[Federal Register Volume 75, Number 62 (Thursday, April 1, 2010)]
[Notices]
[Pages 16439-16445]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-7419]



[[Page 16439]]

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DEPARTMENT OF COMMERCE

International Trade Administration

[C-489-502]


Certain Welded Carbon Steel Standard Pipe From Turkey: 
Preliminary Results of Countervailing Duty Administrative Review

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

SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the countervailing duty (CVD) order on certain 
welded carbon steel standard pipe from Turkey for the period January 1, 
2008, through December 31, 2008. We preliminarily find that the net 
subsidy rate for each company under review is de minimis. See the 
``Preliminary Results of Review'' section of this notice, infra. 
Interested parties are invited to comment on these preliminary results. 
(See the ``Public Comment'' section, infra.)

DATES: Effective Date: April 1, 2010.

FOR FURTHER INFORMATION CONTACT: Kristen Johnson or Christopher 
Hargett, AD/CVD Operations, Office 3, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230; telephone: 
(202) 482-4793 and (202) 482-4161, respectively.

SUPPLEMENTARY INFORMATION: 

Background

    On March 7, 1986, the Department published in the Federal Register 
the CVD order on certain welded carbon steel pipe and tube products 
from Turkey. See Countervailing Duty Order: Certain Welded Carbon Steel 
Pipe and Tube Products from Turkey, 51 FR 7984 (March 7, 1986). On 
March 2, 2009, the Department published a notice of opportunity to 
request an administrative review of this CVD order. See Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity to Request Administrative Review, 74 FR 9077 (March 2, 
2009). On March 31, 2009, we received a timely request from petitioner 
\1\ to review the following companies: Borusan Group, Borusan 
Mannesmann Boru Sanayi ve Ticaret A.S. (BMB), and Borusan Istikbal 
Ticaret T.A.S. (Istikbal), (collectively, Borusan); Yucel Boru Group, 
Cayirova Boru Sanayi ve Ticaret A.S., Yucelboru Ihracat Ithalat ve 
Pazarlama A.S., and Yucel Boru ve Profil Endustrisi A.S. (collectively, 
Yucel); Tosyali dis Ticaret A.S. (Tosyali) and Toscelik Profil ve Sac 
Endustrisi A.S. (Toscelik Profil), (collectively, Toscelik); and 
Alexico Group Plc. On April 16, 2009, petitioner amended its request 
for an administrative review by withdrawing its request for a review of 
Alexico Group, Plc.
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    \1\ Petitioner is Wheatland Tube Company.
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    On April 27, 2009, the Department initiated an administrative 
review of the CVD order on certain welded carbon steel standard pipe 
from Turkey for the period January 1, 2008, through December 31, 2008, 
covering Borusan, Yucel, and Toscelik. See Initiation of Antidumping 
and Countervailing Duty Administrative Reviews and Request for 
Revocation, In Part, 74 FR 19042 (April 27, 2009).
    On April 29, 2009, the Department issued the initial questionnaire 
to Borusan, Yucel, Toscelik, and the Government of the Republic of 
Turkey (GOT). On May 13, 2009, Yucel notified the Department that it 
had no sales, shipments, or entries, directly or indirectly, of subject 
merchandise to the United States during the review period (POR) of 
January 1, 2008, through December 31, 2008.\2\ To confirm Yucel's no 
shipment claim, we conducted an internal customs data query on June 16, 
2009. We also issued a ``no shipments inquiry'' message to U.S. Customs 
and Border Protection (CBP), which posted the message on June 19, 
2009.\3\ The customs data query indicated that Yucel had no sales, 
shipments, or entries of subject merchandise to the United States 
during the POR. We did not receive any information from CBP contrary to 
Yucel's claim of no sales, shipments, or entries of subject merchandise 
to the United States during the POR. See Memorandum to the File through 
Melissa Skinner, Director, AD/CVD Operations, Office 3, titled 
``Customs Data Query,'' (July 7, 2009). On August 5, 2009, we published 
the notice of preliminary rescission of this CVD duty administrative 
review with respect to Yucel, and invited interested parties to 
comment. See Welded Carbon Steel Standard Pipe and Tube from Turkey: 
Intent to Rescind Countervailing Duty Administrative Review, in Part, 
74 FR 39062 (August 5, 2009) (Preliminary Rescission). We received no 
comments in response to the Preliminary Rescission. Subsequently, on 
September 18, 2009, the Department rescinded the administrative review 
of Yucel. See Welded Carbon Steel Standard Pipe and Tube from Turkey: 
Notice of Rescission of Countervailing Duty Administrative Review, In 
Part, 74 FR 47921 (September 18, 2009).
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    \2\ See Yucel's Notification of No Shipments letter to the 
Department (June 15, 2009). A copy of this public document is 
available on the public record in the Department's Central Records 
Unit (CRU), Room 1117 located in the main Commerce Department 
building.
    \3\ See Message number 9170203, available at http://addcvd.cbp.gov.
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    On July 6, 2009, the Department received responses to the initial 
questionnaire from Borusan, Toscelik, and the GOT. We issued 
supplemental questionnaires to the GOT on August 21, 2009, and December 
17, 2009, and received the government's responses on September 17, 
2009, and January 4, 2010, respectively. On August 18, 2009, and 
October 26, 2009, we issued supplemental questionnaires to Toscelik and 
received the company's responses to these questionnaires on September 
1, 2009, and November 9, 2009, respectively. On August 19, 2009, 
October 14, 2009, and October 30, 2009, we issued supplemental 
questionnaires to Borusan and received the company's responses on 
September 2, 2009, November 4, 2009, and November 10, 2009, 
respectively. On August 4, 2009, petitioner submitted a letter 
requesting that the Department conduct verification of the 
questionnaire responses submitted by Borusan, Toscelik, and the GOT in 
this review.
    On July 27, 2009, petitioner filed new subsidies allegations with 
the Department arguing that Borusan and Toscelik received 
countervailable subsidies, including upstream subsidies, from the 
GOT.\4\ Subsequently, on August 20, 2009, petitioner filed additional 
information in support of its new subsidies allegations.\5\ On October 
16, 2009, the Department declined to initiate on the new subsidies 
allegations presented by petitioner. See Memorandum to Melissa G. 
Skinner, Director, AD/CVD Operations, Office 3, from Team concerning 
``New Subsidies Allegations'' (October 16, 2009) (New Subsidies 
Memorandum).\6\ On November 3, 2009, petitioner submitted comments 
regarding the Department's New Subsidies Memorandum.\7\
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    \4\ See Upstream Subsidy Allegation and New Subsidy Allegation 
submission (New Subsidies Submission) (July 27, 2009). The public 
version of this document, as well as all other public versions of 
proprietary documents submitted to the Department, is available on 
the public file in the CRU.
    \5\ See Additional Information in Support of Petitioner's 
Upstream Subsidy Allegation and New Subsidy Allegation submission 
(Additional Submission) (August 20, 2009).
    \6\ A public version of this memorandum and all public 
Departmental memoranda are available on the public file in the CRU.
    \7\ A public document on file in the CRU.

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[[Page 16440]]

    Being issued concurrently with this notice of preliminary results 
is the Department's response to petitioner's November 3, 2009, comments 
regarding the Department's New Subsidies Memorandum. See Memorandum to 
Melissa G. Skinner, Director, AD/CVD Operations, Office 3, from Team 
concerning ``Response to Petitioner's Comments on New Subsidies 
Allegations Memorandum'' (March 25, 2010). In the March 25, 2010, 
memorandum, the Department reiterates its decision to not initiate on 
the upstream subsidy allegation regarding income tax exemptions 
provided to OYAK, the Turkish military pension fund.
    On November 20, 2009, the Department postponed the deadline for the 
preliminary results of this administrative review until March 31, 2010. 
See Welded Carbon Steel Standard Pipe from Turkey: Extension of Time 
Limit for Preliminary Results of Countervailing Duty Administrative 
Review, 74 FR 60238 (November 20, 2009). In addition, as explained in 
the memorandum from the Deputy Assistant Secretary for Import 
Administration, the Department has exercised its discretion to toll 
deadlines for the duration of the closure of the Federal Government 
from February 5, through February 12, 2010. Thus, all deadlines in this 
segment of the proceeding have been extended by seven days. The revised 
deadline for the preliminary results of this administrative review is 
now April 7, 2010. See Memorandum to the Record from Ronald K. 
Lorentzen, DAS for Import Administration, regarding ``Tolling of 
Administrative Deadlines As a Result of the Government Closure During 
the Recent Snowstorm,'' dated February 12, 2010.
    In accordance with 19 CFR 351.213(b), this review covers only those 
producers or exporters of the subject merchandise for which a review 
was specifically requested and not rescinded. Therefore, the only 
companies subject to this review are Borusan and Toscelik. This review 
covers 14 programs.

Scope of the Order

    The products covered by this order are certain welded carbon steel 
pipe and tube with an outside diameter of 0.375 inch or more, but not 
over 16 inches, of any wall thickness (pipe and tube) from Turkey. 
These products are currently provided for under the Harmonized Tariff 
Schedule of the United States (HTSUS) as item numbers 7306.30.10, 
7306.30.50, and 7306.90.10. Although the HTSUS subheadings are provided 
for convenience and customs purposes, the written description of the 
merchandise is dispositive.

Period of Review

    The period for which we are measuring subsidies is January 1, 2008, 
through December 31, 2008.

Company History

    Toscelik Profil and its affiliated foreign trading company, 
Tosyali, are owned by Tosyali Holding, a Turkish holding company. 
Toscelik Profil, which produces subject merchandise for both the 
domestic and export markets, was established in 1992. Tosyali, founded 
in 1996, is the exporter of record with respect to Toscelik Profil's 
export sales and sells subject merchandise to unaffiliated customers in 
the United States. Consistent with 19 CFR 351.525(c), we are 
attributing any subsidies received by Tosyali to Toscelik Profil.
    BMB and its affiliated foreign trading company, Istikbal, are both 
part of the Borusan Group. BMB produces subject merchandise for both 
the home and export markets and was acquired by the Borusan Group in 
1998. During the POR, all subject merchandise exported to the United 
States was exported from Turkey by BMB. For sales of subject 
merchandise to other destinations, Istikbal was the exporter from 
Turkey. Consistent with 19 CFR 351.525(c), we are attributing any 
subsidies received by Istikbal to BMB.

Subsidies Valuation Information

Benchmark Interest Rates

    To determine whether government-provided loans under review 
conferred a benefit, the Department uses, where possible, company-
specific interest rates for comparable commercial loans. See 19 CFR 
351.505(a). Where no company-specific benchmark interest rates are 
available, as is the case in this review, the Department's regulations 
direct us to use a national average interest rate as the benchmark. See 
19 CFR 351.505(a)(3)(ii). However, according to the GOT, there is no 
official national average short-term interest rate available in 
Turkey.\8\ Therefore, consistent with our past practice in Turkey CVD 
proceedings,\9\ we have calculated the 2008 benchmark interest rate for 
short-term Turkish Lira denominated loans based on short-term interest 
rate data as reported by The Economist. In the public version of its 
July 6, 2009, questionnaire response at Exhibit 25, Borusan submitted, 
for each month of the POR, a copy of the print edition of The Economist 
that contains interest rate data for Turkey. The short-term Turkish 
Lira interest rates sourced from The Economist do not include 
commissions or fees paid to commercial banks, i.e., they are nominal 
rates. See Wire Rod Memorandum at 4.
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    \8\ See GOT's Initial Questionnaire Response at 19 (July 6, 
2009).
    \9\ See Carbon and Certain Alloy Steel Wire Rod from Turkey; 
Final Negative Countervailing Duty Determination, 67 FR 55815 
(August 30, 2002), and accompanying Issues and Decision Memorandum 
(Wire Rod Memorandum) at ``Benchmark Interest Rates;'' see also 
Preliminary Results of Countervailing Duty Administrative Review: 
Certain Welded Carbon Steel Standard Pipe from Turkey, 72 FR 62837, 
62838 (November 7, 2007) (2006 Pipe Prelim), unchanged in Final 
Results of Countervailing Duty Administrative Review: Certain Welded 
Carbon Steel Standard Pipe from Turkey, 73 FR 12080 (March 6, 2008).
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    To calculate the 2008 benchmark, we performed a simple average 
calculation of the monthly rates to compute an annual short-term 
interest rate for Turkey. See Memorandum to the File from Kristen 
Johnson regarding Short-Term Turkish Lira Benchmark (March 25, 2010). 
We then compared that interest rate with the interest rates that the 
company paid during the POR against export financing provided by the 
Export Credit Bank of Turkey (Export Bank). This methodology is 
consistent with the Department's practice. See Certain Welded Carbon 
Steel Standard Pipe From Turkey: Preliminary Results of Countervailing 
Duty Administrative Review, 72 FR 62837, 62838 (November 7, 2007) (2006 
Pipe Prelim); see also Preliminary Results of Countervailing Duty 
Administrative Review: Certain Welded Carbon Steel Standard Pipe from 
Turkey, 71 FR 68550, 68551 (November 27, 2006) (2005 Pipe Prelim), 
unchanged in Final Results of Countervailing Duty Administrative 
Review: Certain Welded Carbon Steel Standard Pipe from Turkey, 72 FR 
13479 (March 22, 2007); Preliminary Results of Countervailing Duty New 
Shipper Review: Certain Welded Carbon Steel Standard Pipe from Turkey, 
72 FR 8348, 8349 (February 26, 2007) (NSR Prelim), unchanged in Final 
Results of Countervailing Duty New Shipper Review: Certain Welded 
Carbon Steel Standard Pipe from Turkey, 72 FR 24278 (May 2, 2007).

Analysis of Programs

I. Programs Preliminarily Determined To Be Countervailable

A. Deduction From Taxable Income for Export Revenue

    Addendum 4108 of Article 40 of the Income Tax Law, effective June 
2, 1995, allows taxpayers engaged in export activities to claim a lump 
sum

[[Page 16441]]

deduction from gross income, in an amount not to exceed 0.5 percent of 
the taxpayer's foreign-exchange earnings. The deduction for export 
earnings may either be taken as a lump sum on a company's annual income 
tax return or be shown as a separate account within the company's 
selling expenses in the chart of accounts to record the subtraction of 
relevant expenses from gross income.
    Consistent with prior determinations, we preliminarily find that 
this tax deduction is a countervailable subsidy. See 2006 Pipe Prelim, 
72 FR at 62838; see also NSR Prelim, 72 FR at 8350. The income tax 
deduction provides a financial contribution within the meaning of 
section 771(5)(D)(ii) of the Tariff Act of 1930, as amended (the Act), 
because it represents revenue forgone by the GOT. The deduction 
provides a benefit in the amount of the tax savings to the company 
pursuant to section 771(5)(E) of the Act. It is also specific under 
section 771(5A)(B) of the Act because its receipt is contingent upon 
export earnings. In this review, no new information or evidence of 
changed circumstances has been submitted to warrant reconsideration of 
the Department's prior finding of countervailability for this program.
    During 2008, BMB, Istikbal, and Tosyali utilized the deduction for 
export earnings with respect to their 2007 income taxes.
    The Department typically treats a tax deduction as a recurring 
benefit in accordance with 19 CFR 351.524(c)(1). To calculate the 
countervailable subsidy rate for this program, we calculated the tax 
savings realized by BMB, Istikbal, and Tosyali in 2008, as a result of 
the deduction for export earnings. For BMB and Istikbal, we divided 
their combined tax savings by Borusan's total export sales for 2008. 
For Tosyali, we divided the tax savings realized by Toscelik's total 
export sales for 2008.
    On this basis, we preliminarily determine the net countervailable 
subsidy for this program to be 0.06 percent ad valorem for Borusan and 
to be 0.09 percent ad valorem for Toscelik.

B. Foreign Trade Companies Short-Term Export Credits

    The Foreign Trade Company (FTC) loan program was established by the 
Turkish Export Bank to meet the working capital needs of exporters, 
manufacturer-exporters, and manufacturers supplying exporters. This 
program is specifically designed to benefit Foreign Trade Corporate 
Companies (FTCC) and Sectoral Foreign Trade Companies (SFTC).\10\ An 
FTCC is a company whose export performance was at least US$100 million 
in the previous year.
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    \10\ To promote exports and diversity in products exported, the 
GOT encouraged small and medium scale enterprises to form SFTC, 
which comprise five to ten companies that operate together in a 
similar sector.
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    To eligible companies, the Export Bank provides short-term export 
loans in Turkish Lira or foreign currency, based on their prior export 
performance and financial criteria, up to 100 percent of the free on 
board (FOB) export commitment. The loan interest rates are set by the 
Export Bank and the term is 120 to 180 days for Turkish Lira-
denominated loans and 120 to 360 days for foreign currency denominated 
loans. To qualify for an FTC loan, along with the necessary application 
documents, a company must provide a bank letter of guarantee, 
equivalent to the loan's principal and interest amount, because the 
financing is a direct credit from the Export Bank. Istikbal was the 
only Borusan company to pay interest against FTC credits during the 
POR. Toscelik did not use this program during the POR.
    Consistent with previous determinations, we preliminarily find that 
these loans confer a countervailable subsidy within the meaning of 
section 771(5) of the Act. See, e.g., 2006 Pipe Prelim, 72 FR at 62839. 
The loans constitute a financial contribution in the form of a direct 
transfer of funds from the GOT, under section 771(5)(D)(i) of the Act. 
A benefit exists under section 771(5)(E)(ii) of the Act in the amount 
of the difference between the payments of interest that Istikbal made 
on its loans during the POR and the payments the company would have 
made on comparable commercial loans. The program is also specific in 
accordance with section 771(5A)(B) of the Act because receipt of the 
loans is contingent upon export performance. Further, the FTC loans are 
not tied to a particular export destination. Therefore, we have treated 
this program as an untied export loan program, which renders it 
countervailable regardless of whether the loans were used for exports 
to the United States. See 2006 Pipe Final (affirming preliminary 
results, 72 FR at 62839).
    Pursuant to 19 CFR 351.505(a)(1), we have calculated the benefit as 
the difference between the payments of interest that Istikbal made on 
its FTC loans during the POR and the payments the company would have 
made on comparable commercial loans.\11\ In accordance with section 
771(6)(A) of the Act, we subtracted from the benefit amount the fees 
that Istikbal paid to commercial banks for the required letters of 
guarantee. We then divided the resulting benefit by Borusan's total 
export sales for 2008. On this basis, we preliminarily find that the 
net countervailable subsidy for this program is 0.02 percent ad valorem 
for Borusan.
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    \11\ See ``Benchmark Interest Rates,'' supra (discussing the 
benchmark rates used in these preliminary results).
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C. Pre-Export Credits

    The Pre-Export Credit program meets the working capital needs of 
exporters, manufacturers, and manufacturers supplying exporters, except 
for FTC and SFTC classified exporters, which are ineligible to receive 
credits under this program. Eligible applicants are companies that 
exported more than $200,000 of goods in the previous 12 months. Like 
FTC loans, the Export Bank directly extends pre-export loans to 
eligible companies. These loans are contingent upon an export 
commitment. The loans, whose interest rates are set by the Turkish 
Export Bank, are denominated in either Turkish Lira or foreign currency 
and have a maximum maturity of 360 and 540 days, respectively. To 
qualify for a pre-export loan, along with the necessary application 
documents, a company must provide a bank letter of guarantee, 
equivalent to the loan's principal and interest amount. During the POR, 
BMB was the only Borusan company that paid interest against pre-export 
loans. Toscelik did not use this program during the POR.
    Consistent with previous determinations, we preliminarily find that 
these loans confer a countervailable subsidy within the meaning of 
section 771(5) of the Act. See, e.g., 2006 Pipe Prelim, 72 FR at 62839. 
The loans constitute a financial contribution in the form of a direct 
transfer of funds from the GOT, under section 771(5)(D)(i) of the Act. 
A benefit exists under section 771(5)(E)(ii) of the Act in the amount 
of the difference between the payments of interest that BMB made on the 
loans during the POR and the payments the company would have made on 
comparable commercial loans. The program is also specific in accordance 
with section 771(5A)(B) of the Act because receipt of the loans is 
contingent upon export performance.
    Further, like the FTC loans, these loans are not tied to a 
particular export destination. Therefore, we have treated this program 
as an untied export loan

[[Page 16442]]

program rendering it countervailable regardless of whether the loans 
were used for exports to the United States. See 2006 Pipe Prelim, 72 FR 
at 62839.
    Pursuant to 19 CFR 351.505(a)(1), we have calculated the benefit as 
the difference between the payments of interest that BMB made on its 
pre-export loans during the POR and the payments the company would have 
made on comparable commercial loans. In accordance with section 
771(6)(A) of the Act, we subtracted from the benefit amount the fees 
which BMB paid to commercial banks for the required letters of 
guarantee. We then divided the resulting benefit by Borusan's total 
export value for 2008. On this basis, we preliminarily find that the 
net countervailable subsidy for this program is 0.02 percent ad valorem 
for Borusan.

D. Pre-Shipment Export Credits

    Turkey's Export Bank provides short-term pre-shipment export loans 
through intermediary commercial banks to exporters, manufacturer-
exporters, and manufacturers supplying exporters and SFTCs to assist 
the borrowers in meeting their export commitments. The commercial 
banks, which assume the default risks of the borrowers, are allocated 
credit lines by the Export Bank to make the loans. These loans cover up 
to 100 percent of the FOB export value, are denominated in either 
Turkish Lira or foreign currency, and have maximum terms of 360 and 540 
days, respectively. The interest rates charged on these pre-shipment 
loans are set by the Export Bank. However, because these loans are 
provided through intermediary commercial banks, those banks can add a 
maximum one percent to the Turkish Lira loan interest rate and 0.5 
percent to the foreign currency loan interest rate as their 
commissions.\12\
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    \12\ See GOT Initial Questionnaire Response at 13 (July 6, 
2009).
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    In previous determinations, the Department found this program to be 
countervailable because receipt of the loans is contingent upon export 
performance and a benefit was conferred to the extent that the interest 
rates paid on the government loan were less than the amount the 
recipient would pay on comparable commercial loans. See, e.g., Final 
Results of Countervailing Duty Administrative Review: Certain Welded 
Carbon Steel Standard Pipe from Turkey, 71 FR 43111 (July 31, 2006) 
(2004 Pipe Final), and accompanying Issues and Decision Memorandum 
(2004 Pipe Memorandum) at ``Pre-Shipment Export Credits'' under 
``Programs Determined To Be Countervailable.''
    The Department also found that this program is an untied export 
loan program because the loans are not specifically tied to a 
particular destination at the time of approval and the borrower only 
has to show that the export commitment was satisfied (i.e., exports 
amounting to the FOB value of the credit) to close the loan. Id. In 
this review, no new information or evidence of changed circumstances 
has been submitted to warrant reconsideration of the Department's prior 
findings for this program. During the POR, BMB was the only Borusan 
company that paid interest against pre-shipment export credit loans. 
Toscelik used pre-shipment export credit loans during the POR, but did 
not pay interest on (i.e., realize a benefit from) those loans in 2008.
    Consistent with the 2004 Pipe Final, we preliminarily find that 
these loans confer a countervailable subsidy within the meaning of 
section 771(5) of the Act. The loans constitute a financial 
contribution in the form of a direct transfer of funds from the GOT, 
under section 771(5)(D)(i) of the Act. A benefit exists under section 
771(5)(E)(ii) of the Act in the amount of the difference between the 
payments of interest that BMB made on the loans during the POR and the 
payments the company would have made on comparable commercial loans. 
The program is also specific in accordance with section 771(5A)(B) of 
the Act because receipt of the loans is contingent upon export 
performance.
    Pursuant to 19 CFR 351.505(a)(1), we have calculated the benefit as 
the difference between the payments of interest that BMB made on its 
pre-shipment export loans during the POR and the payments the company 
would have made on comparable commercial loans. It is the Department's 
practice to normally compare effective interest rates rather than 
nominal rates in making the loan comparison. See Countervailing Duties; 
Final Rule, 63 FR 65348, 65362 (November 25, 1998) (Preamble). 
``Effective'' interest rates are intended to take account of the actual 
cost of the loan, including the amount of any fees, commissions, 
compensating balances, government charges, or penalties paid in 
addition to the ``nominal'' interest rate.
    The benchmark short-term Turkish Lira interest rates sourced from 
The Economist, however, do not include commissions or fees paid to 
commercial banks, i.e., they are nominal rates. See ``Benchmark 
Interest Rate,'' section supra. Therefore, for these preliminary 
results, we compared the benchmark Turkish Lira interest rate to the 
interest rate that BMB was charged on the pre-shipment export credit 
loans, exclusive of the intermediary bank commissions, to make the 
comparison on a nominal interest rate basis.
    After computing the benefit amount, we subtracted from the benefit 
amount the fees which BMB paid to commercial banks for the required 
letters of guarantee, as provided under section 771(6)(A) of the Act. 
We then divided that amount by Borusan's total export value for 2008. 
On this basis, we preliminarily find that the net countervailable 
subsidy for this program is 0.02 percent ad valorem for Borusan.

II. Program Preliminary Determined To Be Not Countervailable

A. Law 4857, Article 30

    Under Law 4857, which has been in effect since 2003, the GOT, 
through its Ministry of Labor and Social Security and Undersecretariat 
of Treasury, encourages companies to employ handicapped workers by 
exempting the employer's share of insurance premium paid to the 
Undersecretariat of Treasury (Treasury) for the handicapped workers. 
The GOT explained that Article 30 of Law 4857, most recently amended in 
May 2008, outlines the requirement to employ disabled persons and ex-
convicts. Article 30 states that ``employers in private businesses 
employing 50 or more employees are obliged to employ three percent 
handicapped and in public businesses four percent handicapped and two 
percent ex-convicts in jobs appropriate for their professions and 
physical and psychological status.'' \13\
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    \13\ See GOT Supplemental Questionnaire Response at Exhibit 1 
(January 4, 2010). For example, Article 30 indicates that 
handicapped workers cannot be employed in underground and underwater 
works.
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    Regarding employers with 50 or more employees, the GOT reported 
that for the handicapped workers within the three percent quota, 100 
percent of the employer's share of insurance premium for the 
handicapped workers is paid by the Treasury. For handicapped workers 
exceeding the quota (i.e., more than three percent), only 50 percent of 
the employer's share of insurance premium is paid by the Treasury for 
the handicapped workers. Employers that employ less than 50 employees 
are not obliged to employ handicapped workers, but should they, 50 
percent of the employer's share of insurance premium for the 
handicapped workers is paid by the Treasury. The GOT also added that 
there are protected businesses for which 100 percent of the employer's 
share of insurance premium for handicapped workers is paid by the

[[Page 16443]]

Treasury. The GOT explained that protected businesses are businesses 
supported by the government for the purpose of creating jobs and 
providing professional rehabilitation for the handicapped who may not 
be employed in the normal labor market. The GOT stated that as of 
December 30, 2009, there were no longer protected businesses in Turkey. 
Toscelik provided to the Department Article 30 of Law 4857 in this 
review.\14\
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    \14\ See Toscelik's Supplemental Questionnaire Response at 
Exhibit 4, pages 13-14 (November 9, 2009).
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    Because Article 30 of Law 4857 does not limit access to the 
benefit, but indicates that an exemption of insurance premium is 
available to all employers who employ handicapped workers in jobs 
appropriate for their professions and physical and psychological 
status, we preliminarily determine that this program is not specific 
within the meaning of section 771(5A)(D) of the Act. This approach is 
consistent with the Department's decisions in other CVD proceedings. 
For example, in Steel Plate from Korea, the Department found the 
``Special Tax Credit for Boosting Employment'' not to be 
countervailable because the tax credit was available to nearly all 
companies in Korea except for a small category of businesses, which the 
GOK deemed ``harmful to juveniles, affecting public morals, certain 
private teaching institutes, and certain real estate businesses.'' See 
Notice of Final Results of Countervailing Duty Administrative Review: 
Certain Cut-to-Length Carbon-Quality Steel Plate from the Republic of 
Korea, 72 FR 38565 (July 13, 2007) (Steel Plate from Korea), and 
accompanying Issues and Decision Memorandum at ``Special Tax Credit for 
Boosting Employment.'' Because we preliminarily find that this program 
is not specific, we need not address whether the program provides a 
financial contribution or benefit.

III. Programs Preliminary Determined To Not Confer Countervailable 
Benefits

A. Inward Processing Certificate Exemption

    Under the Inward Processing Certificate (IPC) \15\ program, 
companies are exempt from paying customs duties and value added taxes 
(VAT) on raw materials and intermediate unfinished goods imported to be 
used in the production of exported goods. Companies may choose whether 
to be exempted from the applicable duties and taxes upon importation 
(i.e., the Suspension System) or have the duties and taxes reimbursed 
after exportation of the finished goods (i.e., the Drawback System). 
Under the Suspension System, companies provide a letter of guarantee 
that is returned to them upon fulfillment of the export commitment.
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    \15\ During the POR, the IPC was implemented under Resolution 
No. 2005/8391. A copy of this resolution was submitted by the GOT in 
its July 6, 2009, Initial Questionnaire Response at Exhibit 26.
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    To participate in this program, a company must hold an IPC, which 
lists the amount of raw materials/intermediate unfinished goods to be 
imported and the amount of product to be exported. To obtain an IPC, an 
exporter must submit an application, which states the amount of 
imported raw material required to produce the finished products and a 
``letter of export commitment,'' which specifies that the importer of 
materials will use the materials to produce exported goods. Once an IPC 
is issued, the producer must show the certificate to Turkish customs 
each time it imports raw materials on a duty exempt basis. There are 
two types of IPCs: (1) D-1 certificate for imported raw materials or 
intermediate unfinished goods used in the production of exported goods, 
and (2) D-3 certificate for imported raw materials or intermediate 
unfinished goods used in the production of goods sold in the domestic 
market and defined as ``domestic sales and deliveries considered as 
exports.'' \16\ The GOT also reported that imports made with an 
acceptance credit, deferred payment letter of credit, or cash against 
goods payment in relation to an IPC are exempt from paying the three 
percent Resource Utilization Support Fund.\17\ During the POR, Borusan 
and Toscelik used D-1 certificates of the importation of raw materials 
used in the production of exported carbon steel pipe and tube. Neither 
Borusan nor Toscelik used D-3 certificates during the POR.\18\
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    \16\ See GOT's Initial Questionnaire Response at 43 (July 6, 
2009).
    \17\ See GOT's Supplemental Questionnaire Response at II-5 
(September 17, 2009).
    \18\ For more information on D-3 certificates, see GOT's Initial 
Questionnaire Response at 42-45 (July 6, 2009).
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    Concerning D-1 certificates, pursuant to 19 CFR 351.519(a)(1)(ii), 
a benefit exists to the extent that the exemption extends to inputs 
that are not consumed in the production of the exported product, making 
normal allowances for waste, or if the exemption covers charges other 
than import charges that are imposed on the input. With regard to the 
VAT exemption granted under this program, pursuant to 19 CFR 
351.517(a), in the case of the exemption upon export of indirect taxes, 
a benefit exists to the extent that the Department determines that the 
amount exempted exceeds the amount levied with respect to the 
production and distribution of like products when sold for domestic 
consumption.
    In prior reviews, the Department has found that, in accordance with 
19 CFR 351.519(a)(4)(i), the GOT has a system in place to confirm which 
inputs, and in what amounts are consumed in the production of the 
exported product, and that the system is reasonable for the purposes 
intended. See, e.g., 2004 Pipe Memorandum at ``Inward Processing 
Certificate Exemption'' under ``Programs Determined To Not Confer 
Countervailable Benefits.'' The Department has also found that the 
exemption granted on certain methods of payments used in purchasing 
imported raw materials under this program does not constitute a subsidy 
pursuant to 19 CFR 351.517(a), because the tax exempted upon export 
does not exceed the amount of tax levied on like products when sold for 
domestic consumption. See Wire Rod Memorandum at ``Inward Processing 
Certificate Exemptions'' and Comment 8. No new information is on the 
record of this proceeding to warrant a reconsideration of the 
Department's earlier findings.
    During the POR, under D-1 certificates, Borusan and Toscelik 
received duty and VAT exemptions on certain imported inputs used in the 
production of steel pipes and tubes. Consistent with the Department's 
findings in 2004 Pipe Final and based on our review of the information 
supplied by Borusan and Toscelik regarding this program, we 
preliminarily determine there is no evidence on the record of this 
review that indicates the amount of exempted inputs imported under the 
program were excessive or that the firms used the imported inputs for 
any other product besides those exported.
    Therefore, consistent with past cases,\19\ we preliminarily 
determine that the tax and duty exemptions, which Borusan and Toscelik 
received on imported inputs under D-1 certificates of the IPC program, 
did not confer countervailable benefits as Borusan and Toscelik 
consumed the imported inputs in the production of the exported product, 
making normal allowance for waste. We further preliminarily find that 
the VAT exemption did not confer countervailable benefits on Borusan or 
Toscelik because the exemption does not exceed the amount levied with 
respect to the production and

[[Page 16444]]

distribution of like products when sold for domestic consumption. 
Further, because Borusan and Toscelik did not import any goods under a 
D-3 certificate during the POR, we preliminarily determine that this 
aspect of the IPC program was not used.
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    \19\ See 2004 Pipe Memorandum, 2005 Pipe Prelim, 2006 Pipe 
Prelim, and NSR Prelim.
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B. Withholding of Income Tax on Wages and Salaries

    Toscelik reported that during the POR the company received an 
exemption from the withholding of income tax on wages and salaries paid 
to employees at its Osmaniye facility.\20\ Toscelik stated that the 
Osmaniye facility produces spiral-welded pipe and flat-rolled steel, 
products which are not subject merchandise.\21\ As such, Toscelik 
stated that the Osmaniye plant is not involved in the production or 
sale of subject merchandise. Toscelik, therefore, argued that any tax 
exemption benefits relating to the Osmaniye facility are not relevant 
to this proceeding.
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    \20\ See Toscelik's Supplemental Questionnaire Response at 11 
(September 1, 2009).
    \21\ See Toscelik's Supplemental Questionnaire Response at 3 
(November 9, 2009).
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    We preliminarily find that we need not address Toscelik's argument 
that the withholding tax exemption is unrelated to the production and 
sale of subject merchandise. Assuming that there was a financial 
contribution, by dividing the 2008 tax exemption benefit amount by 
Toscelik's total sales for 2008, we preliminarily determine that a 
subsidy rate under this program is less than 0.005 percent ad 
valorem.\22\ Consistent with the Department's practice,\23\ a subsidy 
rate of less than 0.005 percent ad valorem does not confer a measurable 
benefit and, therefore, we have not included it in the calculation of 
the net countervailable rate.
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    \22\ See Preliminary Calculations Memorandum for Toscelik (March 
31, 2010).
    \23\ See Corrosion-Resistant Carbon Steel Flat Products from the 
Republic of Korea: Preliminary Results of Countervailing Duty 
Administrative Review, 74 FR 46100, 46103, 46106 (September 8, 2009) 
at ``Research and Development Grants Under the Industrial 
Development Act'' and ``R&D Grants Under the Act on the Promotion of 
the Development of Alternative Energy,'' unchanged in Corrosion-
Resistant Carbon Steel Flat Products from the Republic of Korea: 
Final Results of Countervailing Duty Administrative Review, 74 FR 
55192 (October 27, 2009).
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    Consequently, we preliminarily determine that it is unnecessary for 
the Department to make a finding as to the countervailability of this 
program in this review. If a future administrative review of Toscelik 
is requested, we will further examine the withholding tax exemption at 
that time.

IV. Programs Preliminarily Determined To Not Be Used

    We examined the following programs and preliminarily determine that 
Borusan and Toscelik did not apply for or receive benefits under these 
programs during the POR:
    A. Post-Shipment Export Loans.
    B. Pre-Shipment Rediscount Loans.
    C. Export Credit Bank of Turkey Buyer Credits.
    D. Subsidized Turkish Lira Credit Facilities.
    E. Subsidized Credit for Proportion of Fixed Expenditures.
    F. Subsidized Credit in Foreign Currency.
    G. Regional Subsidies.

Verification

    The Department's regulations provide that factual information upon 
which the Secretary relies for the final results of an administrative 
review will be verified if a domestic party timely requests 
verification and the Secretary has not conducted verification during 
either of the two immediately preceding administrative reviews. See 19 
CFR 351.307(b)(1)(v). As such, because the Department has not verified 
Borusan in either of the two immediately preceding administrative 
reviews of this order (i.e., the 2005 and 2006 administrative 
reviews),\24\ and petitioner requested that the Department conduct a 
verification in this review, the Department will be verifying the 
questionnaire responses submitted by Borusan after these preliminary 
results.
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    \24\ Borusan was last verified during the 2004 administrative 
review. Toscelik was last verified during the new shipper review 
that covered the period of January 1, 2005, through December 31, 
2005.
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Preliminary Results of Review

    In accordance with 19 CFR 351.221(b)(4)(i), we calculated an 
individual subsidy rate for each producer/exporter subject to this 
administrative review. For the period January 1, 2008, through December 
31, 2008, we preliminarily determine the total net countervailable 
subsidy rate for Borusan is 0.12 percent ad valorem and for Toscelik is 
0.09 percent ad valorem; both rates are de minimis, pursuant to 19 CFR 
351.106(c)(1).
    The Department intends to issue assessment instructions to CBP 15 
days after the date of publication of the final results of this review. 
If the final results remain the same as these preliminary results, the 
Department will instruct CBP to liquidate without regard to 
countervailing duties all shipments of subject merchandise produced by 
Borusan and Toscelik entered, or withdrawn from warehouse, for 
consumption from January 1, 2008, through December 31, 2008. The 
Department will also instruct CBP not to collect cash deposits of 
estimated countervailing duties on all shipments of the subject 
merchandise produced by Borusan and Toscelik, entered, or withdrawn 
from warehouse, for consumption on or after the date of publication of 
the final results of this review.
    We will instruct CBP 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 companies covered by this order, but not 
examined in this review, are those established in the most recently 
completed administrative proceeding for each company. Those rates shall 
apply to all non-reviewed companies until a review of a company 
assigned these rates is requested.
    These cash deposit requirements, when imposed, shall remain in 
effect until further notice.

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. Case and rebuttal briefs will be due at the dates specified by 
the Department. The Department will notify interested parties of the 
case and rebuttal due dates once those dates are finalized. Parties who 
submit argument in this proceeding are requested to submit with the 
argument: (1) A statement of the issues, 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(c), 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.
    Representatives of parties to the proceeding may request disclosure 
of

[[Page 16445]]

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)(1)(ii), are due. The Department will 
publish the final results of this administrative review, including the 
results of its analysis of arguments made in any case or rebuttal 
briefs.
    These preliminary results of review are issued and published in 
accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 
351.221(b)(4).

    Dated: March 25, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-7419 Filed 3-31-10; 8:45 am]
BILLING CODE 3510-DS-P