[Federal Register Volume 60, Number 164 (Thursday, August 24, 1995)]
[Notices]
[Pages 44017-44020]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21068]
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DEPARTMENT OF COMMERCE
[C-401-804]
Certain Cut-to-Length Carbon Steel Plate 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 cut-
to-length carbon steel plate from Sweden. We preliminarily determine
the net subsidy to be 2.98 percent ad valorem for the period December
7, 1992 through December 31, 1993. 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 indicated
above. Interested parties are invited to comment on these preliminary
results.
EFFECTIVE DATE: August 24, 1995.
FOR FURTHER INFORMATION CONTACT: Stephanie Moore or Christopher
Jimenez, Office of Countervailing Compliance, 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 August 17, 1993, the Department published in the Federal
Register (58 FR 43758) the countervailing duty order on certain cut-to-
length carbon steel plate from Sweden. On August 3, 1994, the
Department published a notice of ``Opportunity to Request an
Administrative Review'' (59 FR 39543) of this countervailing duty
order. We received a timely request for review from SSAB Svenskt Stal
AB (SSAB), the sole known producer/exporter of the subject merchandise
during the period of review (POR).
We initiated the review, covering the period December 7, 1992
through December 31, 1993, on September 8, 1994 (59 FR 46391). We
conducted verification of the questionnaire responses from March 27,
1995 through March 31, 1995. The review covers SSAB and ten programs.
Because the POR covers only three weeks in 1992 (December 7 through
December 31, 1992), the Department determined that it was appropriate
to apply the assessment rate calculated for 1993 to exports made during
the three-week period. See, Memorandum for Joseph A. Spetrini from the
Steel Team dated October 3, 1994, regarding calculation of the
assessment rate in the first administrative reviews of the Certain
Steel Countervailing Duty Orders, which is on file in the Central
Records Unit, Room B-099 of the Department of Commerce.
Applicable Statute and Regulations
The Department is conducting this administrative review in
accordance with section 751(a) of the Tariff Act of 1930, as amended
(the Act). Unless otherwise indicated, all citations to the GATT
Subsidies Code, the U.S. statute, and to the Department's regulations
are in reference to the provisions as they existed on December 31,
1994. References to the Department's Countervailing Duties; Notice of
Proposed Rulemaking and Request for Public Comments, (54 FR 23366, May
31, 1989) (Proposed Regulations), are provided solely for further
explanation of the Department's countervailing duty practice. Although
the Department has withdrawn the particular rulemaking proceeding
pursuant to which the Proposed Regulations were issued, the subject
matter of these regulations is being considered in connection with an
ongoing rulemaking proceeding which, among other things, is intended to
conform the Department's regulations to the Uruguay Round Agreements
Act. See 60 FR 80, Jan. 3, 1995.
Scope of the Review
Imports covered by this review are shipments of certain cut-to-
length carbon steel plate from Sweden. These products include hot-
rolled carbon steel universal mill plates (i.e., flat-rolled products
rolled on four faces or in a closed box pass, of a width or in a closed
box pass, of a width exceeding 150 millimeters but not exceeding 1,250
millimeters and of a thickness of not less than 4 millimeters and of a
thickness of not less than 4 millimeters, not in coils and without
patterns in relief), of rectangular shape, neither clad, plated nor
coated with metal, whether or not painted, varnished, or coated with
plastics or other nonmetallic substances; and certain hot-rolled carbon
steel flat-rolled products in straight lengths, of rectangular shape,
hot rolled, neither clad, plated, nor coated with metal, whether or not
painted, varnished, or coated with plastics or other nonmetallic
substances, 4.75 millimeters or more in thickness and of a width which
exceeds 150 millimeters and measures at least twice the thickness.
During the review period, such merchandise was classifiable under the
Harmonized Tariff Schedule (HTS) item numbers 7208.31.0000,
7208.32.0000, 7208.33.1000, 7208.33.5000, 7208.41.0000, 7208.42.0000,
7208.43.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.11.0000,
7211.12.0000, 7211.21.0000, 7211.22.0045, 7211.90.0000, 7212.40.1000,
7212.40.5000, and 7212.50.0000. Included in this order are flat-rolled
products of non-rectangular cross-section where cross-section is
achieved subsequent to the rolling process (i.e., products which have
been
[[Page 44018]]
``worked after rolling'')--for example, products which have been
beveled or rounded at the edges. Excluded from this order is grade X-70
plate. The HTS item numbers are provided for convenience and customs
purposes. The written description remains dispositive.
Calculation Methodology for Assessment and Cash Deposit Purposes
Because SSAB is the only manufacturer/exporter of the subject
merchandise to the United States, SSAB's net subsidy rate is also the
country-wide rate.
Privatization
SSAB was partially privatized twice, in 1987 and in 1989. In the
Final Affirmative Countervailing Duty Determinations: Certain Steel
Products from Sweden (58 FR 37385, July 9, 1993) (Final Determination),
the Department found that SSAB had received countervailable subsidies
prior to these 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 the General Issues Appendix appended to the
Final Countervailing Duty Determination; Certain Steel Products from
Austria (58 FR 37262, July 9, 1993) (General Issues Appendix)).
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 the subsidies remaining with SSAB after each partial
privatization, we performed the following calculations. We first
calculated the net present value (NPV) of the future benefit stream of
the subsidies at the time of the sale of the shares. We then multiplied
the NPV by the percentage of shares the government retained after the
sale and derived the amount of subsidies not affected by privatization.
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 37259). This amount was then subtracted from the NPV,
and the result was divided by the NPV to calculate the ratio
representing the amount of subsidies remaining with SSAB after each
partial privatization.
With respect to sales of ``productive units'' by SSAB, we have
followed the same methodology used in the Final Determination (58 FR
37385). In accordance with that methodology, a portion of the price
paid when a productive unit is sold is allocable repayment of subsidies
received in prior years by the seller of the productive unit. The
subsidies allocated to the POR have been reduced for all of the
programs, as described above. These subsidies were further adjusted by
the asset value of the productive unit. For a further explanation of
the Department's methodology regarding ``sales of productive units''
and these calculations, see the ``Restructuring'' section of the
General Issues Appendix (58 FR 37265).
To calculate the benefit provided to SSAB, we multiplied the
benefit calculated for 1993, adjusted for sales of productive units, by
the ratio representing the amount of subsidies remaining with SSAB
after the partial privatization. We then divided the results by the
company's total sales in 1993.
Analysis of Programs
I. Programs Preliminarily Found to Confer Subsidies
(1) Equity Infusion
In 1981, the Government of Sweden (GOS) provided equity capital to
SSAB totaling 1,125 million Swedish kronor (MSEK). Simultaneously,
Granges, a private company and the only other shareholder at the time,
contributed 375 MSEK. To persuade Granges to contribute this equity
capital, the GOS guaranteed a specified sum to be paid to Granges in
1991. Because of this arrangement, we determined that the 375 MSEK paid
by Granges was an equity infusion provided indirectly by the GOS,
through Granges, specifically to SSAB. See, Final Determination (58 FR
37387).
In the Final Determination (58 FR 37385) and in the final
determination from a previous investigation of Swedish steel, Final
Affirmative Countervailing Duty Determinations; Certain Carbon Steel
Products from Sweden (50 FR 33377, August 19, 1985) (Final Certain
Carbon Steel Products), we determined that SSAB was unequityworthy in
1981 when it received the equity infusions, and that the two equity
infusions are therefore countervailable. There has been no new
information or evidence of changed circumstances in this review to
warrant reconsideration of this determination.
In accordance with the ``Equity'' section of the General Issues
Appendix, we treated the equity infusions as grants. To calculate the
benefit from these equity infusions for the POR, we used the grant
methodology as described in the ``Allocation'' section of the General
Issues Appendix (58 FR 37226). Because the Department determined in the
Final Determination that the infusions are non-recurring subsidies, we
have allocated the subsidies over 15 years, the average useful life of
assets in the steel industry, according to the asset guideline classes
of the Internal Revenue Service. As the discount rate, we have used
SSAB's company-specific interest rate on fixed-rate long-term loans
(see Sec. 355.49 of the Proposed Regulations).
We reduced the benefit from these equity infusions attributable to
the POR according to the methodology outlined in the ``Privatization''
section above. We then divided the result by SSAB's total sales for
1993. On this basis, we preliminarily determine the net subsidy to be
0.82 percent ad valorem.
(2) Structural Loans
SSAB received structural loans under three separate pieces of
legislation for investment in plant and equipment. The loans were
disbursed in installments between 1978 and 1983. All three loans were
outstanding during the 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, one loan incurred interest at a fixed rate of five percent
per annum while the other two loans incurred interest at a variable
rate subject to change every five years. The variable interest rate on
these two loans 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 (58 FR 37388) and in Final Certain
Carbon Steel Products (50 FR 33376), we determined that these loans are
countervailable because they were provided specifically to SSAB on
terms inconsistent with commercial considerations. 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 loan, we
employed the long-term loan methodology described in Sec. 355.49(c)(1)
of the Proposed Regulations. To calculate the benefits from the two
variable-rate loans, we used the variable-rate long-term loan
methodology described in Sec. 355.49(d)(1) of the Proposed Regulations.
As the discount rate, we used the same benchmark previously
established. See, Final Determination (58 FR 37386).
[[Page 44019]]
We reduced the benefit attributable to the POR from the fixed-rate
structural loan 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 1993. On this basis, we
preliminarily determine the net subsidy from the three structural loans
to be 0.38 percent ad valorem.
(3) Forgiven Reconstruction Loans
The GOS provided reconstruction loans to SSAB between 1979 and 1985
to cover operating losses, investment in certain plants 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 can be written off after the second calendar year following the
disbursement. The remainder of the loan can be written off entirely at
the end of the ninth calendar year after disbursement. Pursuant to the
terms of the reconstruction loans, the GOS wrote off large portions of
principal and accrued interest on these loans between 1980 and 1990.
In the Final Determination (58 FR 37388) and in Final Certain
Carbon Steel Products (50 FR 33377), 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 using the
grant methodology as described in the ``Allocation'' section of the
General Issues Appendix (58 FR 37225). 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 1993. On this basis, we preliminarily
determine the net subsidy from the three structural loans to be 1.77
percent ad valorem.
(4) Grants for Temporary Employment for Public Works
The GOS provided temporary employment grants to companies and
government agencies which hired individuals on a temporary basis to
work on public works projects (e.g., construction, road building,
repairs). SSAB received such grants between 1979 and 1988.
In the Final Determination (58 FR 37389) and in Final Certain
Carbon Steel Products (50 FR 33375), we determined that these grants
are countervailable. There has been no new information or evidence of
changed circumstances in this review to warrant reconsideration of this
determination.
We calculated the net subsidy of the grant received in 1979 using
the grant methodology as described in the ``Allocation'' section of the
General Issues Appendix. The amounts received by SSAB under this
program in all other years were less than 0.5 percent of the value of
the company's total sales in each year. Therefore, those amounts were
allocated to the year of receipt. See, ``Allocation'' section of the
General Issues Appendix (37226).
To calculate the benefit for the POR, we reduced the benefit from
the 1979 grant according to the methodology outlined in the
``Privatization'' section above. We then divided the result by SSAB's
total sales for 1993. On this basis, we preliminarily determine the net
subsidy to be 0.01 percent ad valorem.
II. Programs Preliminarily found not to Confer Subsidies
(1) Research & Development (R&D) 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. However, no interest or principal
payments are due until the R&D project is completed. If upon completion
of a project the company wishes to use the research results for
commercial purposes, the loan must be repaid. On the other hand, if the
company decides not to utilize the results and, therefore, does not
claim proprietary treatment for the results, NUTEK will forgive the
loan and the results of the research become publicly available.
SSAB had several R&D loans outstanding during the POR on which it
did not make either principal or interest payments. However, we cannot
determine whether SSAB has received a countervailable benefit until the
research is completed. It is only then that it is known (1) whether the
loans are forgiven, and (2) if the loans were not forgiven, whether the
accrued interest is less than what would have accrued had the loans
been provided at commercial rates. See, Final Determination (58 FR
37389). Therefore, we will continue to examine the R&D loans in future
administrative reviews.
As explained above, NUTEK may forgive R&D loans if the companies
receiving them disseminate publicly the results of the research
financed by the loans. Although the Department's practice is to treat
forgiven R&D loans as grants, if the research results are publicly
available, such assistance does not bestow a countervailable benefit.
See, Final Determination (58 FR 37391). During the POR, three loans
were forgiven. At verification, we confirmed that the results of these
research projects were publicly available. On this basis, we
preliminarily determine that this R&D program did not confer
countervailable benefits on the export of the subject merchandise to
the United States during the POR.
(2) Fund for Industry and New Business Research and Development
SSAB reported in its questionnaire responses that SSAB Oxelosund, a
subsidiary, received a conditional repayment research and development
loan from the Fund for Industry and New Business (the Fund).
The Fund provides project financing to firms with a budget of at
least two million Swedish kronor (MSEK), and start-up loans to new
``limited'' companies. Projects are financed through (1) conditional
repayment loans (2) capital in return for royalty (3) project
guarantees, and (4) credit guarantees for developing new products,
processes and systems, and marketing. The terms and conditions of the
financing depend on the type of financing provided.
In October 1992, the Fund approved a 6 MSEK conditional repayment
loan for SSAB Oxelosund, a subsidiary of SSAB. Only 3 MSEK of the loan
amount was disbursed. Under the terms of the loan, 50 percent of the
principal was to be paid at the end of 1994, with the remaining 50
percent to be paid at the end of 1995. The loan accrued interest from
the date of disbursement at a rate equal to the Central Bank's
``discount'' rate plus a 4 percent premium, paid quarterly for the
prior quarter.
The Proposed Regulations at Sec. 355.44(b)(5) sets forth the
hierarchy for selecting long-term interest rate benchmarks for variable
rate loans. We
[[Page 44020]]
were unable to use a company-specific rate because SSAB did not obtain
any long-term commercial loans during 1992 or 1993, nor did the company
issue any bonds. The record does not contain any information on
variable interest rates in Sweden during 1992 or 1993. Therefore, as
the benchmark, we used the national average long-term fixed interest
rate on 10-year industrial bonds in Sweden in 1992 and in 1993. We
compared the interest paid by the company with the amount of interest
that the company would have paid on a similar loan provided at the
benchmark rates. We found that the amount paid by the company was
higher than the amount that would have been paid at the commercial
benchmark rates. On this basis, we preliminarily determine that this
program did not confer a countervailable benefit on the export of the
subject merchandise to the United States during the POR. See,
Memorandum for the File from Team E dated July 6, 1995 regarding the
Fund for Industry and New Business Research and Development Program,
which is on file in the Central Records Unit, Room B-099 of the
Department of Commerce.
III. Programs Preliminarily Found Not to be Used
We also examined the following programs and preliminarily determine
that SSAB did not apply for or receive benefits under them during the
POR:
(A) Regional Development Grants
(B) Transportation Grants
(C) Location-of-industry Loans
IV. Program Preliminarily Found to be Terminated
We also examined the following program and preliminarily determine
that the program has been officially terminated and there are no
residual benefits. See, Memorandum to File from Team E dated June 23,
1995 regarding termination of the program, which is on file in the
Central Records Unit, Room B-099 of the Department of Commerce.
State Stockpiling Subsidies
Preliminary Results of Review
In accordance with 19 CFR 355.22(b)(1), an administrative review
``normally will cover entries or exports of merchandise during the most
recently completed reporting year of the government of the affected
country.'' However, because this is the first administrative review of
this countervailing duty order, in accordance with 19 CFR 355.22(b)(2),
this review covers the period, and the corresponding entries, ``from
the date of suspension of liquidation * * * to the end of the most
recently completed reporting year of the government of the affected
country.'' This period is December 7, 1992 through December 31, 1993.
The Department issued its preliminary affirmative countervailing
duty determination in the investigation on December 7, 1992 (57 FR
57793). On March 8, 1993 in accordance with section 705(a)(1) of the
Tariff Act of 1930, as amended (the Act), we aligned the final
countervailing duty determinations with the final antidumping duty
determinations on certain steel products from various countries (58 FR
12935, March 8, 1993).
Under 19 CFR 355.20(c)(1)(ii), and pursuant to article 5.3 of the
GATT Subsidies Code, we cannot require suspension of liquidation under
these circumstances (i.e., alignment of countervailing and antidumping
determinations) for more than 120 days without the issuance of a
countervailing duty order. Therefore, the Department instructed the
U.S. Customs Service to suspend liquidation of all entries, or
withdrawals from warehouse, for consumption of the subject merchandise
entered between December 7, 1992, and April 5, 1993, but to discontinue
the suspension of liquidation of the subject merchandise entered, or
withdrawn from warehouse, for consumption on or after April 6, 1993.
The Department reinstated suspension of liquidation and required cash
deposits of estimated countervailing duties of entries made on or after
August 17, 1993, the date of the publication of the countervailing duty
order. Merchandise entered on or after April 6, 1993 and before August
17, 1993 is to be liquidated without regard to countervailing duties.
For the periods December 7, 1992 through April 5, 1993, and August
17, 1993 through December 31, 1993, we preliminarily determine the net
subsidy to be 2.98 percent ad valorem.
If the final results of this review remain the same as these
preliminary results, the Department intends to instruct the U.S.
Customs Service to assess the following countervailing duties:
December 7, 1992-April 5, 1993; 2.98 percent ad valorem.
April 6, 1993-August 16, 1993; 0 (zero).
August 17, 1993-December 31, 1993; 2.98 percent ad valorem.
The Department also intends to instruct the U.S. Customs Service to
collect a cash deposit of estimated countervailing duties of 2.98
percent of the f.o.b. invoice price on all shipments of the subject
merchandise from all manufacturers, producers, and exporters, entered
or withdrawn from warehouse, for consumption on or after the date of
publication of the final results of this review.
Parties to the proceeding may request disclosure of the calculation
methodology and interested parties may request a hearing not later than
10 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
seven days after the time limit for filing the case brief. Parties who
submit written arguments 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 seven 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 19 CFR 355.38(e). 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
Sec. 355.38(c), 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 in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.
Dated: August 16, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-21068 Filed 8-23-95; 8:45 am]
BILLING CODE 3510-DS-P
