[Federal Register Volume 59, Number 227 (Monday, November 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29239]
[Federal Register: November 28, 1994]
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DEPARTMENT OF COMMERCE
[C-475-815]
Preliminary Affirmative Countervailing Duty Determination: Small
Diameter Circular Seamless Carbon and Alloy Steel Standard, Line and
Pressure Pipe (``Seamless Pipe'') From Italy
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: November 28, 1994.
FOR FURTHER INFORMATION CONTACT: Thomas McGinty or Peter Wilkniss,
Office of Countervailing Investigations, Import Administration, U.S.
Department of Commerce, Room 3099, 14th Street and Constitution Avenue,
N.W., Washington, D.C. 20230; telephone (202) 482-5055 and (202) 482-
0588, respectively.
Preliminary Determination
The Department preliminarily determines that benefits which
constitute subsidies within the meaning of section 701 of the Tariff
Act of 1930, as amended (``the Act''), are being provided to
manufacturers, producers, or exporters of seamless pipe in Italy. For
information on the estimated net subsidies, please see the Suspension
of Liquidation section of this notice.
Case History
Since the publication of the notice of initiation in the Federal
Register (59 FR 37028, July 20, 1994), the following events have
occurred.
On July 26 and 27, 1994, respectively, we issued countervailing
duty questionnaires to the Government of Italy (``GOI'') and the
Commission of the European Communities (``EC''), in Washington, D.C.,
concerning petitioner's allegations. On August 2, 1994, the GOI
responded to the first section of our questionnaire informing us that
Dalmine S.p.A. (``Dalmine''), an Italian steel pipe producer, accounted
for more than 85 percent of Italian exports of the subject merchandise
to the United States during the POI. The GOI, the EC, and Dalmine
submitted questionnaire responses on October 3, 1994. On October 18,
1994, we issued deficiency questionnaires to these parties. We received
responses from the GOI and the EC on October 31, 1994, and from Dalmine
on November 7, 1994.
On August 24, 1994, we postponed the preliminary determination in
this investigation until November 18, 1994 (59 FR 43554, August 24,
1994).
Scope of Investigation
For the purposes of this investigation, seamless pipes are seamless
carbon and alloy (other than stainless) steel pipes, of circular cross-
section, not more than 114.3 mm (4.5 inches) in outside diameter,
regardless of wall thickness, manufacturing process (hot-finished or
cold-drawn), end finish (plain end, bevelled end, upset end, threaded,
or threaded and coupled), or surface finish. These pipes are commonly
known as standard pipe, line pipe or pressure pipe, depending upon the
application. They may also be used in structural applications.
The seamless pipes subject to this investigation are currently
classifiable under subheadings 7304.10.10.20, 7304.10.50.20,
7304.31.60.50, 7304.39.00.16, 7304.39.00.20, 7304.39.00.24,
7304.39.00.28, 7304.39.00.32, 7304.51.50.05, 7304.51.50.60,
7304.59.60.00, 7304.59.80.10, 7304.59.80.15, 7304.59.80.20, and
7304.59.80.25 of the Harmonized Tariff Schedule of the United States
(``HTSUS'').
The following information further defines the scope of this
investigation, which covers pipes meeting the physical parameters
described above:
Specifications, Characteristics, and Uses: Seamless pressure pipes
are intended for the conveyance of water, steam, petrochemicals,
chemicals, oil products, natural gas, and other liquids and gasses in
industrial piping systems. They may carry these substances at elevated
pressures and temperatures and may be subject to the application of
external heat. Seamless carbon steel pressure pipe meeting the American
Society for Testing and Materials (``ASTM'') standard A-106 may be used
in temperatures of up to 1000 degrees fahrenheit, at various American
Society of Engineers (``ASME'') code stress levels. Alloy pipes made to
ASTM standard A-335 must be used if temperatures and stress levels
exceed those allowed for A-106 and the ASME codes. Seamless pressure
pipes sold in the United States are commonly produced to the ASTM-106
standard.
Seamless standard pipes are most commonly produced to the ASTM A-53
specification and generally are not intended for high temperature
service. They are intended for the low temperature and pressure
conveyance of water, steam, natural gas, air and other liquids and
gasses in plumbing and heating systems, air conditioning units,
automatic sprinkler systems, and other related uses. Standard pipes
(depending on type and code) may carry liquids at elevated temperatures
but must not exceed relevant ASME code requirements.
Seamless line pipes are intended for the conveyance of oil and
natural gas or other fluids in pipe lines. Seamless line pipes are
produced to the API 5L specification.
Seamless pipes are commonly produced and certified to meet ASTM A-
106, ASTM A-53, and API 5L specifications. Such triple certifications
of pipes is common because all pipes meeting the stringent A-106
specification necessarily meet the API 5L and ASTM A-53 specifications.
Pipes meeting the API 5L specification necessarily meet the ASTM A-53
specification. However, pipes meeting the A-53 or API 5L specifications
do not necessarily meet the A-106 specification. To avoid maintaining
separate productions runs and separate inventories, manufacturers
triple certify the pipes. Since distributors sell the vast majority of
this product, they can thereby maintain a single inventory to service
all customers.
The primary application of ASTM A-106 pressure pipes and triple
certified pipes is in pressure piping systems by refineries,
petrochemical plants, and chemical plants. Other applications are in
power generation plants (electrical-fossil fuel or nuclear), and in
some oil field uses (on shore and off shore) such as for separator
lines, gathering lines, and metering runs. A minor application of this
product is for use as oil and gas distribution line for commercial
applications. These applications constitute the majority of the market
for the subject seamless pipes. However, A-106 pipes may be used in
some boiler applications.
The scope of this investigation includes all multiple-stenciled
seamless pipe meeting the physical parameters described above and
produced to one of the specifications listed above, whether or not also
certified to a non-covered specification. Standard, line and pressure
applications are defining characteristics of the scope of this
investigation. Therefore, seamless pipes meeting the physical
description above, but not produced to the A-106, A-53, or API 5L
standards shall be covered if used in an A-106, A-335, A-53, or API 5L
application.
For example, there are certain other ASTM specifications of pipe
which, because of overlapping characteristics, could potentially be
used in A-106 applications. These specifications include A-162, A-192,
A-210, A-333, and A-524. When such pipes are used in a standard, line
or pressure pipe application, such products are covered by the scope of
this investigation.
Specifically excluded from this investigation are boiler tubing,
mechanical tubing, and oil country tubular goods except when used in a
standard, line or pressure pipe application. Also excluded from this
investigation are redraw hollows for cold-drawing when used in the
production of cold-drawn pipe or tube.
Although the HTSUS subheadings are provided for convenience and
U.S. Customs purposes, our written description of the scope of this
proceeding is dispositive. This scope description is currently under
review and may be altered in the preliminary determination of the
companion antidumping duty investigation of seamless pipe from Italy.
Injury Test
Because Italy is a ``country under the Agreement'' within the
meaning of section 701(b) of the Act, the U.S. International Trade
Commission (``ITC'') is required to determine whether imports of
seamless pipe from Italy materially injure, or threaten material injury
to, a U.S. industry. On August 3, 1994, the ITC preliminarily
determined that there is a reasonable indication that an industry in
the United States is being materially injured or threatened with
material injury by reason of imports from Italy of the subject
merchandise (59 FR 42286, August 17, 1994).
Petitioner
The petition in this investigation was filed by Gulf States Tubes,
a division of Quanex Corporation.
Corporate History of Respondent Dalmine
Prior to its liquidation in 1988, Finsider S.p.A. (``Finsider'')
was the holding company for all state-owned steel companies in Italy.
Dalmine was an operating company wholly owned by Finsider. After
Finsider's liquidation, a new government-owned holding company, ILVA
S.p.A. (``ILVA''), was created. ILVA took over the former Finsider
companies, among them Dalmine, which became a subsidiary of ILVA in
1989, when Finsider's shareholding in Dalmine was transferred to ILVA.
Between 1990 and 1993, Dalmine itself was restructured. Dalmine
became a financial holding company, with industrial, trading, and
service shareholdings. As part of its restructuring, Dalmine made
several asset purchases, sold two of its subsidiaries to private
parties, and closed several manufacturing facilities. As of December
31, 1993, the Dalmine Group consisted of a holding company (Dalmine
S.p.A.), four wholly-owned, and one majority-owned, manufacturing
companies, and a number of sales and service subsidiaries.
During the POI, ILVA was owned by the Istituto per la Ricostruzione
Industriale (``IRI''), a holding company which was wholly-owned by the
GOI.
Spin-offs
In its questionnaire response, Dalmine reported that between 1990
and 1991, as part of its overall restructuring process, the company
sold two ``productive units'' to private buyers. According to Dalmine,
these sales involved assets that do not produce the subject
merchandise. Based on our analysis of Dalmine's response with respect
to the productive units sold, we preliminarily determine that the
amount of potentially spun-off benefits is insignificant. Therefore, we
have not evaluated whether these benefits are attributable to sales of
the subject merchandise for purposes of this preliminary determination.
(See Final Concurrence Memorandum dated November 18, 1994.)
Equityworthiness
Petitioner has alleged that Dalmine was unequityworthy in 1989, the
year it received an indirect equity infusion from the GOI, through ILVA
S.p.A. (``ILVA''), and that the equity infusion was, therefore,
inconsistent with commercial considerations.
In its questionnaire response, Dalmine has provided evidence that
private investors, unrelated to Dalmine or the GOI, purchased a
significant percentage of the 1989 equity offering, on the same terms
as ILVA. Therefore, the Department preliminarily determines that ILVA's
purchase of Dalmine's shares was consistent with commercial
considerations. (See section 355.44(e)(1)(i) of the Proposed
Regulations.)
Creditworthiness
Petitioner has alleged that Dalmine was uncreditworthy in every
year between 1979 and 1993. In accordance with section 355.44 of the
Proposed Regulations, we examined Dalmine's current, quick, times
interest earned, and debt-to-equity ratios, in addition to its profit
margin. Based on this analysis, we preliminarily determine that Dalmine
was creditworthy from 1979 through 1993. (See Creditworthy Memorandum,
November 18, 1994). Specifically, although a number of the financial
indicators are weak for certain years, none of the indicators are weak
over the medium or long term, and when examined together on a yearly
basis, the indicators support the determination that Dalmine was
creditworthy in every year examined. In addition, Dalmine received
comparable long-term, commercial loans from private lenders in several
of the years examined. While we have based our preliminary
creditworthiness determination on the company's financial indicators,
the fact that Dalmine received a number of long-term commercial loans
during this period supports our finding.
Benchmarks and Discount Rates
Dalmine did not take out any long-term fixed rate lira denominated
loans or other debt obligations in any of the years of the government
loans under investigation. Therefore, in accordance with section
355.44(b)(4) of the Proposed Regulations, we used, as the benchmark
interest rate, the Bank of Italy reference rate. We have determined
that this rate constitutes the best approximation of the cost of long-
term borrowing in Italy and the only long-term fixed interest rate
commonly available in Italy. (See Final Affirmative Countervailing Duty
Determinations: Certain Steel Products from Italy (``Certain Steel from
Italy''), 58 FR, 37327 (July 9, 1993).)
We have also used this rate as the discount rate for allocating
over time the benefit from non-recurring grants for the same reasons as
explained in Final Affirmative Countervailing Duty Determination:
Certain Steel Products from Spain, 58 FR 37374, 37376 (July 9, 1993).
For long-term loans denominated in other currencies, we used, as
the benchmark interest rate, the average long-term fixed interest rate
denominated in the same currency. (See section E--Article 54 Loans
below.)
Calculation Methodology
For purposes of this preliminary determination, the period for
which we are measuring subsidies (the POI) is calendar year 1993. In
determining the benefits received under the various programs described
below, we used the following calculation methodology. We first
calculated the benefit attributable to the POI for each countervailable
program, using the methodologies described in each program section
below. For each program, we then divided the benefit attributable to
Dalmine in the POI by Dalmine's total sales revenue, as none of the
programs was limited to either certain subsidiaries or products of
Dalmine. Next, we added the benefits for all programs, including the
benefits for programs which were not allocated over time, to arrive at
Dalmine's total subsidy rate. Because Dalmine is the only respondent
company in this investigation, this rate is also the country-wide rate.
Consistent with our practice in preliminary determinations, when a
response to an allegation denies the existence of a program, receipt of
benefits under a program, or eligibility of a company or industry under
a program, and the Department has no persuasive evidence showing that
the response is incorrect, we accept the response for purposes of the
preliminary determination. All such responses, however, are subject to
verification. If the response cannot be supported at verification, and
the program is otherwise countervailable, the program will be
considered a subsidy in the final determination.
Based upon our analysis of the petition and the responses to our
questionnaires, we preliminarily determine the following:
I. Programs Preliminarily Determined to be Countervailable
A. Benefits Provided Under Law 675/77
Law 675/77 was enacted in 1977 to bring about restructuring and
reconversion in the following industrial sectors: (1) electronic
technology; (2) the manufacturing industry; (3) the agro-food industry;
(4) the chemical industry; (5) the steel industry; (6) the pulp and
paper industry; (7) the fashion sector; and (8) the automobile and
aviation sectors. Law 675/77 also sought to promote optimal
exploitation of energy resources, and ecological and environmental
recovery.
A primary goal of this legislation was to bring all government
industrial assistance programs under a single law. Other goals were (1)
to reorganize and develop the industrial sector as a whole; (2) to
increase employment in the South; and (3) to maintain employment in
depressed areas. Among other measures taken, the Interministerial
Committee for the Coordination of Industrial Policy (``CIPI'') was
created as a result of Law 675/77. CIPI approves individual projects in
each of the industrial sectors listed above.
Six main programs were provided under Law 675/77: (1) interest
contributions on bank loans; (2) mortgage loans provided by the
Ministry of Industry at subsidized interest rates; (3) interest
contributions on funds raised by bond issues; (4) capital grants for
projects in the South; (5) personnel retraining grants; and (6) VAT
reductions on purchases of capital goods by companies in the South.
Dalmine reported that it received benefits under items (1), (2), and
(5) above.
In its response, the GOI asserts that the steel and automobile
industries did not receive a ``disproportionate'' share of benefits
associated with interest contributions when the extent of government
investment in those industries is compared to the extent of investment
in other industries. However, in keeping with past practice, we did not
consider the level of investment in the individual industries receiving
benefits under Law 675/77. Instead, we followed the analysis outlined
in Grain-Oriented Electrical Steel and Final Affirmative Countervailing
Duty Determination: Certain Steel Products from Brazil, 58 FR 37295,
37295 (July 9, 1993), of comparing the share of benefits received by
the steel industry to the collective share of benefits provided to
other users of the programs.
According to the information provided by the GOI, the two dominant
users of the interest contribution program were (1) the Italian steel
industry which accounted for 33 percent of the benefits, and (2) the
auto industry which accounted for 34 percent of the benefits. Likewise,
with respect to the mortgage loans, the two dominant users were the
auto and steel industries which received 45 percent and 31 percent of
the benefits, respectively.
In light of the above evidence, we preliminarily determine that the
steel industry was a dominant user of both the interest contribution
and the mortgage loan programs under Law 675/77 because the steel
industry has been a dominant user of these programs. (See section
355.43(b)(2)(iii) of the Proposed Regulations.) Therefore, we
preliminarily determine that benefits received by Dalmine under these
programs are being provided to a specific enterprise or industry or
group of enterprises or industries. On this basis, we preliminarily
find Law 675/77 financing to be countervailable.
Under the interest contribution program, Italian commercial banks
provided loans to industries designated under Law 675/77. According to
the responses of the GOI and Dalmine, the interest owed by the
recipient companies was partially offset by interest contributions from
the GOI. Dalmine received bank loans with interest contributions under
Law 675/77 which were outstanding in the POI.
Because Dalmine knew that it would receive the GOI interest
contributions over the life of the loan when it obtained the loans, we
consider the contributions to constitute reductions in the interest
rates charged rather than grants (see Certain Steel from Italy at
37335).
Under the mortgage loan program, the GOI provides long-term loans
at subsidized interest rates. Dalmine received financing under this
program which was outstanding in the POI.
To determine whether these programs conferred a benefit, we
compared the effective interest rate paid by Dalmine to the benchmark
interest rate, discussed above. Based on this comparison, we
preliminarily determine that the financing provided under these
programs is inconsistent with commercial considerations, i.e., on terms
more favorable than the benchmark financing.
To calulcate the benefit from these programs, we used our standard
long-term loan methodology as described in section 355.49(c)(1) of the
Proposed Regulations. We then divided the benefit allocated to the POI
for each program by Dalmine's total sales in 1993. On this basis, we
determine the net subsidy from these programs to be 0.47 percent ad
valorem for all manufacturers, producers, and exporters in Italy of the
subject merchandise.
With respect to retraining grants provided to Dalmine under Law
675/77, it is the Department's practice to treat training benefits as
recurring grants. (See Certain Steel General Issues Appendix at 37226).
Since the only grant reported under this program was received by
Dalmine in 1986, any benefit to Dalmine as a result of this grant
cannot be attributed to the POI. Therefore, we determine that
retraining benefits provided under Law 675/77 conferred no benefit to
Dalmine during the POI.
B. Grants Under Law 193/84
According to the GOI, Articles 2, 3, and 4 of Law 193/84 provide
for subsidies to close steel plants. As stated in Art. 20 of Law N. 46
of 17/2/1982, steel enterprises, including enterprises producing
seamless pipes, welded pipes, conduits and welded pipes for water and
gas, are the recipients of these subsidies. As benefits under this
program are limited to the steel industry, we preliminary determine
that Law 193/84 is de jure specific and, therefore, countervailable. In
this investigation, information provided by Dalmine indicates that the
company received grants under Law 193/84.
To calculate the benefit during the POI, we used our standard grant
methodology (see section 355.49(b) of the Proposed Regulations). We
then divided the benefits attributable to Dalmine under Law 193/84 in
the POI by Dalmine's total sales. On this basis, we determine the
estimated net subsidy to be 0.75 percent ad valorem for all
manufacturers, producers, and exporters in Italy of the subject
merchandise.
C. Exchange Rate Guarantee Program
This program, which was enacted by Law 796/76, provides exchange
rate guarantees on foreign currency loans from the European Coal and
Steel Community (``ECSC'') and The Council of European Resettlement
Fund (``CER''). Under the program, repayment amounts are calculated by
reference to the exchange rate in effect at the time the loan is agreed
upon. The program sets a ceiling and a floor on repayment to limit the
effect on the borrower of exchange rate changes over time. For example,
if the lire depreciates five percent against the DM (the currency in
which the loan is taken out), borrowers would normally find that they
would have to repay five percent more (in lire terms). However, under
the Exchange Rate Guarantee Program, the ceiling would act to limit the
increased repayment amount to two percent. There is also a floor in the
program which would apply if the lire appreciated against the DM. The
floor would limit any windfall to the borrower.
In Grain-Oriented Electrical Steel, the Department found this
program to be not countervailable because of incomplete information
regarding the specificity of the program. The Department stated that,
because the determination was reached while lacking certain important
information, the finding of non-countervailability would not carry over
to future investigations.
In this investigation, information provided by the GOI shows that
the steel industry received 25% of the benefits under the program.
Based on this information, the Department preliminarily determines that
the steel industry was a dominant user of exchange rate guarantees
under Law 796/76 and, thus, that benefits received by Dalmine under
this law are being provided to a specific enterprise or industry or
group of enterprises or industries. (See section 355.43(b)(2)(iii) of
the Proposed Regulations.) Therefore, we preliminarily determine that
the exchange rate guarantees offered under the program are
countervailable to the extent they are provided on terms inconsistent
with commercial considerations.
Dalmine provided information that it could have purchased an
exchange rate guarantee from commercial sources. However, Dalmine's
information pertained to 1993, not to the period when the government-
provided guarantees were taken out. The GOI's response indicates that
commercial exchange rate guarantees were not available in 1986, the
year in which the loan and the guarantee were received. Therefore, we
preliminarily determine the benefit to Dalmine to be the total amount
of GOI payments on these loans made during the POI by the GOI. (Because
the amount the government will pay in any given year will not be known
until that year, benefits can only be calculated on a year-by-year
basis.) We divided the GOI's payments in 1993 by Dalmine's 1993 total
sales. On this basis, we determine the estimated net subsidy from this
program to be 0.20 percent ad valorem for all manufacturers, producers,
and exporters in Italy of the subject merchandise.
II. Programs Preliminarily Determined to be Not Countervailable
A. 1988/89 Equity Infusion
In November 1989, Dalmine completed an equity rights offering which
allowed existing shareholders to purchase 7 new shares for every 10
shares they already owned. The new shares were offered at a price of
LIT 300 per share. At that time, ILVA owned 81.7 percent of Dalmine's
equity, with the remaining 18.3 percent owned by private investors.
Pursuant to the rights offering, ILVA subscribed to its full allotment
of the new shares. The remainder of the new shares were purchased by
private shareholders. All shares were purchased at LIT 300 per share.
Petitioner argues that although Dalmine's shares were nominally
publicly traded, the vast majority of Dalmine shares were indirectly
owned by the GOI and, therefore, shares were not purchased in adequate
volume by private investors to establish a valid benchmark.
Specifically, petitioner contends that in 1991 ILVA owned 99.9 percent
of Dalmine and, therefore, Dalmine's shares were in fact not publicly
traded. Consequently, because essentially no private purchases were
being made, the market price at the time of the equity infusion cannot
serve as a valid benchmark. Furthermore, petitioner asserts that it is
highly likely that the remaining shares not purchased by ILVA were
purchased indirectly by the GOI through other holding companies.
In response to our questionnaire, Dalmine provided a list of all
purchasers of shares in the 1989 offering. There is no evidence to
indicate that the shares not purchased by ILVA were purchased by other
government controlled or owned entities, as petitioner suggests.
Moreover, the extent of ILVA's ownership in 1991 is not relevant to the
choice of a benchmark for the equity investment in 1989.
We have preliminarily determined that, because 18.3 percent of the
equity infusion was purchased by private shareholders, the sale of
these shares provides the market-determined price for Dalmine's equity.
Furthermore, in accordance with section 355.44 (e)(1) of the
Department's Proposed Regulations, we preliminarily determine that the
equity infusion is not countervailable because the market-determined
price for Dalmine's shares is not less than the price paid by ILVA for
those shares.
B. European Social Fund (``ESF'') Grants
The ESF was established by the 1957 European Economic Community
Treaty to increase employment and help raise worker living standards.
As described in Grain-Oriented Electrical Steel, the ESF receives
its funds from the EC's general budget whose main revenue sources are
customs duties, agricultural levies, value-added taxes collected by the
member states, and other member state contributions.
The member states are responsible for selecting the projects to be
funded by the EC. The EC then disburses the grants to the member states
which manage the funds and implement the projects. According to the EC,
ESF grants are available to (1) people over 25 who have been unemployed
for more than 12 months; (2) people under 25 who have reached the
minimum school-leaving age and who are seeking a job; and (3) certain
workers in rural areas and regions characterized by industrial decline
or lagging development.
The GOI has stated that the ESF grants received by Italy have been
used for vocational training. Certain regions in the South are also
eligible for private sector re-entry and retraining schemes. Since
1990, the vocational training grants have been available to unemployed
youths and long-term unemployed adults all over Italy, according to the
GOI. Before 1990, however, the GOI gave preference to certain regions
in Italy.
In Grain-Oriented Electrical Steel, we determined that this program
was not regionally specific and not otherwise limited to a specific
enterprise or industry, or group of enterprises or industries.
Furthermore, we noted that to the extent there is a regional preference
(i.e., southern Italy) in the distribution of ESF benefits, it has not
resulted in a countervailable benefit to the production of the subject
merchandise, which is produced in northern Italy.
The GOI's response in this investigation is consistent with the
information provided in Grain-Oriented Electrical Steel. Therefore, we
preliminarily determine that this program is not limited to a specific
enterprise or industry, or group of enterprises or industries and,
therefore, is not countervailable.
C. ECSC Article 54 Loans
Under Article 54 of the 1951 ECSC Treaty, the European Commission
provides loans directly to iron and steel companies for modernization
and the purchase of new equipment. The loans finance up to 50 percent
of an investment project. The remaining financing needs must be met
from other sources. The Article 54 loan program is financed by loans
taken by the Commission, which are then re-lent to iron and steel
companies in the member states at a slightly higher interest rate than
that at which the Commission obtained them.
Consistent with the Department's finding in Grain-Oriented
Electrical Steel, we preliminarily determine that this program is
limited to the iron and steel industry. As a result, loans under this
program are specific.
Of the Article 54 loans Dalmine had outstanding during the POI,
some were denominated in U.S. dollars and others were in Dutch guilders
(``NLG''). To determine whether the loans were provided on terms
inconsistent with commercial considerations, we used benchmark interest
rates for the currencies in which the loans were denominated. That is,
for the U.S. dollar loans we used the average interest rate on long-
term fixed-rate U.S. dollar loans obtained in the United States, as
reported by the Federal Reserve. For the NLG denominated loan, we used
the average long-term bond rate for private borrowers in the
Netherlands, as reported by the Organization for Economic Cooperation
and Development (``OECD'').
Because the interest rates paid on Dalmine's Article 54 loans are
higher than the benchmark interest rates, the Department preliminarily
determines that loans provided under this program are not preferential
and, therefore, not countervailable.
D. 1989 Provisional Payment in Connection With 1989 Equity Infusion
In March 1989, ILVA made a payment to Dalmine in anticipation of
purchasing new shares in Dalmine. The payment was provisional in nature
because EC authorization of the capital increase was necessary, and if
authorization was not granted, the money would have been repaid to
ILVA. The capital increase was not finalized until November 1989, due
to delays in EC approval. At that time, the payment became equity
capital.
Consistent with the Department's position in Final Affirmative
Countervailing Duty Determination: Grain-Oriented Electrical Steel from
Italy (Grain-Oriented Electrical Steel), 59 FR 18357 (April 18, 1994),
we preliminarily determine that the funds provided by ILVA to Dalmine
are countervailable.
During the period March-November 1989, Dalmine had use of the money
and paid no interest on it. Therefore, we have treated the funds
provided by ILVA to Dalmine as an interest-free short-term loan from
March 1989 to November 1989.
Because any benefit from this interest-free loan would be allocable
entirely to 1989, no benefit is attributable to the POI.
III. Programs Preliminarily Determined to be Not Used
Based on the information provided in the responses, we
preliminarily determine that the following programs were not used. This
determination is subject to verification.
1. Preferential IMI Export Financing Under Law 227/77
2. Preferential Insurance Under Law 227/77
3. Retraining Grants under Law 181/89
4. Benefits under ECSC Article 56
Verification
In accordance with section 776(b) of the Act, we will verify the
information submitted by respondents prior to making our final
determination.
Suspension of Liquidation
In accordance with section 703(d) of the Act, we are directing the
U.S. Customs Service to suspend liquidation of all entries of seamless
pipe from Italy, which are entered or withdrawn from warehouse, for
consumption on or after the date of the publication of this notice in
the Federal Register, and to require a cash deposit or bond for such
entries of the merchandise in the amounts indicated below. This
suspension will remain in effect until further notice.
Seamless Pipe
Country-Wide Ad Valorem Rate--1.42 percent
ITC Notification
In accordance with section 703(f) of the Act, we will notify the
ITC of our determination. In addition, we are making available to the
ITC all nonprivileged and nonproprietary information relating to this
investigation. We will allow the ITC access to all privileged and
business proprietary information in our files, provided the ITC
confirms that it will not disclose such information, either publicly or
under an administrative protective order, without the written consent
of the Deputy Assistant Secretary for Investigations, Import
Administration.
If our final determination is affirmative, the ITC will make its
final determination within 45 days after the Department makes its final
determination.
Public Comment
In accordance with 19 CFR 355.38, we will hold a public hearing, if
requested, to afford interested parties an opportunity to comment on
this preliminary determination. The hearing will be held on January 18,
1995, at the U.S. Department of Commerce, Room 3708, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230. Individuals who wish
to request a hearing must submit a written request within ten days of
the publication of this notice in the Federal Register to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, room
B099, 14th Street and Constitution Avenue, NW., Washington, DC 20230.
Parties should confirm by telephone the time, date, and place of the
hearing 48 hours before the scheduled time.
Requests should contain: (1) the party's name, address, and
telephone number; (2) the number of participants; (3) the reason for
attending; and (4) a list of the issues to be discussed. In addition,
ten copies of the business proprietary version and five copies of the
nonproprietary version of the case briefs must be submitted to the
Assistant Secretary no later than January 9, 1995. Ten copies of the
business proprietary version and five copies of the nonproprietary
version of the rebuttal briefs must be submitted to the Assistant
Secretary no later than January 16, 1995. An interested party may make
an affirmative presentation only on arguments included in that party's
case or rebuttal briefs. Written arguments should be submitted in
accordance with section 355.38 of the Commerce Department's regulations
and will be considered if received within the time limits specified
above.
This determination is published pursuant to section 703(f) of the
Act (19 U.S.C. 1671b(f)).
Dated: November 18, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-29239 Filed 11-25-94; 8:45 am]
BILLING CODE 3510-DS-P
