[Federal Register Volume 64, Number 50 (Tuesday, March 16, 1999)]
[Notices]
[Pages 12993-12996]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-6294]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-894-802]
Notice of Initiation of Countervailing Duty Investigation:
Certain Cut-To-Length Carbon-Quality Steel Plate From the Former
Yugoslav Republic of Macedonia
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: March 16, 1999.
FOR FURTHER INFORMATION CONTACT: Eva Temkin, at (202) 482-1167, Import
Administration, U.S. Department of Commerce, Room 1870, 14th Street and
Constitution Avenue, NW, Washington, DC 20230.
Initiation of Investigation
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 (URAA). In addition, unless otherwise
indicated, all citations to the
[[Page 12994]]
Department's regulations are to the regulations codified at 19 CFR Part
351 (1998) and to the substantive countervailing duty regulations
published in the Federal Register on November 25, 1998 (63 FR 65348).
The Petition
On February 16, 1999, the Department of Commerce (the Department)
received a petition filed in proper form on behalf of U.S. Steel Group,
a Unit of USX Corporation, Bethlehem Steel Corporation, Gulf States,
Inc., IPSCO Steel Inc., Tuscaloosa Steel Corporation, and the United
Steelworkers of America (the petitioners). Supplements to the petition
were filed on February 26 and March 2, 1999.
In accordance with section 702(b)(1) of the Act, petitioners allege
that manufacturers, producers, or exporters of certain cut-to-length
carbon-quality steel plate (CTL plate or subject merchandise) in the
Former Yugoslav Republic of Macedonia receive countervailable subsidies
within the meaning of section 701 of the Act.
The Department finds that petitioners filed the petition on behalf
of the domestic industry because they are interested parties as defined
under sections 771(9)(C) and (D) of the Act. The petitioners have
demonstrated sufficient industry support (see Determination of Industry
Support for the Petition below).
Scope of the Investigation
The products covered by this scope are certain hot-rolled carbon-
quality steel: (1) Universal mill plates (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 nominal or actual thickness of
not less than 4 mm, which are cut-to-length (not in coils) and without
patterns in relief), of iron or non-alloy-quality steel; and (2) flat-
rolled products, hot-rolled, of a nominal or actual thickness of 4.75
mm or more and of a width which exceeds 150 mm and measures at least
twice the thickness, and which are cut-to-length (not in coils).
Steel products to be included in this scope are of rectangular,
square, circular or other shape and of rectangular or non-rectangular
cross-section where such non-rectangular cross-section is achieved
subsequent to the rolling process (i.e., products which have been
``worked after rolling'')--for example, products which have been
beveled or rounded at the edges. Steel products that meet the noted
physical characteristics that are painted, varnished or coated with
plastic or other non-metallic substances are included within this
scope. Also, specifically included in this scope are high strength, low
alloy (HSLA) steels. HSLA steels are recognized as steels with micro-
alloying levels of elements such as chromium, copper, niobium,
titanium, vanadium, and molybdenum.
Steel products to be included in this scope, regardless of
Harmonized Tariff Schedule of the United States (HTSUS) definitions,
are products in which: (1) Iron predominates, by weight, over each of
the other contained elements, (2) the carbon content is two percent or
less, by weight, and (3) none of the elements listed below is equal to
or exceeds the quantity, by weight, respectively indicated:
1.80 percent of manganese, or
1.50 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
0.41 percent of titanium, or
0.15 percent of vanadium, or
0.15 percent zirconium.
All products that meet the written physical description, and in
which the chemistry quantities do not equal or exceed any one of the
levels listed above, are within the scope of this investigation unless
otherwise specifically excluded. The following products are
specifically excluded from this investigation: (1) Products clad,
plated, or coated with metal, whether or not painted, varnished or
coated with plastic or other non-metallic substances; (2) SAE grades
(formerly AISI grades) of series 2300 and above; (3) products made to
ASTM A710 and A736 or their proprietary equivalents; (4) abrasion-
resistant steels (i.e., USS AR 400, USS AR 500); (5) products made to
ASTM A202, A225, A514 grade S, A517 grade S, or their proprietary
equivalents; (6) ball bearing steels; (7) tool steels; and (8) silicon
manganese steel or silicon electric steel.
The merchandise subject to this investigation is classified in the
HTSUS under subheadings:
7208.40.3030, 7208.40.3060, 7208.51.0030, 7208.51.0045, 7208.51.0060,
7208.52.0000, 7208.53.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000,
7211.13.0000, 7211.14.0030, 7211.14.0045, 7211.90.0000, 7212.40.1000,
7212.40.5000, 7212.50.0000, 7225.40.3050, 7225.40.7000, 7225.50.6000,
7225.99.0090, 7226.91.5000, 7226.91.7000, 7226.91.8000, 7226.99.0000.
Although the HTSUS subheadings are provided for convenience and Customs
purposes, the written description of the merchandise under
investigation is dispositive.
During our review of the petition, we discussed the scope with the
petitioners to ensure that the scope in the petition accurately
reflects the merchandise for which the domestic industry is seeking
relief. Moreover, as we discussed in the preamble to the Department's
regulations (62 FR at 27323), we are setting aside a period for parties
to raise issues regarding product coverage. In particular, we seek
comments on the specific levels of alloying elements set out in the
description above, the clarity of grades and specifications excluded
from the scope, and the physical and chemical description of the
product coverage. The Department encourages all parties to submit such
comments by March 29, 1999. Comments should be addressed to Import
Administration's Central Records Unit at Room 1870, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC
20230. The period of scope consultations is intended to provide the
Department with ample opportunity to consider all comments and consult
with parties prior to the issuance of the preliminary determinations.
Consultations
Pursuant to 19 CFR 351.202(i)(2), the Department invited
representatives of the Government of the Former Yugoslav Republic of
Macedonia for consultations with respect to the petition filed. On
March 3, 1999, the Department held consultations with a representative
of the Former Yugoslav Republic of Macedonia. See the March 8, 1999,
memoranda to the file regarding these consultations (public documents
on file in the Central Records Unit of the Department of Commerce, Room
B-099).
Determination of Industry Support for the Petition
Section 702(b)(1) of the Act requires that a petition be filed on
behalf of the domestic industry. Section 702(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
[[Page 12995]]
support for, or opposition to, the petition.
Section 771(4)(A) of the Act defines the ``industry'' as the
producers of a domestic like product. Thus, to determine whether the
petition has the requisite industry support, the statute directs the
Department to look to producers and workers who produce the domestic
like product. Section 771(10) of the Act defines domestic like product
as ``a product that is like, or in the absence of like, most similar in
characteristics and uses with, the article subject to an investigation
under this title.'' 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
petition. Moreover, the petitioners do not offer a definition of
domestic like product distinct from the scope of the investigation.
In this case, ``the article subject to investigation'' includes
certain products which have not previously been included within the
scope of investigation involving cut-to-length carbon steel products.
To this end, the Department has reviewed reasonably available
information to determine whether the products within the scope of the
investigation constitutes one or more than one domestic like
product(s).
Some steel products classified as alloy steels based on the HTSUS
are recognized as carbon steels by the industry and/or the marketplace.
For example, The Book of Steel, a 1996 publication by Sollac, a flat-
rolled steel division of Usinor, one of the largest steel companies in
the world, identifies HSLA as falling within categories of plain carbon
sheet steels (see chapter 44). Also, Carbon and Alloy Steels, published
in 1996 by ASM International, a major materials society, indicates that
HSLA steels are not considered to be alloy steels, but are in fact
similar to as-rolled mild-carbon steel and are generally priced by
reference to the base price for carbon steels (see page 29). Carbon and
Alloy Steels also distinguishes between carbon-boron and alloy-boron
steels; the former may contain boron at levels which would classify it
as alloy under the HTSUS, but would not classify it as an alloy steel
commercially because, unlike the alloy-boron steels, higher levels of
other alloying elements are not specified (see, e.g., pages 159 and
161).
The Department has considered that, with respect to certain steel
products, such as HSLA, the petitioners indicate that these steel
products are manufactured by similar processes, are priced from similar
bases, are marketed in comparable ways, and are used for similar
applications as carbon steels.
Further, we confirmed this description with product experts at the
Department and the International Trade Commission (ITC). Other than the
fact that the AISI technically defines alloy steels based on alloy
levels comparable to those in the HTSUS, none of the individuals cited
reasons why the products in question might be treated as distinct from
cut-to-length carbon steels. For these reasons, the Department
determines that for purposes of this investigation, the domestic like
product definition is the single domestic like product defined in the
``Scope of the Investigation'' section above.
Based on our analysis of the information and arguments presented to
the Department and the information independently obtained and reviewed
by the Department, we have determined that there is a single domestic
like product which is defined in the ``Scope of the Investigation''
section above. Moreover, the Department has determined that the
petition (and subsequent amendments to the petition) and supplemental
information obtained through Department research contain adequate
evidence of industry support and, therefore, polling is unnecessary.
The Department received no opposition to the petition. The petitioners
established industry support representing over 50 percent of total
production of the domestic like product.
Therefore, for this investigation, petitioners have established a
level of support for the petition commensurate with the statutory
requirements. Accordingly, the Department determines that the petition
was filed on behalf of the domestic industry within the meaning of
section 702(b)(1) of the Act. See the March 8, 1999, memoranda to the
file regarding the initiation of this investigation (public documents
on file in the Central Records Unit of the Department of Commerce, Room
B-099).
Injury Test
The Former Yugoslav Republic of Macedonia is not a ``Subsidies
Agreement country'' within the meaning of section 701(b) of the Act.
Therefore, the International Trade Commission (ITC) is not required to
determine whether imports of the subject merchandise from the Former
Yugoslav Republic of Macedonia materially injure or threaten material
injury to a U.S. industry.
Initiation of Countervailing Duty Investigation
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 petitioners
supporting the allegations. Because the Former Yugoslav Republic of
Macedonia is not a Subsidies Agreement country, the requirements of
section 701(a)(2), which relate to injury, do not apply to this
proceeding.
The Department has examined the petition on CTL plate from the
Former Yugoslav Republic of Macedonia and has found that it complies
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 to determine whether manufacturers,
producers, or exporters of CTL plate from the Former Yugoslav Republic
of Macedonia received countervailable subsidies during the period of
investigation (POI), January 1, 1998 through December 31, 1998. See the
March 8, 1999, memoranda to the file regarding the initiation of this
investigation (public documents on file in the Central Records Unit of
the Department of Commerce, Room B-099).
Company History
Petitioners have made specific subsidy allegations with respect to
one CLT producer: Rudnici i Zelezara, known as ``Makstil.'' Makstil is
the spun-off entity from Skopje Steel Works (``Skopje''), a state-owned
steel company. During 1996, the Government of the Former Yugoslav
Republic of Macedonia spun-off Skopje into thirteen companies to
prepare for privatization. Makstil received Skopje's CTL plate
production. In 1997, Makstil was privatized when a Swiss-Italian
trading company, Duferco, purchased a majority interest in Makstil with
the remaining shares sold to other private investors.
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 the Former
Yugoslav Republic of Macedonia:
[[Page 12996]]
Government of Yugoslavia Programs (Prior to July 1991)
1. ``Gains on Money'': We will investigate whether the producer/
exporter of subject merchandise received loans that were still
outstanding during 1998, at negative real interest rates, or whether
the producer/exporter had debt forgiven in order to prevent financial
losses.
2. ``Quasi-subsidies'': We will investigate whether non-recurring
subsidies were provided through the Yugoslavian system of income
redistribution, which appears to be a complex system of inflationary
accounting methods and involuntary transfers of funds between
profitable and unprofitable enterprises.
Government of the Former Yugoslav Republic of Macedonia Programs (After
July 1991)
1. Subsidies Provided to Enterprises That Are ``Restructuring''
With respect to this allegation, we will investigate whether
countervailable subsidies were provided to Makstil or Skopje Steel in
conjunction with the government's economic restructuring and
privatization program. Petitioners have also alleged that Makstil and
Skopje Steel were unequityworthy and uncreditworthy. They have
submitted sufficient information to provide a reasonable basis to
believe or suspect that the companies were unequityworthy and
uncreditworthy. Therefore, we will investigate whether the producer
Makstil or the predecessor company Skopje Steel was unequityworthy from
1994 through 1998. In addition, we will investigate whether Skopje/
Makstil was uncreditworthy during those years.
2. Export Subsidies From the Export-Import Bank
We will investigate whether countervailable benefits were provided
by the Former Yugoslav Republic of Macedonia's newly developed Export-
Import Bank in the form of: (1) Loans provided at subsidized rates; (2)
rediscounted export loans; or (3) loan guarantees for export loans.
With regard to export insurance, according to section 351.520(a)(1) of
the Department's regulations, export insurance confers a benefit, ``if
the premium rates charged are inadequate to cover the long-term
operating costs and losses of the program.'' The petition provides no
information to indicate that the rates may be insufficient to cover
long-term operating costs and losses. Therefore, we will not
investigate this subsidy allegation.
We are also not including in our investigation the following
programs alleged to be benefitting producers and exporters of the
subject merchandise in the Former Yugoslav Republic of Macedonia:
1. ``Formal Subsidies''
Petitioners allege that formal subsidies, i.e., direct grants from
the Government of Yugoslavia given to companies to ``prevent or lessen
financial losses'' continue to confer benefits in the POI. Petitioners
rely solely on a World Bank study as evidence of these direct subsidy
programs. However, the same World Bank study specifically states that
there was a ``virtual absence of direct government subsidies to firms''
and that ``such subsidies have been virtually nonexistent in the
Yugoslav economy for more than two decades.'' In addition, this World
Bank study indicates that no ``formal subsidies'' were provided to the
Macedonian region. Because the information submitted by petitioner does
not support their allegation that direct subsidies were conferred by
the Government of Yugoslavia, we are not initiating an investigation of
this program.
2. The National Bank's Division for Export and Export Stimulation
The petitioners allege that producers and exporters may be
receiving export-based benefits from the National Bank of the Republic
of Macedonia Division for Export and Export Stimulation. Because
petitioners provided no information to indicate that this division of
the National Bank provides subsidies, we are not initiating an
investigation of this program.
Distribution of Copies of the Petition
In accordance with section 702(b)(4)(A)(i) of the Act, copies of
the public version of the petition have been provided to
representatives of the Former Yugoslav Republic of Macedonia. We will
attempt to provide copies of the public version of the petition to all
of the exporters named in the petition, as provided for under
Sec. 351.203(c)(2) of the Department's regulations.
ITC Notification
Pursuant to section 702(d) of the Act, we have notified the ITC of
this initiation. However, according to section 701(c) of the Act, the
ITC will not make an injury determination with respect to the Former
Yugoslav Republic of Macedonia.
This notice is published pursuant to section 777(i) of the Act.
Dated: March 8, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-6294 Filed 3-15-99; 8:45 am]
BILLING CODE 3510-DS-P
