[Federal Register Volume 67, Number 91 (Friday, May 10, 2002)]
[Notices]
[Pages 31774-31780]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-11768]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-427-815]


Stainless Steel Sheet and Strip in Coils from France: Preliminary 
Results of Countervailing Duty Administrative Review

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

ACTION: Notice of Preliminary Results of Countervailing Duty 
Administrative Review.

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SUMMARY: The Department of Commerce is conducting an administrative 
review of the countervailing duty order on stainless steel sheet and 
strip in coils from France for the period January 1, 2000, through 
December 31, 2000. We have preliminarily determined that Ugine SA, the 
sole producer/exporter covered by this review, has received 
countervailable subsidies during the period of review.
    Interested parties are invited to comment on these preliminary 
results.

EFFECTIVE DATE: May 10, 2002.

FOR FURTHER INFORMATION CONTACT: Suresh Maniam, Group I, Office 1, 
Import Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone (202) 482-
0176.

SUPPLEMENTARY INFORMATION:

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''). Unless otherwise indicated, all citations to the 
Department's regulations are to the regulations codified at 19 CFR Part 
351 (2001).

Case History

    The Department published the countervailing duty order on stainless 
steel sheet and strip in coils from France on August 6, 1999 (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 in Coils from France, Italy, and the Republic of 
Korea, 64 FR 42923 (August 6, 1999)). On August 1, 2001, the Department 
published a notice of ``Opportunity to Request Administrative Review'' 
of this countervailing duty order for calendar year 2000 (Notice of 
Opportunity to Request Administrative Review of Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation, 66 FR 
39729). We received a review request from Ugine SA (``Ugine'') and we 
initiated this review on October 1, 2001 (Initiation of Antidumping and 
Countervailing Duty Administrative Reviews and Requests for Revocation 
in Part, 66 FR 49924 (October 1, 2001)).
    On October 26, 2001, we issued countervailing duty questionnaires 
to the Commission of the European Union (``EC''), the Government of 
France (``GOF''), and Ugine. We received responses to our 
questionnaires on December 20, 2001 (EC), and January 8, 2002 (GOF and 
Ugine). On February 25, 2002, the petitioners, Allegheny Ludlum 
Corporation, AK Steel, Inc., North American Stainless, United 
Steelworkers of America, AFL-CIO/CLC, Butler Armco Independent Union, 
and Zanesville Armco Independent Organization, filed comments on the 
responses received from the GOF and Ugine. We issued a supplemental 
questionnaire to Ugine on March 5, 2002, and received Ugine's responses 
on April 2, and April 22, 2002.

Scope of the Review

    The products covered by this countervailing duty order 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 covered by this order is currently classifiable in 
the Harmonized Tariff Schedule of the United States (``HTSUS'') at the 
following 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 HTSUS subheadings are provided for convenience and 
customs purposes, the Department's written description of the 
merchandise under investigation 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).
    Also excluded from the scope of this order are:
    Flapper Valve Steel: 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

[[Page 31775]]

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.
    Suspension Foil: Suspension foil is 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 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: 
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 less than 0.002 or greater than 
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: 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\
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    \1\ ``Arnokrome III'' is a trademark of the Arnold Engineering 
Company.
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    Certain Electrical Resistance Alloy Steel: 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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    \2\ ``Gilphy 36'' is a trademark of Imphy, S.A.
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    Certain Martensitic Precipitation-hardenable Stainless Steel: 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\
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    \3\ ``Durphynox 17''is a trademark of Imphy, S.A.
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    Three Specialty Stainless Steels Typically Used in Certain 
Industrial Blades and Surgical and Medical Instruments: 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 AISI 
grade 420 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 Mo.'' 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 100 square microns. 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.''\5\
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    \4\ This list of uses is illustrative and provided for 
descriptive purposes only.
    \5\ ``GIN4 Mo,''``GIN5'' and ``GIN6'' are the proprietary grades 
of Hitachi Metals America, Ltd.
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Period of Review

    The period of review (``POR'') for which we are measuring subsidies 
is January 1, 2000, through December 31, 2000.

Attribution of Subsidies

    Ugine has filed its response on behalf of Usinor and all of 
Usinor's affiliates involved in the manufacture, production or 
exportation of the subject merchandise. These affiliates are: Ugine SA, 
Imphy Ugine Precision, Ugine France Service, Sollac Mediterrannee, 
Usinor Packaging, Sollac Lorraine, Sollac Atlantique, CARLAM, G. Fer, 
IRSID, and Usinor Stainless. Usinor holds a majority interest in all of 
these companies. Therefore, in accordance with 19 CFR 
351.525(b)(6)(iii), we have preliminarily attributed subsidies received 
by these companies to the total sales by Usinor of French-produced 
merchandise.

Changes in Ownership

    On February 2, 2000, the U.S. Court of Appeals for the Federal 
Circuit (``CAFC'') in Delverde Srl v. United States, 202 F.3d 1360, 
1365 (Feb. 2, 2000), reh'g en banc denied, 2000 U.S. App. LEXIS 15215 
(June 20, 2000) (``Delverde III''), rejected the Department's change-
in-ownership methodology as explained in the General Issues 
Appendix\6\. The CAFC held that ``the Tariff Act, as amended, does not 
allow Commerce to presume conclusively that the subsidies granted to 
the former owner of Delverde's

[[Page 31776]]

corporate assets automatically 'passed through' to Delverde following 
the sale. Rather, the Tariff Act requires that Commerce make such a 
determination by examining the particular facts and circumstances of 
the sale and determining whether Delverde directly or indirectly 
received both a financial contribution and benefit from the 
government.'' Id. at 1364.
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    \6\ Final Affirmative Countervailing Duty Determination: Certain 
Steel Products from Austria, 58 FR 37217, 37225 (July 9, 1993).
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    Pursuant to the CAFC's finding, the Department developed a new 
change-in-ownership methodology, first announced in a remand 
determination on December 4, 2000. This new methodology was also 
applied in remand determinations resulting from remand orders in 
Allegheny-Ludlum Corp., et al v. United States, No. 99-09-00566 
(``Allegheny-Ludlum I'') and GTS Industries S.A. v. United States, No. 
00-03-00118 (``GTS I''). (See Final Results of Redetermination Pursuant 
to Court Remand: Allegheny-Ludlum Corp., et al v. United States, No. 
99-09-00566 (December 20, 2000) and Final Results of Redetermination 
Pursuant to Court Remand: GTS Industries S.A. v. United States, No. 00-
03-00118 (December 22, 2000).) In Allegheny-Ludlum I, the CAFC was 
reviewing the final determination which gave rise to the countervailing 
duty order covered by this review. In both of the cited remand 
determinations, the Department examined the privatization of Usinor and 
found that the pre-privatization subsidies continued to benefit subject 
merchandise exported to the United States after Usinor's privatization.
    Ugine argues that in Allegheny Ludlum Corp. v. United States, Slip 
Op. 02-01 (Ct. Int'l Trade Jan. 4, 2002) (``Allegheny Ludlum II''), the 
Court of International Trade (``CIT'') rejected as unlawful the change-
in-ownership test applied by the Department in the Allegheny Ludlum I 
remand determination. We note, however, that the CIT has remanded this 
issue to the Department again in Allegheny Ludlum II and that the 
results of our redetermination have not yet been filed with the CIT. 
Consequently, the CIT's ruling in Allegheny Ludlum II is not final. 
Thus, we have continued to apply the same change-in-ownership 
methodology that we employed in the Allegheny Ludlum I remand 
determination in these preliminary results.
    The first step under this methodology is to determine whether the 
legal person (entity) to which the subsidies were given is, in fact, 
distinct from the legal person that produced the subject merchandise 
exported to the United States. If we determine the two persons are 
distinct, we then analyze whether a subsidy has been provided to the 
purchasing entity as a result of the change-in-ownership transaction. 
If we find, however, that the original subsidy recipient and the 
current producer/exporter are the same person, then that person 
benefits from the original subsidies, and its exports are subject to 
countervailing duties to offset those subsidies. In other words, we 
will determine that a ``financial contribution'' and a ``benefit'' have 
been received by the ``person'' under investigation. Assuming that the 
original subsidy has not been fully amortized under the Department's 
normal allocation methodology as of the POI, the Department would then 
continue to countervail the remaining benefits of that subsidy.
    In making the ``person'' determination, where appropriate and 
applicable, we analyze factors such as (1) continuity of general 
business operations, including whether the successor holds itself out 
as the continuation of the previous enterprise, as may be indicated, 
for example, by use of the same name, (2) continuity of production 
facilities, (3) continuity of assets and liabilities, and (4) retention 
of personnel. No single factor will necessarily provide a dispositive 
indication of any change in the entity under analysis. Instead, the 
Department will generally consider the post-sale person to be the same 
person as the pre-sale person if, based on the totality of the factors 
considered, we determine the entity in question can be considered a 
continuous business entity because it was operated in substantially the 
same manner before and after the change in ownership.

Usinor's Privatization

    Up until the time of Usinor's privatization, Usinor was owned 
(directly or indirectly) by the GOF. Usinor was privatized beginning in 
July 1995, when the GOF and Clindus offered the vast majority of their 
shares in the company for sale. Clindus was a subsidiary of Credit 
Lyonnais, which at that time was controlled by the GOF. After the 
privatization and, in particular, by the end of calendar year 1997, 
82.28 percent of Usinor's shares were held by private shareholders who 
could trade them freely. Usinor's employees owned 5.16 percent of 
Usinor's shares; Clindus, 2.5 percent; and, the GOF, 0.93 percent. The 
remaining 14.29 percent of Usinor's shares were held by the so-called 
``Stable Shareholders.'' According to Usinor's 2000 annual report, the 
government-owned Electricite de France continues to own 3.6 percent of 
Usinor's shares.
    In analyzing whether the producer of merchandise subject to this 
investigation is the same business entity as pre-privatization Usinor, 
we have examined whether Usinor continued the same general business 
operations, retained production facilities, assets and liabilities, and 
retained the personnel of the pre-privatization Usinor. Based on our 
analysis, we have concluded that the privatized Usinor is, for all 
intents and purposes, the same person as the GOF-owned steel producer 
of the same name which existed prior to the privatization. 
Consequently, the subsidies bestowed on Usinor prior to its 1995 
privatization are attributable to present-day Usinor and continue to 
benefit the subject merchandise during the POR.

1. Continuity of General Business Operations

    Usinor produced the same products and remained the same corporation 
at least since the late 1980s. In 1987, Usinor became the holding 
company for the French steel groups, Usinor and Sacilor (the GOF had 
majority ownership of both Usinor and Sacilor since 1981). Usinor's 
principal businesses covered flat products, stainless steel and alloys, 
and specialty products. In 1994, these three product groups were 
produced by three subsidiaries: Sollac, Ugine and Aster (respectively). 
This same structure continued after Usinor's privatization in 1995. 
Usinor's organizational chart during the period of investigation shows 
the same three major products being produced by the same three 
subsidiaries.
    In 1994 (prior to the privatization), flat products contributed 55 
percent of consolidated sales, while stainless and specialty products 
contributed 20 and 18 percent, respectively. In the years following 
privatization (1995 -2000), flat carbon steels continued to contribute 
49 - 58 percent of Usinor's consolidated net sales. Sales of stainless 
and alloy, and specialty steel accounted for 23 - 25 percent, and 19 - 
21 percent, respectively, during the years 1995 - 1997. Since then, 
sales of the stainless, alloy, and specialty steel have been combined 
in Usinor's annual report and a separate category has been reported for 
``processing and distribution.'' The combined sales of stainless, alloy 
and specialty steel ranged from 21 - 28 percent of Usinor's 
consolidated net sales over the period 1998 - 2000, while processing 
and distribution ranged from 6 - 18 percent over the same period. In

[[Page 31777]]

1999, Usinor divested itself of its specialty steels business.
    We have also examined whether post-privatization Usinor held itself 
out as the continuation of the previous enterprise (e.g., by retaining 
the same name). In this instance, Usinor retained its same name and 
there is no indication that the privatized company held itself out as 
anything other than a continuation of pre-privatization Usinor.
    The continuity of Usinor's business operations is also reflected in 
Usinor's customer base. Prior to privatization, the automobile industry 
was a principal purchaser of Usinor's output, accounting for 
approximately 30 percent of Usinor's sales in 1994. In 1997 and 2000, 
the automobile industry was still Usinor's major customer (36 percent 
of Usinor's sales in 1997 and 38 percent in 2000). The construction 
industry has continued as the second largest purchaser: 26 percent in 
1994, 23 percent in 1997, and 15 percent in 2000.

2. Continuity of Production Facilities

    Neither product lines nor production capacity changed as a result 
of the privatization, except those changes that occurred in an ongoing 
manner in the ordinary course of business. No facilities or production 
lines were added or eliminated specifically as a result of the sale. As 
is clear from a comparison of the Prospectus for the 1995 privatization 
and Usinor's 1997 Annual Report, steel production facilities have 
remained intact. The company has continued to focus on an ``all steel'' 
strategy, engaging in all aspects of the steel production process and 
produces a wide variety of steel products. Finally, Usinor's steel 
production facilities did not change their physical locations.

3. Continuity of Assets and Liabilities

    Usinor was sold intact, with all of its assets and liabilities. 
While the GOF continued to own a small percentage of Usinor's shares, 
there is no indication that it retained any of Usinor's assets or 
liabilities.

4. Retention of Personnel

    Usinor's Articles of Incorporation changed as a result of the 
privatization, and the new Articles of Incorporation specified new 
procedures for electing the Board of Directors. New directors were 
elected to the Board under the new procedures. However, Usinor's 
Chairman and Chief Executive Officer remained the same before and after 
the privatization. Similarly, Usinor's workforce did not change.
    Therefore, based on the facts and our analysis of a variety of 
relevant factors, once privatized, Usinor continued to operate, for all 
intents and purposes, as the same person that existed prior to the 
privatization and, thus, the pre-privatization subsidies continued to 
benefit Usinor even under private ownership.

Use of Facts Available

    Sections 776(a)(2)(A) and (B) of the Act require the use of facts 
available when an interested party withholds information requested by 
the Department, or when an interested party fails to provide 
information required in a timely manner and in the format requested. In 
selecting from among facts available, section 776(b) of the Act 
provides that the Department may use an inference adverse to the 
interests of a party if the Department determines that the party has 
failed to cooperate to the best of its ability. Such adverse inference 
may include reliance on information derived from (1) the petition; (2) 
a final determination in a countervailing duty or an antidumping duty 
investigation; (3) any previous administrative review, new shipper 
review, expedited antidumping review, section 753 review, or section 
762 review; or (4) any other information placed on the record. See 
section 776(b) of the Act; see also, 19 CFR 351.308(a), (b), and (c).
    Sections 782(d) and 782(e) of the Act require the Department to 
inform a respondent if there are deficiencies in its responses and 
allow it a reasonable time to correct these deficiencies before the 
Department applies facts available. Even if the information provided is 
deficient, if it is usable without undue difficulty, is timely, is 
verifiable, can serve as a reliable basis for reaching our 
determination, and if the party has cooperated to the best of its 
ability in providing responses to the Department's questionnaires, 
section 782(e) of the Act directs the Department not to decline to 
consider deficient submissions.
    In this proceeding, the GOF did not provide information regarding 
the specificity of benefits under certain programs included under 
Investment/Operating Subsidies reported by Usinor. Instead, the GOF 
responded, ``this question is not readily answerable given the 
multiplicity of programs involved. The GOF will undertake to provide 
responsive information at verification.'' See GOF Questionnaire 
Response, dated January 8, 2002, at II-9. Similarly, the GOF was asked 
to provide this information in the investigation segment of this 
proceeding and elected not to do so. (See Final Affirmative 
Countervailing Duty Determination: Stainless Steel Sheet and Strip in 
Coils from France, 64 FR 30774, 30779 (June 8, 1999) (``SSSS from 
France'').) Thus, the GOF is aware of the specific information needed 
by the Department and apparently possesses responsive information, but 
has declined to provide it in response to our questionnaires.
    In these circumstances, the Department has no alternative but to 
apply facts available, pursuant to section 776(a) of the Act. Further, 
we preliminarily determine that an adverse inference is warranted in 
applying facts available because the GOF elected not to provide 
information which it could provide and, hence, has not acted to the 
best of its ability. We do not believe that verification, if one is 
conducted, is the appropriate means for gathering this information.
    Because the GOF did not provide information about these programs, 
including the distribution of benefits under the programs, the 
Department is unable to make specificity findings. Therefore, in 
applying adverse facts available, we preliminarily determine that these 
programs are de facto specific. (Our analysis of the financial 
contribution and benefit under these programs is discussed below under 
``Investment/Operating Subsidies.'')

Subsidies Valuation Information

Allocation Period

    Pursuant to 19 CFR 351.524(b), non-recurring subsidies are 
allocated over a period corresponding to the average useful life 
(``AUL'') of the renewable physical assets used to produce the subject 
merchandise. Section 351.524(d)(2) of the regulations creates a 
rebuttable presumption that the AUL will be taken from the U.S. 
Internal Revenue Service's 1977 Class Life Asset Depreciation Range 
System (``the IRS Tables''). For stainless steel sheet and strip in 
coils, the IRS Tables prescribe an AUL of 15 years.
    In order to rebut the presumption in favor of the IRS tables, the 
challenging party must show that the IRS tables do not reasonably 
reflect the company-specific AUL or the country-wide AUL for the 
industry in question, and that the difference between the company-
specific or country-wide AUL and the IRS tables is significant. 19 CFR 
351.524(d)(2)(i). For this difference to be considered significant, it 
must be one year or greater. 19 CFR 351.524(d)(2)(ii).
    In this proceeding, Usinor has calculated a company-specific AUL of 
12 years. We note, however, that the one allocable subsidy received by 
Usinor and attributed to Ugine, FIS Bonds, has previously been 
allocated over a company-specific AUL of 14 years. The

[[Page 31778]]

14-year AUL was calculated in a remand determination involving the 
Final Affirmative Countervailing Duty Determination: Certain Steel 
Products from France, 58 FR 37304 (July 9, 1993) (``French Certain 
Steel'') and was subsequently used to allocate this same subsidy in 
SSSS from France (64 FR at 30778) and Final Affirmative Countervailing 
Duty Determination: Certain Cut-to-Length Carbon-Quality Steel Plate 
From France, 64 FR 73277, 73280 (December 29, 1999) (``French Plate''). 
Because the 14-year AUL was calculated using company-specific 
information and the information is more contemporaneous with the 
bestowal of the subsidy in question than the information underlying 
Usinor's 12-year calculation, we have continued to use the 14-year AUL 
to allocate the benefits of the FIS bonds in this proceeding.
    For non-recurring subsidies to Usinor, we applied the ``0.5 percent 
expense test'' described in 19 CFR 351.524(b)(2). Under this test, we 
compare the amount of subsidies approved under a given program in a 
particular year to sales (total or export, as appropriate) in that 
year. If the amount of subsidies is less than 0.5 percent of sales, the 
benefits are allocated to the year of receipt rather than over the AUL 
period.

Equityworthiness and Creditworthiness

    In French Certain Steel and SSSS from France, we found Usinor to be 
unequityworthy from 1986 through 1988 and uncreditworthy from 1982 
through 1988. No new information has been presented in this review to 
warrant a reconsideration of these findings. Therefore, based upon 
these previous findings of unequityworthiness and uncreditworthiness, 
in this review, we continue to find Usinor unequityworthy and 
uncreditworthy from 1987 through 1988, the years relevant to this 
investigation.

Benchmarks for Loans and Discount Rates

    As discussed above, we have determined that Usinor was 
uncreditworthy in 1988, the only year in which it received a 
countervailable subsidy which is being allocated over time.
    In accordance with 19 CFR 351.524(d)(3)(ii), the discount rate for 
companies considered uncreditworthy is the rate described in 19 CFR 
351.505(a)(3)(iii). To calculate that rate, the Department must specify 
values for four variables: (1) the probability of default by an 
uncreditworthy company; (2) the probability of default by a 
creditworthy company; (3) the long-term interest rate for creditworthy 
borrowers; and (4) the term of the debt.
    For the probability of default by an uncreditworthy company, we 
have used the average cumulative default rates reported for the Caa- to 
C-rated category of companies as published in Moody's Investors 
Service, ``Historical Default Rates of Corporate Bond Issuers, 1920-
1997'' (February 1998). For the probability of default by a 
creditworthy company, we used the cumulative default rates for 
investment grade bonds as published in Moody's Investor Services: 
``Statistical Tables of Default Rates and Recovery Rates'' (February 
1998). For the commercial interest rate charged to creditworthy 
borrowers, we used the average of the following long-term interest 
rates: medium-term credit to enterprises, equipment loan rates as 
published by the OECD, cost of credit rates published in the Bulletin 
of Banque de France, and private sector bond rates as published by the 
International Monetary Fund. For the term of the debt, we used the AUL 
period for Usinor, as the equity benefits are being allocated over that 
period.
    To measure the benefit from reimbursable advances received by 
Usinor, we relied on an average long-term interest rate developed in 
SSSS from France for 1989, and on Usinor's company-specific borrowing 
rate for 1995.

I. Programs Preliminarily Determined to Be Countervailable

A. FIS Bonds
    The 1981 Corrected Finance Law granted Usinor the authority to 
issue convertible bonds. In 1983, the Fonds d'Intervention Siderurgique 
(``FIS''), or steel intervention fund, was created to implement that 
authority. In 1983, 1984, and 1985, Usinor issued convertible bonds to 
the FIS, which in turn, with the GOF's guarantee, floated the bonds to 
the public and to institutional investors. These bonds were converted 
to common stock in 1986 and 1988.
    In several previous cases, the Department has treated these 
conversions of Usinor's FIS bonds into equity as countervailable equity 
infusions. See French Certain Steel, 58 FR at 37307; French Plate, 64 
FR at 73282; SSSS from France, 64 FR at 30779; and Final Affirmative 
Countervailing Duty Determinations: Certain Hot Rolled Lead and Bismuth 
Carbon Steel Products From France, 58 FR 6221, 6224 (January 27, 1997). 
These equity infusions were limited to Usinor and were, therefore, 
specific within the meaning of section 771(5A)(D)(i) of the Act. Also, 
these equity infusions provided a financial contribution to Usinor 
within the meaning of section 771(5)(D)(i) of the Act. Finally, because 
Usinor was unequityworthy at the time of the infusions, we determined 
that Usinor received a benefit in the amount of the investments.
    No new information or evidence of changed circumstances has been 
submitted in this proceeding to warrant a reconsideration of our past 
findings. Therefore, we determine that a countervailable benefit is 
being bestowed on the subject merchandise. Because the final year of 
the benefit stream for the 1986 infusion was 1999, i.e., prior to this 
POR, we determine that there is no countervailable benefit to the 
subject merchandise in this POR for the 1986 conversion. Thus, only the 
1988 equity infusion continues to provide a benefit in the POR.
    We have determined that the 1988 equity infusion should be treated 
as a non-recurring subsidy pursuant to 19 CFR 351.507(c). Because 
Usinor was uncreditworthy in 1988 (see section above on ``Subsidies 
Valuation Information: Equityworthiness and Creditworthiness''), we 
used an uncreditworthy discount rate to allocate the benefit of the 
equity infusion.
    In French Plate, we attributed separately to Usinor and GTS 
Industries S.A. their relative portions of the benefits from the equity 
infusion. 64 FR at 73282. We have continued to do so in this 
proceeding. We note, however, that the amount attributed to the 
respective companies differs from the amounts in French Plate. This is 
because of the revisions to the Department's change-in-ownership 
methodology since the French Plate determination.
    Dividing the POR benefit attributed to Usinor by Usinor's total 
sales of French-produced merchandise during the POR, we preliminarily 
determine Usinor's net subsidy rate for this program to be 1.13 percent 
ad valorem.
B. Investment/Operating Subsidies
    During the period 1987 through the POR, Usinor received a variety 
of small investment and operating subsidies from various GOF agencies 
and from the European Coal and Steel Community (``ECSC''). These 
subsidies were provided to Usinor for research and development, 
projects to reduce work-related illnesses and accidents, projects to 
combat water pollution, etc. The subsidies are classified as 
investment, equipment, or operating subsidies in the company's 
accounts, depending on how the funds are used.
    In SSSS from France and French Plate, the Department determined 
that

[[Page 31779]]

the funding provided to Usinor by the water boards (les agences de 
l'eau) and certain work/training grants were not countervailable. See 
64 FR at 30779, 30782; 64 FR at 73282. Consistent with these previous 
cases, the Department has not included these programs in this review.
    For the remaining programs, we preliminarily determine that the 
investment and operating subsidies provide a financial contribution, as 
described in section 771(5)(D)(i) of the Act, and a benefit, as 
described in section 771(5)(E)(i) of the Act. Also, as discussed above 
under ``Use of Facts Available,'' we preliminarily determine that these 
investment and operating subsidies are specific within the meaning of 
section 771(5A)(D) of the Act. Therefore, consistent with SSSS from 
France, 64 FR at 30779, and French Plate, 64 FR at 73282, we determine 
that these investment and operating subsidies are countervailable 
subsidies.
    The investment and operating subsidies provided in years prior to 
1999 were already determined to be less than 0.5 percent of Usinor's 
sales of French-produced merchandise in the relevant year and expensed 
in the years in which they were received (see SSSS from France, 64 FR 
at 30780, and French Plate, 64 FR at 73283). The amount of investment 
and operating subsidies in 1999 was also less than 0.5 percent of 
Usinor's sales of French-produced merchandise in 1999. Therefore, this 
benefit was also expensed in the year of receipt (1999), in accordance 
with 19 CFR 351.524 (b)(2).
    To calculate the benefit received during the POR, we divided the 
subsidies received by Usinor in the POR by Usinor's total sales of 
French-produced merchandise during the POR. Accordingly, we 
preliminarily determine Usinor's net subsidy rate for this program to 
be 0.16 percent ad valorem.

II. Programs Preliminarily Determined To Be Not Countervailable

A. Loans With Special Characteristics (PACS)
    In SSSS from France, we determined that Usinor received a 
countervailable subsidy as a result of the GOF's 1986 conversions of 
PACS into common shares of Usinor. Because the final year of the 
benefit stream for this subsidy was 1999, i.e., prior to this POR, we 
determine that there is no countervailable benefit to the subject 
merchandise in the POR.
B. Shareholders' Advances
    In SSSS from France, we determined that Usinor received a 
countervailable subsidy as a result of shareholder advances made by the 
GOF in 1984 - 1986. Because the final year of the benefit streams for 
these advances was 1999, prior to this POR, we determine that there is 
no countervailable benefit to the subject merchandise in the POR.
C. Electric Arc Furnace
    In SSSS from France, we explained that the GOF had agreed to 
provide Usinor with reimbursable advances to support the company's 
efforts to increase the efficiency of the melting process, the first 
stage in steel production. Because the first disbursements were not to 
be made until 1998, i.e., after the POI in SSSS from France, the 
Department found no benefit during the POI. (See SSSS from France, 64 
FR at 30780). In French Plate, the Department also found no benefit 
during the POI (1998), because the reimbursable advance was treated as 
a loan and no payment would be due on the loan until 1999. (See French 
Plate, 64 FR at 73284)
    In the instant review, Usinor has reported that it received 
reimbursable advances under this program in 1998 and 1999, and that the 
program was phased out in 1999 and 2000. These advances were approved 
in 1995 and they are to be repaid in 2002 and 2005, respectively.
    We divided the total amount approved by the GOF for this project by 
Usinor's total sales of French-produced merchandise in 1995, the year 
the reimbursable advances were approved. The result was less than 0.5 
percent. Therefore, even if these reimbursable advances were treated as 
grants, they would be expensed prior to the POR. Alternatively, we have 
calculated the possible benefit to Usinor if the reimbursable advances 
were treated as zero-interest long-term loans. The benefit (when 
rounded to the nearest hundredth) is zero during the POR.
    Therefore, we have not analyzed these reimbursable advances further 
and preliminarily determine that they do not confer a countervailable 
benefit on the subject merchandise during the POR.
D. Funding for Myosotis Project
    In SSSS from France, we explained that Usinor received grants and 
reimbursable advances from the GOF to fund the Myosotis project. We 
found that the amounts received by Usinor between 1989 and 1993 were 
properly expensed in the years of receipt and, hence, that there was no 
countervailable subsidy to the subject merchandise from these grants. 
We also found that Usinor has received a reimbursable advance from the 
GOF in support of the Myosotis project in 1997. We viewed the 
reimbursable advance as a loan and found no countervailable benefit 
from the 1997 reimbursable advance during the 1997 POI. (See SSSS from 
France, 64 FR at 30780) In French Plate, we also found no 
countervailable benefit from the 1997 reimbursable advance. (See French 
Plate, 64 FR at 73283) In the instant review, Usinor has responded that 
it received a second reimbursable advance in 1999.
    The reimbursable advances provided by the GOF to support the 
Myosotis project were approved in 1995. The advances were to be repaid 
in 1999 and 2001, respectively.
    We divided the total amount approved by the GOF for this project by 
Usinor's total sales of French-produced merchandise in 1995, the year 
the reimbursable advances were approved. The result was less than 0.5 
percent. Therefore, even if these reimbursable advances were treated as 
grants, they would be expensed prior to the POR. Alternatively, we have 
calculated the possible benefit to Usinor if the reimbursable advances 
were treated as zero-interest long-term loans. The benefit (when 
rounded to the nearest hundredth) is zero during the POR.
    Therefore, we have not analyzed these reimbursable advances further 
and preliminarily determine that they do not confer a countervailable 
benefit on the subject merchandise during the POR.
E. Conditional Advances
    InSSSS from France, we explained that Usinor received a conditional 
advance from the GOF in connection with a project aimed at developing a 
new type of steel used in the production of catalytic converters. 
Payments were received by Usinor in 1992 and 1995. Repayment of the 
conditional advance was contingent upon sales of the product resulting 
from the project exceeding a set amount. In SSSS from France, we found 
that no repayment had been made and we treated the advance as a 
countervailable short-term, interest-free loan. In this review, Usinor 
has responded that it repaid a portion of the conditional advance in 
November 1999, and that the balance remained outstanding in the POR.
    Assuming the conditional advance was approved in either 1991 or 
1992, we divided the total amount received by Usinor's total sales of 
French-produced merchandise in each of those years. The result in both 
instances was less than 0.5 percent. Therefore, even if the

[[Page 31780]]

conditional advance were treated as a grant, it would have been 
expensed prior to the POR. Alternatively, we have calculated the 
possible benefit to Usinor if the outstanding amount of the conditional 
advance were treated as a zero-interest long-term loan. The benefit 
(when rounded to the nearest hundredth) is zero during the POR.
    Therefore, we have not analyzed the conditional advance further and 
preliminarily determine that it does not confer a countervailable 
benefit on the subject merchandise during the POR.

III. Programs Preliminarily Determined to Be Not Used

    Based on the information provided in the responses, we determine 
that neither Usinor nor its affiliated companies that produce subject 
merchandise received benefits under the following programs during the 
POI:
A. ESF Grants
    In SSSS from France and French Plate, we found that certain Usinor 
companies had received grants under the European Social Fund (``ESF'') 
for worker training, and that the grants provided countervailable 
subsidies. Normally, the Department treats benefits from worker 
training programs to be recurring (see 19 CFR 351.524(c)(1)). However, 
we have found in several cases that ESF grants relate to specific, 
individual projects that require separate approval and, hence, should 
be treated as non-recurring grants. See, e.g., SSSS from France, 64 FR 
at 30781.
    Because ESF grants are non-recurring subsidies and potentially 
allocable over time, we reviewed SSSS from France and French Plate 
regarding past disbursements to Usinor under this program. In SSSS from 
France, we determined that ESF grants received in 1995 and 1997 were 
less than 0.5 percent of Ugine's sales in those years. Hence, the 
benefits of those ESF grants were expensed in the years of receipt. See 
SSSS from France, 64 FR at 30781. In French Plate, an ESF grant 
received in 1998 by CLI, an Usinor subsidiary, was also expensed in the 
year of receipt.
    In this review, Usinor has stated that any ESF grants received by 
the Usinor companies in 1999 would be included among the investment and 
operating subsidies reported in Usinor's financial statement. Because 
we find, for 1999, that these subsidies were less than 0.5 percent of 
Usinor's total sales of French-produced merchandise in 1999, any 
benefits in 1999 would have been expensed in 1999.
    Therefore, we determine that ESF grants received by Usinor and it 
affiliates prior to the POR do not confer a countervailable benefit on 
the subject merchandise during the POR. Moreover, Usinor has responded 
that it did not receive any ESF grants during the POR.
B. Export Financing under Natexis Banque Programs
C. DATAR Regional Development Grants (PATs)
D. DATAR 50 Percent Taxing Scheme
E. DATAR Tax Exemption for Industrial Expansion
F. DATAR Tax Credit for Companies Located in Special Investment Zone
G. DATAR Tax Credits for Research
H. GOF Guarantees
I. Long-term Loans from CFDI
J. Resider I and II Programs
K. Youthstart
L. ECSC Article 54 Loans
M. ECSC Article 56(2)(b) Redeployment/Readaptation Aid
N. ERDF Grants

Preliminary Results of Review

    In accordance with 19 CFR 351.221(b)(4)(i), we calculated an 
individual subsidy rate for Ugine. For the period January 1, 2000, 
through December 31, 2000, we preliminarily determine Ugine's net 
subsidy rate to be 1.29 percent. The calculations will be disclosed to 
the interested parties in accordance with section 351.224(b) of the 
regulations.
    If the final results of this review remain the same as these 
preliminary results, the Department intends to instruct the U.S. 
Customs Service (``Customs'') to collect cash deposits of estimated 
countervailing duties at the rate of 1.29 percent on the f.o.b. value 
of all shipments of the subject merchandise from Ugine that are 
entered, or withdrawn from warehouse, for consumption on or after the 
date of publication of the final results of this administrative review.
    For companies that were not named in our notice initiating this 
administrative review, we will instruct Customs to collect cash 
deposits of estimated countervailing duties 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 are those established in the 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 in Coils from France, Italy, and the Republic of 
Korea. These rates shall apply to all non-reviewed companies until a 
review of a company assigned these rates is requested.
    While the countervailing duty deposit rate for Ugine may change as 
a result of this administrative review, we have been enjoined from 
liquidating any entries of the subject merchandise after August 6, 
1999. Consequently, we do not intend to issue liquidation instructions 
for these entries until such time as the injunction, issued on December 
22, 1999, is lifted.

Public Comment

    Interested parties may submit written arguments in case briefs 
within 30 days of the date of publication of this notice. 19 CFR 
351.509(c). Rebuttal briefs, limited to issues raised in case briefs, 
may be filed not later than five days after the date of filing the case 
briefs. Parties who submit briefs in this proceeding should provide a 
summary of the arguments not to exceed five pages and a table of 
statutes, regulations, and cases cited. Copies of case briefs and 
rebuttal briefs must be served on interested parties in accordance with 
19 CFR 351.303(f).
    Interested parties may request a hearing within 30 days after the 
date of publication of this notice. Any hearing, if requested, will be 
held two days after the scheduled date for submission of rebuttal 
briefs. 19 CFR 351.310(c).
    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 a notice of the final results of this 
administrative review within 120 days from the publication of these 
preliminary results.
    This administrative review and notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    DATED: May 3, 2002
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-11768 Filed 5-9-02; 8:45 am]
BILLING CODE 3510-DS-S