[Federal Register Volume 65, Number 69 (Monday, April 10, 2000)]
[Notices]
[Pages 18973-18976]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-8819]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-580-818]


Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat 
Products From Korea: Final Results of Expedited Sunset Reviews

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

ACTION: Certain cold-rolled and corrosion-resistant carbon steel flat 
products from Korea; final results of expedited sunset reviews.

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SUMMARY: On September 1, 1999, the Department of Commerce (``the 
Department'') initiated sunset reviews of the countervailing duty 
orders on certain cold-rolled and corrosion-resistant carbon steel flat 
products from Korea (64 FR 47767) 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 adequate substantive comments filed on 
behalf of domestic interested parties in each of these reviews, as well 
as inadequate response from respondent interested parties, we 
determined to conduct expedited sunset reviews. Based on our analysis 
of the substantive comments received, we find that revocation of the 
countervailing duty orders would be likely to lead to continuation or 
recurrence of a countervailable subsidy. The net countervailable 
subsidy rates are listed in the Final Results of Review section of this 
notice.

EFFECTIVE DATE: April 10, 2000.

FOR FURTHER INFORMATION CONTACT: Martha V. Douthit or Melissa G. 
Skinner, Office of Policy for Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street & 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
5050 or (202) 482-1560, respectively.

SUPPLEMENTARY INFORMATION:

Statute and Regulations

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (``the Act''), are references to the provisions 
effective January 1, 1995,

[[Page 18974]]

the effective date of the amendments made to the Act by the Uruguay 
Round Agreements Act (``URAA''). In addition, unless otherwise 
indicated, all citations to the Department of Commerce's (``the 
Department's'') regulations are to 19 CFR part 351 (1999). 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'').

Background

    On September 1, 1999, the Department initiated sunset reviews of 
the countervailing duty orders on certain cold-rolled and corrosion-
resistant carbon steel flat products from Korea (64 FR 47767), pursuant 
to section 751(c) of the Act. We invited parties to comment. On the 
basis of a notice on intent to participate and adequate substantive 
responses filed on behalf of domestic interested parties in both 
reviews, and inadequate response (in these cases no response) from 
respondent interested parties, we determined to conduct expedited (120-
day) sunset reviews, in accordance with 19 CFR 351.218(e)(1)(ii)(C). 
The Department has conducted these sunset reviews in accordance with 
sections 751 and 752 of the Act.
    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). These reviews concern transition orders within the meaning of 
section 751(c)(6)(C)(i) of the Act. Therefore, on December 22, 1999, 
the Department determined the sunset reviews of the countervailing duty 
orders on certain cold-rolled and corrosion-resistant carbon steel flat 
products from Korea to be extraordinarily complicated, and, extended 
the time limit for completion of the final results of these reviews 
until not later than March 29, 2000, in accordance with section 
751(c)(5)(B) of the Act.\1\
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    \1\ See Extension of Time Limit for Final Results of Five-Year 
Reviews, 64 FR 71726 (December 22, 1999).
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Scope of Review

    The products covered by these orders are certain cold-rolled and 
corrosion-resistant carbon steel flat products as described below. 
Although the Harmonized Tariff Schedule of the United States (``HTS'') 
subheadings are provided for convenience and customs purposes, our 
written descriptions of the scope of these proceedings are dispositive.

Certain Cold-Rolled Carbon Steel Flat Products

    The products covered by this order include cold-rolled (cold-
reduced) carbon steel flat-rolled products, of rectangular shape, 
neither clad, plated nor coated with metal, whether or not painted, 
varnished or coated with plastics or other nonmetallic substances, in 
coils (whether or not in successively superimposed layers) and of a 
width of 0.5 inch or greater, or in straight lengths which, if of a 
thickness less than 4.75 millimeters, are of a width of 0.5 inch or 
greater and which measures at least 10 times the thickness or if of a 
thickness of 4.75 millimeters or more are of a width which exceeds 150 
millimeters and measures at least twice the thickness, as currently 
classifiable in the HTS under item numbers 7209.11.0000, 7209.12.0030, 
7209.12.0090, 7209.13.0030, 7209.13.0090, 7209.14.0030, 7209.14.0090, 
7209.21.0000, 7209.22.0000, 7209.23.0000, 7209.24.1000, 7209.24.5000, 
7209.31.0000, 7209.32.0000, 7209.33.0000, 7209.34.0000, 7209.41.0000, 
7209.42.0000, 7209.43.0000, 7209.44.0000, 7209.90.0000, 7210.70.3000, 
7210.90.9000, 7211.30.1030, 7211.30.1090, 7211.30.3000, 7211.30.5000, 
7211.41.1000, 7211.41.3030, 7211.41.3090, 7211.41.5000, 7211.41.7030, 
7211.41.7060, 7211.41.7090, 7211.49.1030, 7211.49.1090, 7211.49.3000, 
7211.49.5030, 7211.49.5060, 7211.49.5090, 7211.90.0000, 7212.40.1000, 
7212.40.5000, 7212.50.0000, 7217.11.1000, 7217.11.2000, 7217.11.3000, 
7217.19.1000, 7217.19.5000, 7217.21.1000, 7217.29.1000, 7217.29.5000, 
7217.31.1000, 7217.39.1000, and 7217.39.5000. Included in this order 
are flat-rolled products of nonrectangular cross-section where such 
cross-section is achieved subsequent to the rolling process (i.e., 
products which have been ``worked after rolling'')--for example, 
products which have been bevelled or rounded at the edges. Excluded 
from this order is certain shadow mask steel, i.e., aluminum-killed, 
cold-rolled steel coil that is open-coil annealed, has a carbon content 
of less than 0.002 percent, is of 0.003 to 0.012 inch in thickness, 15 
to 30 inches in width, and has an ultra flat, isotropic surface.

Certain Corrosion-Resistant Carbon Steel Flat Products

    The merchandise covered by this order includes flat-rolled carbon 
steel products, of rectangular shape, either clad, plated, or coated 
with corrosion-resistant metals such as zinc, aluminum, or zinc-, 
aluminum-, nickel- or iron-based alloys, whether or not corrugated or 
painted, varnished or coated with plastics or other nonmetallic 
substances in addition to the metallic coating, in coils (whether or 
not in successively superimposed layers) and of a width of 0.5 inch or 
greater, or in straight lengths which, if of a thickness less than 4.75 
millimeters, are of a width of 0.5 inch or greater and which measures 
at least 10 times the thickness or if of a thickness of 4.75 
millimeters or more are of a width which exceeds 150 millimeters and 
measures at least twice the thickness, as currently classifiable in the 
HTS under item numbers 7210.31.0000, 7210.39.0000, 7210.41.0000, 
7210.49.0030, 7210.49.0090, 7210.60.0000, 7210.70.6030, 7210.70.6060, 
7210.70.6090, 7210.90.1000, 7210.90.6000, 7210.90.9000, 7212.21.0000, 
7212.29.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000, 7212.30.5000, 
7212.40.1000, 7212.40.5000, 7212.50.0000, 7212.60.0000, 7215.90.1000, 
7215.90.5000, 7217.12.1000, 7217.13.1000, 7217.19.1000, 7217.19.5000, 
7217.22.5000, 7217.23.5000, 7217.29.1000, 7217.29.5000, 7217.32.5000, 
7217.33.5000, 7217.39.1000, and 7217.39.5000. Included in this order 
are flat-rolled products of nonrectangular cross-section where such 
cross-section is achieved subsequent to the rolling process (i.e., 
products which have been ``worked after rolling'')-- for example, 
products which have been bevelled or rounded at the edges. Excluded 
from this order are flat-rolled steel products either plated or coated 
with tin, lead, chromium, chromium oxides, both tin and lead (``terne 
plate''), or both chromium and chromium oxides (``tin-free steel''), 
whether or not painted, varnished or coated with plastics or other 
nonmetallic substances in addition to the metallic coating. Excluded 
from this order are clad products in straight lengths of 0.1875 inch or 
more in composite thickness and of a width which exceeds 150 
millimeters and measures at least twice the thickness. Also excluded 
from this order are certain clad stainless flat-rolled

[[Page 18975]]

products, which are three-layered corrosion-resistant carbon steel 
flat-rolled products less than 4.75 millimeters in composite thickness 
that consist of a carbon steel flat-rolled product clad on both sides 
with stainless steel in a 20%-60%-20% ratio.

Analysis of Comments Received

    All issues raised in the substantive responses by parties to these 
sunset reviews are addressed in the ``Issues and Decision Memorandum'' 
(``Decision Memo'') from Jeffrey A. May, Director, Office of Policy, 
Import Administration, to Robert S. LaRussa, Assistant Secretary for 
Import Administration, dated March 29, 2000, which is hereby adopted by 
this notice. The issues discussed in the attached Decision Memo include 
the likelihood of the continuation or recurrence of a countervailable 
subsidy, the net countervailable subsidy likely to prevail were the 
orders revoked, and the nature of the subsidy. Parties can find a 
complete discussion of all issues raised in these reviews and the 
corresponding recommendations in this public memorandum which is on 
file in the Department's Central Record Units, Room B-099.
    In addition, a complete version of the Decision Memo can be 
accessed directly on the Web at www.ita.doc.gov/import__admin/records/
frn. The paper copy and electronic version of the Decision Memo are 
identical in content.

Final Results of Reviews

    As a result of these reviews, the Department finds that revocation 
of the countervailing duty orders would likely lead to continuation or 
recurrence of a countervailable subsidy at the rates listed below:

------------------------------------------------------------------------
                                                               Net
                                                         countervailable
              Producers/exporters/product                    subsidy
                                                            (percent)
------------------------------------------------------------------------
Cold-rolled carbon steel flat products: All Korean                3.95
 producers/exporters
Corrosion-resistant carbon steel flat products: All               2.69
 Korean producers/exporters
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Nature of the Subsidy

    In the Sunset Policy Bulletin, the Department states that, 
consistent with section 752(a)(6) of the Act, the Department will 
provide to the Commission information concerning the nature of the 
subsidy, and whether the subsidy is a subsidy described in Article 3 or 
Article 6.1 of the Subsidies Agreement. Because the benefits received 
in some of the programs were contingent on exports, these programs fall 
within the definition of an export subsidy under Article 3.1(a) of the 
Subsidies Agreement. The remaining programs, outside the export subsidy 
definition under Article 3.1(a) 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 calculate whether 
the net countervailable subsidy exceeds 5 percent, as measured in 
accordance with Annex IV of the Subsidies Agreement, nor do we believe 
it appropriate to attempt such a calculation in the course of a sunset 
review. Therefore, we are providing the Commission the following 
program descriptions.

(1) Government Equity Infusions in Pohang Iron & Steel Company, Ltd.

    Government equity infusions bestow a countervailable benefit when 
they occur on terms inconsistent with commercial considerations. See 19 
U.S.C. 1677(5)(A)(1988). In the investigation, the Department 
determined subsidy rates of 0.13 percent and 0.07 percent for certain 
cold-rolled carbon steel flat products and certain corrosion-resistant 
carbon steel flat product, respectively.

(2) Loans Inconsistent With Commercial Considerations/Preferential 
Access to Foreign Loans

    This benefit is conferred through a disproportionately high volume 
of loans to the steel industry at rates that are substantially below 
Korea's generally available commercial interest rates. In the 
investigation, the Department determined subsidy rates of 2.94 percent 
and 1.83 percent for certain cold-rolled and certain corrosion-
resistant carbon steel flat products, respectively.\2\
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    \2\ On October 1, 1999, the Court of Appeals for the Federal 
Circuit issued an opinion affirming-in-part and reversing-in-part 
the Department's determination in this investigation. AK Steel Corp. 
et al. v. United States 192 F. 3d 1367 (CAFC Oct. 1, 1999). In that 
litigation, the court reviewed the Department's determination with 
respect to the following programs: foreign and domestic loans and 
government infrastructure assistance for POSCO's integrated steel 
mill at Kwangyang Bay including POSCO's exemption from the payment 
of dockyard fees. The case has been remanded to the Court of 
International Trade. Thus, the CAFC's decision is not yet final and 
conclusive.
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(3) Government Infrastructure Assistance for POSCO's Integrated Steel 
Mill at Kwangyang Bay

    The Korean government's infrastructure development at Kwangyang Bay 
constituted a specific and countervailable subsidy to POSCO because 
POSCO was found to be the predominant user of the infrastructure. In 
the investigation, the Department determined subsidy rates of 0.58 
percent and 0.30 percent for certain cold-rolled and certain corrosion-
resistant carbon steel flat products, respectively.

(4) Dockyard Fees

    In the investigation, we determined that POSCO enjoys the use of 15 
berths in the Kwangyang Bay port facility at no charge. The GOK 
normally charges a user fee, or dockyard fee, for the use of berths at 
all of Korea's ports. Thus, we determined the free use of 15 berths by 
POSCO in the Kwangyang Bay Industrial Estate constitutes a 
countervailable benefit. The Department determined subsidy rates of 
0.01 percent and less than 0.005 percent for certain cold-rolled and 
certain corrosion-resistant carbon steel flat products, respectively.

(5) Reserve for Export Loss

    Under Article 22 of the Tax Exemption and Reduction Control Act 
(TERCL), a corporation engaged in export activities can establish a 
reserve amounting to the lesser of one percent of foreign exchange 
earnings or 50 percent of net income for the respective tax year. This 
program confers a benefit that constitutes an export subsidy because it 
provides a deferment, contingent upon export performance, of direct 
taxes. In the period of investigation, the Department determined that 
Dongbu, POSCO, and Union received benefits under this program. In the 
investigation, the Department determined subsidy rates of 0.03 percent, 
and 0.06 percent for certain cold-rolled and certain corrosion-
resistant carbon steel flat products, respectively.\3\
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    \3\ See Preliminary Affirmative Countervailing Duty 
Determinations and Alignment of Final Countervailing Duty 
Determinations with Final Antidumping Duty Determinations: Certain 
Steel Products from Korea, 57 FR 57761 (December 7, 1992)
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(6) Reserve for Overseas Market Development

    This program operates in a similar fashion to Article 22 of the 
TERCL described above. This program constitutes an export subsidy 
because benefits under the program are contingent upon export 
performance. In the investigation, the Department determined subsidy 
rates of 0.04 percent and 0.09 percent for certain cold-rolled and 
certain corrosion-resistant carbon steel flat products, respectively.

[[Page 18976]]

(7) Unlimited Deduction of Overseas Entertainment Expense

    Under Article 18-2 of the Corporation Tax Act and supporting 
legislation, entertainment expenses for domestic clients and foreign 
clients are eligible to be deducted from taxable income. The amount 
that can be deducted for domestic entertainment expenses is subject to 
a ceiling according to an established formula and depending on the 
amount of any overseas entertainment expenses claimed. There is no cap 
on overseas entertainment expenses. Because entertainment expense 
deductions are unlimited only for overseas clients, this program 
confers benefits which constitute export subsidies, to the extent that 
the overseas expenses claimed are greater than those which would have 
been allowed using the domestic cap formula. In the investigation, the 
Department determined a subsidy rate of less than 0.005 percent for 
both certain cold-rolled and certain corrosion-resistant carbon steel 
flat products.

(7) Reserve for Investment

    This reserve fund program operates in the same manner as reserves 
for export loss and overseas market development described above. 
However, because this program provides benefits only to those 
industries that use certain production facilities outside of 
metropolitan Seoul, this program is a regional subsidy. In the 
investigation, the Department determined subsidy rates of 0.03 percent 
and 0.02 percent for certain cold-rolled and certain corrosion-
resistant carbon steel flat products, respectively.

(8) Duty Drawback

    The Government of Korea establishes an authorized loss rate for raw 
materials used in the manufacture of exported goods. Duty drawback 
includes the amount of duty remitted on the authorized loss or wastage 
for the raw materials. Duty drawback for loss or wastage only becomes 
countervailable when the allowance for this loss or wastage is 
unreasonable or excessive. Here, we found the duty drawback was not 
excessive and, therefore, was not countervailable with regard to POSCO. 
However, Union Steel was found to benefit from this program. The 
Department, therefore, calculated estimated net subsidies of 0.01 
percent for both certain cold-rolled and corrosion carbon steel flat 
products.

(9) Preferential Utility Rates

    In the investigation, the Department determined that 
countervailable benefits were provided to the steel industry with 
respect to certain discounts applied to electricity charges for certain 
firms. The Department determined subsidy rates of 0.03 percent and 0.02 
percent for certain cold-rolled and certain corrosion-resistant carbon 
steel flat product, respectively.

(10) Short-Term Export Financing

    The Department determined that during the period of investigation, 
Pohang Coated Steel Company (``POCOS''), was the only respondent to 
receive short-term loans contingent on exports. The calculated 
estimated net ad valorem subsidies was less than 0.005 percent for both 
certain cold-rolled and corrosion-resistant carbon steel flat products.
    This notice also serves as the only reminder to parties subject to 
administrative protective orders (``APO'') of their responsibility 
concerning the return or destruction of proprietary information 
disclosed under APO in accordance with 19 CFR 351.305 of the 
Department's regulations. Timely notification of the return or 
destruction of APO materials or conversions to judicial protective 
order is hereby requested. Failure to comply with the regulations and 
terms of an APO is a violation which is subject to sanction.
    We are issuing and publishing these determinations and notice in 
accordance with sections section 751(c), 752, and 777(i) of the Act.

    Dated: March 29, 2000.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-8819 Filed 4-7-00; 8:45 am]
BILLING CODE 3510-DS-P