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[C-351-818] 
 
Final Affirmative Countervailing Duty Determinations: Certain 
Steel Products From Brazil 
 
AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
 
EFFECTIVE DATE: July 9, 1993.
 
FOR FURTHER INFORMATION CONTACT: Philip Pia or Laurel Lynn, 
Office of Countervailing Compliance, U.S. Department of Commerce, 
room 3099, 14th Street and Constitution Avenue, NW., Washington, 
DC 20230; telephone (202) 482-3961 or 482-1168, respectively. 
 
Final Determinations
  
   The Department determines that benefits which constitute 
subsidies within the meaning of section 701 of the Tariff Act 
of 1930, as amended (the Act), are being provided to manufacturers, 
producers, or exporters in Brazil of certain steel products. 
   For information on the estimated net subsidies, please see 
the Suspension of Liquidation section of this notice. 
 
Case History 
 
   Since the publication of the preliminary determinations (57 
FR 57806, December 7, 1992) the following events have occurred. 
On December 22, 1992, we issued a supplemental questionnaire 
to the Government of Brazil (GOB). On January 12, 1993, we received 
a response to that questionnaire from the respondents. We conducted 
verification of the responses submitted in these investigations 
from January 27, 1993, through February 18, 1993. Public hearings 
were held on April 21, 1993, regarding case-specific issues, 
and on May 5-6, 1993, regarding general issues affecting this 
and other certain steel investigations from various countries. 
   On March 8, 1993, we published in the Federal Register a 
notice postponing the final determinations in these investigations 
in accordance with the postponement of the final determinations 
in the companion antidumping duty investigations (58 FR 12935). 
   On April 6, 1993, we terminated the suspension of liquidation 
of all entries of the subject merchandise entered, or withdrawn 
for consumption, on or after that date (see Suspension of Liquidation 
section, below). 
 
Scope of Investigations 
 
   The products covered by these investigations, certain steel 
products, constitute the following four separate ``classes or 
kinds'' of merchandise, as found in the ``Scope Appendix'' to 
the Final Affirmative Countervailing Duty Determination: Certain 
Steel Products from Austria: (1) Certain hot-rolled carbon steel 
flat products, (2) certain cold-rolled carbon steel flat products, 
(3) certain corrosion-resistant carbon steel flat products, 
(4) certain cut-to-length carbon steel plate. 
 
Injury Test 
 
   Because Brazil is a ``country under the Agreement'' within 
the meaning of section 701(b) of the Act, the U.S. International 
Trade Commission (ITC) is required to determine whether imports 
of the certain steel products from Brazil materially injure, 
or threaten material injury to, U.S. industries. On August 21, 
1992, the ITC preliminarily determined that there is a reasonable 
indication that industries in the United States are being materially 
injured or threatened with material injury by reason of imports 
from Brazil of the subject merchandise (57 FR 38064, August 
21, 1992). 
 
Respondents 
 
   The GOB is a respondent for each class or kind of merchandise 
subject to these investigations. The following is a list of 
respondent companies for each class or kind of merchandise subject 
to these investigations: 
   Certain Hot-Rolled Carbon Steel Flat Products: USIMINAS, 
COSIPA, CSN.
   Certain Cold-Rolled Carbon Steel Flat Products: USIMINAS, 
COSIPA, CSN.
   Certain Corrosion-Resistant Carbon Steel Flat Products: CSN.
   Certain Cut-To-Length Carbon Steel Plate: USIMINAS, COSIPA. 
 
Analysis of Programs 
 
   Based on our analysis of the petition, the responses to our 
questionnaires, verification and comments by interested parties, 
we determine the following:
 
General Issues 
 
   Several issues raised by interested parties in these investigations, 
and in other countervailing duty investigations of certain steel 
products from various countries were not case-specific but rather 
general in nature. These included: 
· Allocation Issues; 
· Denominator Issues; 
· Equity Issues; 
· Prepension Program Issues; 
· Privatization Issues; and 
· Restructuring Issues. 
   The comments submitted by interested parties concerning these 
issues, in both the general issues case and rebuttal briefs 
as well as the country-specific briefs, and the Department's 
positions on each are addressed in the General Issues Appendix 
which is attached to the Final Affirmative Countervailing Duty 
Determination: Certain Steel Products from Austria which is 
published concurrently with this notice. 
 
Period of Investigation 
 
   For purposes of these final determinations, the period for 
which we are measuring subsidies (the period of investigation 
(POI)) is calendar year 1991, which corresponds to the fiscal 
years of USIMINAS, COSIPA, and CSN. 
 
Calculation of Country-Wide Rates 
 
   In determining the benefits received under the various programs 
described below, we used the following calculation methodology. 
We first calculated a country-wide rate for each program. This 
rate comprised the ad valorem benefit received by each firm 
weighted by each firm's share of exports, separately, for each 
class or kind of merchandise, to the United States. The rates 
for all programs were then summed to arrive at a country-wide 
rate for each class or kind of merchandise. 
   Pursuant to section 355.20(d) of the Department's regulations 
(19 CFR 355.20(d)(1992)), for each class or kind of merchandise, 
we compared the total ad valorem subsidy received by each firm 
to the country-wide rate for all programs. Only one company, 
CSN, is a respondent in the corrosion-resistant carbon steel 
flat products investigation. Its rate, therefore, is the country-
wide rate for corrosion-resistant carbon steel flat products. 
   Of the three respondent companies in the hot-rolled carbon 
steel flat products investigation, two of the companies, USIMINAS 
and COSIPA, have rates that are significantly different than 
the country-wide rate as defined in section 355.20(d) of the 
Department's regulations. Therefore, USIMINAS and COSIPA received 
individual company rates for this class or kind of merchandise. 
For the remaining firm, CSN, we recalculated the country-wide 
rate, based solely on the benefits received by this firm for 
this class or kind of merchandise. This is the rate that will 
be applied to all other manufacturers, producers, and exporters, 
with the exception of USIMINAS and COSIPA. 
   For the cut-to-length carbon steel plate investigation, both 
companies under investigation, USIMINAS and COSIPA, were significantly 
different from the country-wide rate. Therefore, these firms 
received individual company rates for this class or kind of 
merchandise. Because all of the firms under investigation were 
significantly different from the country-wide rate, we are applying 
the weighted-average rate for these two companies to all other 
manufacturers, producers, and exporters of cut-to-length carbon 
steel plate, with the exception of USIMINAS and COSIPA. 
   For the cold-rolled carbon steel flat products investigation, 
all three companies under investigation, USIMINAS, CSN and COSIPA, 
were significantly different from the country-wide rate. Therefore, 
these firms received individual company rates for this class 
or kind of merchandise. Because all of the firms under investigation 
were significantly different from the country-wide rate, we 
are applying the weighted-average rate for these three companies 
to all other manufacturers, producers, and exporters of cold-
rolled carbon steel flat products, with the exception of USIMINAS, 
CSN and COSIPA. 
 
Equityworthiness 
 
   The Department considers a company equityworthy if, from 
the perspective of a reasonable private investor examining the 
firm at the time the government equity infusions were made, 
the firm showed an ability to generate a reasonable rate of 
return within a reasonable period of time. For a detailed explanation 
of the standards used by the Department to determine whether 
a company is equityworthy, please see the Equity section of 
the General Issues Appendix. 
   Petitioners have alleged that USIMINAS, COSIPA and CSN were 
unequityworthy during 1980-1988, 1977-1989 and 1991, and 1977-
1991, respectively, and, therefore, that equity infusions received 
during those years were inconsistent with commercial considerations. 
The Department has previously analyzed the equityworthiness 
of some of these years. COSIPA has been previously found to 
be unequityworthy in the following years: 1977-1984 (See Final 
Affirmative Countervailing Duty Determination: Certain Carbon 
Steel Products From Brazil, 49 FR 17988 (April 26, 1984), (Carbon 
Steel), and subsequent administrative reviews); and 1985-1991 
(See Final Negative Countervailing Duty Determination: Circular 
Welded Non-Alloy Steel Pipe From Brazil, 57 FR 42968 (September 
17, 1992) (Pipe and Tube)). USIMINAS was found unequityworthy 
from 1980-1987 (See Final Affirmative Countervailing Duty Determination: 
Steel Wheels From Brazil, 54 FR 15523 (April 16, 1989) (Steel 
Wheels)). CSN was determined to be unequityworthy in the following 
years: 1977-1982 (See Carbon Steel, 1984 Investigation); and 
1983-1984 (See Certain Carbon Steel Products from Brazil: Final 
Results of Countervailing Duty Administrative Review, 52 FR 
829 (January 9, 1987)). 
   In the present investigations, respondents submitted additional 
information for our consideration of whether they were equityworthy 
after 1986. A financial restructuring plan was adopted in 1987 
by the GOB-owned steel holding company SIDERBRAS, which owned 
COSIPA, CSN and USIMINAS. The plan was based on internal studies 
and outside consultants' recommendations, and entailed financial 
restructuring of the three companies and government assistance 
in various forms. We have examined the financial restructuring 
plan, and particularly the projections contained therein, in 
analyzing the equityworthiness of COSIPA, CSN, and USIMINAS 
for the years after 1986. 
   The projections contained in a consultant's evaluation of 
the plan, as supplied by respondent, do not support a determination 
of equityworthiness for any of the companies in the years under 
investigation. The goal of the restructuring plan was that at 
the end of the restructuring period, the companies would provide 
a satisfactory return on equity. However, according to the plan 
itself and the projections provided, that goal would not be 
achieved until the end of the plan's implementation period, 
after the years under investigation. 
   In addition, respondents have argued that one of the reasons 
for their poor financial health was the failure of the GOB to 
provide equity infusions in accordance with long-term plans 
established by the GOB and the companies. Given that history, 
a reasonable investor would have had cause to be skeptical regarding 
the full implementation of the restructuring plan, which included 
future GOB assistance to the companies. 
   Projections of future earnings are only one part of the Department's 
analysis of equityworthiness. The Department's ``Equityworthy 
and Creditworthy'' memorandum dated November 27, 1992, outlines 
the analysis of the current and past indicators of the firms' 
financial health as calculated from financial statements and 
financial ratios. The analysis of these factors strongly indicates 
that the companies were unequityworthy during the years under 
investigation. A private investor would have had to reconcile 
such an analysis of past performance with projections of future 
earnings based on the financial restructuring plan. As noted 
above, the information in the response regarding the projections 
does not support a finding of equityworthiness. The projections 
do not provide a sufficient basis to overcome the historical 
records of poor performance by the companies under investigation. 
   This analysis of the impact of the SIDERBRAS financial restructuring 
plan on the companies' equityworthiness does not provide evidence 
which would cause us to change our preliminary determinations 
regarding equityworthiness. 
   Based on prior Department determinations and analysis of 
respondents' data, we have determined that respondents were 
unequityworthy in the following years: USIMINAS 1980-1988 (USIMINAS 
did not receive equity infusions after 1988); COSIPA 1977-1989, 
1991; CSN 1977-1991. We, therefore, determine that equity infusions 
provided by the GOB to each company in these respective years 
were inconsistent with commercial considerations. See the Department's 
memorandum dated June 21, 1993, regarding final determinations 
of equityworthiness and creditworthiness. 
 
Creditworthiness 
 
   The Department will find a firm uncreditworthy if the firm 
did not have sufficient revenues or resources to meet its fixed 
financial obligations in the three years prior to the year in 
which the firm and the government agreed upon the terms of the 
loan. 
   Based on petitioners' allegation, we initiated investigations 
to determine whether USIMINAS, COSIPA, and CSN were uncreditworthy 
during the period 1979-1991. For certain years, we had previously 
determined that these companies were uncreditworthy and respondents 
provided no new information that would lead us to reconsider 
those determinations. Based on previous Department determinations 
and respondents' submitted financial data, we determine that 
respondents were uncreditworthy in the following years: USIMINAS, 
1980-1988; COSIPA, 1979-1991; and CSN, 1979-1991. See the Department's 
memorandum dated June 21, 1993, regarding final determinations 
of equityworthiness and creditworthiness. 
 
Privatization 
 
   In these final determinations, we have decided that a portion 
of the price paid for a formerly government-owned company represents 
partial repayment of prior subsidies. We calculated the portion 
of the purchase price attributable to repayment of prior subsidies. 
We then reduced the benefit streams for each of the prior subsidies 
by the ratio of the repayment amount to the net present value 
of all remaining benefits from those prior subsidies at the 
time of privatization. A further explanation of the Department's 
determination on privatization and these calculations can be 
found in the Privatization section of the General Issues Appendix. 
The subsidies allocated to the POI for USIMINAS reflect, where 
appropriate, the application of the privatization methodology. 
USIMINAS was partially privatized in 1991. 
 
Grant Methodology 
 
   The Department's methodology for calculating the net subsidy 
rate attributable to grants is discussed in the Allocation section 
of the General Issues Appendix. 
 
A. Programs Determined To Be Countervailable 
 
   We determine that subsidies are being provided to manufacturers, 
producers, or exporters in Brazil of certain steel products 
under the following programs: 
   1. Equity Infusions. USIMINAS, COSIPA, and CSN received equity 
infusions from the GOB in the following years: USIMINAS, 1980 
through 1988; COSIPA, 1977 through 1989 and 1991; and CSN, 1977 
through 1991. We have consistently held that government provision 
of equity does not per se confer a subsidy (see section 355.44(e)(1) 
of the Department's Proposed Regulations (Countervailing Duties; 
Notice of Proposed Rulemaking and Request for Public Comments, 
54 FR 23366 (May 31, 1989)) (Proposed Regulations)). Government 
equity infusions bestow a countervailable benefit only when 
provided on terms inconsistent with commercial considerations. 
Therefore, we examined whether the responding companies were 
reasonable investments in the years they received infusions 
from the GOB in order to determine whether the infusions were 
inconsistent with commercial considerations. For the reasons 
specified in the Equityworthiness section of this notice, and 
in the Equity section of the General Issues Appendix, we determine 
that the GOB's equity infusions into USIMINAS between 1980-1988, 
into CSN between 1977-1991, and into COSIPA from 1977-1989 and 
in 1991, were made on terms inconsistent with commercial considerations, 
and thus countervailable. 
   In calculating the benefit from the equity infusions it was 
necessary to adjust the nominal values of the equity infusions 
to account for Brazilian hyperinflation that averaged over 350 
percent per year since 1977. While various Brazilian inflation 
indices are available to hold nominal cruzeiro values constant, 
we have determined that it is more appropriate to convert the 
nominal cruzeiro amounts of the infusions into U.S. dollars 
using the exchange rate in effect at the time of the infusions. 
We have chosen dollarization over Brazilian inflation indices 
for a number of reasons. First, because of triple-digit inflation, 
there has been very little long-term cruzeiro lending in Brazil 
over the last decade. Consequently, no appropriate long-term 
cruzeiro discount rate for use in our grant calculation exists. 
Second, the Brazilian currency has undergone three reforms since 
1977. With each currency reform, the Brazilian government introduced 
a new inflation index. Thus, indexing individual equity infusions 
across different currencies and indices becomes extremely complex. 
Third, the government-published indices have been generally 
criticized as understating real increases in prices. For these 
reasons, therefore, we have dollarized all equity infusions 
as a reasonable and workable alternative. 
   In calculating a benefit from the infusions, we first established 
a discount rate, as provided for in section 355.49(b)(2) of 
the Proposed Regulations. Because we have converted the equity 
infusions into dollars in order to account for hyperinflation, 
we must use a long-term discount rate in dollars. For our benchmark 
discount rates, we used data for U.S. dollar lending in Brazil 
for long-term non-guaranteed loans from private lenders as published 
in World Bank Debt Tables: External Debt of Developing Countries. 
For those years that respondents were found to be uncreditworthy, 
we added a risk premium to the discount rate. This risk premium 
was calculated in accordance with the Proposed Regulations. 
   To calculate the benefit from the subsidies, we used the 
calculation methodology specified in the Equity section of the 
General Issues Appendix. 
   On this basis, we determine the net subsidies for this program 
to be 28.10 percent ad valorem for certain hot-rolled carbon 
steel flat products except for USIMINAS (3.45 percent ad valorem), 
and COSIPA (43.12 percent ad valorem); and 19.20 percent ad 
valorem for certain cold-rolled carbon steel flat products except 
for USIMINAS (3.45 percent ad valorem), CSN (28.10 percent ad 
valorem), and COSIPA (43.12 percent ad valorem); 28.10 percent 
ad valorem for certain corrosion-resistant carbon steel flat 
products; and 19.66 percent ad valorem for certain cut-to-length 
carbon steel plate except for USIMINAS (3.45 percent ad valorem) 
and COSIPA (43.12 percent ad valorem). 
   2. Fiscal Benefits by Virtue of CDI. Under Decree-Law (D.L.) 
1428, the Industrial Development Council (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 sales tax) on certain 
imported machinery for specific projects in 14 industries approved 
by the GOB. In order to qualify for these reductions, the recipient 
must prove that the machinery or equipment to be imported is 
not available from a Brazilian manufacturer. 
   This program was repealed in 1979 under Decree-Law 1726. 
However, companies whose projects were approved prior to the 
repeal continue to receive benefits from this program pending 
completion of their respective project. We verified that only 
USIMINAS received benefits under this program, in the form of 
import duty and IPI tax reductions, during the POI. 
   This program was found to be limited to a specific enterprise 
or industry, or group of enterprises or industries, in Steel 
Wheels. In these investigations, respondents have provided no 
new information or evidence of changed circumstances to contradict 
that decision. 
   To calculate the benefit from the CDI program import duty 
and IPI tax exemptions, we computed the amount of import duties 
and IPI tax that would have been paid by USIMINAS in 1991 absent 
this program and divided that amount by sales of cut-to-length 
steel plate. We are allocating this exemption to the POI because 
this is a recurring benefit (see the Allocation Issues section 
in the General Issues Appendix). We used only sales of that 
product since the machinery imported under CDI can only produce 
cut-to-length carbon steel plate. On this basis, we determine 
the net subsidies for this program to be 0.21 percent ad valorem 
for cut-to-length carbon steel plate except for USIMINAS (0.36 
percent ad valorem) and COSIPA (zero). 
   3. IPI Rebate Program Under Law 7554/86. The IPI Rebate Program, 
which consists of a rebate of 95 percent of the IPI tax paid 
on domestic sales of industrial products, was established by 
Decree-Law 1547 in 1977. Although the program was suspended 
in April 1990 (Decree-Law 8034), steel companies with projects 
approved before April 12, 1990, are eligible for IPI rebates 
until 1996 (pursuant to the old legislation, as amended by Law 
7554/86). 
   In the Pipe and Tube and Final Affirmative Countervailing 
Duty Determination: Certain Hot-Rolled Lead and Bismuth Carbon 
Steel Products From Brazil (Leaded Bar), 58 FR 6213 (January 
27, 1993), we determined this program was limited to a specific 
enterprise or industry, or group of enterprises or industries. 
The GOB did not provide any information or evidence of changed 
circumstances to contradict that decision. USIMINAS, COSIPA, 
and CSN received benefits under this program during the POI. 
These benefits are not tied to any class or kind of merchandise. 
We determine these benefits to be recurring, based on the analysis 
set forth in the Allocation Issues section in the General Issues 
Appendix. Therefore, to calculate the benefit, we divided the 
total amount of each company's IPI rebates received during the 
POI by their respective total sales during the POI. 
   On this basis, we determine the net subsidies for this program 
to be 2.04 percent ad valorem for certain hot-rolled carbon 
steel flat products except for USIMINAS (2.00 percent ad valorem), 
and COSIPA (0.58 percent ad valorem); 1.56 percent ad valorem 
for certain cold-rolled carbon steel flat products except for 
USIMINAS (2.00 percent ad valorem), CSN (2.04 percent ad valorem) 
and COSIPA (0.58 percent ad valorem); 2.04 percent ad valorem 
for certain corrosion-resistant carbon steel flat products; 
and 1.42 percent ad valorem for certain cut-to-length carbon 
steel plate except for USIMINAS (2.00 percent ad valorem) and 
COSIPA (0.58 percent ad valorem).    
4. Exemption of IPI and Duties on Imports under Decree-Law 
2324. Decree-Law 2324 of March 30, 1987, provided exporters 
of manufactured products exemptions from IPI and duties on imported 
spare parts and machinery. This program was used by CSN and 
USIMINAS during the POI. Because this exemption was limited 
to exporters, and because the imported goods were not physically 
incorporated into the subject merchandise, we determine this 
program to be countervailable. 
   We determine these benefits to be recurring, based on the 
analysis set forth in the Allocation Issues section in the General 
Issues Appendix. We calculated the benefit for CSN by dividing 
the amount of IPI and import duties exempted in 1991 by that 
company's total exports in 1991. The USIMINAS claim for this 
exemption is being challenged by the GOB, and the matter is 
presently before the Brazilian courts. Therefore, since the 
matter has not been resolved by the Brazilian judicial system 
and there is a possibility that USIMINAS may have to pay the 
IPI taxes and import duties, we are treating the amount of the 
exempted tax and duty as an interest-free loan. To calculate 
the benefit to USIMINAS, we determined the amount of IPI and 
export duties not paid in 1991 and multiplied that by the short-
term interest rate in Brazil and the number of days those payments 
were outstanding during the POI. If a countervailing duty order 
is issued in these investigations, and if a section 751 administrative 
review is requested, we will reexamine this issue in an administrative 
review pending the resolution of this challenge in the Brazilian 
judicial system. 
   On this basis, we determine the net subsidy to be 0.01 percent 
ad valorem for certain hot-rolled carbon steel flat products 
except for USIMINAS (0.19 percent ad valorem) and COSIPA (zero); 
0.11 percent ad valorem for certain cold-rolled carbon steel 
flat products except for USIMINAS (0.19 percent ad valorem), 
CSN (0.01 percent ad valorem), and COSIPA (zero); 0.01 percent 
ad valorem for certain corrosion-resistant carbon steel flat 
products; and 0.11 percent ad valorem for certain cut-to-length 
carbon steel plate except for USIMINAS (0.19 percent ad valorem), 
and COSIPA (zero). 
   The Department has verified that Decree-Law 2324 terminated 
by its own decree in 1991 and that no residual benefits have 
been provided. Because the program was terminated prior to the 
preliminary determination in these investigations and no residual 
benefits have been provided since before the preliminary determination, 
we will reduce the estimated cash deposit of countervailing 
duties to zero in accordance with section 355.50(a)(2) of the 
Department's Proposed Regulations. 
   5. BNDES Financing. The Banco Nacional de Desenvolvimento 
Economico e Social (BNDES) is Brazil's government-owned bank 
for economic and social development. BNDES lends to a variety 
of sectors of the economy through a set of operating programs 
in accordance with government economic objectives. BNDES is 
the only source of long-term cruzeiro lending in Brazil. 
   BNDES financing has been found to be non-specific and therefore 
not countervailable in prior Department determinations. See, 
e.g., Carbon Steel, 1984 Investigations. However, in these current 
investigations, petitioners have alleged that BNDES provided 
a disproportionate share of loans to the steel sector. Petitioners 
have also alleged that the loans were provided on terms inconsistent 
with commercial considerations because the companies were uncreditworthy 
at the time of receipt of the loans. USIMINAS, COSIPA, and CSN 
received loans from BNDES which were outstanding during the 
POI. 
   In prior investigations, the Department has considered whether 
respondent companies received disproportionate benefits under 
a program. See, e.g., Final Affirmative Countervailing Duty 
Determination: Iron Ore Pellets from Brazil (Iron Ore), 51 FR 
21961 (June 17, 1986); and Final Affirmative Countervailing 
Duty Determinations: Pure and Alloy Magnesium from Canada (Magnesium), 
57 FR 30946 (July 13, 1992). In these investigations, we analyzed 
whether respondents received a disproportionate share of benefits 
by comparing their share of benefits to the collective or individual 
share of benefits provided to all other users of the program 
in question. 
   In Iron Ore, the Department compared the amount of BNDES 
lending to the mining sector (the notice mistakenly refers to 
the metallurgy sector) to the amount of BNDES lending provided 
to the total industrial sector. Based on that analysis, we determined 
that the mining sector did not receive a disproportionate share 
of BNDES lending. Similarly, in Magnesium we compared the amount 
of program assistance provided to each of the recipients to 
the amount of assistance provided to the respondent. Based on 
this examination, we found that the respondent received a disproportionate 
share of benefits under the program, and thus the benefits it 
received were countervailable. 
   We have employed the same type of analysis in these investigations. 
To determine whether the steel industry received a disproportionate 
share of loans under BNDES, we went back to the earliest year 
in which loans were received by any of the respondents which 
were still outstanding during the POI. We then compared BNDES 
lending to the steel industry in those years to total BNDES 
lending to all other industries in Brazil. 
   In every year from 1975 through 1986, the steel industry 
was the largest single industrial recipient of BNDES lending. 
The steel industry received two-and-a-half times more in BNDES 
lending than the second largest industrial recipient during 
that same time period. We also compared the lending received 
by the steel industry during those years to total BNDES lending 
to all sectors of the economy, not just lending provided to 
industry. A comparison of total lending provided to the steel 
industry to total BNDES lending, including funding for the development 
of electrical energy and infrastructure in Brazil, also shows 
that the steel industry is the single largest recipient of BNDES 
financing in those years. Therefore, BNDES provided more funding 
to one single industry, steel, than was provided for the entire 
development of electricity or infrastructure within the country. 
Based on this analysis, we determine that the steel industry 
in Brazil received a disproportionate share of BNDES lending 
for the years 1975 through 1986, and, therefore, loans provided 
to the respondents from BNDES in those years are specific to 
the steel industry.
   We verified that BNDES sets the interest rates to be charged 
on indexed cruzeiro loans based on the long-term rates for U.S. 
dollars. Because there is no other source for fixed-rate, long-
term cruzeiro lending, we converted the indexed BNDES loans 
into U.S. dollars, and used a U.S. dollar benchmark. Because 
respondents were uncreditworthy in each of the years BNDES loans 
were approved, we added a risk premium to the benchmark. The 
risk premium was calculated in accordance with section 355.44(b)(6)(iv) 
of the Proposed Regulations. For further information on the 
calculation of the benchmark, please see Comment 8, below. A 
comparison of the benchmark interest rates to the interest rates 
on these loans indicates that at least some of the BNDES loans 
were provided on terms inconsistent with commercial considerations. 
   Because virtually all of the BNDES loans were contracted 
and recorded in the respondents' accounting system in inflation 
indices and not in cruzeiros, it was not possible to convert 
the loan principal into dollars at the time of loan contract. 
However, we do have verified information regarding the indexed 
amounts of each loan in cruzeiros outstanding at both the beginning 
and at the end of our POI. Therefore, instead of calculating 
the benefit from BNDES loans using our standard long-term, fixed-
rate loan methodology we have used the following methodology: 
(1) We converted the cruzeiro amounts of principal outstanding 
at the beginning and at the end of the POI into dollars using 
the corresponding exchange rates, (2) we subtracted the year-
end balance from the year-beginning balance to find the amount 
paid during 1991, (3) we multiplied the differential between 
our dollar benchmark and the interest rate on the loan by the 
amount of principal paid in 1991 to derive the dollar benefit 
during 1991, and (4) we divided the dollar benefit by 1991 total 
sales in dollars to calculate the ad valorem benefit. 
   On this basis, we determine the net subsidies for this program 
to be 0.24 percent ad valorem for certain hot-rolled carbon 
steel flat products except for USIMINAS (0.07 percent ad valorem), 
and COSIPA (0.96 percent ad valorem); 0.37 percent ad valorem 
for certain cold-rolled carbon steel flat products except for 
USIMINAS (0.07 percent ad valorem), CSN (0.24 percent ad valorem) 
and COSIPA (0.96 percent ad valorem); 0.24 percent ad valorem 
for certain corrosion-resistant carbon steel flat products; 
and 0.43 percent ad valorem for certain cut-to-length carbon 
steel plate except for USIMINAS (0.07 percent ad valorem) and 
COSIPA (0.96 percent ad valorem). 
   6. Provision of Infrastructure: Port of Praia Mole. Petitioners 
alleged that the use and sale of these port facilities, constitute 
a provision of subsidized infrastructure to USIMINAS.
   Praia Mole Port consists of a pier, terminals, and other 
facilities designed for use by steel and coal companies. Praia 
Mole Port is located within the larger Vitoria Bay Port, which 
contains port facilities for a variety of industries. Praia 
Mole Port was jointly constructed by SIDERBRAS (GOB-owned steel 
holding company), CVRD (GOB-owned mining concern) and PORTOBRAS 
(GOB entity responsible for ports and associated infrastructure). 
The port was built for the exclusive use of CVRD and three steel 
manufacturers which were subsidiaries of SIDERBRAS: USIMINAS, 
CST, and ACOMINAS. 
   SIDERBRAS's interest in the port was sold in October 1991 
in three equal shares to the three steel companies. USIMINAS's 
purchase agreement with SIDERBRAS stipulated that USIMINAS would 
have a grace period before principal and interest payments were 
required, but that monetary correction and interest would be 
computed from the date of the agreement. 
   We verified that, prior to the sale of the port, the three 
steel companies paid the following four types of fees for the 
use of the facilities: (1) To SIDERBRAS, a fee of twelve percent 
of the total of its invested capital per year for recovery of 
its investment; (2) to CST, which held a contract to operate 
the port, a fee for operating expenses such as management, maintenance, 
and insurance; (3) to PORTOBRAS, a GOB agency administering 
ports, a fee to cover costs of the general port infrastructure; 
and (4) to unrelated third parties, a fee for handling cargo.
   We verified the origin and calculation of each of the charges. 
SIDERBRAS' charge is based on the cost to SIDERBRAS of constructing 
the port facilities plus a twelve percent return on investment. 
The operating costs are based on use of the facilities. The 
PORTOBRAS charges are based on the agency's standard charges 
applicable to all ports. The charges for cargo handling are 
negotiated directly with the outside parties. 
   After the sale, the fees paid by USIMINAS, CST, and ACOMINAS 
for the use of the port changed only in that there was no longer 
a fee to SIDERBRAS for its return on investment. 
   We determine that USIMINAS did not receive a benefit from 
the use of the port facilities in the form of preferential fees. 
The fees charged by PORTOBRAS were calculated on the same basis 
as the other companies' fees and reflect standard fees applied 
to all users of port facilities, thus, they are non-specific. 
We found no evidence that the fees charged by CST or the unrelated 
third parties were set by the GOB or at the GOB's direction. 
   However, we do determine that a benefit did accrue to USIMINAS 
in the form of a preferential interest rate on the purchase 
agreement with SIDERBRAS. For purposes of these final determinations, 
as in the preliminary determinations, we analyzed the purchase 
agreement effectively as a loan, and find that the interest 
rate is inconsistent with commercial considerations based on 
a comparison to a real short-term benchmark rate. Although the 
financing for the Praia Mole Port was at a fixed long-term interest 
rate, we had to use a short-term interest rate as our benchmark 
because there are no long-term fixed interest rates for cruzeiro 
loans available from commercial sources in Brazil. We calculated 
the differential between the actual interest deferred during 
the POI and the amount that should have been deferred using 
the benchmark rate. The amount of that differential was then 
divided by USIMINAS' total export sales. 
   On this basis, we determine the net subsidies to be less 
than 0.005 percent ad valorem for all products subject to these 
investigations. 
 
B. Programs Determined Not to Exist 
 
   We determine that the following program does not exist: 

Deferred Income Tax and Social Contribution 
 
 
Interested Party Comments 
 
   The following are country-specific comments only. All other 
issues are either addressed in the sections above or in the 
General Issues Appendix. 
   Comment 1: Respondents argue that the Department's equity 
infusion calculation overstated the benefits received by respondents. 
First, the Department's use of U.S. dollars in the benefit stream 
distorted the calculation of benefits conferred by prior infusions. 
Second, even if the Department uses the dollar methodology, 
the Department must use the daily exchange rate in effect on 
the last day of each month to dollarize those amounts of equity 
infusions that were provided to the Department on a monthly 
basis in order to avoid overstating the amount of the equity 
infusion. 
   Petitioners argue that the Department's dollar-based methodology 
for quantifying the equity infusion benefit does not overstate 
the benefit. On the contrary, the methodology actually understates 
the benefits, but to a much lesser degree than the methodology 
advocated by respondents, which is indexing the cruzeiro values. 
Petitioners, therefore, state that the Department should continue 
to dollarize equity infusions. 
   Department Position: For the reasons explained in the Equity 
Infusions section of this notice, we find that dollarizing the 
equity infusions is the most reasonable and workable method 
to account for Brazilian hyperinflation. As for the respondents' 
argument that we should use the daily exchange rates in effect 
at the last day of each month, we must continue to use the monthly 
average exchange rates since the information provided by respondents 
shows only the month, not the particular day, in which the infusion 
occurred. Where the respondent provided only yearly totals, 
we continued to use the average annual exchange rate to dollarize 
the infusions. 
   Comment 2: Respondents argue that the Department should use 
COSIPA's equity infusion amounts tables net of interest. COSIPA 
accidently included interest as part of the equity infusion 
when it submitted its questionnaire response. Information for 
making this revision was provided to the Department at verification 
and is contained in the verification exhibits. 
   Department Position: We agree that interest should be deducted 
from the amount of the equity infusion. We have adjusted our 
calculations accordingly. 
   Comment 3: Petitioners argue that the World Debt Tables (World 
Bank publication) used by the Department are not appropriate 
measurements for discount rates in these investigations. World 
Debt Tables interest rates are rates for public and publicly-
guaranteed debt in various currencies. As an alternative, the 
Department should use a variable, U.S. dollar-based rate that 
reflects each firms' actual borrowing experience. 
   Department Position: We disagree. Petitioner's request that 
we construct company-specific discount rates contravenes the 
ranking of discount rates in the Department's Proposed Regulations. 
Section 355.49(b)(2) of the Proposed Regulations establishes 
the hierarchy of discount rates used with respect to valuing 
equity infusions over time. The first two discount rates in 
the hierarchy are inappropriate because the respondents were 
found to be uncreditworthy at the time they received the equity 
infusions. Therefore, to determine the most appropriate discount 
rate, we have followed the interest rate hierarchy for uncreditworthy 
firms found in section 355.44(b)(6). We consider the rates in 
the World Debt Tables to be the closest proxy available for 
the highest fixed, long-term, rates commonly available to firms 
borrowing dollars in Brazil. They represent rates for private, 
nonguaranteed debt from private creditors. As such they are 
appropriate discount rates to use for our equity calculations. 
In those years that the respondent firms were uncreditworthy, 
we added a risk premium stipulated in section 355.44(b)(6) of 
the Proposed Regulations.
   Comment 4: Petitioners contend that the Department should 
reject its preliminary determination that the IPI tax exemptions 
received by USIMINAS under the CDI program were also available 
to all companies in Brazil under Decree-Law 8191. Petitioners 
contend that the Department's verification report states that 
less than one percent of USIMINAS' CDI-related imports would 
have been covered under Decree-Law 8191.
   Department Position: In our preliminary determinations, the 
Department stated that, based on the information on the record, 
the IPI exemptions received by USIMINAS under the CDI program 
were available to all Brazilian companies under Decree-Law 8191. 
At verification, the Department determined that while Decree-
Law 8191 does provide for exemption from IPI on certain imports, 
less than one percent of the goods imported by USIMINAS under 
CDI would have been covered by Decree-Law 8191. Respondents 
have made no argument that benefits under these laws are integrally 
linked, and there is no evidence on the record that they are 
integrally linked; therefore, we have not included the industries 
benefitting from D.L. 8191 in our analysis of the specificity 
of the CDI program. Because the CDI program was the only program 
which offered these benefits, and the CDI program has been determined 
to be specific, we have included the IPI exemption in the subsidy 
calculation. 
   Comment 5: Respondents argue that in these investigations, 
the CDI program and its benefits, including eligibility for 
residual benefits, terminated prior to the preliminary determination. 
Therefore, they argue the cash deposit rate should be set at 
zero. 
   Department Position: At verification, the GOB informed the 
Department that USIMINAS' eligibility for CDI benefits expired 
on September 1, 1992. However, USIMINAS had been granted CDI 
benefits prior to September 1, 1992, for imports which would 
enter the country between September 1, 1992, and December 31, 
1992. The GOB granted USIMINAS the right to receive its previously-
approved CDI benefits through December 31, 1992. Because USIMINAS 
was still receiving benefits until December 31, 1992, the Department 
considers that benefits were provided under CDI after the preliminary 
determinations in these investigations. Therefore, the termination 
does not constitute a program-wide change in accordance with 
section 355.50(d) of the Proposed Regulations, and the cash 
deposit rate has not been set to zero. 
   Comment 6: Respondents argue that the Department should not 
countervail the IPI rebate program, because the IPI tax is selectively 
imposed by the GOB on only 14 sectors of the Brazilian economy, 
and the rebate of that tax merely places the steel sector in 
the same position as other sectors in Brazil. Petitioners argue 
that the IPI rebates do constitute a non-specific benefit. Petitioners 
contend that the industry sectors subject to IPI tax account 
for a major portion of the Brazilian economy. Therefore, they 
state it is incorrect to suggest that a rebate of the tax for 
the steel industry serves to place steel on an even basis with 
the rest of the economy. The rebate of IPI tax is specifically 
provided to the steel industry by the GOB, and should be countervailed. 
   Department Position: We agree with petitioners. The program 
under investigation in this case is the IPI rebate program, 
under which the steel industry in Brazil receives a specific 
subsidy not provided to other industries. While other industries 
may or may not be required to pay the IPI tax, the GOB rebates 
that tax only to the steel industry, and thus we have determined 
that the rebate is specific and countervailable. The Department 
has previously found the IPI rebate program specific to the 
steel industry (see, e.g., Carbon Steel, Pipe and Tube (1992), 
and Leaded Bar (1993)). In these investigations, respondents 
provided no new information or evidence of changed circumstances 
to contradict our determination of specificity. 
   Comment 7: Petitioners state that the Department, in its 
preliminary determination in these investigations, correctly 
determined that Decree-Law 2324 provided countervailable benefits 
to USIMINAS and CSN through exemptions of IPI and import duties 
on machinery and spare parts, and that the Department should 
affirm this finding in its final determinations. 
   Respondents argue that none of the respondents in these investigations 
received countervailable benefits under the 2324 program during 
the POI. Respondents first state that the Department verified 
that COSIPA did not receive benefits under this program during 
the POI. 
   Respondents state that while the imports for which CSN received 
2324 program benefits cleared Brazilian Customs in January 1991, 
those imports were related to imports made in 1990, and therefore 
were assessed and exempted in 1990. Respondents argue that benefits 
under this program did not accrue to CSN during the POI, and 
therefore are not countervailable. 
   Respondents also argue that the Department should determine 
that USIMINAS did not receive countervailable benefits under 
this program during the POI. USIMINAS did claim 2324 program 
benefits during the POI, but that claim is currently being disputed 
by the GOB. The legal position of the GOB, as explained by respondents, 
is that USIMINAS was not eligible for these benefits in 1991. 
Respondents argue that, because the GOB itself disputes USIMINAS's 
claim to these benefits, the Department should not consider 
that a subsidy has been granted. 
   Department Position: In these final determinations, the Department 
affirms its preliminary determination that Decree-Law 2324 provided 
countervailable benefits to CSN and USIMINAS during the POI. 
   At verification, the Department examined documentation which 
showed that CSN's benefits did derive from imports which entered 
the country in 1990. However, because the imports cleared Brazilian 
Customs in 1991, CSN actually realized the benefit from this 
program during the POI. This is consistent with Department policy 
which states that a benefit is received at the time of the cash 
flow to the company from the subsidy program (see section 355.48(a) 
of the Department's Proposed Regulations). Under this program, 
the cash flow to the company from the program occurred in 1991, 
because it is during that year that import duties would have 
been paid, absent this program. 
   The Department also considers that USIMINAS received a benefit 
from the 2324 program during the POI. Respondents' argument 
that USIMINAS and the GOB are disputing the propriety of the 
benefit is not relevant to the Department's determination of 
whether a countervailable subsidy was received by USIMINAS. 
However, because the matter has not been resolved by the Brazilian 
judicial system, and there is a possibility that USIMINAS will 
ultimately have to pay the IPI taxes and import duties, we are 
treating the non-payment as an interest-free loan. If a countervailing 
duty order is issued in these investigations, and if a section 
751 administrative review is requested, we will reexamine this 
issue in an administrative review pending the resolution of 
this challenge in the Brazilian judicial system. 
   Comment 8: Petitioners argue that the Department should develop 
a benchmark rate for fixed-rate, indexed BNDES loans that is 
based on U.S. dollar interest rates plus a spread derived from 
each respondent's real cost of U.S. dollar borrowings. The Department 
found support at verification for comparing indexed loans with 
a U.S. dollar-denominated benchmark. The most appropriate benchmark 
is a U.S. prime-based rate for COSIPA and a LIBOR-based rate 
for CSN and USIMINAS. In addition, the Department should include 
a 25 percent remittance tax in the nominal rate to reflect the 
actual cost of borrowing U.S. dollars in Brazil.
   Respondents argue that the Department's Proposed Regulations 
state that the benchmark rate should be fixed and that variable 
rates such as the U.S. prime and LIBOR would violate the criteria 
established in the Department's regulations. The Proposed Regulations 
are concerned with the average cost of long-term debt in the 
country in question. Therefore, if the Department decides to 
base its discount rate on U.S. dollar interest rates, the Department 
should continue to use the World Debt Tables referred to in 
the preliminary determinations. Respondents also argue that 
U.S. dollar financing obtained in Brazil will not be subject 
to the 25 percent remittance tax. The income tax associated 
with each loan depends on the source of the loan and the particular 
agreements underlying some of the loan contracts stipulate that 
the lending bank will often pay the tax. 
   Department Position: As explained in the BNDES Financing 
section of this notice, we learned at verification that BNDES 
regularly sets the interest rates to be charged on fixed-rate, 
long-term indexed cruzeiro loans based on long-term rates for 
U.S. dollars. Moreover, there are no long-term rates for cruzeiro 
loans whether or not they are indexed. It is reasonable and 
consistent to convert indexed BNDES loans into U.S. dollars 
and to use a U.S. dollar benchmark. While petitioners have noted 
the logic and consistency of this approach based on a reading 
of the information in the record, we disagree with their argument 
for a company-specific benchmark. 
   For uncreditworthy firms, the first preference for a benchmark 
for a fixed-rate loan under section 355.44(b)(6) of the Proposed 
Regulations is the highest long-term fixed interest rate commonly 
available to firms in the country in question. In the case of 
Brazil, the Department has relied on the World Bank because 
that was the only source found during the course of these investigations 
which published interest rates on long-term dollar lending in 
Brazil. Of all the U.S. dollar rates published in the World 
Bank's Debt Tables, the highest rates are those for private, 
nonguaranteed debt from private creditors lending U.S. dollars 
in Brazil. Absent the availability of any other source providing 
statistics on the interest rates charged in Brazil on long-term 
U.S. dollar lending, we are using the highest interest rates 
published in the World Bank's Debt Tables. 
   Furthermore, in our view it is not appropriate to move outside 
of Brazil, such as to the U.S. lending market as suggested by 
petitioners, in search of another dollar-based benchmark. This 
decision is based on several specific facts unique to these 
Brazilian investigations. Both BNDES loans and equity infusions 
were originally provided in cruzeiros, but because of persistent 
hyperinflation over the last decade they were converted into 
U.S. dollars for purposes of calculating the benefits conferred 
by these programs. Therefore, because we have converted the 
loans and equity infusions into dollars for purposes of our 
calculations, we do not consider it appropriate to search outside 
of Brazil for a benchmark. In our view, only in-country dollar 
rates accurately reflect the unique factors involved in lending 
dollars in a hyperinflationary economy. These factors are presumably 
accounted for in the dollar interest rates available within 
Brazil, but are not reflected in interest rates on dollar lending 
within the United States. Therefore, due to these economic conditions 
which are unique to Brazil, it would be inappropriate to move 
to the U.S. market for our dollar benchmark. 
   Regarding the remittance tax, we found no evidence at verification 
that such a tax is levied in Brazil. An examination of the verified 
loan lists submitted by the respondents shows that the remittance 
tax was not required on U.S. dollar borrowings in Brazil from 
either BNDES or private commercial banks. Therefore, we do not 
find it appropriate to account for that tax when constructing 
our benchmark. 
   Accordingly, we determine that the World Bank's Debt Table 
rates are appropriate representations of ``the highest long-
term fixed interest rate commonly available to firms in the 
country.'' For those years that the respondents were found to 
be uncreditworthy we have also included a risk premium. 
   Comment 9: Petitioners argue that the Department must include 
FINAME loans as part of its analysis of the countervailability 
of the BNDES lending system. FINAME financing is an integral 
part of BNDES preferential provision of capital to the steel 
industry. 
   Respondents argue that allegations regarding direct lending 
by BNDES do not pertain to FINAME, or any other of the various 
separate and distinct lending programs of BNDES. The Department 
has always investigated FINAME separately and has always found 
it to be noncountervailable. See, e.g., Construction Casting, 
(1986); Tool Steel, (1986); Wire Rod, (1982). Appropriately, 
the Department did not separately solicit information regarding 
FINAME lending. 
   Department Position: We disagree with petitioners. It has 
been the Department's practice to treat loan programs administered 
by these sub-agencies as separate programs. The Department did 
not initiate an investigation of the lending of BNDES sub-agencies 
BNDESPAR and FINAME, because, unlike the information provided 
regarding long-term BNDES loans, no argument or evidence regarding 
the steel sector's share of borrowing from these sub-agencies 
was provided in the petition. Thus, there was no new information 
in the petition that would have led the Department to reexamine 
the noncountervailability determinations cited by respondents. 
   Comment 10: Respondents argue that the question of disproportionate 
use must be analyzed on a case-by-case basis and is not subject 
to a simple mathematical test that would apply to all cases. 
Doing otherwise would be analyzing disproportionate use in the 
extreme abstract with no consideration of the program or policy 
being analyzed. There is no authority or logic for the proposition 
that the analysis of whether a benefit is disproportionally 
provided to a specific industry should ignore the nature of 
the alleged benefit. Particularly in this case, development 
banks such as BNDES should be given such case-by-case analysis. 
Bunching or spikes in the distribution of benefits may be justified 
given the natural course of economic development. Presumably, 
in the absence of other evidence, the market is the ultimate 
allocator of benefits rather than the government. 
   Department Position: Respondents' basic premise is that if 
a program provides specific benefits to selected industries 
due to the inherent nature of the program or the inherent needs 
of the recipients of the benefits under the program, then the 
program should not be found countervailable. This analysis is 
untenable and has been explicitly overturned by the Department 
in Final Results of Countervailing Duty Administrative Review: 
Carbon Black from Mexico, 51 FR 30385 (1986), and Final Countervailing 
Duty Determination: Certain Softwood Lumber Products from Canada, 
57 FR 22570, 22582 (1992). 
   We do agree, however, with respondents' statement that disproportionate 
use should be analyzed on a case-by-case basis. Our analysis 
in this case shows that for the years 1975 through 1986, the 
steel industry was the single largest recipient of BNDES lending. 
The steel industry received two-and-a-half times more loans 
under this program than the second largest industrial recipient 
of BNDES funds. The steel industry received more in BNDES financing 
than the total financing provided to either the development 
of electricity or infrastructure in Brazil. It is based on this 
case-specific analysis that we find BNDES lending disproportionate 
to the steel industry. 
   Comment 11: Respondent argues that neither the purchase nor 
the use of the Praia Mole Port conferred a countervailable subsidy 
to USIMINAS. The sale of Praia Mole was a fair-value, arm's-
length sale based on market considerations. The financing terms 
available to USIMINAS were not preferential. The Department's 
use of an ``overnight'' rate (a daily rate) as a benchmark is 
unreasonable for comparison to an eight-year loan. The fees 
paid by USIMINAS for the use of the port did not confer a benefit. 
   Petitioner argues that because the interest rate on the loan 
used to purchase Praia Mole was below the Department's benchmark, 
the Department correctly found the terms preferential and therefore 
countervailable. In the absence of preferred information regarded 
benchmarks, the Department was correct in choosing a short-term 
interest rate for its benchmark in accordance with practice 
and the Proposed Regulations. 
   Department Position: Section 355.44(b)(2) of the Proposed 
Regulations state that the Department must take into account 
any deferral of principal repayments or interest payments on 
a loan. Unless such deferral is a normal or customary lending 
practice in the country in question, the deferral of principal 
or interest provides a countervailable benefit to the extent 
that the deferral results in a total loan repayment that is 
less than the repayment would have been in the absence of the 
deferral. While we find no evidence that grace periods on repayment 
of local currency loans were the normal or customary lending 
practice in Brazil, the interest on the loan began accruing 
from the date of the loan contract in 1990. Therefore, the grace 
period itself bestows no benefit. However, as long as the interest 
rate on the purchase agreement is preferential in relation to 
our benchmark, a countervailable benefit accrues to USIMINAS 
every time it makes an interest payment. 
   Regarding the benchmark, since USIMINAS was creditworthy 
in 1990, we followed the hierarchy for creditworthy firms established 
in section 355.44(b)(4) of the Proposed Regulations. The first 
five benchmarks in the hierarchy are long-term rates. Long-term 
rates for cruzeiro loans are not available. Therefore, we arrive 
at the sixth preferred rate in the long-term, fixed-rate hierarchy 
which is a benchmark based on the ``predominant source of short-
term financing in the country in question.'' The predominant 
source of short-term financing in Brazil in 1990 was the ``overnight'' 
rate. Monthly averages for overnight rates are published in 
Conjuntura Economica, a private Brazilian statistical publication. 
Since ``overnight'' rates are nominal rates, we use the same 
deflator index applied to USIMINAS' loan to derive a real ``overnight'' 
rate to use as our benchmark. 
   The benchmark derivation for this indexed cruzeiro loan is 
different from our treatment of indexed BNDES loans, which were 
converted into U.S. dollars. As explained in both the BNDES 
Financing section and an earlier comment, BNDES indexed loans 
were converted into U.S. dollars because rates set by BNDES 
were usually based on U.S. dollar rates. In this instance, there 
is no information that the interest rate charged by SIDERBRAS 
in the purchase agreement is based on U.S. dollar interest rates. 
Therefore, we used the ``overnight'' rate because it is consistent 
with the benchmark hierarchy prescribed by the Proposed Regulations. 
 
Verification 
 
   In accordance with section 776(b) of the Act, we verified 
the information used in making our final determinations. We 
followed standard verification procedures, including meeting 
with government and company officials, examination of relevant 
accounting records, and examination of original source documents. 
Our verification results are outlined in detail in the public 
versions of the verification reports, which are on file in the 
Central Records Unit (room B-099 of the Main Commerce Building). 
 
Suspension of Liquidation 
 
   In accordance with our affirmative preliminary determinations, 
we instructed the U.S. Customs Service to suspend liquidation 
of all entries of certain steel products from Brazil, which 
were entered, or withdrawn from warehouse, for consumption on 
or after December 7, 1992, the date of publication of our preliminary 
determinations in the Federal Register. These final countervailing 
duty determinations were aligned with the final antidumping 
duty determinations on certain steel products from various countries, 
pursuant to section 606 of the Trade and Tariff Act of 1984 
(section 705(a)(1) of the Act). 
   Under article 5, paragraph 3 of the Subsidies Code, provisional 
measures cannot be imposed for more than 120 days without final 
affirmative determinations of subsidy and injury. Therefore, 
we instructed the U.S. Customs Service to discontinue the suspension 
of liquidation on the subject merchandise entered on or after 
April 6, 1993, but to continue the suspension of liquidation 
of all entries, or withdrawal from warehouse, for consumption 
of the subject merchandise entered between December 7, 1992, 
and April 6, 1993. We will reinstate suspension of liquidation 
under section 703(d) of the Act, if the International Trade 
Commission (ITC) issues final affirmative injury determinations, 
and will require a cash deposit of estimated countervailing 
duties for such entries of merchandise in the amounts indicated 
below.
 
 
 
                                 [In percent]                                 
                                                                              
------------------------------------------------------------------------------
                                                      |    Net   |  Deposit   
                                                      |  subsidy |   rate     
                                                      |   rate   |            
------------------------------------------------------------------------------
                                                      |          |            
Certain hot-rolled carbon steel flat products:        |          |            
  Country-wide ...................................... |    30.39 |    30.36   
  USIMINAS .......................................... |     5.71 |     5.52   
  CSN ............................................... |    30.39 |    30.36   
  COSIPA ............................................ |    44.66 |    44.36   
Certain cold-rolled carbon steel flat products:       |          |            
  Country-wide ...................................... |    21.24 |    21.04   
  USIMINAS .......................................... |     5.71 |     5.52   
  CSN ............................................... |    30.39 |    30.36   
  COSIPA ............................................ |    44.66 |    44.36   
Certain corrosion-resistant carbon steel flat         |          |            
 products:                                            |          |            
  Country-wide ...................................... |    30.39 |    30.36   
Certain cut-to-length carbon steel plate:             |          |            
  Country-wide ...................................... |    21.84 |    21.61   
  USIMINAS .......................................... |     6.07 |     5.88   
  COSIPA ............................................ |    44.66 |    44.36   
------------------------------------------------------------------------------
 
 
ITC Notification 
 
   In accordance with section 705(c) of the Act, we will notify 
the ITC of our determinations. In addition, we are making available 
to the ITC all nonprivileged and nonproprietary information 
relating to these investigations. We will allow the ITC access 
to all privileged and business proprietary information in our 
files, provided the ITC confirms that it will not disclose such 
information, either publicly or under an administrative protective 
order, without the written consent of the Deputy Assistant Secretary 
for Investigations, Import Administration. 
   If the ITC determines that material injury, or threat of 
material injury does not exist, these proceedings will be terminated 
and all estimated duties deposited or securities posted as a 
result of the suspension of liquidation will be refunded or 
cancelled. If, however, the ITC determines that such injury 
does exist, we will issue countervailing duty orders, directing 
Customs officers to assess countervailing duties on entries 
of certain steel products from Brazil. 
 
Return or Destruction of Proprietary Information 
 
   This notice serves as the only reminder to parties subject 
to Administrative Protective Order (APO) of their responsibility 
concerning the return or destruction of proprietary information 
disclosed under APO in accordance with 19 CFR 355.34(d). Failure 
to comply is a violation of the APO. 
   These determinations are published pursuant to section 705(d) 
of the Act (19 U.S.C. 1671(d) and 19 CFR 355.20(a)(4)).
 
   Dated: June 21, 1993.
 
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.  
 
[FR Doc. 93-15631 Filed 7-8-93; 8:45 am]
BILLING CODE 3510-DS-P
 
The Contents entry for this article reads as follows:
 
International Trade Administration
NOTICES
Countervailing duties:
  Steel products from-
    Brazil, 37295