71 FR 32522, June 6, 2006
C-351-818
Second Sunset Review
Public Document
IA/ O6: MD
MEMORANDUM TO: David M. Spooner
Assistant Secretary
for Import Administration
FROM: Stephen J. Claeys
Deputy Assistant Secretary
for Import Administration
SUBJECT: Issues and Decision Memorandum for Final Results of Expedited
Sunset Review of the Countervailing Duty Order on Cut-to-Length
Carbon Steel Plate from Brazil
Summary
We have analyzed the responses of interested parties in the expedited sunset review of the
countervailing duty order on certain cut-to-length carbon steel plate (“CTL Plate”) from Brazil.
We recommend that you approve the positions we have developed in the “Discussion of the
Issues” section of this memorandum. Below is the complete list of the issues that we are
addressing in this expedited sunset review:
1. Likelihood of Continuation or Recurrence of a Countervailable Subsidy
2. Net Countervailable Ssubsidy Likely to Prevail
3. Nature of the Subsidy
History of the Order
On July 9, 1993, the Department of Commerce (“the Department”) published in the Federal
Register its final determination on certain steel products from Brazil. See Final Affirmative
Determinations: Certain Steel Products from Brazil; 58 FR 37295 (“Final Determination”). In
the final determination of the investigation, the Department found estimated net subsidy rates of
6.07 percent for Usinas Siderurgicas de Minas Gerais. S.A. (“USIMINAS”), 44.66 percent for
Companhia Siderurgica Paulista (“COSIPA”), and 21.84 percent for “all others” based on the
following countervailable programs: Equity Infusions program, Fiscal Benefits by Virtue of
Industrial Development Council (“CDI”) programs, IPI Rebate Program Under Law 7554/86
program, Banco Nacional de Desenvolvimento Economico e Docial Financing (“BNDES”) and
Provision of Infrastructure program. On August 17, 1993, the Department published the
countervailing duty order (“CVD order”) and amendment to the final determination, which
1 Subsequent to the Department’s determination on July 9, 1993, the International Trade Commission
(ITC), in accordance with section 705(d) of the Act, notified the Department of its final determinations regarding
each of the two classes or kinds of merchandise covered in these investigations. The ITC determined that imports of
certain cut-to-length carbon steel plate from B razil were materially injuring a U.S. industry. The IT C also
determined that a U.S. industry was not materially injured, or threatened with material injury, by reason of imports of
certain cold-rolled carbon steel flat products from Brazil.
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covered only certain cut-to-length carbon steel plate from Brazil.1 See Countervailing Duty
Order and Amendment to Final Affirmative Countervailing Duty Determination: Certain Steel
Products from Brazil, 58 FR 43751 (August 17, 1993). The net subsidy rates were amended.
The amended rates were 5.44 percent for USIMINAS, 48.64 percent for COSIPA, and 23.10
percent for all other producers and exporters of subject merchandise.
There were no reviews conducted since the original investigation of the CVD order and the
initiation of the first sunset review. The Department published its final results of the first sunset
review, pursuant to section 751(c) of the Tariff Act of 1930, as amended (“the Act”). See
Certain Cut-to-Length Steel Plate From Brazil; Final Results of Countervailing Duty Expedited
Sunset Review, 65 FR 18065 (April 6, 2000) (“First Sunset Review”). In that review, the
Department determined that revocation of the CVD order would be likely to lead to continuation
or recurrence of countervailable subsidies at the same margins as found in the amended final
determination of the investigation. As a result, pursuant to 19 CFR 351.218 (e)(4), the
Department published a notice of the continuation, based on the Department and the
International Trade Commission’s (ITC) affirmative findings. See Continuation of
Antidumping and Countervailing Duty Orders on Certain Carbon Steel Products from Australia,
Belgium, Brazil, Canada, Finland, France, Germany, Japan, South Korea, Mexico, Poland,
Romania, Spain, Sweden, Taiwan, and the United Kingdom, 65 FR 78469 (December 15, 2000).
Since the publication of the notice of continuation of the first sunset review, no administrative
reviews, or changed circumstances reviews of the CVD order have been conducted. However,
on June 19, 2003, the Department ruled that continuous cast steel slab is outside of the scope of
the CVD order. See Notice of Scope Rulings and Anti-circumvention Inquires, 68 FR 36770
(June 19, 2003).
Background
On November 1, 2005, the Department published the notice of initiation of the second sunset
review of the CVD order on CTL Plate from Brazil, pursuant to section 751(c) of the Act. See
Initiation of Five-Year (Sunset) Reviews, 70 FR 65884 (November 1, 2005)(“Initiation of
Second Sunset Review”). The Department received notices of intent to participate from IPSCO,
Inc., Mittal Steel USA ISG, Inc., Nucor Corporation, Oregon Steel Mills, Inc., and United Steel,
Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers
2 USW notes that it is a certified union or recognized union or group of workers which is representative of
an industry engaged in the manufacture and production of the subject merchandise.
3 Mittal, IPSCO, and O regon Steel Mills note that they were the petitioners or successors to petitioners in
the investigation, and that they participated in the first sunset review.
4 On December 1, 2005, the Department received a letter from domestic interested parties concerning an
amendment to their November 30, 2005 substantive response to the Department’s notice of initiation of the sunset
review on CTL Plate from B razil. In the letter, domestic interested parties added United Steel, Paper and Forestry,
Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC
(“USW”), to the November 30, 2005 substantive response.
5 See December 21, 2005 letter to ITC, Robert Carpenter, Director of Investigations, from Barbara E.
Tillman, Director, Office 6, AD/CVD Operations, Import Administration.
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International Union, AFL-CIO-CLC (“USW”)2 (collectively “domestic interested parties”),
within the deadline specified in 19 CFR 351.218(d)(1)(i).3 Domestic interested parties claimed
interested party status under sections 771(9)(C) and (D) of the Act, as U.S. producers of CTL
Plate in the United States, and as a certified union or recognized group of workers engaged in
the manufacturer, production or wholesale of CTL Plate in the United States.
On November 30, 2005, the Department received a substantive response from domestic
interested parties within the deadline specified in section 19 CFR 351.218(d)(3)(i).4 We did not
receive any responses from any respondent interested party to this proceeding. In accordance
with 19 CFR 351.218(e)(1)(ii)(C)(2), the Department notified the ITC that respondent interested
parties provided an inadequate response to the Notice of Initiation of Five-Year (“Sunset”)
Reviews.5 As such, the Department has conducted an expedited sunset review of the CVD
order, pursuant to 19 CFR 351.218(e)(1)(ii)(B) and 19 CFR 351.218(e)(1)(ii)(C)(2).
In accordance with section 751(c)(5)(C)(v) of the Act, the Department may treat a sunset review
as extraordinarily complicated if it is a review of a transition order (i.e., an order in effect on
January 1, 1995, the effective date of the Uruguay Round Agreements Act), as is the case in this
proceeding. The Department determined that the sunset review of the CVD order on CTL Plate
from Brazil is extraordinarily complicated; therefore, in accordance with section 751(c)(5)(B) of
the Act, the Department extended the time limit for completion of the final results of this review
until no later than May 30, 2006. See Cut-to-Length Carbon Steel Plate from Brazil and Spain;
Extension of Time Limits for Final Results of Expedited Five-year ("Sunset") Reviews of
Countervailing Duty Orders; 71 FR 7018 (February 10, 2006).
Discussion of the Issues
In accordance with section 751(c)(1) of the Act, the Department has conducted this sunset
review to determine whether revocation of the CVD 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
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determined in the investigation and subsequent reviews, and whether any change in the
programs which gave rise to the net countervailable subsidy has occurred and is likely to affect
that net countervailable subsidy. Pursuant to section 752(b)(3) of the Act, the Department shall
provide to the ITC the net countervailable subsidy likely to prevail if the order were revoked. In
addition, consistent with section 752(a)(6) of the Act, the Department shall provide to the ITC
information concerning the nature of the subsidy and whether it is a subsidy described in Article
3 or Article 6.1 of the 1994 WTO Agreement on Subsidies and Countervailing Measures (“SCM”).
Below we address the comments of the interested parties.
1. Likelihood of Continuation or Recurrence of a Countervailable Subsidy
Domestic interested parties argue that revocation of the CVD order on CTL Plate from Brazil
would likely lead to the continuation or recurrence of a countervailable subsidy. Domestic
interested parties further argue that the net countervailable subsidies determined in the final
affirmative countervailing duty determination have not changed. They argue that the rates found
in the investigation are the same net subsidy rates affirmed in the first sunset review.
Although domestic interested parties did not discuss programs, they argue that shipments of
CTL Plate to the United States decreased dramatically following the imposition of the CVD
order. Furthermore, they note that since the first sunset review, import levels of the subject
merchandise remain at relatively low levels. Domestic interested parties believe that the
imposition of the CVD order has had an effect on shipments of CTL Plate to the United States.
Therefore, they argue that the order should not be revoked.
Department's Position
In their substantive response, domestic interested parties do not discuss specific programs that
provided countervailable subsidies. Instead, they argue that import volumes of CTL Plate from
Brazil declined following the imposition of the CVD order. Moreover, they argue that imports
of CTL Plate to the United States from Brazil have stayed at low levels since the first sunset
review. While the domestic interested parties’ discussion of the CTL Plate shipment levels after
the imposition of the CVD order is informative, the statute does not require the Department to
consider such import levels for purposes of determining the likelihood of continuation or
recurrence of a countervailable subsidy.
The Department makes its likelihood determination, (i.e., of whether revocation of the order is
likely to lead to continuation or recurrence of a countervailable subsidy) on an order-wide
(country-wide) basis, although company-specific rates are reported to the ITC. See Statement of
Administrative Action (SAA) accompanying the URAA, H.R. Doc. No. 103-316, Vol. 1 (1994)
at 879 and House Report, H.R. Rep. No. 103-826 (1994) at 56.
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There was no participation in this review by any of the respondent interested parties. Further,
except as noted below, the facts available to the Department indicate that the subsidy programs
previously found countervailable continue to exist. Consequently, the Department finds that a
countervailable subsidy is likely to continue or recur in the event that this countervailing duty
order were revoked.
There have been no administrative reviews of this order since the first sunset review and no
evidence has been submitted to the Department in this proceeding that demonstrates the
termination of the countervailable programs. However, the Exemption of IPI and Duties on
Imports under Decree-Law 2324 program, which the Department investigated and found
countervailable in the original investigation, was also found to have been terminated in the
investigation with no residual benefits. The Department recognized this termination in the
investigation by establishing a cash deposit rate of zero percent for this program. See Final
Affirmative Countervailing Duty Determinations: Certain Steel Products from Brazil; 58 FR
37295 (July 9, 1993).
2. Net Countervailable Subsidy Likely to Prevail
The domestic interested parties argue that the magnitude of the net countervailable subsidy rate
likely to prevail is equal to the rate in the amended final determination to the investigation.
Therefore, the rate provided to the ITC should be equal to that established in the amended final
determination as the net countervailable subsidy likely to prevail if the CVD order were
revoked.
Department’s Position
The Department normally will provide the ITC the net countervailable subsidy that was
determined in the investigation, as the subsidy rate 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 in place. See SAA at 890, and House Report
at 64. For companies not specifically investigated or for companies that did not begin shipping
until after the order was issued, the Department normally will provide a net countervailable
subsidy rate based on the “Country-wide” rate determined in the investigation.
In the amended final determination to the investigation, we found that the Government of Brazil
(“GOB”) provided countervailable subsidies to producers of the subject merchandise. Since that
time, in the absence of administrative reviews, the net countervailable subsidy rate has remained
unchanged. As noted above, we did not receive a response from any of the respondent interested
parties in this sunset review. Therefore, because there is no evidence that changes have been
made to any of the Brazilian subsidy programs, and absent any argument and evidence to the
contrary, the Department determines, as it did in the first sunset review, that the net
countervailable subsidy that would be likely to prevail in the event of revocation of the order
would be 5.44 percent ad valorem for USIMINAS, 48.64 percent ad valorem for COSIPA, and
23.10 percent ad valorem for “all others.” Consistent with section 752(b)(3) of the Act, the
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Department will provide the ITC the net countervailable subsidy rate below in the section
entitled “Final Results of Review.”
3. Nature of the Subsidy
Consistent with section 752(a)(6) of the Act, the Department is providing the following
information to the ITC information concerning the nature of the subsidy, and whether the
subsidy is a subsidy as described in Article 3 or Article 6.1 of the WTO Agreement on Subsidies
and Countervailing Measures (ASCM). We note that Article 6.1 of the ASCM expired effective
January 1, 2000.
In the instant review there were no programs that fall within the meaning of Article 3.1 of the
ASCM. However, they could be subsidies described in Article 6.1 of the ASCM if the amount
of the subsidy exceeds five percent, as measured in accordance with Annex IV of the ASCM.
They also could fall within the meaning of Article 6.1 if they constitute debt forgiveness or are
subsidies to cover operating losses sustained by an industry or enterprise. However, there is
insufficient information on the record of this review in order for the Department to make such a
determination. We, however, are providing the ITC with the following program descriptions:
1. Equity Infusions: This program enabled USIMINAS and COSIPA to receive equity
infusions from the GOB in the following years: USIMINAS, 1980 to 1988; and
COSIPA, 1977 through 1991. We determined that equity infusions by the GOB into
USIMINAS, in these years, and into COSIPA in the years 1997 through 1989 and 1991
were made on terms inconsistent with commercial considerations.
2. Fiscal Benefits by Virtue of the CDI: The CDI provides for the reduction of up to
100 percent of the import duties and up to 10 percent of the IPI tax (value-added tax) on
certain imported machinery for specific projects.
3. IPI Rebate Program Under Law 7554/86: This Program consists of a rebate of 95
percent of the IPI tax paid on domestic sales of industrial products.
4. BNDES Financing: In this program, loans were provided in terms inconsistent with
commercial considerations because the companies that received the loans were
uncreditworthy.
5. Provision of Infrastructure: This program provides preferential interest on purchasing
agreements with a government-owned steel holding company.
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Final Results of Review
The Department finds that revocation of the CVD order would be likely to lead to continuation
or recurrence of a countervailable subsidy at the rates listed below:
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Brazilian Manufacturers/Exporters Net countervailable subsidy rate (percent)
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Usinas Siderurgicas de Minas Gerais S.A.(“USIMINAS”) 5.44
Companhia Siderurgica Paulista (“COSIPA”) 48.64
All Others 23.10
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Recommendation
Based on our analysis of the substantive response received, we recommend adopting all of the
above positions. If these recommendations are accepted, we will publish the final results of
review in the Federal Register.
AGREE__________ DISAGREE___________
__________________________
David M. Spooner
Assistant Secretary
for Import Administration
__________________________
Date