[Federal Register Volume 64, Number 148 (Tuesday, August 3, 1999)]
[Notices]
[Pages 42088-42091]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19920]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-580-842]


Notice of Initiation of Countervailing Duty Investigation: 
Structural Steel Beams From the Republic of Korea

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

EFFECTIVE DATE: August 3, 1999.

FOR FURTHER INFORMATION CONTACT: Eric B. Greynolds at (202) 482-6071 or 
Tipten Troidl at (202) 482-1767, Office of CVD/AD Enforcement VI, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, Room 1870, 14th Street and Constitution Avenue, 
N.W., Washington, D.C. 20230.

[[Page 42089]]

Initiation of Investigation

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
regulations codified at 19 C.F.R. Part 351 (1998) and to the 
substantive countervailing duty regulations published in the Federal 
Register on November 25, 1998 (63 FR 65348).

The Petition

    On July 7, 1999, the Department of Commerce (the Department) 
received petitions filed in proper form on behalf of Northwestern Steel 
and Wire Co., Nucor-Yamato Steel Co., TXI-Chaparral Steel Co., and the 
United Steelworkers of America AFL-CIO (the petitioners). Supplements 
to the petitions were filed on July 22 and 23, 1999.
    In accordance with section 702(b)(1) of the Act, petitioners allege 
that manufacturers, producers, or exporters of structural beams from 
the Republic of Korea (Korea) received countervailable subsidies within 
the meaning of section 701 of the Act.
    The Department finds that petitioners filed the petition on behalf 
of the domestic industry because they are interested parties as defined 
under sections 771(9)(C) and (D) of the Act. The petitioners have 
demonstrated sufficient industry support with respect to this 
countervailing duty investigation, which they are requesting the 
Department to initiate (see Determination of Industry Support for the 
Petition below).

Scope of the Investigation

    For purposes of this investigation, the products covered are 
doubly-symmetric shapes, whether hot-or cold-rolled, drawn, extruded, 
formed or finished, having at least one dimension of at least 80 mm 
(3.2 inches or more), whether of carbon or alloy (other than stainless) 
steel, and whether or not drilled, punched, notched, painted, coated, 
or clad. These products (Structural Steel Beams) include, but are not 
limited to, wide-flange beams (W shapes), bearing piles (HP shapes), 
standard beams (S or I shapes), and M-shapes.
    All products that meet the physical and metallurgical descriptions 
provided above are within the scope of this investigation unless 
otherwise excluded. The following products, are outside and/or 
specifically excluded from the scope of this investigation:
     Structural steel beams greater than 400 pounds per linear 
foot or with a web or section height (also known as depth) over 40 
inches.
    In addition to the above exclusion, petitioners have requested that 
the Department exclude certain special section I-shapes. See Exhibit 5 
of the petition, submitted on July 7, 1999, see also Attachment A of 
the July 23, 1999 petition amendment. The Department is currently 
considering this exclusion request, and attempting to define the 
request using physical, mechanical, and chemical criteria.
    The merchandise subject to these investigations is classified in 
the Harmonized Tariff Schedule of the United States (HTSUS) at 
subheadings: 7216.32.0000, 7216.33.0030, 7216.33.0060, 7216.33.0090, 
7216.50.0000, 7216.61.0000, 7216.69.0000, 7216.91.0000, 7216.99.0000, 
7228.70.3040, 7228.70.6000. Although the HTSUS subheadings are provided 
for convenience and Customs purposes, the written description of the 
merchandise under investigation is dispositive.
    During our review of the petition, we discussed the scope with the 
petitioners to ensure that the scope in the petition accurately 
reflects the product for which the domestic industry is seeking relief. 
Moreover, as we discussed in the preamble to the Department's 
regulations (62 FR 27323), we are setting aside a period for parties to 
raise issues regarding product coverage. The Department encourages all 
parties to submit such comments by August 16, 1999. Comments should be 
addressed to Import Administration's Central Records Unit at Room 1870, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, D.C. 20230. Any product coverage comment filed must be 
filed for the record of each structural steel beam investigation (i.e., 
commentors must file all coverage comments on the record of the 
investigations for structural steel beams from Germany, Japan, South 
Korea (both antidumping and countervailing duty investigations) and 
Spain). The period of scope consultations is intended to provide the 
Department with ample opportunity to consider all comments and consult 
with parties prior to the issuance of the preliminary determination.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department 
invited representatives of the Government of Korea (GOK) for 
consultations with respect to the petition filed. The GOK declined to 
hold consultations with the Department regarding the petition, but on 
July 20, 1999, submitted a letter to the Department expressing 
opposition to the petition.

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (1) at least 
25 percent of the total production of the domestic like product; and 
(2) more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who produce the domestic 
like product. The International Trade Commission (ITC), which is 
responsible for determining whether ``the domestic industry'' has been 
injured, must also determine what constitutes a domestic like product 
in order to define the industry. While both the Department and the ITC 
must apply the same statutory definition regarding the domestic like 
product (section 771(10) of the Act), they do so for different purposes 
and pursuant to separate and distinct authority. In addition, the 
Department's determination is subject to limitations of time and 
information. Although this may result in different definitions of the 
like product, such differences do not render the decision of either 
agency contrary to the law (see Algoma Steel Corp. Ltd., v. United 
States, 688 F. Supp. 639, 642-44 (CIT 1988); High Information Content 
Flat Panel Displays and Display Glass Therefore from Japan: Final 
Determination; Rescission of Investigation and Partial Dismissal of 
Petition, 56 FR 32376, 32380-81 (July 16, 1991).
    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be

[[Page 42090]]

the scope as defined in the petition. Moreover, petitioners do not 
offer a definition of domestic like product distinct from the scope of 
the investigation.
    The domestic like product referred to in the petition is the single 
domestic like product defined in the ``Scope of Investigation'' 
section, above. The Department has no basis on the record to find the 
petition's definition of the domestic like product to be inaccurate. 
The Department has, therefore, adopted the domestic like product 
definition set forth in the petition.
    In this case, the Department has determined that the petition and 
supplemental information to the petition contain adequate evidence of 
sufficient industry support (see Attachment to the Initiation Checklist 
Re: Industry Support, July 27, 1999). Producers and workers supporting 
the petition represent over 50 percent of total production of the 
domestic like product. Therefore, polling was not necessary.
    Accordingly, the Department determines that these petitions are 
filed on behalf of the domestic industry within the meaning of section 
702(b)(1) of the Act.

Injury Test

    Because Korea is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, section 701(a)(2) applies to this 
investigation. Accordingly, the ITC must determine whether imports of 
the subject merchandise from Korea materially injure, or threaten 
material injury to, a U.S. industry.

Allegations and Evidence of Material Injury and Causation

    Petitioners allege that the U.S. industry producing the domestic 
like product is being materially injured, and is threatened with 
material injury, by reason of the individual and cumulated imports of 
the subject merchandise sold at less than NV. Petitioners explained 
that the industry's injured condition is evident in the declining 
trends in output and net operating profits. The allegations of injury 
and causation are supported by relevant evidence including U.S. Customs 
import data, lost sales, and pricing information. The Department 
assessed the allegations and supporting evidence regarding material 
injury and causation and determined that these allegations are 
supported by accurate and adequate evidence and meet the statutory 
requirements for initiation (see Attachments to Initiation Checklist, 
Re: Material Injury, July 27, 1999).

Allegations of Subsidies

    Section 702(b) of the Act requires the Department to initiate a 
countervailing duty proceeding whenever an interested party files a 
petition, on behalf of an industry, that (1) alleges the elements 
necessary for an imposition of a duty under section 701(a), and (2) is 
accompanied by information reasonably available to petitioners 
supporting the allegations.

Initiation of Countervailing Duty Investigation

    The Department has examined the petition on structural steel beams 
from Korea and found that it complies with the requirements of section 
702(b) of the Act. Therefore, in accordance with section 702(b) of the 
Act, we are initiating a countervailing duty investigation to determine 
whether manufacturers, producers, or exporters of structural beams from 
Korea receive subsidies. See the July 27, 1999, memorandum to the file 
regarding the initiation of this investigation (public documents on 
file in the Central Records Unit of the Department of Commerce, Room B-
099).
    We are including in our investigation the following programs 
alleged in the petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in Korea:
1. GOK Directed Credit Programs
    a. Pre-1992 Directed Credit
    b. Post-1991 Directed Credit
2. Debt Restructuring for Kangwon Industries 
3. Private Capital Investment Act (PCIA)
4. Tax Programs Under the Tax Reduction and Exemption Control Act 
(TERCL)
    a. Technical Development Reserve Funds (Article 8)
    b. Tax Credit for Investment in Equipment to Develop Technology and 
Manpower/Investment Tax Credit (Article 10)
    c. Reserve for Export Loss (Article 16)
    d. Reserve for Overseas Market Development (Article 17)
    e. Tax Credits for Vocational Training (Article 18)
    f. Exemption of Corporation Tax on Dividend Income from Overseas 
Resources Development Investment (Article 24)
    g. Tax Credit for Investment in Productivity Improvement Facilities 
(Article 25)
    h. Tax Credits for Investment in Specific Facilities (Article 26)
    i. Tax Credits for Temporary Investments (Article 27)
    j. Social Indirect Capital Investment Reserve Funds (Article 28)
    k. Energy-Saving Facilities Investment Reserve Funds (Article 29)
    l. Tax Credits for Specific Investments (Article 71)
    m. Mining Investment Reserve Funds (Article 95)
5. Reserve for Investment 
6. Asset Revaluation Pursuant to TERCL Article 56(2)
7. Special Cases of Tax for Balanced Development among Areas (TERCL 
Articles 41, 42, 43, 44, and 45)
8. Industry Promotion and Research and Development Subsidies
    a. Promotion Fund for Science and Technology
    b. Highly Advanced National Project Fund
    c. Steel Campaign for the 21st Century
9. Overseas Resource Development (Loans and Grants) Programs
10. Excessive Duty Drawback 
11. Electricity Discounts 
12. Scrap Reserve Fund 
13. Export Insurance Rates By The Korean Export Insurance Corporation 
14. Short-Term Export Financing 
15. Korean Export-Import Bank Loans 
16. Export Industry Facility Loans (EIFL) and Specialty Facility Loans
17. Loans from the Energy Savings Fund 
18. Tax Incentives for Highly Advanced Technology Businesses 
19. Special Depreciation of Assets Based on Foreign Exchange Earnings 

    Petitioners have also alleged that Kangwon was uncreditworthy from 
1991 through 1998. Based upon the information provided by petitioners, 
including financial ratios, we are initiating an investigation of 
Kangwon's creditworthiness for the years 1991 through 1998.
    We are not including in our investigation the following programs 
alleged to be benefitting producers and exporters of the subject 
merchandise in Korea:

1. Tax Credit for Technology and Manpower Development Expenses (Article 
9 of TERCL)

    Petitioners alleged that producers and exporters of the subject 
merchandise may be benefitting from this program. However, we have 
decided not to initiate an investigation of this program. We recently 
examined this program in the Final Affirmative Countervailing Duty 
Determination: Stainless Steel Sheet and Strip in Coils From the 
Republic of Korea, 64 FR 30636 (June 8, 1999) (Sheet and Strip). In 
Sheet and Strip, we found this program not countervailable. See Sheet 
and Strip, 64 FR at 30645-6. Petitioners have provided no new 
information or

[[Page 42091]]

evidence of changed circumstances to warrant a reexamination of this 
program.

2. Free Trade Zones (FTZs)

    In 1997, the GOK announced its intention of establishing FTZs in 
the ports of Pusan and Kwangyang. Petitioners allege that special 
concessions, such as various tax and customs incentives, apply only to 
companies in GOK-designated FTZs thereby bestowing regionally specific 
subsidies on companies located in these zones. However, petitioners 
point out, neither Inchon nor Kangwon is located in the ports scheduled 
to be designated as FTZs by the GOK. Moreover, petitioners do not 
provide any evidence in support of their contention that the GOK may 
have expanded the FTZ program to include ports where Inchon and Kangwon 
have operations. Therefore, we are not initiating an investigation of 
this program.

Distribution of Copies of the Petitions

    In accordance with section 702(b)(4)(A)(i) of the Act, copies of 
the public version of the petition have been provided to the 
representatives of Korea. We will attempt to provide copies of the 
public version of the petition to all the exporters named in the 
petition, as provided for under section 351.203(c)(2) of the 
Department's regulations.

ITC Notification

    Pursuant to section 702(d) of the Act, we have notified the ITC of 
this initiation.

Preliminary Determination by the ITC

    The ITC will determine by August 23, 1999, whether there is a 
reasonable indication that an industry in the United States is 
materially injured, or is threatened with material injury, by reason of 
imports of structural steel beams from Korea. A negative ITC 
determination will result in the investigation being terminated; 
otherwise, the investigation will proceed according to statutory and 
regulatory time limits.
    This notice is published pursuant to section 777(i) of the Act.

    Dated: July 27, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-19920 Filed 8-2-99; 8:45 am]
BILLING CODE 3510-DS-P