[Federal Register Volume 64, Number 50 (Tuesday, March 16, 1999)]
[Notices]
[Pages 12996-13002]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-6295]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-427-817, C-533-818, C-560-806, C-475-827, C-580-837]
Notice of Initiation of Countervailing Duty Investigations:
Certain Cut-To-Length Carbon-Quality Steel Plate From France, India,
Indonesia, Italy, and the Republic of Korea
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: March 16, 1999.
FOR FURTHER INFORMATION CONTACT: Eric Greynolds (France), at (202) 482-
6071; Robert Copyak (India), at (202) 482-2209; Kathleen Lockard
(Indonesia), at (202) 482-1168; Kristen Johnson (Italy), at (202) 482-
4406; and Stephanie Moore (Republic of Korea), at (202) 482-3692,
Import Administration, U.S. Department of Commerce, Room 1870, 14th
Street and Constitution Avenue, NW, Washington, DC 20230.
Initiation of Investigations
The Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act) by the
Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all citations to the Department's regulations are to the
regulations codified at 19 CFR part 351 (1998) and to the substantive
countervailing duty regulations published in the Federal Register on
November 25, 1998 (63 FR 65348).
The Petitions
On February 16, 1999, the Department of Commerce (the Department)
received petitions filed in proper form on behalf of U.S. Steel Group,
a Unit of USX Corporation, Bethlehem Steel Corporation, Gulf States,
Inc., IPSCO Steel Inc., Tuscaloosa Steel Corporation, and the United
Steelworkers of America (the petitioners). Tuscaloosa Steel Corporation
is not a petitioner to the countervailing duty investigations involving
France and Italy. Supplements to the petitions were filed
[[Page 12997]]
on February 22, 24, 25, 26, March 2, and 4, 1999.
In accordance with section 702(b)(1) of the Act, petitioners allege
that manufacturers, producers, or exporters of certain cut-to-length
carbon-quality steel plate (CTL plate or subject merchandise) in
France, India, Indonesia, Italy, and Republic of Korea (Korea) receive
countervailable subsidies within the meaning of section 701 of the Act.
The Department finds that petitioners filed the petitions on behalf
of the domestic industry because they are interested parties as defined
under sections 771(9)(C) and (D) of the Act. The petitioners have
demonstrated sufficient industry support with respect to each of the
countervailing duty investigations, which they are requesting the
Department to initiate (see Determination of Industry Support for the
Petitions below).
Scope of the Investigations
The products covered by this scope are certain hot-rolled carbon-
quality steel: (1) Universal mill plates (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 nominal or actual thickness of
not less than 4 mm, which are cut-to-length (not in coils) and without
patterns in relief), of iron or non-alloy-quality steel; and (2) flat-
rolled products, hot-rolled, of a nominal or actual thickness of 4.75
mm or more and of a width which exceeds 150 mm and measures at least
twice the thickness, and which are cut-to-length (not in coils).
Steel products to be included in this scope are of rectangular,
square, circular or other shape and of rectangular or non-rectangular
cross-section where such non-rectangular cross-section is achieved
subsequent to the rolling process (i.e., products which have been
``worked after rolling'')--for example, products which have been
beveled or rounded at the edges. Steel products that meet the noted
physical characteristics that are painted, varnished or coated with
plastic or other non-metallic substances are included within this
scope. Also, specifically included in this scope are high strength, low
alloy (HSLA) steels. HSLA steels are recognized as steels with micro-
alloying levels of elements such as chromium, copper, niobium,
titanium, vanadium, and molybdenum.
Steel products to be included in this scope, regardless of
Harmonized Tariff Schedule of the United States (HTSUS) definitions,
are products in which: (1) Iron predominates, by weight, over each of
the other contained elements, (2) the carbon content is two percent or
less, by weight, and (3) none of the elements listed below is equal to
or 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
0.10 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 zirconium.
All products that meet the written physical description, and in
which the chemistry quantities do not equal or exceed any one of the
levels listed above, are within the scope of these investigations
unless otherwise specifically excluded. The following products are
specifically excluded from these investigations: (1) Products clad,
plated, or coated with metal, whether or not painted, varnished or
coated with plastic or other non-metallic substances; (2) SAE grades
(formerly AISI grades) of series 2300 and above; (3) products made to
ASTM A710 and A736 or their proprietary equivalents; (4) abrasion-
resistant steels (i.e., USS AR 400, USS AR 500); (5) products made to
ASTM A202, A225, A514 grade S, A517 grade S, or their proprietary
equivalents; (6) ball bearing steels; (7) tool steels; and (8) silicon
manganese steel or silicon electric steel.
The merchandise subject to these investigations is classified in
the HTSUS under subheadings: 7208.40.3030, 7208.40.3060, 7208.51.0030,
7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000, 7208.90.0000,
7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 7211.14.0045,
7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7225.40.3050,
7225.40.7000, 7225.50.6000, 7225.99.0090, 7226.91.5000, 7226.91.7000,
7226.91.8000, 7226.99.0000.
Although the HTSUS subheadings are provided for convenience and
Customs purposes, the written description of the merchandise under
investigation is dispositive.
During our review of the petitions, we discussed the scope with the
petitioners to ensure that the scope in the petitions accurately
reflects the merchandise for which the domestic industry is seeking
relief. Moreover, as we discussed in the preamble to the Department's
regulations (62 FR at 27323), we are setting aside a period for parties
to raise issues regarding product coverage. In particular, we seek
comments on the specific levels of alloying elements set out in the
description above, the clarity of grades and specifications excluded
from the scope, and the physical and chemical description of the
product coverage. The Department encourages all parties to submit such
comments by March 29, 1999. Comments should be addressed to Import
Administration's Central Records Unit at Room 1870, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC.
20230. The period of scope consultations is intended to provide the
Department with ample opportunity to consider all comments and consult
with parties prior to the issuance of the preliminary determinations.
Consultations
Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department
invited representatives of the relevant foreign governments for
consultations with respect to the petitions filed. On February 26,
1999, the Department held consultations with representatives of the
governments of France, Italy, and the Delegation of the European
Commission (EC). On March 2, 1999, consultations were held with
representatives of the government of India. On March 8, 1999,
consultations were held with representatives of the government of
Indonesia. See the March 8, 1999, memoranda to the file regarding these
consultations (public documents on file in the Central Records Unit of
the Department of Commerce, Room B-099).
Determination of Industry Support for the Petitions
Section 702(b)(1) of the Act requires that a petition be filed on
behalf of the domestic industry. Section 702(c)(4)(A) of the Act
provides that a petition meets this requirement if the domestic
producers or workers who support the petition account for: (1) At least
25 percent of the total production of the domestic like product; and
(2) more than 50 percent of the production of the domestic like product
produced by that portion of the industry expressing support for, or
opposition to, the petition.
Section 771(4)(A) of the Act defines the ``industry'' as the
producers of a domestic like product. Thus, to determine whether the
petition has the
[[Page 12998]]
requisite industry support, the statute directs the Department to look
to producers and workers who produce the domestic like product. The
International Trade Commission (ITC), which is responsible for
determining whether ``the domestic industry'' has been injured, must
also determine what constitutes a domestic like product in order to
define the industry. While both the Department and the ITC must apply
the same statutory definition regarding the domestic like product
(section 771(10) of the Act), they do so for different purposes and
pursuant to separate and distinct authority. In addition, the
Department's determination is subject to limitations of time and
information. Although this may result in different definitions of the
like product, such differences do not render the decision of either
agency contrary to the law.1
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\1\ See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp.
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays
and Display Glass Therefor from Japan: Final Determination;
Rescission of Investigation and Partial Dismissal of Petition, 56 FR
32376, 32380-81 (July 16, 1991).
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Section 771(10) of the Act defines domestic like product as ``a
product that is like, or in the absence of like, most similar in
characteristics and uses with, the article subject to an investigation
under this title.'' Thus, the reference point from which the domestic
like product analysis begins is ``the article subject to an
investigation,'' i.e., the class or kind of merchandise to be
investigated, which normally will be the scope as defined in the
petition. Moreover, the petitioners do not offer a definition of
domestic like product distinct from the scope of the investigations.
In this case, ``the article subject to investigation'' includes
certain products which have not previously been included within the
scope of investigations involving cut-to-length carbon steel products.
To this end, the Department has reviewed reasonably available
information to determine whether the products within the scope of the
investigations constitute one or more than one domestic like
product(s).
Some steel products classified as alloy steels based on the HTSUS
are recognized as carbon steels by the industry and/or the marketplace.
For example, The Book of Steel, a 1996 publication by Sollac, a flat-
rolled steel division of Usinor, one of the largest steel companies in
the world, identifies HSLA as falling within categories of plain carbon
sheet steels (see chapter 44). Also, Carbon and Alloy Steels, published
in 1996 by ASM International, a major materials society, indicates that
HSLA steels are not considered to be alloy steels, but are in fact
similar to as-rolled mild-carbon steel and are generally priced by
reference to the base price for carbon steels (see page 29). Carbon and
Alloy Steels also distinguishes between carbon-boron and alloy-boron
steels; the former may contain boron at levels which would classify it
as alloy under the HTSUS, but would not classify it as an alloy steel
commercially because, unlike the alloy-boron steels, higher levels of
other alloying elements are not specified (see, e.g., pages 159 and
161).
The Department has considered that, with respect to certain steel
products, such as HSLA, the petitioners indicate that these steel
products are manufactured by similar processes, are priced from similar
bases, are marketed in comparable ways, and are used for similar
applications as carbon steels.
Further, we confirmed this description with product experts at the
Department and the ITC. Other than the fact that the AISI technically
defines alloy steels based on alloy levels comparable to those in the
HTSUS, none of the individuals cited reasons why the products in
question might be treated as distinct from cut-to-length carbon steels.
For these reasons, the Department determines that for purposes of these
investigations, the domestic like product definition is the single
domestic like product defined in the ``Scope of the Investigations''
section above.
Based on our analysis of the information and arguments presented to
the Department and the information independently obtained and reviewed
by the Department, we have determined that there is a single domestic
like product which is defined in the ``Scope of Investigations''
section above. Moreover, the Department has determined that the
petitions (and subsequent amendments to the petitions) and supplemental
information obtained through Department research contain adequate
evidence of industry support and, therefore, polling is unnecessary.
The Department received no opposition to the petitions. For all
countries, the petitioners established industry support representing
over 50 percent of total production of the domestic like product.
Therefore, for these investigations, petitioners have established a
level of support for the petitions commensurate with the statutory
requirements. Accordingly, the Department determines that the petitions
were filed on behalf of the domestic industry within the meaning of
section 702(b)(1) of the Act. See the March 8, 1999, memoranda to the
file (for each country) regarding the initiation of each investigation
(public documents on file in the Central Records Unit of the Department
of Commerce, Room B-099).
Injury Test
Because France, India, Indonesia, Italy, and Korea are ``Subsidies
Agreement Countries'' within the meaning of section 701(b) of the Act,
section 701(a)(2) applies to these investigations. Accordingly, the ITC
must determine whether imports of the subject merchandise from these
countries materially injure, or threaten material injury to, a U.S.
industry.
Allegations and Evidence of Material Injury and Causation
The petitions allege that the U.S. industry producing the domestic
like product is being materially injured, and is threatened with
material injury, by reason of the individual and cumulated subsidized
imports of the subject merchandise. Petitioners explained that the
industry's injured condition is evident in the declining trends in net
operating profits, net sales volumes, profit-to-sales ratios, and
capacity utilization. The allegations of injury and causation are
supported by relevant evidence including business proprietary data from
the petitioning firms and U.S. Customs import data. The Department
assessed the allegations and supporting evidence regarding material
injury and causation, and determined that these allegations are
supported by accurate and adequate evidence and meet the statutory
requirements for initiation. See the March 8, 1999, memoranda to the
file (for each country) regarding the initiation of each investigation
(public documents on file in the Central Records Unit of the Department
of Commerce, Room B-099).
Allegations of Subsidies
Section 702(b) of the Act requires the Department to initiate a
countervailing duty proceeding whenever an interested party files a
petition, on behalf of an industry, that (1) alleges the elements
necessary for an imposition of a duty under section 701(a), and (2) is
accompanied by information reasonably available to petitioners
supporting the allegations.
Initiation of Countervailing Duty Investigations
The Department has examined the petitions on CTL plate from France,
India, Indonesia, Italy, and Korea and found that they comply with the
[[Page 12999]]
requirements of section 702(b) of the Act. Therefore, in accordance
with section 702(b) of the Act, we are initiating countervailing duty
investigations to determine whether manufacturers, producers, or
exporters of CTL plate from these countries receive subsidies. See the
March 8, 1999, memoranda to the file (for each country) regarding the
initiation of each investigation (public documents on file in the
Central Records Unit of the Department of Commerce, Room B-099).
A. France
We are including in our investigation the following programs
alleged in the petition to have provided countervailable subsidies to
producers and exporters of the subject merchandise in France:
Government of France Programs
1. 1986 Write-off of Steel Amortization Fund Debts (PACs)
2. 1986 Write-off of Steel Intervention Fund (FIS) Bonds
3. 1988 Write-off of Steel Intervention Fund (FIS) Bonds
4. 1986 Write-off of Shareholder's Advances
5. 1994 Purchase of Power Plant for Excessive Remuneration
6. Investment Operating Subsidies
7. Soft Loans from Credit Lyonnais
8. Grants for Funding of Myosotis Project
9. Advances for Electric Arc Furnace Technology
10. Caisse Francaise de Developpement Industriel (CFDI) Loans
11. Shareholder Guarantees
12. Subsidies Provided Directly to GTS Industries
European Commission Programs
1. ECSC Loans under Article 54
2. ECSC Article 56 Funding
3. European Regional Development Fund
4. Resider and Resider II
5. European Social Fund
Petitioners allege that Usinor was uncreditworthy in each year 1980
through 1995. In the Final Affirmative Countervailing Duty
Determination: Certain Steel Products from France, 58 FR 37304 (July 9,
1993) (Certain Steel 1993), Usinor was found uncreditworthy in years
1982 through 1988, and creditworthy 1989 through 1991. Petitioners
provided sufficient information to believe or suspect that Usinor was
uncreditworthy in years 1992 through 1995. Thus for the years 1982
through 1988, and 1992 through 1995, we will investigate whether Usinor
was uncreditworthy in the years in which petitioners have alleged non-
recurring countervailable subsidies.
We are not including in our investigation the following programs
alleged to be benefitting producers and exporters of the subject
merchandise in France:
1. 1991 Infusion Via Credit Lyonnais
In 1991, the state-owned Credit Lyonnais (CL) purchased a 20
percent share of Usinor for FF 2.5 billion. In (Certain Steel 1993) and
the Final Affirmative Countervailing Duty Determination: Certain Hot
Rolled Lead and Bismuth Carbon Steel Products from France, 58 FR 6221
(January 27, 1993) (Lead and Bismuth), the Department determined that
Usinor was equityworthy and found the investment not countervailable.
The Department determined not to initiate in the Notice of Initiation
of Countervailing Duty Investigations: Stainless Steel Sheet and Strip
in Coils From France, Italy, and the Republic of Korea, 63 FR 37539
(July 13, 1998) (Stainless Steel). Although petitioners claim to submit
new information on this program, the information is the same as
submitted in Stainless Steel. Petitioners also argue that the holding
in Aimcor Alabama v. United States, 871 F. Supp. 447 (CIT 1994), which
is incorporated into the new CVD regulations, compels us to initiate on
this program. Though Stainless Steel preceded the new regulations,
Aimcor was considered when we declined to initiate. Therefore, we are
not including this program in our investigation.
2. 1991 PACs Write-Off
In 1991, Usinor converted FF 2.8 billion of PAC liabilities into
common stock held by the Government of France (GOF). Petitioners allege
that this constituted a countervailable benefit in the form of debt
forgiveness. In Certain Steel 1993 and Lead and Bismuth, we determined
that this transaction was a debt-to-equity swap, and because we found
Usinor equityworthy in 1991, this program was not countervailable.
Thus, we declined to initiate in Stainless Steel. Again, petitioners
contest the 1991 equityworthy finding but, aside from citing press
reports of the poor financial state of Usinor at the time, they do not
supply sufficient new information or evidence of changed circumstances
to warrant reinvestigating this program. Therefore, we are not
including this program in our investigation.
3. 1995 Capital Infusion
Petitioners allege that the GOF forewent revenue otherwise due when
it allowed Usinor to keep FF 5 billion resulting from the issuance of
additional Usinor shares to private investors prior to its partial
privatization. Petitioners argue that, at the time of the sale, Usinor
was 100 percent government-owned and, therefore, all of the revenue
resulting from the sale should have remained with the GOF. Petitioners
argue that this sale constituted a financial contribution in the form
of a direct cash grant or failure to collect revenue otherwise due in
which the purchase by Stable Shareholders (i.e. the GOF) of shares at
about the same time played a meaningful, but ancillary, role in the
private investors' decision to purchase Usinor shares. Petitioners
further argue that, in the event that the Department does not deem this
program to be a grant, it can be viewed as an infusion by private
parties acting at the behest of the GOF at a time when Usinor was
unequityworthy. In Stainless Steel, we declined to initiate on these
purchases of Usinor shares by the Stable Shareholders. No new
information has been provided in this petition to warrant a
reexamination of our decision not to initiate in Stainless Steel.
Therefore, we are not including this program in our investigation.
4. GOF Advances for SODIs
Regional development subsidiaries (SODIs) were established by
Usinor and Sacilor in 1983, to assist in the retraining of laid-off
personnel. Petitioners allege that the SODI advances to Usinor from
1991 through 1994 are countervailable. In Certain Steel 1993, we
determined that the program was not tied to steel production and that
it did not relieve Usinor of any obligations that it would otherwise
incur with respect to the retraining of laid-off personnel and thus, it
was not countervailable. As new evidence, petitioners cite to the 1997
European Union (EU) notification to the WTO of the SODI program for
1995, claiming that it represents the EU's confirmation that SODI
constitutes a subsidy program under the SCM agreement. However, we note
that the EU's report to the WTO states that none of the GOF's SODI
advances went to Usinor. Therefore, we are not including this program
in our investigation.
5. 1987 through 1990 Write-off of Shareholder's Advances
Petitioners allege that Usinor received additional shareholder
advances during the years 1987 through 1990. They further allege that
these advances were written off in 1991, and thus constitute
countervailable debt forgiveness. We note that this allegation is the
same as
[[Page 13000]]
the allegation under the GOF Advances for SODIs program (discussed
above) and that these two allegations concern the same program;
petitioners own source documentation indicates that these two programs
are, in fact, one program. Furthermore, in the Preliminary Affirmative
Countervailing Duty Determination: Certain Steel Products from France
and Alignment of Final Countervailing Duty Determination With Final
Antidumping Duty Determinations: Certain Steel Products from France,
(57 FR 57785) (December 7, 1992), the Department referred to this
program as Shareholder Advances After 1986 and classified it as a
program for which more information was needed. In Certain Steel 1993,
this program was determined to be not countervailable under the name
Regional Development Subsidiaries (SODIs). Therefore, we are not
including this program in our investigation.
6. Credit National Loans
Petitioners allege that the GOF's Credit National (CN) selectively
funnels subsidized loans to the steel industry, and that any CN loans
outstanding during the POI are countervailable. In Certain Steel 1993,
we found that the loans were not provided on either a de jure or de
facto specific basis. Petitioners claim that new evidence indicates
that CN loan terms vary depending on the recipient and thus, we should
investigate whether Usinor or the French steel industry received
subsidized loans on a specific basis. The information that petitioners
have submitted is not sufficient to revisit the Department's previous
determination on this program because it does not indicate that CN
offered subsidized loans to the steel industry on a specific basis.
Therefore, we are not including this program in our investigation.
7. Fonds de Developpement Economique et Social (FDES) Loans
Petitioners allege that in 1991, Usinor received subsidized loans
from the GOF under the FDES program. In Certain Steel 1993, the
Department found that, although the loans were specifically provided to
the steel industry, after comparing interest actually paid to interest
that would have been paid at the benchmark interest rate, the 1991
loans conferred no benefit. Thus, we declined to initiate in Stainless
Steel. Petitioners provide no new information or evidence of changed
circumstances indicating that Usinor has obtained any new loans or to
prompt a reexamination of the loans and benchmark from the previous
investigation.
B. India
We are including in our investigation the following programs
alleged in the petition to have provided countervailable subsidies to
producers and exporters of the subject merchandise in India:
1. Passbook Scheme
2. Duty Entitlement Passbook Scheme
3. Import Licenses
a. Advance Licenses
b. Advanced Intermediate Licenses
c. Special Imprest Licenses
4. Special Import Licenses
a. Special Import License for Quality
b. Special Import License for Star Trading Houses
5. Export Promotion Capital Goods Scheme
6. Pre-shipment and Post-shipment Export Financing
7. Government of India (GOI) Loans through the Steel Development Fund
8. Loan Guarantees from the GOI
9. Tax Exemption for Export Profits
We are not including in our investigation the following program
alleged to be benefitting producers and exporters of the subject
merchandise in India:
Possible Conversion of Steel Development Fund Loans into Equity in the
Steel Authority of India Limited (SAIL)
The petition contains a news article dated December 1998, which
indicates that India's steel ministry favors a proposal by SAIL to
convert SAIL's Steel Development Fund loans into equity. The petition
does not contain information as to whether such an agreement has been
finalized. Absent information that any agreement occurred during the
period of investigation (1998), this is not an issue for purposes of
this investigation.
C. Indonesia
We are including in our investigation the following programs
alleged in the petition to have provided countervailable subsidies to
producers and exporters of the subject merchandise in Indonesia:
1. Bank of Indonesia Rediscount Loans
2. Corporate Income Tax Holidays
3. Reduction in Electricity Tariffs
4. 1995 Equity Infusion into Krakatau
We are also investigating whether Krakatau was uncreditworthy in
1995, the year in which the company received the alleged equity
infusion.
D. Italy
We are including in our investigation the following programs
alleged in the petition to have provided countervailable subsidies to
producers and exporters of the subject merchandise in Italy:
Government of Italy Programs
1. Equity Infusions into Italsider/Nuova Italsider
2. Equity Infusions into ILVA
3. Debt Forgiveness in Connection with the 1981 Restructuring Plan
4. Debt Forgiveness in Connection with the 1988 Restructuring Plan
5. Debt Forgiveness Given in the Course of Privatization in Connection
with the 1993-1994 Restructuring Plan
6. Additional Debt Forgiveness in Course of Privatization
7. Unpaid Portion of Payment Price for ILP
8. Grants to ILVA
9. Working Capital Grants to ILVA in 1993
10. Grants to ILVA to Cover Closure and Liquidation Expenses as Part of
the 1993-1994 Privatization Plan
11. Grants to Riva/ILP
12. Interest Grants for ``Indirect Debts'' under Law 750/81
13. Lending from the Ministry of Industry under Law 675/77
14. Loans with Interest Contributions under Law 675/77
15. Capital Grants to Nuova Italsider under Law 675/77
16. Personnel Retraining under Law 675/77
17. VAT Reductions under Law 675/77
18. Closure Payments under Law 481/94 and its Predecessor Law
19. Closure Grants under Laws 46 and 706
20. Early Retirement Benefits
21. Decree Law 120/89
Regional Programs
22. Capital Grants
23. Law 488/92
24. Law 341/95 Tax Concessions
25. Exemptions from Taxes
26. Interest Rate Reductions under Law 902
27. Interest Contributions under the Sabatini Law
28. Urban Redevelopment Packages under Law 181/89
29. Exchange Rate Guarantees under Law 796/76
30. Export Marketing Grants under Law 394/81
European Commission Programs
1. ECSC Loans under Article 54
2. Interest Rebates on ECSC Article 54 Loans
3. ECSC Conversion Loans, Interest Rebates, Restructuring Grants, and
Traditional and Social Aid under Article 56
[[Page 13001]]
4. ERDF Aid
5. Resider and Resider II
6. European Social Fund
We are also investigating whether ILVA/ILP and their predecessor
companies were uncreditworthy in the years 1977 through 1994. In the
Final Affirmative Countervailing Duty Determinations: Certain Steel
Products from Italy, 58 FR 37327 (July 9, 1993), (Certain Steel from
Italy), we found that ILVA and its corporate predecessors were
uncreditworthy in each year 1977 through 1991. In the Final Affirmative
Countervailing Duty Determination: Grain-Oriented Electrical Steel From
Italy, 59 FR 18357 (April 18, 1994), (Electrical Steel), we found that
ILVA and its corporate predecessors were uncreditworthy in each year
1978 through 1992. In the Final Affirmative Countervailing Duty
Determination: Certain Stainless Steel Wire Rod from Italy, 63 FR
40,474 (July 29, 1998), (Wire Rod), we found that ILVA and its
corporate predecessors were uncreditworthy in each year 1985 through
1993. Thus, for the years 1977 through 1994, we will investigate
whether the companies were uncreditworthy in the years in which
petitioners have alleged non-recurring countervailable subsidies.
We are not including in our investigation the following program
alleged to be benefitting producers and exporters of the subject
merchandise in Italy:
Social Security Exemptions
Petitioners allege that employers in the southern Mezzogiorno
region were entitled to a full or partial exemption from social
security contributions for workers that represented an addition to the
company's labor force. Petitioners provide documentation that producers
of the subject merchandise had their eligibility for the program
suspended in 1986. Petitioners also point out that social security
benefits were to be phased out by December 1997. In Certain Steel
Italy, we treated social security exemptions as non-recurring benefits.
However, in the Final Affirmative Countervailing Duty Determination:
Certain Pasta from Italy, 61 FR 30288, 30293 (June 14, 1996) (Pasta), a
subsequent determination to Certain Steel Italy, we determined that
social security exemptions are recurring benefits. Because our
methodology treats these benefits as recurring, along with the fact
that producers of the subject merchandise had their eligibility for the
program suspended in 1986, and these benefits were to be phased out
before the period of investigation (1998) began, no benefit to
producers of the subject merchandise would have been conferred during
the period of investigation. Therefore, we are not including this
program in our investigation.
E. Korea
We are including in our investigation the following programs
alleged in the petition to have provided countervailable subsidies to
producers and exporters of the subject merchandise in Korea:
1. POSCO's Two-Tiered Pricing Structure to Domestic Customers
2. GOK Directed Credit Programs
a. Pre-1992 Directed Credit
b. Post-1991 Directed Credit
3. Private Capital Investment Act (PCIA)
4. Kwangyang Bay
a. GOK Infrastructure Investments at Kwangyang Bay Pre-1992
b. GOK Infrastructure Investments at Kwangyang Bay Post-1991
5. Tax Programs Under the Tax Reduction and Exemption Control Act
(TERCL)
a. Technical Development Reserve Funds (Article 8)
b. Tax Credit for Technology and Manpower Development Expenses
(Article 9)
c. Tax Credit for Investment in Equipment to Develop Technology and
Manpower/Investment Tax Credit (Article 10)
d. Tax Credits for Vocational Training (Article 18)
e. Tax Credit for Investment in Productivity Improvement Facilities
(Article 25)
f. Tax Credits for Investment in Specific Facilities (Article 26)
g. Tax Credits for Temporary Investments (Article 27)
h. Tax Credits for Specific Investments (Article 71)
i. Reserve for Export Loss (Article 16)
j. Reserve for Overseas Market Development (Article 17)
k. Exemption of Corporation Tax on Dividend Income from Overseas
Resources Development Investment (Article 24)
l. Social Indirect Capital Investment Reserve Funds (Article 28)
m. Energy-Saving Facilities Investment Reserve Funds (Article 29)
n. Mining Investment Reserve Funds (Article 95)
6. Asset Revaluation Pursuant to TERCL Article 56(2)
7. Special Cases of Tax for Balanced Development among Areas (TERCL
Articles 41, 42, 43, 44, and 45)
8. Industry Promotion and Research and Development Subsidies
a. Promotion Fund for Science and Technology
b. Highly Advanced National Project Fund
c. Steel Campaign for the 21st Century
9. Overseas Resource Development (Loans and Grants) Programs
10. Free Trade Zones (FTZs) at Pusan and Kwangyang
11. Excessive Duty Drawback
12. Dockyard Fees (Port Facility Fees)
13. Preferential Utility Rates
14. Scrap Reserve Fund
15. Export Insurance Rates By The Korean Export Insurance Corporation
16. Short-Term Export Financing
17. Korean Export-Import Bank Loans
18. Export Industry Facility Loans (EIFL) and Specialty Facility Loans
19. Loans from the Energy Savings Fund
We are not including in our investigation the following programs
alleged to be benefitting producers and exporters of the subject
merchandise in Korea:
1. Infrastructure at Asan Bay and Regional Tax Subsidies for Industries
Located at Asan Bay
Petitioners allege that the GOK is providing various infrastructure
benefits to steel companies that relocate to Asan Bay, and that Dongkuk
Steel Mill Co., Ltd. (Dongkuk Steel), a producer/exporter of the
subject merchandise, is reportedly relocating to Asan Bay. In addition,
petitioners allege that companies located in the Posung Industrial
Complex located in Asan Bay are eligible for numerous tax subsidies.
Petitioners cite a July 1998 report which states that Asan Bay ``is now
emerging as Korea's steel mecca'' attracting companies such as Dongkuk
Steel. However, press reports submitted in the petition, state that
Dongkuk Steel shut down its plant in Pusan in December 1998, and plans
to shift production to its Pohang and Inchon plants. Thus, the
information provided in the petition does not indicate that Dongkuk
Steel has moved, built or shifted production facilities to Asan Bay.
Therefore, we are not initiating an investigation on programs
specifically related to Asan Bay.
2. Overseas Investment Loss Reserve Funds (Article 23)
Petitioners note that Article 23 permits a company to include the
reserve for overseas business losses in the general losses in the
current taxable year. Petitioners allege that this program is an export
incentive, as the amount of the allowable loss is limited to a set
percentage of foreign exchange receipts from overseas business. In the
Final Affirmative Countervailing Duty
[[Page 13002]]
Determinations and Final Negative Critical Circumstances
Determinations: Certain Steel Products from Korea, 58 FR 37338 (July 9,
1993), the Department determined that this program was not
countervailable. Petitioners have not provided any new information or
evidence of changed circumstances that warrants reconsideration of that
final determination. Therefore, we are not initiating an investigation
on this program.
3. Industry Promotion and Research and Development Subsidies
a. Environmental Engineering and Technology Development.
b. Industrial Development Fund.
Petitioners allege that POSCO and Dongkuk Steel are benefitting
from industrial promotion funds and research and development subsidies.
Petitioners' allegations regarding these two programs are based on the
importance of the steel industry to the Korean economy, rather than on
information regarding the eligibility criteria or usage of these two
programs. The information provided in the petition does not indicate
that the programs are de jure or de facto specific to the steel sector.
Therefore, we are not initiating an investigation on these programs.
4. Special Depreciation for Energy Saving and Productivity Promotion
Petitioners state that this program allows Korean exporters to
claim a special depreciation charge for energy-savings facilities.
Petitioners state that POSCO's 1994 SEC Prospectus recorded ``special
depreciation charges'' for energy-saving and productivity promotion
facilities and equipment. Note (4) of POSCO's 1994 SEC Prospectus
specifically states that pursuant to a change in Korean GAAP (General
Accounting Principles), ``special depreciation will no longer be
allowed for financial reporting purposes, commencing in 1994.''
Moreover, petitioners have not provided any evidence indicating POSCO
took special depreciation after 1993. Therefore, we are not
investigating this program.
5. Tax Credit for Equipment Investment to Promote Workers' Welfare--
Article 88 (Article 72-2 and 90, prior to 1995)
Petitioners allege that Korean steel producers are benefitting from
several tax programs, including Articles 72-2 and 90. In support of
their allegation, petitioners note that in the 1997 Stainless Steel
Plate verification report for POSCO dated January 27, 1999, the
Department reported that POSCO used tax credits under Articles 72-2 and
90.
However, the Department has not previously found these articles to
be countervailable. Furthermore, petitioners did not make any
allegations regarding the specificity of these articles, nor did they
provide any supporting information. Therefore, we are not initiating an
investigation on this program.
Distribution of Copies of the Petitions
In accordance with section 702(b)(4)(A)(i) of the Act, copies of
the public version of the petition have been provided to the
representatives of France, India, Indonesia, Italy, and Korea. We will
attempt to provide copies of the public version of the petition to all
the exporters named in the petition, as provided for under
Sec. 351.203(c)(2) of the Department's regulations.
ITC Notification
Pursuant to section 702(d) of the Act, we have notified the ITC of
these initiations.
Preliminary Determination by the ITC
The ITC will determine by April 2, 1999, whether there is a
reasonable indication that an industry in the United States is
materially injured, or is threatened with material injury, by reason of
imports of certain cut-to-length carbon-quality steel plate from
France, India, Indonesia, Italy, and Korea. A negative ITC
determination for any country will result in the investigation being
terminated with respect to that country; otherwise, the investigations
will proceed according to statutory and regulatory time limits.
This notice is published pursuant to section 777(i) of the Act.
Dated: March 8, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-6295 Filed 3-15-99; 8:45 am]
BILLING CODE 3510-DS-P