[Federal Register Volume 64, Number 171 (Friday, September 3, 1999)]
[Notices]
[Pages 48374-48378]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23035]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-580-602]


Final Results of Expedited Sunset Review: Top-of-the-Stove 
Stainless Steel Cookware From South Korea

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

ACTION: Notice of final results of expedited sunset review: top-of-the-
stove stainless steel cookware from South Korea.

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SUMMARY: On February 1, 1999, the Department of Commerce (``the 
Department'') initiated a sunset review of the countervailing duty 
order on top-of-the-stove stainless steel cookware from South Korea (64 
FR 4840) pursuant to section 751(c) of the Tariff Act of 1930, as 
amended (``the Act''). On the basis of a notice of intent to 
participate and an adequate substantive response filed on behalf of 
domestic interested parties and inadequate response (in this case, no 
response) from respondent interested parties, the Department determined 
to conduct an expedited review. As a result of this review, the 
Department finds that revocation of the countervailing duty order would 
be likely to lead to continuation or recurrence of a countervailable 
subsidy. The net countervailable subsidy and the nature of the subsidy 
are identified in the Final Results of Review section of to this 
notice.

FOR FURTHER INFORMATION CONTACT: Darla D. Brown or Melissa G. Skinner, 
Office of Policy for Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street & Constitution 
Ave.. NW., Washington, D.C. 20230; telephone: (202) 482-3207 or (202) 
482-1560, respectively.

EFFECTIVE DaTE: September 3, 1999.

Statute and Regulations

    This review was conducted pursuant to sections 751(c) and 752 of 
the Act. The Department's procedures for the conduct of sunset reviews 
are set forth in Procedures for Conducting Five-year (``Sunset'') 
Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516 
(March 20, 1998) (``Sunset

[[Page 48375]]

Regulations''). Guidance on methodological or analytical issues 
relevant to the Department's conduct of sunset reviews is set forth in 
the Department's Policy Bulletin 98:3--Policies Regarding the Conduct 
of Five-year (``Sunset'') Reviews of Antidumping and Countervailing 
Duty Orders; Policy Bulletin, 63 FR 18871 (April 16, 1998) (``Sunset 
Policy Bulletin'').

Scope

    The merchandise subject to this countervailing duty order is top-
of-the-stove stainless steel cookware (``cookware'') from Korea. The 
subject merchandise is all non-electric cooking ware of stainless steel 
which may have one or more layers of aluminum, copper or carbon steel 
for more even heat distribution. The subject merchandise includes 
skillets, frying pans, omelette pans, saucepans, double boilers, stock 
pots, dutch ovens, casseroles, steamers, and other stainless steel 
vessels, all for cooking on stove top burners, except tea kettles and 
fish poachers.
    Excluded from the scope of the order is stainless steel oven ware 
and stainless steel kitchen ware. Certain stainless steel pasta and 
steamer inserts and certain stainless steel eight-cup coffee 
percolators are within the scope (63 FR 41545 (August 4, 1998) and 58 
FR 11209 (February 24, 1993), respectively).
    Moreover, as a result of a changed circumstances review, the 
Department revoked the order on Korea with regards to certain stainless 
steel camping ware that (1) is made of single-ply stainless steel 
having a thickness no greater than 6.0 millimeters; and (2) consists of 
1.0, 1.5, and 2.0 quart saucepans without handles and with lids that 
also serve as fry pans (62 FR 32767, June 17, 1997).
    Cookware is currently classifiable under Harmonized Tariff Schedule 
(``HTS'') item numbers 7323.93.00 and 9604.00.00. The HTS item numbers 
are provided for convenience and Customs purposes only. The written 
description remains dispositive.

History of the Order

    The countervailing duty order on cookware from Korea was published 
in the Federal Register on January 20, 1987 (52 FR 2140). In the 
original investigation, the Department determined that the following 
six programs administered by the Government of Korea (``GOK'') 
conferred bounties:
    (1) Short-Term Export Financing under the Export Financing 
Regulations and Foreign Trade Financing Regulations (hereinafter 
``Short-Term Export Financing'')--0.38 percent ad valorem;
    (2) Export Tax Reserve under Articles of the Act Concerning the 
Regulation of Tax Reduction and Exemption (hereinafter ``Export Tax 
Reserve'')--0.01 percent ad valorem;
    (3) Unlimited Deduction of Overseas Entertainment Expenses under 
Article 18-2 of the Corporation Tax Law (hereinafter ``Unlimited 
Entertainment Expense Deductions'')--0.01 percent ad valorem;
    (4) Loans to Promising Small and Medium Enterprises (hereinafter 
``Small Business Loans'')--0.11 percent ad valorem;
    (5) Exemption from the Acquisition Tax under the Law for the 
Promotion of Income Sources in Rural Areas (hereinafter ``Acquisition 
Tax Exemption'')--0.07 percent ad valorem; and
    (6) Duty Drawback on Non-Physically Incorporated Items and 
Excessive Loss Rates under the Duty Drawback System (hereinafter ``Duty 
Drawback Programs'')--0.20 percent ad valorem.1
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    \1\Final Affirmative Countervailing Duty Determination; Certain 
Stainless Steel Cooking Ware from the Republic of Korea, 51 FR 42867 
(November 26, 1986).
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    The Department calculated that these programs conferred a total net 
subsidy of 0.78 percent ad valorem for all Korean manufacturers, 
producers, or exporters, except Woo Sung Company Ltd. and Dae Sung 
Industrial Company Ltd. As a result of de minimis net subsidies found 
for Woo Sung Company Ltd. and Dae Sung Industrial Company Ltd., these 
two Korean producers/exporters were excluded from the 
order.2
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    \2\ Countervailing Duty Order; Certain Stainless Steel Cooking 
Ware from the Republic of Korea, 52 FR 2140 (January 20, 1987).
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    Since the original investigation, the Department has conducted no 
administrative reviews of the order. The order, therefore, remains in 
effect for all known manufacturers and exporters of the subject 
merchandise from Korea, except two: Woo Sung Company Ltd. and Dae Sung 
Industrial Company Ltd.

Background

    On February 1, 1999, the Department initiated a sunset review of 
the countervailing duty order on cookware from Korea (64 FR 4840), 
pursuant to section 751(c) of the Act. The Department received a Notice 
of Intent to Participate on behalf of the Stainless Steel Cookware 
Committee, whose current members are Regal Ware, Inc., All-Clad 
Metalcrafters, Inc., and Vita Craft Corp. (collectively, the 
``Committee''), on February 16, 1999, within the deadline specified in 
section 351.218(d)(1)(i) of the Sunset Regulations. Pursuant to section 
771(9)(E) of the Act, the Committee claimed interested party status as 
an association of U.S. manufacturers of a domestic like product. In 
addition, the Committee's individual members claimed domestic 
interested party status pursuant to section 771(9)(C) of the Act, as 
domestic producers of a like product. The Department received a 
complete substantive response from the Committee on March 3, 1999, 
within the 30-day deadline specified in the Sunset Regulations under 
section 351.218(d)(3)(i). We did not receive a substantive response 
from any respondent interested party. As a result, pursuant to 19 CFR 
351.218(e)(1)(ii)(C), the Department determined to conduct an 
expedited, 120-day, review of this order.
    The Department determined that the sunset review of the 
countervailing duty order on cookware from Korea is extraordinarily 
complicated. In accordance with section 751(c)(5)(C)(v) of the Act, the 
Department may treat a review as extraordinarily complicated if it is a 
review of a transition order (i.e., an order in effect on January 1, 
1995). (See section 751(c)(6)(C) of the Act.) Therefore, on June 7, 
1999, the Department extended the time limit for completion of the 
final results of this review until not later than August 30, in 
accordance with section 751(c)(5)(B) of the Act.3
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    \3\ See Porcelain-on-Steel Cooking Ware From the People's 
Republic of China, et. al.: Extension of Time Limit for Final 
Results of Five-Year Reviews, 64 FR 30305 (June 7, 1999).
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Determination

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

[[Page 48376]]

provide the Commission information concerning the nature of each 
subsidy and whether the subsidy is a subsidy described in Article 3 or 
Article 6.1 of the 1994 WTO Agreement on Subsidies and Countervailing 
Measures (``Subsidies Agreement'').
    The Department's determinations concerning continuation or 
recurrence of a countervailable subsidy, the net countervailable 
subsidy likely to prevail if the order is revoked, and nature of the 
subsidy are discussed below. In addition, the Committee's comments with 
respect to each of these issues are addressed within the respective 
sections below.

Continuation or Recurrence of a Countervailable Subsidy

    Drawing on the guidance provided in the legislative history 
accompanying the Uruguay Round Agreements Act (``URAA''), specifically 
the Statement of Administrative Action (``the SAA''), H.R. Doc. No. 
103-316, vol. 1 (1994), the House Report, H.R. Rep. No. 103-826, pt.1 
(1994), and the Senate Report, S. Rep. No. 103-412 (1994), the 
Department issued its Sunset Policy Bulletin providing guidance on 
methodological and analytical issues, including the basis for 
likelihood determinations. The Department clarified that determinations 
of likelihood will be made on an order-wide basis (see section III.A.2 
of the Sunset Policy Bulletin). Additionally, the Department normally 
will determine that revocation of a countervailing duty order is likely 
to lead to continuation or recurrence of a countervailable subsidy 
where (a) a subsidy program continues, (b) a subsidy program has been 
only temporarily suspended, or (c) a subsidy program has been only 
partially terminated (see section III.A.3.a of the Sunset Policy 
Bulletin). Exceptions to this policy are provided where a company has a 
long record of not using a program (see section III.A.3.b of the Sunset 
Policy Bulletin).
    In addition to considering the guidance on likelihood cited above, 
section 751(c)(4)(B) of the Act provides that the Department shall 
determine that revocation of the order would be likely to lead to 
continuation or recurrence of a countervailable subsidy where a 
respondent interested party waives its participation in the sunset 
review. Pursuant to the SAA, at 881, in a review of a countervailing 
duty order, when the foreign government has waived participation, the 
Department shall conclude that revocation of the order would be likely 
to lead to continuation or recurrence of a countervailable subsidy for 
all respondent interested parties.4 In the instant review, 
the Department did not receive a substantive response from the foreign 
government or from any other respondent interested party. Pursuant to 
section 351.218(d)(2)(iii) of the Sunset Regulations, this constitutes 
a waiver of participation.
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    \4\ See 19 CFR 351.218(d)(2)(iv).
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    In their substantive response, the Committee argued that the GOK 
continues to confer countervailable subsidies to Korean producers/
exporters of stainless steel cookware. The Committee identified the six 
programs administered by the GOK and determined in the original 
investigation to confer bounties or grants. Further, the Committee 
pointed out that, in its final countervailing duty determination, the 
Department calculated that these programs conferred a total net subsidy 
of 0.78 percent ad valorem for all Korean manufacturers, producers, or 
exporters, except Woo Sung Company Ltd. and Dae Sung Industrial Company 
Ltd.
    Of these six programs, the Committee argued that five continue to 
confer countervailable subsidies to Korean producers/exporters. The 
Committee cited to the November, 1998, preliminary affirmative 
countervailing duty determination with respect to stainless steel sheet 
and strip in coils from Korea and argued that the short-term export 
financing, export tax reserve, small business loans, acquisition tax 
exemption, and the duty drawback programs continue to exist and confer 
countervailable benefits.5 Additionally, the Committee noted 
that in that same preliminary determination, the Department determined 
that the unlimited deduction of overseas entertainment expenses program 
had been terminated. The Committee argued that if, in the final 
determination, the Department finds that the program has been 
terminated and is not likely to be reinstated, the Department should 
determine that the program will not provide a countervailable subsidy 
if the order were revoked. The Committee maintained, however, that the 
Department should determine that revocation of the countervailing duty 
order on Korea would likely result in the continuation of a 
countervailable subsidy on the basis of the continued existence of five 
of the original six programs.
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    \5\See Preliminary Affirmative Countervailing Duty 
Determination: Stainless Steel Sheet and Strip in Coils from the 
Republic of Korea, 63 FR 63884 (November 17, 1998).
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    As noted above, in our final determination, the Department 
determined that the programs in question conferred a bounty or grant, 
the net amount of which was calculated to be 0.78 percent ad valorem 
for Korean exporters/producers. The Department has conducted no 
administrative reviews of this outstanding countervailing duty order.
    We agree with the Committee that the Korean programs, with the 
exception of one,6 remain in place. Based on the continued 
existence of programs found to provide countervailable subsidies, the 
fact that the foreign government and other respondent parties waived 
their right to participate in this review before the Department, and 
absent argument and evidence to the contrary, the Department determines 
that it is likely that a countervailable subsidy will continue if the 
order is revoked.
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    \6\ As noted by the Committee, the Department determined that 
the Article 18-2(5) of the Corporate Tax Law, which provided that 
Korean exporters could deduct overseas entertainment expenses 
without limit, was repealed by revisions to the law dated December 
29, 1995 (see Final Affirmative Countervailing Duty Determination: 
Stainless Steel Sheet and Strip in Coils From the Republic of Korea, 
64 FR 30636, 30650 (June 8, 1999)).
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Net Countervailable Subsidy

    In the Sunset Policy Bulletin, the Department stated that, 
consistent with the SAA and House Report, the Department normally will 
select a rate from the investigation as the net countervailable subsidy 
likely to prevail if the order is revoked because that is the only 
calculated rate that reflects the behavior of exporters and foreign 
governments without the discipline of an order or suspension agreement 
in place. The Department noted that this rate may not be the most 
appropriate rate if, for example, the rate was derived from subsidy 
programs which were found in subsequent reviews to be terminated, if 
there has been a program-wide change, or if the rate ignores a program 
found to be countervailable in a subsequent administrative review. (See 
section III.B.3 of the Sunset Policy Bulletin.) Additionally, where the 
Department determined company-specific countervailing duty rates in the 
original investigation, the Department normally will report to the 
Commission company-specific rates from the original investigation or 
where no company-specific rate was determined for a company, the 
Department normally will provide to the Commission the country-wide or 
``all others'' rate. (See section III.B.2 of the Sunset Policy 
Bulletin.)
    In their substantive response, the Committee argued that the 
countervailing duty rate likely to prevail if the order on cookware 
from Korea is

[[Page 48377]]

revoked would be at least as large as that existing at the time of the 
original order. The Committee argued that as the rate determined in the 
original investigation is the only calculated rate which reflects the 
behavior of exporters without the discipline of the order in place, the 
Department's policy provides that it normally will select this rate to 
provide to the Commission. Noting that five of the six programs found 
to provide subsidies in the original investigation continue to exist, 
the Committee maintained that the Department should include the subsidy 
rates it originally determined when calculating the net countervailable 
subsidy in this sunset review.
    The Committee also argued that the Act requires the Department to 
consider programs, in addition to those considered in the original 
investigation, determined in other reviews or investigations to provide 
countervailable subsidies. The Committee argued that the Department 
should consider the dual pricing scheme in which the GOK mandates that 
POSCO, the government-owned steel producer, sell stainless steel to 
domestic producers at a price below the international market price. 
This program is referred to as POSCO's Two-Tiered Pricing Structure to 
Domestic Customers. The Committee argued that Korean manufacturers of 
stainless steel cookware are potential beneficiaries of this pricing 
scheme because they may purchase a significant amount of their 
stainless steel requirements from POSCO--the largest stainless steel 
producer in Korea. Further, the Committee argued that this pricing 
scheme was not in existence in January 1987, when the order on cookware 
was issued. In conclusion, the Committee argued that given the 
significance of this program, 7 it is imperative that the 
Department include this program in calculating the net countervailable 
subsidy likely to prevail if the order is revoked.
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    \7\ Citing to the Department's preliminary determination in 
Stainless Sheet and Strip, 63 FR at 63897, the Committee asserts 
that this program was found to provide one respondent a 
countervailable subsidy of 5.51 percent ad valorem.
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    As discussed in the Sunset Policy Bulletin, the Department normally 
will report to the Commission an original subsidy rate as adjusted to 
take into account terminated programs, program-wide changes, and 
programs found to be countervailable in subsequent reviews. Although no 
administrative review has been conducted of the order on cookware from 
Korea, we agree with the Committee that the program for the unlimited 
deduction of overseas entertainment expenses has been 
terminated.8 Further, we agree with the Committee that all 
other programs found in the original investigation to provide 
countervailable subsidies continue to exist.
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    \8\ See footnote 6.
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    Referring to section 752(b)(2) of the Act, the Sunset Policy 
Bulletin provides that if the Department determines that good cause is 
shown, the Department will consider other factors in sunset reviews. 
Specifically, the Department will consider programs determined to 
provide countervailable subsidies in other investigations or reviews, 
but only to the extent that such programs (a) can potentially be used 
by the exporters or producers subject to the sunset review and (b) did 
not exist at the time that the countervailing duty order was issued 
(see section III.C.1). Additionally, the Sunset Policy Bulletin 
provides that if the Department determines that good cause is shown, 
the Department will also consider programs newly alleged to provide 
countervailable subsidies, but only to the extent that the Department 
makes an affirmative countervailing duty determination with respect to 
such programs and with respect to the exporters or producers subject to 
the sunset review (see section III.C.2). Both sections specify that the 
burden is on interested parties to provide information or evidence that 
would warrant consideration of the subsidy program in question.
    In the recent final affirmative countervailing duty determination 
on stainless steel sheet and strip in coils from Korea, the Department 
found that POSCO sold hot-rolled stainless steel coil, which was the 
main input into stainless steel sheet and strip in coils, to the 
respondents in that investigation. Additionally, the Department found 
that POSCO charged a lower price to domestic customers that purchase 
steel for further processing into products that are exported than to 
domestic customers for products that will be consumed in Korea. As a 
result, the Department determined that POSCO's two-tiered pricing 
scheme constitutes an export subsidy under section 771(5A)(B) of the 
Act and provides a financial contribution to exporters under section 
771(5)(D) of the Act. The Department measured the benefit provided to 
respondents from this program by dividing the price savings 
9 of respondents by the value of respondents' exports. On 
this basis, the Department found company-specific countervailable 
subsidy rates of 0.87 and 2.36 percent ad valorem.
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    \9\ The price savings were calculated by comparing the prices 
charged by POSCO to respondents for domestic production to the 
prices charged by POSCO to respondents for export production (see 
Final Affirmative Countervailing Duty Determination: Stainless Steel 
Sheet and Strip in Coils From the Republic of Korea, 64 FR 30636, 
30647 (June 8, 1999)).
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    As noted above, the Department will only consider other factors 
under section 752(b)(2) of the Act where it determines good cause for 
such consideration has been shown. Additionally, the Sunset Regulations 
specify that the Department normally will consider such other factors 
only where it conducts a full sunset review. In this case, although the 
Committee argues that producers of cookware may benefit from this 
program because the producers are likely to purchase stainless steel 
from POSCO, we have no information that cookware producers actually 
benefit from this program. As stated in the SAA at 889, the more 
appropriate vehicle for consideration of new subsidies is an 
administrative review pursuant to section 751(a) of the Act, which the 
Committee did not request. Therefore, we are not considering this 
program for the purpose of this review.
    As a result of the termination of one program since the imposition 
of the order, the Department determines that using the net 
countervailable subsidy rate as determined in the original 
investigation is no longer appropriate. Further, as noted above, 
because the Department has not conducted an administrative review of 
this order, no other programs have been found to provide cookware 
producers/exporters a countervailable subsidy. Therefore, we have 
adjusted the net countervailable subsidy from the original 
investigation by subtracting the subsidy from the unlimited 
entertainment expense deductions program which the Department found 
terminated. (See calculation memo of August 24, 1999.)

Nature of the Subsidy

    In the Sunset Policy Bulletin, the Department stated that, 
consistent with section 752(a)(6) of the Act, the Department will 
provide information to the Commission concerning the nature of the 
subsidy and whether it is a subsidy described in Article 3 or Article 
6.1 of the Subsidies Agreement. The Committee did not specifically 
address this issue in their substantive response.
    Because the benefits received under four of the remaining five 
programs is contingent upon exports, these programs fall within the 
definition of an export subsidy under Article 3.1(a) of the Subsidies 
Agreement. The

[[Page 48378]]

remaining program, although not falling within the definition of an 
export subsidy under Article 3.1(a) of the Subsidies Agreement, could 
be found to be inconsistent with Article 6 if the net countervailable 
subsidy exceeds 5 percent, as measured in accordance with Annex IV of 
the Subsidies Agreement. The Department, however, has no information 
with which to make such a calculation, nor do we believe it appropriate 
to attempt such a calculation in the course of a sunset review. Rather, 
we are providing the Commission the following program descriptions.
    (1) Because only exporters are eligible to use short-term export 
financing under the Foreign Trade Regulations, short-term export 
financing falls within the definition of an export subsidy under 
Article 3.1(a) of the Subsidies Agreement.
    (2) The program for export tax reserves under Articles 22, 23, and 
24 or the Act Concerning the Regulation of Tax Reduction and Exemption 
was found to confer benefits which constitute export subsidies because 
they provide a deferral, contingent upon exports, of direct taxes. 
Therefore, this program falls within the definition of an export 
subsidy under Article 3.1(a) of the Subsidies Agreement.
    (3) The program providing for small business loans to ``promising'' 
companies on the basis that they were exporting companies, was found to 
be a countervailable export subsidy to the extent that the loans were 
provided at preferential interest. Because companies qualified for 
these loans on the basis of export performance, this program falls 
within the definition of an export subsidy under Article 3.1(a) of the 
Subsidies Agreement.
    (4) Because the Duty Drawback Program provides for duty drawback on 
items not physically incorporated into exported articles and because 
the duty drawback for loss or wastage on physically incorporated items 
is unreasonable or excessive, we found the program to confer a 
countervailable export subsidy. As such, this program falls within the 
definition of an export subsidy under Article 3.1(a) of the Subsidies 
Agreement.
    (5) Exemption from the acquisition tax under the Law for the 
Promotion of Income Sources in Rural Areas is limited to companies 
located in certain regions of the country and therefore, may fall 
within the definition of an actionable subsidy under Article 6.1 of the 
Subsidies Agreement.

Final Results of Review

    As a result of this review, the Department finds that revocation of 
the countervailing duty order on cookware from Korea would be likely to 
lead to continuation or recurrence of countervailable subsidies. The 
country-wide net countervailable subsidy likely to prevail if the order 
were revoked is 0.77 percent ad valorem. 10
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    \10\ As noted above, due to de minimis net subsidies found for 
Woo Sung Company Ltd. and Dae Sung Industrial Company Ltd., these 
two Korean producers/exporters were excluded from the order. .
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    This notice serves as the only reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 351.305 of the Department's regulations. 
Timely notification of return/destruction of APO materials or 
conversion to judicial protective order is hereby requested. Failure to 
comply with the regulations and the terms of an APO is a sanctionable 
violation.
    This five-year (``sunset'') review and notice are in accordance 
with sections 751(c), 752, and 777(i)(1) of the Act.

    Dated: August 30, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-23035 Filed 9-2-99; 8:45 am]
BILLING CODE 3510-DS-P