[Federal Register Volume 64, Number 33 (Friday, February 19, 1999)]
[Notices]
[Pages 8313-8322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-4198]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-351-829]


Preliminary Affirmative Countervailing Duty Determination and 
Alignment of Final Countervailing Duty Determination With Final 
Antidumping Duty Determination: Certain Hot-Rolled Flat-Rolled Carbon-
Quality Steel Products From Brazil

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

EFFECTIVE DATE: February 19, 1999.

FOR FURTHER INFORMATION CONTACT: Kathleen Lockard or Javier Barrientos, 
Office of CVD/AD Enforcement VI, Import Administration, U.S. Department 
of Commerce, Room 4012, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone (202) 482-2786.

Preliminary Determination

    The Department of Commerce (the Department) preliminarily 
determines that countervailable subsidies are being provided to 
Companhia Siderugica Nacional (CSN), Usinas Siderugicas de Minas Gerais 
(USIMINAS) and Companhia Siderurgica Paulista (COSIPA) producers and 
exporters of certain hot-rolled flat-rolled carbon-quality steel 
products from Brazil. 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 by Bethlehem Steel 
Corporation, U.S. Steel Group, a unit of USX Corporation, Ispat Inland 
Steel, LTV Steel Company, Inc., National Steel Corporation, California 
Steel Industries, Gallatin Steel Company, Geneva Steel, Gulf States 
Steel Inc., IPSCO Steel Inc., Steel Dynamics, Weirton Steel 
Corporation, Independent Steelworkers Union, and United Steelworkers of 
America (the petitioners).

Case History

    Since the publication of the notice of initiation in the Federal 
Register, the following events have occurred. See Notice of Initiation 
of Countervailing Duty Investigation: Certain Hot-Rolled Flat-Rolled 
Carbon-Quality Steel Products from Brazil, 63 FR 56623 (October 22, 
1998) (Initiation Notice). On October 19, 1998 we issued countervailing 
duty questionnaires to the Government of Brazil (GOB) and the 
producers/exporters of the subject merchandise. We issued supplemental 
countervailing duty questionnaires on November 10 and December 17, 
1998, and January 26, 1999. We received responses to these 
questionnaires on December 7, 1998, January 6, 1999, January 12, 1999, 
and February 8, 1999.
    On November 12, 1998, Petitioners alleged an additional subsidy 
that was not included in the petition. On December 8, 1998 we initiated 
on this program. See ``Memorandum to Holly Kuga, Acting Deputy 
Assistant Secretary for AD/CVD Enforcement II, Regarding Petitioners' 
Allegations,'' a public document on file in the Central Records Unit, 
Room B-099 of the Main Commerce Building (CRU).
    On December 1, 1998, we deemed this investigation extraordinarily 
complicated and postponed the preliminary determination to no later 
than January 25, 1998. See Hot-Rolled Flat-Rolled Carbon-Quality Steel 
Products from Brazil: Postponement of Time Limit for Countervailing 
Duty Investigation, 63 FR 67459 (December 7, 1998). On January 22, 
1999, we determined that additional time was necessary to make the 
preliminary determination and further postponed the preliminary 
determination to no later than February 12, 1999. See Hot-Rolled Flat-
Rolled Carbon-Quality Steel Products from Brazil: Postponement of Time 
Limit for Countervailing Duty Investigation, 64 FR 4638 (January 29, 
1999).

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's regulations are to the regulations as codified at 19 CFR 
351 and published in the Federal Register on May 19, 1997 (62 FR 
27295).

Scope of Investigation

    For purposes of this investigation, the products covered are 
certain hot-rolled flat-rolled carbon-quality steel products of a 
rectangular shape, of a width of 0.5 inch or greater, neither clad, 
plated, nor coated with metal and whether or not painted, varnished, or 
coated with plastics or other non-metallic substances, in coils 
(whether or not in successively superimposed layers) regardless of 
thickness, and in straight lengths, of a thickness less than 4.75 mm 
and of a width measuring at least 10 times the thickness. Universal 
mill plate (i.e., flat-rolled products rolled on four faces or in a 
closed box pass, of a width exceeding 150 mm but not exceeding 1250 mm 
and of a thickness of not less than 4 mm, not in coils and without 
patterns in relief) of a thickness not less than 4.0 mm is not included 
within the scope of these investigations.
    Specifically included in this scope are vacuum degassed, fully 
stabilized (commonly referred to as interstitial-free (``IF'')) steels, 
high strength low alloy (``HSLA'') steels, and the substrate for motor 
lamination steels. IF steels are recognized as low carbon steels with 
micro-alloying levels of elements such as titanium and/or niobium added 
to stabilize carbon and nitrogen elements.

[[Page 8314]]

HSLA steels are recognized as steels with micro-alloying levels of 
elements such as chromium, copper, niobium, titanium, vanadium, and 
molybdenum. The substrate for motor lamination steels contains micro-
alloying levels of elements such as silicon and aluminum.
    Steel products to be included in the scope of this investigation, 
regardless of HTSUS definitions, are products in which: (1) iron 
predominates, by weight, over each of the other contained elements; (2) 
the carbon content is 2 percent or less, by weight; and (3) none of the 
elements listed below exceeds the quantity, by weight, respectively 
indicated:

1.80 percent of manganese, or
1.50 percent of silicon, or
1.00 percent of copper, or
0.50 percent of aluminum, or
1.25 percent of chromium, or
0.30 percent of cobalt, or
0.40 percent of lead, or
1.25 percent of nickel, or
0.30 percent of tungsten, or
0.012 percent of boron, or
0.10 percent of molybdenum, or
0.10 percent of niobium, or
0.41 percent of titanium, or
0.15 percent of vanadium, or
0.15 percent of zirconium.

    All products that meet the physical and chemical description 
provided above are within the scope of this investigation unless 
otherwise excluded. The following products, by way of example, are 
outside and/or specifically excluded from the scope of this 
investigation:
     Alloy hot-rolled steel products in which at least one of 
the chemical elements exceeds those listed above (including e.g., ASTM 
specifications A543, A387, A514, A517, and A506).
     SAE/AISI grades of series 2300 and higher.
     Ball bearing steels, as defined in the HTSUS.
     Tool steels, as defined in the HTSUS.
     Silico-manganese (as defined in the HTSUS) or silicon 
electrical steel with a silicon level exceeding 1.50 percent.
     ASTM specifications A710 and A736.
     USS Abrasion-resistant steels (USS AR 400, USS AR 500).
     Hot-rolled steel coil which meets the following chemical, 
physical and mechanical specifications:

----------------------------------------------------------------------------------------------------------------
  C percent      Mn percent     P percent     S percent    Si percent    Cr percent    Cu percent    Ni percent
----------------------------------------------------------------------------------------------------------------
0.10-0.14....         0.90*        0.025*        0.005*     0.30-0.50     0.50-0.70     0.20-0.40         0.20*
----------------------------------------------------------------------------------------------------------------
*Max
Width = 44.80 inches maximum; Thickness = 0.063-0.198 inches;
Yield Strength = 50,000 ksi minimum; Tensile Strength = 70,000-88,000 psi.

     Hot-rolled steel coil which meets the following chemical, 
physical and mechanical specifications:

--------------------------------------------------------------------------------------------------------------------------------------------------------
      C percent           Mn percent         P percent          S percent          Si percent         Cr percent         Cu percent        Ni percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.10-0.16             0.70-0.90*         0.025*             0.006*             0.30-0.50*         0.50-0.70*         0.25*              0.20
Mo                    .................  .................  .................  .................  .................  .................  ................
0.21*                 .................  .................  .................  .................  .................  .................  ................
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Max
Width = 44.80 inches maximum; Thickness = 0.350 inches maximum;
Yield Strength = 80,000 ksi minimum; Tensile Strength = 105,000 psi Aim.

     Hot-rolled steel coil which meets the following chemical, 
physical and mechanical specifications:

--------------------------------------------------------------------------------------------------------------------------------------------------------
      C percent           Mn percent         P percent          S percent          Si percent         Cr percent         Cu percent        Ni percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.10-0.14             1.30-1.80          0.025*             0.005*             0.30-0.50          0.50-0.70          0.20-0.40          0.20*
V(wt.)                Cb                 .................  .................  .................  .................  .................  ................
0.10*                 0.08*              .................  .................  .................  .................  .................
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Max
Width = 44.80 inches maximum; Thickness = 0.350 inches maximum;
Yield Strength = 80,000 ksi minimum; Tensile Strength = 105,000 psi Aim.

     Hot-rolled steel coil which meets the following chemical, 
physical and mechanical specifications:

--------------------------------------------------------------------------------------------------------------------------------------------------------
      C percent           Mn percent         P percent          S percent          Si percent         Cr percent         Cu percent        Ni percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.15*                 1.40*              0.025*             0.010*             0.50*              1.00*              0.50*              0.20*
Nb                    Ca                 Al                 .................  .................  .................  .................  ................

[[Page 8315]]

 
0.005 Min             Treated            0.01-0.07          .................  .................  .................  .................  ................
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Max
Width = 39.37 inches; Thickness = 0.181 inches maximum;
Yield Strength = 70,000 psi minimum for thicknesses  0.148 inches and 65,000 psi minimum for thicknesses > 0.148 inches; Tensile Strength =
  80,000 psi minimum.

     Hot-rolled dual phase steel, phase-hardened, primarily 
with a ferritic-martensitic microstructure, contains 0.9 percent up to 
and including 1.5 percent silicon by weight, further characterized by 
either (i) tensile strength between 540 N/mm\2\ and 640 N/mm\2\ and an 
elongation percentage  26 percent for thicknesses of 2 mm 
and above, or (ii) a tensile strength between 590 N/mm\2\ and 690 N/
mm\2\ and an elongation percentage  25 percent for 
thicknesses of 2mm and above.
     Hot-rolled bearing quality steel, SAE grade 1050, in 
coils, with an inclusion rating of 1.0 maximum per ASTM E 45, Method A, 
with excellent surface quality and chemistry restrictions as follows: 
0.012 percent maximum phosphorus, 0.015 percent maximum sulfur, and 
0.20 percent maximum residuals including 0.15 percent maximum chromium.
    The merchandise subject to these investigations is classified in 
the Harmonized Tariff Schedule of the United States (``HTSUS'') at 
subheadings: 7208.10.15.00, 7208.10.30.00, 7208.10.60.00, 
7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60, 
7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60, 
7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30, 
7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90, 
7208.40.60.30, 7208.40.60.60, 7208.53.00.00, 7208.54.00.00, 
7208.90.00.00, 7210.70.30.00, 7210.90.90.00, 7211.14.00.30, 
7211.14.00.90, 7211.19.15.00, 7211.19.20.00, 7211.19.30.00, 
7211.19.45.00, 7211.19.60.00, 7211.19.75.30, 7211.19.75.60, 
7211.19.75.90, 7212.40.10.00, 7212.40.50.00, 7212.50.00.00. Certain 
hot-rolled flat-rolled carbon-quality steel covered by this 
investigation, including: vacuum degassed, fully stabilized; high 
strength low alloy; and the substrate for motor lamination steel may 
also enter under the following tariff numbers: 7225.11.00.00, 
7225.19.00.00, 7225.30.30.50, 7225.30.70.00, 7225.40.70.00, 
7225.99.00.90, 7226.11.10.00, 7226.11.90.30, 7226.11.90.60, 
7226.19.10.00, 7226.19.90.00, 7226.91.50.00, 7226.91.70.00, 
7226.91.80.00, and 7226.99.00.00. Although the HTSUS subheadings are 
provided for convenience and Customs purposes, the written description 
of the merchandise under investigation is dispositive.

Injury Test

    Because Brazil 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 Brazil materially injure, or threaten material 
injury to, a U.S. industry. On November 25, 1998, the ITC published its 
preliminary determination 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 Brazil of 
the subject merchandise (63 FR 65221).

Alignment With Final Antidumping Duty Determination

    On January 19, 1999, 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: Certain Hot-Rolled 
Flat-Rolled Carbon-Quality Steel Products from Brazil, Japan and the 
Russian Federation, 63 FR 56607 (October 22, 1998). In accordance with 
section 705(a)(1) of the Act, we are aligning the final determination 
in this investigation with the final antidumping duty determinations in 
the antidumping investigations of certain hot-rolled flat-rolled 
carbon-quality steel products.

Period of Investigation

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

Facts Available

    Section 776(a)(1) of the Act requires the Department to use the 
facts available if ``necessary information is not available on the 
record.'' The Department asked the GOB and the respondent companies 
twice to provide information about the market value of privatization 
currencies, but so far they have been unable to do so. This information 
is necessary to our analysis of the privatizations of the respondent 
companies. Because this information is not available on the record, we 
have resorted to the facts available as detailed in the ``Change in 
Ownership'' section below.

Company Histories

    USIMINAS was founded in 1956 as a venture between the Brazilian 
Government, various stockholders and Nippon Usiminas. In 1974, the 
majority interest in USIMINAS was transferred to SIDERBRAS, the 
government holding company for steel interests. The company underwent 
several expansions of capacity throughout the 1980s. In 1990, SIDERBRAS 
was put into liquidation and the GOB decided to include its operating 
companies, including USIMINAS, in its National Privatization Program 
(NPP). In 1991, USIMINAS was partially privatized; as a result of the 
initial auction, Companhia do Vale do Rio Doce (CVRD), a majority 
government-owned iron ore producer, acquired 15 percent of USIMINAS's 
common shares. In 1994, the Government disposed of additional holdings, 
amounting to 16.2 percent of the company's equity. USIMINAS is now 
owned by CVRD and a consortium of private investors, including Nippon 
Usiminas, Caixa de Previdencia dos Funcionarios do Banco do Brasil 
(Previ) and the USIMINAS Employee Investment Club. CVRD was partially 
privatized in 1997.
    COSIPA was established in 1953 as a government-owned steel 
production company. In 1974, COSIPA was transferred to SIDERBRAS. In 
the 1980s, the company underwent restructurings of its capacity. Like 
USIMINAS, COSIPA was included in the NPP after SIDERBRAS was put into 
liquidation. In 1993, COSIPA was partially privatized, with the GOB 
retaining a minority of the preferred shares. Control of the company 
was acquired by a consortium of investors led by USIMINAS. In 1994, 
additional government-held shares were sold, but the GOB still 
maintained approximately 25 percent of COSIPA's preferred shares. 
During the POI, USIMINAS owned 49.8 percent of the voting capital stock 
of the company.

[[Page 8316]]

Other principal owners include Bozano Simonsen Asset Management Ltd., 
the COSIPA Employee Investment Club and COSIPA's Pension Fund (FEMCO).
    CSN was established in 1941 and commenced operations in 1946 as a 
government-owned steel company. In 1974, CSN was transferred to 
SIDERBRAS; only a very small amount of shares, a fraction of a percent, 
were held by private investors. The company underwent several capacity 
restructurings throughout the 1980s. In 1990, SIDERBRAS was put into 
liquidation and the GOB decided to include its operating companies, 
including CSN, in its NPP. In 1991, 12 percent of the equity of the 
company was transferred to the CSN employee's pension fund. In 1993, 
CSN was partially privatized; CVRD, through its subsidiary Vale do Rio 
Doce Navegacao S.A. (Docenave), acquired 9.4 percent of the common 
shares. The GOB's remaining share of the firm was sold in 1994. CSN is 
now owned by Docenave/CVRD and a consortium of private investors, 
including Uniao Comercio e Partipacoes Ltda., Textilia S.A., Previ, the 
CSN Employee Investment Club, and the CSN employee pension fund. As 
discussed above, CVRD was partially privatized in 1997; CSN was part of 
the consortium that acquired control of CVRD through this partial 
privatization.

Affiliated Parties

    In the present investigation, there are affiliated parties (within 
the meaning of section 771(33) of the Act) whose relationship is 
sufficient to warrant treatment as a single company. In the 
countervailing duty questionnaire, consistent with our past practice, 
the Department defined companies as sufficiently affiliated to warrant 
potential treatment as a single company where one company owns 20 
percent or more of the other company, or where companies prepare 
consolidated financial statements. The Department also has stated that 
companies may be considered sufficiently affiliated where there are 
common directors or one company performs services for the other 
company. See Final Affirmative Countervailing Duty Determination: 
Certain Pasta (``Pasta'') From Italy, 61 FR 30287 (June 14, 1996) 
(Pasta). According to the questionnaire, companies that are 
sufficiently affiliated to warrant potential treatment as a single 
company and either (1) produce the subject merchandise or (2) have 
engaged in certain financial transactions are required to respond. This 
standard is designed to identify instances where two companies 
interests have merged and either both produce subject merchandise or 
there is ``evidence of the transmittal of subsidies between the 
companies.'' See Pasta, 61 FR at 30308.
    USIMINAS owns 49.79 percent of COSIPA, as such, the companies are 
affiliated within the meaning of section 771(33)(E) of the Act. 
Moreover, given the level of ownership and the fact that both companies 
produce the subject merchandise, we preliminarily determine that it is 
appropriate to treat these two producers as a single company for 
purposes of this investigation. We calculated a single countervailing 
duty rate for these companies by dividing their combined subsidy 
benefits by their combined sales.
    We also examined the relationship between USIMINAS and CSN in order 
to determine whether these two companies were affiliated and, if so, 
whether the level of affiliation between the two companies was 
sufficient to warrant treatment as a single company.
    Two entities, CVRD and Previ, the pension fund of the Bank of 
Brasil, have meaningful holdings in both USIMINAS and CSN. CVRD holds 
15.48 percent of USIMINAS and 10.3 percent of CSN (through Docenave) 
and holds two of the eight seats on each company's board of directors. 
Previ holds 15 percent of the common shares of USIMINAS and one seat on 
its board of directors and 13 percent of CSN and two seats on its board 
of directors. The record does not support a conclusion that either 
CVRD's ownership interests or Previ's ownership interests, standing 
alone, constitute common control of USIMINAS and CSN within the meaning 
of section 771(33)(F). Therefore, we do not consider that the evidence 
supports a finding that USIMINAS and CSN are affiliated through common 
control. In addition, as discussed below, the record at this time does 
not contain evidence to establish that the interests between CVRD and 
Previ have merged or that the two companies operate together when 
acting as owners of the respondent companies in order to warrant 
aggregating their interests when analyzing potential affiliation 
between USIMINAS and CSN.
    CVRD, through its nearly wholly-owned subsidiary, Docenave, is a 
member of the CSN Shareholders Agreement, as is Previ. In this 
Agreement, which includes the major shareholders that participated in 
the first privatization auction, the members agreed to pre-vote CSN 
board issues and then vote the entire block of shares subject to the 
Agreement in order to control the company. The CSN Shareholders 
Agreement also confers certain additional rights on the members and 
resulted in Docenave's right to one more seat on CSN's board of 
directors than its percentage ownership of common shares would 
otherwise entitle. We note that CSN is also a principal member of the 
group of investors that gained control of CVRD in its 1997 partial 
privatization, and the two companies have the same Chairman.
    With respect to USIMINAS, CVRD and Previ do not have the same 
position. Neither CVRD nor Previ is a party to the USIMINAS 
Shareholders Agreement. We note that there is one additional overlap 
between USIMINAS and CVRD; each company also holds 50 percent of VUP 
S.A., a holding company that controls a ferro-alloys producer.
    The record does not indicate at this time that USIMINAs and CSN are 
under the common control of Previ and CVRD. Therefore, for purposes of 
this preliminary determination, we determine that the relationship 
between USIMINAS and CSN is not sufficient to justify a finding of 
affiliation and, as a result, also not sufficient to warrant treating 
the two companies as a single company. However, these relationships 
warrant further analysis and we will continue to examine the 
affiliation issue for the final determination.

Changes in Ownership

    In the General Issues Appendix (GIA), attached to the Final 
Affirmative Countervailing Duty Determination; Certain Steel Products 
from Austria, 58 FR 37217, 37226 (July 9, 1993), we applied a new 
methodology with respect to the treatment of subsidies received prior 
to the sale of the company (privatization).
    Under this methodology, we estimate the portion of the company's 
purchase price which is attributable to prior subsidies. We compute 
this by first dividing the face value of the company's subsidies by the 
company's net worth for each of the years corresponding to the 
company's allocation period, ending one year prior to the 
privatization. We then take the simple average of these ratios, which 
serves as a reasonable surrogate for the percentage that subsidies 
constitute of the overall value, i.e., net worth, of the company. Next, 
we multiply the purchase price of the company by this average ratio to 
derive the portion of the purchase price that we estimate to be a 
repayment of prior subsidies. Then, we reduce the benefit streams of 
the prior subsidies by the ratio of the repayment amount to the net 
present value of all remaining benefits at the time of the change in 
ownership.
    In the current investigation, we are analyzing the privatizations 
of USIMINAS, COSIPA and CSN,

[[Page 8317]]

including the various partial privatizations. In conducting these 
analyses, to the extent that partially government-owned companies 
purchased shares, we have not considered the percentage acquired 
corresponding to government-ownership to warrant any adjustment under 
our methodology. Further, we have preliminarily determined that it is 
appropriate to make an additional adjustment to USIMINAS and CSN's 
calculations to account for CVRD's 1997 partial privatization.
    There are several facts in this case that warrant additional 
examination in the context of our privatization methodology. Because 
the purchase price of the company is a critical factor in our 
privatization methodology, the use of ``privatization currencies,'' 
i.e., certain existing government bonds, debt instruments, 
privatization certificates and frozen currencies, as payment for the 
shares of the companies, could have a significant impact on our 
analysis. Privatization currencies were used to acquire the vast 
majority of shares of producers of subject merchandise. The GOB 
accepted most of these currencies their face value; foreign debt and 
restructuring bonds (MYDFA's) were accepted at 75 percent of their face 
value. Petitioners have provided some indication that the market value 
of these currencies was not their face value; according to a press 
report, the market price for MYDFA's was about 30 percent of the face 
value. See Petitioner's October 22, 1998, submission, a public document 
on file in the CRU. We have made an adjustment to the purchase prices 
in order to take into account this information about the market value 
of the MYDFA's. However, to date, respondents have been unable to 
provide information on how the other privatization currencies were 
valued in secondary markets. Information we were able to gather from 
public sources, including the public record that was compiled in 
reaching the final determination in the countervailing duty 
investigation of certain steel products from Brazil, support 
petitioner's allegation that the privatization currencies were accepted 
by the GOB in the NPP for more than their market values. See 
Attachments to Calculation Memo dated February 12, 1999, public version 
on file in the CRU and Final Affirmative Countervailing Duty 
Determinations: Certain Steel Products from Brazil, 68 FR 37295, (July 
9, 1993) (Certain Steel from Brazil). Thus, some adjustment to the 
purchase price is warranted. Because we were not able to gather 
information on market values for each type of privatization currency in 
time for the preliminary determination, as facts available we have 
reduced the amount of the privatization currencies (with the exception 
of MYDFAs, which are discussed above), by a ratio reflecting the 
percentage difference between the value assigned to the MYDFAs and 
accepted by the GOB and the actual market value of the MYDFAs. We will 
continue to request information from the GOB and companies, about the 
market value of the privatization currencies, and plan to examine this 
issue in detail at verification.

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 AUL in 
determining the allocation period for non-recurring subsidies. See GIA, 
58 FR at 37227. 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 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) (Steel Plate from 
Sweden).
    In recent countervailing duty investigations, it has been our 
practice to follow the Court's decision in British Steel II, and to 
calculate a company-specific allocation period for all countervailable 
non-recurring subsidies where reasonable and practicable. In this 
investigation the Department, in accordance with British Steel II, 
requested that the respondents submit information relating to its 
average useful life of assets. However, our analysis of the data 
submitted by COSIPA, CSN, and USIMINAS regarding the AUL of their 
assets has revealed several problems.
    All three companies have undergone multi-staged privatizations 
within the years relevant to this investigation. As a result of the 
changes in ownership, the firms have changed investment patterns, 
altered asset valuation methodologies and, in some cases, changed the 
amortization periods for certain assets after privatization. When the 
AUL amounts calculated on an annual basis for the years prior to the 
changes in ownership are compared to the AUL amounts calculated after 
the changes in ownership, dramatic differences become apparent. These 
changes have significant impacts upon the cumulative AUL calculated by 
the Department over a ten-year period (i.e., 1988 through 1997).
    Based on the concerns outlined above and in accordance with the 
Department's practice, we preliminarily determine that the calculations 
of company-specific AULs for COSIPA, CSN and USIMINAS should not be 
used to determine the appropriate allocation period for non-recurring 
subsidies. See Final Affirmative Countervailing Duty Determination: 
Steel Wire Rod from Germany, 62 FR 54990, 54999 (October 22, 1997) and 
Preliminary Affirmative Countervailing Duty Determination and Alignment 
of Final Countervailing Duty Determination with Final Antidumping Duty 
Determination: Stainless Steel Sheet and Strip in Coils from the 
Republic of Korea, 63 FR 63884, 63887 (November 17, 1998). Rather, for 
purposes of this preliminary determination, we are using 15 years as 
set out in the U.S. Internal Revenue Service (IRS) depreciation tables.
    While we have not used company-specific AULs because of the 
concerns outlined above, even if we were to use the company-specific 
data submitted by respondents, the facts of this case pose additional 
concerns and possible inconsistencies. In particular, this 
investigation covers countervailable non-recurring subsidies 
benefitting COSIPA, CSN and USIMINAS, i.e., GOB equity infusions. These 
same non-recurring subsidies to the same companies were previously 
found countervailable in Certain Steel from Brazil. See Certain Steel 
from Brazil, 68 FR at 37298. In that investigation, the Department 
allocated the benefits from these GOB investments over 15 years based 
on information from the IRS for the industry-specific average useful 
life of assets. Under current Department practice, previously allocated 
subsidies within the same proceeding are not given a new allocation 
period. Rather, it is our policy to retain the allocation period 
originally established for the subsidies in subsequent administrative 
reviews for the same proceeding. See, e.g., Steel Plate from Sweden, 62 
FR 16551.

[[Page 8318]]

    The issue we are presented with is whether the allocation period, 
once established for a subsidy to a company should change in different 
proceedings. If the allocation period did not change across 
proceedings, the same GOB equity infusions described above would be 
allocated over 15 years in both the current investigation, and any 
future administrative reviews of the Certain Steel from Brazil 
countervailing duty order. However, if we were to adopt different 
allocation periods for different proceedings, the same subsidy to the 
same company would be allocated over different periods.
    We encourage parties to comment on this issue and whether an 
alternative approach may be more appropriate. One option may be to 
retain the allocation period of a subsidy previously investigated in a 
prior investigation, rather than assign a new company-specific 
allocation period based on company-specific AUL data. As described 
above, that would conform with our practice in administrative reviews 
of the same countervailing duty order. Another option would be to 
determine an individual company-specific AUL for each year in which a 
non-recurring subsidy is provided to a company, rather than to 
determine a company-specific AUL for non-recurring subsidies that could 
change with each investigation and result in different allocation 
periods for the same subsidy, as detailed above. We also welcome any 
additional comments on this issue not raised above.

Equityworthiness

    In analyzing whether a company is equityworthy, the Department 
considers whether that company could have attracted investment capital 
from a reasonable private investor in the year of the government equity 
infusion based on the information available at that time. In this 
regard, the Department has consistently stated that a key factor for a 
company in attracting investment capital is its ability to generate a 
reasonable return on investment within a reasonable period of time. In 
making an equityworthiness determination, the Department may examine 
the following factors, among others:
    1. Current and past indicators of a firm's financial condition 
calculated from that firm's financial statements and accounts,
    2. Future financial prospects of the firm including market studies, 
economic forecasts, and project or loan appraisals,
    3. Rates of return on equity in the three years prior to the 
government equity infusion,
    4. Equity investment in the firm by private investors, and
    5. Prospects in the marketplace for the product under 
consideration.
    For a more detailed discussion of the Department's equityworthiness 
criteria, see the GIA, 58 FR at 37244 and Final Affirmative 
Countervailing Duty Determination: Steel Wire Rod from Venezuela, 62 FR 
55104 (Oct. 21, 1997) (Steel Wire Rod from Venezuela).
    The Department has examined the respondents' equityworthiness for 
each equity infusion covered by the initiation: for COSIPA 1977 through 
1989 and 1992 through 1993, USIMINAS 1980 through 1988, and CSN 1977 
through 1992; we note that because the Department has preliminarily 
determined that it is appropriate to use a 15 year allocation period 
for non-recurring subsidies, equity infusions provided in the years 
1977 through 1982 do not provide a benefit in the POI. In a prior 
investigation we have found that COSIPA was unequityworthy in 1983-1989 
and 1991, USIMINAS in 1983 through 1988, and CSN in 1983 through 1991. 
See Certain Steel from Brazil, 58 FR at 37296. No new information has 
been provided in this investigation that would cause us to reconsider 
these determinations.
    In considering whether COSIPA was equityworthy in 1992 and1993, we 
examined information on the above-listed factors. To address factors 
one and three, we examined COSIPA's financial ratios for the three 
years prior to each of the infusions. We found that COSIPA incurred a 
net loss for every year under consideration except for 1989. COSIPA 
also had a negative return on equity, return on sales, and return on 
assets for each of the years under consideration except for 1989. The 
company's quick and current ratios fell steadily from 1989 through 
1992, revealing increasing uncertainty in the company's financial 
health and ability to cover even short-term obligations.
    With respect to the second factor, we note that the GOB made the 
equity investments into COSIPA on the recommendation of a private 
consultant contracted to evaluate the company's financial health prior 
to privatization. However, respondents have not demonstrated that this 
recommendation was premised on independent market studies, economic 
forecasts, or project appraisals that projected that COSIPA's future 
performance would improve significantly. Indeed, the basic purpose of 
the consultant's work was to inform the GOB of the requirements to make 
COSIPA a reasonable privatization candidate; this work was not 
undertaken to address the soundness of a contemplated additional 
investment in the company by the GOB for the purpose of the GOB's 
continued ownership and operation of the company. Thus, we do not find 
the fact that the investments were made on this private consultant's 
recommendation to be dispositive evidence of the company's 
equityworthiness.
    COSIPA had only nominal private investors before the company's 
privatization. Therefore, there are no private investments that may be 
used to evaluate COSIPA's equityworthiness.
    In light of COSIPA's unfavorable financial position throughout this 
period and its long-standing history of poor performance, it seems 
unlikely that a reasonable private investor would have made equity 
investments in the company. On this basis, we preliminarily determine 
that COSIPA was unequityworthy in 1992 and 1993.
    In considering whether CSN was equityworthy in 1992, we examined 
information on the above-listed factors. To address factors one and 
three, we examined CSN's financial ratios for the years 1989, 1990, and 
1991. The company's returns on equity and return on sales were negative 
in 1989 and 1990, including an extremely unfavorable return on sales in 
1990. These ratios became positive in 1991, but both were quite low. 
The company's current ratio has fallen steadily since 1989. CSN's quick 
ratio vacillated during the period, but in each year remained well 
below 1 percent. While these ratios, on the whole, show a gradual 
improvement in 1991, we do not think this mild recovery would cause an 
inflow of private investment, considering the firm's history of poor 
results.
    With respect to the second factor, we note that the GOB made the 
equity investment into CSN on the recommendation of a private 
consultant contracted to evaluate the company's financial health prior 
to privatization. However, respondents have not demonstrated that this 
recommendation was premised on independent market studies, economic 
forecasts, or project appraisals that projected that CSN's future 
performance would improve significantly. In addition, as with COSIPA 
the basic purpose of the consultant's work was to inform the GOB of the 
requirements to make CSN a reasonable privatization candidate, and did 
not address whether the contemplated investment was sound with respect 
to expected return and performance of the company. Thus, we do not find 
the fact that the investments were made on this private consultant's

[[Page 8319]]

recommendation to be dispositive evidence of the company's 
equityworthiness.
    Through 1990, CSN had only nominal private investment, insufficient 
for evaluation in the Department's analysis. In 1991, approximately 12 
percent of CSN's equity was transferred to the company's pension fund 
in exchange for eliminating CSN's debt with the pension fund. CSN's 
1991 Annual Report reveals that this transaction was necessitated by 
CSN's inability to make required contributions to the pension fund. See 
Appendix A, section 12 to the Countervailing Duty Petition, public 
version on file in the CRU. Thus, this transaction is not considered 
evidence of the company's equityworthiness.
    In light of CSN's unfavorable financial position throughout this 
period and its long-standing history of poor performance, it seems 
unlikely that a reasonable private investor would have made an equity 
investment in the company. On this basis, we preliminarily determine 
that CSN was unequityworthy in 1992.

Equity Methodology

    In measuring the benefit from a government equity infusion to an 
unequityworthy company, the Department compares the price paid by the 
government for the equity to a market benchmark, if such a benchmark 
exists. A market benchmark can be obtained, for example, where the 
company's shares are publicly traded. See, e.g., Final Affirmative 
Countervailing Duty Determinations: Certain Steel Products from Spain, 
58 FR 37374, 37376 (July 9, 1993).
    Where a market benchmark does not exist, the Department has 
determined in this investigation to continue to follow the methodology 
described in the GIA, 58 FR at 37239. Following this methodology, 
equity infusions made to unequityworthy companies are treated as 
grants. Use of the grant methodology for equity infusions into an 
unequityworthy company is based on the premise that an 
unequityworthiness finding by the Department is tantamount to saying 
that the company could not have attracted investment capital from a 
reasonable investor in the infusion year based on the available 
information.

Creditworthiness

    When the Department examines whether a company is creditworthy, it 
is essentially attempting to determine if the company in question could 
obtain commercial financing at commonly available interest rates. To do 
so, the Department examines whether the company received long-term 
commercial loans in the year in question, and, if necessary, the 
overall financial health and future prospects of the company. If a 
company receives long-term financing from commercial sources without 
government guarantees, that company will normally be considered 
creditworthy. In the absence of commercial borrowings, the Department 
examines the following factors, among others, to determine whether or 
not a firm is creditworthy:
    1. Current and past indicators of a firm's financial health 
calculated from the firm's financial statements and accounts,
    2. The firm's recent past and present ability to meet its costs and 
fixed financial obligations with its cash flow, and
    3. Future financial prospects of the firm including market studies, 
economic forecasts, and projects or loan appraisals.
    For a more detailed discussion of the Department's creditworthiness 
criteria, see, e.g., Final Affirmative Countervailing Duty 
Determinations: Certain Steel Products from the United Kingdom, 58 FR 
37393 (July 9, 1993).
    The Department has previously determined that respondents were 
uncreditworthy in the following years: USIMINAS, 1983-1988; COSIPA, 
1983-1989 and 1991; and CSN 1983-1991. See Certain Steel from Brazil, 
58 FR at 37297. No new information has been presented in this 
investigation that would lead us to reconsider these findings.
    COSIPA received no long-term financing from commercial sources in 
the years in question. Therefore, to determine whether COSIPA was 
creditworthy in 1992 and 1993, in accordance with the Department's past 
practice, we analyzed financial ratios for each of the three years 
prior to the year under examination. While COSIPA posted a profit in 
1989, it quickly reverted to a pattern of increasing losses from 1990 
through 1992. Further, the company's low and deteriorating current and 
quick ratios from 1989 through 1992 reveal an increasing lack of 
creditor protection that would likely cause doubts about COSIPA's 
ability to meet its debt obligations. The declining interest coverage 
ratio over this period also points to increasing vulnerability in the 
company's financial position. For these reasons, it is doubtful that 
the company could have obtained financing at commercial interest rates 
during these years. Therefore, we preliminarily determine that COSIPA 
was uncreditworthy in 1992 and 1993.
    CSN received one small commercial loan in 1992, however, the terms 
and insignificant principal amount of this loan render it inconclusive 
in determining whether CSN was creditworthy in 1992. Therefore, to 
determine whether CSN was creditworthy in 1992, we also analyzed 
financial data for the prior three years. CSN incurred a loss in 1989 
and a significant loss in 1990 but recovered to post a small profit in 
1991. The company's current ratio decreased over this period, remaining 
well below 1.0. CSN's quick ratio vacillated over these years, but 
remained extremely low, ranging from 0.12 to 0.17. CSN's interest 
coverage ratio also shows a downward trend over these years. In 1990 
and 1991, this ratio is extremely low, and shows that the company had 
difficulty managing its financial obligations. For these reasons, it is 
doubtful that the company could have obtained long-term financing at 
commercial interest rates. Therefore, we preliminarily determine that 
CSN was uncreditworthy in 1992.

Discount Rates

    In the years relevant to this investigation through 1994, Brazil 
has experienced persistent and high inflation. There were no long-term 
fixed-rate commercial loans made in domestic currencies during those 
years that could be used as discount rates. As in the Certain Steel 
from Brazil investigation, we have determined that the most reasonable 
way to account for the high inflation in the Brazilian economy through 
1994, and the lack of an appropriate Brazilian discount rate, is to 
convert the non-recurring subsidies into U.S. dollars based on the 
exchange rate applicable in the month the subsidies were granted, and 
then to apply, as the discount rate, a long-term dollar lending rate. 
Therefore, for our discount rate, we used data for U.S. dollar lending 
in Brazil for long-term non-guaranteed loans from private lenders, as 
published in the World Bank Debt Tables: External Finance for 
Developing Countries. This conforms with our practice in Certain Steel 
from Brazil (58 FR at 37298) and Steel Wire Rod from Venezuela (62 FR 
at 55019 and 55023). Because we have preliminarily determined CSN, 
COSIPA and USIMINAS to be uncreditworthy as described above, we added 
to the discount rates a risk premium equal to 12 percent of the U.S. 
prime rate for each of the years the companies were determined to be 
uncreditworthy.
    Based upon our analysis of the petition and the responses to our 
questionnaires, we determine the following:

[[Page 8320]]

I. Programs Preliminarily Determined To Be Countervailable

A. Pre-1992 Equity Infusions

    The GOB, through SIDERBRAS, provided equity infusions to USIMINAS 
(1983 through 1988), COSIPA (1983 through 1989 and 1991) and CSN (1983 
through 1991) that have previously been investigated by the Department. 
See Certain Steel from Brazil, 58 FR at 37298.
    We preliminarily determine that under section 771(5)(E)(i) of the 
Act, the equity infusions into USIMINAS, COSIPA and CSN were not 
consistent with the usual investment practices of private investors and 
confer a benefit in the amount of each infusion (see 
``Equityworthiness'' section above). These equity infusions are 
specific within the meaning of section 771(5A)(D) of the Act because 
they were limited to each of the companies. Accordingly, we find that 
the pre-1992 equity infusions are countervailable subsidies within the 
meaning of section 771(5) of the Act.
    As explained in the ``Equity Methodology'' section above, we have 
treated equity infusions into unequityworthy companies as grants given 
in the year the infusion was received because no market benchmark 
exists. We have further determined these infusions to be non-recurring 
subsidies because each required separate authorization from SIDERBRAS, 
the shareholder. Because USIMINAS, COSIPA and CSN were uncreditworthy 
in the year of receipt, we applied a discount rate that included a risk 
premium. Since USIMINAS, COSIPA and CSN have been privatized, we 
followed the methodology outlined in the ``Change in Ownership'' 
section above to determine the amount of each equity infusion 
attributable to the companies after privatization. For CSN, we summed 
the benefits allocable to the POI from all equity infusions and divided 
by CSN's total sales during the POI. For USIMINAS/COSIPA, we summed the 
benefits allocable to the POI from all of the equity infusions and 
divided this amount by the combined total sales of USIMINAS/COSIPA 
during the POI. On this basis, we preliminarily determine the net 
subsidy to be 5.63 percent ad valorem for CSN and 5.65 percent ad 
valorem for USIMINAS/COSIPA.

B. GOB Debt-to-Equity Conversions Provided to COSIPA in 1992 and 1993

    In 1990, the GOB decided to liquidate SIDERBRAS and to include the 
SIDERBRAS operating companies, including respondents, in its National 
Privatization Program. The NPP was a major initiative proposed by 
President Collor that was part of the GOB's larger strategy to 
liberalize the Brazilian economy. Under the NPP, approved in Law 8031 
of April 12, 1990, a general framework was established to govern all 
privatizations. Two entities were charged with oversight of the 
process: the Privatization Committee and the Banco Nacionale de 
Desenvolvimento Economico e Social (BNDES), which acted as the general 
coordinator. The Privatization Committee, composed of government and 
private sector representatives, was responsible for approving the 
conditions of sale, guidelines and the minimum price for each 
privatization. BNDES commissioned three consultants to make 
recommendations with respect to each company undergoing privatization: 
two consultants to make an economic assessment of the company including 
its competitiveness and to recommend a minimum price and one consultant 
to act as an independent auditor.
    One of the consultants who examined COSIPA's financial health and 
competitiveness recommended that financial adjustments be made to the 
company before privatization including debt-to-equity conversions and 
deferring certain tax liabilities (see ``Negotiated Deferrals of Tax 
Liabilities'' in the section ``Programs Preliminarily Determined to be 
Non-Countervailable'' below). In accordance with this consultant's 
recommendation, the GOB made two debt-to-equity conversions in 1992 and 
1993 in preparation for COSIPA's privatization.
    We preliminarily determine that pursuant to section 771(5)(E)(i) of 
the Act, these debt-to-equity conversions were not consistent with the 
usual investment practices of private investors and confer a benefit in 
the amount of each conversion (see ``Equityworthiness'' section above). 
These debt-to-equity conversions are specific within the meaning of 
section 771(5A)(D) of the Act because they were limited to COSIPA. 
Accordingly, we find that the GOB debt-to-equity conversions provided 
to COSIPA in 1992 and 1993 are countervailable subsidies within the 
meaning of section 771(5) of the Act.
    As explained in the ``Equity Methodology'' section above, we have 
treated each debt-to-equity conversion as a grant given in the year the 
conversion was made. We have further determined that these conversions 
are non-recurring subsidies because they were specifically approved by 
the GOB. Because COSIPA was uncreditworthy in the years of receipt, we 
applied a discount rate that included a risk premium. Since COSIPA has 
been privatized, we followed the methodology outlined in the ``Change 
in Ownership'' section above to determine the amount of each debt-to-
equity conversion attributable to the company after privatization. We 
divided the benefit allocable to the POI from these debt-to-equity 
conversions by the combined total sales of USIMINAS/COSIPA. On this 
basis, we preliminarily determine the net subsidy to be 3.80 percent ad 
valorem for USIMINAS/COSIPA.

C. GOB Equity Infusion to CSN in 1992

    As discussed above, under the GOB's National Privatization program, 
companies were privatized under the supervision of BNDES and the 
Privatization Committee. In accordance with the established 
privatization procedures, BNDES commissioned three consultants with 
respect to the privatization of CSN: two to analyze the firm's 
financial performance, make recommendations, and formulate the minimum 
price and one to act as an independent auditor. One of the consultants, 
after analysis of CSN's financial data, recommended that additional 
capital be provided to the firm in advance of its privatization. The 
GOB followed this recommendation and made a pre-privatization equity 
infusion in 1992.
    We preliminarily determine that, pursuant to section 771(5)(E)(i) 
of the Act, this equity infusion was not consistent with the usual 
investment practices of private investors and confers a benefit in the 
amount of the infusion (see ``Equityworthiness'' section above). This 
infusion is specific within the meaning of section 771(5A)(D) of the 
Act because it was limited to CSN. Accordingly, we find that the GOB 
equity infusion provided to CSN in 1992 is a countervailable subsidy 
within the meaning of section 771(5) of the Act.
    As explained in the ``Equity Methodology'' section above, we have 
treated this equity infusion as a grant given in the year the infusion 
was received. We have further determined that this infusion is a non-
recurring subsidy because it required separate authorization from the 
GOB. Because CSN was uncreditworthy in the year of receipt, we applied 
a discount rate that included a risk premium. Since CSN was privatized, 
we followed the methodology outlined in the ``Change in Ownership'' 
section above to determine the amount of each equity infusion 
attributable to the company after privatization. We divided the benefit

[[Page 8321]]

allocable to the POI from the equity infusion by CSN's total sales 
during the POI. On this basis, we preliminarily determine the net 
subsidy to be 0.99 percent ad valorem for CSN.

II. Program Preliminarily Determined To Be Non-Countervailable

Negotiated Deferrals of Tax Liabilities

    As discussed above, one of the privatization consultants 
recommended that COSIPA negotiate with the various tax authorities in 
order to arrange to pay its large tax arrears in deferred installments. 
COSIPA petitioned four different tax authorities in order to arrange 
for installment payments for ten different types of taxes owed. In 
addition, CSN petitioned to arrange for installment payments for one 
tax liability.
    Each of the tax agencies, the Revenue Service, Social Security 
Authority, State of Sao Paulo, and City authority has established legal 
procedures for arranging installment payments for delinquent tax 
payers. The authorities established these rules in order to collect tax 
arrears without resorting to legal action. These procedures were 
contained in Law 8383/91, Law 8620/93 and Decree 612/92, Decree 33.118/
91 and Law 1383/83, respectively, and specified penalties, interest 
rates, and in some cases, the maximum repayment term. For example, law 
8383/91 that governs the Revenue Service's operations and applies to 
six of the ten types of taxes COSIPA deferred and the tax that CSN 
deferred, specifies that fines of 20 percent and interest of one per 
cent per month will be charged and that all amounts will be subject to 
monetary correction, i.e., adjustments for inflation. To the extent 
that terms, such as the maximum repayment period, were not covered in 
the agency's laws and regulations, they were negotiated by COSIPA or 
CSN and the relevant tax authority. Once the parties completed 
negotiations, the authority would endorse the petition and, in some 
cases, execute a separate agreement.
    When determining whether a program is countervailable, we must 
ascertain whether it provides benefits to a specific enterprise, 
industry, or group thereof within the meaning of section 771(5A)(D) of 
the Act. By comparing the terms included in the agencies' laws and 
regulations and the terms provided to COSIPA and CSN, we were able to 
conclude that the respondent companies received the same terms as those 
specified in the laws. Therefore, as the GOB did not favor COSIPA or 
CSN over other companies, we turned to an examination of the general 
programs themselves in order to determine whether they are specific. We 
examined whether the programs are de jure specific and found that the 
laws do not limit eligibility to an enterprise, industry, or group 
thereof. We then analyzed whether the program meets the criteria for de 
facto specificity. The GOB indicated in its response that ``[d]eferred 
payment terms are generally available for all companies that have 
outstanding tax obligations to the underlying tax authority.'' See GOB 
Supplemental Questionnaire Response dated January 12, 1999, public 
version on file in the CRU. Further, the GOB stated that tax deferral 
petitions are automatically approved by the authorities as long as they 
conform with the establishing laws and regulations and as stated above 
neither the laws nor regulations provide differential or special 
treatment to any company or industry. Further, the GOB has provided 
information on the number of companies that petitioned the Revenue 
Service to renegotiate taxes; in 1993 and 1994, the years that COSIPA 
and CSN petitioned the Revenue Service to defer payments on various 
taxes, 91,440 and 139,596 taxpayers received deferred payment schedules 
for tax arrears. See GOB Supplemental Questionnaire Response dated 
February 8, 1999, public version on file in the CRU. While the number 
of companies that receive benefits under a program is not dispositive 
as to a program's non-specificity, the extremely large number of 
companies receiving deferrals indicates that a broad range of companies 
and industries received benefits under the program. Therefore, based on 
the response, there is no reason to believe that these tax deferrals 
are limited to a specific enterprise, industry or group thereof, and we 
preliminarily determine that these tax deferrals are not 
countervailable. We will continue to gather information about the de 
facto distribution of benefits under this program and carefully examine 
this issue at verification.

III. Program Preliminarily Determined Not To Exist

GOB Equity Infusions to COSIPA in 1992 and 1993

    The Department included two programs in its initiation relating to 
benefits provided to COSIPA in advance of the company's privatization: 
debt assumptions and equity infusions. According to information 
provided by respondents, there were no equity infusions, per se. 
Instead, all benefits were in the form of debt assumptions that were 
converted into equity and have been addressed in the ``GOB Debt-to-
Equity Conversions Provided to COSIPA in 1992 and 1993'' section above. 
Accordingly, we preliminarily determine that the separate ``GOB Equity 
Infusions to COSIPA in 1992 and 1993'' program does not exist.

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 individual rates for each of the companies under 
investigation. As discussed in the ``Affiliated Parties'' section of 
this notice, we are treating USIMINAS/COSIPA as one company and have 
calculated a single rate for USIMINAS/COSIPA. To calculate the ``all 
others'' rate, we weight-averaged the company rates by each company's 
exports of the subject merchandise to the United States.
    In accordance with section 703(d) of the Act, we are directing the 
U.S. Customs Service to suspend liquidation of all entries of the 
subject merchandise from Brazil, 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 amounts indicated 
below. This suspension will remain in effect until further notice.

                            Ad Valorem Rates
------------------------------------------------------------------------
                                                                  Net
                      Producer/exporter                         subsidy
                                                                 rate %
------------------------------------------------------------------------
USIMINAS/COSIPA..............................................       9.45
CSN..........................................................       6.62
All Others...................................................       7.85
------------------------------------------------------------------------

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.

[[Page 8322]]

    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 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: February 12, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-4198 Filed 2-18-99; 8:45 am]
BILLING CODE 3510-DS-P