01-24503. Notice of Initiation of Countervailing Duty Investigations: Carbon and Certain Alloy Steel Wire Rod From Brazil, Canada, Germany, Trinidad and Tobago, and Turkey

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce is initiating countervailing duty investigations to determine whether manufacturers, producers, or exporters of carbon alloy steel wire rod from Brazil, Canada, Germany, Trinidad and Tobago, and Turkey receive countervailable subsidies.

ACTION:

Initiation of Countervailing Duty Investigations.

EFFECTIVE DATE:

October 1, 2001.

FOR FURTHER INFORMATION CONTACT:

Melani Miller (Brazil) at [phone]; Sally Hastings or Craig Matney (Canada) at [phone] or [phone], respectively; Annika O'Hara or Melanie Brown (Germany) at [phone] or [phone], respectively; Suresh Maniam (Trinidad and Tobago) at [phone]; and Jennifer Jones (Turkey) at [phone]; Import Administration, International Trade Administration, U.S. Department of Commerce, Room 3099, 14th Street and Constitution Avenue, NW, Washington, DC 20230.

Initiation of Investigations

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (the “Act”) by the Uruguay Round Agreements Act. In addition, unless otherwise indicated, all citations to the Department of Commerce's (the “Department”) regulations are references to the provisions codified at 19 CFR part 351 (April 2000).

The Petitions

On August 31, 2001, the Department received petitions filed in proper form by Co-Steel Raritan, Inc., GS Industries, Keystone Consolidated Industries, Inc., and North Star Steel Texas, Inc. (collectively, the petitioners). The Department received various additional information to support the petitions on September 6, 7, 12, 13, 18, and 21, 2001. In addition to supporting evidence, these later submissions contained new subsidy allegations not included in the original petitions for Germany, Trinidad and Tobago, and Turkey.

The petitioners did not file these submissions with the International Trade Commission (“ITC”) until September 20, 2001 (for Germany and Turkey) and September 21, 2001 (for Brazil, Canada, and Trinidad and Tobago). As a result, while we have taken into account the supporting information contained in these submissions in these initiations, due to the lateness of the filing and the resulting lack of time for proper analysis, we have not addressed any new allegations that were made. However, we intend to examine these new allegations following the initiation.

In accordance with section 702(b)(1) of the Act, the petitioners allege that manufacturers, producers, or exporters of the subject merchandise from Brazil, Canada, Germany, Trinidad and Tobago, and Turkey receive countervailable subsidies within the meaning of section 701 of the Act, and that such imports are materially injuring, or threatening material injury to, an industry in the United States.

The Department finds that the petitioners filed these petitions on behalf of the domestic industry because they are interested parties as defined in sections 771(9)(C) of the Act and they have demonstrated sufficient industry support. See infra, “Determination of Industry Support for the Petitions.”

Scope of Investigations

The merchandise covered by these investigations is certain hot-rolled products of carbon steel and alloy steel, in coils, of approximately round cross section, 5.00 mm or more, but less than 19.0 mm, in solid cross-sectional diameter.

Specifically excluded are steel products possessing the above-noted physical characteristics and meeting the Harmonized Tariff Schedule of the United States (“HTSUS”) definitions for (a) stainless steel; (b) tool steel; (c) high nickel steel; (d) ball bearing steel; and (e) concrete reinforcing bars and rods. Also excluded are (f) free machining steel products (i.e., products that contain by weight one or more of the following elements: 0.03 percent or more of lead, 0.05 percent or more of bismuth, 0.08 percent or more of sulfur, more than 0.04 percent of phosphorus, more than 0.05 percent of selenium, or more than 0.01 percent of tellurium). All products meeting the physical description of subject merchandise that are not specifically excluded are included in this scope.

The products under investigation are currently classifiable under subheadings 7213.91.3010, 7213.91.3090, 7213.91.4510, 7213.91.4590, 7213.91.6010, 7213.91.6090, 7213.99.0031, 7213.99.0038, 7213.99.0090, 7227.20.0010, 7227.20.0090, 7227.90.6051 and 7227.90.6058 of the HTSUS. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of these investigations is dispositive.

Consultations

Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department invited representatives of the Governments of Brazil (“GOB”), Canada (“GOC”), Germany (“GOG”), Trinidad and Tobago (“GOTT”), Turkey (“GRT”), and the European Commission (“EC”) for consultations with respect to the petitions filed. The Department held consultations with the GOTT on September 6 and 18, 2001; the GOB on September 13, 2001; the GRT on September 13; the GOG and the EC together on September 18, 2001; and the GOC on September 21, 2001. The points raised in the consultations are described in individual country-specific consultation memoranda to the file dated September 6, 13, 14, 19, and 21, 2001, which are on file in the Department's Central Records Unit, Room B-099 of the main Department of Commerce building (“CRU”).

Determination of Industry Support for the Petition

Section 771(4)(A) of the Act defines the “industry” as the producers of a domestic like product. Thus, when determining the degree of industry support, the statute directs the Department to look to producers and workers who produce the domestic like product. The ITC, which is responsible for determining whether “the domestic industry” has been injured,

must also determine what constitutes a domestic like product in order to define the industry. While both the Department and the ITC must apply the same statutory definition regarding the domestic like product (section 771(10) of the Act), they do so for different purposes and pursuant to separate and distinct authority. In addition, the Department's determination is subject to limitations of time and information. Although this may result in different definitions of the like product, such differences do not render the decision of either agency contrary to the law.^[1]

Section 771(10) of the Act defines the domestic like product as “a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this subtitle.” Thus, the reference point from which the domestic like product analysis begins is “the article subject to an investigation,” i.e., the class or kind of merchandise to be investigated, which normally will be the scope as defined in the petitions. Moreover, the petitioners do not offer a definition of domestic like product distinct from the scope of the investigations.

The petitions cover carbon and certain steel wire rod as defined in the “Scope of the Investigations” section, above, a single class or kind of merchandise. The Department has no basis on the record to find the petitioners' definition of the domestic like product to be inaccurate. The Department, therefore, has adopted the domestic like product definition set forth in the petitions.

Section 732(b)(1) of the Act requires that a petition be filed on behalf of the domestic industry. Section 732(c)(4)(A) of the Act provides that a petition meets this requirement if the domestic producers or workers who support the petition account for: (1) At least 25 percent of the total production of the domestic like product; and (2) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition. Finally, section 732(c)(4)(D) of the Act provides that if the petition does not establish support of domestic producers or workers accounting for more than 50 percent of the total production of the domestic like product, the administering agency shall: (i) Poll the industry or rely on other information in order to determine if there is support for the petition as required by subparagraph (A), or (ii) determine industry support using a statistically valid sampling method.

In this case, the Department has determined that the petitions (and subsequent amendments) contain adequate evidence of industry support; therefore, polling is unnecessary. See Attachment 1 to the Initiation Checklists for each country dated September 24, 2001 (“Initiation Checklist”). To estimate total domestic production of steel wire rod, the petitioners relied on data compiled by the ITC,^[2] adjusted upward by five percent to include an estimate of production of products excluded by Presidential Proclamation 7273. In a letter dated September 7, 2001, the petitioners' provided support for the five percent adjustment in the form of an affidavit from an industry representative familiar with the excluded products.

On September 14, 2001, the Department received comments regarding industry support from Ispat-Sidbec Inc., a Canadian producer of steel wire rod. The petitioners responded to these comments in a letter to the Department dated September 18, 2001. Further, on September 21, 2001, the petitioners submitted a letter adding the support of Nucor Corp., a domestic producer of steel wire rod, for the petitions.

The Department has reviewed the comments of Ispat-Sidbec and the petitioners. In order to estimate production for the domestic industry as defined for purposes of this case, the Department has relied upon not only the petitions and amendments thereto, but also upon “other information” it obtained through research and described in Attachment I of the Initiation Checklist. Based on information from these sources, the Department determined, pursuant to section 732(c)(4)(D), that there is support for the petitions as required by subparagraph (A). Specifically, the Department made the following determinations. For Brazil, Canada, Germany, Trinidad and Tobago, and Turkey the petitioners established industry support representing over 50 percent of total production of the domestic like product. Therefore, the domestic producers or workers who support the petitions account for at least 25 percent of the total production of the domestic like product, and the requirements of section 732(c)(4)(A)(i) are met. Furthermore, because the Department received no opposition to the petitions, the domestic producers or workers who support the petitions account for more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for or opposition to the petitions. Thus, the requirements of section 732(c)(4)(A)(ii) are also met. Accordingly, the Department determines that the petitions were filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act. See Initiation Checklist.

Injury Test

Because Brazil, Canada, Germany, Trinidad and Tobago, and Turkey are each a “Subsidies Agreement Country” within the meaning of section 701(b) of the Act, section 701(a)(2) of the Act applies to these investigations. Accordingly, the ITC must determine whether imports of the subject merchandise from Brazil, Canada, Germany, Trinidad and Tobago, and Turkey materially injure, or threaten material injury to, a U.S. industry.

Allegations and Evidence of Material Injury and Causation

The petitions allege that the U.S. industry producing the domestic like product is being materially injured, or is threatened with material injury, by reason of the individual and cumulated imports of the subject merchandise. The petitioners contend that the industry's injured condition is evident in the stagnation of U.S. producers' sales volumes and profits, the decline of their capacity utilization, the increase of U.S. inventories, and closures of U.S. production facilities. The allegations of injury and causation are supported by relevant evidence including U.S. Customs import data, lost sales, and pricing information. We have assessed the allegations and supporting evidence regarding material injury and causation, and have determined that these allegations are properly supported by accurate and adequate evidence and meet the statutory requirements for initiation (see Injury Allegation section of the Initiation Checklist for each individual country). In accordance with section 771(7)(G)(ii)(III) of the Act, which provides an exception to the mandatory cumulation provision for imports from any country designated as a beneficiary country under the Caribbean Basin Economic Recovery Act, we have considered the petitioners' allegation of injury with respect to Trinidad and Tobago independent of the allegations for each of the remaining countries named in the petition and found that the information provided satisfies the requirements (see Injury Allegation section of the Initiation Checklist for Trinidad and Tobago).

Allegations of Subsidies

Section 702(b) of the Act requires the Department to initiate a countervailing duty proceeding whenever an interested party files a petition on behalf of an industry, that (1) alleges the elements necessary for an imposition of a duty under section 701(a), and (2) is accompanied by information reasonably available to the petitioners supporting the allegations.

Initiation of Countervailing Duty Investigations

The Department has examined the countervailing duty petitions on carbon and certain alloy steel wire rod from Brazil, Canada, Germany, Trinidad and Tobago, and Turkey and found that they comply with the requirements of section 702(b) of the Act. Therefore, in accordance with section 702(b) of the Act, we are initiating a countervailing duty investigation in each country to determine whether manufacturers, producers, or exporters of carbon and certain alloy steel wire rod from Brazil, Canada, Germany, Trinidad and Tobago, and Turkey receive countervailable subsidies (see Initiation Checklist for each country).

Brazil

A. Equityworthiness and Creditworthiness

The petitioners allege that both Usina Siderurgica da Bahia S.A. (“Usiba”) and Cia Siderurgica do Nordeste (“Cosinor”), which were sold to the Gerdau Group in 1989 and 1991, respectively, were both unequityworthy and uncreditworthy during the time periods 1986 through 1989 and 1986 through 1991, respectively. With respect to Usiba, the petitioners allege that Usiba never earned a profit prior to its sale to the Gerdau Group in 1989 and continued to incur losses after its sale. The petitioners point to several articles published in various publications in which Usiba's poor financial condition during the period 1986 through 1989 was discussed. Because of its financial condition, the petitioners contend that Usiba could not have attracted private capital during this period. With respect to Cosinor, the petitioners state that the GOB allegedly converted a significant amount of Cosinor's debt into equity in 1988 and then erased additional Cosinor debt in 1991. Moreover, the petitioners state that the GOB poured millions of dollars into Cosinor during the period 1986 through 1991, which shows that Cosinor was unable to repay its debts to the GOB and that Cosinor was in such poor financial condition that it could not have attracted private capital during this period.

We find that the petitioners have established a reasonable basis to believe or suspect that Usiba was unequityworthy and uncreditworthy in 1988, the only year in which the petitioners have alleged a related program with respect to Usiba. With respect to Cosinor, as noted below in the Brazil “Programs” section, we are not initiating an investigation of the single program involving Cosinor during the years 1986 through 1991. Thus, we are not initiating an investigation of Cosinor's equityworthiness and creditworthiness in these years.

B. Change in Ownership

The petitioners allege that both Usiba and Cosinor received non-recurring grants prior to changes in their ownership and that, after the changes in ownership, the Gerdau Group is, for all intents and purposes, the same “person” as Usiba and Cosinor, respectively. Consequently, according to the petitioners, consistent with the Department's recent Final Results of Redetermination Pursuant to Court Remand in Acciai Speciali Terni S.p.A. v. United States, et al., (Ct. No. 99-06-00364) (December 19, 2000) (“AST Remand Redetermination”), the past countervailable subsidies received by Usiba and Cosinor continue to be countervailable after the changes in ownership. Therefore, the petitioners request, consistent with the methodology in the AST Remand Redetermination, that all non-recurring subsidies provided to Usiba and Cosinor be attributed in full to the Gerdau Group.

We will examine this issue in the course of the investigation to determine whether any non-recurring subsidies provided to Usiba should be attributed to Gerdau. We will not examine this issue with respect to Cosinor, however, because, as noted above, we are not investigating any programs specifically related to Cosinor.

C. Programs

We are including in our investigation the following programs alleged in the petition to have provided countervailable subsidies to producers and exporters of the subject merchandise in Brazil:

1. Programs offered by the National Bank for Economic and Social Development (“BNDES”)

a. Programa de Modernizacao da Siderurgia Brasiliera—Fund for the Modernization of the Steel Industry

b. Financing for the Acquisition or Lease of Machinery and Equipment through the Special Agency for Industrial Financing

c. BNDES Export Financing

2. Programa de Financiamento as Exportacoes

3. Exemption of Import Duties, the Industrial Products Tax (“IPI”), the Merchandise Circulation Tax (“ICMS”), and the Merchant Marine Renewal Tax on the Imports of Spare Parts and Machinery

4. Tax Incentives Provided by Amazon Region Development Authority and the Northeast Region Development Authority

5. Amazonia Investment Fund and Northeast Investment Fund Tax Subsidies

6. Constitutional Funds for Financing Productive Sectors in the Northeast, North, and Midwest Regions (Fundos Constitucionais de Financiamento do Nordeste, do Norte, e do Centro-Oeste)

7. Fiscal Incentives for Regional Development (Provisional Measure No. 1532 of Dec. 18, 1996)

8. Accelerated Depreciation

9. Exemption of Urban Building and Land Tax

10. Gerdau

a. Equity Infusions and Debt Forgiveness Provided to Usina Siderurgica da Bahia S.A. During the Period 1986 through 1989

b. BNDES Financing for the Acquisition of Acominas

11. Belgo-Mineira

a. BNDES Financing for the Acquisition of Mendes Junior Siderurgia S.A.

b. BNDES Financing for the Acquisition of Dedini Siderurgicia de Piracicaba

We are not including in our investigation the following programs alleged to benefit producers and exporters of the subject merchandise in Brazil:

1. Rebate of ICMS Credit for Inputs Consumed in the Production of Exported Products

The ICMS is a state-government value-added tax (“VAT”) applicable to both imports and domestic products. According to the petitioners, the ICMS tax is calculated on a monthly basis, and is based on the total monthly ICMS tax liability for domestic sales (as export sales are exempt) minus monthly tax credits from ICMS taxes embedded in the purchase price of inputs consumed for all products (domestic and export). The petitioners allege that the offset is countervailable because the tax exemption for exports and the tax credits for inputs used in the exported product exceed the ICMS paid on domestic sales. The alleged benefit would be the amount of the ICMS tax creditable to inputs consumed in the manufacture of exported products.

We are not including this program in our investigation. As described by the petitioners, this program does no more than provide a rebate of a VAT tax collected on inputs to exported products. The fact that this rebate is effected as a credit in calculating the amount of VAT tax owed on domestic sales does not necessarily result in an excessive remission of indirect taxes pursuant to 19 CFR 351.517(a) of the Department's regulations.

2. Rebate of the IPI Credit on Inputs Consumed in the Production of Exported Products

The petition states that the IPI is a federal VAT tax levied on most domestic and imported manufactured products. Exports are exempt from the IPI tax. According to the petitioners, an IPI tax credit is created in the amount of the IPI assessed on inputs used to produce goods sold in both the domestic and export markets. The IPI tax, however, is assessed only on products sold in the domestic market because export sales are exempt. Thus, the credit generated from the purchases of inputs for both domestic and export products exceeds the actual IPI tax paid on domestic sales of merchandise, leaving companies with excess IPI tax credits. Therefore, the benefit would be the amount of the IPI tax creditable to inputs consumed in the manufacture of the exported product.

We are not including this program in our investigation. As described by the petitioners, this program does no more than provide a rebate of a VAT tax collected on inputs to exported products. The fact that this rebate is effected as a credit in calculating the amount of VAT tax owed on domestic sales does not necessarily result in an excessive remission of indirect taxes pursuant to 19 CFR 351.517(a) of the Department's regulations.

3. Exemption of Exports From the Social Integration Program (“PIS”) and Social Contribution of Billings (“COFINS”)

Under PIS, firms make contributions on a monthly basis to create a social fund for employees. COFINS is a federal social financing program which is used to finance social security expenses. The petitioners contend that, in past antidumping duty investigations, the Department determined that these taxes are “levied on total revenues (except for export revenues), and thus the taxes are direct, similar to taxes on profit or wages.”

Within the context of a countervailing duty proceeding, taxes on revenues such as PIS and COFINS would generally be considered indirect taxes. (See 19 CFR 351.102(b) of the Department's regulations for the definition of an indirect tax.) In the case of these particular taxes, the Department's regulations at 19 CFR 351.517(a) state that a benefit exists to the extent that the amount remitted or exempted exceeds the amount levied. There is no information in this instance of any excessive remission. Thus, we are not including this allegation in our investigation.

4. Rebate of PIS and COFINS Taxes on Inputs Used for Exporting Products

Through this program, the PIS and COFINS contributions assessed on the purchase of raw materials, intermediate products, and packing materials used in the production of exports can be claimed as an advance IPI credit. Companies may request a cash refund from the GOB if the amount of the advance IPI credit exceeds the amounts paid by the company for certain federal taxes and contributions.

Based on the petitioners' description of this program, noted above, it appears to be a rebate of indirect taxes levied on inputs to export products. The petitioners' evidence does not indicate that the rebate is excessive. Therefore, we find no basis to call this program an export subsidy, and we are not including this program in our investigation.

5. Investment Incentives Provided by the Government of Minas Gerais to the Steel Industry

The petition alleges that funding provided by the Brazilian state Government of Minas Gerais (“GOM”) through the Program for Industrial and Agroindustrial Integration and Diversification and the Program to Induce Industrial Modernization is countervailable. The petitioners contend that this program is de facto specific to the steel industry because, based on the prominence of the steel industry in Minas Gerais, steel production in the region receives a disproportionately large amount of the funding provided through these programs.

According to the same GOM web site cited by the petitioners, the steel industry appears to be one of several prominent industries in Minas Gerais. Thus, although steel may be a large industry, there are also many other industries that appear to play a large role in the economy of Minas Gerais. Therefore, there is insufficient information to show that steel production in the region receives a disproportionately large amount of the funding provided through these programs. Because of this, we are not including these programs in our investigation.

6. Discounted Natural Gas From Petrobras

The petition alleges that Belgo-Mineira, as well as possibly other Brazilian wire rod producers, purchase discounted natural gas from Petrobras, Brazil's state oil company.

There is no information that any producer other than Belgo-Mineira signed an intention protocol with Petrobas to purchase discounted natural gas. Furthermore, as the intention protocol between Belgo-Mineira and Petrobras was not signed until December 2000, there is no evidence that there was any financial contribution made to Belgo-Mineira during 2000. Therefore, we are not including this program in our investigation.

7. Debt-to-Equity Conversion, Equity Infusions, and/or Debt Forgiveness Provided to Cosinor During the Period 1986 Through 1991

The petition alleges that the GOB did not act like a rational private investor when it made various investments in Cosinor during the time period 1988 through 1991. The petitioners argue that in order to make steel firms in general more “privatizable,” the GOB spent millions upgrading and refurbishing these mills. It then sold the steel mills for much less than it invested. The petitioners allege that this made the GOB's investments inconsistent with those of a rational private investor.

There is no information that Cosinor was in a poor financial condition at the time any of these investments were made. Although the petitioner has provided information with respect to actions taken by the GOB to make government firms more “privatizable,” there is no specific information relating to the state of Cosinor's financial condition. Moreover, with respect to the 1991 debt forgiveness, the petitioners have provided no information that this debt forgiveness was part of a debt-to-equity conversion. Therefore, because there is no evidence that Cosinor specifically was in poor financial condition, we have no evidence that a reasonable private investor would not have invested in Cosinor. Moreover, the petitioners have not provided evidence in support of its benefit allegation with respect to the alleged debt forgiveness. Thus, we do not recommend initiating an investigation of these transactions.

Canada

A. Equityworthiness and Creditworthiness

The petitioners have identified three producers of carbon steel wire rod in Canada: Sidbec-Dosco (Ispat) Inc. (“Ispat-Sidbec), Stelco Inc. (“Stelco”), and Ivaco Inc. (“Ivaco”).

The petitioners allege that, consistent with our previous findings in Steel Wire Rod from Canada, 62 FR 54972 (October 22, 1997) (“Canadian Wire Rod”), the Department should continue to find Sidbec-Dosco Limited (“Sidbec-Dosco”), the predecessor to Isapt-Sidbec, unequityworthy from 1983 through 1992. The petitioners note that in Canadian Wire Rod, the Department initiated an unequityworthy investigation on Sidbec-Dosco for the years alleged in this investigation, but made a final determination of unequityworthiness only for 1988 because that was the only year in which we determined that a countervailable equity infusion was made. Based on our previous initiation of an equityworthiness inquiry for Sidbec-Dosco, if in the course of this investigation we discover that Sidbec-Dosco received equity infusions in any year during the period from 1983 through 1992, we will investigate whether it was unequityworthy in that year.

In addition, the petitioners allege that all three producers were uncreditworthy at various times. Consistent with Canadian Wire Rod, the petitioners request that the Department continue to find Sidbec-Dosco uncreditworthy from 1983 through 1992. Furthermore, because of a lack of public information regarding the current owner, Ispat-Sidbec, the petitioners request that the Department assess the creditworthiness of Ispat-Sidbec from 1992 through 2000. Based on our previous finding of uncreditworthiness for Sidbec-Dosco, if in the course of this investigation we discover that Sidbec-Dosco received any non-recurring subsidies, loans, or loan guarantees in any year during the period from 1983 through 1992, we will investigate whether it was uncreditworthy in that year. However, because the petitioners have provided no support for their allegation of uncreditworthiness for Ispat-Sidbec from 1992 through 2000, we will not examine its creditworthiness.

In addition, the petitioners allege that Stelco was uncreditworthy from 1988 through 1994 and that Ivaco was uncreditworthy from 1989 through 1998. However, as stated below and in the Initiation Checklist for Canada, because we are not initiating on any programs with respect to Stelco or Ivaco within the alleged years, we do not need to investigate the creditworthiness for these two companies.

B. Change in Ownership

The petitioners allege that Sidbec-Dosco received non-recurring grants prior to its change in ownership and that, after the change in ownership, Ispat-Sidbec is, for all intents and purposes, the “same person” as Sidbec-Dosco. Consequently, according to the petitioners, consistent with the Department's recent AST Remand Redetermination, the past countervailable subsidies received by Sidbec-Dosco continue to be countervailable after the changes in ownership. Therefore, the petitioners request, consistent with the methodology in the AST Remand Redetermination, that all non-recurring subsidies provided to Sidbec-Dosco be attributed in full to Ispat-Sidbec.

We will examine this issue in the course of the investigation to determine whether non-recurring subsidies provided to Sidbec-Dosco should be attributed to Ispat-Sidbec.

C. Programs

We are including in our investigation the following programs alleged in the petition to have provided countervailable subsidies to producers and exporters of the subject merchandise in Canada:

1. 1988 Conversion of Sidbec-Dosco's Debt into Sidbec Capital Stock

2. 1984 through 1992 Government of Quebec Grants to Sidbec-Dosco

3. Tax Credit for Mining Incentives for Stelco

We are not including in our investigation the following programs alleged to benefit producers and exporters of the subject merchandise in Canada:

1. Provision of Electricity for Less Than Adequate Remuneration for Stelco

The petition states that Ontario Hydro's agreement with Stelco to not increase electricity costs for Stelco, which is described in Stelco's 1994 annual report, is a countervailable benefit. The petitioners argue that, because energy costs have escalated in recent years and the wire rod industry is highly energy-intensive, Ontario Hydro's commitment to lock rates in for Stelco indicates that Ontario Hydro is receiving less than adequate remuneration for the provision of electricity. The petitioners contend that this 1994 agreement shows that the Canadian government has a history of providing discounted rates.

We are not investigating this allegation because the petitioners have not provided evidence to support their claims of specificity and benefit. Even assuming that Stelco's rates did not increase, that does not provide a basis for speculating that others' rates did rise. The benefit claim, too, is based on speculation. Finally, we find no basis to ascribe the behavior of Hydro Quebec to Ontario Hydro.

2. Federal and Provincial Government Assistance for Plant Modernization Under SDI or Other Government Programs

Ivaco reported in its 1999 financial statement that it underwent a C$65 million modernization program. The petitioners contend that, because the Department found that Ivaco received grants from a Government of Quebec (“GOQ”) agency in Canadian Wire Rod to assist with modernization, it is likely that Ivaco also received such grants or loans for the 1999 modernization. The petitioners also state that Stelco has undertaken new expansion projects which have likely benefitted from this type of assistance it could not have afforded on its own. Finally, the petitioners allege that Ispat-Sidbec likely also received such funds because it is located in an area that has traditionally benefitted from such projects and it could not have afforded such projects on its own.

The petitioners have not provided any information evidencing that any of these companies actually received a financial contribution or a benefit from any Canadian governmental entity for plant modernization and associated programs. Therefore, we are not initiating an investigation of this allegation.

3. McGill University Research and Development Services and Production Assets Provided to Ivaco

Ivaco reported in its 1999 financial statement that it participated in joint research work with McGill University in 1999. The petitioners note that McGill's web site states that the largest source of funding for McGill is grants from the GOQ. Thus, the petitioners contend that McGill is a quasi-government agency, and is providing a countervailable benefit to Ivaco by way of the provision of goods and services for less than adequate remuneration in the form of free research and assets.

In past cases, the Department has established several criteria in order to assess whether an entity should be considered to be the government or a public entity for purposes of countervailing duty investigations. (See, e.g., Notice of Preliminary Affirmative Countervailing Duty Determination and Alignment With Final Antidumping Duty Determinations: Certain Hot-Rolled Carbon Steel Flat Products From South Africa, 66 FR 20261 (April 20, 2001).) The criteria include (1) significant government ownership, (2) the government's presence on the entity's board of directors, (3) the government's control over the entity's activities, (4) the entity's pursuit of governmental policies or interests, and (5) whether the entity is created by statute. The petitioners have provided no information with respect to any of these criterion. Lacking evidence that McGill is a government or public entity, we are not initiating an investigation with respect to this allegation.

4. Ivaco's Industrial Revenue Bonds

The petitioners allege that industrial revenue bonds, which are listed in Ivaco's financial statements for 1984 through 1996, appear to be provided at preferential rates of borrowing. The petitioners argue that, because there was no mention of similar bonds in the financial statements of other wire rod producers, or because this type of bond financing would only make sense for large manufacturing concerns and would almost never be used outside of the manufacturing industry, these bonds must be specific because they are limited only to Stelco, or only to “industrial” activities.

The petitioners have provided no evidence showing that these bonds were limited to Ivaco, other producers of subject merchandise, or “industrial” activities. Because there is only speculation as to the specificity of these bonds and the petitioners have not provided any information regarding the provider(s) of these bonds (regardless of country of issuance), we do not recommend initiating an investigation of these industrial revenue bonds.

5. Britannia Environmental Agreement With Ivaco

The petition alleges that the Government of British Columbia's (“GOBC”) agreement with the previous (including Ivaco) and current owners of a mining site in British Columbia with respect to the environmental clean-up of the site is a countervailable subsidy because the owners were responsible for paying only half of the expected clean-up cost, leaving the GOBC responsible for covering the remaining costs.

The petitioners have provided no evidence in the petition showing that this transaction was related to the subject merchandise or its production. Moreover, the petitioners state that this agreement was reached in April 2001, which was after the period of time we would be examining in this investigation. Therefore, as there was no benefit or financial contribution during the POI, we are not including this program in our investigation.

6. Operating Assistance to Stelco

The petitioners state that, according to Stelco's annual reports, Stelco received government assistance to continue operating during periods of financial distress in the early 1990's.

The petitioners withdrew this allegation in their supplemental petition submission dated September 13, 2001. Therefore, we are not including this program in our investigation.

7. Assistance for Energy Projects for Stelco

The petitioners cite a 1999 report by Stelco which states that projects implemented at one of Stelco's plants to improve energy efficiency relied on incentives provided by “government and utility demand side management programs.” Thus, the petitioners allege that the GOC provided assistance to Stelco in the form of grants, or by way of work that may have been done directly by the government itself.

The petitioners did not submit documentation to support their allegation. Moreover, the petitioners did not provide sufficient evidence that any financial contribution or benefit was provided during 2000, or that any potential subsidies were specific only to Stelco (and did not provide any information with respect to other producers). Therefore, we are not including this program in our investigation.

8. Manufacturing and Processing Profits Deduction/Credit Provided to Stelco

The petition notes that, according to its financial statements, Stelco received a manufacturing and processing profits deduction or credit from 1986 through 2000. The petitioners claim that this deduction/credit is a countervailable subsidy because it was either regionally specific or, alternately, provided only to Stelco.

The petitioners have provided no evidence to support their claim that this tax program was regionally specific. The petitioners have also not provided any supporting evidence showing that this tax deduction/credit was specific because it was limited only to Stelco. Thus, we are not including this program in our investigation.

9. Investment Tax Credits Provided to Stelco

The petition notes that Stelco's financial statements from 1986 through 2000 indicate that “capital assets are recorded at historical cost less investment tax credits and include construction in process.” The petition also notes that, in a past antidumping investigation, Stelco reported that it received investment tax credits that represent “reimbursement by the Canadian government of research and development expenses.” Because some of the investment tax credits examined in the Final Affirmative Countervailing Duty Determination: Oil Country Tubular Goods from Canada, 51 FR 15037 (April 22, 1986) (“Oil Country Tubular Goods”) were found to be specific, and because it is unclear which type of industrial tax credits were included in Stelco's financial statements, the petitioners urge the Department to investigate Stelco's investment tax credits. Alternately, the petitioners argue that, because only Stelco's financial statements mentioned these types of credits, these investment tax credits were not provided through a generally available program and were only available to Stelco.

As noted above, the petitioners state as part of their argument that Stelco received “reimbursement by the Canadian government of research and development expenses.” However, the Department found in Oil Country Tubular Goods that research and development investment tax credits were not specific. Moreover, the petitioners have not provided any supporting evidence showing that this tax deduction/credit was, in fact, limited only to Stelco. Therefore, we are not including this program in our investigation.

GERMANY

A. General

The petitioners made several allegations regarding possible subsidies to Georgsmarienhuette GmbH (“GMH”) and Brandenburger Elecktrostahlwerke (“BES”). Based on our review of import data for the period January 1, 2000 through December 31, 2000, neither of these two companies had any imports of subject merchandise into the United States during the expected POI (see Memorandum to File, “Importers of Steel Wire Rod from Germany during the year 2000,” dated September 24, 2000). Given this, GMH and BES would not be selected to respond to our countervailing duty questionnaire. Therefore, we have not analyzed the petitioners' allegations with respect to these two companies and have not included them in our initiation of this investigation. However, if new information indicates that either GMH or BES should respond to our countervailing duty questionnaire, we will evaluate the petitioners' allegations at that time.

B. Equityworthiness and Creditworthiness

The petitioners allege that Saarstahl AG (“Saarstahl”) was both unequityworthy and uncreditworthy and that Ispat Hamburger Stahlwerke (“Ispat)” was uncreditworthy.

First, the petitioners allege that, consistent with our previous findings in Final Affirmative Countervailing Duty Determination: Steel Wire Rod from Germany, 64 FR 54990 (October 22, 1997) (German Wire Rod), the Department should continue to find Saarstahl, uncreditworthy in 1989. The petitioners also allege that Saarstahl was uncreditworthy from 1993 to 2000. In support of this argument, the petitioners, citing to Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from Germany; Preliminary Results of Countervailing Duty Administrative Review, 64 FR 16915 (April 7, 1997), claim that Saarstahl, due to massive financial losses, has been involved in a creditor arrangement from 1993 through 2000. Specifically, the petitioners refer to information on Saarstahl's website indicating that it is required to pay ten percent of its outstanding debt in order to obtain the relinquishment of its remaining debt. The petitioners also point to a 1997 news article confirming that Saarstahl's shareholders agreed to pay ten percent of the company's debts as part of a government-approved plant to relieve Saarstahl of its remaining debt. As a result, according to the petitioners, no rational investor would have loaned money to Saarstahl during these times.

Based on the same information relied upon for the uncreditworthy allegation (i.e., the creditor arrangement beginning in 1993), the petitioners also allege that Saarstahl was unequityworthy in 1994, 1996, 1998, and 1999, the years in which they claim the GOG made equity infusions into Saarstahl.

In Notice of Initiation of Countervailing Duty Investigations: Steel Wire Rod from Germany, Trinidad and Tobago, Canada and Venezuela, 62 FR 13866, 13868 (March 24, 1997), we initiated an uncreditworthy investigation for Saarstahl for the period 1993 through 1996 (in addition to the year 1989, as stated above). We did not, however, initiate an unequityworthy investigation for these same years because the petitioners had not alleged any equity infusions in the relevant years. Id. Our examination of the petitioners' evidence and, in particular, the information on Saarstahl's website concerning its bankruptcy proceedings, indicate sufficient evidence of Saarstahl's uncreditworthiness and unequityworthiness to warrant investigation. Specifically, we find that Saarstahl began bankruptcy proceedings in 1993 and made its last payment pursuant to a settlement agreement with creditors in 1999. Therefore, based upon our previous finding and these facts, we will investigate Saarstahl's creditworthiness in 1989 and those years between 1993 and 1999 in which it received any non-recurring subsidies, loans, or loan guarantees. Regarding Saarstahl's equityworthiness allegation, because we are not initiating with respect to any equity infusions into Saarstahl during the alleged years, we will not investigate Saarstahl's equityworthiness.

Second, consistent with German Wire Rod, the petitioners allege that Ispat was uncreditworthy in 1994. 62 FR at 54991. Based on our previous finding, we will consider Ispat's uncreditworthiness in 1994 if we find that it received any non-recurring subsidies, loans, or loan guarantees in that year.

C. Change in Ownership

The petitioners request that the Department examine the pre- and post-sale entity for each respondent that underwent a change in ownership and conduct a “same person” analysis, consistent with the methodology in the AST Remand Redetermination.

We will examine this issue in the course of the investigation to determine whether non-recurring subsidies provided to pre-sale company should be attributed to the post-sale company.

D. Programs

We are including in our investigation the following programs alleged in the petition to have provided countervailable subsidies to producers and exporters of the subject merchandise in Germany:

1. Allegations Pertaining Only to Saarstahl

a. Private Bank Debt Forgiveness/Liquidity Assurances by the GOS

b. 1989 Debt Forgiveness for Saarstahl

c. Subsidies Leading up to the 1997 Reorganization of Saarstahl

d. Research and Development Assistance to Saarstahl

2. Subsidies Pertaining Only to Ispat

a. Forgiveness of Ispat Hamburger Stahlwerke's 1994 Debt

3. Subsidies Pertaining to All/Other Producers and Exporters

a. Investment Allowance Act

b. Joint Program: Upswing East

c. Treuhandanstalt Assistance

d. Aid for Closure of Steel Operations

e. Structural Improvement Assistance Aids

4. State (Land) Government Benefits

a. Ruhr District Action Program

b. Consolidation Funds

c. Special Depreciation

d. Ecological Tax Scheme

5. ECSC Programs

a. ECSC Article 54 Loans

b. ECSC Loan Guarantees

c. Interest Rate Rebates

d. ECSC Redeployment Aid Under Article 56(2)(b) (Worker Assistance)

We are not including in our investigation the following programs alleged to benefit producers and exporters of the subject merchandise in Germany:

1. Alleged Subsidies to GMH

As noted above, based on our review of Customs' information, we believe that GMH did not export to the United States during our expected POI. Given this, GMH would not be selected to respond to our countervailing duty questionnaire. Consequently, we have not included the following subsidies which allegedly were provided only to GMH in our investigation. However, if new information indicates that this company should respond to our countervailing duty questionnaire, we will evaluate the petitioners' allegations at that time.

a. Operating Assistance to GMH from the Government of Lower Saxony and the GOG

b. Debt Relief and Grant Assistance in Connection with the Sale of GMH

c. Guaranteed Annual Management Service Contract Payments to GMH

2. Extension of Investment Premium Scheme in the New Lander

The petitioners allege that the German Parliament extended an 8 percent investment premium to large enterprises located in the new German Lander. In support of their allegation, the petitioners cite to a 1997 EC Report on competition policy.

Based on our review of the support documentation, it appears that the investment premium was not extended, as petitioners have alleged. Specifically, the report states:

The German Parliament had approved an Act which put back from 1996 to 1998 the date by which qualifying investment projects had to be completed; the Act did not affect the date for the start of the investment. The Commission considered that this extension constituted additional aid to the same projects, and would not encourage new projects. It was therefore operating assistance, and the Commission, citing the judgment in Philip Morris, refused to authorize the extension, which did not satisfy the tests laid down in Article 93.

(Footnote omitted.)

Because the information submitted by the petitioners does not support their allegation, we are not investigating this alleged subsidy.

3. German Lander Guarantee Schemes

The petitioners allege that certain Lander provide guarantee schemes for the rescue and restructuring of large industries. In claiming that this program is specific, the petitioners point to the fact that the guarantee schemes are only available in certain regions of Germany.

By the petitioners' own description, and according to the source documentation they submitted, these guarantee schemes are operated by the individual Lander. Therefore, because the individual Lander are the granting authorities, the petitioners need to address whether the benefits are specific within each of the Lander. They have not done so.

Because the petitioners have not alleged the elements necessary for the imposition of countervailing duties, we are not investigating this alleged subsidy.

4. Capital Investment Grants

The petitioners allege that the Steel Investment Allowance Act provides grants amounting to 20% of the acquisition cost of assets purchased or produced prior to January 1986 and ordered or produced after July 30, 1981.

Because the period covered by this program (1981-1986) predates the 15-year allocation period, there is no basis to believe that benefits continue to exist in the POI. Therefore, we are not investigating this alleged subsidy.

Trinidad and Tobago

A. Equityworthiness and Creditworthiness

The petitioners allege that, consistent with our previous findings in Final Affirmative Countervailing Duty Determination: Steel Wire Rod from Trinidad and Tobago, 62 FR 55003 (October 22, 1997) (“Trinidad Wire Rod”), the Department should find the Iron and Steel company of Trinidad and Tobago (“ISCOTT”) unequityworthy from June 13, 1984, to December 31, 1991. In addition, the petitioners cite to the Department's recent decision in Stainless Steel Plate in Coils from Belgium, 66 FR 20425, 20428 (April 23, 2001) in which the Department determined that where an investment decision occurs without a pre-infusion objective analysis, that investment results in a benefit. Accordingly, in this investigation, the petitioners allege that because they are unaware of any pre-infusion objective analysis undertaken by the GOTT and because in Trinidad Wire Rod the Department determined that the equity infusions made by the GOTT were part of an open-ended agreement to provide financial support regardless of financial performance, that ISCOTT was unequityworthy for all years in which the GOTT made equity infusions into ISCOTT (i.e., from June 13, 1984 through December 31, 1994).

In addition, the petitioners allege that, consistent with Trinidad Wire Rod, the Department should find ISCOTT uncreditworthy from June 13, 1984 to December 31, 1994.

For those years in which we previously found ISCOTT to be uncreditworthy (i.e., from June 13, 1984 through December 31, 1991), we will consider its unequityworthiness if we find that ISCOTT received any equity infusions during this period. In addition, for those years from 1992 through 1994, because, after examination of documentation from Trinidad Wire Rod 1997 (which was submitted on the record of this investigation), we found no evidence of any pre-infusion objective analysis, we will investigate whether ISCOTT was unequityworthy in these years if we find that ISCOTT received any equity infusions during this period. Also, if in the course of this investigation we discover that ISCOTT received any non-recurring subsidies, loans, or loan guarantees in any year during the period from June 13, 1984 to December 31, 1994, we will investigate whether it was uncreditworthy in that year.

B. Change in Ownership

The petitioners allege that ISCOTT received non-recurring grants prior to its change in ownership and that, after the changes in ownership, the successor company, Caribbean Ispat Limited (“CIL”) is, for all intents and purposes, the same “person” as ISCOTT. Consequently, according to the petitioners, consistent with the Department's recent AST Remand Redetermination, the past countervailable subsidies received by ISCOTT continue to be countervailable after the changes in ownership. Therefore, the petitioners request, consistent with the methodology in the AST Remand Redetermination, that all non-recurring subsidies provided to ISCOTT be attributed in full to CIL.

We will examine this issue in the course of the investigation to determine whether non-recurring subsidies provided to ISCOTT should be attributed to CIL.

C. Programs

We are including in our investigation the following programs alleged in the petition to have provided countervailable subsidies to producers and exporters of the subject merchandise in Trindad and Tobago:

1. Equity Infusions into ISCOTT

2. Debt Forgiveness Provided in Conjunction With CIL's Purchase of ISCOTT

3. Export Allowance Under Act No. 14

4. Export Market Development Grants

5. Export Promotion Allowance

6. Corporate Tax Exemptions Under the Fiscal Incentives Act

7. Provision of Electricity

We are not including in our investigation the following programs alleged to benefit producers and exporters of the subject merchandise in Trinidad and Tobago:

1. Point Lisas Lease

The petition alleges that the GOTT holds a majority ownership in Point Lisas Industrial Port Development Company, Ltd. (“PLIPDECO”), and that PLIPDECO received less than adequate remuneration from its lease with CIL. The petitioners state that, while the lease terms were examined in Trinidad Wire Rod and found not countervailable, the renegotiation of the lease terms in 1996 was not examined.

In Trinidad Wire Rod, we found that PLIPDECO received adequate remuneration from the CIL lease, and therefore, no subsidy existed. The petitioners have provided no new evidence in the petition that the 1996 renegotiation of lease terms provided less than adequate remuneration to PLIPDECO. Therefore, we are not investigating the Point Lisas lease.

Turkey

A. Programs

We are including in our investigation the following programs alleged in the petition to have provided countervailable subsidies to producers and exporters of the subject merchandise in Turkey:

1. Deduction from Taxable Income for Export Revenue

2. Export Credit Bank of Turkey Subsidies

a. Pre-shipment Export Loans

b. Foreign Trade Corporate Companies Rediscount Credit Facility

c. Export Credit Insurance Program

d. Past Performance Related Foreign Currency Loan

e. Revolving Export Credits

f. Buyer's Credits

3. Foreign Exchange Loan Assistance

4. Payments for Exports on Turkish Ships/State Aid for Exports Program

5. Advance Refunds of Tax Savings

6. Taxes, Duties, and Credit Charges Exemption

7. Customs Duty Exemption

8. Energy Incentive

9. General Incentives Program (“GIP”)

a. Incentive Program on Domestically Obtained Goods

b. Investment Allowances

i. Investment Allowance Based on Region

ii. 200% Investment Allowance

c. Subsidized Credit Facility

d. Resource Utilization Support Fund

i. VAT Rebate

ii. 15% Investment Payment

iii. Payments to Exporters

e. Incentives Granted to Less Developed and Industrial Belt Regions

i. Law 4325 Land Allocation

ii. Electricity Discounts

iii. Special Incentives for East and Southeast Turkey

We are not including in our investigation the following programs alleged to benefit producers and exporters of the subject merchandise in Turkey:

1. Export Incentive Certificate Customs Duty and Other Tax Exemptions

The petitioners allege that this program, under which companies were permitted to import spare parts free of customs duties and certain other taxes provided the imported parts were used in the manufacture of goods for export, bestowed countervailable benefits on producers and exporters of subject merchandise in the POI. The Department previously investigated this program and found it terminated with no residual benefits accruing. (See Certain Welded Carbon Steel Pipes and Tubes and Welded Carbon Steel Line Pipe from Turkey; Final Results of Countervailing Duty Administrative Review, 64 FR 44496, 44497 (August 16, 1999)). Therefore, the Department is not investigating this program.

2. General Incentives Programs

a. 100% Investment Allowance.

The petitioners allege that a one hundred percent allowance is provided under the GIP for certain investments regardless of geographic region. The Department previously investigated this program in Certain Welded Carbon Steel Pipes and Tubes from Turkey; Preliminary Results of Countervailing Duty Administrative Review (“Pipe Prelim 1998”), 65 FR 18070 (April 6, 2000). We note that in Pipe Prelim 1998, the Department found that this program was neither de jure nor de facto specific and, thus, not countervailable. In the instant proceeding, the petitioners provided no information to the contrary. Therefore, the Department is not investigating the one hundred percent investment allowance program.

b. Law 4325 Corporate and Income Tax Exemption.

The petitioners allege that Law 4325 provides tax exemptions for new businesses established between January 1, 1998, and December 31, 2000, for certain cities within the less-developed regions. They also allege that companies qualifying for this deduction, and who employ at least ten workers, are exempt from corporate and income taxes for a period of five years from the beginning of their operations. However, the information provided by the petitioners does not confirm the existence of this program. Thus, because the petitioners have not met the requirements of section 702(b) of the Act by supporting their allegations with reasonably available information, the Department is not investigating the alleged Law 4325 tax exemptions.

3. Export Tax Rebate and Supplemental Tax Rebate

The petitioners allege that the GRT provides export tax rebates to exporters based on the percentage of export receipts converted from a foreign currency into Turkish lira. They also allege that the Turkish government provides supplemental tax rebates to exporters with annual exports of more than $2 million. In Certain Welded Carbon Steel Pipe and Tube Products from Turkey; Preliminary Results of Countervailing Duty Administrative Reviews, 52 FR 47621 (December 15, 1987) the Department stated that “the Government of Turkey eliminated basic and supplemental export tax rebates on exports of iron and steel products to the United States.” Furthermore, benefits received under this program are considered recurring and as such, would be expensed in the year of receipt. (See 19 CFR 351.524). Therefore, the Department is not investigating this program.

Distribution of Copies of the Petitions

In accordance with section 702(b)(4)(A)(i) of the Act, a copy of the public version of the respective petition has been provided to the GOB, GOC, GOG, GOTT, GRT, and EC. We will attempt to provide a copy of the public version of the respective petition to each exporter named in each petition, as provided for under 19 CFR 351.203(c)(2).

ITC Notification

We have notified the ITC of our initiations, as required by section 702(d) of the Act.

Preliminary Determination by the ITC

The ITC will determine no later than October 15, 2001, whether there is a reasonable indication that imports of carbon and certain alloy steel wire rod from Brazil, Canada, Germany, Trinidad and Tobago, and Turkey are causing material injury, or threatening to cause material injury, to a U.S. industry. A negative ITC determination for any country will result in the investigation being terminated for that country; otherwise, these investigations will proceed according to statutory and regulatory time limits.

This notice is issued and published pursuant to section 777(i) of the Act.

Dated: September 24, 2001.

Faryar Shirzad,

Assistant Secretary for Import Administration.

Footnotes

1.  See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp. 639, 642-44 (CIT 1988); High Information Content Flat Panel Displays and Display Glass from Japan: Final Determination; Rescission of Investigation and Partial Dismissal of Petition, 56 FR 32376, 32380-81 (July 16, 1991).

2.  Certain Steel Wire Rod, Inv. No. TA-204-06, Final Staff Report, Table II-2 at II-4.