NOTICES
DEPARTMENT OF COMMERCE
International Trade Administration
[C-423-806]
Cut-to-Length Carbon Steel Plate From Belgium Preliminary Results of
Countervailing Duty Review
Wednesday, September 9, 1998
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AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of countervailing duty administrative review.
SUMMARY: The Department of Commerce is conducting an administrative review of the
countervailing duty order on certain steel products from Belgium for the period
January 1, 1996 through December 31, 1996. We preliminarily determine the net subsidy
to be de minimis. For information on the net subsidy for non- reviewed companies, please
see the Preliminary Results of Review section of this notice. If the final results remain the
same as these preliminary results of administrative review, we will instruct the U.S.
Customs Service to assess countervailing duties as detailed in the Preliminary Results
of Review section of this notice. Interested parties are invited to comment on these
preliminary results.
EFFECTIVE DATE: September 9, 1998.
FOR FURTHER INFORMATION CONTACT: Lorenza Olivas or Gayle Longest, Office
CVD/AD Enforcement VI, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue,
N.W., Washington, D.C. 20230; telephone: (202) 482-2786.
SUPPLEMENTARY INFORMATION:
Background
On August 7, 1993, the Department published in the Federal Register (58 FR 42749) the
countervailing duty order on certain steel products from Belgium. On August 4,
1997, the Department published a notice of "Opportunity to Request Administrative
Review" (62 FR 41925) of this countervailing duty order. We received a timely request
for review and we initiated the review, covering the period January 1, 1996 through
December 31, 1996, on September 25, 1997 (62 FR 50292).
In accordance with 19 CFR 351.213(b), this review covers only those producers or
exporters of the subject merchandise for which a review was specifically requested.
Accordingly, this review covers Fabrique de Fer de Charleroi, S.A. (Fabfer). This review
covers 28 programs.
On April 13, 1998, we extended the period for completion of the preliminary results
pursuant to section 751(a)(3) of the Tariff Act of 1930, as amended. See Cut-to-Length
Carbon Steel Plate From Belgium; Extension of Time Limit for Countervailing Duty
Administrative Review (63 FR 17990). The deadline for the final results of this review is
no later than 120 days from the date on which these preliminary results are published in
the Federal Register.
On August 13, 1998, Fabfer submitted a claim that the research and development loan
provided under the Economic Expansion Law of 1970 constitutes a non- actionable
green-light subsidy and therefore is not countervailable. The Government of Belgium
(GOB) provided no support for this claim, and information in the record is not sufficient
to determine whether the program under which the loan is provided satisfies the criteria
in section 771(5B)(i) of the Act. Given the timing of Faber's claim and the deficiency of
required information, we are denying Fabfer's request for green-light status in this review.
Applicable Statute
Unless otherwise indicated, all citations to the statute are references to the provisions of
the Tariff Act of 1930, as amended by the Uruguay Round Agreements Act (URAA)
effective January 1, 1995 (the Act). The Department is conducting this administrative
review in accordance with section 751(a) of the Act. All citations to the Department's
regulations reference 19 CFR Part 351 et. seq., Antidumping Duties; Countervailing
Duties; Final Rule, 62 FR 27296 (May 19, 1997), unless otherwise indicated.
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Scope of the Review
The products covered by this review are certain cut-to-length carbon steel plate. These
products include hot-rolled carbon steel universal mill plates (i.e., flat-rolled products
rolled on four faces or in a closed box pass, of a width exceeding 150 millimeters but not
exceeding 1,250 millimeters and of a thickness of not less than 4 millimeters, not in coils
and without patterns in relief), of rectangular shape, neither clad, plated nor coated with
metal, whether or not painted, varnished, or coated with plastics or other nonmetallic
substances; and certain hot-rolled carbon steel flat-rolled products in straight lengths, of
rectangular shape, hot rolled, neither clad, plated, nor coated with metal, whether or not
painted, varnished, or coated with plastics or other nonmetallic substances, 4.75
millimeters or more in thickness and of a width which exceeds 150 millimeters and
measures at least twice the thickness, as currently classifiable in the Harmonized Tariff
Schedule (HTS) under subheadings 7208.31.0000, 7208.32.0000, 7208.33.1000,
7208.33.5000, 7208.41.0000, 7208.42.0000, 7208.43.0000, 7208.90.0000,
7210.70.3000, 7210.90.9000, 7211.11.0000, 7211.12.0000, 7211.21.0000,
7211.22.0045, 7211.90.0000, 7212.40.1000, 7212.40.5000, and 7212.50.0000.
Included in this review are flat-rolled products of non-rectangular cross-section where
such cross-section is achieved subsequent to the rolling process (i.e., products which
have been "worked after rolling")--for example, products which have been beveled or
rounded at the edges. Excluded from these investigations is grade X-70 plate. The HTS
subheadings are provided for convenience and U.S. Customs Service (Customs) purposes.
The written description of the scope remains dispositive.
Allocation Methodology
In British Steel plc. v. United States, 879 F.Supp. 1254 (February 9, 1995) (British Steel),
the U.S. Court of International Trade (the Court) ruled against the allocation period
methodology for non-recurring subsidies that the Department had employed for the past
decade, a methodology that was articulated in the General Issues Appendix (58 FR
37227) appended to Final Affirmative Countervailing Duty Determination: Certain
Steel Products from Austria; 58 FR 37217 (July 9, 1993) (GIA). In accordance with the
Court's decision on remand, the Department determined that the most reasonable method
of deriving the allocation period for nonrecurring subsidies is a company-specific average
useful life (AUL) of non-renewable physical assets. This remand determination was
affirmed by the Court on June 4, 1996. British Steel, 929 F.Supp 426,439 (CIT 1996).
Accordingly, the Department has applied this methodology to those non-recurring
subsidies that have not yet been countervailed.
Fabfer submitted an AUL calculation based on depreciation and asset values of
productive assets reported in its financial statements. Fabfer's AUL was derived by adding
depreciation charges for ten years, and dividing these charges by the sum of average
gross book value of depreciable fixed assets for the related periods. We found this
calculation to be reasonable and consistent with our company-specific AUL objective.
Fabfer's calculation resulted in an average useful life of 26 years. For non-recurring
subsidies received prior to the POR and which have already been countervailed based on
an allocation period established in an earlier segment of the proceeding, it is not
reasonable or practicable to reallocate those subsidies over a different period of time.
Since the countervailing duty rate in earlier segments of the proceeding was
calculated based on a certain allocation period and resulting benefit stream, redefining
the allocation period in later segments of the proceeding would entail taking the original
grant amount and creating an entirely new benefit stream for that grant. Such a practice
may lead to an increase or decrease in the total amount countervailed and, thus, would
result in the possibility of over-countervailing or under-countervailing the actual benefit.
Therefore, for purposes of these preliminary results, the Department is using the original
allocation period assigned to each nonrecurring subsidy received prior to the POR, which
has already been countervailed. See Certain Carbon Steel Products from Sweden; Final
Results of Countervailing Duty Administrative Review, 62 FR 16549 (April 7, 1997)
(Carbon Steel Products from Sweden).
Analysis of Programs
I. Programs Conferring Subsidies
A. Programs Previously Determined To Confer Subsidies Cash Grants and Interest
Subsidies Under the Economic Expansion Law of 1970
The Economic Expansion Law of December 30, 1970 (1970 Law), offers incentives to
promote the establishment of new enterprises or the expansion of existing ones which
contribute directly to the creation of new activities and new employment within
designated development zones. Although funding for programs under the 1970 Law is
provided by the GOB, the provisions of the 1970 Law are implemented and administered
by regional authorities. In the Final Affirmative Countervailing Duty Determinations:
Certain Steel Products From Belgium (Final Determination) 58 FR 37273 (July 9, 1993),
the Department found this program countervailable because it provided benefits to
enterprises or industries or groups of enterprises or industries located in certain regions.
In this proceeding, we have received no new information or evidence of changed
circumstances to warrant reconsideration of this finding.
Fabfer received grants between 1977 and 1985 under this program; none were provided
since the investigation. To calculate the benefit in this review, we followed the
methodology used in the Final Determination. In that proceeding, the Department
determined that, absent the 1970 Law, most of the benefits provided under this law would
have been available under the 1959 Economic Expansion Law (the 1959 Law). The 1959
Law was found to be non-specific and, thus, not countervailable, in Final Affirmative
Countervailing Duty Determinations: Certain Carbon Steel Products from Belgium;
47 FR 39304, (September 7, 1982). Therefore, the Department countervailed benefits
provided under the 1970 Law only to the extent that they exceeded the benefits available
under the 1959 Law.
To calculate the subsidy rate for this review, we employed the standard grant
methodology outlined in the allocation section of the GIA and allocated the benefit from
each grant over fifteen years, the average useful life of the renewable physical assets in
the steel industry as determined under the U.S. Internal Revenue Service's Asset
Depreciation Range System. As the discount rate, we used the long-term fixed rates of the
Kredietbank for each year in which grants were provided. We summed the benefit
amounts attributable to the POR and divided the result by Fabfer's total sales during the
POR. On this basis, we calculated a subsidy rate of 0.28 percent ad valorem.
B. Other Programs Preliminarily Determined To Confer Subsidies Research and
Development Loan Provided Under the 1970 Economic Expansion Law
Under Article 25 of the 1970 Economic Expansion Law and the October 20, 1988 Decree
of the
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Executive of the Walloon Region, assistance is provided to promote
research activities or the development of prototypes, new products or new production in
the Walloon Region. Based on the questionnaire response, it appears that this program is
funded by the GOB and administered by the Walloon regional authority. This
understanding of the authority and funding of the 1970 Law relates only to the benefits
examined in this review and is based upon record evidence of this case. We will seek more
clarification on the administration and funding of these benefits prior to the final results
of review. The program provides interest-free loans for up to 50 percent of the cost of the
project for large enterprises and up to 80 percent for small and medium sized firms.
We examined the 1970 Economic Expansion Law with respect to cash grants and interest
subsidies in the Final Determination and found that it was regionally specific because it
provides incentives to promote economic development in designated development zones
(see Final Determination at 37275). In the verification report (Memorandum to Susan
Kuhbach, "Verification Report of the Government of Belgium, public version on file in
the Centra Records Unit (Room B-099 of the Main Commerce Building) dated April 1,
1993 at 6, we identify research and development as one of the types of "incentives"
provided under this law. We also confirm in the verification report that Fabfer is located
in a development zone. We examined the documentation provided in this review and we
did not find any indication of changed circumstances which would warrant
reconsideration of this finding. Therefore, we preliminarily determine that this program is
regionally specific and therefore countervailable.
Under this program, Fabfer received an interest-free loan approved in 1989 and
disbursed in four installments between 1990 and 1992, which was outstanding in the POR.
To calculate the benefit on this loan we used our long-term loan methodology and
measured the cost savings in each year the loan was outstanding using the long-term fixed
rate of the Kredietbank as the benchmark. We then took the present value of each of these
amounts as of the time the loan was disbursed and we reallocated the present value of the
yearly benefits over the life of the loan, using our standard grant methodology and the
1989 long-term fixed rate of the Kredietbank as the discount rate. We then divided the
amount allocated to the POR by Fabfer's total sales during the POR. On this basis, we
determine the net subsidy for this program to be 0.15 percent ad valorem.
II. Programs Preliminarily Determined Not To Confer Subsidies
1. Societe Nationale de Credite a l'Industrie (SNCI) Loans
The SNCI is a public credit institution which, through medium-and long- term financing,
encourages the development and growth of industrial and commercial enterprises in
Belgium, including the national industries. SNCI is organized as a limited liability
company and is 50-percent owned by the Belgian government. In 1979, SNCI's board of
directors agreed to provide the GOB with the funds needed to assist the steel industry
under the 1978 restructuring plan (the Claes Plan) and to grant loans to steel companies
within the framework of the plan and under the economic expansion laws of 1959 and
1970. In the Final Determination, the Department determined that the SNCI loan
program was countervailable because it was limited to a specific enterprise or industry,
or group of enterprises or industries. In this review, no new information or evidence of
changed circumstances has been submitted to warrant reconsideration of this finding.
Fabfer had two variable-interest long-term loans outstanding during the POR: one
received in 1982, the other in 1983. The interest rates for the 1982 loan were renegotiated
in 1987, 1992 and 1995. The interest rate for the 1983 loan was renegotiated in 1988.
Consistent with Carbon Steel Products from Sweden, we calculated the benefit by
comparing the amount of interest which was paid during the review period to the amount
of interest which would have been paid at the benchmark rate. As in the Final
Determination at 37291, we used as a benchmark the long-term fixed rates of the
Kredietbank as of the last renegotiation date of the loan. (See Final Determination at page
37291.) Because the benchmark rate was lower that the program rate, we preliminarily
determine the benefit from this program to be zero.
2. Exhibition Stands
Fabfer reported to have received grants from the GOW to pay for exhibition stands for
participation in fairs hosted in foreign countries to promote the company's own products.
The grants were received prior to the POR and did not exceed 0.5 percent of Fabfer's total
exports in the year they were received. Therefore, in accordance with our practice, the
entire amount was expensed in the year of receipt. On that basis, we preliminary
determine the benefit from this program during the POR is zero.
3. Promotion Brochure
Fabfer reported to have received a fixed-rate long-term loan during the POR from GOW
for the publication of advertising brochures for international markets. We compared the
interest rate paid on this loan to the benchmark rate, the Kredietbank fixed-rate
long-term rate provided in the response. Because the loan interest rate was higher than
the benchmark rate in year the loan was approved, we preliminarily determine that the
benefit from this program during the POR is zero.
III. Programs Preliminarily Determined To Be Not Used
We examined the following programs and preliminarily determine that the producers
and/or exporters of the subject merchandise did not apply for or receive benefits under
these programs during the period of review.
1. Resider Program
Petitioners alleged that Fabfer received aid from the European Regional Development
Fund under the Resider program to promote reconversion in regions which have
undergone substantial employment losses in the steel industry. Based on the information
on the record, we preliminarily determine that Fabfer did not receive benefits from this
program during the POR.
2. European Commission-approved Grants
3. Early Retirement
4. The "Invests"
5. SNSN
6. FSNW
7. Belgian Industrial Finance Company (Belfin) Loans
8. Government-Guaranteed Loans issued pursuant to the Economic Expansion Laws of
1959 and 1970
9. Programs under the 1970 Law
a. Exemption of the Corporate Income Tax for Grants
b. Accelerated Depreciation Under Article 15
c. Exemption from Real Estate Taxes
d. Exemption from the Capital Registration
10. ECSC Article 54 Loans and Loan Guarantees
11. ECSC Redeployment Aid
12. European Social Funds Grants
13. Interest Rate Subsidies Provided by Copromex
14. Employment Premiums
15. Short-term Export Credit
16. New Community Instrument Loans
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17. European Regional Development Fund Aid
18. ECSC Interest Rebates under Article 54
19. ECSC Conversion Loans under Article 56
20. ECSC Interest Rebates under Article 56
Preliminary Results of Review
In accordance with 19 CFR 351.221(b)(4)(i), we calculated an individual subsidy rate for
each producer/exporter subject to this administrative review. For the period January 1,
1996 through December 31, 1996, we preliminarily determine the net subsidy for Fabfer
to be 0.43 through December 31, 1996, we prelinarily determine the net subsidy for
Fabfer to be 0.37 percent ad valorem. As provided for in the Act, any rate less than 0.5
percent ad valorem in an administrative review is de minimis. Accordingly, pursuant to
19 CFR 351.106(c)(2), if the final results of this review remain the same as these
preliminary results, the Department intends to instruct Customs to liquidate, without
regard to countervailing duties, shipments of the subject merchandise from Fabfer
exported on or after January 1, 1996 and on or before December 31, 1996. Also, the cash
deposits required for Fabfer will be zero.
Because the URAA replaced the general rule in favor of a country-wide rate with a general
rule in favor of individual rates for investigated and reviewed companies, the procedures
for establishing countervailing duty rates, including those for non-reviewed
companies, are now essentially the same as those in antidumping cases, except as
provided for in section 777A(e)(2)(B) of the Act. The requested review will normally
cover only those companies specifically named. See 19 CFR 351.213(b). Pursuant to 19
CFR 351.212(c), for all companies for which a review was not requested, duties must be
assessed at the cash deposit rate, and cash deposits must continue to be collected, at the
rate previously ordered. As such, the countervailing duty cash deposit rate applicable
to a company can no longer change, except pursuant to a request for a review of that
company. See Federal-Mogul Corporation and The Torrington Company v. United States,
822 F.Supp. 782 (CIT 1993) and Floral Trade Council v. United States, 822 F.Supp. 766
(CIT 1993) (interpreting 19 CFR 353.22(e), the antidumping regulation on automatic
assessment, which is identical to 19 CFR 355.22(g)). Therefore, the cash deposit rates for
all companies except those covered by this review will be unchanged by the results of this
review.
We will instruct Customs to continue to collect cash deposits for non- reviewed
companies at the most recent company-specific or country-wide rate applicable to the
company. Accordingly, the cash deposit rates that will be applied to non-reviewed
companies covered by this order will be the rate established for these companies in the
most recently completed administrative proceeding conducted under the URAA. If such
a review has not been conducted, the rate established in the most recently completed
administrative proceeding pursuant to the statutory provisions that were in effect prior
to the URAA amendments is applicable. See Final Determination. These rates shall apply
to all non-reviewed companies until a review of a company assigned these rates is
requested. In addition, for the period January 1, 1996 through December 31, 1996, the
assessment rates applicable to all non-reviewed companies covered by this order are the
cash deposit rates in effect at the time of entry.
Public Comment
Pursuant to 19 CFR 351.224(b), the Department will disclose to parties to the proceeding
any calculations performed in connection with these preliminary results within five days
after the date of publication of this notice. Pursuant to 19 CFR 351.309, interested parties
may submit written comments in response to these preliminary results. Case briefs must
be submitted within 30 days after the date of publication of this notice, and rebuttal
briefs, limited to arguments raised in case briefs, must be submitted no later than five
days after the time limit for filing case briefs. Parties who submit argument in this
proceeding are requested to submit with the argument: (1) A statement of the issues, and
(2) a brief summary of the argument. Case and rebuttal briefs must be served on
interested parties in accordance with 19 CFR 351.303(f). Also, pursuant to 19 CFR
351.310, within 30 days of the date of publication of this notice, interested parties may
request a public hearing on arguments to be raised in the case and rebuttal briefs. Unless
the Secretary specifies otherwise, the hearing, if requested, will be held two days after the
date for submission of rebuttal briefs, that is, thirty-seven days after the date of
publication of these preliminary results.
Representatives of parties to the proceeding may request disclosure of proprietary
information under administrative protective order no later than 10 days after the
representative's client or employer becomes a party to the proceeding, but in no event
later than the date the case briefs, under 19 CFR § 351.309(c)(ii), are due. The Department
will publish the final results of this administrative review, including the results of its
analysis of issues raised in any case or rebuttal brief or at a hearing.
This administrative review and notice are issued and published in accordance with
section 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 1675(a)(1) and 19 U.S.C. 1677f(i).
Dated: August 31, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-24172 Filed 9-8-98; 8:45 am]
BILLING CODE 3510-DS-P