[Federal Register Volume 64, Number 250 (Thursday, December 30, 1999)]
[Notices]
[Pages 73519-73523]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33975]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-122-805]
Final Results of Expedited Sunset Review: New Steel Rail From
Canada
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of expedited sunset review: New steel
rail from Canada.
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SUMMARY: On June 1, 1999, the Department of Commerce (``the
Department'') initiated a sunset review of the countervailing duty
order on new steel rail from Canada (64 FR 29261) pursuant to section
751(c) of the Tariff Act of 1930, as amended (``the Act''). On the
basis of a notice of intent to participate and an adequate substantive
response filed on behalf of domestic interested parties and inadequate
response (in this case, no response) from respondent interested
parties, the Department determined to conduct an expedited review. As a
result of this review, the Department finds that revocation of the
countervailing duty order would be likely to lead to continuation or
recurrence of a countervailable subsidy. The net countervailable
subsidy and the nature of the subsidy are identified in the Final
Results of Review section of to this notice.
FOR FURTHER INFORMATION CONTACT: Darla D. Brown or Melissa G. Skinner,
Office of Policy for Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street & Constitution
Avenue, NW, Washington, DC 20230; telephone: (202) 482-3207 or (202)
482-1560, respectively.
Effective Date: December 30, 1999.
Statute and Regulations
This review was conducted pursuant to sections 751(c) and 752 of
the Act. The Department's procedures for the conduct of sunset reviews
are set forth in Procedures for Conducting Five-year (``Sunset'')
Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516
(march 20, 1998) (``Sunset Regulations'') and 19 CFR Part 351 (1999) in
general. Guidance on methodological or analytical issues relevant to
the Department's conduct of sunset reviews is set forth in the
Department's Policy Bulletin 98:3--Policies Regarding the Conduct of
Five-year (``Sunset'') Reviews of Antidumping and Countervailing Duty
Orders; Policy Bulletin, 63 FR 18871
[[Page 73520]]
(April 16, 1998) (``Sunset Policy Bulletin'').
Scope
The merchandise subject to this countervailing duty order is new
steel rail, whether of carbon, high carbon, alloy or other quality
steel from Canada. Subject merchandise includes but is not limited to,
standard rails, all main line sections (at least 30 kilograms per meter
or 60 pounds per yard), heat-treated or head-hardened (premium) rails,
transit rails, contact rails (or `'third rail'') and crane rails. Rails
are used by the railroad industry, by rapid transit lines, by subways,
in mines, and in industrial applications.
Specifically excluded from the order are light rails (less than 30
kilograms per meter or 60 pounds per yard). Also excluded from the
order are relay rails, which are used rails taken up from primary
railroad track and relaid in a railroad yard or on a secondary track.
As a result of a changed circumstances review in 1996, the
countervailing duty order on new steel rail from Canada was partially
revoked with regard to 100ARA-A new steel rail, except light rail.\1\
Moreover, nominal 60 pounds per yard steel rail is outside the scope of
this order.\2\
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\1\ See New Steel Rail, Except Light Rail, From Canada; Final
Results of Changed Circumstances Antidumping and Countervailing Duty
Administrative Reviews, and Revocation in Part of Antidumping and
Countervailing Duty Orders, 61 FR 11607 (March 21, 1996).
\2\ See New Steel Rail, Except Light Rail, From Canada; Notice
of Termination of Changed Circumstances Administrative Reviews and
Clarification of Scope Language, 63 FR 43137 (August 12, 1998).
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This merchandise is currently classifiable under the Harmonized
Tariff Schedule (HTS) items 7302.10.1010, 7302.10.1015, 7302.10.1035,
7302.10.1045, 7302.10.5020, 8548.90.0000.\3\ The HTS item numbers are
provided for convenience and U.S. Customs purposes only. The written
description remains dispositive.
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\3\ Per conversation with April Avalone at U.S. Customs on
September 7, 1999.
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This order covers imports from all producers and exporters of new
steel rail from Canada, except the Algoma Steel Corporation, which was
excluded from the original order.
History of the Order
In the final determination, as amended, the Department determined
that the following programs conferred countervailable benefits:
Federal Programs
(1) Debenture Guarantees Provided to Sydney Steel Corporation
(``Sysco'');
(2) Forgiven Wharf Loan;
(3) Regional Development Incentives Program (``RDIP'');
(4) Certain Investment Tax Credits (``ITCs'');
Joint Federal-Provincial Programs
(5) General Development Agreements (``GDA'');
(6) Economic and Regional Development Agreements (``ERDA'');
(7) Iron Ore Freight Subsidy to Algoma;
Provincial Programs (Province of Nova Scotia)
(8) Grants for Payment of Principal and Interest on Debentures;
(9) Operating Grants Provided to Sysco; and
(10) Equity Infusions Provided to Sysco.\4\
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\4\ See Final Affirmative Countervailing Duty Determination; New
Steel Rail, Except Light Rail, from Canada, 54 FR 31991 (August 3,
1989), as amended, Countervailing Duty Order and Amendment to the
Final Affirmative Countervailing Duty Determination of New Steel
Rail, Except Light Rail, from Canada, 54 FR 39032 (September 22,
1989), and, as amended New Steel Rail, Except Light Rail, from
Canada: Amendment to Final Affirmative Countervailing Duty
Determination and Order in Accordance with Decision on Remand, 55 FR
35702 (August 31, 1990).
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Specifically, the Department calculated that these programs
conferred a total net subsidy of 94.57 percent ad valorem for all
Canadian manufacturers, producers, or exporters, excluding Algoma. As a
result of a de minimis net subsidy determined for Algoma, this Canadian
producer/exporter was excluded from the order.
Since the original investigation, the Department has conducted a
changed circumstances review of the order.\5\ As noted above, as a
result of this review, the Department revoked the countervailing duty
order with regard to 100ARA-A new steel rail, except light rail from
Canada.\6\ The Department has not conducted any administrative reviews
of this order. The order remains in effect for all manufacturers and
exporters of the subject merchandise from Canada, except for Algoma.
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\5\ See footnote 1.
\6\ See id.
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Background
On June 1, 1999, the Department initiated a sunset review of the
countervailing duty order on new steel rail from Canada (64 FR 29261),
pursuant to section 751(c) of the Act. The Department received a Notice
of Intent to Participate on behalf of Pennsylvania Steel Technologies,
Inc. (``PST''), a subsidiary of Bethlehem Steel Corporation, and Rocky
Mountain Steel Mills (``RMSM'') (collectively, the ``domestic
interested parties'') on June 16, 1999, within the deadline specified
in section 351.218(d)(1)(i) of the Sunset Regulations. We received a
complete substantive response from the domestic interested parties on
July 1, 1999, within the 30-day deadline specified in the Sunset
Regulations under section 351.218(d)(3)(i). Both PST and RMSM claimed
interested party status under 19 USC 1677(9)(C) as U.S. manufacturers
of the subject merchandise. In addition, PST stated that it is a
subsidiary of Bethlehem Steel Corporation, a petitioner in the original
investigation. We did not receive a substantive response from any
respondent interested party in this case. As a result, pursuant to 19
CFR 351.218(e)(1)(ii)(C), the Department determined to conduct an
expedited, 120-day, review of the order.
In accordance with section 751(c)(5)(C)(v) of the Act, the
Department may treat a review as extraordinarily complicated if it is a
review of a transition order (i.e., an order in effect on January 1,
1995). On October 12, 1999, the Department determined that the sunset
review of the countervailing duty order on new steel rail from Canada
is extraordinarily complicated, and extended the time limit for
completion of the final results of this review until not later than
December 28, 1999, in accordance with section 751(c)(5)(B) of the
Act.\7\
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\7\ See extension of Time Limit for Final Results of Five-Year
Reviews, 64 FR 55233 (October 12, 1999).
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Determination
In accordance with section 751(c)(1) of the Act, the Department
conducted this review to determine whether revocation of the
countervailing duty order would be likely to lead to continuation or
recurrence of a countervailable subsidy. Section 752(b) of the Act
provides that, in making this determination, the Department shall
consider the net countervailable subsidy determined in the
investigation and subsequent reviews, and whether any change in the
programs which gave rise to the net countervailable subsidy has
occurred that is likely to affect the net countervailable subsidy.
Pursuant to section 752(b)(3) of the Act, the Department shall provide
to the International Trade Commission (``the Commission'') the net
countervailable subsidy likely to prevail if the order is revoked. In
addition, consistent with section 752(a)(6), the Department shall
provide the Commission information concerning the nature of each
subsidy and whether the subsidy is a subsidy
[[Page 73521]]
described in Article 3 or Article 6.1 of the 1994 WTO Agreement on
Subsidies and Countervailing Measures (``Subsidies Agreement'').
The Department's determinations concerning continuation or
recurrence of a countervailable subsidy, the net countervailable
subsidy likely to prevail if the order is revoked, and nature of the
subsidy are discussed below. In addition, parties' comments with
respect to each of these issues are addressed within the respective
sections below.
Continuation or Recurrence of a Countervailable Subsidy
Drawing on the guidance provided in the legislative history
accompanying the Uruguay Round Agreements Act (``URAA''), specifically
the Statement of Administrative Action (``the SAA''), H.R. Doc. No.
103-316, vol. 1 (1994), the House Report, H.R. Rep. No. 103-826, pt. 1
(1994), and the Senate Report, S. Rep. No. 103-412 (1994), the
Department issued its Sunset Policy Bulletin providing guidance on
methodological and analytical issues, including the basis for
likelihood determinations. The Department clarified that determinations
of likelihood will be made on an order-wide basis (see section III.A.2
of the Sunset Policy Bulletin). Additionally the Department normally
will determine that revocation of a countervailing duty order is likely
to lead to continuation or recurrence of a countervailable subsidy
where (a) a subsidy program continues, (b) a subsidy program has been
only temporarily suspended, or (c) a subsidy program has been only
partially terminated (see section III.A.3.a of the Sunset Policy
Bulletin).
In addition to considering the guidance on likelihood cited above,
section 751(c)(4)(B) of the Act provides that the Department shall
determine that revocation of the order would be likely to lead to
continuation or recurrence of a countervailable subsidy where a
respondent interested party waives its participation in the sunset
review. Pursuant to the SAA, at 881, in a review of a countervailing
duty order, when the foreign government has waived participation, the
Department shall conclude that revocation of the order would be likely
to lead to continuation or recurrence of a countervailable subsidy for
all respondent interested parties.\8\ In this instant review, the
Department did not receive a substantive response from the foreign
government or from any other respondent interested party. Pursuant to
section 351.218(d)(2)(iii) of the Sunset Regulations, this constitutes
a waiver of participation.
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\8\ See 19 CFR 351.218(d)(2)(iv).
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In their substantive response, the domestic interested parties
argue that revocation of the countervailing duty order would likely
result in the continuation or recurrence of countervailable subsidies.
First, they describe several programs administered on the provincial
level by the Province of Nova Scotia that were determined in the
original investigation to confer bounties or grants. They argue that
Sysco was and continues to be the recipient of these subsidies (see
July 1, 1999, Substantive Response of the domestic interested parties
at 8). The domestic interested parties argue that the Grants for
Payment of Principal and Interest on Debentures, Operating Grants, and
Equity Infusions programs continue to exist and confer countervailable
subsidies. As for Long-Term Loan Guarantees, the domestic interested
parties state that Sysco's public financial statements do not indicate
that the trust company guarantees found countervailable in the original
investigation have continued. However, they maintain that the financial
position of the company is so weak that it could not obtain any
commercial funding absent provincial guarantees of its debt (see id. at
10).
Of the three joint-federal programs, the domestic interested
parties argue that under the General Development Agreements and
Economic and Regional Development Agreements programs no direct or
specific outlays were made to Sysco in the most recent budget, but the
province or company may still be benefitting from these programs.
Moreover, they point out that the Canadian government has notified the
World Trade Organization that it uses both of these programs but that
it considers them to be ``green box'' programs that cannot be
countervailed (see id. at 12-13). Finally, the domestic interested
parties point out that the Iron Ore Freight Subsidy to Algoma did not
apply to Sysco, but rather to Algoma.
The domestic interested parties also state that there is no
evidence that the federal programs found to be countervailable in the
original investigation, namely, Debenture Guarantees, Forgiven Wharf
Loan, Regional Development Incentives Program, and Investment tax
Credits, continue to benefit Sysco. However, they point out, there has
not been an administrative review of the order and the Government of
Canada has not provided any information concerning these four programs
(see id. at 13).
The domestic interested parties maintain that Sysco benefits from
past and present subsidies, and therefore, the Department should
determine that revocation of the countervailing duty order on new steel
rail from Canada would likely result in the continuation or recurrence
of countervailable subsidies.
As noted above, in our final determination, as amended, the
Department determined that the programs in question conferred a bounty
or grant, the net amount of which was calculated to be 94.57 percent ad
valorem for Canadian exporters/producers other than Algoma. The
Department has conducted no administrative reviews of this outstanding
countervailing duty order.
Given that the Department has not conducted an administrative
review of this order nor have we reviewed the programs in question in
any other administrative review, the Department does not have any
information that programs have been terminated without residual
benefits. Therefore, we agree with the domestic interested parties that
the Canadian programs remain in place. Based on the continued existence
of programs found to confer countervailable subsidies, the fact that
the foreign government and other respondent parties waived their right
to participate in this review before the Department, and absent
argument and evidence to the contrary, the Department determines that
it is likely that a countervailable subsidy will continue if the order
is revoked.
Net Countervailable Subsidy
In the Sunset Policy Bulletin, the Department stated that,
consistent with the SAA and House Report, the Department normally will
select a rate from the investigation as the net countervailable subsidy
likely to prevail if the order is revoked because that is the only
calculated rate that reflects the behavior of exporters and foreign
governments without the discipline of an order or suspension agreement
in place. The Department noted that this rate may not be the most
appropriate rate if, for example, the rate was derived from subsidy
programs which were found in subsequent reviews to be terminated, if
there has been a program-wide change, or if the rate ignores a program
found to be countervailable in a subsequent administrative review. (See
section III.B.3 of the Sunset Policy Bulletin). Additionally, where the
Department determined company-specific countervailing duty rates in the
original investigation, the Department normally will report to the
Commission
[[Page 73522]]
company-specific rates from the original investigation or where no
company-specific rate was determined for a company, the Department
normally will provide to the Commission the country-wide or ``all
others'' rate. (See section III.B.2 of the Sunset Policy Bulletin).
In their substantive response, the domestic interested parties
argue that the countervailing duty rate likely to prevail if the order
on new steel rail from Canada is revoked would be at least as large as
that existing at the time of the original order. The domestic
interested parties argue that as the rate determined in the original
investigation is the only calculated rate which reflects the behavior
of exporters without the discipline of the order in place, the
Department's policy provides that it normally will select this rate to
provide to the Commission. Noting that the programs found to provide
subsidies in the original investigation continue to exist, the domestic
interested parties maintain that the Department should utilize the
subsidy rate it originally determined when calculating the net
countervailable subsidy in this sunset review.
As discussed in the Sunset Policy Bulletin, the Department normally
will report to the Commission an original subsidy rate as adjusted to
take into account terminated programs, program-wide changes, and
programs found to be countervailable in subsequent reviews. We agree
with the domestic interested parties that all programs, with the
exception of the Long-term Loan Guarantees program (which was
determined on remand not to confer a countervailable subsidy), found in
the original investigation to provide countervailable subsidies
continue to exist. Absent evidence or argument that there have been any
changes to the programs found to be countervailable in the original
determination, as amended, that would affect the net countervailable
subsidy, consistent with the Sunset Policy Bulletin, the Department
determines that the net countervailable subsidy likely to prevail if
the order were revoked is 94.57 percent.
Nature of the Subsidy
In the Sunset Policy Bulletin, the Department stated that,
consistent with section 752(a)(6) of the Act, the Department will
provide information to the Commission concerning the nature of the
subsidy and whether it is a subsidy described in Article 3 or Article
6.1 of the Subsidies Agreement.
The domestic interested parties maintain that the provincial
subsidy programs fall under Article 6 of the Subsidies Agreement
because they cause serious prejudice to the importing country and the
total value of the subsidies provided over the past ten years, spread
over the total sales value of that period, far exceeds five percent of
sales (see July 1, 1999, Substantive Response of the domestic
interested parties at 21).
Given that receipt of benefits under any of the programs included
in our calculation is not contingent upon export, none of these
programs fall within the definition of an export subsidy under Article
3.1(a) of the Subsidies Agreement. The Department agrees with the
domestic interested parties that because the benefits received under
the provincial programs include subsidies to cover operating losses
sustained by an enterprise (Operating Grants) and direct forgiveness of
debt and grants to cover debt repayment (Grants for Payment of
Principal and Interest Debentures), these programs are actionable under
Article 6 of the Subsidies Agreement. Moreover, the Equity Infusions
program could be found to be inconsistent with Article 6 if the net
countervailable subsidy exceeds 5 percent, as measured in accordance
with Annex IV of the Subsidies Agreement. The Department, however, has
no information with which to make such a calculation, nor do we believe
it appropriate to attempt such a calculation in the course of a sunset
review. Rather, we are providing the Commission the following program
descriptions.
Subsidy Programs
The subsidy programs, including a description of each, identified
by the Department and used in its determination of the net
countervailable subsidy likely to prevail if the order were revoked are
listed below.
Grants for Payment of Principal and Interest on Debentures
The Government of Nova Scotia has provided Sysco with grants to
cover principal payments and interest payments on its long-term
debentures since 1982.
Operating Grants Provided to Sysco
The Government of Nova Scotia has provided Sysco with operating
grants to cover its general operating expenses and for capital
expenditures.
Equity Infusions Provided to Sysco
The Department determined in the original investigation that Sysco
is unequityworthy and, therefore, the equity infusions made by the
Government of Nova Scotia were found to be countervailable.
Debenture Guarantees Provided to Sysco
Federal debentures were issued in 1973 and 1975 for 20 years.
Forgiven Wharf Loan
In 1972, the federal government provided Sysco with a loan to
construct a loading wharf, which was completed in June 1978.
Regional Development Incentive Program
This program was established in 1969 for the purpose of creating
stable employment opportunities in certain regions in Canada where
employment and economic opportunities are chronically low, particularly
in the Atlantic provinces.
General Development Agreements (GDA)
GDAs provided the legal basis for various departments of the
federal and provincial governments to cooperate in the establishment of
economic assistance programs.
Economic and Regional Development Agreements (ERDA)
Essentially a continuation of GDAs, ERDAs established programs,
delineated administrative procedures, and set up the relative funding
commitments of the federal and provincial governments.
Final Results of Review
As a result of this review, the Department finds that revocation of
the countervailing duty order on new steel rail from Canada would be
likely to lead to continuation or recurrence of countervailable
subsidies at the rates listed below.\9\
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\9\ As noted above, due to a de minimis net subsidy found for
Algoma, this Canadian producer/exporter was excluded from the order.
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Net
subsidy
Manufacturer/exporter rate
(percent)
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Sydney Steel Corporation.................................... 94.57
Bernard Railtrack Export Inc................................ 94.57
All Others.................................................. 94.57
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This notice serves as the only reminder to parties subject to
administrative protective order (``APO'') of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 351.305 of the Department's regulations.
Timely notification of return/destruction of APO materials or
conversion to judicial protective order is hereby requested. Failure to
comply with the regulations and the terms of an APO is a sanctionable
violation.
[[Page 73523]]
This five-year (``sunset'') review and notice are in accordance
with sections 751(c), 752, and 777(i)(1) of the Act.
Dated: December 23, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-33975 Filed 12-29-99; 8:45 am]
BILLING CODE 3510-DS-M
