[Federal Register Volume 62, Number 165 (Tuesday, August 26, 1997)]
[Notices]
[Pages 45229-45232]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-22687]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-475-821]
Notice of Initiation of Countervailing Duty Investigation:
Certain Stainless Steel Wire Rod (``SSWR'') from Italy
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: August 26, 1997.
FOR FURTHER INFORMATION CONTACT: Kathleen Lockard or Kelly Parkhill,
Office of CVD/AD Enforcement VI, International Trade Administration,
U.S. Department of Commerce, Room 3099, 14th Street and Constitution
Avenue, NW, Washington, DC 20230; telephone (202) 482-2786.
Initiation of Investigation
The 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''). In addition, unless otherwise indicated, all citations
to the Department's regulations are to the current regulations as
amended by the regulations published in the Federal Register on May 19,
1997 (62 FR 27295).
The Petition
On July 30, 1997, the Department of Commerce (the Department)
received a petition filed in proper form by AL Tech Speciality Steel
Corp., Carpenter Technology Corp., Republic Engineered Steels, Talley
Metals Technology, Inc., and United Steelworkers of America, AFL-CIO/
CLC (the petitioners). Supplements to the petition were filed on August
6, 13, 14, and 15, 1997.
In accordance with section 701(a) of the Act, the petitioners
allege that producers and/or exporters of SSWR in Italy receive
countervailable subsidies. The petitioners state that they have
standing to file the petition because they are interested parties, as
defined under section 771(9)(C) of the Act.
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 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 account for production
of the domestic like product. The International Trade Commission
(``ITC''), which is responsible for determining whether ``the domestic
industry'' has been injured, must also determine what constitutes a
domestic like product in order to define the industry. While both the
Department and the ITC must apply the same statutory provision
regarding the domestic like product (section 771(10) of the Act), they
do so for different purposes and pursuant to separate and distinct
authority. In addition, the Department's determination is subject to
limitations of time and information. Although this may result in
different definitions of the domestic like product, such differences do
not render the decision of either agency contrary to the
law.1
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\1\ See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp.
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays
and Display Glass Therefor from Japan: Final Determination;
Rescission of Investigation and Partial Dismissal of Petition, 56 FR
32376, 32380-81 (July 16, 1991).
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Section 771(10) of the Act defines domestic like product as ``a
product which 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.
The petition refers to the single domestic like product defined in
the ``Scope of Investigation'' section, below. The Department has no
basis on the record to find the petition's definition of the domestic
like product to be inaccurate. In this regard, we have found no basis
on which to reject petitioners' representations that there are clear
dividing lines, in terms of
[[Page 45230]]
characteristics and uses, between the product under investigation and
other coiled steel products. The Department has, therefore, adopted the
domestic like product definition set forth in the petition. In this
case, petitioners established industry support substantially above the
statutory requirement. Accordingly, the Department determines that the
petition is filed on behalf of the domestic industry within the meaning
of section 702(b)(1) of the Act.
Scope of Investigation
For purposes of this investigation, certain SSWR comprises products
that are hot-rolled or hot-rolled annealed and/or pickled and/or
descaled rounds, squares, octagons, hexagons or other shapes, in coils,
that may also be coated with a lubricant containing copper, lime or
oxalate. SSWR is made of alloy steels containing, by weight, 1.2
percent or less of carbon and 10.5 percent or more of chromium, with or
without other elements. These products are manufactured only by hot-
rolling or hot-rolling, annealing, and/or pickling and/or descaling,
and are normally sold in coiled form, and are of solid cross-section.
The majority of SSWR sold in the United States is round in cross-
sectional shape, annealed and pickled, and later cold-finished into
stainless steel wire or small-diameter bar.
The most common size for such products is 5.5 millimeters or 0.217
inches in diameter, which represents the smallest size that normally is
produced on a rolling mill and is the size that most wire drawing
machines are set up to draw. The range of SSWR sizes normally sold in
the United States is between 0.20 inches and 1.312 inches in diameter.
Two stainless steel grades SF20T and K-M35FL are excluded from the
scope of the investigation. The chemical makeup for the excluded grades
are as follows:
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SF20T
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Carbon............................... 0.05 max............... Chromium............... 19.00/21.00
Manganese............................ 2.00 max............... Molybdenum............. 1.50/2.50
Phosphorous.......................... 0.05 max............... Lead................... Added (0.10/0.30)
Sulfur............................... 0.15 max............... Tellurium.............. Added (0.03 min)
Silicon.............................. 1.00 max...............
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K-M35FL
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Carbon............................... 0.015 max.............. Nickel................. 0.30 max
Silicon.............................. 0.70/1.00.............. Chromium............... 12.50/14.00
Manganese............................ 0.40 max............... Lead................... 0.10/0.30
Phosphorous.......................... 0.04 max............... Aluminum............... 0.20/0.35
Sulfur............................... 0.03 max...............
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The products under investigation are currently classifiable under
subheadings 7221.00.0005, 7221.00.0015, 7221.00.0030, 7221.00.0045, and
7221.00.0075 of the Harmonized Tariff Schedule of the United States
(HTSUS). Although the HTSUS subheadings are provided for convenience
and customs purposes, the written description of the scope of this
investigation is dispositive.
As we discussed in the preamble to the new regulations (62 FR at
27323), we are setting aside a period for interested parties to raise
issues regarding product coverage. The Department encourages all
interested parties to submit such comments by September 15, 1997.
Comments should be addressed to Import Administration's Central Records
Unit at Room 1874, U.S. Department of Commerce, Pennsylvania Avenue and
14th Street, NW., Washington, DC 20230. This period of scope
consultation is intended to provide the Department with ample
opportunity to consider all comments and consult with parties prior to
the issuance of the preliminary determination.
Consultations
On August 13, 1997, pursuant to Section 702(b)(4)(A)(ii) of the
Act, the Department held consultations with representatives of the
European Commission (``EC'') and the Government of Italy (``GOI'') with
respect to the petition.
Injury Test
Because Italy is a ``Subsidies Agreement Country'' within the
meaning of section 701(b) of the Act, the U.S. International Trade
Commission (``ITC'') must determine whether imports of the subject
merchandise from Italy materially injure, or threaten material injury
to, a U.S. industry.
Allegation of Subsidies
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.
Initiation of Countervailing Duty Investigation
The Department has examined the petition on SSWR from Italy and
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
producers and/or exporters of SSWR from Italy receive subsidies.
Company Histories
Petitioners have made specific subsidy allegations with respect to
three Italian SSWR producers: Cogne Acciai Speciali CAS S.r.l.
(``Cogne''), Acciaierie di Bolzano S.p.A. (``Bolzano'') and Acciaierie
Valbruna S.r.l. (``Valbruna'').
Cogne was a subsidiary of the ILVA Group (or its precursors) until
1993, at which time it was privatized and sold to the Marzorati Group.
ILVA and its precursors were subsidiaries of the Istituto per la
Ricostruzione Industriale (``IRI''), which, in turn, was owned by the
GOI. In a stock swap approved in 1991, 22.4 percent of Cogne was
transferred to Falck, the privately-owned parent company of Bolzano, in
return for shares accounting for 44.8 percent of Bolzano. In 1993, ILVA
reacquired Falck's shares of Cogne and returned the Bolzano shares to
Falck.
Bolzano was 100 percent owned and controlled by Falck between 1982-
1991 and 1993-1995. In a stock swap approved in 1991, 44.8 percent of
Bolzano was acquired by ILVA, and Falck's share of the company dropped
to 55.2 percent. As discussed above, Falck
[[Page 45231]]
reacquired these shares in 1993 when it returned the shares of Cogne to
ILVA. In 1995, Bolzano was sold to Valbruna.
Valbruna is owned and controlled by the Gruppo Amenduni. Valbruna
now owns and controls 100 percent of Bolzano.
Equityworthiness
In the July 30, 1997 petition, petitioners alleged that ILVA was
unequityworthy from 1982 through 1994; Cogne was unequityworthy from
1982 through 1996; Bolzano was unequityworthy from 1990 through 1996;
and Falck was unequityworthy from 1992 through 1994. However, on August
13, 1997, petitioners clarified that they are not alleging any
previously uninvestigated equity infusions other than the equity
infusion provided to ILVA in 1992 and approved by the EC in 1993. As
petitioners only allege corresponding equity infusions for ILVA in
1982, 1984 through 1988, and 1991 through 1993, we will not examine
ILVA's equityworthiness in 1983 and 1989 through 1990.
Creditworthiness
Petitioners allege ILVA was uncreditworthy from 1982 through 1994;
Cogne was uncreditworthy from 1982 through 1996; Bolzano was
uncreditworthy from 1990 through 1996; and Falck was uncreditworthy
from 1992 through 1994. We will investigate ILVA's creditworthiness
from 1982 through 1994, Cogne's creditworthiness from 1994 through
1996, Bolzano's creditworthiness from 1995 through 1996 and Falck's
creditworthiness from 1992 through 1994 to the extent government equity
infusions, loans or loan guarantees were provided in those years.
Programs
We are including in our investigation the following programs
alleged in the petition to have provided subsidies to producers and
exporters of the subject merchandise in Italy:
Government of Italy Programs
1. Debt Forgiveness: Finsider-to-ILVA Restructuring (predecessor
companies)
2. Equity Infusions to ILVA and Precursor Companies
3. Debt Forgiveness: 1981 Restructuring Plan
4. 1992 Equity Infusions to ILVA (Approved by the EC in 1993)
5. ILVA Pre-Privatization Assistance and Debt Forgiveness
6. R&D Grants
7. Law 481/94 and Precursors
8. Decree Law 120/89
9. Deliberazione: Law 46 Grants for Technological Innovation
10. Law 675
a. Interest Grants on Bank Loans
b. Mortgage Loans
c. Interest Contributions on IRI Loans
d. Personnel Retraining Aid
11. Law 193/84 Programs
12. Grants and Loans for Reduction of Production Capacity: Laws 46 and
706
13. Law 796/76 Exchange Rate Guarantees
14. Law 227/77 Export Loans and Remission of Taxes
15. Law 394/81 Export Marketing Grants and Loans
16. Law 451/94 Early Retirement Assistance
17. Subsidies for Operating Expenses and ``Easy Term'' Funds
Regional Programs of the Government of Italy
1. Law 488/92 and Legislative Decree 96/93
2. Law 341/95 and Circolare 50175/95
Programs of Regional Governments
1. Valle d'Aosta Regional Assistance Associated With the Sale of Cogne
Including Laws 1/96 and 28/96
2. Valle d'Aosta Regional Law 16/88 Modifying Law 33/73
3. Valle d'Aosta Regional Law 64/92
4. Valle d'Aosta Regional Law 12/87
5. Valle d'Aosta Regional Law 3/92
6. Bolzano/Trentino Alto-Adige Regional Assistance Associated with the
Sale of Bolzano
7. Provincial Grants/Loans Provided to Bolzano 2
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\2\ We note that the EC has ordered repayment of the Provincial
Grants/Loans provided to Bolzano. During consultations, the EC
stated that the assistance will be repaid even though the EC
decision is under appeal. In the investigation, we intend to look
into the possibility that the assistance has been repaid.
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8. Bolzano Law 44/92
European Commission Programs
1. European Coal and Steel Community (ECSC) Article 54 Loans
2. Interest Rebates on ECSC Article 54 Loans
3. ECSC Article 56 Loans
4. European Social Fund
5. European Regional Development Fund
6. Resider Program
7. 1993 European Commission Steel Funds
We are not including in our investigation the following programs
alleged to be benefitting producers and exporters of the subject
merchandise in Italy:
1. Grants to ILVA: The petitioners allege that, in a previous
investigation of steel products, the Department countervailed various
programs that provided grants to ILVA; however, the amounts of the
grants exceeded those authorized by the GOI and the EC. (See Final
Affirmative Countervailing Duty Determinations: Certain Steel Products
from Italy, 58 FR 37327 (July 9, 1993) (``Certain Steel''). Because
there was no verification of ILVA's response in that investigation, we
countervailed the excess as miscellaneous grants based on best
information available (BIA).
However, in a subsequent investigation, it was verified that these
miscellaneous grants were included in Law 675/77 programs. See Final
Affirmative Countervailing Duty Determination: Grain-Oriented
Electrical Steel from Italy, 59 FR 18357 (April 18, 1994) (``Electrical
Steel''). Since the Department is initiating an investigation on these
Law 675/77 programs, this alleged subsidy is already captured. As such,
we are not initiating separately on ``grants to ILVA.''
2. Interest Subsidies under Law 617/81: The petitioners allege
that, in 1982, IRI issued two trillion lire worth of bonds. It then re-
lent these funds to its subsidiaries. Of that amount, over 900 billion
lire was provided to ILVA's predecessor company, Nuovo Italsider. Under
Law 617/81, the GOI promised to pay 11 percent of the total interest
costs of the loans. In Certain Steel, this program was countervailed as
a non-recurring grant based on BIA. In Electrical Steel, this program
was determined not to be used because none of the loans were
outstanding during the POI in that investigation. Because, as
determined in Electrical Steel, the loans on which these interest
payments had been made were no longer outstanding in 1992, we are not
initiating on this program.
3. Law 675: Value Added Tax (VAT) Reductions: The petitioners
allege that VAT Reductions under law 675 were countervailed in Certain
Steel; however, in Electrical Steel, this program was found to be
targeted to southern Italy. Since none of the producers of subject
merchandise are located in southern Italy, and petitioners have not
provided any information that demonstrates that firms outside of
southern Italy are eligible for benefits under this program, we are not
initiating on this program.
4. Other Government Loans: Petitioners request that the Department
investigate financing provided by the GOI to producers of subject
merchandise. Several of the producers of subject merchandise have
received loans from the GOI or GOI-owned banks. However, petitioners
have not presented sufficient information to
[[Page 45232]]
indicate that these loans are at noncommercial rates, or otherwise
provide a benefit to producers of subject merchandise. Of the loans
identified by petitioners, one loan appears to have been on
preferential terms to a producer of subject merchandise. However, that
loan was provided under law 46, which we have included in this
investigation. Therefore, we are not initiating on this allegation
regarding ``other government loans.''
5. Government Loan Guarantees: Petitioners allege that several
third party loan guarantees listed in the producers' annual reports are
likely to have been provided by the government at preferential rates.
Petitioners claim that these guarantees may be the same, or similar to,
loan guarantees countervailed by the Department in Certain Steel.
The Department countervailed government loan guarantees provided by
IRI and Finsider in Certain Steel based on BIA. However, in Electrical
Steel, these loan guarantees were found to have been provided only by
Finsider, not IRI. Since Finsider was in liquidation, and therefore
could not have paid the loan even if required to, the Department found
that these loan guarantees provided no benefit.
Petitioners have not provided any information that indicates that
the guarantees listed in the company's annual reports are provided by
the government at preferential rates, nor have they provided any
information demonstrating that these guarantees, if provided by the
government, were done so on a specific basis. Therefore, we are not
initiating on these loan guarantees.
6. Bolzano/Trentino-Alto Adige Law 9/91: Petitioners allege that
Law 9/91, which provides easy term loans to stimulate local economic
activity, provides countervailable benefits to producers of subject
merchandise. Loans under this law are available to companies in
tourism, agriculture, crafts and services. Petitioners have not shown
that producers of subject merchandise would be eligible for benefits
under this provision. Moreover, they have not provided sufficient
information to indicate that Law 9/91 would be specific. Therefore, we
are not initiating on this program.
7. Trentino-Alto Adige Law 8/95: Petitioners allege that the region
of Trentino-Alto Adige provides various incentives under Law 8/95 to
promote local industry, commerce, services, crafts and tourism.
However, they have not provided sufficient information to indicate that
the incentives provided under this law are specific. Therefore, we are
not initiating on Law 8/95 of the region of Trentino-Alto Adige.
8. Veneto Law 39/87: Petitioners allege that Law 39/87 of the
Veneto region provides countervailable benefits to producers of subject
merchandise. This law establishes a registry for financial assistance
in the province. Based on the information contained in the petition,
this law seems to be simply an administrative measure that requires
companies to register with the province before applying for assistance.
Petitioners have provided no basis to believe that Law 39/87 provide
any benefits; therefore, we are not initiating on this program.
9. Veneto Law 16/93: Petitioners allege that Law 16/93 of the
Veneto region provides countervailable benefits to producers of subject
merchandise. This law established various initiatives designed to
promote the economic and social development of Veneto's eastern region.
However, based on evidence in the petition, Valbruna, the only producer
of subject merchandise located in the Veneto Region, is not located in
the eastern portion of the region and there is no indication that other
parts of the region are eligible for benefits. As no producers of
subject merchandise appear eligible for benefits under this law, we are
not initiating on this program.
Distribution of Copies of the Petition
In accordance with section 702(b)(4)(A)(i) of the Act and section
351.203(c)(2) of the Department's regulations, copies of the public
version of the petition have been provided to the representatives of
the GOI and the EC. We will attempt to provide copies of the public
version of the petition to all the exporters named in the petition.
ITC Notification
Pursuant to section 702(d) of the Act and section 351.203(c)(1) of
the Department's regulations, we have notified the ITC of this
initiation.
Preliminary Determination by the ITC
The ITC will determine by September 15, 1997, whether there is a
reasonable indication that an industry in the United States is being
materially injured, or is threatened with material injury, by reason of
imports from Italy of SSWR. Any ITC determination which is negative
will result in the investigation being terminated; otherwise, the
investigation will proceed according to statutory and regulatory time
limits.
This notice is published pursuant to section 702(c)(2) of the Act
and section 351.203(c)(1) of the Department's Regulations.
Dated: August 19, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-22687 Filed 8-25-97; 8:45 am]
BILLING CODE 3510-DS-P
