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[C-433-402]

Final Affirmative Countervailing Duty Determinations; Certain Carbon Steel Products From Austria

Monday, August 19, 1985

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AGENCY: Notice.

SUMMARY: We determine that certain benefits which constitute subsidies within the meaning of the countervailing duty law are being provided to manufacturers, producers, or exporters in Austria of certain carbon steel products. The estimated net subsidy is 2.27 percent ad valorem. We have notified the United States International Trade Commission (ITC) of our determinations.

EFFECTIVE DATE: August 19, 1985.

FOR FURTHER INFORMATION CONTACT:Loc Nguyen or Mary Martin, Office of Investigations, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, D.C. 20230; telephone: (202) 377-0167 or 377-3464.

SUPPLEMENTARY INFORMATION:

Final Determinations

Based upon our investigations, we determine 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 Austria of certain carbon steel products. For purposes of these investigations, the following programs are found to confer subsidies:

- Equity Infusions;

- Grants to the Austrian Steel Industry;

- Kontrollbank Export Financing to Voest-Alpine AG; and

- Kontrollbank Export Financing to an East German Company.

We determine the estimated net subsidy to be 2.27 percent ad valorem.

Case History

On December 19, 1984, we received a petition from United States Steel Corporation of Pittsburgh, Pennsylvania,

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filed on behalf of the U.S. industry producing certain carbon steel products. In compliance with the filing requirements of s 355.26 of our regulations (19 CFR 355.26), the petition alleged that manufacturers, producers, or exporters in Austria of certain carbon steel products directly or indirectly receive benefits which constitute subsidies within the meaning of section 701 of the Act, and that these imports materially injure, or threaten material injury to, a U.S. industry.

We found that the petition contained sufficient grounds upon which to initiate countervailing duty investigations, and on January 8, 1985, we initiated such investigations (50 FR 2318). We stated that we expected to issue preliminary determinations by March 14, 1985.

Since Austria is a "country under the Agreement" within the meaning of section 701(b) of the Act, injury determinations are required for these investigations. Therefore, we notified the ITC of our initiation. On February 4, 1985, the ITC determined that there is a reasonable indication that an industry in the United States is materially injured or threatened with material injury by reason of imports of hot-rolled carbon steel sheet and cold-rolled carbon steel plates and sheets from Austria. The ITC also determined that there is no reasonable indication that an industry in the United States is materially injured or threatened with material injury, or that the establishment of an industry in the United States is materially retarded, by reason of imports of galvanized carbon steel sheets from Austria which are alleged to be subsidized 950 FR 6070).

We presented a questionnaire concerning the allegations to the government of Austria in Washington, D.C. on January 28, 1985. A supplemental questionnaire was presented on February 14, 1985. The government of Austria and Voest-Alpine AG, provided responses to our questionnaires on February 28, 1985. On the basis of the information contained in these responses, we made preliminary determinations on March 14, 1985, (50 FR. 11220). We verified the responses of the government of Austria and Voest-Alpine AG from March 25-29, 1985, and from June 10-14, 1985.

On March 22, 1985, United States Steel Corporation filed a request for extension of the deadline date for the final countervailing duty determinations to correspond with the date of the final determinations in the antidumping investigations of the same products. Pursuant to section 705(a)(1) of the Tariff Act of 1930, as amended by section 606 of the Trade Act of 1984, the Department granted an extension of the aforementioned deadline to August 12, 1985, the same deadline for the final determinations in the antidumping investigations.

Scope of the Investigations

The products covered by these investigations are certain carbon steel products, which comprise:

- Hot-rolled carbon steel sheet; and

- Cold-rolled carbon steel sheet.

These products are more fully described in the Appendix to this notice.

Analysis of Programs

Throughout this notice, we refer to certain general principles applied to the facts of the current investigations. These principles are described in the "Subsidies Appendix" attached to the notice of "Cold-Rolled Carbon Steel Flat- Rolled Products from Argentina; Final Affirmative Countervailing Duty Determination and Countervailing Duty Order," which was published in the April 26, 1984, issue of the Federal Register (49 FR 18006).

Voest-Alpine AG is the only producer in Austria of the products under investigation. For purposes of these determinations, the period for which we are measuring subsidization ("the review period") is calendar year 1984.

The Department of Commerce has consistently held that government provision of equity does not per se confer a subsidy. Government equity purchases bestow countervailable benefits only when they occur on terms inconsistent with commercial considerations. When there is no market-determined price for equity, it is necessary to determine whether the company was a reasonable commercial investment. Voest-Alpine AG's shares are not publicly traded and there are no market-determined prices for its shares.

Therefore, we had to determine whether the equity infusions into Voest-Alpine AG were reasonable commercial investments. To make this determination, we reviewed and assessed Voest-Alpine AG's financial statements from 1971 to 1983 as well as its 1984 preliminary statements. In analyzing the financial statements, we considered the information from the viewpoint of an investor. More specifically, we analyzed the following data:

- Rate of return on sales;

- Rate of return from operations;

- Rate of return on equity;

- Debt to equity ratio; and

- Current ratio.

Based on our review of the financial statements, and responses of the company and government, we determine that the government's equity infusions into Voest- Alpine AG between 1978 and 1984 were on terms inconsistent with commercial considerations.

Based upon our analysis of the petition, the responses to our questionnaire, our verification and comments filed by petitioners and respondents, we determine the following:

I. Programs Determined To Confer Subsidies

We determine that subsidies are provided to manufacturers, producers, or exporters in Austria of certain carbon steel products under the following programs:

A. Equity Infusions
Voest-Alpine AG received equity infusions, during the period 1975-1984, from Osterreichische Industrieverwaltungs-Akteiengesellshaft (OIAG), the government holding company for state-owned enterprises. Portions of the equity infusions into Voest-Alpine AG have been transferred to an affiliated company, Vereinigte Edelstahlwerke AG (VEW). Under the terms of applicable legislation, Voest- Alpine AG was required to transfer the funds to VEW. VEW does not produce or export any of the merchandise under investigation, and therefore we do not consider equity infusions to VEW to benefit the products under investigation.

As discussed in the "Analysis of Programs" section, we determine that Voest- Alpine AG was not a reasonable commercial investment and was unequityworthy from 1978 to 1984; thus the government equity infusions between 1978 and 1984 were on terms inconsistent with commercial considerations. Therefore, we determine that these equity infusions confer benefits which constitute a subsidy.

Following the methodology contained in the Subsidies Appendix, we have calculated the benefit from these equity infusions by multiplying the difference between Voest-Alpine AG's estimated rate of return on equity in 1984 and the national average rate of return on equity during the same period by the total amount of equity infusions made since 1978. The national average rate of return on equity was taken from Capital International Perspective. We then allocated the aggregate benefit over the value of total sales of all products produced by Voest-Alpine AG. On this basis we determine the estimated net subsidy to be .04 percent ad valorem.

B. Grants to the Austrian Steel Industry
Under Law 602/1981, the Austrian government authorized a grant of 2

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billion Austrian schillings for the structural improvement of Voest- Alpine AG. These funds were disbursed through OIAG to Voest-Alpin AG in 1981 and 1982.

Law 589/1983 further permitted OIAG to raise new funds beginning in 1983. These funds were to be used for improving the economic structure of nationalized industrial enterprises. Of the funds raised by OIAG pursuant to the 1983 law, a portion went to Voest-Alpine AG in the form of equity infusions; these are discussed above. Another portion was made available to Voest-Alpine AG in the form of grants, approximately 85 percent of which had been disbursed by June 1985.

We find these grants to be limited to a specific enterprise or industry or to a specific group of enterprises or industries. Therefore, we determine these grants to be countervailable.

To calculate the amount of the benefit, we allocated the grants over 15 years (the average useful life of renewable assets in the steel industry). Discount rates have been developed for the years in which the grants were agreed upon. The grants authorized under the 1981 law have been allocated using Voest-Alpine AG's 1981 weighted cost of capital as our discount rate (where applicable Voest-Alpine AG's 1984 floating interest rates on its long-term loans, received in 1981, were used to determine the weighted cost of capital). For the grants authorized by the 1983 law, the date of agreement (allocation) varies, since the amounts and the date of allocation were the subject of negotiation between OIAG and Voest-Alpine AG. Therefore, for grants received pursuant to the 1983 law we have used Voest-Alpine AG's 1983 weighted cost of capital as our discount rate, and where applicable the 1984 floating interest rates on the capital were incorporated into these calculations. The portion of the grant authorized by the 1983 law, but which had not been disbursed as of June 1985, was not included in these calculations.

We allocated the aggregate benefit over the value of total sales of all products produced by Voest-Alpine AG. Based on this methodology we find the estimated net subsidy conferred by these grants to 1.54 percent ad valorem.

C. Kontrollbank Export Financing to Voest-Alpine AG
Under this program, export financing credits are extended by commercial banks, to exporters or buyers, which are then refinanced through one of the export financing schemes operated by Osterreichische Kontrollbank Aktiengesellschaft (OKB). The OKB was founded in 1946 to provide services not normally available from commercial banks. It has administered the official Austrain Export Credit and Guarantee Scheme on behalf of the Federal Ministry of Finance since 1950. OKB's twelve shareholders are exclusively Austrian credit institutions of which two are large nationalized banks.

Voest-Alpine AG received export financing from commercial banks, which was then refinanced by the Kontrollbank, at interest rates lower than the national average short-term interest rate in Austria during 1984. For purposes of these determinations, we have used 9.25 percent as the benchmark for short-term loans. This is the "Commercial Bank Lending Rate to Prime Borrowers" as reported in World Financial Markets. Since kontrollbank export financing is only available for use by exporters and the rates of interest charged are less than our benchmark, we determine that the provision of such financing constitutes a countervailable benefit.

The benefit provided under this program was determined by applying the interest rate differential between by applying the interest rate differential between the short-term benchmark and the interest rates paid by Voest-Alpine AG on the principal amount of all loans received by the company for the numbers of days the loans were outstanding. We then allocated the aggregate benefit over the value of exports of all products produced by Voest-Alpine AG. On this basis, we calculated an estimated net subsidy in the amount of .08 percent ad valorem for the products under investigation.

D. Kontrollbank Export Financing to an East German Company for U.S. Sales
Another financing scheme operated by the OKB provides for refinancing of short-term commercial bank loans granted to buyers of Austria's export products. In the past, the Department found that this type of financing, if preferential, confers a subsidy to the products under investigation when the recipient of the financing was a U.S. purchaser. See "Bars and Shapes from Mexico; Final Affirmative Countervailing Duty Determination and Countervailing Duty Orders" (49 FR 32887). In this instance, however, OKB export financing was used to partially finance sales of the products under investigation to an East German company (i.e., a company that is neither Austrian nor American owned). The East German company then sold these goods to a trading company with the knowledge that these goods eventually would be sold to the United States.

We learned the details of these circuitous sales to the United States when, at our request, counsel for the respondent submitted additional information on sales of the products under investigation through this East German company. During verification, we verified the total sales of the products under investigation to the East German company, as well as the fact that commercial banks had, indeed, provided loans to the East German company which were then refinanced by OKB. However, we were unable to obtain information on the amount of OKB refinancing of the products under investigation sold to the United States that the East German company received.

Since the interest rate charged on the short-term OKB loans was lower than the national average short-term interest rate in 1984 and since this preferential financing is limited to Austrian exports, we determine that the provision of such financing confers a countervailable benefit on the exports of the products under investigation that were eventually sold to the United States. The interest rate charged by the OKB was 8.5 percent for 85 percent of the sales and 8.75 percent for 15 percent of the sales. Using best information available, we have assumed that 85 percent of the sales from Voest-Alpine to the East Germany company benefitted from this financing. This is the maximum amount of export financing available to importers from the Kontrollbank. Because the borrowing is denominated in Austrian schillings, we have used 9.25 percent as our benchmark.

The benefit provided under this program was determined by applying the interest rate differential to the value of sales financed and allocating the benefit over the value of the sales to the East German company. On this basis, we calculated an estimated net subsidy of .61 percent ad valorem.

II. Programs Determined Not To Confer a Subsidy

We determine that subsidies are not being provided to manufacturers, producers, or exporters in Austria of certain cabon steel products under the following programs:

A. Osterreichische Investitionskredit TOP-1 and TOP-2 Loans
The TOP-1 and TOP-2 loan programs are intended to further investments which are important for structural change by providing federal interest rate support for credits given by Austrian banks. These credits are refinanced on the Austrian capital market by the Investitionskredit AG. We verified that

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loans were received by a range of sectors of the Austrian economy including electrical, chemical, metals, textiles, wood processing, ceramics, food, etc., and were primarily directed towards small- and medium-sized firms. Since these two TOP programs are neither limited to export promotion, nor to a specific industry or group of industries, we determine that the benefits from this program do not constitute a subsidy.

B. Labor Subsidies

1. Government-Funded Labor Training. Under the Labor Market Promotion Act, Law No. 31/1969, companies in Austria may receive funds from the Austrian government for the establishment of in-house training programs to improve worker skills or to teach workers new vocations. In addition, under this law, companies in Austria with low levels of capacity utilization may receive funds to be paid to the workers engaged in training in combination with reduced hours of work. Employees whose working hours are reduced receive support payments compensating them for the loss in earnings sustained. Workers receiving benefits under this program spend the difference between their reduced working hours and their normal working hours in training programs. We verified that funding for these labor training programs is available to all sectors of Austrian industry and not just to the iron and steel industry or to export- related industries. Because this program is not limited to a specific enterprise or industry, or group of enterprises or industries, we determine that the program does not constitute a subsidy.

2. Special Assistance Act. The Special Assistance Act of 1973, Law No. 642/1973, provides enhanced unemployment benefits for former employees of sectors of the economy hit by the downturn which have been let go and are at least 55 years old for men or 50 years old for women. The Federal Minister of Social Affairs is empowered to determine by decree which sectors of the economy warrant application of the provisions of the law. In a decree issued on March 21, 1983, the iron and steel industry was included within the provisions of this law. We verified that payments under this law are made directly to the workers who have been laid off by an employer. The employer itself is not entitled to any support or subsidies under this law, and is not relieved from payment of any expenses or obligations which it would normally incur. Because this program provides assistance to workers and does not relieve Voest-Alpine AG of any expenses or obligations, we determine that the company does not receive any subsidy under this program.

C. Interest Subsidy Program--European Recovery Program (ERP) Loans
The government of Austria administered the European Recovery Program Fund of Austria from 1978-1981 to encourage the development of industrial projects. Under this program, qualifying investments were eligible for interest support, reducing the amount of interest payable on commercial loans obtained to finance such investments. All companies in Austria were eligible for this program and we verified it was used by a wide variety of industries. We also verified that this program was not confined to export-related projects. Because this program is not limited to a specific enterprise or industry, or group of enterprises or industries, we determine that this program does not constitute a subsidy.

D. Loan Guaranty Program
Petitioner alleged that Voest-Alpine AG received loan guarantees from the Austrian government in 1981 and 1982. We verified that the only loan guarantees the Austrian government provided to Voest-Alpine AG were for loans issued by Austrian insurance companies pursuant to section 77 of the Insurance Supervisory Law of October 18, 1976, No. 5691/1978. This law requires insurance companies to secure their contingent liabilities by maintaining as security certain types of safe investments of the following classes: (1) High- grade loans and securities; (2) government-guaranteed securities; and (3) real estate. We also verified that Voest-Alpine has obtained a substantial amount of financing on an unguaranteed basis from ordinary commercial sources, and that the government guarantee of insurance company loans to Voest-Alpine AG enabled the insurance companies to find large-scale, legally eligible investments for placement of their investment portfolios. Accordingly, we determine that this program does not provide subsidies to Voest-Alpine AG.

III. Programs Determined Not To Be Used

We determine that manufacturers, producers or exporters in Austria of certain carbon steel products did not use the following programs:

A. Local Incentives
Petitioner alleged that Voest-Alpine AG may have received benefits from a number of local investment incentives that are available to industries in Austria. We verified that during the review period no local incentives were applicable to the production of the merchandise under investigation.

B. Income Tax Deferral on Export Sales
In a submission dated January 31, 1985, petitioner alleged that the Austrian government provides an export subsidy to exporters by permitting them to deduct 15 percent of receivables originating from exports from their taxable income. Our verification revealed that Voest-Alpine AG did not use this program during the review period.

Petitioner's Comments

Comment 1: Petitioner argues that in quantifying the subsidy from loss coverage/restructuring funds (i.e., grants) received by the Austrian steel producer, the benefit should be allocated to the year of receipt and not spread over 15 years because of the recurring nature of the Austrian government's grant program.

DOC Position: We disagree. The grants given to Voest-Alpine AG by the Austrian government are not recurring in nature, since the Austrian Parliament must provide separate legislative authority for each of these infusions. Hence, we have calculated the benefits provided by these grants according to our normal grant methodology.

Comment 2: Petitioner contends that under both the current ITA standard and a private lender standard. Voest-Alpine AG has been uncreditworthy since at least 1973.

DOC Position: Voest-Alpine AG has issued bonds to private investors and has also obtained substantial amounts of credit from Austrian and non-Austrian commercial banks from 1973 forward: on this basis, we consider it to be creditworthy.

Comment 3: Petitioner argues that absent future government support, Voest-Alpine would not have been able to obtain commercial loans comparable to those which it did obtain.

DOC Position: We consider this issue to be irrelevant since the Department, in determining the creditworthiness of a company, does not speculate on the possible impact of future government support. Instead it analyzes the company's operations at the point in time at which the debt was incurred.

Comment 4: Petitioner contends that government loan guarantees to Voest- Alpine AG benefit the company rather than insurance company lenders.

DOC Position: We disagree. As stated above, the Department has found Voest- Alpine AG to be creditworthy because it

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received numerous commercial loans without any government guarantee. Lenders included many commercial banks, both Austrian and non-Austrian. Therefore, Voest-Alpine AG has been able to obtain financing from commercial sources. Furthermore, because government guarantees of insurance company loans are necessary to enable the insurance companies to find investments that would be legally eligible for the placement of their portfolios, these government loan guarantees do not bestow a countervailable benefit on Voest-Alpine AG.

Comment 5: Petitioner argues that implicit government loan guarantees which reduce a State firm's borrowing costs should be found to constitute countervailable subsidies. In support of this, petitioner argues that state firms benefit from implicit government loan guarantees that are substantively no different from explicit government loan guarantees, and that failure to consider implicit government loan guarantees causes the subsidy from explicit government loan guarantees and preferential government loans to be understated.

DOC Position: We disagree. Government ownership of a firm does not per se guarantee the payment of a state-owned firm's unguaranteed debt. Moreover, the implicit guarantee theory would result in double-counting in cases where we find explicit government loan guarantees to be countervailable.

Comment 6: Petitioner argues that should the Department need to estimate a discount rate, then the interest rate component should reflect Voest-Alpine AG's uncreditworthiness (i.e., the commerical interest rate plus a risk premium).

DOC Position: Since we have determined that Voest-Alpine AG is creditworthy, this issue is moot.

Comment 7: Petitioner argues that because the response stated that the TOP loan program "subsidizes investment projects" and that an important criterion for project selection is the "share of goods [to be] exported into developed countries" the TOP loans therefore constitute countervailable export subsidies.

DOC Position: We disagree. We verified that this program was available to, and used by, a wide variety of industries. Furthermore, while the export effect of a particular project is one criterion of the TOP-1 and TOP-2 programs, it is only one of many criteria. Other pertinent criteria in determining what investment projects are eligible for the TOP program include: self-financing power; relevance of the program in terms of structural policy, including demand trend, product characteristics, innovative merits, employment structure of the project; side effects of the project, including domestic competitors, infrastructure demands, pollution; chances of the projects' success, etc. For these reasons, we have determined that the TOP-1 and TOP-2 programs do not confer export subsidies.

Comment 8: Petitioner argues that government equity infusions into Voest-Alpine AG benefit the firm as a whole, regardless of their application and, therefore, equity infusions passed through Voest-Alpine AG to its subsidiary, VEW, are countervailable.

DOC Position: We disagree. The equity infusions which were made to VEW, were specifically tied by law to VEW, therefore, funds were not available for Voest- Alpine's general corporate purposes. VEW's financial statements, annual reports, etc., are not combined with those of Voest-Alpine AG. Moreover, the subsidy calculations do not include any benefits received by VEW, nor are VEW's sales or exports included in the denominators of the calculations. For these reasons, we determine that the equity infusions made to VEW do not confer countervailable subsidies to Voest-Alpine AG.

Comment 9: Petitioner argues that equity infusions into Voest-Alpine AG (including its two state-owned predecessors) should be investigated back to 1968 since they constitute countervailable benefits.

DOC Position: We disagree. The petition alleged that Voest-Alpine AG received massive government equity infusions since 1975. We initiated on this allegation. During our investigation, we examined Voest-Alpine AG's equityworthiness during the years 1971-1984. Based on this information, we determined that Voest-Alpine AG was equityworthy unitl 1978.

Comment 10: Petitioner argues that government subsidies should be excluded from Voest-Alpine AG's reported profits to determine the government's actual rate of return on its equity in the company for purposes of analyzing Voest- Alpine AG's equityworthiness and for determining the net subsidy received by the company.

DOC Position: The Department, for purposes of analyzing the company's operations for the equityworthy determination and for determining the net subsidy received by the company, uses the rate of return from its business activity based on acceptable accounting principles.

In this case, the net profit/loss of VA included funds received as the principal amounts from borrowings and certain appropriations to and from reserve accounts. Since there amounts did not result from operations, the rate of return used by the Department to analyze the company and calculate the net subsidy did not include these amounts. In determining the equityworthiness of the company, the Department analyzes the operations of the company without considering the sources of the funds received. Funds received through other government programs, debt or equity may have been made in accordance with commercial considerations. If the Department concludes that such funds were not provided in accordance with commercial considerations, these are then countervailed under the other program.

Respondent Voest-Alpine AG's Comments

Comment 1: Respondent contends that the weighted cost of capital (discount rate) used in the grant calculations should take into account the floating interest rates on Voest-Alpine AG's long-term loans.

DOC Position: We agree. However, at the time of the preliminary determination we were unaware that these long-term loans had floating interest rates. In these final determinations, Voest-Alpine AG's verified long-term floating interest rates were used to calculate the weighted cost of capital.

Comment 2: Respondent argues that the 9.25 benchmark interest rate for short- term loans is too high and that information published by a U.S. bank with respect to interest rates prevailing in a foreign country does not constitute best available information, when other more reliable information has been provided and verified. Respondent also argues that information from Voest- Alpine AG, and from Austrian banks, concerning their 1984 bill of exchange and short-term loans' discount rates would be more appropriate "best information available" than information published in the U.S. by a U.S. bank regarding a type of financing that is not comparable to bill of exchange financing.

DOC Position: We disagree. There are no published short-term interest rates in Austria. Since we were unable to verify the short-term interest rates which the Austrian banks provided, we cannot consider these interest rates to be the best information available. Although respondent provided information that bills of exchange are an instrument of

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short-term financing in Austria, no information was provided about the percentage of short-term financing that bills of exchange constitute. The information provided by respondents indicated that bills of exchange are not the predominant form of short-term financing in Austria and, therefore, they are not representative of the national average short-term interest rate.

Comment 3: Respondent contends that export financing given to a third country company (i.e. neither a U.S. nor Austrian company) by the OKB should not be regarded as a subsidy, since Voest-Alpine AG was not a recipient of any of the export financing.

DOC Position: We disagree. We assume that Voest-Alpine AG sold the East German company the merchandise under investigation for commercial purposes. And as we discussed above, a subsidy was bestowed on the goods which were eventually imported into the United States. Therefore, preferential loans provided to the East German purchaser by the Austrian government benefitted the goods exported to the United States.

Comment 4: Respondent contends that the Austrian export credit programs are not countervailable because they conform to OECD rules governing export credit programs and are, therefore, permissible under paragraph k of the "Illustrative List of Export Subsidies" which is annexed to the GATT Subsidy Code.

DOC Position: We disagree. The OECD rules governing such programs are only applicable to export credits of more than 2 years. The loans in question, however, have a duration of only 18 months and are therefore not subject to OECD's export credit regulations. Thus, we do not believe that the portion of paragraph k cited by respondent is relevant with respect to the loans in questions.

Comment 5: Respondent argues that OKB credits to a third country company are not made at subsidized rates since OECD found that the rates charged on its credits are "sufficient to earn a positive spread over OKB's cost of funds," and since these rates were at, or above, the prevailing rates in Austria for comparable types of loans.

DOC Position: We disagree. The OKB loans were not at, or above, the prevailing rates in Austria for comparable types of loans. Whether or not OKB's credits are sufficient to earn a positive spread over its cost of funds is irrelevant to our analysis.

Comment 6: Respondent argues that the grants and equity infusions received by Voest-Alpine AG could constitute a subsidy only with respect to the "manufacture, production or exportation" of the goods under investigation, and that because these funds were not used for the manufacture, production or exportation of these goods. ITA should not be countervail them.

DOC Position: We disagree. All equity infusions made to Voest-Alpine AG as of 1978, when it was deemed unequityworthy, are countervailable regardless of whether these infusions only benefit certain Voest-Alpine plants, since they were available to Voest-Alpine AG to utilize as it wished.

Comment 7: Respondent argues that the OKB rates for short-term loans are higher than its medium-term rates, which are in accord with OECD rules; and since, short-term interest rates are generally lower than longer term interest rates, the rates applicable to OKB's short-term financing are also in accord with the applicable international rules. The Department should conclude, therefore, that these rates are not preferential.

DOC Position: The fact that some of OKB's short-term rates are higher than some of its medium-term rates, which conform to OECD rules and/or other international rules, is irrelevant to our investigation. In determining whether loan rates given by central or state-owned banks are preferential, it is our policy to use a national average commercial interest rate as a benchmark, if the loan program is a broad, national lending program. In this case, we are using an average commercial rate in World Financial Markets which is published by Morgan Guarantee Trust and Co. as best information available.

Verification

In accordance with section 776(a) of the Act, we verified the information used in making our final determinations. Commerce officials spent from March 24-29, 1985, and from June 11-14, 1985, verifying the information submitted by the government of Austria and Voest-Alpine AG, and gathering additional information to be used in these determinations. During these verifications, we followed normal verification procedures including the inspection of documents and ledgers, and the tracing of information in the response to source documents, accounting ledgers and financial statements.

Administrative Procedures

We afforded interested parties an opportunity to present oral views in accordance with our regulations (19 CFR 355.35). A public hearing was not requested. In accordance with the Department's regulations (19 CFR 355.34(a)), written views have been received and considered in this determination.

Suspension of Liquidation

In accordance with our preliminary countervailing duty determinations published on March 20, 1985, we directed the U.S. Customs Service to suspend liquidation on the products under investigation and to collect the estimated net subsidy. The countervailing duty final determinations were extended to coincide with the antidumping final determinations on the same products, pursuant to section 606 of the Trade and Tariff Act of 1984 (section 705(a)(1) of the Tariff Act). However, we cannot impose the suspension of liquidation of the subject merchandise for more than 120 days without the issuance of a final determination. Therefore, on July 17, 1985, we instructed the U.S. Customs Service to terminate the suspension of liquidation on the subject merchandise entered on or after July 19, 1985, under the preliminary countervailing duty determinations. On July 19, 1985, United States Steel Corporation, petitioner in this case, obtained a temporary restraining order from the Court of International Trade enjoining the U.S. Department of Commerce and the U.S. Customs Service from terminating the suspension of liquidation in the countervailing duty investigations of certain carbon steel products from Austria. On July 25, 1985, the Court of International Trade lifted the July 19, 1985, temporary restraining order; therefore, we instructed the U.S. Customs Service to terminate the suspension of liquidation on the subject merchandise entered on or after July 26, 1985 under the preliminary countervailing duty determinations.

We will instruct the U.S. Customs Service to continue the suspension of liquidation of all entries, or withdrawal from warehouse, for consumption of the subject merchandise entered between March 20, 1985 and July 26, 1985. This suspension of liquidation does not apply to entries of the subject merchandise entered on or after July 26, 1985, and the final ITC determinations.

ITC Notification

In accordance with section 705(d) of the Act, we will notify the ITC of our determinations. In addition, we are making available to the ITC all non- privileged and non-confidential information relating to these investigations. We will allow the ITC

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access to all privileged and confidential 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 Import Administration.

The ITC will determine whether these imports materially injure, or threaten material injury to, a U.S. industry 45 days after the publication of this notice.

If the ITC determines that material injury, or the threat of material injury, does not exist, this proceeding 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 certain carbon steel products from Austria entered, or withdrawn from warehouse, for consumption as described in the "Suspension of Liquidation" section, equal to the estimated net subsidy amount of 2.27 percent.

This notice is published pursuant to section 703(f) of the Act (19 U.S.C. 1671b(f)).

Theodore W. Wu,

Acting Assistant Secretary for Trade Administration.

August 12, 1985.

Appendix--Description of Products, Austria

1. The term "hot-rolled carbon steel flat-rolled products" covers hot-rolled carbon steel products, whether or not corrugated, or crimped; not cold- rolled; not cut, not pressed, and not stamped to non-rectangular shape; not coated or plated with metal and not clad; 0.1875 inch or more in thickness and over 8 inches in width and pickled, as currently provided for in item 607.8320 of the TSUSA; and not pickled and in coils; as currently provided in item 607.6610, or under 0.1875 inch in thickness and over 12 inches in width, whether or not pickled, whether or not in coils, as currently provided for in items 607.6710, 607.6720, 607.6730, 607.6740, or 607.8342 of the TSUSA.

2. The term "cold-rolled carbon steel flat-rolled products" covers cold-rolled carbon steel products, whether or not corrugated or crimped; whether or not painted or varnished and whether or not pickled; not cut, nor pressed, and not stamped to non-rectangular shape; not coated or plated with metal and not clad; over 12 inches in width and 0.1875 or more in thickness, as currently provided for in item 607.8320 of the TSUSA; or over 12 inches in width and under 0.1875 inch in thickness, whether or not in coils as currently provided for in items 607.8350, 607.8355, or 607.8360 of the TSUSA.