[Federal Register Volume 66, Number 175 (Monday, September 10, 2001)]
[Notices]
[Pages 47008-47014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-22650]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-580-835]


Preliminary Results and Partial Rescission of Countervailing Duty 
Administrative Review: Stainless Steel Sheet and Strip in Coils From 
the Republic of Korea

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 stainless 
steel sheet and strip in coils from the Republic of Korea for the 
period

[[Page 47009]]

November 17, 1998 through December 31, 1999. For information on the net 
subsidy for the reviewed company, please see the ``Preliminary Results 
of Review'' section of this notice. Interested parties are invited to 
comment on these preliminary results. (See the ``Public Comment'' 
section of this notice).

EFFECTIVE DATE: September 10, 2001.

FOR FURTHER INFORMATION CONTACT: Darla Brown or Tipten Troidl, Office 
of AD/CVD Enforcement VI, Import Administration, U.S. Department of 
Commerce, Room 4012, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone (202) 482-2786.

SUPPLEMENTARY INFORMATION:

The 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). In addition, unless otherwise indicated, all citations to the 
Countervailing Duty regulations are references to the provisions 
codified at 19 CFR part 351 (2001) (CVD Regulations).

Background

    On August 6, 1999, the Department published in the Federal Register 
the countervailing duty order on stainless steel sheet and strip in 
coils from the Republic of Korea. See Amended Final Determination: 
Stainless Steel Sheet and Strip in Coils from the Republic of Korea; 
and Notice of Countervailing Duty Orders: Stainless Steel Sheet and 
Strip from France, Italy and the Republic of Korea, 64 FR 42923 (August 
6, 1999). On August 16, 2000, the Department published an opportunity 
to request an administrative review of this countervailing duty order. 
See Antidumping or Countervailing Duty Order, Finding, or Suspended 
Investigation; Opportunity to Request an Administrative Review, 65 FR 
49962 (August 16, 2000). We received a timely request for review of 
Inchon Iron and Steel Co. (Inchon) and Sammi Steel Co. (Sammi), from 
petitioners. On October 2, 2000, the Department published ``Initiation 
of Antidumping and Countervailing Duty Administrative Reviews and 
Request for Revocation in Part'' of the countervailing duty order on 
stainless steel sheet and strip in coils from the Republic of Korea, 
covering the period of review (POR) November 17, 1998 through December 
31, 1999. See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Requests for Rescission in Part with August 
Anniversary Dates, 65 FR 58735 (October 2, 2000).
    On September 15, 2000, Sammi provided the Department with a 
certification stating that neither it nor its affiliates exported the 
subject merchandise to the United States during the POR. Because there 
were no shipments of exports to the United States of the subject 
merchandise, the Department is preliminarily rescinding this 
administrative review with respect to Sammi.
    In accordance with 19 CFR 351.213(b), this review covers only those 
producers or exporters for which a review was specifically requested. 
The company subject to this review is Inchon. This review covers 14 
programs.

Scope of Review

    For purposes of this review, 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 review is classified in the 
Harmonized Tariff Schedule of the United States (HTSUS) at 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, 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 HTS subheadings are provided for convenience and Customs 
purposes, the Department's written description of the merchandise is 
dispositive.
    Excluded from the scope of this order 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).
    The Department has determined that certain specialty stainless 
steel products are also excluded from the scope of this order. 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

[[Page 47010]]

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 order. 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 between 0.002 and 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 order. 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\
    Certain electrical resistance alloy steel is also excluded from the 
scope of this order. 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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    \1\ ``Arnokrome III'' is a trademark of the Arnold Engineering 
Company.
    \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 order. 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\
    Finally, three specialty stainless steels typically used in certain 
industrial blades and surgical and medical instruments are also 
excluded from the scope of this order. 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 ASTM grade 440F, 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 HI-C.'' 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 no more than 
0.020 percent. This steel has a carbide density on average of 100 
carbide particles per square micron. 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.''

Subsidies Valuation Information

    Benchmarks for Long-term Loans: During the POR, Inchon had both 
won-denominated and foreign currency-denominated long-term loans 
outstanding which had been received from government-owned banks, Korean 
commercial banks, overseas banks, and foreign banks with branches in 
Korea.
    In the Final Negative Countervailing Duty Determination: Stainless 
Steel Plate in Coils from the Republic of Korea, 64 FR 15530 (March 31, 
1999) (Plate in Coils) and 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), the 
Department, for the first time, examined the Government of Korea 
(GOK)'s direction of credit policies for the period 1992 through 1997. 
Based on new information gathered during the course of those 
investigations, the Department determined that the GOK controlled 
directly or indirectly the lending practices of most sources of credit 
in Korea between 1992 and 1997. In the Final Affirmative Countervailing 
Duty Determination: Certain Cut-to Length Carbon-Quality Steel Plate 
from the Republic of Korea, 64 FR 73176, 73180 (December 29, 1999) (CTL 
Plate) the Department determined that the GOK still exercised 
substantial control over lending institutions in Korea during 1998. In 
addition, because no new factual information has been placed on the 
record, we preliminarily find direction of credit countervailable 
through 1999, which is the POR of this current administrative review.
    Based on our findings on this issue in prior investigations, we are 
using the following benchmarks to calculate the subsidies attributable 
to respondents' long-term loans obtained in the years 1992 through 
1999:
    (1) For countervailable, foreign-currency denominated loans, we 
used, where available, the company-specific weighted-average U.S. 
dollar-denominated interest rates on the company's loans from foreign 
bank branches in Korea.
    (2) For countervailable won-denominated long-term loans, where 
available, we used the company-specific corporate bond rate on the 
company's public and private bonds. We note that this benchmark is 
based on the decision in Plate in Coils in which we determined that the 
GOK did not control the Korean domestic bond market after 1991, and 
that domestic bonds may serve as an appropriate

[[Page 47011]]

benchmark interest rate (see Plate in Coils, 64 FR at 15531). Where 
unavailable, we used the national average of the yields on three-year 
corporate bonds, as reported by the Bank of Korea (BOK). We note that 
the use of the three-year corporate bond rate from the BOK follows the 
approach taken in Plate in Coils, in which we determined that, absent 
company-specific interest rate information, the corporate bond rate is 
the best indicator of a market rate for won-denominated long-term loans 
in Korea (see Id.).
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    \3\ ``Durphynox 17'' is a trademark of Imphy, S.A.
    \4\ This list of uses is illustrative and provided for 
descriptive purposes only.
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    Treatment of Subsidies Received by Trading Companies: We required 
responses from trading companies because the subject merchandise may be 
subsidized by means of subsidies provided to both the producer and the 
exporter of the subject merchandise. Subsidies conferred on the 
production and exportation of subject merchandise benefit the subject 
merchandise even if the merchandise is exported to the United States by 
a trading company rather than by the producer itself. Therefore, the 
Department calculates countervailable subsidy rates on the subject 
merchandise by cumulating subsidies provided to the producer with those 
provided to the exporter. During the POR, Inchon exported subject 
merchandise to the United States through a trading company, Hyundai 
Corporation (Hyundai). We required the trading company to provide a 
response to the Department with respect to the export subsidies under 
review.
    Under section 351.107(b)(1) of the Department's regulations, when 
the subject merchandise is exported to the United States by a company 
that is not the producer of the merchandise, the Department may 
establish a ``combination'' rate for each combination of an exporter 
and supplying producer. However, as noted in the Preamble to the Final 
Regulations, there may be situations in which it is not appropriate or 
practicable to establish combination rates when the subject merchandise 
is exported by a trading company. See Antidumping Duties; 
Countervailing Duties; Final rule, 62 FR 27296, 27303 (May 19, 1997). 
In such situations, the Department will make exceptions to its 
combination rate approach on a case-by-case basis. See Id.
    Preliminarily, we determined that it is not appropriate to 
establish combination rates. This determination is based on two main 
facts: first, the majority of the subsidies conferred upon the subject 
merchandise were received by the producer; second, the level of 
subsidies conferred upon the individual trading company with regard to 
the subject merchandise is insignificant.
    Instead, we have continued to calculate a rate for the producer of 
subject merchandise that includes the subsidies received by the trading 
company. To reflect those subsidies that are received by the exporter 
of the subject merchandise in the calculated ad valorem subsidy rate, 
we calculated the benefit attributable to the subject merchandise. We 
then factored that amount into the calculated subsidy rate for the 
relevant producer. In each case, we determined the benefit received by 
the trading company for each export subsidy, and weighted the average 
of the benefit amounts by the relative share of the trading company's 
value of exports of the subject merchandise to the United States. These 
calculated ad valorem subsidies were then added to the subsidies 
calculated for the producer of subject merchandise. Thus, for each of 
the programs below, the listed ad valorem subsidy rate includes 
countervailable subsidies received by both the producer and the trading 
company.

I. Programs Conferring Subsidies

A. The GOK's Direction of Credit
    We determined in the Final Affirmative Countervailing Duty 
Determination: Structural Steel Beams from the Republic of Korea, 65 FR 
41051 (July 3, 2000) (H-beams), that the provision of long-term loans 
via the GOK's direction of credit policies was specific to the Korean 
steel industry through 1991 within the meaning of section 
771(5A)(D)(iii) of the Act. In H-beams, we also determined that the 
provision of these long-term loans through 1991 resulted in a financial 
contribution, within the meaning of sections 771(5)(E)(ii) and 
771(5)(D)(i) of the Act, respectively.
    In H-beams, the Department also determined that the GOK continued 
to control directly and indirectly the lending practices of most 
sources of credit in Korea through 1997. The Department determined in 
H-beams that the GOK's regulated credit from domestic commercial banks 
and government-controlled banks such as the Korea Development Bank 
(KDB) was specific to the steel industry. Further the Department 
determined in this investigation that these regulated loans conferred a 
benefit on the producer of the subject merchandise to the extent that 
the interest rates on these loans were less than the interest rates on 
comparable commercial loans within the meaning of section 771(5)(E)(ii) 
of the Act. In the final determination of CTL Plate, the Department 
determined that the GOK continued to control, directly and indirectly, 
the lending practices of sources of credit in Korea in 1998. See CTL 
Plate, 64 FR at 73180.
    We provided the GOK with the opportunity to present new factual 
information concerning the government's credit policies through 1999, 
the POR, which we would consider along with our finding in the prior 
investigations. The GOK did not provide any new factual information on 
this program that would lead us to change our determination in the 
current administrative review. Therefore, we continue to find lending 
from domestic banks and from government-owned banks such as the KDB to 
be countervailable.
    With respect to foreign sources of credit, in Plate in Coils and 
Sheet and Strip, we determined that access to foreign currency loans 
from Korean branches of foreign banks (i.e., branches of U.S.-owned 
banks operating in Korea) did not confer a benefit to the recipient as 
defined by section 771(5)(E)(ii) of the Act, and, as such, credit 
received by the respondent from these sources was found not 
countervailable. This determination was based upon the fact that credit 
from Korean branches of foreign banks was not subject to the 
government's control and direction. Thus, in Plate in Coils and Sheet 
and Strip, we determined that respondent's loans from these banks could 
serve as an appropriate benchmark to establish whether access to 
regulated foreign sources of credit conferred a benefit on respondents. 
As such, lending from this source continues to be not countervailable, 
and, where available, loans from Korean branches of foreign banks 
continue to serve as an appropriate benchmark to establish whether 
access to regulated foreign currency loans from domestic banks confers 
a benefit upon respondents.
    Inchon received long-term fixed and variable rate loans from GOK 
owned/controlled institutions during the years 1993 through 1999 that 
were outstanding during the POR. In order to determine whether these 
GOK directed loans conferred a benefit, we compared the interest rates 
on the directed loans to the benchmark interest rates detailed in the 
``Subsidies Valuation Information'' section of this notice.
    The repayment schedules of these loans did not remain constant 
during the lives of the respective loans. Therefore, in these 
preliminary results, we have calculated the benefit from these loans 
using the Department's variable rate methodology. We first derived the 
benefit amounts attributable

[[Page 47012]]

to the POR for the company's fixed and variable rate loans, we then 
summed the benefit amounts from the loans and divided the total benefit 
by Inchon's total f.o.b. sales value during the POR. On this basis, we 
preliminarily determine the net countervailable subsidy to be 0.06 
percent ad valorem for Inchon.
B. Article 17 of the Tax Exemption and Reduction Control Act (TERCL): 
Reserve for Overseas Market Development
    Under Article 17 of the TERCL, a domestic person engaged in a 
foreign trade business is allowed to establish a reserve fund equal to 
one percent of its foreign exchange earnings from its export business 
for the respective tax year. Expenses incurred in developing overseas 
markets may be offset by returning from the reserve, to the income 
account, an amount equivalent to the expense. Any part of the fund that 
is not placed in the income account for the purpose of offsetting 
overseas market development expenses must be returned to the income 
account over a three-year period, after a one-year grace period. The 
balance of this reserve fund is not subject to corporate income tax 
during the grace period. However, all of the money in the reserve is 
eventually reported as income and subject to corporate tax either when 
it offsets export losses or when the grace period expires. The deferral 
of taxes owed amounts to an interest-free loan equal to the company's 
tax savings. This program is only available to exporters. Although 
Inchon did not use this program during the POR, it exported subject 
merchandise through Hyundai, which used this program during the POR.
    In CTL Plate, 64 FR at 73181, we determined that the Reserve for 
Overseas Market Development program constituted a countervailable 
export subsidy under section 771(5A)(B) of the Act because use of the 
program is contingent upon export performance. Respondents have not 
provided any new information to warrant reconsideration of this 
determination. Therefore, we continue to find this program 
countervailable.
    To determine the benefit conferred by this program, we calculated 
the tax savings by multiplying the balance amount of the reserve as of 
December 31, 1999, by the corporate tax rate for 1999. We treated the 
tax savings on these funds as a short-term interest-free loan. 
Accordingly, to determine the benefit, the amount of tax savings was 
multiplied by the Hyundai's weighted-average interest rate for short-
term won-denominated commercial loans for the POR. Using the 
methodology for calculating subsidies received by trading companies, 
which also is detailed in the ``Subsidies Valuation Information'' 
section of this notice, we calculate a countervailable subsidy of less 
than 0.005 percent ad valorem for Inchon.
C. Electricity Discounts Under the Requested Load Adjustment Program 
(RLA)
    With respect to the Requested Load Adjustment (RLA) program, the 
GOK introduced this discount in 1990, to address emergencies in KEPCO's 
ability to supply electricity. Under this program, customers with a 
contract demand of 5,000 kW or more, who can curtail their maximum 
demand by 20 percent or suppress their maximum demand by 3,000 kW or 
more, are eligible to enter into a RLA contract with KEPCO. Customers 
who choose to participate in this program must reduce their load upon 
KEPCO's request, or pay a surcharge to KEPCO.
    Customers can apply for this program between May 1 and May 15 of 
each year. If KEPCO finds the application in order, KEPCO and the 
customer enter into a contract with respect to the RLA discount. The 
RLA discount is provided based upon a contract for two months, normally 
July and August. Under this program, a basic discount of 440 won per kW 
is granted between July 1 and August 31, regardless of whether KEPCO 
makes a request for a customer to reduce its load. During the POR, 
KEPCO granted Inchon electricity discounts under this program.
    In Sheet and Strip, the Department found this program 
countervailable under section 771(5A)(D)(iii)(I) of the Act because the 
discounts were distributed to a limited number of customers (see Sheet 
and Strip, 64 FR at 30646). Respondents have not provided any new 
information to warrant reconsideration of this determination. 
Therefore, we continue to find this program countervailable.
    Because the electricity discounts provide recurring benefits, we 
have expensed the benefit from this program in the year of receipt. To 
measure the benefit from this program, we summed the electricity 
discounts which Inchon received from KEPCO under the RLA program during 
the POR. We then divided that amount by Inchon's total f.o.b. sales 
value for 1999. On this basis, we determine a net countervailable 
subsidy of less than 0.005 percent ad valorem for Inchon.
D. POSCO's Provision of Steel Inputs for Less Than Adequate 
Remuneration
    POSCO is the only Korean producer of hot-rolled stainless steel 
coil (hot-rolled coil), which is the main input into the subject 
merchandise. During the POR, POSCO sold hot-rolled coil to Inchon for 
products that were consumed in Korea, as well as hot-rolled coil to 
produce exports of the subject merchandise. In CTL Plate, the 
Department determined that the GOK through its ownership and control of 
POSCO set prices of steel inputs used by the Korean steel industry at 
prices at less than adequate remuneration (see CTL Plate, 64 FR at 
73184). Thus, in CTL Plate, the Department found this program 
countervailable.
    Respondent claims that in May 1999, POSCO eliminated it's two-
tiered pricing system and established unit prices applicable for sales 
to all customers. Prior to that period, POSCO set different prices 
depending on whether the input was to be used to produce products for 
domestic consumption or export consumption. However, this change in 
pricing policies does not impact the determination made by the 
Department in CTL Plate (see id. at 73184-85). In CTL Plate, the 
Department did not determine that the difference in pricing between 
domestic and export consumption constituted a countervailable subsidy. 
Instead, the Department found that the prices charged by POSCO were for 
less than adequate remuneration (see id. at 73185). Therefore, the fact 
that POSCO now only charges one price to the Korean steel industry for 
steel inputs does not affect the determination as to whether a good or 
service has been provided for less than adequate remuneration. The 
Department must still examine the prices charged to Inchon by POSCO for 
hot roiled coil to determine whether the prices are still for less than 
adequate remuneration.
    Under section 351.511(a)(2) of the CVD Regulations, the adequacy of 
remuneration is to be determined by comparing the government price to a 
market determined price based on actual transactions in the country in 
question. Such prices could include prices stemming from actual 
transactions between private parties, actual imports, or, in certain 
circumstances, actual sales from competitively run government auctions. 
During the POR, Inchon imported hot-rolled coil; therefore, we are 
using actual imported prices of hot-rolled coil as our basis of 
comparison to the price at which POSCO sold hot-rolled coil. Based upon 
this comparison, we

[[Page 47013]]

preliminarily determined that POSCO sold hot-rolled coil to Inchon at 
less than adequate remuneration. As a result, a benefit is conferred to 
Inchon under section 771(5)(E)(iv); therefore, we continue to find this 
program countervailable.
    To determine the value of the benefit under this program, we 
compared the quarterly delivered weighted-average price charged by 
POSCO to Inchon for hot-rolled coils to the quarterly delivered 
weighted-average price Inchon paid for imported hot-rolled coil, by 
grade of hot-rolled coil, making due allowance for factors affecting 
comparability. We then multiplied this price difference by the quantity 
of hot-rolled coil that Inchon purchased from POSCO during the POR. We 
then divided the amount of the price savings by the f.o.b. sales value 
of merchandise produced using hot-rolled coils. On this basis, we 
determine that Inchon received a countervailable subsidy of 2.87 
percent ad valorem from this program during the POR.
    Respondents state that after the POR, on September 29, 2000, the 
privatization of POSCO was completed. As a result, they claim that this 
privatization of POSCO qualifies as a program-wide change pursuant to 
section 351.526 of the CVD Regulations. Under this regulation, the 
Department may adjust the CVD cash deposit rate to account for changes 
in the administration of a program under very specific circumstances. 
In accordance with Section 351.526 of the CVD Regulations, we 
preliminarily find that the privatization or a change in ownership of 
POSCO does not qualify as a program-wide change. If requested in any 
subsequent administrative review, we will examine the effect of POSCO's 
alleged privatization on this program.

II. Programs Determined To Be Not Used

A. Article 16 of the TERCL: Reserve for Export Loss
    B. Investment Tax Credits under Article 10, 18, 25, 26, 27 and 71 
of TERCL
    C. Loans from the National Agricultural Cooperation Federation
    D. Tax Incentives for Highly-Advanced Technology Businesses under 
the Foreign Investment and Foreign Capital Inducement Act
    E. Reserve for Investment under Article 43-5 of TERCL
    F. Export Insurance Rates Provided by the Korean Export Insurance 
Corporation
    G. Special Depreciation of Assets on Foreign Exchange Earnings
    H. Excessive Duty Drawback
    I. Short-Term Export Financing
    J. Export Industry Facility Loans

Preliminary Results of Review

    In accordance with 19 CFR 351.221(b)(4)(i), we calculated an 
individual subsidy rate for the producer/exporter subject to this 
administrative review. For the period November 17, 1998, through 
December 31, 1999, we preliminarily determine the net subsidy for 
Inchon to be 2.93 percent ad valorem.
    If the final results of this review remain the same as these 
preliminary results, the Department intends to instruct Customs to 
assess countervailing duties as indicated above. The Department also 
intends to instruct Customs to collect cash deposits of estimated 
countervailing duties as indicated above of the f.o.b. invoice price on 
all shipments of the subject merchandise from reviewed companies, 
entered, or withdrawn from warehouse, for consumption on or after the 
date of publication of the final results of this review.
    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. See Federal-Mogul Corporation and 
The Torrington Company v. United States, 822 F.Supp. 782 (CIT 1993) and 
Floral Trade Council v. United States, 822 F.Supp. 766 (CIT 1993) 
(interpreting 19 CFR 353.22(e), the antidumping regulation on automatic 
assessment, which is identical to 19 CFR 351.212(c)(ii)(2). 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. 
If such a review has not been conducted, the rate established in the 
most recently completed administrative proceeding pursuant to the 
statutory provisions that were in effect prior to the URAA amendments 
is applicable. See Final Affirmative Countervailing Duty Determination: 
Stainless Steel Sheet and Strip in Coils from the Republic of Korea, 64 
FR 30636 (June 8, 1999). 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 November 17, 1998 through 
December 31, 1999, 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 19 CFR 351.224(b), the Department will disclose to 
parties to the proceeding any calculations performed in connection with 
these preliminary results within five days after the date of the public 
announcement of this notice. Pursuant to 19 CFR 351.309, interested 
parties may submit written comments in response to these preliminary 
results. Unless otherwise indicated by the Department, case briefs must 
be submitted within 30 days after the date of publication of this 
notice, and rebuttal briefs, limited to arguments raised in case 
briefs, must be submitted no later than five days after the time limit 
for filing case briefs, unless otherwise specified by the Department. 
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. Parties submitting case and/or rebuttal briefs 
are requested to provide the Department copies of the public version on 
disk. Case and rebuttal briefs must be served on interested parties in 
accordance with 19 CFR 351.303(f). Also, pursuant to 19 CFR 351.310, 
within 30 days of the date of publication of this notice, interested 
parties may request a public hearing on arguments to be raised in the 
case and rebuttal briefs. Unless the Secretary specifies otherwise, the 
hearing, if requested, will be held two days after the date for 
submission of rebuttal briefs, that is, thirty-seven days after the 
date of publication of these preliminary results.

[[Page 47014]]

    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 is issued and published in accordance 
with sections 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 1675(a)(1) 
and 19 U.S.C. 1677f(i)(1)).

    Dated: August 31, 2001.
Bernard T. Carreau,
Acting Assistant Secretary for Import Administration.
[FR Doc. 01-22650 Filed 9-7-01; 8:45 am]
BILLING CODE 3510-DS-P