained long-term commercial loans 
contemporaneously with the receipt of certain government loans or 
grants. Therefore, when available, we have used these company-specific 
interest rates as the long-term loan benchmark interest rate or 
discount rate. For those years in which ALZ did not receive commercial 
loans, we used the national average rates for long-term, fixed-rate 
debt as reported by the GOF.
Green Light
    The GOF requested green light treatment for certain benefits 
provided pursuant to the Economic Expansion Law of 1970 (``1970 Law''). 
Among other things, the 1970 Law offers incentives to promote the 
establishment of new enterprises or the expansion of existing ones 
which contribute directly to the creation of new activities and new 
employment within designated development zones.
    While the 1970 Law is currently administered by the GOF, the GOB 
originally oversaw the implementation of 1970 Law benefits to 
disadvantaged regions throughout Belgium. Pursuant to the overall 
devolution of power from the GOB to the regional governments since the 
early 1980s, the authority to administer the 1970 Law has been 
transferred to the regional governments. With respect to Flanders, many 
of the 1970 Law subsidy programs have been implemented and administered 
by the GOF since the late 1980s and the ``execution modalities'' have 
been amended by several Flemish decrees. Currently, funding for 
programs under the 1970 Law at issue in this investigation is included 
in a lump sum amount from the GOB as part of the funds needed to 
finance the overall operation of the GOF. This understanding of the 
authority and funding of the 1970 Law relates only to the benefits 
examined in this investigation and is based upon record evidence of 
this case. We will seek more clarification on the administration and 
funding of the 1970 Law.
    ALZ received several types of assistance under the 1970 Law (the 
initiation notice identified these subsidies as: 1993 Expansion Grant, 
1994 Environmental Grants, Investment and Interest Subsidies, 
Accelerated Depreciation, and Real Estate Tax Exemption). Most of this 
assistance was granted after the GOF assumed control of the subsidy 
programs. Therefore, for purposes of this preliminary determination, we 
are treating the GOF as the granting government for these bestowals. 
However, ALZ received one grant in 1983 (identified in the initiation 
notice as Investment and Interest Subsidies). Because this grant was 
received prior to the GOF takeover of 1970 Law authority, we consider 
this one grant as having been bestowed by the GOB.
    As mentioned above, the GOF requested green light treatment for 
certain benefits provided pursuant to the 1970 Law. They requested such 
treatment under both sections 771(5B)(C) (disadvantaged regions) and 
771(5B)(D) (environmental adaptations) of the Act. In order for an 
otherwise countervailable benefit to be accorded green light status, it 
must meet each of the requirements set forth in sections 771(5B)(C) or 
(D) of the Act (see also Statement of Administrative Action,

[[Page 47241]]

H.R. Doc. 316, Vol. 1, 103d Cong., 2d sess. 870, 266 (1994)).

Aid to Disadvantaged Regions

    At this time, the record lacks certain fundamental information 
necessary to evaluate this program for potential regional green light 
treatment. Section 771(5B)(C) of the Act permits green light status for 
only those subsidies provided pursuant to a general framework of 
regional development, which means that the regional subsidy programs 
are part of an internally consistent and generally applicable regional 
development program. See also section 771(5B)(E)(iii)(I) of the Act. 
Moreover, sections 771(5B)(C)(i) (II) and (III) of the Act require that 
each region be considered disadvantaged on the basis of neutral and 
objective criteria, including a measurement of economic development. In 
response to questions regarding the process by which regions are 
classified as disadvantaged, the GOF stated that the EC establishes the 
regions as disadvantaged and that neither the GOB nor the GOF are 
involved in this process. The information on the record to date does 
not provide a full understanding of the EC process and how it relates 
to the framework of GOF regional assistance. Moreover, it appears that 
the GOF distinguishes its own regions (similar to the EC's regions) and 
provides this information in an application to the EC. The GOF did not 
provide any information regarding its own system of identifying 
disadvantaged regions. Consequently, there is an absence of record 
evidence relating to whether the subsidies are provided pursuant to a 
``general framework of regional development which is internally 
consistent and generally applicable.''
    Therefore, we preliminarily determine that subsidies provided 
pursuant to the 1970 Law for the reduction of regional disparities are 
countervailable.

Aid for Environmental Adaptations

    Section 771(5B)(D)(i) of the Act stipulates that subsidies provided 
to promote the adaptation of existing facilities to new environmental 
requirements that are imposed by statute or by regulation shall not be 
countervailable, assuming other statutory requirements are met. In this 
investigation, we are evaluating only the grants received by ALZ under 
the 1970 Law for ecological investments (identified in the initiation 
notice as 1994 Environmental Grants).
    Section 771(5B)(D)(i) of the Act requires that the adaptation must 
be made to satisfy specific environmental requirements and those 
environmental requirements must ``* * * result in greater constraints 
and financial burdens on the recipient of the subsidy * * *'' In 
addition, a subsidy must: (I) be a one-time nonrecurring measure, (II) 
be limited to 20% of the cost of adaptation, (III) not cover the cost 
of replacing and operating the subsidized investment, and (IV) be 
directly linked and proportionate to the recipient's planned reduction 
of nuisances and pollution, and must not cover any manufacturing cost 
savings that may be achieved. Based upon the information currently on 
the record, we preliminarily determine the following.
    ALZ has shown that a financial burden was incurred because, by law, 
it was required to pay a large majority of the costs of the 
environmental adaptations necessary to conform to environmental 
regulations; non-compliance with these regulations would result in 
fines. Moreover, because these subsidies are one-time, non-recurring 
grants which are limited to 15 percent de jure, and 12 percent de facto 
(due to GOF budgetary constraints) of the adaptation costs, we 
preliminarily determine that ecological grants provided under the 1970 
Law fulfill requirements (I) and (II). With respect to requirements 
(III) and (IV), ALZ has shown that the calculation of assistance is 
based solely on the costs of the environmental adaptation, and does not 
include any costs of expansion. Moreover, the assistance cannot cover 
plant expansion or result in manufacturing cost savings. In this 
regard, there is a provision in the 1970 Law which states that if an 
investment is associated with an increase in the capacity of the plant, 
the eligible costs shall be proportionate to the initial capacity of 
the plant. Stated differently, the amount of aid granted for an 
ecological investment can only apply to an existing facility and may 
not be used to build or adapt an expanded facility.
    Notwithstanding the analysis outlined above, certain questions have 
arisen which are not fully addressed by the information currently on 
the record. For example, section 771(5B)(D)(i) stipulates that 
subsidies provided to promote the adaptation of existing facilities to 
new environmental requirements that are imposed by statute or by 
regulation shall not be countervailable (emphasis added). There is a 
question as to whether certain projects were performed by ALZ to adapt 
to a published law or regulation.
    Moreover, section 771(5B)(D)(i)(V) of the Act states that the 
subsidy must be ``available to all persons that can adopt the new 
equipment or production processes.'' The 1970 Law provides 
environmental grants only to enterprises located in a development 
region. Shortly before this preliminary determination, we discovered 
that two Flemish acts may supplement the 1970 Law: the 1993 Economic 
Expansion Decree (``1993 Decree'') and the Act of August 4, 1978 
(``1978 Act''). There is a copy of the 1993 Decree on the record and it 
appears that the 1993 Decree provides the same assistance for 
ecological investments to any medium-and large-sized enterprises in 
Flanders not eligible for assistance under the 1970 Law. However, the 
1978 Act is not on the record and there is no record evidence to 
suggest that the same provisions for ecological adaptations are 
provided to small-sized enterprises under the 1978 Act.
    Because of these outstanding questions, we preliminarily determine 
that more information is needed to complete our analysis. After we 
collect additional information and conduct verification, we will 
prepare an analysis memorandum addressing the green light status of 
this program during this period, and provide all parties an opportunity 
to comment on our analysis.

I. Programs Preliminarily Determined To Be Countervailable

A. Regional Subsidies Under the Economic Expansion Law of 1970

    As stated above, the 1970 Law offers incentives to enterprises 
located within designated disadvantaged regions. This law provides 
benefits specifically to firms in certain development zones of 
Flanders. Therefore, we preliminarily determine that benefits provided 
under this law are specific under section 771(5A)(D)(i) of the Act.
    In the Final Affirmative Countervailing Duty Determinations: 
Certain Steel Products from Belgium, 58 FR 37273 (July 9, 1993) 
(``Certain Steel''), we determined that assistance provided under the 
1970 Law complemented that provided under the 1959 Economic Expansion 
Law (``1959 Law''), because it generally increased the amount of 
assistance for companies located in certain development zones. 
Subsidies provided pursuant to the 1959 Law were found not 
countervailable in the Final Affirmative Countervailing Duty 
Determinations: Certain Steel Products From Belgium, September 7, 1982 
(47 FR 39305) (``Belgian Steel'') because they were not specific. 
Therefore, in Certain Steel, we countervailed benefits under the 1970 
Law only to the extent they exceeded benefits available under the 1959 
Law (see Certain Steel at 37275 and 37289

[[Page 47242]]

and section 355.44(n) of the 1989 Proposed Regulations).
    ALZ has argued for the same treatment in this case. However, the 
verification report of the GOB in Certain Steel states that the 1959 
Law was repealed effective August 1, 1991. Therefore, for benefits 
received by ALZ after 1991, it is not appropriate to take into account 
the benefits that might have been provided under the 1959 Law. The GOB 
stated that the 1959 Law was replaced with the Flemish 1993 Decree. 
However, we need more information on the 1993 Decree to determine 
whether benefits available under it are non-specific and whether such 
benefits should affect the level of countervailable benefits provided 
under the 1970 Law.
1. 1993 Expansion Grant
    The GOF gave Albufin, a subsidiary of ALZ, a cash grant in 1994 to 
construct an annealing and pickling line. The grant is a financial 
contribution as described in section 771(5)(D)(i) of the Act which 
provides a benefit to the recipient in the amount of the grant. 
Furthermore, as mentioned above, benefits under the 1970 Law are 
available only to firms in certain regions of Flanders. On this basis, 
we preliminarily determine that the program is specific under section 
771(5A)(D)(i) of the Act. Therefore, we preliminarily determine that 
the 1993 Expansion Grant received by Albufin is countervailable within 
the meaning of section 771(5) of the Act.
    We further preliminarily determine that this grant is non-recurring 
because the company could not expect to receive it on an ongoing basis. 
Because the benefit to Albufin was below 0.5 percent of sales in the 
year of receipt, we expensed the grant in that year. Thus, Albufin 
received no benefit during the POI.
2. Investment and Interest Subsidies
    The petitioners alleged that ALZ financial statements for 1996 and 
1997 show entries for ``investment subsidies'' and ``interest 
subsidies.'' According to ALZ, the majority of these figures are 
comprised of the environmental grants described above. However, as 
mentioned above, in 1983, ALZ received one cash grant from the GOB 
under the old system of assistance. At that time, the 1959 Law was 
still in effect.
    We preliminarily determine that this grant received by ALZ is 
countervailable within the meaning of section 771(5) of the Act. The 
1983 grant is a financial contribution as described in section 
771(5)(D)(i) of the Act which provides a benefit to the recipient in 
the amount of the grant. Because the countervailable portion of the 
assistance was received from the GOB pursuant to the 1970 Law and, as 
mentioned above, benefits under the 1970 Law were available only to 
firms in certain regions of the country, we preliminarily determine 
that the program is specific under section 771(5A)(D)(i) of the Act.
    Therefore, because cash grants of this nature were also available 
to companies under the 1959 Law, we preliminarily determine that only 
the difference in the assistance level between the two laws constitutes 
a countervailable benefit (see also Certain Steel, 58 FR 37273, 37275). 
To derive the benefit, we calculated the difference in the level of 
benefit between what was actually granted pursuant to the 1970 Law and 
what could have been received pursuant to the 1959 Law.
    We further determine that this grant is non-recurring because it 
was not provided on an ongoing basis. In calculating the benefit, we 
applied the Department's standard grant methodology. We divided the 
benefit attributable to the POI by ALZ's total sales during the POI. On 
this basis, we preliminarily determine the countervailable subsidy to 
be 0.02 percent ad valorem.
3. Accelerated Depreciation
    Article 15 of the 1970 Law allows companies to declare twice the 
standard depreciation for assets acquired through funds provided by the 
grants bestowed under the law. The tax benefit is a financial 
contribution as described in section 771(5)(D)(ii) of the Act which 
provides a benefit to the recipient in the amount of the tax savings. 
Because only enterprises situated in certain development zones are 
eligible to apply for accelerated depreciation, we preliminarily 
determine that the program is specific under section 771(5A)(D)(i) of 
the Act. Therefore, we preliminarily determine that this tax benefit 
received by ALZ is countervailable within the meaning of section 771(5) 
of the Act.
    Albufin, an ALZ subsidiary, received tax savings under this program 
during the POI. In calculating the benefit, we treated the tax savings 
as a recurring benefit and divided it by ALZ's total sales during the 
POI. On this basis, we preliminarily determine the countervailable 
subsidy to be 0.49 percent ad valorem.
4. Real Estate Tax Exemption
    Pursuant to Article 16, assets acquired through investments 
financed in part by the 1970 Law may be exempted from real estate taxes 
for up to five years, depending on the extent to which objectives of 
the 1970 Law are achieved. The tax benefit is a financial contribution 
as described in section 771(5)(D)(ii) of the Act which provides a 
benefit to the recipient in the amount of the tax savings. Because only 
enterprises situated in certain development zones are eligible to apply 
for a real estate tax exemption, we preliminarily determine that the 
program is specific under section 771(5A)(D)(i) of the Act. Therefore, 
we preliminarily determine that this tax benefit received by ALZ is 
countervailable within the meaning of section 771(5) of the Act.
    Albufin received tax savings under this program during the POI. In 
calculating the benefit, we treated the tax savings as a recurring 
benefit and divided it by ALZ's total sales during the POI. On this 
basis, we preliminarily determine the countervailable subsidy to be 
0.04 percent ad valorem.

B. 1985 ALZ Share Subscriptions and Subsequent Transactions (Identified 
in the Initiation Notice as 1985 Debt to Equity Conversion and Purchase 
of ALZ Shares)

    On September 26, 1985, the GOB made three share subscriptions in 
ALZ pursuant to the Royal Decree No. 245 of December 31, 1983. This 
Royal Decree allowed the GOB to make preference share subscriptions in 
the steel industry as long as the subscriptions did not exceed one-half 
of the social capital of the company. The Nationale Maatschappig voor 
de Herstructurering van de Nationale Sectoren (``NMNS''), the 
government agency purchasing the shares, acquired ordinary shares and 
preference shares through this transaction.
    In analyzing whether these share purchases conferred a benefit on 
ALZ, we must determine whether the GOB investment was inconsistent with 
the usual investment practice of private investors in Belgium. Neither 
ALZ's ordinary nor preference shares were publicly traded. Therefore, 
we have analyzed the circumstances of the transaction.
    According to ALZ, the price at which the GOB purchased shares in 
ALZ was determined by two separate studies as discussed in ALZ's 
shareholders' meeting of September 26, 1985. These studies were 
performed by an independent accounting firm and a group of experts 
selected by ALZ. ALZ also submitted documentation from the European 
Commission notifying the GOB that ALZ's capital increase met the 
Commission's private investor standard. In addition, we have performed 
an

[[Page 47243]]

independent analysis of ALZ's financial health at the time of the stock 
purchase. This analysis indicates that the company was equityworthy.
    Consistent with the standard established in Aimcor v. the United 
States, 871 F. Supp. 447, 454 (CIT 1994) and Geneva Steel et al. v. 
United States, 914 F. Supp. 563, at 582, (CIT 1996), a finding of 
equityworthiness means that the Department need not inquire further 
regarding the commercial soundness of a government's purchases of 
ordinary shares. Hence, we preliminary determine that the GOB's 1985 
purchase of ordinary shares was consistent with the usual investment 
practice of private investors in Belgium.
    With respect to ALZ's preference shares, we have analyzed the 
characteristics of the shares and the price paid per share, and have 
concluded that the government's 1985 investment in these preferred 
shares was consistent with the usual investment practice of private 
investors in Belgium (see memorandum from Team to Richard Moreland, 
``Concurrence Memorandum; Summary of Issues,'' public version, dated 
August 28, 1998 (``Concurrence Memorandum'')).
    However, in 1987, the GOB sold ALZ's ordinary shares purchased 
under the Royal Decree No. 245 to Kempense Investeringsvennootschap 
(``KIV''), a company controlled by Sidmar. The price received by the 
GOB was lower than the price Sidmar paid a private company for its 
ordinary shares in ALZ, in a relatively contemporaneous transaction.
    Furthermore, in 1993, Sidmar acquired the preference shares 
originally purchased under the Royal Decree No. 245 from the GOB in 
return for an ownership interest in a Sidmar controlled company. Based 
on our analysis, the GOB sold these preference shares at a price below 
the market value for ALZ stock (the exact terms of this transaction are 
proprietary in nature and are discussed in the Concurrence Memorandum.
    We preliminarily determine that the GOB's sales of ALZ's ordinary 
and preferred shares to Sidmar constitute countervailable subsidies 
within the meaning of section 771(5) of the Act. These programs provide 
a financial contribution, as described in section 771(5)(D)(i) of the 
Act. As discussed above, benefits under Royal Decree No. 245 are 
available only to the steel sector. On this basis, we preliminarily 
determine that the programs are specific under section 771(5A)(D) of 
the Act.
    To calculate the benefits, we took the difference between market 
values for ALZ's ordinary and preferred shares and the price paid by 
Sidmar for the stock in question. We then applied the Department's 
standard grant methodology and divided the benefit attributable to the 
POI by Sidmar's total sales during the POI. On this basis, we 
preliminarily determine the countervailable subsidies to be 0.05 and 
0.12 percent ad valorem, respectively.

C. Belgian Industrial Finance Company (``Belfin'') Loans

    Belfin was established by Royal Decree on June 29, 1981, as a mixed 
corporation with 50 percent GOB participation and 50 percent private 
industry participation. In Certain Steel, we determined that Belfin's 
objective is to finance investments needed for the restructuring and 
development of various sectors of industry, commerce, and state 
services. Belfin borrows money in Belgium and on international markets, 
with the benefit of government guarantees, in order to obtain the funds 
needed to make loans to Belgian companies. The government's guarantee 
makes it possible for Belfin to borrow at favorable interest rates and 
to pass the savings along when it lends the funds to Belgian companies. 
Belfin loans to Belgian companies are not guaranteed by the GOB. 
However, these loans carry a one percent commission which is used to 
maintain a guarantee fund to support the GOB's guarantee of Belfin's 
borrowing. ALZ received Belfin loans which were outstanding during the 
POI.
    We preliminarily determine that this program constitutes a 
countervailable subsidy within the meaning of section 771(5) of the 
Act. These loans provide a financial contribution, as described in 
section 771(5)(D)(i) of the Act, with the benefit equal to the 
difference between the benchmark rate and the rate ALZ pays on these 
loans. Although the objective of Belfin loans is to assist the 
restructuring and development of various sectors, steel companies are 
the predominant recipients of Belfin loans. Therefore, we preliminarily 
determine that the Belfin loans to the steel industry are specific 
under section 771(5A) of the Act.
    To calculate the subsidy conferred by these loans we used our long-
term fixed-rate loan methodology. We measured the interest savings to 
ALZ in each year the loans were outstanding. We then took the present 
value of each of these amounts as of the time the loan was received. 
Finally, using the benchmark as a discount rate, we allocated the 
subsidy over the life of the loan. We then divided the benefit 
attributable to the POI by ALZ's total 1997 sales. On this basis, we 
preliminarily determine the countervailable subsidy to be 0.01 percent 
ad valorem.

D. Industrial Reconversion Zones

Alfin
    Alfin was established as a ``proper'' reconversion company in 1985 
under the reconversion program ``Herstelwet 1984.'' It was financed by 
a government agency, Nationale Investeringsmaatschappij (``NIM'') and 
ALZ. In exchange for its investment, NIM received preferred non-voting 
shares and a two percent annual return on its investment. ALZ is 
obligated to repurchase all of the shares purchased by NIM over a ten 
year period at the issued price.
    We used the hierarchical criteria discussed in the ``Classification 
of Hybrid Financial Instruments Issue'' section of the GIA to examine 
these shares and preliminarily find that they constitute debt 
instruments because they have a fixed repayment period. We 
preliminarily determine that this program constitutes a countervailable 
subsidy within the meaning of section 771(5) of the Act. This program 
provides a financial contribution, as described in section 771(5)(D)(i) 
of the Act. Because the ``Herstelwet 1984'' law provides benefits 
specifically to firms in certain regions of the country, we 
preliminarily determine that it is specific under section 771(5A) of 
the Act.
    To measure the benefit on this loan, we used our long-term fixed-
rate loan methodology and measured the cost savings conferred by the 
loan in each year the loan was outstanding, as described above. We 
divided the subsidy allocated to the POI by ALZ's total 1997 sales. On 
this basis, we preliminarily determine the countervailable subsidy to 
be 0.20 percent ad valorem.
Albufin
    Albufin was established as an ``improper'' reconversion company in 
1989, also under the reconversion program ``Herstelwet 1984.'' It 
received capital with partial financing from the government (NIM), the 
Sidmar Group (FININDUS), a private company (Klockner Stahl) and ALZ. 
Because Klockner Stahl was a private company at the time of Albufin's 
establishment, and it invested on the same terms as the government, we 
preliminarily determine that there is no countervailable benefit 
resulting from the establishment of the company. However, as an 
``improper'' reconversion company, Albufin benefits from a tax 
exemption on dividend payments and is exempt from the capital 
registration tax. We

[[Page 47244]]

preliminarily determine that these tax benefits received by Albufin are 
countervailable subsidies within the meaning of section 771(5) of the 
Act. The tax benefits are a financial contribution as described in 
section 771(5)(D)(ii) of the Act which provide a benefit to the 
recipient in the amount of the tax savings. Because the ``Herstelwet 
1984'' law provides benefits specifically to firms in certain regions 
of the country, we preliminarily determine that it is specific under 
section 771(5A) of the Act.
    In the POI, Albufin did not receive tax savings under the capital 
registration tax but did benefit from the exemption on dividend 
payments. To measure the benefit from this tax exemption, we treated 
the tax savings as a recurring benefit and divided it by ALZ's total 
sales during the POI. On this basis, we preliminarily determine the 
countervailable subsidy to be 0.05 percent ad valorem. 

E. Subsidies Provided to Sidmar That Are Attributable to ALZ

    As discussed in the ``Company History'' section above, Sidmar owns 
either directly or indirectly 100 percent of ALZ's voting shares and is 
the overall majority shareholder of ALZ. In Certain Steel and in the 
Department's redetermination on remand of Certain Steel, we found that 
Sidmar received several countervailable benefits that were attributable 
to the entire Sidmar group. Because ALZ is a fully consolidated 
subsidiary of Sidmar, any untied subsidies provided to Sidmar are 
attributable to ALZ (see Certain Hot-Rolled Lead and Bismuth Carbon 
Steel Products From the United Kingdom; Final Results of Countervailing 
Duty Administrative Review, 63 FR 18367 (April 15, 1998) (``UK Lead and 
Bismuth'')). Thus, we preliminarily determine that the following two 
programs provide countervailable benefits to ALZ via its parent 
company, Sidmar.
1. Assumption of Sidmar's Debt
    Between 1979 and 1983, the GOB assumed the interest costs 
associated with medium- and long-term loans for certain steel 
producers, including Sidmar. In exchange for the GOB's assumption of 
financing costs, Sidmar agreed to the conditional issuance of 
convertible profit sharing bonds (``OCPCs'') to the GOB. In 1985, 
Sidmar and the GOB agreed to substitute parts beneficiaires (``PBS'') 
for the OCPCs.
    Consistent with Certain Steel and the attendant litigation, we 
preliminarily determine that the GOB's initial assumption of interest 
costs was specific under section 771(5A) of the Act. Furthermore, we 
preliminarily determine that the OCPCs are properly classifiable as 
debt and that the conversion of OCPCs to PBS constituted a debt to 
equity conversion. Comparing the price paid for the PBS to the market 
value of Sidmar's common stock, we preliminarily determine that the 
debt to equity conversion provided a benefit to Sidmar as the share 
transactions were on terms inconsistent with the usual practice of a 
private investor.
    We preliminarily determine that this program constitutes a 
countervailable subsidy within the meaning of section 771(5) of the 
Act. This program provides a financial contribution, as described in 
section 771(5)(D)(i) of the Act. As discussed above, benefits under 
this program were available only to certain steel producers. On this 
basis, we preliminarily determine that the program is specific under 
section 771(5A)(D) of the Act.
    To measure the benefit from the debt to equity conversion, we 
calculated the premium paid by the government as the difference between 
the price paid by the government for the PBS and the adjusted market 
price of the common shares. We then applied the Department's standard 
grant methodology and divided the benefit attributable to the POI by 
Sidmar's total sales during the POI. On this basis, we preliminarily 
determine the countervailable subsidy to be 0.31 percent ad valorem.
2. SidInvest
    The right to establish ``Invests'' was limited to the five national 
industries. SIDINVEST N.V. (``SidInvest'') was incorporated on August 
31, 1982, as a holding company jointly owned by Sidmar and the Societe 
Nationale d'Investissement, S.A. (``SNI''). SidInvest was given drawing 
rights on SNI to finance specific projects. The drawing rights took the 
form of conditional refundable advances (``CRAs''), which were 
interest-free, but repayable to SNI based on a company's profitability. 
In 1987, the GOB moved to accelerate the repayment of the CRAs and 
thus, in 1988, SidInvest agreed to pay back the outstanding balance on 
the CRAs at a rate of 3 percent per year. Later in July 1988, an 
agreement was reached for NMNS to become a shareholder in SidInvest by 
contributing the CRAs owed to it by SidInvest in exchange for SidInvest 
stock. Through a series of transactions the Sidmar group then 
repurchased the SidInvest shares obtained by NMNS.
    Consistent with Certain Steel, we preliminarily determine that the 
CRAs were interest-free loans. On July 29, 1988, a fixed repayment 
schedule over 32 years was established for these interest-free loans. 
Thus, the first benefit arising from the July 1988, transactions was 
the creation of a 32-year interest-free loan.
    The second benefit arose from the GOB's subsequent exchange of the 
loan for shares in SidInvest and the selling of those shares back to 
various members of the Sidmar group. Because SidInvest paid less than 
the net present value in 1988 of the amount due in 32 years for the 
repurchase of its loan, we are treating the difference between what 
SidInvest should have been willing to pay and what NMNS received as a 
benefit.
    We preliminarily determine that both transactions provided a 
countervailable subsidy within the meaning of section 771(5) of the 
Act. Both provide a financial contribution, as described in section 
771(5)(D)(i) of the Act. Moreover, because the right to establish 
``Invests'' was limited to the five national sectors, we view these 
programs as being limited to a specific group of industries. On this 
basis, we preliminarily determine that the programs are specific under 
section 771(5A)(D) of the Act.
    To measure the benefit from the interest-free loan, we allocated 
the benefit over the life of the loan using our standard long-term loan 
methodology. To calculate the benefit from the selling of the loan, we 
applied the Department's standard grant methodology. We divided the 
benefits attributable to the POI by Sidmar's consolidated total sales 
during the POI. On this basis, we preliminarily determine the 
countervailable subsidies to be 0.25 and 0.05 percent ad valorem, 
respectively.

II. Programs Preliminarily Determined To Be Not Countervailable

A. Societe Nationale de Credite a l'Industrie (``SNCI'') Loans (Loans 
Approved Between 1987 and 1990)

    The SNCI was a public credit institution, which, through medium- 
and long-term financing, encouraged the development and growth of 
industrial and commercial enterprises in Belgium. SNCI was organized as 
a limited liability company and, until 1997, was 50-percent owned by 
the Belgian government. ALZ received investment loans from SNCI which 
were outstanding during the POI. All SNCI loans received by ALZ and 
outstanding during the POI were approved and disbursed after 1986.

[[Page 47245]]

    In Certain Steel, we examined whether investment loans from SNCI 
were specific by analyzing whether the steel industry received a 
disproportionate share of benefits (58 FR 37273, 37280-37281). We 
compared the steel industry's share of benefits to the share of 
benefits provided to all other users of the program. Although SNCI made 
loans to many sectors of the Belgian economy, we determined that the 
steel industry had received a disproportionately large share of 
investment loans granted between 1975 and 1986. However, we did not 
find disproportionality or specificity in 1987 and 1988 as the steel 
industry's share of benefits dropped significantly. No new information 
has been presented in this investigation to change our Certain Steel 
determination.
    In the present case, we examined data on the distribution of SNCI 
investment loans after 1988 to determine whether they were specific 
under section 771(5A)(D)(iii) of the Act. The GOB provided information 
on the sectoral distribution of loans under the program for the years 
1989 and 1990. This information indicates that the steel industry did 
not receive a disproportionate share of benefits in those years. 
Therefore, for loans approved between 1989 and 1990, we preliminarily 
determine that SNCI investment loans were non-specific, and therefore, 
not countervailable. Moreover, ALZ stated that it received one loan 
from SNCI after the institution was completely privatized. Because the 
loan was approved and disbursed after SNCI's privatization, we 
preliminarily determine that this loan is not countervailable under 
section 771(5B) of the Act.
    We do not have specific industry usage information for SNCI loans 
for years after 1990 and before SNCI was privatized. We requested this 
information from the GOB in both the original and supplemental 
questionnaires. While the GOB provided SNCI's annual reports for all 
relevant years, after 1990 these reports ceased to provide specific 
information on sectoral distribution of loans. However, there are 
general descriptions of changes in SNCI lending patterns. These 
descriptions provide no indication that the steel industry received a 
disproportionate share of investment loans from SNCI during this 
period. Therefore, we need more information to determine whether SNCI 
loans approved after 1990 were specific under section 771(5A)(D)(iii) 
of the Act. However, after we collect additional information and 
conduct verification, we will prepare an analysis memorandum addressing 
the specificity of this program during the period under investigation, 
and provide all parties an opportunity to comment on our analysis.

III. Programs for Which We Need More Information

A. Societe Nationale de Credite a l'Industrie (``SNCI'') Loans (loans 
approved after 1990)
See ``SNCI Loans'' section, above.
B. 1994 Environmental Grants under the 1970 Law
See ``Green Light'' section, above.

IV. Programs Preliminarily Determined To Be Not Used

    Based upon the information provided in the responses, we determine 
that the company under investigation did not apply for or receive 
benefits under the following programs during the POI.

A. Government of Belgium Programs

1. Subsidies Provided to Sidmar that are Potentially Attributable to 
ALZ
    a. Water Purification Grants
2. Societe Nationale pour la Reconstruction des Secteurs Nationaux 
(``SNSN'')
3. Regional subsidies under the Economic Expansion Law of 1970 (``1970 
Law'')
    a. Corporate Income Tax Exemption
    b. Capital Registration Tax Exemption
    c. Government Loan Guarantees
4. Special Depreciation Allowance
5. Preferential Short-Term Export Credit
6. Interest Rate Rebates

B. Programs of the European Commission

1. ECSC Article 54 Loans and Interest Rebates
2. ECSC Article 56 Conversion Loans, Interest Rebates and Redeployment 
Aid
3. European Social Fund Grants
4. European Regional Development Fund Grants
5. Resider II Program

Verification

    In accordance with section 782(i) of the Act, we will verify the 
information submitted by respondents prior to making our final 
determination.

Suspension of Liquidation

    In accordance with section 703(d)(1)(A)(i) of the Act, we have 
calculated an individual rate for ALZ, the sole manufacturer of the 
subject merchandise. We preliminarily determine that the total 
estimated net countervailable subsidy rate is 1.59 percent ad valorem. 
Because we only investigated one producer/exporter, ALZ's rate will 
also serve as the ``all others'' rate. Therefore, the ``all others'' 
rate is 1.59 percent ad valorem.
    In accordance with section 703(d) of the Act, we are directing the 
U.S. Customs Service to suspend liquidation of all entries of plate in 
coils from Belgium, which are entered or withdrawn from warehouse, for 
consumption on or after the date of the publication of this notice in 
the Federal Register, and to require a cash deposit or bond for such 
entries of the merchandise in the amount of 1.59 percent ad valorem. 
This suspension will remain in effect until further notice.

ITC Notification

    In accordance with section 703(f) of the Act, we will notify the 
ITC of our determination. In addition, we are making available to the 
ITC all nonprivileged and nonproprietary information relating to this 
investigation. We will allow the ITC access to all privileged and 
business proprietary information in our files, provided the ITC 
confirms that it will not disclose such information, either publicly or 
under an administrative protective order, without the written consent 
of the Assistant Secretary, Import Administration.
    If our final determination is affirmative, the ITC will make its 
final determination within 45 days after the Department makes its final 
determination.

Public Comment

    In accordance with 19 CFR 351.310, we will hold a public hearing, 
if requested, to afford interested parties an opportunity to comment on 
this preliminary determination. The hearing is tentatively scheduled to 
be held 57 days from the date of publication of the preliminary 
determination at the U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230. Individuals who wish 
to request a hearing must submit a written request within 30 days of 
the publication of this notice in the Federal Register to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, 14th Street and Constitution Avenue, N.W., Washington, DC 20230. 
Parties should confirm by telephone the time, date, and place of the 
hearing 48 hours before the scheduled time.
    Requests for a public hearing should contain: (1) the party's name, 
address, and telephone number; (2) the number of participants; and, (3) 
to the extent practicable, an identification of the arguments to be 
raised at the hearing. In addition, six copies of the business 
proprietary version and six copies of the

[[Page 47246]]

nonproprietary version of the case briefs must be submitted to the 
Assistant Secretary no later than 50 days from the date of publication 
of the preliminary determination. As part of the case brief, parties 
are encouraged to provide a summary of the arguments not to exceed five 
pages and a table of statutes, regulations, and cases cited. Six copies 
of the business proprietary version and six copies of the 
nonproprietary version of the rebuttal briefs must be submitted to the 
Assistant Secretary no later than 55 days from the date of publication 
of the preliminary determination. An interested party may make an 
affirmative presentation only on arguments included in that party's 
case or rebuttal briefs. Written arguments should be submitted in 
accordance with 19 CFR 351.309 and will be considered if received 
within the time limits specified above.
    This determination is published pursuant to sections 703(f) and 
777(i) of the Act.

    Dated: August 28, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-23911 Filed 9-3-98; 8:45 am]
BILLING CODE 3510-DS-P