[Federal Register Volume 64, Number 103 (Friday, May 28, 1999)]
[Notices]
[Pages 28978-28982]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-13687]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-357-004]


Preliminary Results of Full Sunset Review: Carbon Steel Wire Rod 
From Argentina

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

ACTION: Notice of preliminary results of full sunset review: Carbon 
steel wire rod from Argentina.

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SUMMARY: On November 2, 1998, the Department of Commerce (``the 
Department'') initiated a sunset review of the suspended countervailing 
duty investigation on carbon steel wire rod from Argentina (63 FR 
58709) pursuant to section 751(c) of the Tariff Act of 1930, as amended 
(``the Act''). On the basis of a notice of intent to participate filed 
on behalf of the domestic industry and substantive comments filed on 
behalf of the domestic industry and respondent interested parties, the 
Department is conducting a full review. As a result of this review, the 
Department preliminarily finds that termination of the suspended 
countervailing duty investigation would be likely to lead to 
continuation or recurrence of a countervailable subsidy. The net 
countervailable subsidy and the nature of the subsidy are identified in 
the ``Preliminary Results of Review'' section of this notice.

FOR FURTHER INFORMATION CONTACT: Scott E. Smith or Melissa G. Skinner, 
Office of Policy for Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th & Constitution, 
Washington, D.C. 20230; telephone: (202) 482-6397 or (202) 482-1560, 
respectively.

EFFECTIVE DATE: May 28, 1999.

Statute and Regulations

    This review is being conducted pursuant to sections 751(c) and 752 
of the Act. The Department's procedures for the conduct of sunset 
reviews are set forth in Procedures for Conducting Five-year 
(``Sunset'') Reviews of Antidumping and Countervailing Duty Orders, 63 
FR 13516 (March 20, 1998) (``Sunset Regulations'') and in 19 C.F.R. 
Part 351 (1998) in general. Guidance on methodological or analytical 
issues relevant to the Department's conduct of sunset reviews is set 
forth in the Department's Policy Bulletin 98:3--Policies Regarding the 
Conduct of Five-year (``Sunset'') Reviews of Antidumping and 
Countervailing Duty Orders; Policy Bulletin, 63 FR 18871 (April 16, 
1998) (``Sunset Policy Bulletin'').

Scope

    The merchandise subject to this suspended countervailing duty 
investigation is carbon steel wire rod, both high carbon and low 
carbon, manufactured in Argentina and exported, directly or indirectly 
from Argentina to the United States. The term ``carbon steel wire rod'' 
covers a coiled, semi-finished, hot-rolled carbon steel product of 
approximately round solid cross section, not under 0.02 inches nor over 
0.74 inches in diameter, not tempered, not treated, and not partly 
manufactured, and valued at over 4 cents per pound. As of the 
publication of the last administrative review,1 the 
merchandise subject to this order was classifiable under item numbers 
7213.20.00, 7213.31.30, 7213.39.00, 7213.41.30, 7213.49.00, and 
7213.50.00

[[Page 28979]]

of the Harmonized Tariff Schedule of the United States (``HTSUS''). 
Although the HTSUS subheadings are provided for convenience and Customs 
purposes, the written description remains dispositive.
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    \1\ See Carbon Steel Wire Rod from Argentina; Final Results of 
Countervailing Duty Administrative Review, 56 FR 40309 (August 14, 
1991).
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History of the Investigation

    On July 14, 1982, the Department issued a preliminary affirmative 
countervailing duty determination with respect to imports of carbon 
steel wire rod from Argentina.2 In the preliminary 
determination, the Department found a total export subsidy of 13.80 
percent ad valorem, based on two programs: 10.33 percent under the 
``reembolso'' (tax rebate on exports) and 3.36 percent under pre-
financing of exports through dollar-indexed pesos.
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    \2\ See Carbon Steel Wire Rod from Argentina; Preliminary 
Affirmative Countervailing Duty Determination, 47 FR 30539 (July 14, 
1982).
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    On September 27, 1982, the Department suspended the countervailing 
duty investigation on the basis of a suspension agreement by the 
Government of Argentina to eliminate all benefits which the Department 
found to be bounties or grants on exports to the United States of the 
subject merchandise.3 Specifically, the Government of 
Argentina agreed, through its Ministry of Economy, that: (1) it would 
not provide to manufacturers, producers, or exporters of carbon steel 
wire rod, any reembolso payment constituting a bounty or grant, as 
determined by the Department, (2) the Central Bank would not provide 
preferential dollar-indexed pre-export financing, and (3) no new or 
equivalent benefits would be granted. In the notice announcing the 
suspension agreement, the Department identified a change since the 
preliminary determination with respect to the reembolso. Specifically, 
the Department stated that, of the total 10 percent reembolso, the 
portion that constituted an allowable rebate is 7.60 percent and the 
over rebate to be eliminated as a condition of the suspension agreement 
is currently 2.40 percent.
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    \3\ See Carbon Steel Wire Rod from Argentina; Suspension of 
Investigation, 47 FR 42393, (September 27, 1982).
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    In conjunction with the administrative review of the period 
September 27, 1982 through December 31, 1982, the suspension agreement 
was revised to clearly specify the scope of the agreement and include 
renunciation of a program not included in the original investigation, 
that was subsequently found countervailable in other investigations 
involving products from Argentina.4 Specifically, the 
suspension agreement was revised to clarify that both high carbon and 
low carbon were within the scope of the agreement. Further, the 
Ministry of Economy agreed that the Central Bank would not provide 
post-shipment financing for exports under Circular OPRAC 1-9. The 
Department has conducted one additional administrative review of this 
suspended countervailing duty investigation covering the period January 
1, 1989 through December 1, 1989.5 The Department found that 
both the Government of Argentina and Acindar Industria Argentina de 
Aceros S.A. (``Acindar'') had complied with the terms of the suspension 
agreement.
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    \4\ See Carbon Steel Wire Rod from Argentina; Final Results of 
Countervailing Duty Administrative Review and Revised Suspension 
Agreement, 51 FR 44649 (December 11, 1986).
    \5\ See Carbon Steel Wire Rod from Argentina; Final Results of 
Countervailing Duty Administrative Review, 56 FR 40309 (August 14, 
1991).
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Background

    On November 2, 1998, the Department initiated a sunset review of 
the suspended countervailing duty investigation on carbon steel wire 
rod from Argentina (63 FR 58709), pursuant to section 751(c) of the 
Act. The Department received a Notice of Intent to Participate on 
behalf of Co-Steel Raritan (formerly Raritan River Steel), GS 
Industries, Inc., and North Star Steel (collectively ``the domestics'') 
on November 16, 1998, within the deadline specified in section 
351.218(d)(1)(i) of the Sunset Regulations. Each company claimed 
interested party status under section 771(9)(C) of the Act. We received 
complete substantive responses on behalf of the Argentine Republic, 
Acindar, and the domestics on December 2, 1998, within the 30-day 
deadline specified in the Sunset Regulations under section 
351.218(d)(3)(i).
    In its substantive response, the domestics stated that all three 
domestic producers participated as petitioners in the original 
investigation and the administrative reviews for the periods of 
September 27, 1982, through December 31, 1982, and January 1, 1989, 
through December 31, 1989.
    In its substantive response, the Embassy of Argentina stated that 
the Argentine Republic was a participant in the original countervailing 
duty proceeding and in all of the administrative reviews of the 
suspension agreement. The Argentine Republic qualifies as an interested 
party under section 771(9)(B) of the Act. In its substantive response, 
Acindar claimed interested party status under section 771(9)(A) of the 
Act, as an Argentine producer of carbon steel wire rod. Further, 
Acindar stated that, as far as it is aware, Acindar accounted for one 
hundred percent of the total exports of Argentine subject merchandise 
to the United States during each of the five calendar years preceding 
the year of publication of the notice of initiation.
    On December 7, 1998, we received rebuttal comments from the 
domestics. We did not receive rebuttal comments from the Argentine 
Republic or Acindar. On the basis of complete substantive responses 
from the Argentine Republic and Acindar to the notice of initiation, 
and in accordance with section 351.218(e)(2) of the Sunset Regulations, 
the Department is conducting a full review.
    The Department determined that the sunset review of the suspended 
countervailing duty investigation on carbon steel wire rod from 
Argentina is extraordinarily complicated. In accordance with section 
751(c)(5)(C)(v) of the Act, the Department may treat a review as 
extraordinarily complicated if it is a review of a transition order 
(i.e., an order in effect on January 1, 1995). (See section 
751(c)(6)(C) of the Act.) Therefore, on January 15, 1999, the 
Department extended the time limit for completion of the preliminary 
results of this review until not later than May 23, 1999, in accordance 
with section 751(c)(5)(B) of the Act.6
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    \6\ See Carbon Steel Wire Rod from Argentina: Extension of Time 
Limit for Preliminary Results of Five-Year Reviews, 64 FR 9475 
(February 26, 1999).
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Determination

    In accordance with section 751(c)(1) of the Act, the Department is 
conducting this review to determine whether termination of the 
suspended countervailing duty investigation would be likely to lead to 
continuation or recurrence of a countervailable subsidy. Section 752(b) 
of the Act provides that, in making this determination, the Department 
shall consider the net countervailable subsidy determined in the 
investigation and subsequent reviews, and whether any change in the 
program which gave rise to the net countervailable subsidy has occurred 
that is likely to affect that net countervailable subsidy. Pursuant to 
section 752(b)(3) of the Act, the Department shall provide to the 
International Trade Commission (``the ITC'') the net countervailable 
subsidy likely to prevail if the order is revoked. In addition, 
consistent with section 752(a)(6), the Department shall provide the ITC 
information concerning the

[[Page 28980]]

nature of the subsidy and whether the subsidy is a subsidy described in 
Article 3 or Article 6.1 of the Subsidies Agreement.
    The Department's preliminary determinations concerning continuation 
or recurrence of a countervailable subsidy, the net countervailable 
subsidy likely to prevail if the order is revoked, and nature of the 
subsidy are discussed below. In addition, parties' comments with 
respect to each of these issues are addressed within the respective 
sections.

Continuation or Recurrence of a Countervailable Subsidy

Party Comments

    In its substantive response, the domestics stated that the three 
programs identified in the suspension agreement, as amended--the 
``reembolso'' (an over-rebate of indirect taxes on exports), pre-
financing through dollar-indexed pesos, and post-shipment financing of 
exports under Circular OPRAC 1-9--still exist. The domestics refer to 
the final results of administrative review of the countervailing duty 
order on oil country tubular goods from Argentina as evidence that the 
programs continue to exist.7
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    \7\ See Oil Country Tubular Goods From Argentina; Final Results 
of Countervailing Duty Administrative Review, 62 FR 55589 (October 
27, 1997) and Oil Country Tubular Goods From Argentina; Preliminary 
Results of Countervailing Duty Administrative Review, 62 FR 32307 
(June 13, 1997) (``OCTG'').
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    Acindar argued that countervailable subsidies would not be likely 
to continue or resume if the suspended investigation were terminated 
for two reasons. First, Acindar argued that there is currently no U.S. 
authority to maintain the suspension agreement in effect. Citing to the 
1997 revocation of the countervailing duty orders on leather, wool, oil 
country tubular goods, and carbon steel cold-rolled flat products from 
Argentina,8 Acindar asserted that by revoking those orders 
without consideration of the current status of countervailable 
subsidies, the Department was following the dictates of the Federal 
Circuit in Ceramica.9 Acindar argued that the principles of 
Ceramica apply equally to suspension agreements entered into without 
the benefit of a preliminary injury determination. Further, Acindar 
stated that according to Ceramica, ``Section 1303 ceases to operate as 
authority for countervailing duties on goods imported after a country 
has become a `country under the Agreement.' 64 F.3d at 1582.'' Thus, 
Acindar argued, the Department may only maintain a countervailing duty 
regime under Section 1671, which requires a preliminary injury 
determination. Therefore, since no injury determination underpins the 
suspension agreement, the United States should terminate the suspension 
agreement.
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    \8\ See Substantive response of Acindar, page 3 (December 2, 
1998) and Leather from Argentina, Wool from Argentina, Oil Country 
Tubular Goods from Argentina, and Carbon Steel Cold-rolled Flat 
Products from Argentina, Final Results of Changed Circumstance 
Reviews, 62 FR 41361 (August 1, 1997) (``Leather'').
    \9\ See Substantive response of Acindar, page 3 (December 2, 
1998) and Ceramica Regiomontana v. United States, 64 F.3d 1579 (Fed. 
Cir. 1995) (``Ceramica'').
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    Second, Acindar noted that in the most recent administrative 
review, the Department found that Argentina was in compliance with the 
suspension agreement. Acindar stated that there is no reason to assume 
that it would start receiving, or that the Argentine Government would 
start confering on Acindar, benefits that the Department determines to 
constitute countervailable subsidies. The Argentine Republic did not 
address this issue.
    In their rebuttal comments, the domestics stated that neither 
Ceramica nor Leather addressed the issue of suspension agreements. 
Rather, the domestics point out that the Federal Circuit focused on the 
Department's ability to assess duties, not the ability to administer a 
suspension agreement or resume a suspended investigation. The domestics 
stated that since the Department's sunset review will reactivate this 
investigation, and Argentina is now a ``country under the Agreement,'' 
the special regime for a simultaneous injury and sunset review set 
forth in 19 U.S.C. 1677b and 19 CFR 207.46 should apply to this case. 
The domestics concluded that, for the reasons stated in their 
substantive response, the Department should find that subsidization is 
likely to recur at the rate determined in the preliminary investigation 
(as adjusted for new subsidies).

Department's Determination

    Drawing on the guidance provided in the legislative history 
accompanying the Uruguay Round Agreements Act (``URAA''), specifically 
the Statement of Administrative Action (``the SAA''), H.R. Doc. No. 
103-316, vol. 1 (1994), the House Report, H.R. Rep. No. 103-826, pt. 1 
(1994), and the Senate Report, S. Rep. No. 103-412 (1994), the 
Department issued its Sunset Policy Bulletin providing guidance on 
methodological and analytical issues, including the basis for 
likelihood determinations. The Department clarified that determinations 
of likelihood will be made on an order-wide basis (see section III.A.2 
of the Sunset Policy Bulletin). Additionally, the Department normally 
will determine that revocation of a countervailing duty order or 
termination of a countervailing duty investigation is likely to lead to 
continuation or recurrence of a countervailable subsidy where (a) a 
subsidy program continues, (b) a subsidy program has been only 
temporarily suspended, or (c) a subsidy program has been only partially 
terminated (see section III.A.3.a of the Sunset Policy Bulletin). 
Exceptions to this policy are provided where a company has a long 
record of not using a program (see section III.A.3.b of the Sunset 
Policy Bulletin).
    With respect to Acindar's argument that, based on Ceramica, the 
Department must terminate the suspension agreement, we disagree. 
Rather, we agree with the domestics that Ceramica addresses the issue 
of the Department's authority to assess countervailing duties on 
imports that did not receive an injury test. However, in this case, the 
Department is not assessing countervailing duties and, in fact, 
terminated the suspension of liquidation as a result of the conclusion 
of the suspension agreement. Since the administration of the suspension 
agreement does not include the assessment of duties, the principles of 
Ceramica do not apply.
    On the basis of information submitted during this sunset review, we 
have no reason to believe that any of the three programs covered by the 
suspension agreement have been eliminated by the Government of 
Argentina. In their substantive responses, neither the Government of 
Argentina nor Acindar argued that the programs had been terminated. 
Rather, Acindar argued that the government and Acindar have been 
complying with the terms of the suspension agreement. As noted above, 
the terms of the suspension agreement do not require the termination of 
the programs found countervailable. Rather, the terms of the agreement 
merely provide that the Government of Argentina (through the Ministry 
of Economy and Central Bank) shall not provide pre-export and post-
shipment financing on exports of carbon steel wire rod and shall not 
provide any reembolso payments constituting a bounty or grant to 
manufacturers, producers, or exporters of carbon steel wire rod.
    In their substantive response, the domestics relied on the final 
results issued in 1997 in the administrative review covering OCTG and 
the period January 1, 1991 through September 19, 1991, as support for 
their assertion that

[[Page 28981]]

the three programs continue to exist. Consistent with the findings in 
the latest administrative review of the suspension agreement, in the 
review on OCTG the Department found that the pre-export financing 
program was totally suspended on March 8, 1991, by Communique A-1807. 
In the OCTG review, the Department found the post-export financing was 
not used. However, in the latest review of the suspension agreement, 
the Department found that the post-export financing was also totally 
suspended on March 8, 1991, by Communique A-1807. With respect to the 
reembolso, in the administrative review of OCTG, the Department found 
that the legal structure of the reembolso program was changed by Decree 
1011/91 in May 1991. Specifically, the Department found that the rebate 
system was changed to cover only the reimbursements of indirect local 
taxes and does not cover import duties, except reimbursement of duties 
paid on imported products which are re-exported. Additionally, the 
Department found that the rates of reimbursement were reduced by 33 
percent for all products and, for OCTG that reduction was from 12.5 to 
8.3 percent. Despite the changes found in the programs, we have no 
evidence that the programs have been terminated.
    The SAA at 888, states that temporary suspension or partial 
termination of a subsidy program also will be probative of continuation 
or recurrence of countervailable subsidies, absent significant evidence 
to the contrary. As noted above, neither the Government of Argentina, 
nor Acindar, provided any argument or evidence that any of the three 
programs have been terminated. Therefore, absent evidence to the 
contrary, the Department preliminarily determines that termination of 
the suspended countervailing duty investigation would likely result in 
the recurrence of countervailable subsidies.

Net Countervailable Subsidy

Party Comments

    In their substantive response, the domestics asserted that the 
Department should find the base countervailing duty rate likely to 
prevail if the suspended investigation is terminated to be the rate 
calculated in the preliminary determination of the original 
investigation--13.70 percent, as adjusted to reflect likely benefits 
under the post-export financing program. The domestics stated that this 
approach would be consistent with the SAA, Sunset Policy Bulletin, and 
section 752(b)(1)(B) of the Act.
    As noted above, Acindar argued that the countervailable subsidy 
rate that is likely to prevail if the agreement is terminated is zero. 
Acindar supported this argument by noting that both the government and 
Acindar have complied with the terms of the suspension agreement. 
Further, Acindar asserted that there is no reason to assume that 
Acindar would start receiving, or the Argentine Government would start 
conferring on Acindar, countervailable subsidies if the investigation 
were terminated.

Department's Determination

    In the Sunset Policy Bulletin, the Department stated that, 
consistent with the SAA and House Report, ``the Department normally 
will select a rate ``from the investigation, because that is the only 
calculated rate that reflects the behavior of exporters and foreign 
governments without the discipline of an order or suspension agreement 
in place.' '' The Department went on to clarify that, in a sunset 
review where the Department did not issue a final determination because 
the investigation was suspended and continuation was not requested, the 
Department may provide to the Commission the net countervailable 
subsidy that was determined in the preliminary determination in the 
original investigation (see Section III.B.1 of the Sunset Policy 
Bulletin). The Department noted that the rate from the original 
investigation may not be the most appropriate rate if, for example, the 
rate was derived from subsidy programs which were found in subsequent 
reviews to be terminated, there has been a program-wide change, or the 
rate ignores a program found to be countervailable in a subsequent 
administrative review. (See section III.B.3 of the Sunset Policy 
Bulletin).
    We agree with the domestics that, in the original investigation, 
the Department preliminarily found the net subsidy to be 13.70 percent. 
However, as noted above, the Department revised the subsidy rate 
attributable to the reembolso program at the time it concluded the 
suspension agreement. Specifically, the Department found that 7.6 
percent of the 10 percent reembolso constituted an allowable rebate and 
the overrebate, the amount to be eliminated as a condition of the 
suspension agreement, was 2.40 percent. Therefore, it is appropriate to 
reduce the export subsidy attributable to the reembolso from the 
preliminary 10.44 percent to 2.40 percent. Thus, the net subsidy found 
in the original investigation was actually 5.36 percent, the sum of 
3.36 percent from pre-financing of exports through dollar-indexed pesos 
and 2.40 percent from the reembolso.
    Consistent with the Department's Sunset Policy Bulletin and section 
752(b)(1)(B) of the Act, the domestics requested that the Department 
adjust the net countervailable subsidy from the preliminary 
determination to reflect the likely benefits under the post-export 
financing program, the renunciation of which was included in the 
revised suspension agreement on the basis that it had been found 
countervailable in countervailing duty investigations on two other 
Argentine products. The domestics did not specify, however, how, or on 
what basis, the Department should determine the likely benefits under 
this program. As a result, we have not adjusted the subsidy to reflect 
an amount for post-export financing.
    Finally, as noted above, in the final results of administrative 
review on OCTG from Argentina, the Department found that the legal 
structure of the reembolso program had been changed in May 1991, by 
Decree 1011/91. Not only had the rebate system been changed to cover 
only the reimbursement of indirect local taxes and reimbursement of 
duties paid on imported products which are re-exported, but the rate of 
reimbursement was reduced by 33 percent for all products. While such a 
change could potentially have an effect on the level of countervailable 
subsidy, if any, attributable to the reembolso, we have no basis to 
determine whether this change would have an effect on exports of carbon 
steel wire rod. Therefore, we have not made any adjustment for this 
program-wide change.

Nature of the Subsidy

    In the Sunset Policy Bulletin, the Department stated that, 
consistent with section 752(a)(6) of the Act, the Department will 
provide information to the ITC concerning the nature of the subsidy and 
whether it is a subsidy described in Article 3 or Article 6.1 of the 
Subsidies Agreement. Neither of the parties specifically addressed this 
issue.
    Because receipt of the benefits provided under the reembolso, pre-
export financing, and post-export financing programs, are contingent 
upon export, each program falls within the definition of an export 
subsidy under Article 3.1(a) of the Subsidies Agreement.

Preliminary Results of Review

    As a result of this review, the Department finds that termination 
of the suspended countervailing duty investigation would be likely to 
lead to recurrence of a countervailable subsidy. The net 
countervailable subsidy is 5.36

[[Page 28982]]

percent ad valorem. Additionally, each of the three programs 
(reembolso, pre-export financing, and post-export financing) are 
subsidies within the meaning of Article 3 of the Subsidies Agreement.
    Any interested party may request a hearing within 30 days of 
publication of this notice in accordance with 19 CFR 351.310(c). Any 
hearing, if requested, will be held on July 17, 1999. Interested 
parties may submit case briefs no later than July 10, 1999, in 
accordance with 19 CFR 351.309(c)(1)(i). Rebuttal briefs, which must be 
limited to issues raised in the case briefs, may be filed not later 
than July 15, 1999. The Department will issue a notice of final results 
of this sunset review, which will include the results of its analysis 
of issues raised in any such comments, no later than September 28, 
1999.
    This five-year (``sunset'') review and notice are in accordance 
with sections 751(c), 752, and 777(i)(1) of the Act.

    Dated: May 21, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-13687 Filed 5-27-99; 8:45 am]
BILLING CODE 3510-DS-P