01-24755. Final Affirmative Countervailing Duty Determination: Certain Hot-Rolled Carbon Steel Flat Products from South Africa

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Final Affirmative Countervailing Duty Investigation.

SUMMARY:

On April 20, 2001, the Department of Commerce (the Department) published in the Federal Register its preliminary affirmative determination in the countervailing duty investigation of certain hot-rolled carbon steel flat products from South Africa.

The subsidy rates in the final determination differ from those in the preliminary determination. The revised final subsidy rates for the investigated producers/exporters are listed below in the “Suspension of Liquidation” section of this notice.

EFFECTIVE DATE:

October 3, 2001.

FOR FURTHER INFORMATION CONTACT:

Sally C. Gannon at [phone], Mark Hoadley at [phone], or Julio Fernandez at [phone], Office of AD/CVD Enforcement VII, Group III, Import Administration, International Trade Administration, U.S. Department of Commerce, Room 7866, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are references to the Tariff Act of 1930 (the Act), as amended. In addition, unless otherwise indicated, all citations to the Department's regulations are to the regulations codified at 19 CFR Part 351 (2000).

Background

This investigation covers three producers/exporters: Highveld Steel and Vanadium Corporation Limited (Highveld), Iscor, Ltd. (Iscor), and Saldanha Steel Ltd. (Saldanha Steel). On April 20, 2001, the Department published the results of its preliminary determination in the investigation of certain hot-rolled carbon steel flat products from South Africa. See 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) (Preliminary Determination). We invited interested parties to comment on the Preliminary Determination. On April 26, 2001, Saldanha Steel Ltd. (Saldanha Steel) submitted comments on what it alleged to be clerical errors in the preliminary determination calculations. The Department addressed these allegations in the Memorandum to Joseph A. Spetrini From Barbara E. Tillman Regarding Clerical Error Allegations (May 7, 2001) (Clerical Error Memo) (on file in the Department's Central Records Unit, in Room B-099).

On May 7, 2001, we received comments from petitioners regarding the verification of the questionnaire responses. Verification of the parties' questionnaire responses was conducted from May 7 through May 21, 2001. On June 13, 2001, we postponed the final determination in this investigation until September 17, 2001, pursuant to the postponement of the final determination in the companion antidumping duty investigation of certain hot-rolled carbon steel flat products from Thailand with which this investigation had previously been aligned. See Notice of Postponement of Final Antidumping Duty Determination: Certain Hot-Rolled Carbon Steel Flat Products from Thailand; and Notice of Postponement of Final Countervailing Duty Determinations: Certain Hot-Rolled Carbon Steel Flat Products from Thailand and South Africa, 66 FR 31888 (June 13, 2001).

The GOSA, Saldanha Steel, and Iscor, as well as the petitioners, submitted timely case briefs in this investigation. On August 29, 2001, we received rebuttal briefs from Saldanha Steel and petitioners. On August 30, 2001, we conducted a public hearing.

Although the deadline for this final determination was September 17, 2001, in light of the events of September 11, 2001 and the subsequent closure of the Federal Government for reasons of security, the time frame for issuing this determination has been extended by four days.

Scope of the Investigation

The merchandise subject to this investigation is certain hot-rolled carbon steel flat products of a rectangular shape, of a width of 0.5 inch or greater, neither clad, plated, nor coated with metal and whether or not painted, varnished, or coated with plastics or other non-metallic substances, in coils (whether or not in successively superimposed layers), regardless of thickness, and in straight lengths, of a thickness of less than 4.75 mm and of a width measuring at least 10 times the thickness. Universal mill plate (i.e., flat-rolled products rolled on four faces or in a closed box pass, of a width exceeding 150 mm, but not exceeding 1250 mm, and of a thickness of not less than 4 mm, not in coils and without patterns in relief) of a thickness not less than 4.0 mm is not included within the scope of this investigation.

Specifically included within the scope of this investigation are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, and the substrate for motor lamination steels. IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium or niobium (also commonly referred to as columbium), or both, added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum.

Steel products included in the scope of this investigation, regardless of definitions in the Harmonized Tariff Schedule of the United States (HTSUS), are products in which: (i) iron predominates, by weight, over each of the other contained elements; (ii) the carbon content is 2 percent or less, by weight; and (iii) none of the elements listed below exceeds the quantity, by weight, respectively indicated:

1.80 percent of manganese, or

2.25 percent of silicon, or

1.00 percent of copper, or

0.50 percent of aluminum, or

1.25 percent of chromium, or

0.30 percent of cobalt, or

0.40 percent of lead, or

1.25 percent of nickel, or

0.30 percent of tungsten, or

0.10 percent of molybdenum, or

0.10 percent of niobium, or

0.15 percent of vanadium, or

0.15 percent of zirconium.

All products that meet the physical and chemical descriptions provided above are within the scope of this investigation unless otherwise excluded. The following products, by way of example, are outside or specifically excluded from the scope of this investigation:

• Alloy hot-rolled steel products in which at least one of the chemical elements exceeds those listed above (including, e.g., American Society for Testing and Materials (ASTM) specifications A543, A387, A514, A517, A506).
• Society of Automotive Engineers (SAE)/American Iron & Steel Institute (AISI) grades of series 2300 and higher.
• Ball bearings steels, as defined in the HTSUS.
• Tool steels, as defined in the HTSUS.
• Silico-manganese (as defined in the HTSUS) or silicon electrical steel with a silicon level exceeding 2.25 percent.
• ASTM specifications A710 and A736.
• USS Abrasion-resistant steels (USS AR 400, USS AR 500).
• All products (proprietary or otherwise) based on an alloy ASTM specification (sample specifications: ASTM A506, A507).
• Non-rectangular shapes, not in coils, which are the result of having been processed by cutting or stamping and which have assumed the character of articles or products classified outside chapter 72 of the HTSUS.

The merchandise subject to this investigation is classified in the HTSUS at subheadings: 7208.10.15.00, 7208.10.30.00, 7208.10.60.00, 7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60, 7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60, 7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30, 7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90, 7208.40.60.30, 7208.40.60.60, 7208.53.00.00, 7208.54.00.00, 7208.90.00.00, 7211.14.00.90, 7211.19.15.00, 7211.19.20.00, 7211.19.30.00, 7211.19.45.00, 7211.19.60.00, 7211.19.75.30, 7211.19.75.60, and 7211.19.75.90. Certain hot-rolled carbon steel flat products covered by this investigation, including vacuum degassed fully stabilized; high strength low alloy; and the substrate for motor lamination steel may also enter under the following tariff numbers: 7225.11.00.00, 7225.19.00.00, 7225.30.30.50, 7225.30.70.00, 7225.40.70.00, 7225.99.00.90, 7226.11.10.00, 7226.11.90.30, 7226.11.90.60, 7226.19.10.00, 7226.19.90.00, 7226.91.50.00, 7226.91.70.00, 7226.91.80.00, and 7226.99.00.00. Subject merchandise may also enter under 7210.70.30.00, 7210.90.90.00, 7211.14.00.30, 7212.40.10.00, 7212.40.50.00, and 7212.50.00.00. Although the HTSUS subheadings are provided for convenience and U.S. Customs purposes, the Department's written description of the merchandise under investigation is dispositive.

Analysis of Programs and Analysis of Comments Received

The programs under investigation as well as the issues raised in the case and rebuttal briefs submitted in this countervailing duty investigation are discussed in the Issues and Decision Memorandum in the Final Affirmative Countervailing Duty Determination: Certain Hot-Rolled Carbon Steel Flat Products from South Africa, from Joseph A. Spetrini, Deputy Assistant Secretary for AD/CVD Enforcement III, to Faryar Shirzad, Assistant Secretary for Import Administration, dated September 21, 2001 (Decision Memorandum), which is hereby adopted by this notice. Attached to this notice as an appendix is a list of the programs under investigation and a list of the issues the parties raised and to which we have responded in the Decision Memorandum. Parties can find a complete discussion of the programs and issues raised in this investigation and the corresponding recommendations in this public memorandum, which is on file in the Department's Central Records Unit, in Room B-099. In addition, the Decision Memorandum can be accessed directly on the World Wide Web at http://ia.ita.doc.gov,, under the heading “Federal Register Notices.” The paper copy and electronic version of the Decision Memorandum are identical in content.

Subsidy Rates

In accordance with section 705(c)(1)(B)(i)(I) of the Act, we have calculated an individual rate for the companies under investigation, Highveld, Iscor and Saldanha. We have determined that the total estimated countervailable subsidy rate for Highveld is 0.45 percent ad valorem, which is de minimis. In accordance with section 705(c)(2) of the Act, we, therefore, determine that no countervailable subsidies are being provided to Highveld for the production or exportation of subject merchandise. As discussed in the “Cross-Ownership and Attribution of Subsidies” section of the Decision Memorandum, we are treating Saldanha Steel and Iscor as a single entity and, therefore, have calculated a single rate to be applied to these companies. With respect to the “all others” rate, section 705(c)(5)(A)(i) of the Act requires that the “all others” rate equal the weighted-average countervailable subsidy rates established for exporters and producers individually investigated, excluding any zero and de minimis countervailable subsidy rates. Therefore, because Highveld's rate is de minimis, we are using the Saldanha/Iscor rate as the “all others” rate.

Producer/Exporter	Subsidy rate
Saldanha Steel/Iscor	6.37% Ad Valorem
Highveld	0.45% Ad Valorem
All Others	6.37% Ad Valorem

Suspension of Liquidation

In accordance with our preliminary affirmative determination, we instructed the U.S. Customs Service (Customs) to suspend liquidation of all entries of certain hot-rolled carbon steel flat products from South Africa, which were entered or withdrawn from warehouse for consumption on or after April 20, 2001, the date of the publication of our Preliminary Determination in the Federal Register, and to require a cash deposit or bond for such entries of the merchandise in the amounts indicated in the Preliminary Determination. In the Preliminary Determination, in accordance with section 703(d) of the Act, we instructed Customs to discontinue the suspension of liquidation for merchandise entered on or after August 18, 2001, but to continue the suspension of liquidation of entries made between April 20, 2001 and August 17, 2001.

We will reinstate suspension of liquidation under section 706(a) of the Act for all entries, except those from Highveld, if the International Trade Commission (ITC) issues a final affirmative injury determination, and we will require a cash deposit of estimated countervailing duties for such entries of merchandise in the amounts indicated above. If the ITC determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or canceled.

ITC Notification

In accordance with section 705(d) of the Act, we will notify the ITC of our determination. In addition, we are making available to the ITC all non-privileged and non-proprietary information related to this investigation. We will allow the ITC access to all privileged and business proprietary information in our files, provided that the ITC confirms that it will not disclose such information, either publically or under an administrative protective order (APO), without the written consent of the Assistant Secretary for Import Administration.

If the ITC determines that material injury, or threat of material injury, does not exist, these proceedings will be terminated. If however, the ITC determines that such injury does exist, we will issue a countervailing duty order.

Return or Destruction of Proprietary Information

In the event that the ITC issues a final negative injury determination, this notice will serve as the only reminder to parties subject to the APO of their responsibility concerning the destruction of proprietary information disclosed under the APO in accordance with 19 CFR 351.305(a)(3). Failure to comply is a violation of the APO.

This determination is published pursuant to sections 705(d) and 777(i) of the Act.

Dated: September 21, 2001.

Faryar Shirzad,

Assistant Secretary for Import Administration.

Appendix I—Issues and Decision Memorandum

I. Subsidies Valuation Information

A. Industrial Development Corporation

B. Diversification of the South African Economy and Specificity of Programs

C. Allocation Period

D. Realignment of the Benefit Stream

E. Calculation of Discount Rates and Benchmark Loan Rates

F. Creditworthiness

G. Cross-Ownership and Attribution of Subsidies

H. Trading Companies

II. Programs Determined to Confer Subsidies

A. Section 37E Tax Allowances

B. Industrial Loan Financing Provided by the IDC and Findevco Ltd.

C. Loan Guarantees Provided by the IDC

D. Wharfage Fees for Exports

III. Programs Determined Not to Confer Subsidies

A. The IDC's Equity Infusions in Saldanha Steel

B. Improvements to Saldanha Bay Port

C. Improvements to the Sishen-Saldanha Rail Line

IV. Analysis of Comments

Comment 1: Treatment of the IDC

Comment 2: Diversification of the South African Economy and Specificity of Programs

Comment 3: Average Useful Life of Assets

Comment 4: Realignment of the Benefit Stream

Comment 5: Creditworthiness

Comment 6: Cross-Ownership

Comment 7: Section 37E and Specificity as an Export Subsidy

Comment 8: Section 37E and Specificity as a Domestic Subsidy

Comment 9: Equity Infusions

Comment 10: Loan Guarantees Provided by the IDC

Comment 11: Rates for Loan Guarantees

Comment 12: Wharfage Fees

Comment 13: Saldanha Bay Port Expansion Project, the Sishen-Saldanha Rail Line Upgrade and General Infrastructure

Comment 14: Improvements to the Sishen-Saldanha Rail Line

Comment 15: Improvements to Saldanha Bay Port

Comment 16: Saldanha Steel's Sales Values

V. Total Ad Valorem Rate

VI. Recommendation