[Federal Register Volume 64, Number 109 (Tuesday, June 8, 1999)]
[Notices]
[Pages 30774-30790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-13677]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-427-815]


Final Affirmative Countervailing Duty Determination: Stainless 
Steel Sheet and Strip in Coils From France

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

EFFECTIVE DATE: June 8, 1999.

FOR FURTHER INFORMATION CONTACT: Rosa Jeong, Marian Wells, or Annika 
O'Hara, AD/CVD Enforcement, Group I, Office 1, Import Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-3853, 482-6309, or 482-
3798, respectively.

Final Determination

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

The Petitioners

    The petition in this investigation was filed by the Allegheny 
Ludlum Corporation, Armco Inc., Washington Steel Division of Bethlehem 
Steel Corporation, United Steel Workers of America, AFL-CIO/CLC, Butler 
Armco Independent Union, and Zanesville Armco Independent Organization, 
Inc. (collectively referred to hereinafter as ``the petitioners'').

Case History

    Since the publication of the preliminary determination (see 
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 France, 63 
FR 63876 (November 17, 1998) (Preliminary Determination)), the 
following events have occurred:
    We conducted verification in Belgium and France of the 
questionnaire responses submitted by the European Commission (EC), the 
Government of France (GOF), and Usinor (the only respondent company in 
this investigation) from November 11 through November 24, 1998. On 
November 24 and December 8, 1998, we received allegations of certain 
clerical errors in the Preliminary Determination. We corrected these 
errors in a January 20, 1999, memorandum to Laurie Parkhill, Acting 
Deputy Assistant Secretary (see ``Clerical Error Allegations in the 
Preliminary Determination of Stainless Steel Sheet and Strip in Coils 
from France'' (``Clerical Errors Memo'') which is on file in the 
Central Records Unit of the Department). On February 18, 1999, we 
postponed the final determination of this investigation until May 19, 
1999 (see Countervailing Duty Investigations of Stainless Steel Sheet 
and Strip in Coils from France, Italy, and the Republic of Korea: 
Notice of Extension of Time Limit for Final Determinations, 64 FR 9476 
(February 26, 1999)). The petitioners and Usinor/GOF filed case and 
rebuttal briefs on March 3 and March 10, 1999. A public hearing was 
held on March 12, 1999.

Scope of Investigation

    We have made minor corrections to the scope language excluding 
certain stainless steel foil for automotive catalytic converters and 
certain specialty stainless steel products in response to comments by 
interested parties.
    For purposes of this investigation, the products covered are 
certain stainless steel sheet and strip in coils. Stainless steel is an 
alloy steel containing, by weight, 1.2 percent or less of carbon and 
10.5 percent or more of chromium, with or without other elements. The 
subject sheet and strip is a flat-rolled product in coils that is 
greater than 9.5 mm in width and less than 4.75 mm in thickness, and 
that is annealed or otherwise heat treated and pickled or otherwise 
descaled. The subject sheet and strip may also be further processed 
(e.g., cold-rolled, polished, aluminized, coated, etc.) provided that 
it maintains the specific dimensions of sheet and strip following such 
processing.
    The merchandise subject to this investigation is classified in the 
Harmonized Tariff Schedule of the United States (HTSUS) at the 
following subheadings: 7219.13.00.30, 7219.13.00.50, 7219.13.00.70, 
7219.13.00.80, 7219.14.00.30, 7219.14.00.65, 7219.14.00.90, 
7219.32.00.05, 7219.32.00.20, 7219.32.00.25, 7219.32.00.35, 
7219.32.00.36, 7219.32.00.38, 7219.32.00.42, 7219.32.00.44, 
7219.33.00.05, 7219.33.00.20, 7219.33.00.25, 7219.33.00.35, 
7219.33.00.36, 7219.33.00.38, 7219.33.00.42, 7219.33.00.44, 
7219.34.00.05, 7219.34.00.20, 7219.34.00.25, 7219.34.00.30, 
7219.34.00.35, 7219.35.00.05, 7219.35.00.15, 7219.35.00.30,

[[Page 30775]]

7219.35.00.35, 7219.90.00.10, 7219.90.00.20, 7219.90.00.25, 
7219.90.00.60, 7219.90.00.80, 7220.12.10.00, 7220.12.50.00, 
7220.20.10.10, 7220.20.10.15, 7220.20.10.60, 7220.20.10.80, 
7220.20.60.05, 7220.20.60.10, 7220.20.60.15, 7220.20.60.60, 
7220.20.60.80, 7220.20.70.05, 7220.20.70.10, 7220.20.70.15, 
7220.20.70.60, 7220.20.70.80, 7220.20.80.00, 7220.20.90.30, 
7220.20.90.60, 7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and 
7220.90.00.80. Although the HTSUS subheadings are provided for 
convenience and customs purposes, the Department's written description 
of the merchandise under investigation is dispositive.
    Excluded from the scope of this investigation are the following: 
(1) sheet and strip that is not annealed or otherwise heat treated and 
pickled or otherwise descaled; (2) sheet and strip that is cut to 
length; (3) plate (i.e., flat-rolled stainless steel products of a 
thickness of 4.75 mm or more); (4) flat wire (i.e., cold-rolled 
sections, with a prepared edge, rectangular in shape, of a width of not 
more than 9.5 mm); and (5) razor blade steel. Razor blade steel is a 
flat-rolled product of stainless steel, not further worked than cold-
rolled (cold-reduced), in coils, of a width of not more than 23 mm and 
a thickness of 0.266 mm or less, containing, by weight, 12.5 to 14.5 
percent chromium, and certified at the time of entry to be used in the 
manufacture of razor blades. See Chapter 72 of the HTSUS, ``Additional 
U.S. Note'' 1(d).
    In response to comments by interested parties the Department has 
determined that certain specialty stainless steel products are also 
excluded from the scope of this investigation. These excluded products 
are described below:
    Flapper valve steel is defined as stainless steel strip in coils 
containing, by weight, between 0.37 and 0.43 percent carbon, between 
1.15 and 1.35 percent molybdenum, and between 0.20 and 0.80 percent 
manganese. This steel also contains, by weight, phosphorus of 0.025 
percent or less, silicon of between 0.20 and 0.50 percent, and sulfur 
of 0.020 percent or less. The product is manufactured by means of 
vacuum arc remelting, with inclusion controls for sulphide of no more 
than 0.04 percent and for oxide of no more than 0.05 percent. Flapper 
valve steel has a tensile strength of between 210 and 300 ksi, yield 
strength of between 170 and 270 ksi, plus or minus 8 ksi, and a 
hardness (Hv) of between 460 and 590. Flapper valve steel is most 
commonly used to produce specialty flapper valves in compressors.
    Also excluded is a product referred to as suspension foil, a 
specialty steel product used in the manufacture of suspension 
assemblies for computer disk drives. Suspension foil is described as 
302/304 grade or 202 grade stainless steel of a thickness between 14 
and 127 microns, with a thickness tolerance of plus-or-minus 2.01 
microns, and surface glossiness of 200 to 700 percent Gs. Suspension 
foil must be supplied in coil widths of not more than 407 mm and with a 
mass of 225 kg or less. Roll marks may only be visible on one side, 
with no scratches of measurable depth. The material must exhibit 
residual stresses of 2 mm maximum deflection and flatness of 1.6 mm 
over 685 mm length.
    Certain stainless steel foil for automotive catalytic converters is 
also excluded from the scope of this investigation. This stainless 
steel strip in coils is a specialty foil with a thickness of between 20 
and 110 microns used to produce a metallic substrate with a honeycomb 
structure for use in automotive catalytic converters. The steel 
contains, by weight, carbon of no more than 0.030 percent, silicon of 
no more than 1.0 percent, manganese of no more than 1.0 percent, 
chromium of between 19 and 22 percent, aluminum of no less than 5.0 
percent, phosphorus of no more than 0.045 percent, sulfur of no more 
than 0.03 percent, lanthanum of less than 0.002 or greater than 0.05 
percent, and total rare earth elements of more than 0.06 percent, with 
the balance iron.
    Permanent magnet iron-chromium-cobalt alloy stainless strip is also 
excluded from the scope of this investigation. This ductile stainless 
steel strip contains, by weight, 26 to 30 percent chromium and 7 to 10 
percent cobalt, with the remainder of iron, in widths 228.6 mm or less, 
and a thickness between 0.127 and 1.270 mm. It exhibits magnetic 
remanence between 9,000 and 12,000 gauss, and a coercivity of between 
50 and 300 oersteds. This product is most commonly used in electronic 
sensors and is currently available under proprietary trade names such 
as ``Arnokrome III.'' 1
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    \1\ ``Arnokrome III'' is a trademark of the Arnold Engineering 
Company.
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    Certain electrical resistance alloy steel is also excluded from the 
scope of this investigation. This product is defined as a non-magnetic 
stainless steel manufactured to American Society of Testing and 
Materials (ASTM) specification B344 and containing, by weight, 36 
percent nickel, 18 percent chromium, and 46 percent iron, and is most 
notable for its resistance to high-temperature corrosion. It has a 
melting point of 1390 degrees Celsius and displays a creep rupture 
limit of 4 kilograms per square millimeter at 1000 degrees Celsius. 
This steel is most commonly used in the production of heating ribbons 
for circuit breakers and industrial furnaces, and in rheostats for 
railway locomotives. The product is currently available under 
proprietary trade names such as ``Gilphy 36.'' 2
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    \2\ ``Gilphy 36'' is a trademark of Imphy, S.A.
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    Certain martensitic precipitation-hardenable stainless steel is 
also excluded from the scope of this investigation. This high-strength, 
ductile stainless steel product is designated under the Unified 
Numbering System (UNS) as S45500-grade steel, and contains, by weight, 
11 to 13 percent chromium and 7 to 10 percent nickel. Carbon, 
manganese, silicon and molybdenum each comprise, by weight, 0.05 
percent or less, with phosphorus and sulfur each comprising, by weight, 
0.03 percent or less. This steel has copper, niobium, and titanium 
added to achieve aging and will exhibit yield strengths as high as 1700 
Mpa and ultimate tensile strengths as high as 1750 Mpa after aging, 
with elongation percentages of 3 percent or less in 50 mm. It is 
generally provided in thicknesses between 0.635 and 0.787 mm, and in 
widths of 25.4 mm. This product is most commonly used in the 
manufacture of television tubes and is currently available under 
proprietary trade names such as ``Durphynox 17.'' 3
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    \3\ ``Durphynox 17'' is a trademark of Imphy, S.A.
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    Finally, three specialty stainless steels typically used in certain 
industrial blades and surgical and medical instruments are also 
excluded from the scope of this investigation. These include stainless 
steel strip in coils used in the production of textile cutting tools 
(e.g., carpet knives). 4 This steel is similar to AISI grade 
420 but containing, by weight, 0.5 to 0.7 percent of molybdenum. The 
steel also contains, by weight, carbon of between 1.0 and 1.1 percent, 
sulfur of 0.020 percent or less, and includes between 0.20 and 0.30 
percent copper and between 0.20 and 0.50 percent cobalt. This steel is 
sold under proprietary names such as ``GIN4 Mo.'' The second excluded 
stainless steel strip in coils is similar to AISI 420-J2 and contains, 
by weight, carbon of between 0.62 and 0.70 percent, silicon of between 
0.20 and 0.50 percent, manganese of between 0.45 and 0.80 percent, 
phosphorus of no more than 0.025 percent, and sulfur of

[[Page 30776]]

no more than 0.020 percent. This steel has a carbide density on average 
of 100 carbide particles per 100 square microns. An example of this 
product is ``GIN5'' steel. The third specialty steel has a chemical 
composition similar to AISI 420 F, with carbon of between 0.37 and 0.43 
percent, molybdenum of between 1.15 and 1.35 percent, but lower 
manganese of between 0.20 and 0.80 percent, phosphorus of no more than 
0.025 percent, silicon of between 0.20 and 0.50 percent, and sulfur of 
no more than 0.020 percent. This product is supplied with a hardness of 
more than Hv 500 guaranteed after customer processing, and is supplied 
as, for example, ``GIN6''. 5
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    \4\ This list of uses is illustrative and provided for 
descriptive purposes only.
    \5\ 'GIN4 Mo,'' ``GIN5'' and ``GIN6'' are the proprietary grades 
of Hitachi Metals America, Ltd.
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The Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions of the Tariff Act of 1930, as amended by 
the Uruguay Round Agreements Act (URAA) effective January 1, 1995 (the 
Act). In addition, unless otherwise indicated, all citations to the 
Department's regulations are to the regulations codified at 19 CFR Part 
351 (1998).

Injury Test

    Because France 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 France materially injure, or threaten material 
injury to, a U.S. industry. On August 9, 1998, the ITC published its 
preliminary determination finding that there is a reasonable indication 
that an industry in the United States is being materially injured or 
threatened with material injury by reason of imports from France of the 
subject merchandise (see Certain Stainless Steel Sheet and Strip From 
France, Germany, Italy, Japan, the Republic of Korea, Mexico, Taiwan, 
and the United Kingdom, 63 FR 41864 (August 9, 1998)).

Period of Investigation

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

Corporate History

    As stated in the Preliminary Determination, the GOF identified the 
Ugine Division of Usinor as the only producer of the subject 
merchandise that exported to the United States during the POI.
    In the early 1980s, Ugine (then called Ugine Aciers) was one of 
several producers of stainless steel in France. In 1982, the French 
steel company Sacilor acquired a controlling interest in Ugine. In the 
following year, Sacilor bought a majority of the shares in another 
stainless steel producer, Forges de Gueugnon, which was merged with one 
part of Ugine and renamed Ugine-Gueugnon. During the same time, Usinor 
was a separate steel company with one division called Usinor Chatillon 
producing stainless steel. In 1987, the GOF placed Usinor and Sacilor 
in a holding company named Usinor Sacilor. At the same time, Ugine-
Gueugnon and Usinor Chatillon were combined into one company called 
Ugine Aciers de Chatillon et Gueugnon (Ugine ACG).
    In 1991, Ugine ACG merged with Sacilor and became Ugine S.A., a 
subsidiary of the Usinor Sacilor holding company. In 1994, Usinor 
Sacilor sold approximately 40 percent of its equity in Ugine S.A. to 
the general public. However, in 1995, Usinor Sacilor bought back the 
shares in Ugine S.A. and obtained total control of the company. In late 
1995, Ugine S.A. was converted into a division of Usinor Sacilor and 
became ``the Ugine Division,'' producing stainless steel and alloys. 
Finally, in 1997, Usinor Sacilor was renamed Usinor.
    The GOF was the majority owner of both Usinor and Sacilor until the 
mid-1980s. In 1986, the GOF emerged as the sole owner of both companies 
after a capital restructuring. In 1987, the GOF created the Usinor 
Sacilor holding company. In 1991, Credit Lyonnais, a government-owned 
bank, bought 20 percent of the equity in the company.
    In July 1995, the privatization of Usinor Sacilor began. At the 
same time, Usinor Sacilor offered additional shares for sale in the 
form of a capital increase. All shares were sold through a public 
offering of shares which consisted of a French public offering, an 
international public offering, and an employee offering. In accordance 
with the French privatization law, a certain portion of the shares were 
also sold to a group of so-called ``stable shareholders,'' some of 
which were government-owned banks and other entities. The privatization 
continued throughout the years 1996 and 1997. At the end of the 
privatization, the stable shareholders held approximately 14 percent of 
Usinor's total shares, 10 percent of which were held by government-
owned or controlled entities.
    Usinor purchased shares from the GOF in 1995 to sell to employees 
on an extended payment plan in 1996. In addition, the GOF sold shares 
to employees at the time of the 1995 privatization. Monies for these 
shares were received by the GOF in 1995, 1996, and 1997. In December 
1995, Usinor Sacilor repurchased shares of Ugine which had been 
previously sold to the public, approximately 41 percent of Ugine's 
shares.
    In early 1997, the GOF transferred (without remuneration) a small 
part of its stake in Usinor to individual French shareholders and 
company employees who had held their shares for at least 18 months 
following the July 1995 privatization. In October 1997, the GOF sold 
most of its remaining shares on the market, leaving it with less than 
one percent of total Usinor shares. These shares were to be given away 
without remuneration (for ``free'') in August 1998.
    As noted in the February 19, 1999, Usinor Verification Report 
(Usinor Report), because the French steel industry was not thriving in 
the mid-1990's, Usinor made an effort to streamline its holdings and 
maintain ownership of only steel-producing divisions. This streamlining 
included the sale of the Richemont power plant in 1994, as well as the 
sale of assets to FOS-OXY in 1993 and Entreprise Jean LeFebvre in 1994.

Change 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 explained our 
current methodology with respect to the treatment of subsidies received 
prior to the sale of the company (privatization) or the spinning-off of 
a productive unit.
    Under this methodology, we estimate the portion of the purchase 
price attributable to prior subsidies. We compute this by first 
dividing the privatized company's subsidies by the company's net worth 
for each year during the period beginning with the earliest point at 
which non-recurring subsidies would be attributable to the POI (i.e., 
in this case, 1984 for Usinor) and ending one year prior to the 
privatization. We then take the simple average of the ratios. The 
simple average of these ratios of subsidies to net worth serves as a 
reasonable surrogate for the percent that subsidies constitute of the 
overall value of the company. Next, we multiply the average ratio by 
the purchase price to derive the portion of the purchase price 
attributable to repayment of prior subsidies. Finally, we reduce the 
benefit streams of the prior subsidies by the ratio of the repayment 
amount to the net present

[[Page 30777]]

value of all remaining benefits at the time of privatization. For 
further discussion of our privatization methodology, see Preliminary 
Determination, 63 FR at 63878, and the Clerical Errors Memo.
    With respect to spin-offs, consistent with our position regarding 
privatization, we analyze the spin-off of productive units to assess 
what portion of the sales price of the productive units can be 
attributable to payment for prior subsidies. To perform this 
calculation, we first determine the amount of the seller's subsidies 
that the spun-off productive unit could potentially take with it. To 
calculate this amount, we divide the value of the assets of the spun-
off unit by the value of the assets of the company selling the unit. We 
then apply this ratio to the net present value of the seller's 
remaining subsidies. We next estimate the portion of the purchase price 
that can be viewed as payment for prior subsidies in accordance with 
the privatization methodology outlined above.
    Usinor and the GOF have indicated their opposition to the 
Department's methodology in recalculating the amount of subsidies 
attributable to Usinor after the spin-off of the Richemont facility. 
(We did this recalculation to address a clerical error in the 
Preliminary Determination.) The GOF and Usinor do not agree that the 
subsidies attributable to Richemont should have been reallocated to 
Usinor as a result of the sale of Richemont. Instead, in their view, at 
least some of the subsidies originally attributable to Richemont's 
production should have been assigned to Richemont after its sale.
    The petitioners support the corrections described in the 
Department's Clerical Errors Memo. They argue that, in making the 
changes, the Department has applied correctly the spin-off methodology 
upheld by the court in British Steel plc v. United States, 27 F. Supp. 
2d 209 (CIT 1998). The petitioners maintain that there is not an 
extinguishment of subsidies in a spin-off, citing the Final 
Determination of Redetermination Pursuant to Delverde SrL v. United 
States, 989 F. Supp. 218 (CIT 1997).
    We disagree with the GOF and Usinor, and we have continued to apply 
the methodology described in the Clerical Errors Memo regarding the 
sale of the Richemont facility. The revised calculation comports with 
the Department's methodology as described in the GIA, 58 FR at 37269. 
In this instance, application of our methodology leads to the 
conclusion that all subsidies potentially allocable to Richemont were, 
in fact, returned to the seller (Usinor) through the price paid for 
Richemont.
    In addition, the petitioners have argued that, because the change 
in ownership of Ugine in 1994, as well as the privatization of Usinor 
in 1996 and 1997, did not result in changes in the control of these 
companies, the change-in-ownership methodology should not be applied. 
The petitioners cite to Inland Steel Bar Co. v. United States, 155 F.3d 
1370, 1374 (Fed. Cir. 1998) (Inland Steel), in which the court stated 
that a purchaser's valuation of a company ``will depend not only on the 
intrinsic value of the unit, but also on whether the purchaser opts to 
discharge the liability at purchase time rather than continuing to pay 
countervailing duties until the obligation expires.''
    According to the petitioners, the court's reasoning dictates that a 
purchaser must be able to value a company's assets and liabilities, 
assume the liabilities and opt to repay or reallocate the 
countervailing duty liability. In order to do this, the petitioners 
argue that a purchaser must take control of the company. The 
petitioners argue that where the purchasing company acquires only a 
minority share in the subsidized company, the liability remains with 
the current majority owners while the minority purchaser simply buys 
into the subsidized company.
    In further support of their position, the petitioners cite to the 
GIA, 58 FR at 37273, where the Department stated that ``a change in 
ownership position, whereby a company's percentage of ownership 
fluctuates over time, is not a bona fide spin-off. Therefore, we did 
not perform the spin-off calculation with regard to change in ownership 
position.'' The petitioners warn that application of the change-in-
ownership methodology to small-share transactions that do not affect 
the control of a company would create a loophole in the countervailing 
duty law whereby each share transaction on the open market would 
constitute a change-in-ownership. In effect, point out the petitioners, 
the privatization of a company via stock issuance would result in the 
extinguishment of subsidies as each trade would result in a 
reallocation of those subsidies. The petitioners also state that 
continued application of the change-in-ownership methodology involving 
minority transfers of ownership could also provide an incentive for 
majority owners to manipulate share transactions so as to eliminate 
countervailing duty liability.
    The GOF and Usinor contend that the Department has never linked 
application of its change-in-ownership methodology to a change in 
control of the company. The GOF and Usinor insist that the methodology 
should continue to be applied to the sale of shares in Ugine.
    We have not adopted the position urged by the petitioners. In the 
Department's recent decision in the Final Affirmative Countervailing 
Duty Determination: Stainless Steel Plate in Coils from Italy, 64 FR 
15508, 15510 (March 31, 1999) (Italian Plate), regarding the 
application of the change-in-ownership methodology, the Department 
stated:

    We were not persuaded by petitioners' argument that a 
transaction must involve a transfer of control in order for our 
methodology to be applicable. However, we are deeply concerned that 
application of our methodology to sales of private minority share 
interests such as these could lead us toward the application of our 
methodology to daily transactions on the open market for publicly 
traded companies--a clearly absurd result that must be prevented.

    The specific facts presented in Italian Plate led the Department to 
conclude that it should not apply its methodology to certain changes in 
the ownership of a respondent, AST. However, the Department has applied 
its change-in-ownership methodology in other situations where there was 
no change in control. For example, the Department applied its change-
in-ownership methodology to the partial privatizations of a respondent, 
SSAB, undertaken by the Government of Sweden. See Final Affirmative 
Countervailing Duty Determinations; Certain Steel Products from Sweden, 
58 FR 37385, 37386 (July 9, 1993) (Certain Steel from Sweden). 
Similarly, in Industrial Phosphoric Acid from Israel; Final Results of 
Countervailing Duty Administrative Review, 63 FR 13626, 13627 (March 
20, 1998) (IPA from Israel 1995 Review), the Department applied the 
change-in-ownership methodology to the partial privatization of a 
respondent, ICL. In that case, 24.9 percent of ICL's shares were sold.
    Moreover, the Department has applied its change-in-ownership 
methodology to transactions involving changing levels of ownership over 
time. In Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from 
the United Kingdom; Final Results of Countervailing Duty Administrative 
Review, 63 FR 18367, 18368 (April 15, 1998) (UK Lead Bar 1996 Review), 
as well as Certain Hot-Rolled Lead and Bismuth Carbon Steel Products 
from the United Kingdom; Final Results of Countervailing Duty

[[Page 30778]]

Administrative Review, 61 FR 58377, 58381 (November 14, 1996) (UK Lead 
Bar 1994 Review), the Department examined a situation where British 
Steel placed its special steel business into a joint venture, UES. In 
return, British Steel became partial owner of UES (and, consequently, 
partial owner of the business it formerly owned). The Department 
recognized this change and applied its change-in-ownership methodology 
to this ``spin-off.'' Later, when UES was repurchased (``spun-in'') by 
British Steel, the Department found that the subsidies that 
``traveled'' with the UES should be ``rejoined'' with its parent 
company's pool of untied subsidies. Thus, the change-in-ownership 
methodology was also applied to this transaction. The UES spin-off 
demonstrates, that the Department does not require a change in control 
before it applies its change-in-ownership methodology. Moreover, where 
changes in the level of ownership occur over time, as was the case with 
British Steel and UES, we account for those changes through the change-
in-ownership methodology.
    There have also been situations where application of the change-in-
ownership methodology was not appropriate. In Italian Plate, 64 FR at 
15510, for example, the transactions at issue involved ``the sale of a 
relatively small amount of shares by minority owners of a holding 
company two levels removed from the production of the subject 
merchandise.'' Also, in IPA from Israel 1995 Review, 63 FR at 13627, 
the Department did not apply the change-in-ownership methodology to the 
sales by another party, Rotem, of less than 0.05 percent of ICL because 
the sale of shares had no impact on Rotem's overall net subsidy rate.
    In light of these precedents and recognizing the flexibility 
afforded by the statute in recognizing changes in ownership, we have 
reexamined the circumstances surrounding the spin-off and spin-in of 
Ugine, as well as the 1996 and 1997 sales of Usinor's shares by the GOF 
for this final determination. We have continued to apply the change-in-
ownership methodology to the spin-off of Ugine and the post-1995 sale 
of Usinor's shares by the GOF. Both sets of transactions involved sales 
by a government or government-owned company (Usinor) and a significant 
number of shares.
    We have not, however, applied the change-in-ownership methodology 
to the spin-in of Ugine. The repurchase of shares consisted of numerous 
transactions between a predominately privately owned purchaser (Usinor) 
and individual minority shareholders. By contrast, when UES was 
reacquired by British Steel, the transaction involved only two parties, 
each holding fifty percent of the subsidized company. Reallocation of 
subsidies was appropriate in that case because the seller was a single 
company selling a significant interest. Application of the change-in-
ownership methodology to the repurchase of Ugine shares in this case 
would essentially result in an allocation of Ugine's subsidies to 
individual investors who are trading Ugine shares on the market. As we 
indicated in Italian Plate, the change-in-ownership methodology was 
never intended to result in such an allocation. Therefore, the 
subsidies spun off in the 1994 sale of Ugine's shares were returned to 
Usinor in their entirety when Usinor repurchased Ugine in 1995.
    Consequently, in this final determination, we have applied the 
change-in-ownership methodology to the following transactions: (1) the 
sale of Ugine shares in 1994; (2) the 1994 sale of Centrale 
Siderurgique de Richemont (CSR); (3) the privatization of Usinor which 
spans 1995, 1996, and 1997; (4) the spin-off of assets to Entreprise 
Jean LeFebvre in 1994; and (5) the spin-off of assets to FOS-OXY in 
1993. See also our responses to Comment 2 concerning the spin-off of 
assets to FOS-OXY and Entreprise Jean LeFebvre, and Comment 3 
concerning the privatization of Usinor during the years 1995, 1996, and 
1997.

Subsidies Valuation Information

    Benchmarks for Loans and Discount Rates: To calculate the 
countervailable benefit from loans and non-recurring grants received, 
we used Usinor's company-specific cost of long-term, fixed-rate loans 
where available. For years where a company-specific rate was not 
available, we used the rates for average yields on long-term private-
sector bonds in France as published by the OECD. For years in which 
Usinor was determined to be uncreditworthy (i.e., 1984 through 1988), 
we added a risk premium to the benchmark interest rate (see our 
response to Comment 10 below regarding the selection of this rate) in 
accordance with our practice described in Sec. 355.44(b)(6)(iv) of 
Countervailing Duties; Notice of Proposed Rulemaking and Request for 
Public Comment, 54 FR 23366, 23374 (May 31, 1989) (1989 Proposed 
Regulations). While the 1989 Proposed Regulations are not controlling 
in this case, they do represent the Department's practice with respect 
to this investigation.
    Allocation Period: In the past, the Department has relied upon 
information from the U.S. Internal Revenue Service (IRS) for the 
industry-specific average useful life of assets in determining the 
allocation period for non-recurring subsidies. See GIA. 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) held that the IRS 
information did not necessarily reflect a reasonable period based on 
the actual commercial and competitive benefit of the subsidies to the 
recipients. In accordance with the Court's remand order, the Department 
calculated a company-specific allocation period for non-recurring 
subsidies for Usinor Sacilor based on the average useful life (AUL) of 
its non-renewable physical assets of 14 years. This remand 
determination was affirmed by the Court in British Steel plc v. United 
States, 929 F. Supp. 426 (CIT 1996) (British Steel II).
    As discussed below, the current investigation includes untied, non-
recurring subsidies that were found to be countervailable in Final 
Affirmative Countervailing Duty Determination: Certain Steel Products 
from France, 58 FR 37304 (July 9, 1993) (Certain Steel from France), 
i.e., PACS, FIS, and Shareholders' Advances. Because we have already 
assigned a company-specific allocation period of 14 years to those 
previously investigated subsidies, we determine that it is appropriate 
to continue to allocate those subsidies over 14 years. See our response 
to Comment 1, below.
    This investigation includes no other non-recurring subsidies that 
have been determined to provide countervailable benefits that should be 
allocated over time. Accordingly, we have not calculated a new company-
specific allocation period for subsidies not previously investigated.
    Based upon our analysis of the petition, the responses to our 
questionnaires, and the results of verification, we determine the 
following:

I. Programs Determined To Be Countervailable GOF Programs

A. Loans With Special Characteristics (PACS)

    The steel restructuring plan of 1978 created a steel amortization 
fund, called the Caisse d'Amortissement pour l'Acier (CAPA), for the 
purpose of ensuring repayment of funds borrowed by these companies 
prior to June 1, 1978. According to the 1978 plan, bonds issued 
previously on behalf of the steel companies and pre-1978 loans from 
Credit National and Fonds de Developpement Economique et Social (FDES) 
were converted into ``loans with

[[Page 30779]]

special characteristics'' or PACS. As a result of this process, the 
steel companies were no longer liable for the loans and bonds, but they 
did take on PACS obligations.
    In 1978, Usinor and Sacilor converted 21.1 billion French francs 
(FF) of debt into PACS. From 1980 to 1981, Usinor and Sacilor issued FF 
8.1 billion of new PACS. PACS in the amount of FF 13.8 billion, FF 12.6 
billion, and FF 2.8 billion were converted into common stock in 1981, 
1986, and 1991, respectively.
    In Certain Steel from France and Final Affirmative Countervailing 
Duty Determinations: Certain Hot Rolled Lead and Bismuth Carbon Steel 
Products from France, 58 FR 6221 (January 27, 1993) (Lead Bar from 
France), the Department determined that the conversion of PACS to 
common stock in 1981 and 1986 constituted equity infusions on terms 
inconsistent with commercial considerations because Usinor Sacilor was 
found to be unequityworthy during those years. No new information or 
evidence of changed circumstances has been submitted in this proceeding 
to warrant a reconsideration of our earlier finding. Therefore, we 
continue to find that these equity infusions constitute countervailable 
subsidies within the meaning of section 771(5) of the Act. Using the 
allocation period of 14 years, the 1986 conversion of PACS continues to 
yield a countervailable benefit during the POI of this investigation.
    Consistent with our practice in Certain Steel from France, we have 
treated the equity infusion as a non-recurring grant received in 1986. 
Because Usinor was uncreditworthy in the year of receipt, we used a 
discount rate that includes a risk premium to allocate the benefits 
over time. Additionally, we followed the methodology described in the 
``Change in Ownership'' section above to determine the amount of each 
equity infusion appropriately allocated to Usinor during the POI. We 
divided this amount by Usinor's total sales during the POI. 
Accordingly, we determine the countervailable subsidy to be 1.22 
percent ad valorem.

B. Shareholders' Advances

    The GOF provided Usinor and Sacilor grants in the form of 
shareholders' advances during the period 1982 through 1986. The purpose 
of these advances was to finance the revenue-shortfall needs of Usinor 
and Sacilor while the GOF planned for the next major restructuring of 
the French steel industry. These shareholders' advances carried no 
interest and there was no precondition for receipt of these funds. 
These advances were converted to common stock in 1986.
    In Certain Steel from France and Lead Bar from France, the 
Department determined that the shareholders' advances constituted 
countervailable grants at the time the advances were received because 
no shares were exchanged for them. No new information or evidence of 
changed circumstances has been submitted in this proceeding to warrant 
a reconsideration of our earlier finding. Therefore, we continue to 
find that these grants constitute countervailable subsidies within the 
meaning of section 771(5) of the Act. Using the allocation period of 14 
years, subsidies dating back to 1984 continue to provide 
countervailable benefits during the POI of this case.
    Consistent with our practice in Certain Steel from France, we have 
treated these advances as non-recurring grants. Because Usinor was 
uncreditworthy in the years of receipt, we used a discount rate that 
includes a risk premium to allocate the benefits over time. 
Additionally, we followed the methodology described in the ``Change in 
Ownership'' section above to determine the amount of each grant 
appropriately allocated to Usinor during the POI. We divided this 
amount by Usinor's total sales during the POI. Accordingly, we 
determine the countervailable subsidy to be 0.97 percent ad valorem.

C. Steel Intervention Fund (FIS)

    The 1981 Corrected Finance Law granted Usinor and Sacilor the 
authority to issue convertible bonds. In 1983, the Fonds d'Intervention 
Sid deg.rurgique (FIS), or steel intervention fund, was created to 
implement that authority. In 1983, 1984, and 1985, Usinor and Sacilor 
issued convertible bonds to the FIS which, in turn, with the GOF's 
guarantee, floated the bonds to the public and to institutional 
investors. These bonds were converted to common stock in 1986 and 1988.
    In Certain Steel from France and Lead Bar from France, the 
Department determined that the conversions of FIS bonds to common stock 
in 1986 and 1988 constituted equity infusions on terms inconsistent 
with commercial considerations because Usinor Sacilor was found to be 
unequityworthy during those years. No new information or evidence of 
changed circumstances has been submitted in this proceeding to warrant 
a reconsideration of our earlier finding. Therefore, we continue to 
find that these equity infusions constitute countervailable subsidies 
within the meaning of section 771(5) of the Act. Using the allocation 
period of 14 years, the 1986 and 1988 conversions of FIS bonds yield a 
benefit during our POI.
    We have treated the equity infusions as non-recurring grants given 
in 1986 and 1988. Because Usinor was uncreditworthy in the years of 
receipt, we used discount rates that include a risk premium to allocate 
the benefits over time. Additionally, we followed the methodology 
described in the ``Change in Ownership'' section above to determine the 
amount of each equity infusion appropriately allocated to Usinor during 
the POI. Dividing this amount by Usinor's total sales during the POI, 
we determine the countervailable subsidy to be 3.09 percent ad valorem.

D. Investment and Operating Subsidies

    During the period 1987 through 1997, Usinor received a variety of 
small investment and operating subsidies from various GOF agencies as 
well as from the European Coal and Steel Community (ECSC). The 
subsidies were provided for research and development, projects to 
reduce work-related illnesses and accidents, projects to combat water 
pollution, etc. The subsidies are classified as investment, equipment, 
or operating subsidies in the company's accounts, depending on how the 
funds are used.
    At verification, the GOF provided information about the water 
program subsidies which indicated that Usinor received only a small 
portion of the total amount of funding provided by the regional water 
boards (les agences de l'eau) to reduce industrial pollution. For 
reasons outlined in our response to Comment 8 below, we determine that 
the water board subsidies are not specific to Usinor.
    However, the GOF did not provide any information regarding the 
distribution of funds under the other investment and operating subsidy 
programs, citing the ``extreme burden'' of providing such information 
and also because, in the GOF's view, the total amount of investment and 
operating subsidies received by Usinor was ``insignificant and would . 
. . be expensed.''
    In accordance with section 776(a)(2) of the Act, we have, 
therefore, decided to use facts available because the GOF did not 
provide information that had been requested. Section 776(b) of the Act 
permits the Department to draw an inference that is adverse to the 
interests of an interested party if that party has ``failed to 
cooperate by not acting to the best of its ability to comply with a 
request for information.'' See Industrial

[[Page 30780]]

Phosphoric Acid from Israel: Final Results of Countervailing Duty 
Administrative Review, 64 FR 2879, 2885 (January 19, 1999) (IPA from 
Israel 1996 Review). Therefore, the Department determines it 
appropriate to use an adverse inference in concluding that the 
investment and operating subsidies (except those provided by the water 
boards) are specific within the meaning of section 771(5A)(D) of the 
Act.
    We also determine that the investment and operating subsidies 
provide a financial contribution, as described in section 771(5)(D)(i) 
of the Act, in the form of a direct transfer of funds from the GOF and 
the ECSC to Usinor, providing a benefit in the amount of the grants.
    Because the investment and operating subsidies received in the 
years prior to the POI were less than 0.5 percent of Usinor's sales 
during the respective years of receipt, we have expensed these grants 
in the years of receipt. To calculate the ad valorem rate of the 
subsidy, we divided the subsidies received in 1997 by Usinor's total 
sales during the POI. Accordingly, we determine the countervailable 
subsidy to be 0.10 percent ad valorem.

E. Myosotis Project

    Since 1988, Usinor has been developing an innovative continuous 
thin-strip casting process called ``Myosotis'' in a joint venture with 
the German steelmaker Thyssen. The Myosotis project is intended to 
eliminate the separate hot-rolling stage of Usinor's steelmaking 
process by transforming liquid metal directly into a coil between two 
to five millimeters thick.
    To assist this project, the GOF, through the Ministry of Industry 
and L'Agence pour la Matrise de L'nergie (AFME), entered into three 
agreements with Usinor Sacilor (in 1989) and Ugine (in 1991 and 1995). 
The first agreement, dated December 27, 1989, covered a three-year 
period and established schedules for the initial and subsequent 
payments to Usinor. These payments were contingent upon the submission 
of progress reports including a statement of investment outlays. The 
final payment was contingent upon the submission of a final program 
report and a statement of total expenses. The three installments were 
paid in 1989, 1991, and 1993. The 1991 Agreement between Ugine and AFME 
covered the cost of some equipment for the project. This agreement 
resulted in two disbursements to Ugine from AFME in 1991 and 1992. The 
1995 agreement with Ugine provided interest-free reimbursable advances 
for the final two-year stage of the project, with the goal of casting 
molten steel from ladles to produce thin strips. The first reimbursable 
advance was made in 1997. Repayment of one-third of the reimbursable 
advance is due July 31, 1999. The remaining two-thirds are due for 
repayment on July 31, 2001.
    The GOF has claimed that assistance for the Myosotis project was 
provided under the Grands Projets Innovants (GPI) program which is 
available to all industrial sectors in France. The GOF also asserts 
that the program is a non-countervailable (i.e., ``green-light'') 
research subsidy within the meaning of section 771(5B)(B) of the Act. 
At verification, we confirmed that the reimbursable advances were 
provided under the GPI program. However, the information provided was 
not sufficient to establish that the grants provided by the Ministry of 
Industry and AFME were connected to the GPI program.
    Accordingly, we determine that the grants constitute 
countervailable subsidies within the meaning of section 771(5) of the 
Act. The amounts transferred are financial contributions in the form of 
direct transfers of funds from the GOF to Usinor and/or Ugine pursuant 
to section 771(5)(D)(i) of the Act. The GOF did not provide any 
information indicating that the grants were provided to other companies 
in France. Therefore, we determine that the grants provided to the 
Myosotis project are specific within the meaning of section 771(5A)(D) 
of the Act because they were provided exclusively to Usinor.
    We determine the subsidies provided between 1989 and 1993 to be 
non-recurring grants based on the analysis set forth in the Allocation 
section of the GIA. Because the amounts received during these years 
were less than 0.5 percent of Usinor or Ugine's sales during their 
respective year of receipt, we are expensing these grants in the years 
of receipt.
    With respect to the reimbursable advance received in 1997, we are 
treating this advance as a long-term interest-free loan. Information 
provided at verification indicates that Usinor makes all payments of 
interest on its long-term loans on an annual basis. According to 
information provided by private banks of France, we found that such a 
payment schedule would not be considered atypical of general banking 
practices in France. Accordingly, we have assumed that a payment on a 
comparable commercial loan taken out by Usinor at the time of the 
Myosotis advance would not be due until 1998. Because there would be no 
effect on Usinor's cash flow during the POI (i.e, no payment would have 
been made on a benchmark loan during the POI), we determine that there 
is no benefit attributable to the POI. See GIA, 58 FR at 37228-29. 
Consequently, we have not addressed whether the reimbursable advance 
received under the GPI program in 1997 is countervailable. See our 
response to Comment 9 below.

F. Electric Arc Furnace

    In 1996, the GOF agreed to provide assistance in the form of 
reimbursable advances to support Usinor's research and development 
efforts to improve and increase the efficiency of the melting process--
the first stage in steel production. The first disbursement of funds 
occurred on July 17, 1998.
    The Department deems benefits to have been received at the time 
that there is an effect on the recipient's cash flow. See GIA, 58 FR at 
37228-29. Because Usinor did not receive any payments until 1998, there 
is no benefit during the POI of this investigation. Consequently, we 
have not addressed whether this program is countervailable.

G. GOF Conditional Advance

    During our verification of Usinor, we learned that Usinor received 
an interest-free conditional advance from the GOF. This advance was 
provided through the Ministry of Industry in connection with a project 
aimed to develop a new type of steel used in the production of 
catalytic converters. Ugine, Sollac, and two unaffiliated companies 
participated in the project and each company received a portion of the 
total project funding provided by the GOF. Ugine received its first 
payment in 1992 and a second payment in 1995. According to the 
agreement between the GOF and the participating companies, repayment of 
the advance was contingent upon sales of the product resulting from 
this project exceeding a set amount. Because this condition has not 
been met, the entire amount of the advance received by Ugine remained 
outstanding during the POI.
    We determine that this conditional advance constitutes a 
countervailable subsidy within the meaning of section 771(5) of the 
Act. Because assistance was only provided to four companies, two of 
which are part of the Usinor group, the program is specific pursuant to 
section 771(5A)(D) of the Act. According to the Department's practice, 
as reflected in Sec. 355.49(f) of the 1989 Proposed Regulations, the 
Department normally treats an interest-free loan, for which the 
repayment obligation is contingent upon certain subsequent events, as 
an interest-free, short-term

[[Page 30781]]

loan for the purpose of calculating the amount of benefit. See also 
Sec. 351.505(d) of Countervailing Duties; Final Rule, 63 FR 65438, 
65410 (November 25, 1998) (Final CVD Regulations). Accordingly, we have 
calculated the benefit from the advance by dividing the amount of 
interest that would be due using the benchmark rate by the value of 
Ugine's total sales. On this basis, we determine the countervailable 
subsidy from this program to be less than 0.005 percent ad valorem.

H. Related-Party Grants

    Usinor's financial statements identify ``grants from related 
parties'' in the years 1992 through1995. Information provided by Usinor 
demonstrates that these grants do not constitute a separate program 
from the Myosotis project and investment and operating subsidies 
discussed above. Specifically, a yearly breakdown of these grants shows 
that the amount of each grant corresponds to the amounts provided under 
the Myosotis project or investment and operating subsidies. Therefore, 
we have not treated ``Related Party Grants'' as a separate program. See 
``Myosotis Project'' and ``Investment and Operating Subsidies'' 
sections of this notice.

I. 1991 Grant to Ugine

    Ugine's 1991 financial statements indicate that Ugine received FF 
26,318 thousand in subsidies and also note that FF 16,295 thousand of 
``share'' in subsidies were posted to income. Information provided by 
Usinor indicates that these amounts reflect the funds received under 
the Myosotis project as well as investment and operating subsidies. 
Specifically, a breakdown of these grants shows that the amount of each 
grant corresponds to the amounts provided under the Myosotis project or 
investment and operating subsidies. Because we investigated Myosotis 
and investment and operating subsidies separately in this proceeding, 
we have not treated the ``1991 Grant to Ugine'' as a separate program. 
See ``Myosotis Project'' and ``Investment and Operating Subsidies'' 
sections of this notice.
EC Program
    European Social Fund. The European Social Fund (ESF), one of the 
Structural Funds operated by the EC, was established in 1957. The main 
purpose of the Fund is to improve workers' employment opportunities, 
raise their living standards, and increase their geographical and 
occupational mobility within the European Union (EU). It provides 
support for vocational training, employment, and self-employment.
    The member states are responsible for identifying and implementing 
the individual projects that are selected to receive ESF financing. The 
member states must also contribute to the financing of the projects. In 
general, the maximum benefit provided by the ESF is 50 percent of the 
project's total cost for projects geared toward Objectives 2, 3, 4, and 
5b (see below). For Objective 1 projects, the ESF contributes a maximum 
of 75 percent of the project's total cost.
    Like the other Structural Funds, the ESF contributes to the 
attainment of the five different objectives identified in the EC's 
framework regulations for Structural Funds: Objective 1 is to promote 
development and structural adjustment in underdeveloped regions, 
Objective 2 addresses areas in industrial decline, Objective 3 relates 
to combating long-term unemployment and creating jobs for young people 
and people excluded from the labor market, Objective 4 focuses on the 
adaptation of workers to industrial changes and changes in production 
systems, and Objective 5 pertains to rural development. Recently, the 
EC added a sixth objective under which assistance is provided to 
sparsely populated areas in northern Europe.
    Ugine S.A. received an ESF grant for worker readaptation training 
in 1995. In the same year, the company also received an approximately 
equivalent amount from the GOF as cofinancing for the project. In 1997, 
the Ugine Division of Usinor received an ESF grant for training workers 
in a new production process at its cold-rolling mill in Isbergues. At 
verification, we found that the Ugine Division had also received a 
small ESF grant for its plant in Gueugnon in 1997. No GOF cofinancing 
for the 1997 ESF grants was received during the POI. All the ESF grants 
were provided under Objective 4.
    The Department considers worker-assistance programs to provide a 
countervailable benefit to a company when the company is relieved of a 
contractual or legal obligation it would otherwise have incurred. See 
Final Affirmative Countervailing Duty Determination: Certain Pasta From 
Italy, 61 FR 30288, 30294 (June 14, 1996) (Pasta From Italy). While 
Usinor has stated that the ESF grants did not relieve it of any 
contractual or legal obligations, neither Usinor nor the GOF has 
provided any documentation to support this claim. Since companies 
normally incur the costs of training to enhance the job-related skills 
of their employees, we determine that the ESF grants relieved Usinor of 
an obligation it would have otherwise incurred.
    Neither the EC nor the GOF has provided any documentation regarding 
the distribution of ESF grants in France. At verification GOF officials 
stated that, during the POI, Usinor did not receive a disproportionate 
amount of ESF assistance, but they did not provide any documentation in 
support of this statement.
    In accordance with section 776(a)(2) of the Act, we have, 
therefore, decided to use facts available because the GOF did not 
provide information that we had requested. Section 776(b) of the Act 
permits the Department to draw an inference that is adverse to the 
interests of an interested party if that party has ``failed to 
cooperate by not acting to the best of its ability to comply with a 
request for information.'' See IPA from Israel 1996 Review. Therefore, 
the Department determines it appropriate to use an adverse inference in 
concluding that the ESF grants are specific within the meaning of 
section 771(5A)(D) of the Act.
    We also determine that the ESF grants provide a financial 
contribution, as described in section 771(5)(D)(i) of the Act, in the 
form of a direct transfer of funds from the EC and the GOF to Usinor, 
providing a benefit in the amount of the grants.
    Normally, the Department considers the benefits from worker-
training programs to be recurring. See GIA, 58 FR at 37255. However, 
consistent with our past practice and our understanding that ESF grants 
relate to specific, individual projects which require separate 
government approvals, we have treated these as non-recurring grants. 
See Final Affirmative Countervailing Duty Determination: Certain 
Stainless Steel Wire Rod from Italy, 63 FR 40474, 40488 (July 29, 1998) 
(Wire Rod from Italy), and Pasta from Italy, 61 FR at 30295. Because 
the value of the ESF grants and the accompanying GOF contribution were 
less than 0.5 percent of Ugine's total sales in 1995 and 1997, 
respectively, we expensed these grants in the years of receipt. We 
calculated the benefit for the POI by dividing the amount of the ESF 
grant received in 1997 by Ugine's total sales in that year. In this 
way, we determine the countervailable subsidy to be less than 0.005 
percent ad valorem for this program.

II. Programs Determined To Be Not Countervailable

A. Purchase of Power Plant

    In 1994, Usinor sold the shares of CSR to Electricite de France 
(EDF), a government-owned entity. CSR was set up to convert gas 
generated by steel plants in the Lorraine region into electricity for 
sale to l'Union Siderurgique de L'Energie (USE). USE, in turn, sold the 
electricity to steel

[[Page 30782]]

producers in the region. At the time of the transaction, both CSR and 
USE were owned by Usinor and Usinor factories purchased their 
electricity from USE.
    In addition to the physical assets of CSR (i.e., land, buildings, 
plant and equipment), the 1994 transaction also provided EDF the 
exclusive right to supply electricity to USE for a 15-year period. 
Prior to the transaction, Usinor and EDF conducted independent 
valuations of the transaction based on detailed projections of future 
costs and revenues associated with the operation of CSR and sales of 
electricity to USE. The projected revenues were calculated using 
detailed estimates of yearly outputs, consumption, and rates. 
Similarly, projected costs were based on estimated costs for purchasing 
gas and operating expenses, as well as costs for developing an electric 
power system. After negotiations, Usinor and EDF agreed on a purchase 
price of FF 1 billion, which represented a compromise between the 
independent valuations of the transaction by Usinor and EDF.
    We examined whether Usinor received more than a reasonable market 
price from the EDF in this transaction. We determine that, while FF 1 
billion represented a large gain over the book value of CSR's physical 
assets, the purchase price was based on independent valuation of the 
future sales of electricity by EDF to Usinor. These valuations were 
supported by reasonable estimates of projected costs and revenues. We 
found no evidence to indicate that the transaction was anything other 
than an arms-length transaction for full market value. Accordingly, we 
determine that this program does not constitute a countervailable 
subsidy within the meaning of section 771(5) of the Act.

B. Related-Party Loans

    Usinor's 1992 and 1993 financial statements identify ``interest 
free loans to related parties'' in the amounts of FF 622 million in 
1993 and FF 455 million in 1992. According to Usinor, these loans 
consist of interest-free advances by Usinor and other Usinor Group 
entities to non-consolidated entities within the Usinor Group. 
Information provided by Usinor indicates that the funds for these loans 
were provided out of Usinor's self-generated cash flow. Because there 
is no financial contribution as defined under section 771(5)(D) of the 
Act, we determine that these loans do not constitute a countervailable 
subsidy.

C. Work/Training Contracts

    Employers who hire young people (16-25 years of age) through 
various government-administered work/training or apprenticeship 
contracts may receive grants and an exemption from social security 
contributions. The contracts also impose training requirements for 
those employees and establish minimum compensation set in proportion to 
the SMIC (the indexed minimum wage) according to the age of the young 
person and the duration of the contract. This program is administered 
by Delegation Generale a l'Emploi et a la Formation Professionnelle of 
the Ministere de l'Emploi et de la Solidarite at the national level and 
locally by the Directions Departementales du Travail, de l'Emploi et de 
la Formation Professionnelle (DDTEFP) (Departmental Labor, Employment 
and Professional Training Head Offices). The purpose of this program is 
to encourage the permanent employment of young people.
    Usinor has entered into two types of such contracts: (1) 
apprenticeship contracts and (2) contracts of specific duration 
(including qualification agreements and adaptation agreements). Any 
employer can hire an apprentice and enter into an apprenticeship 
contract providing training for the apprentice. Qualification and 
adaptation agreements require approval by the DDTEFP. Approval is 
dependent upon (1) adoption of an agreement with an educational 
institution or training entity and (2) the company's approval of a 
standard agreement adopted by the GOF and an occupational organization. 
Usinor received lump-sum payments and exemptions from social security 
contributions as a result of these contracts.
    We analyzed whether the benefits provided under this program are 
specific ``in law or fact'' within the meaning of section 771(5A) of 
the Act. We determine that the program is not de jure specific because 
the receipt of the benefits, in law, is not contingent on export 
performance or on the use of domestically-sourced goods over imported 
goods; nor are the benefits limited to an enterprise, industry or 
region.
    Pursuant to section 771(5A)(D)(iii) of the Act, a subsidy is de 
facto specific if one or more of the following factors exists: (1) the 
number of enterprises, industries or groups thereof which use a subsidy 
is limited; (2) there is predominant use of a subsidy by an enterprise, 
industry, or group; (3) there is disproportionate use of a subsidy by 
an enterprise, industry, or group; or (4) the manner in which the 
authority providing a subsidy has exercised discretion indicates that 
an enterprise or industry is favored over others. As explained in the 
Statement of Administrative Action (SAA) (H.R. Doc. No. 103-316 at 931 
(1994)), the fourth criterion normally serves to support the analysis 
of other de facto specificity criteria.
    Assistance under this program was distributed to a wide variety of 
industries in the majority of the regions of France. Therefore, the 
program is not limited based on the number of users. The evidence also 
indicates that the steel industry did not receive a predominant or a 
disproportionate share of the total funding. Given our findings that 
the number of users is large and that there is no predominant or 
disproportionate use of the program by the steel industry, we do not 
reach the issue of whether administrators of the program exercised 
discretion in awarding benefits. Accordingly, we determine that this 
program is not specific and has not conferred countervailable subsidies 
within the meaning of section 771(5) of the Act.

III. Programs Determined To Be Not Used

    Based on the information provided in the responses and the results 
of verification, we determine that Usinor did not apply for or receive 
benefits under the following programs during the POI:

GOF Programs

A. Export Financing under Natexis Banque Programs
B. DATAR Regional Development Grants (PATs)
C. DATAR 50 Percent Taxing Scheme
D. DATAR Tax Exemption for Industrial Expansion
E. DATAR Tax Credit for Companies Located in Special Investment Zone
F. DATAR Tax Credits for Research
G. GOF Guarantees
H. Long-Term Loans from CFDI

EC Programs

A. Resider I and II Programs
B. Youthstart
C. ECSC Article 54 Loans
D. ECSC Article 56(2)(b) Redeployment/Readaptation Aid
E. Grants from the European Regional Development Fund (ERDF)

IV. Program Determined Not To Exist

Forgiveness of Shareholders' Loans

    Usinor's 1994 and 1995 financial statements indicate that the 
balance in the account identified as ``loans granted

[[Page 30783]]

by the shareholders'' or ``borrowings granted by the shareholders'' was 
reduced from FF 2.161 billion in 1993 to FF 1.92 billion in 1994 (i.e., 
a reduction in the amount of FF 241 million). At the end of 1995, the 
balance in the same account was zero. The petitioners alleged that the 
reduction in the loan balance represented a debt forgiveness by the GOF 
in order to make the company more attractive to investors prior to its 
privatization.
    Information provided by Usinor and the GOF indicates that there was 
no loan forgiveness. Rather, the decreases of the loan balances in the 
financial statements represent a combination of loan payments by the 
company and the elimination of the disclosure requirement in accordance 
with international accounting standards due to a reduction in 
shareholdings. Specifically, the 1995 reduction reflects the 
elimination of disclosure requirements applicable to loans from Credit 
Lyonnais as the result of the reduction in Credit Lyonnais' ownership 
interest in Usinor from 20 percent to less than 10 percent at the time 
of Usinor's privatization. There were no disclosed shareholder loans at 
the end of 1995 because there were no shareholders with an interest of 
10 percent or greater. International accounting standards require 
disclosure of transactions between a business entity and owners of more 
than 10 percent of shares. For 1994, the reduction is accounted for by 
repayments of certain outstanding loans during that year. On this 
basis, we determine that this program does not exist.
Interested Party Comments

Comment 1: Allocation Period

    Usinor and the GOF argue that, in the Preliminary Determination, 
the Department applied the 14-year AUL period found in Certain Steel 
from France improperly to allocate the benefits of certain non-
recurring subsidies found countervailable in that case. Usinor and the 
GOF urge the Department to apply instead a company-specific allocation 
period based on information submitted in the instant investigation.
    Usinor and the GOF argue that the Department's use of the 
allocation period derived from a different proceeding is inconsistent 
with the applicable court decision and the Department's past practice. 
The respondents point out that, in British Steel I, the court rejected 
the Department's previous allocation methodology based on the IRS 
tables because the methodology was not based on substantial evidence on 
the record. Consequently, the respondents note, the Department formally 
abandoned the use of IRS tables and instead adopted the practice of 
determining a company-specific AUL based on record evidence. Usinor and 
the GOF state that this practice is reflected in the Department's 
countervailing duty questionnaires, as well as in the 1997 Proposed 
Regulations, which direct a firm to calculate its average AUL over a 
period of ten years. By deviating from that practice, Usinor and the 
GOF contend that the Department's approach in the Preliminary 
Determination violated its court-ordered mandate to allocate subsidies 
in a manner supported by evidence on the record of the instant 
proceeding. Usinor and the GOF add that the Department's practice is 
tantamount to penalizing the company simply because it happens to have 
been the subject of a prior investigation. Usinor and the GOF contend 
that, absent the earlier investigation, the programs at issue--PACS, 
FIS and Shareholders'' Advances--would have been deemed outside the 
scope of the present investigation.
    Usinor and the GOF argue that the 14-year AUL from a different 
investigation--involving different producers, different subject 
merchandise, and a different time period--is not a proper measure of 
benefit for the current investigation. According to the respondents, 
the AUL merely represents a reasonable period for allocation of 
benefits in a particular investigation rather than the actual duration 
of the benefit. Usinor and the GOF state that any given company-
specific AUL in an investigation is a snapshot that can vary from year 
to year because it is based on the company's asset values and 
depreciation charges that inevitably vary from year to year. Therefore, 
the respondents contend, a decision not to revisit the allocation 
period in a subsequent investigation undermines the integrity of the 
later investigation by failing to allocate all subsidies found in 
accordance with the record of that investigation. Usinor and the GOF 
assert, the methodology of focusing on the POI and the preceding nine 
years is reasonable because it is linked to the time period for which 
alleged subsidies were received.
    Usinor and the GOF point out that, although the Department has 
applied the same allocation period in different segments of the same 
proceeding, it has never before applied a previously determined AUL in 
an entirely separate proceeding. Citing Certain Carbon Steel Products 
from Sweden; Final Results of Countervailing Duty Administrative 
Review, 62 FR 16549,16550 (April 7, 1997) (Carbon Steel from Sweden), 
Usinor and the GOF recognize the Department's rationale that revising 
an allocation period in subsequent segments of the same proceeding 
would create an entirely new benefit stream, thereby resulting in 
under-countervailing or over-countervailing the benefits in the review 
period. According to the respondents, however, this rationale does not 
apply when dealing with an entirely separate proceeding because the 
allocation period that was determined in one proceeding has no effect 
on the benefit stream in a separate proceeding. Usinor and the GOF also 
distinguish the current situation from UK Lead Bar 1996 Review, where 
the Department applied an 18-year company-specific AUL period found in 
separate proceeding (see Final Results of Redetermination Pursuant to 
Court Remand on General Issue of Allocation: British Steel plc v. 
United States, Consol. Ct. No. 93-09-00550-CVD, Slip Op. 95-17 and 
Order (CIT Feb. 9, 1995) (UK Certain Steel)) instead of the 15-year IRS 
table-based AUL used in the earlier segment of the same proceeding. In 
that case, Usinor and the GOF argue, the rejected allocation period--
i.e., the IRS tables-based allocation period--was one that was 
overruled by the British Steel I decision.
    The petitioners counter that the Department should affirm its 
decision in the Preliminary Determination and continue to apply 
Usinor's 14-year AUL to the company's previously investigated 
subsidies. The petitioners argue that the application of Usinor's 
company-specific AUL is consistent with the Department's established 
allocation methodology. According to the petitioners, the Department 
has concluded in past cases, such as Pasta from Italy and Carbon Steel 
from Sweden, that previously countervailed subsidies based on an 
allocation period established in an earlier segment of the proceeding 
should not be reallocated over a different period of time. The 
petitioners contend that the principle underlying the Department's 
decision to use the same AUL across different segments of a single 
proceeding applies equally in the current investigation. According to 
the petitioners, the Department followed this reasoning recently in UK 
Lead Bar where it applied a single company-specific AUL to the same 
subsidies across different proceedings involving the same company to 
avoid ``significant inconsistencies.''

[[Page 30784]]

    Citing to the GIA, the petitioners state further that the 
Department's practice in the Preliminary Determination was consistent 
with the statutory requirement that the amount of the countervailable 
subsidy, including the allocated subsidy stream, is not to be 
reevaluated based upon subsequent events. The petitioners contend that, 
because the 14-year AUL and the benefit stream of the previously 
investigated subsidies are based on data from the period when those 
subsidies were received, they represent a more accurate measurement of 
the duration of the benefit to the company. The petitioners note that, 
for subsidies that have not been previously investigated, the 
Department's current approach of requesting data for a time period 
linked to the POI is a reasonable and administrable method for 
allocating those subsidies. For previously investigated and allocated 
subsidies, in contrast, the petitioners contend that the established 
benefit streams should be maintained consistently in future 
investigations. The petitioners argue that using the new 11-year AUL 
would result in effectively revaluing the subsidies that were allocated 
over a 14-year AUL, thereby ignoring the continuing benefit to the 
company.
    The petitioners contend that the fact that a company's AUL is bound 
to change from year to year should not affect the Department's prior 
AUL finding because, at the time Usinor received the subsidies in 
question, the Department determined that those subsidies benefitted 
Usinor for 14 years from the point of receipt. The changing value of 
the company's assets after the appropriate allocation period, according 
to the petitioners, is a subsequent event which should be considered 
irrelevant to the allocated subsidy stream. The petitioners emphasize 
that, despite the respondent's claims to the contrary, the present 
investigation involves the same untied subsidies, the same producer, 
and the same product. Specifically, the petitioners point out that, in 
Certain Steel from France, the subsidies in question--FIS, PACS and 
Shareholders' Advances--were found to benefit all products produced by 
the entire Usinor group.
    The petitioners state that the Department routinely applies a 
determination from one proceeding to a separate proceeding despite the 
absence of evidence on the record of the new proceeding. The 
petitioners note that, for example, absent new evidence of changed 
circumstances, the Department does not revisit its determinations 
regarding a company's equityworthiness. Consistent with this standard, 
the petitioners argue that the AUL determination based on the record 
evidence in the prior proceeding should only be revisited if new 
information regarding the validity of the previous determination is 
presented. Because the respondents have not provided any such 
information, the petitioners maintain that the Department should 
continue to apply Usinor's 14-year AUL to the previously investigated 
subsidies.
    Department's Position: For this final determination, we have 
continued to apply Usinor's company-specific AUL of 14 years found in 
Certain Steel from France to allocate the benefits of certain non-
recurring subsidies found countervailable in that case.
    We disagree with the respondents that our use of the 14-year AUL is 
inconsistent with the court decision in British Steel I and our 
practice. In British Steel I, the court emphasized that by using the 
IRS table-based allocation methodology, the Department did not allocate 
the benefits of the non-recurring subsidies in a manner reflecting the 
actual ``commercial and competitive benefits'' of the subsidies. See 
British Steel I, 879 F. Supp. at 1298. Following the court's remand 
order in that case, the Department calculated a Usinor-specific AUL of 
14 years based on its company-specific information. The court upheld 
this methodology in British Steel II, stating that ``the AUL 
methodology using company-specific calculations is a reasonable method 
of allocating the commercial and competitive benefit of subsidy 
benefits.'' 929 F. Supp. at 438.
    The most important factor in our decision is the fact that we are 
investigating the same respondent, Usinor, and the same untied 
subsidies. The AUL of 14 years, based on Usinor's company-specific 
information, was determined to be a reasonable reflection of the actual 
``commercial and competitive benefits'' for the subsidies in question. 
As stated in UK Lead Bar, ``[d]ifferent allocation periods for the same 
subsidies in two different proceedings involving the same company 
generate significant inconsistencies.'' 63 FR at 18369.
    Further, we disagree that applying the 14-year AUL amounts to 
penalizing Usinor for being the subject of an earlier investigation. 
The respondents were afforded ample opportunity in the earlier 
proceeding (and in the subsequent remands) to submit any factual 
information and comments related to the AUL calculation. The 
calculation, as affirmed by the court, was based on the company-
specific facts Usinor submitted. As noted by the petitioners, it is 
well within the Department's practice to apply a determination from one 
proceeding to a separate proceeding absent evidence of changed 
circumstances. In the instant investigation, for example, we have 
applied the determination of creditworthiness from Certain Steel from 
France for certain years. We also applied our finding in Certain Steel 
from France that certain long-term loans issued by FDES were not 
countervailable to exclude those loans from the instant investigation. 
See 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, 37542 (July 13, 1998). A 
reconsideration of the Department's determination in one proceeding, 
regardless of the parties involved, would only be warranted if there is 
new evidence to indicate that the circumstances with respect to the 
initial decision have changed. Moreover, we find that the decision in 
UK Lead Bar to apply the allocation period determined in a separate 
proceeding is reflective of our current practice regarding the issue of 
allocation.

Comment 2: Information on Spin-Offs Presented at Verification

    The GOF and Usinor contend that the Department should apply its 
change-in-ownership methodology as it relates to the spin-off of 
productive assets to the sale of its oxygen-generating unit to FOS-OXY, 
the sale of its lime-production division to Entreprise Jean LeFebvre, 
and its sale of J&L shares. The petitioners oppose the application of 
the Department's change-in-ownership methodology to these three 
transactions. Pointing out that the specific information regarding 
these transactions was provided to the Department at verification, the 
petitioners argue that verification was not an opportunity for Usinor 
to submit new information. According to the petitioners, the purpose of 
verification is to ensure that the information submitted by the 
respondent is complete and accurate. The petitioners cite Tianjin 
Machinery Import and Export v. United States, 806 F. Supp. 1008, 1015 
(CIT 1992) (Tianjin), and Heavy Forged Hand Tools, Finished or 
Unfinished, with or without Handles, from the People's Republic of 
China; Final Results of Antidumping Duty Administrative Review, 63 FR 
16758, 16761 (April 6, 1998) (Hand Tools). The petitioners argue that 
the Department has stated that it will not allow the submission of new 
information that constitutes substantive information and not simply a 
clerical error. The petitioners contend

[[Page 30785]]

that, because Usinor did not submit this information within the time 
requirements imposed by the statute, this information should not be 
considered for the final determination.
    The petitioners also state that under no circumstances should the 
Department apply its change-in-ownership methodology to the sale of 
shares in J&L, Ugine's U.S. subsidiary. The petitioners point out that, 
according to the GIA, 58 FR at 37236, the Department found that 
Usinor's subsidies were ``tied to domestic production and, accordingly, 
. . . allocated the benefits of those subsidies to sales of Usinor 
Sacilor's domestically produced merchandise and excluded sales of 
Usinor Sacilor's foreign-produced merchandise.'' Since Usinor has not 
shown that any of the subsidies investigated are attributable to 
merchandise produced by J&L, the petitioners claim that the Department 
should not attribute any of Usinor's subsidies to J&L after the sale of 
Usinor's shares in J&L.
    Department's Position: Regarding the J&L shares, we agree that no 
subsidies were attributable to J&L's production in this investigation. 
Therefore, it would not be appropriate to apply the change-of-ownership 
methodology to the sale of J&L shares.
    With respect to the sale of productive assets to Entreprise Jean 
LeFebvre and FOS-OXY, we have applied the change-of-ownership 
methodology. Although we agree with the petitioners that the purpose of 
verification is to ascertain the accuracy of already-presented 
information, the special circumstances of this case have led us to use 
the verified data we have on these transactions. First, we note that we 
did not request information on spin-offs of productive assets in our 
questionnaire. Second, because verification followed directly on the 
issuance of the Preliminary Determination and, in fact, the 
calculations were disclosed to the respondents at verification, Usinor 
did not have any opportunity to submit data after learning of our 
methodology in the Preliminary Determination and before verification. 
In light of these circumstances, we believe it is appropriate to use 
the data obtained at verification and to apply the change-of-ownership 
methodology to these transactions.

Comment 3: Privatization and Prior Subsidies

    The GOF and Usinor comment that the Department should find that 
Usinor's privatization extinguished prior subsidies. The GOF and Usinor 
cite section 771(5)(F) of the Act and the SAA at 928, stating that the 
Department is required to examine the circumstances of the 
privatization transaction to determine whether and to what extent 
subsidies pass through to the privatized entity and to what extent the 
privatization of a government-owned firm eliminated subsidies.

    The GOF and Usinor continue their argument citing Inland Steel, 
155 F.3d at 1376:
    When [a market] price is paid in an arms [sic] length 
transaction by a new owner, it is difficult to understand why future 
production by the new owner would carry the burden of prior 
subsidization.

Usinor and the GOF conclude that the full value of pre-existing 
subsidies was embodied in the purchase price, such that the purchasers 
of Usinor shares paid for any residual value added to the company by 
the subsidies found previously. Usinor and the GOF argue that the 
Department is required to make an explicit finding of this pass-through 
of prior subsidies for the final determination.
    The petitioners cite to section 771(5)(F) of the Act where it 
states that a change-in-ownership does not require an automatic finding 
of no pass-through of subsidies, even if accomplished by an arm's-
length transaction. In addition, the petitioners cite to the SAA at 928 
which notes that the statutory provision is intended to ``correct and 
prevent such an extreme interpretation'' as the idea that subsidies are 
eliminated automatically in an arm's-length sale. Contrary to the 
respondents' claim that the Department has never really faced the issue 
of whether an arms-length sale extinguishes subsidies under the URAA, 
the petitioners mention Wire Rod from Italy in which the Department 
rejected the assertion that an arm's length privatization at market 
value extinguished prior subsidies. The petitioners also point out that 
the Department's repayment calculation has been upheld by the Court of 
International Trade in Delverde.
    Department's Position: As we stated in Italian Plate, under our 
existing methodology, we neither presume automatic extinguishment nor 
automatic pass-through of prior subsidies in an arms-length 
transaction. Instead, our methodology recognizes that a change-in-
ownership has some impact on the allocation of previously bestowed 
subsidies and, through an analysis based on the facts of each 
transaction, determines the extent to which the subsidies pass through 
to the buyer. In the instant proceeding, the Department relied upon the 
pertinent facts of the case in determining whether the countervailable 
benefits received by Usinor Sacilor pass through to Usinor and Ugine. 
Following the GIA methodology, the Department subjected the level of 
previously bestowed subsidies and Usinor's purchase price to a 
specific, detailed analysis. This analysis resulted in a particular 
``pass-through ratio'' and a determination as to the extent of 
repayment of prior subsidies. On this basis, the Department determined 
that when Usinor was privatized a portion of the benefits received by 
Usinor Sacilor passed through to Usinor and a portion was repaid to the 
government. This is consistent with our past practice and has been 
upheld in Saarstahl AG v. United States, 78 F.3d 1539 (Fed. Cir. 1996) 
(Saarstahl II), British Steel plc v. United States, 127 F.3d 1471 (Fed. 
Cir. 1997), and Delverde.
    The Department rejects Usinor's argument that an arms-length 
transaction at fair market value extinguishes any previously bestowed 
subsidies because no benefit was conferred. As explained in the Final 
Determination of Redetermination Pursuant to Delverde. SrL v. United 
States, 989 F. Supp. 218 (CIT 1997) (Delverde Remand), the 
countervailable subsidy amount is fixed at the time that the government 
bestows the subsidy. The sale of a company, per se, does not and cannot 
eliminate this potential countervailability because the countervailing 
duty statute ``does not permit the amount of the subsidy, including the 
allocated subsidy stream, to be revalued based upon subsequent events 
in the market place.'' GIA, 58 FR at 37263. The Court of Appeals for 
the Federal Circuit, in Saarstahl II, addressed the Department's 
privatization methodology and ``specifically stated that the Department 
does not need to demonstrate competitive benefit.''
    The Department's methodology requires it to consider and rely upon 
several facts particular to the change of ownership at issue. In this 
investigation, these facts included the nature of the previously 
bestowed subsidies, the amounts of those subsidies, the time when those 
subsidies were bestowed, the appropriate period for allocating the 
subsidies, the net worth over time of the company sold, and the amount 
of the purchase price. Based on these facts, the Department determined 
the ultimate repayment of the prior subsidies to the GOF. In sum, the 
Department considered all of the factual evidence presented by Usinor 
and then followed its existing methodology properly. Furthermore, this 
methodology was upheld by the Federal Circuit in

[[Page 30786]]

Saarstahl II, British Steel, 78 F.3d 1471, and Delverde.

Comment 4: Sale of Shares in 1996 and 1997

    The petitioners argue that the GOF's sales of its shares in Usinor 
in 1996 and 1997 did not transfer control of Usinor and the Department 
should, therefore, not apply the change-in-ownership methodology to the 
sales of these shares (as discussed in the change-in-ownership section 
above). The petitioners purport that, because there was not a change in 
control, these sales of shares do not constitute a ``bona-fide change-
in-ownership.''
    The GOF and Usinor state that the Department should apply the 
change-in-ownership methodology arguing that the sales of these shares 
were not ``post-privatization.'' The GOF and Usinor contend that the 
1996 and 1997 transfer of shares were the last stages of the 
privatization rather than ``post-privatization'' transactions. The GOF 
and Usinor note that the Department has applied its change-in-ownership 
methodology to partial privatizations in IPA from Israel 1995 Review, 
63 FR at 13627.
    Department's Position: We agree with the GOF and Usinor that the 
application of the change-of-ownership methodology is appropriate in 
this situation. As explained above, it is not the Department's practice 
to require a change in control in order to apply the change-in-
ownership methodology. As we noted at verification, the 1995 
privatization continued through the years 1996 and 1997. Moreover, the 
sales of these shares in these years were sufficiently large. Compare 
IPA from Israel 1995 Review, 63 FR at 13627 (where the Department did 
not apply the change-of-ownership methodology to small sales of 
shares). Therefore, we have applied the change-in-ownership methodology 
to the sales of these shares in these years.

Comment 5: Purchase of Power Plant

    The petitioners urge the Department to reconsider its preliminary 
determination that the purchase of CSR by EDF was not a countervailable 
subsidy. The petitioners note that, in their questionnaire responses 
and at verification, Usinor and the GOF focused exclusively on the 
valuation method used to determine the FF 1 billion sales price. 
According to the petitioners, however, the valuation methodology 
detailed in the verification reports does not address the decisive 
question of whether Usinor received a financial benefit from the 
transaction. The petitioners argue that evidence does not establish 
that the valuation methodology can serve as a benchmark for an arms-
length, negotiated commercial transaction between two entities.
    According to the petitioners, the facts demonstrate that the power 
plant had little, if any, commercial value and as such, could not have 
been sold on the open market. The petitioners point out that there were 
no other offers to purchase the plant and the only potential offer--
from Generale de Chauffe--refers to a ``significantly lower price.'' 
The petitioners allege that the two parties recognized that the plant 
had very little commercial value and, thus, developed the ``future 
revenue stream'' approach to value the transaction. The petitioners add 
that, according to the GOF's description, Usinor was anxious to sell 
the plant prior to its privatization.
    The petitioners argue further that there is no evidence that the 
valuation methodology used by Usinor and the EDF was one that would be 
used by a private purchaser of a power plant. The petitioners contend 
that, while a private investor may evaluate the potential revenue in 
deciding whether to purchase an asset, it would not form the basis for 
establishing market value to the private investor. Rather, the 
petitioners claim, the basis for value would include the book value and 
the market value of the assets, as well as the cost of building a 
similar facility. Accordingly, the petitioners conclude that the power 
plant was purchased for more than its worth, resulting in a 
countervailable benefit in the amount of the gain over the net book 
value of the assets.
    Usinor and the GOF contend that the relevant issue is not whether 
Usinor received a financial benefit from the transaction; rather, the 
issue is whether EDF paid ``more than adequate remuneration'' for the 
sale. Usinor and the GOF assert that facts, as verified by the 
Department, demonstrate that no excess remuneration was paid by EDF 
and, thus, the transaction was not countervailable. With respect to the 
potential offer by Generale de Chauffe, Usinor and the GOF argue that 
Generale de Chauffe never made a formal offer and the terms of the deal 
contemplated by Generale de Chauffe were different from the terms 
between Usinor and EDF. According to the respondents, Generale de 
Chauffe's potential terms contemplated that Usinor was to retain 
ownership of the plant. In addition, the respondents point out that an 
independent review of the transaction by the Audit Office (a quasi-
judicial tribunal) suggested that the EDF had negotiated a good deal 
for itself.
    Department's Position: We disagree with the petitioners that Usinor 
received a countervailable benefit from its sale of CSR to the 
government-owned EDF. Evidence on the record, which we verified, 
demonstrates that the valuation of the transaction was based on 
reasonable projections of future costs and revenues associated with the 
operation of CSR and the sale of electricity produced by CSR. The 
resulting sales price for CSR represented the amount of money, in net 
present terms, that would be saved by Usinor if it were to continue 
producing electricity through its CSR facilities. Additionally, we 
found no evidence to indicate that the negotiations were not conducted 
on an arms-length basis.
    Because the sales price was based entirely on the value of the 
right to produce electricity, the amount of gain in excess of the 
nominal book value of the physical assets of CSR is irrelevant. Both 
Usinor and EDF indicated that the book value of the assets was, in 
fact, never considered in the valuation process. The parties were only 
interested in obtaining the right to produce and sell electricity; the 
physical facility of CSR was only a means to secure that right. The 
value of a company is often based on more than its physical assets. 
Intangible assets, e.g., goodwill, patents, and licenses, which are 
valued for the future revenue stream that they represent, may 
constitute an important part of a company's worth. In the present 
investigation, the exclusive right to produce electricity was the 
significant intangible asset, if not the only material asset, of CSR.
    In addition, given the nature of the transaction, it is not 
possible to compare the sales price with that of a similar transaction 
between private parties. As noted by the respondents, the difference in 
the material terms, as well as its inconclusive nature, renders the 
potential offer by Generale de Chauffe unsuitable for comparison 
purposes. We have not found, and the petitioners have not presented, a 
price from a comparable transaction that demonstrates that the price 
paid by EDF exceeded the fair value of the transaction.

Comment 6: Capital Increase

    The petitioners argue that, by authorizing a capital increase of FF 
4,999,999,975 at the time of Usinor's 1995 privatization, the GOF 
conferred a benefit upon Usinor in the amount of the increased capital. 
The petitioners claim that, as the sole owner of Usinor

[[Page 30787]]

prior to the 1995 privatization, the GOF was entitled to all the 
revenue from the sale of the company, whether the revenue resulted from 
the sale of new or existing shares. By transferring the proceeds from 
the sale of new shares to Usinor, the petitioners argue, the GOF was 
foregoing revenue otherwise due to it, acting in a non-commercial 
manner. According to the petitioners, the fact that the report by the 
Privatization Commission concluded that the issuance of new shares 
would not alter substantially the value of the shares does not 
establish that the transaction did not confer a countervailable 
benefit. The petitioners contend that the respondents have not provided 
``any objective studies that evaluated the extent to which the new 
shares diminished the value of the GOF's existing shares.''
    In the alternative, the petitioners argue that the capital increase 
is countervailable as an indirect subsidy because the GOF structured 
the privatization transaction in such a way that the private investors 
were entrusted to make an equity investment in Usinor. The petitioners 
state that the transaction was inconsistent with a typical government-
equity transaction in that the GOF did not receive any form of 
remuneration in exchange for its investment. As such, the petitioners 
argue that the GOF conferred a benefit upon Usinor in the amount of the 
foregone revenue from the sale of the new shares that the company 
otherwise would not have received but for the GOF's actions.
    Usinor and the GOF rebut that, because the FF 4,999,999,975 that 
Usinor received through the capital increase was not provided by the 
GOF, Usinor did not receive a countervailable benefit as defined by 
section 771(5)(B) of the Act. The respondents argue that, rather than 
giving up revenue, the GOF benefitted from the capital increase because 
the private capital infusion resulted in increasing the value of the 
company being sold by the GOF. The respondents explain:

    It simply cannot be the case that every time a company (whether 
government-owned or otherwise) raises capital by means of a stock 
increase, it is the beneficiary of a grant. A shareholder does not 
in such circumstances give away money to which it otherwise would be 
entitled. Instead, it participates in the growth in the value of the 
company attributable to the capital increase.

    The respondents add that the findings at verification demonstrate 
that there was an objective finding by the private investment bankers 
that the price of the shares would be not affected by the capital 
increase. This finding, according to the respondents, undercuts the 
petitioners' argument further that the GOF gave up revenues.
    Department's Position: As an initial matter, we note that the 
arguments set forth by the petitioners may constitute a subsidy 
allegation made in untimely manner. According to 
Sec. 351.301(d)(4)(i)(A) of the Department's regulations, a subsidy 
allegation in an investigation is due no later than 40 days before the 
scheduled date of the preliminary determination. The record shows that 
the first instance on which the petitioners presented this particular 
argument was a submission dated October 29, 1998 (``pre-preliminary 
comments''), merely ten days before the scheduled date of the 
preliminary determination (November 9, 1998). Nevertheless, we have 
opted to address the substantive aspects of the petitioners' comment. 
In exercising our discretion, we considered the fact that the 
respondents did not express an objection to the petitioners' allegation 
with respect to its possible untimeliness.
    Substantively, we disagree with the petitioners that Usinor 
received a subsidy by virtue of the capital increase. The petitioners 
argue first that revenue otherwise due to the GOF was foregone when the 
GOF authorized a capital increase in Usinor and the money earned from 
the sale of shares to effect the capital increase was paid directly to 
Usinor. According to the petitioners, all revenues received from the 
sale of Usinor's shares should have accrued to the GOF because the GOF 
was the sole owner at that time.
    We do not agree that, in fact, revenue was foregone by the GOF in 
this situation. In 1995, the GOF decided to privatize Usinor by selling 
off the majority of the existing shares in the company. At the same 
time, the GOF authorized an increase in Usinor's share capital. This 
increase was funded through the sale of newly issued shares in Usinor. 
These new shares were sold as part of the privatization but, instead of 
the proceeds going to the GOF, they went to Usinor. Potential 
purchasers of shares in Usinor were aware that new shares were being 
issued and how the proceeds from the sale of those shares would be 
used.
    Had the GOF sold its outstanding shares in Usinor without any 
capital increase, the GOF would have received an amount reflecting the 
value of Usinor as it existed without the new capital. With the 
increase in its capital, the value of Usinor increased. However, since 
the increase in value did not result from an infusion of GOF funds, the 
GOF did not have a direct or exclusive claim on the increased value. 
Instead, the increase in Usinor's value came from the purchasers of the 
new shares and all shareholders benefitted. Thus, petitioners are 
incorrect that the GOF should have claimed all the proceeds of the sale 
of Usinor's shares. The GOF received the return from the sale of its 
existing shares and did not forego revenue when the proceeds from the 
sale of new shares went to Usinor.
    As a holder and seller of existing shares, the GOF did have an 
indirect claim on the increased value of Usinor resulting from the 
capital increase. Specifically, as the value of Usinor increased, the 
value of shares in Usinor should have increased. At the same time, 
however, because the capital increase was effected through a sale of 
new shares, the total number of shares increased. Thus, although the 
total value of Usinor increased, the concurrent increase in the number 
of shares would offset the increase in value per share. The 
Privatization Commission Report to which the petitioners refer makes 
this very point when it states in reference to the share increase that, 
``on the basis of experts'' reports which have been submitted to it, 
the Commission believes that this transaction shall not substantially 
alter the value of shares, in as much as its diluting nature shall be 
offset by its beneficial effects upon the Group's financial 
structure.'' These statements support the conclusion that no value was 
forgone by the GOF in authorizing the capital increase for Usinor 
through the sale of new shares.
    In the alternative, the petitioners have argued that the capital 
increase was an indirect subsidy because the GOF structured the 
privatization such that private investors were entrusted to make a 
countervailable equity infusion into Usinor. We do not need to reach 
the issue of whether private investors were ``entrusted'' to provide a 
subsidy because we find that there is no subsidy in this equity 
purchase. Under section 771(5)(E)(i) of the Act, a countervailable 
subsidy is conferred, in the case of an equity infusion, ``if the 
investment decision is inconsistent with the usual investment practice 
of private investors * * * in the country in which the equity infusion 
is made.'' The focus of the Department's inquiry into this allegation 
is whether the decision Usinor's investors made was consistent with the 
private-investor standard. The Department will determine that the 
equity infusion was inconsistent with usual investment practice of 
private investors if the company is determined to be unequityworthy or 
if the terms and the nature of the equity purchased

[[Page 30788]]

otherwise indicates that the investment was inconsistent with the usual 
private investment practice. See Sec. 351.507(3) of the Final CVD 
Regulations.
    In the instant investigation, we have not found, and the 
petitioners have failed to provide, any evidence indicating that Usinor 
was unequityworthy or that the equity purchased by the investors was 
otherwise inconsistent with the usual investment practice of private 
investors. See also Sec. 351.507(a)(7) of the Final CVD Regulations 
(stating that the Department will not investigate an equity infusion in 
a firm absent a specific allegation by the petitioner that the 
investment decision was inconsistent with the usual investment practice 
of private investors). Therefore, we determine that Usinor's investors 
acted in a manner consistent with the investment practices of private 
investors.
    For the reasons discussed above, we determine that the 1995 capital 
increase in Usinor was not a countervailable subsidy.

Comment 7: European Social Fund Grants

    Usinor and the GOF argue that the ESF grant the Ugine Division 
received in 1997 is not specific and, therefore, not countervailable. 
The respondents point to two factors in support of their position. 
First, they claim that the Department found at verification that the 
Ugine Division did not receive a disproportionate amount of the ESF 
funds provided to France in 1997. Second, the respondents maintain that 
the purpose of the grant was to train people at risk of unemployment 
pursuant to Objective 4. Because Objective 4 projects are funded 
throughout France, assistance provided to such projects is not 
regionally specific, the respondents argue.
    The petitioners refute the respondents' arguments. First, they say, 
the verification report merely quotes statements by GOF officials to 
the effect that Usinor did not get a disproportionate amount of ESF 
assistance and that Usinor was the only steel company receiving such 
funds during the POI. The petitioners note that GOF officials did not 
provide any documentation in support of these statements. Second, they 
argue that while EU officials stated at verification that Objective 4 
projects are funded throughout France, they did not provide any 
documentation supporting this assertion. The petitioners also point out 
that, according to the EU verification report, the EU does not maintain 
any records showing which individual companies receive ESF funding. 
Thus, there is no documentation to support the notion that ESF grants 
are not specific, according to the petitioners.
    Department's Position: We agree with the petitioners. Because we do 
not have sufficient information on the record regarding the actual use 
of Objective 4 funds in France during the POI, we must use facts 
available (see discussion under the description of the ESF grants in 
Section I above). On this basis, we have determined that the ESF grants 
received by the Ugine Division are specific and, therefore, 
countervailable.

Comment 8: Investment and Operating Subsidies

    Usinor and the GOF argue that the investment and operating 
subsidies Usinor received from the GOF are not specific and, therefore, 
should not be countervailed. With regard to the funds received from 
regional water boards for water protection, pollution control, and 
water rehabilitation projects, Usinor and the GOF contend that the 
Department verified that these funds were not limited to Usinor or to 
the steel industry. Based on the information submitted by the GOF at 
verification, Usinor and the GOF also maintain that the steel industry 
did not receive a disproportionate amount of the water board subsidies.
    The petitioners contend that the Department should continue to 
treat the investment and operating subsidies as specific and that they, 
therefore, should be subject to countervailing duties. The petitioners 
assert that the Department's GOF verification report does not draw any 
conclusions with respect to the specificity of this program. 
Furthermore, the petitioners argue that information supporting a 
respondent's claim of non-specificity should be submitted with the 
original questionnaire response in order to ensure that the Department 
and the petitioners have ample time to evaluate and comment upon the 
factual evidence prior to verification. They state that verification 
should not be used as an opportunity to submit new, substantive 
information to supplement the original questionnaire response.
    The petitioners finally contend that, even if the information GOF 
officials provided at verification had been submitted in a timely 
manner, it would not corroborate the respondents' claim of non-
specificity. The petitioners argue that, although GOF officials 
maintained that this assistance was provided to any type of enterprise 
or industry, the documentation presented at verification did not 
demonstrate actual usage by type of industry.
    Department's Position: In our Preliminary Determination, we found 
that the investment and operating subsidies, including the assistance 
from the regional water boards, provided a financial contribution in 
the form of a direct transfer of funds from the GOF to Usinor pursuant 
to section 771(5)(D)(i) of the Act. Prior to the Preliminary 
Determination, the GOF argued that the water board grants were not 
specific but did not provide any information to support this statement. 
Therefore, as facts available, we determined preliminarily that these 
subsidies were specific under section 771(5A)(D) of the Act.
    However, at verification the GOF presented, and we verified, 
information showing that assistance under the program provided by the 
water boards was provided to a wide variety of water-related projects. 
We also found that the amount received by Usinor constituted a very 
small percentage of the total amount provided by the water boards to 
combat industrial pollution. In principle we agree with the petitioners 
that information supporting a respondent's claim of non-specificity, as 
well as other factual information, should be submitted with the 
questionnaire response, but we do not believe that the information 
presented to us at verification should be classified as entirely 
``new.'' We learned about the existence of the water program from 
Usinor's and the GOF's questionnaire responses in which the GOF also 
made a claim for non-specificity of this program. The Department has 
the discretion to accept new information at verification when ``the 
information makes minor revisions to information already on the record 
or * * * the information corroborates, supports, or clarifies 
information already on the record.'' See Final Results of Antidumping 
Administrative Review: Titanium Sponge from the Russian Federation, 61 
FR 58525 (November 15, 1996), and Certain Refrigeration Compressors 
from the Republic of Singapore: Final Results of Countervailing Duty 
Administrative Review, 63 FR 32849, 32852 (June 16, 1998). In this 
instance, we believe that the information presented to us at 
verification merely clarified information already on the record. 
Although this information is not sufficient to determine that the water 
board program is not specific in general, we believe that it is enough 
to support a finding that the program is not specific to Usinor. 
Accordingly, we determine that the grants from the regional water 
boards are not specific to Usinor within the meaning of section 
771(5A)(D)(iii) of

[[Page 30789]]

the Act and, therefore, not countervailable.
    However, due to the lack of information about their usage and 
distribution, as adverse facts available, we continue to find the other 
programs included in the category investment and operating subsidies to 
be countervailable (our reasons for using adverse facts available are 
explained in section I.D above).

Comment 9: Myosotis Project

    Usinor and the GOF urge the Department to grant green-light status 
to the benefits received by Usinor for the Myosotis project. They argue 
that this project qualifies as industrial research as defined by 
section 771(5B)(B)(ii)(I) of the Act because its purpose is to develop 
``new products, processes, or services'' or to bring about ``a 
significant improvement to existing products, processes, or services.'' 
The respondents state further that the level of assistance is far below 
the 75-percent maximum that the statute permits for industrial research 
and that the EU has found the project to be in concordance with its 
State Aids Code. Moreover, the respondents argue, the Myosotis project 
qualifies for green-light treatment because it is a pre-competitive 
development activity involving the development of a prototype that 
cannot be put to commercial use as described in section 
771(5B)(B)(ii)(II) of the Act. According to the respondents, the level 
of assistance is well below the 50-percent maximum that the statute 
allows for pre-competitive development activities.
    Usinor and the GOF argue that, if the Department should decide not 
to grant the Myosotis project green-light status, it should determine 
that the assistance for this project is not countervailable because it 
is not specific. The respondents state that the Myosotis assistance 
came from the GPI program which is administered by the Ministry of 
Industry. They contend that at verification the Department found that 
GPI funding is not limited by law to any particular industry and, also, 
that assistance from this fund is provided to a wide range of 
industries. Last, the respondents assert that the Department found at 
verification that the steel industry did not receive a disproportionate 
share of GPI funds in the years that Usinor received assistance for the 
Myosotis project.
    The petitioners urge the Department to follow its decision in the 
Preliminary Determination and not address the respondents' green-light 
claim for the Myosotis project. First, the petitioners state, in the 
preliminary determination, the Department expensed the grants Usinor 
received between 1989 and 1993 for Myosotis because they were below 0.5 
percent of the company's sales in the years of receipt and, with 
respect to the reimbursable advance received in 1997, the Department 
preliminarily determined that there was no benefit attributable to the 
POI. Accordingly, the petitioners observe, the countervailable subsidy 
rate for the Myosotis program was 0.00 percent ad valorem in the 
Preliminary Determination. The petitioners note that the new 
regulations state specifically that the Department will not consider a 
green-light claim for a subsidy that does not provide a benefit to the 
subject merchandise in the period of investigation or review. 
Therefore, they argue, the Department should not address the green-
light claim advanced by Usinor and the GOF.
    As a second argument for not making a green-light determination, 
the petitioners point to administrative efficiency. Citing Final 
Negative Countervailing Duty Determination: Fresh Atlantic Salmon from 
Chile, 63 FR 31437 (June 9, 1998), Final Affirmative Countervailing 
Duty Determination: Steel Wire Rod from Germany, 62 FR 54990 (October 
22, 1997), and Final Negative Countervailing Duty Determination and 
Final Negative Critical Circumstances Determination: Certain Laminated 
Hardwood Trailer Flooring from Canada, 62 FR 5201 (February 4, 1997), 
the petitioners argue that a decision not to address Usinor's green-
light claim would be consistent with the Department's practice, as 
established in these cases, of not analyzing a program that has no 
impact on the net countervailable subsidy rate.
    Third, the petitioners argue that the Department should not make a 
green-light determination because the administrative record in this 
proceeding is incomplete. Specifically, the petitioners point to the 
GOF's refusal to make certain reports on the Myosotis project available 
to the Department at verification. The petitioners believe that the 
absence of these documents from the record is particularly relevant in 
light of the Department's ``commitment to interpret [the green-light] 
provisions strictly as required by the SAA.''
    The petitioners recommend that the Department to postpone a green-
light decision on the Myosotis project until the next administrative 
review to ensure (1) that a more complete administrative record can be 
developed, and (2) that there is a benefit to Usinor from the 1997 
reimbursable advance.
    Department's Position: We agree with the petitioners that there is 
no need for us to make a determination regarding green-light treatment 
of the assistance provided under the Myosotis project. As stated in the 
preamble to the Department's recently issued regulations:

    [W]e will not consider claims for green light status if the 
subject merchandise did not benefit from the subsidy during the 
period of investigation or review. Instead, consistent with the 
Department's existing practice, the green light status of a subsidy 
will be considered only in an investigation or review of a time 
period where the subject merchandise did benefit from the subsidy.

See Final CVD Regulations, 63 FR at 65388. While these final 
regulations are not controlling in this case, they do reflect the 
Department's current practice. Therefore, we will not make a green-
light determination when there is no countervailable benefit in the 
period of investigation or review, in accordance with our existing 
practice. We also consider a specificity determination to be 
unwarranted when there is no benefit in the POI. Instead, we intend to 
make determinations on green-light status and specificity in an 
administrative review, if this investigation results in a 
countervailing duty order.

Comment 10: Lending Rates

    The petitioners argue that the Department should use the lending 
rates reported in Table 4.11 of the Bulletin of Banque de France as the 
benchmark lending rate for the years in which Usinor was found to be 
uncreditworthy. The petitioners assert that the statements made by 
private bank and GOF officials at verification indicate the lending 
rates in question represent an average cost of credit for companies in 
France which includes high- and low-risk financing. The petitioners 
argue that these interest rates provide a better indication of the rate 
at which Usinor could have actually obtained financing for those years 
in which Usinor was found to be uncreditworthy because they reflect 
some degree of greater risk.
    Usinor and the GOF point out that the officials of the Banque de 
France indicated that the rates reported in Table 4.11 include variable 
rates. Usinor and the GOF argue that, as such, the Table 4.11 rates are 
inappropriate to use as benchmark rates because the Department's 
preference, as reflected in the 1989 Proposed Regulations, is to use 
the average cost of long-term fixed-rate loans. Moreover, Usinor and 
the GOF point to the statement made by the GOF officials at 
verification asserting that the Table 4.11 rates ``do not reflect the 
cost of credit for a company as Usinor because the rates are surveys of 
rates applicable for companies of all sizes and

[[Page 30790]]

types'' and that an average interest rate derived from a survey would, 
thus, not be an accurate indicator of the cost of credit for an 
individual company.
    Department's Position: We agree with the petitioners that the rates 
reported in Table 4.11 of the Bulletin are more appropriate benchmark 
and discount rates for the years in which Usinor was found to be 
uncreditworthy and where the other benchmark interest rates are lower 
than the rates reported in Table 4.11. For this final determination, we 
have applied the methodology described in the 1989 Proposed Regulations 
for calculating the benchmark and discount rates for the years in which 
Usinor was found uncreditworthy. Specifically, the 1989 Proposed 
Regulations state that the long-term fixed benchmark rate for an 
uncreditworthy firm will be calculated by taking the sum of 12 percent 
of the prime interest rate in the country in question and, in order of 
preference: ``(1) the highest long-term fixed interest rate commonly 
available to firms in the country in question; (2) the highest long-
term variable interest rate commonly available to firms in the country 
in question; or (3) the short-term benchmark interest rate determined 
in accordance with [the Department's methodology].'' 
Sec. 355.44(b)(6)(iv)(A) of the 1989 Proposed Regulations (emphasis 
added). Accordingly, we have applied the rates reported in Table 4.11 
in our calculation where those rates represented the highest long-term 
interest rate among the various types of interest rates the respondents 
provided to us. Contrary to the respondents' assertion, an expressed 
``preference'' for a fixed rate does not preclude us from using a rate 
that we find more appropriate, even if that rate happens to include 
variable rate loans. Further, we disagree with the respondents that the 
Table 4.11 rates are not appropriate because the rates are derived from 
surveys of rates applicable for companies of all sizes and types. While 
an average rate which by its very definition is derived from rates 
applicable to more than one company, may not represent the most 
accurate rate applicable to any single company, it nevertheless 
provides a reasonable indicator of rates ``commonly available to firms 
in the country in question.''
    Verification. In accordance with section 782(i) of the Act, we 
verified the information used in making our final determination. We 
followed standard verification procedures, including meeting with 
government and company officials, and examining relevant accounting 
records and original source documents. Our verification results are 
detailed in the public versions of the verification reports, which are 
on file in the Central Records Unit.
    Suspension of Liquidation. In accordance with section 
705(c)(1)(B)(i) of the Act, we have calculated an individual rate for 
Usinor. Because Usinor is the only respondent in this case, its rate 
serves as the all-others rate. We determine that the total estimated 
net countervailable subsidy rate is 5.38 percent ad valorem for Usinor 
and for all others.
    In accordance with our Preliminary Determination, we instructed the 
U.S. Customs Service to suspend liquidation of all entries of stainless 
steel sheet and strip in coils from France, which were entered or 
withdrawn from warehouse, for consumption on or after November 17, 
1998, the date of the publication of our Preliminary Determination in 
the Federal Register. In accordance with section 703(d) of the Act, we 
instructed the U.S. Customs Service to discontinue the suspension of 
liquidation for merchandise entered on or after January 2, 1999, but to 
continue the suspension of liquidation of entries made between 
September 4, 1998, and January 1, 1999. We will reinstate suspension of 
liquidation under section 706(a) of the Act if the ITC issues a final 
affirmative injury determination, and will require a cash deposit of 
estimated countervailing duties for such entries of merchandise in the 
amounts indicated above. If the ITC determines that material injury, or 
threat of material injury, does not exist, this proceeding will be 
terminated and all estimated duties deposited or securities posted as a 
result of the suspension of liquidation will be refunded or canceled.
    ITC Notification. In accordance with section 705(d) of the Act, we 
will notify the ITC of our determination. In addition, we are making 
available to the ITC all non-privileged and non-proprietary information 
related 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 for Import Administration.
    If the ITC determines that material injury, or threat of material 
injury, does not exist, these proceedings will be terminated and all 
estimated duties deposited or securities posted as a result of the 
suspension of liquidation will be refunded or canceled. If, however, 
the ITC determines that such injury does exist, we will issue a 
countervailing duty order.
    Destruction of Proprietary Information. In the event that the ITC 
issues a final negative injury determination, this notice will serve as 
the only reminder to parties subject to Administrative Protective Order 
(APO) of their responsibility concerning the destruction of proprietary 
information disclosed under APO in accordance with 19 CFR 351.305(a). 
Failure to comply is a violation of the APO.
    This determination is published pursuant to sections 705(d) and 
777(i) of the Act.

    Dated: May 19, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-13677 Filed 6-7-99; 8:45 am]
BILLING CODE 3510-DS-P