[Federal Register Volume 64, Number 132 (Monday, July 12, 1999)]
[Notices]
[Pages 37507-37509]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17646]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-401-401]


Certain Carbon Steel Products From Sweden: Preliminary Results of 
Countervailing Duty Administrative Review

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

ACTION: Notice of preliminary results of countervailing duty 
administrative review.

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SUMMARY: The Department of Commerce (``the Department'') is conducting 
an administrative review of the countervailing duty order on certain 
carbon steel products from Sweden. The period covered by this 
administrative review is January 1, 1997 through December 31, 1997. For 
information on the net subsidy for each reviewed company, as well as 
for all non-reviewed companies, please see the Preliminary Results of 
Review section of this notice. If the final results remain the same as 
these preliminary results of administrative review, we will instruct 
the U.S. Customs Service to assess countervailing duties as detailed in 
the Preliminary Results of Review section of this notice. Interested 
parties are invited to comment on these preliminary results. (See 
Public Comment section of this notice.)

EFFECTIVE DATE: July 12, 1999.

FOR FURTHER INFORMATION CONTACT: Tipten Troidl or Gayle Longest, Office 
of CVD/AD Enforcement VI, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
2786.

SUPPLEMENTARY INFORMATION:

Background

    On October 4, 1985, the Department published in the Federal 
Register (50 FR 48517) the countervailing duty order on certain carbon 
steel products from Sweden. On October 9, 1998, the Department 
published a notice of ``Opportunity to Request Administrative Review'' 
(63 FR 54440) of this countervailing duty order. We received timely 
requests for review, and we initiated a review covering the period 
January 1, 1997 through December 31, 1997, on November 30, 1998 (63 FR 
65749).
    In accordance with 19 CFR 351.213(b) this review covers only those 
producers or exporters of the subject merchandise for which a review 
was specifically requested. The producer/exporter of the subject 
merchandise for which the review was requested is: SSAB Svenskt Stal AB 
(SSAB). This review covers seven programs.

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions of the Tariff Act of 1930, as amended by 
the Uruguay Round Agreements Act (``URAA'') effective January 1, 1995 
(``the Act''). The Department is conducting this administrative review 
in accordance with section 751(a) of the Act. All citations to the 
Department's regulations reference 19 CFR Part 351 (1998), unless 
otherwise indicated.

Scope of the Review

    Imports covered by this review are shipments of certain carbon 
steel products from Sweden. These products include cold-rolled carbon 
steel, flat-rolled products, whether or not corrugated, or crimped: 
whether or not pickled, not cut, not pressed and not stamped to non-
rectangular shape; not coated or pleated with metal and not clad; over 
12 inches in width and of any thickness; whether or not in coils. 
During the review period, such merchandise was classifiable under the 
Harmonized Tariff Schedule (HTS) item numbers 7209.11.0000, 
7209.12.0000, 7209.13.0000, 7209.21.0000, 7209.22.0000, 7209.23.0000, 
7209.24.5000, 7209.31.0000, 7209.32.0000, 7209.33.0000, 7209.34.0000, 
7209.41.0000, 7209.43.0000, 7209.44.0000, 7209.90.0000, 7211.30.5000, 
7211.41.7000 and 7211.49.5000. The written description remains 
dispositive.

Subsidies Valuation Information

Privatization and Sale of Assets to Other Companies

    SSAB is the only Swedish company that produces and exports the 
subject merchandise. SSAB has sold several productive units and the 
company was partially privatized in 1987 and in 1989. In 1994, SSAB was 
completely privatized.
    In Final Affirmative Countervailing Duty Determinations: Certain 
Steel Products from Sweden, 58 FR 37385 (July 9, 1993) (1993 Certain 
Steel Products), the Department found that SSAB had received 
countervailable subsidies prior to the sale of the productive units and 
the two partial privatizations. Further, the Department found that a 
private party purchasing all or part of a government-owned company can 
repay prior subsidies on behalf of the company as part or all of the 
sales price (see General Issues Appendix, (GIA) 58 FR 37217, 37262 
(July 9, 1993)). Therefore, to the extent that a portion of the sales 
price paid for a privatized company can be reasonably attributed to 
prior subsidies, that portion of those subsidies will be extinguished.
    To calculate a rate for the subsidies that were allocated to the 
spin-off, i.e., a productive unit that was sold, we first determined 
the amount of the subsidies attributable to each productive unit by 
dividing the asset value of that productive unit by the total asset 
value of SSAB in the year of the spin-off. We then applied this ratio 
to the net present value (NPV), in the year of the spin-off, of the 
future benefit streams from all of SSAB's prior subsidies allocable to 
the POR. The future benefit streams at the time of the sale of each 
productive unit reflect the Department's allocation over time of prior 
subsidies to SSAB in accordance with the declining balance methodology 
(see Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From the 
United Kingdom; Preliminary Results of Countervailing Duty 
Administrative Review, 62 FR 64568 (December 8, 1997) and Certain Hot-
Rolled Lead and Bismuth Carbon Steel Products From the United Kingdom; 
Final Results of Countervailing Duty Administrative Review, 63 FR 18367 
(April 15, 1998)), and reflect also the effect of prior spin-offs of 
SSAB productive units.
    We next estimated the portion of the purchase price which 
represents repayment of prior subsidies by determining the portion of 
SSAB's net worth that was accounted for by subsidies. To do that, we 
divided the face value of the allocable subsidies

[[Page 37508]]

received by SSAB in each year from fiscal year 1979 through fiscal year 
1993 by SSAB's net worth in the same year. We calculated a simple 
average of these ratios, which was then multiplied by the purchase 
price of the productive unit. Thus, we determined the amount of the 
purchase price which represents repayment of prior subsidies. This 
amount was subtracted from the subsidies attributed to the productive 
unit at the time of sale to arrive at the amount of subsidies allocated 
to the productive unit being spun-off.
    To calculate the subsidies remaining with SSAB after privatization, 
we performed the following calculations. We first calculated the NPV of 
the future benefit stream of the subsidies at the time of the sale of 
the shares. Next, we estimated the portion of the purchase price which 
represents repayment of prior subsidies in accordance with the 
methodology described in the ``Privatization'' section of the General 
Issues Appendix (58 FR 37217, 37259). This amount was then subtracted 
from the amount of the NPV eligible for repayment, and the result was 
divided by the NPV to calculate the ratio representing the amount of 
subsidies remaining with SSAB.
    To calculate the benefit provided to SSAB in the POR, where 
appropriate, we multiplied the benefit calculated for 1997, adjusted 
for sales of productive units, by the ratio representing the amount of 
subsidies remaining with SSAB after privatization. We then divided the 
results by the company's total sales in 1997.

Allocation Methodology

    In the current review, there are no new subsidies. All of the non-
recurring grants under review were provided prior to the POR; 
allocation periods for these grants were established during prior 
segments of this proceeding. Therefore, for purposes of these 
preliminary results, the Department is using the original allocation 
period assigned to each grant. See Certain Carbon Steel Products from 
Sweden; Final Results of Administrative Review, 66 FR 16549-16550 
(April 7, 1997) (1994 Final Results).

Analysis of Programs

I. Programs Conferring Subsidies

A. Structural Loans
    Under three separate pieces of legislation, SSAB received 
structural loans for investment in plant and equipment. The loans were 
disbursed in installments between 1978 and 1983. Three loans were 
outstanding during the period of review (POR).
    According to the terms of the loans, all three structural loans 
were interest-free for three years from the date of disbursement. After 
that time, two loans incurred interest at a fixed rate of five percent 
per annum while the other loan incurred interest at a variable rate 
subject to change every five years. See SAAB's February 16, 1999 
Questionnaire Response at page 11-13 (Public Version on file in Room B-
099 of the main Commerce Building). The variable interest rate on this 
loan is set at the rate of the long-term government bonds plus a 0.25 
percent margin. After a five-year grace period, the principal is repaid 
in 20 equal installments at the end of each calendar year.
    In the final determination of the original investigation of the 
subject merchandise, Final Affirmative Countervailing Duty 
Determination; Certain Carbon Steel Products from Sweden, 50 FR 33377 
(August 19, 1985) and 1993 Certain Steel Products, we determined that 
these loans were received at an interest rate lower than what the 
recipient would have paid on a comparable commercial loan. We 
therefore, determined that the loans are countervailable. There has 
been no new information or evidence of changed circumstances in this 
review to warrant reconsideration of this determination.
    To calculate the benefit from the fixed-rate structural loans, we 
employed the long-term loan methodology described in the 1994 
administrative review of this order. See 1994 Final Results. To 
calculate the benefits of the variable-rate loan, we used the variable-
rate long-term loan methodology described in the 1994 Final Results. As 
the benchmark, we used SSAB's company-specific long-term interest 
rates, previously established in 1993 Certain Steel Products.
    We reduced the benefit attributable to the POR from the fixed-rate 
structural loans according to the methodology outlined in the 
``Privatization'' section above. We then aggregated the benefits for 
the three loans (fixed interest rate and variable interest rate) and 
divided the results by SSAB's total sales for 1997. On this basis, we 
preliminarily determine the net subsidy from the three structural loans 
to be 0.12 percent ad valorem.
B. Forgiven Reconstruction Loans
    The Government of Sweden (GOS) provided reconstruction loans to 
SSAB between 1979 and 1985 to cover operating losses, investment in 
certain plant and equipment, and for employment promotion purposes. The 
loans were interest free for three years, after which a fixed interest 
rate was charged. According to the terms of the loans, up to half of 
the outstanding amount of the loan could be written off after the 
second calendar year following the disbursement. The remainder of the 
loan could be written off entirely at the end of the ninth calendar 
year after disbursement. Pursuant to the terms of the reconstruction 
loans, evidence indicated that the GOS wrote off large portions of 
principal and accrued interest on these loans between 1980 and 1990.
    In the 1985 Final Determination and in 1993 Certain Steel Products, 
we determined that forgiveness of these loans is countervailable. There 
has been no new information or evidence of changed circumstances in 
this review to warrant reconsideration of this determination.
    To calculate the benefit, we treated the written-off portions of 
the reconstruction loans as countervailable grants received in the 
years the loans were forgiven and calculated the benefit for the POR 
from this program using the methodology described in the ``Allocation 
Methodology'' section above. We reduced the benefits from these grants 
attributable to the POR according to the methodology outlined in the 
``Privatization'' section above. We then divided the results by SSAB's 
total sales for 1997. On this basis, we preliminarily determine the net 
subsidy from the three allocable forgiven reconstruction loans to be 
0.59 percent ad valorem.

II. Other Programs Examined

A. Research and Development Loans and Grants
    The Swedish National Board for Industrial and Technical Development 
(NUTEK) provides research and development loans and grants to Swedish 
industries for R&D purposes. One type of R&D loan (industrial 
development loans) is mostly aimed at ``new'' industries such as the 
biotechnical, electronic, and medical industries. Another type of R&D 
loan (energy efficiency loans) is directed towards big energy 
consumers.
    The loans accrue interest equal to the official ``discount'' rate 
plus a premium of 3.75 percent. SSAB had several R&D loans outstanding 
during the POR on which it did not make either principal or interest 
payments. To calculate the benefit on these long-term variable rate 
loans, we used the variable-rate long-term loan methodology described 
in the 1994 Final Results. We measured the interest savings on each 
outstanding loan during the POR using the Department's long-term 
benchmark.

[[Page 37509]]

Because SSAB did not have any long-term loans in 1997, we used as the 
discount rate the long-term industrial bond rate in Sweden, a benchmark 
previously established in 1993 Certain Steel Products. Then we divided 
the aggregate benefit of these loans by SSAB's total sales for 1997. On 
this basis, we preliminarily determine that, because the assistance 
provided under this program would result in a rate of less than 0.005 
percent ad valorem, and would have no impact on the countervailing duty 
rate calculated for this POR, it is not necessary to determine whether 
these loans under NUTEK are specific. See, e.g. Final Affirmative 
Countervailing Duty Determination: Steel Wire Rod from Germany, 62 FR 
54990, 54995-54996 (October 22, 1997).
    In addition, SSAB reported to have received a NUTEK R&D grant for 
the application and further development of Information Technology 
concerning improved energy utilization and control of industrial 
processes. Disbursements of these grants, which were received prior to 
the POR, did not exceed the 0.5 percent of SSAB's total sales in the 
year they were received. Therefore, in accordance with our practice, 
the entire amount was expensed in the year of receipt. See Cut-to-
Length Steel Plate from Belgium; Preliminary Results of Countervailing 
Duty Review, 63 FR 48188, 48190 (September 9, 1998). On that basis, we 
preliminarily determine that it is not necessary to determine whether 
grants under NUTEK are specific.

Preliminary Results of Review

    In accordance with 19 CFR 351.221(b)(4)(i), we calculated an 
individual subsidy rate for each producer/exporter subject to this 
administrative review. For the period January 1, 1997 through December 
31, 1997, we preliminarily determine the net subsidy for SSAB to be 
0.72 percent ad valorem.
    Because the URAA replaced the general rule in favor of a country-
wide rate with a general rule in favor of individual rates for 
investigated and reviewed companies, the procedures for establishing 
countervailing duty rates, including those for non-reviewed companies, 
are now essentially the same as those in antidumping cases, except as 
provided for in section 777A(e)(2)(B) of the Act. The requested review 
will normally cover only those companies specifically named. See 19 CFR 
351.213(b). Pursuant to 19 CFR 351.212(c), for all companies for which 
a review was not requested, duties must be assessed at the cash deposit 
rate, and cash deposits must continue to be collected, at the rate 
previously ordered. As such, the countervailing duty cash deposit rate 
applicable to a company can no longer change, except pursuant to a 
request for a review of that company. Therefore, the cash deposit rates 
for all companies except those covered by this review will be unchanged 
by the results of this review.
    We will instruct Customs to continue to collect cash deposits for 
non-reviewed companies at the most recent company-specific or country-
wide rate applicable to the company. Accordingly, the cash deposit 
rates that will be applied to non-reviewed companies covered by this 
order will be the rate for that company established in the most 
recently completed administrative proceeding conducted under the URAA. 
See Certain Carbon Steel Products from Sweden; Final Results of 
Countervailing Duty Administrative Review, 61 FR 5378 (February 12, 
1996). These rates shall apply to all non-reviewed companies until a 
review of a company assigned these rates is requested. In addition, for 
the period January 1, 1997 through December 31, 1997, the assessment 
rates applicable to all non-reviewed companies covered by this order 
are the cash deposit rates in effect at the time of entry.

Public Comment

    Pursuant to Subpart B of 19 CFR 351.224(b), the Department will 
disclose to the parties of this proceeding within five days after the 
date of any public announcement or if none within five days after the 
publication of this notice, the calculations performed in this review. 
Interested parties may request a hearing not later than 30 days after 
the date of publication of this notice. Interested parties may submit 
written arguments in case briefs on these preliminary results within 30 
days of the date of publication. Rebuttal briefs, limited to arguments 
raised in case briefs, may be submitted five days after the time limit 
for filing the case brief. Parties who submit argument in this 
proceeding are requested to submit with the argument (1) a statement of 
the issue and (2) a brief summary of the argument. Any hearing, if 
requested, will be held two days after the scheduled date for 
submission of rebuttal briefs. Copies of case briefs and rebuttal 
briefs must be served on interested parties in accordance with Subpart 
B of 19 CFR 351.303(f).
    Representatives of parties to the proceeding may request disclosure 
of proprietary information under administrative protective order no 
later than 10 days after the representative's client or employer 
becomes a party to the proceeding, but in no event later than the date 
the case briefs, under 19 CFR 351.309(c)(ii), are due. The Department 
will publish the final results of this administrative review, including 
the results of its analysis of issues raised in any case or rebuttal 
brief or at a hearing.
    This administrative review and notice are issued and published in 
accordance with section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)), 19 
CFR 351.213.

    Dated: July 6, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-17646 Filed 7-9-99; 8:45 am]
BILLING CODE 3510-DS-P