[Federal Register Volume 64, Number 132 (Monday, July 12, 1999)]
[Notices]
[Pages 37507-37509]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17646]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-401-401]
Certain Carbon Steel Products From Sweden: Preliminary Results of
Countervailing Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of countervailing duty
administrative review.
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SUMMARY: The Department of Commerce (``the Department'') is conducting
an administrative review of the countervailing duty order on certain
carbon steel products from Sweden. The period covered by this
administrative review is January 1, 1997 through December 31, 1997. For
information on the net subsidy for each reviewed company, as well as
for all non-reviewed companies, please see the Preliminary Results of
Review section of this notice. If the final results remain the same as
these preliminary results of administrative review, we will instruct
the U.S. Customs Service to assess countervailing duties as detailed in
the Preliminary Results of Review section of this notice. Interested
parties are invited to comment on these preliminary results. (See
Public Comment section of this notice.)
EFFECTIVE DATE: July 12, 1999.
FOR FURTHER INFORMATION CONTACT: Tipten Troidl or Gayle Longest, Office
of CVD/AD Enforcement VI, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
2786.
SUPPLEMENTARY INFORMATION:
Background
On October 4, 1985, the Department published in the Federal
Register (50 FR 48517) the countervailing duty order on certain carbon
steel products from Sweden. On October 9, 1998, the Department
published a notice of ``Opportunity to Request Administrative Review''
(63 FR 54440) of this countervailing duty order. We received timely
requests for review, and we initiated a review covering the period
January 1, 1997 through December 31, 1997, on November 30, 1998 (63 FR
65749).
In accordance with 19 CFR 351.213(b) this review covers only those
producers or exporters of the subject merchandise for which a review
was specifically requested. The producer/exporter of the subject
merchandise for which the review was requested is: SSAB Svenskt Stal AB
(SSAB). This review covers seven programs.
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions of the Tariff Act of 1930, as amended by
the Uruguay Round Agreements Act (``URAA'') effective January 1, 1995
(``the Act''). The Department is conducting this administrative review
in accordance with section 751(a) of the Act. All citations to the
Department's regulations reference 19 CFR Part 351 (1998), unless
otherwise indicated.
Scope of the Review
Imports covered by this review are shipments of certain carbon
steel products from Sweden. These products include cold-rolled carbon
steel, flat-rolled products, whether or not corrugated, or crimped:
whether or not pickled, not cut, not pressed and not stamped to non-
rectangular shape; not coated or pleated with metal and not clad; over
12 inches in width and of any thickness; whether or not in coils.
During the review period, such merchandise was classifiable under the
Harmonized Tariff Schedule (HTS) item numbers 7209.11.0000,
7209.12.0000, 7209.13.0000, 7209.21.0000, 7209.22.0000, 7209.23.0000,
7209.24.5000, 7209.31.0000, 7209.32.0000, 7209.33.0000, 7209.34.0000,
7209.41.0000, 7209.43.0000, 7209.44.0000, 7209.90.0000, 7211.30.5000,
7211.41.7000 and 7211.49.5000. The written description remains
dispositive.
Subsidies Valuation Information
Privatization and Sale of Assets to Other Companies
SSAB is the only Swedish company that produces and exports the
subject merchandise. SSAB has sold several productive units and the
company was partially privatized in 1987 and in 1989. In 1994, SSAB was
completely privatized.
In Final Affirmative Countervailing Duty Determinations: Certain
Steel Products from Sweden, 58 FR 37385 (July 9, 1993) (1993 Certain
Steel Products), the Department found that SSAB had received
countervailable subsidies prior to the sale of the productive units and
the two partial privatizations. Further, the Department found that a
private party purchasing all or part of a government-owned company can
repay prior subsidies on behalf of the company as part or all of the
sales price (see General Issues Appendix, (GIA) 58 FR 37217, 37262
(July 9, 1993)). Therefore, to the extent that a portion of the sales
price paid for a privatized company can be reasonably attributed to
prior subsidies, that portion of those subsidies will be extinguished.
To calculate a rate for the subsidies that were allocated to the
spin-off, i.e., a productive unit that was sold, we first determined
the amount of the subsidies attributable to each productive unit by
dividing the asset value of that productive unit by the total asset
value of SSAB in the year of the spin-off. We then applied this ratio
to the net present value (NPV), in the year of the spin-off, of the
future benefit streams from all of SSAB's prior subsidies allocable to
the POR. The future benefit streams at the time of the sale of each
productive unit reflect the Department's allocation over time of prior
subsidies to SSAB in accordance with the declining balance methodology
(see Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From the
United Kingdom; Preliminary Results of Countervailing Duty
Administrative Review, 62 FR 64568 (December 8, 1997) and Certain Hot-
Rolled Lead and Bismuth Carbon Steel Products From the United Kingdom;
Final Results of Countervailing Duty Administrative Review, 63 FR 18367
(April 15, 1998)), and reflect also the effect of prior spin-offs of
SSAB productive units.
We next estimated the portion of the purchase price which
represents repayment of prior subsidies by determining the portion of
SSAB's net worth that was accounted for by subsidies. To do that, we
divided the face value of the allocable subsidies
[[Page 37508]]
received by SSAB in each year from fiscal year 1979 through fiscal year
1993 by SSAB's net worth in the same year. We calculated a simple
average of these ratios, which was then multiplied by the purchase
price of the productive unit. Thus, we determined the amount of the
purchase price which represents repayment of prior subsidies. This
amount was subtracted from the subsidies attributed to the productive
unit at the time of sale to arrive at the amount of subsidies allocated
to the productive unit being spun-off.
To calculate the subsidies remaining with SSAB after privatization,
we performed the following calculations. We first calculated the NPV of
the future benefit stream of the subsidies at the time of the sale of
the shares. Next, we estimated the portion of the purchase price which
represents repayment of prior subsidies in accordance with the
methodology described in the ``Privatization'' section of the General
Issues Appendix (58 FR 37217, 37259). This amount was then subtracted
from the amount of the NPV eligible for repayment, and the result was
divided by the NPV to calculate the ratio representing the amount of
subsidies remaining with SSAB.
To calculate the benefit provided to SSAB in the POR, where
appropriate, we multiplied the benefit calculated for 1997, adjusted
for sales of productive units, by the ratio representing the amount of
subsidies remaining with SSAB after privatization. We then divided the
results by the company's total sales in 1997.
Allocation Methodology
In the current review, there are no new subsidies. All of the non-
recurring grants under review were provided prior to the POR;
allocation periods for these grants were established during prior
segments of this proceeding. Therefore, for purposes of these
preliminary results, the Department is using the original allocation
period assigned to each grant. See Certain Carbon Steel Products from
Sweden; Final Results of Administrative Review, 66 FR 16549-16550
(April 7, 1997) (1994 Final Results).
Analysis of Programs
I. Programs Conferring Subsidies
A. Structural Loans
Under three separate pieces of legislation, SSAB received
structural loans for investment in plant and equipment. The loans were
disbursed in installments between 1978 and 1983. Three loans were
outstanding during the period of review (POR).
According to the terms of the loans, all three structural loans
were interest-free for three years from the date of disbursement. After
that time, two loans incurred interest at a fixed rate of five percent
per annum while the other loan incurred interest at a variable rate
subject to change every five years. See SAAB's February 16, 1999
Questionnaire Response at page 11-13 (Public Version on file in Room B-
099 of the main Commerce Building). The variable interest rate on this
loan is set at the rate of the long-term government bonds plus a 0.25
percent margin. After a five-year grace period, the principal is repaid
in 20 equal installments at the end of each calendar year.
In the final determination of the original investigation of the
subject merchandise, Final Affirmative Countervailing Duty
Determination; Certain Carbon Steel Products from Sweden, 50 FR 33377
(August 19, 1985) and 1993 Certain Steel Products, we determined that
these loans were received at an interest rate lower than what the
recipient would have paid on a comparable commercial loan. We
therefore, determined that the loans are countervailable. There has
been no new information or evidence of changed circumstances in this
review to warrant reconsideration of this determination.
To calculate the benefit from the fixed-rate structural loans, we
employed the long-term loan methodology described in the 1994
administrative review of this order. See 1994 Final Results. To
calculate the benefits of the variable-rate loan, we used the variable-
rate long-term loan methodology described in the 1994 Final Results. As
the benchmark, we used SSAB's company-specific long-term interest
rates, previously established in 1993 Certain Steel Products.
We reduced the benefit attributable to the POR from the fixed-rate
structural loans according to the methodology outlined in the
``Privatization'' section above. We then aggregated the benefits for
the three loans (fixed interest rate and variable interest rate) and
divided the results by SSAB's total sales for 1997. On this basis, we
preliminarily determine the net subsidy from the three structural loans
to be 0.12 percent ad valorem.
B. Forgiven Reconstruction Loans
The Government of Sweden (GOS) provided reconstruction loans to
SSAB between 1979 and 1985 to cover operating losses, investment in
certain plant and equipment, and for employment promotion purposes. The
loans were interest free for three years, after which a fixed interest
rate was charged. According to the terms of the loans, up to half of
the outstanding amount of the loan could be written off after the
second calendar year following the disbursement. The remainder of the
loan could be written off entirely at the end of the ninth calendar
year after disbursement. Pursuant to the terms of the reconstruction
loans, evidence indicated that the GOS wrote off large portions of
principal and accrued interest on these loans between 1980 and 1990.
In the 1985 Final Determination and in 1993 Certain Steel Products,
we determined that forgiveness of these loans is countervailable. There
has been no new information or evidence of changed circumstances in
this review to warrant reconsideration of this determination.
To calculate the benefit, we treated the written-off portions of
the reconstruction loans as countervailable grants received in the
years the loans were forgiven and calculated the benefit for the POR
from this program using the methodology described in the ``Allocation
Methodology'' section above. We reduced the benefits from these grants
attributable to the POR according to the methodology outlined in the
``Privatization'' section above. We then divided the results by SSAB's
total sales for 1997. On this basis, we preliminarily determine the net
subsidy from the three allocable forgiven reconstruction loans to be
0.59 percent ad valorem.
II. Other Programs Examined
A. Research and Development Loans and Grants
The Swedish National Board for Industrial and Technical Development
(NUTEK) provides research and development loans and grants to Swedish
industries for R&D purposes. One type of R&D loan (industrial
development loans) is mostly aimed at ``new'' industries such as the
biotechnical, electronic, and medical industries. Another type of R&D
loan (energy efficiency loans) is directed towards big energy
consumers.
The loans accrue interest equal to the official ``discount'' rate
plus a premium of 3.75 percent. SSAB had several R&D loans outstanding
during the POR on which it did not make either principal or interest
payments. To calculate the benefit on these long-term variable rate
loans, we used the variable-rate long-term loan methodology described
in the 1994 Final Results. We measured the interest savings on each
outstanding loan during the POR using the Department's long-term
benchmark.
[[Page 37509]]
Because SSAB did not have any long-term loans in 1997, we used as the
discount rate the long-term industrial bond rate in Sweden, a benchmark
previously established in 1993 Certain Steel Products. Then we divided
the aggregate benefit of these loans by SSAB's total sales for 1997. On
this basis, we preliminarily determine that, because the assistance
provided under this program would result in a rate of less than 0.005
percent ad valorem, and would have no impact on the countervailing duty
rate calculated for this POR, it is not necessary to determine whether
these loans under NUTEK are specific. See, e.g. Final Affirmative
Countervailing Duty Determination: Steel Wire Rod from Germany, 62 FR
54990, 54995-54996 (October 22, 1997).
In addition, SSAB reported to have received a NUTEK R&D grant for
the application and further development of Information Technology
concerning improved energy utilization and control of industrial
processes. Disbursements of these grants, which were received prior to
the POR, did not exceed the 0.5 percent of SSAB's total sales in the
year they were received. Therefore, in accordance with our practice,
the entire amount was expensed in the year of receipt. See Cut-to-
Length Steel Plate from Belgium; Preliminary Results of Countervailing
Duty Review, 63 FR 48188, 48190 (September 9, 1998). On that basis, we
preliminarily determine that it is not necessary to determine whether
grants under NUTEK are specific.
Preliminary Results of Review
In accordance with 19 CFR 351.221(b)(4)(i), we calculated an
individual subsidy rate for each producer/exporter subject to this
administrative review. For the period January 1, 1997 through December
31, 1997, we preliminarily determine the net subsidy for SSAB to be
0.72 percent ad valorem.
Because the URAA replaced the general rule in favor of a country-
wide rate with a general rule in favor of individual rates for
investigated and reviewed companies, the procedures for establishing
countervailing duty rates, including those for non-reviewed companies,
are now essentially the same as those in antidumping cases, except as
provided for in section 777A(e)(2)(B) of the Act. The requested review
will normally cover only those companies specifically named. See 19 CFR
351.213(b). Pursuant to 19 CFR 351.212(c), for all companies for which
a review was not requested, duties must be assessed at the cash deposit
rate, and cash deposits must continue to be collected, at the rate
previously ordered. As such, the countervailing duty cash deposit rate
applicable to a company can no longer change, except pursuant to a
request for a review of that company. Therefore, the cash deposit rates
for all companies except those covered by this review will be unchanged
by the results of this review.
We will instruct Customs to continue to collect cash deposits for
non-reviewed companies at the most recent company-specific or country-
wide rate applicable to the company. Accordingly, the cash deposit
rates that will be applied to non-reviewed companies covered by this
order will be the rate for that company established in the most
recently completed administrative proceeding conducted under the URAA.
See Certain Carbon Steel Products from Sweden; Final Results of
Countervailing Duty Administrative Review, 61 FR 5378 (February 12,
1996). These rates shall apply to all non-reviewed companies until a
review of a company assigned these rates is requested. In addition, for
the period January 1, 1997 through December 31, 1997, the assessment
rates applicable to all non-reviewed companies covered by this order
are the cash deposit rates in effect at the time of entry.
Public Comment
Pursuant to Subpart B of 19 CFR 351.224(b), the Department will
disclose to the parties of this proceeding within five days after the
date of any public announcement or if none within five days after the
publication of this notice, the calculations performed in this review.
Interested parties may request a hearing not later than 30 days after
the date of publication of this notice. Interested parties may submit
written arguments in case briefs on these preliminary results within 30
days of the date of publication. Rebuttal briefs, limited to arguments
raised in case briefs, may be submitted five days after the time limit
for filing the case brief. Parties who submit argument in this
proceeding are requested to submit with the argument (1) a statement of
the issue and (2) a brief summary of the argument. Any hearing, if
requested, will be held two days after the scheduled date for
submission of rebuttal briefs. Copies of case briefs and rebuttal
briefs must be served on interested parties in accordance with Subpart
B of 19 CFR 351.303(f).
Representatives of parties to the proceeding may request disclosure
of proprietary information under administrative protective order no
later than 10 days after the representative's client or employer
becomes a party to the proceeding, but in no event later than the date
the case briefs, under 19 CFR 351.309(c)(ii), are due. The Department
will publish the final results of this administrative review, including
the results of its analysis of issues raised in any case or rebuttal
brief or at a hearing.
This administrative review and notice are issued and published in
accordance with section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)), 19
CFR 351.213.
Dated: July 6, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-17646 Filed 7-9-99; 8:45 am]
BILLING CODE 3510-DS-P
