Government Provision of Operating Capital

Carbon Steel Products (1982) 49 FR 5157 (2/10/84-prelim);   49 FR 17988 (4/26/84-final)
Standard Pipe (1991) 57 FR 24466 (6/9/92-prelim);   57 FR 42970 (9/17/92-final) not used
Steel Wheels (1987) 53 FR 43749 (10/28/88-prelim);   54 FR 15523 (4/18/89-final)
Tillage Tools (1983) 50 FR 24270 (6/10/85-prelim);   50 FR 34525 (8/26/85-final)

The Government of Brazil granted equity infusions to companies in order to cover their operating losses. The Brazilian government funds granted to the various steel companies was for the purpose of expansion.

Import Tax Exemptions

Iron Ore Pellets (1984) 50 FR 11527 (3/22/85-prelim);   51 FR 21961 (6/17/86-final)

Decree Law 1287 allows a 100 percent exemption from import duties and IPI tax on equipment, machinery, appliances or instruments, spare parts, etc., provided similar equipment is not produced in Brazil. This program is part of the mining industry incentives administered by the "Grupo Executivo da Industrial de Mineracao" ('GEIMI") of the Ministry of Mines and Energy. Firms must have projects approved by GEIMI to qualify for the import duty exemption. The Department found this program to be limited to a specific enterprise or industry or group of enterprises or industries, and, hence, countervailable.

IPI Rebates for Capital Investment

Carbon Steel Plate (1981) 47 FR 26310 (6/17/82-prelim);   48 FR 2568 (1/20/83-final)
Carbon Steel Wire Rod (1981) 47 FR 30550 (7/14/82-prelim);   Investigation Suspended 47 FR 42399 (9/27/82)
Cast Iron Pipe Fittings (1983-84) 49 FR 49319 (12/19/84-prelim);   50 FR 8755 (3/5/85-final) not used
Certain Stainless Steel (1981-82) 47 FR 52207 (11/19/82-prelim);   48 FR 21610 (5/13/83-final)
Forged Steel Crankshafts (1985) 52 FR 699 (1/8/87-prelim);   52 FR 38254 (10/15/87-final) not used
Heavy Iron Construction Castings (1984) 50 FR 32462 (8/12/85-prelim);   51 FR 9491 (3/19/86-final) not used
Iron Ore Pellets (1984) 50 FR 11527 (3/22/85-prelim);   51 FR 21961 (6/17/86-final)
Tillage Tools (1983) 50 FR 24270 (6/10/85-prelim);   50 FR 34525 (8/26/85-final) not used

Decree Law 1547 (April 1977) provides funding for the expansion of the Brazilian steel industry through a rebate of the Industrialized Products Tax ("IPI") the Brazilian federal excise tax. The Department found that the amount rebated each year was an united grant received in that year.

IPI Rebate Program Under Law 7554/86

Carbon Steel Plate (SR) (Expedited review - no prelim);   71 FR 32522 (6/6/06-final);   Final Memo
Certain Steel Products (1993) 57 FR 57810 (12/7/92-prelim);   58 FR 37298 (7/9/93-final)
Hot-Rolled Lead and Bismuth Steel Products (1991) 57 FR 42980 (9/17/92-prelim);   58 FR 6216 (1/27/93-final)
Standard Pipe (1991) 57 FR 24466 (6/9/92-prelim);   57 FR 42969 (9/17/92-final)

Under this program, Brazilian steel producers are eligible to receive a rebate for the IPI tax a value-added state tax paid on domestic sales of industrial products. The steel producers must meet the following conditions in order to receive IPI rebates under this program: (1) the company must produce liquid steel, (2) the IPI rebate must be used to increase the production of certain steel products, (3) the companies must have an ongoing capital investment project originally approved by the Conselho do Desenvolvimento Industrial (CDI), (4) the companies must receive quarterly approval from the Department for Industry and Commerce, and (5) the company must have a net IPI obligation in each quarter.

Partes Beneficiarias

Hot-Rolled Lead and Bismuth Steel Products (1991) 57 FR 42980 (9/17/92-prelim);   58 FR 6215 (1/27/93-final)

Partes Beneficiaries ("PBs") are "hybrid" instruments with qualities of both debt and equity. PBs are similar to liabilities because they carry an obligation for the issuer to repay the bearer the nominal purchase value in equal yearly installments following a grace period. PBs are like equity in that the purchaser has the right to share in the company's annual profits. PBs were chosen over an equity issuance because (1) Banco do Brasil (a state-owned bank and the largest shareholder) was prohibited by law from increasing its equity share in the company and (2) other shareholders would have been unlikely to participate in a stock offering.

Provision of Infrastructure (Subsidized Port Facilities, Transportation Subsidies)

Carbon Steel Plate (SR) (Expedited review - no prelim);   71 FR 32522 (6/6/06-final);   Final Memo
Carbon Steel Plate (SR) 65 FR 18065 (4/6/00-final);   Decision Memo (4/6/00)
Carbon Steel Plate (1981) 47 FR 26310 (6/17/82-prelim);   48 FR 2568 (1/20/83-final)
Carbon Steel Products (1984) 51 FR 39774 (10/31/86-prelim);   52 FR 829 (1/9/87-final) not used
Carbon Steel Products (1982) 49 FR 5157 (2/10/84-prelim);   49 FR 17988 (4/26/84-final) not used
Carbon Steel Wire Rod (1981) 47 FR 30550 (7/14/82-prelim);   Investigation Suspended 47 FR 42399 (9/27/82)
Certain Stainless Steel (1981-82) 47 FR 52207 (11/19/82-prelim);   48 FR 21610 (5/13/83-final)
Certain Steel Products (1993) 57 FR 57811 (12/7/92-prelim);   58 FR 37300 (7/9/93-final)

Paria Mole Port consists of a pier, terminals, and other facilities designed for the use by steel and coal companies. Paria Mole Port is located within the larger Vitoria Bay Port, which contains port facilities for a variety of industries. This port was jointly constructed by SIDERBRAS (a government-owned steel company), CVRD (a government-owned mining concern), and PORTOBRAS (the government entity responsible for ports and associated infrastructure). The port was constructed for the exclusive use of SIDERBRAS, its three entities being: USIMINAS, CST, and ACOMINAS. We found that the use and sale of this port to the subsidiaries of SIDERBRAS upon de-privatization, constitutes a provision of subsidized infrastructure.

Subsidies to Upstream Suppliers of Steel Inputs

Tillage Tools (1983) 50 FR 24270 (6/10/85-prelim);   50 FR 34525 (8/26/85-final)

No program description available.

SUBSIDY PROGRAMS FOUND TO BE NOT COUNTERVAILABLE

The subsidy programs listed below have been investigated by the Department and have been found to be "not countervailable" in the cases listed and during the periods reviewed based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition, you may click on the cases listed under the subsidy program title for a full explanation of the Department's analysis in each case where the subsidy program has been examined.

• IRON ORE

Depletion Allowance

Iron Ore Pellets (1984) 50 FR 11527 (3/22/85-prelim);   51 FR 21961 (6/17/86-final)

Decree-law 1096, extended by Decree-Law 1779, allowas a 20 percent depletion for mineral projects. We found that any firm owning a mine is eligible for the depletion allowance. The firm has the option of taking a depletion allowance equal to the greater of:
1. The percentage of the total reserves extracted during the tax year times the original value of the mine; or
2. Twenty percent of the ex-mine value of the minerals extracted during the tax year.
Because the depletion allowance on minerals in Brazil is part of the normal tax practice and because there is no indication that it favors exports over domestic products, we determined this program not to be countervailable.

• STEEL PRODUCTS

Gerdau BNDES Financing for the Acquisition of Acominas

Wire Rod (2000) 67 FR 5967 (2/8/02-prelim);   67 FR 169 (8/30/02-final);   Final Memo

Gerdau received a loan to invest in Acominas. We determined that this type of FINAM loan is widely available to all producers in Brazil. Therefore, we determined that it was not countervailable.

Non-Indexation of Overdue Accounts Payable

Carbon Steel Plate (1981) 47 FR 26310 (6/17/82-prelim);   48 FR 2568 (1/20/83-final)
Carbon Steel Products (1982) 49 FR 5157 (2/10/84-prelim);   49 FR 17988 (4/26/84-final)

The Department found that no standard accounting principle exists for indexing accounts payable nor is there a special provision which provides preferential treatment for late payments by public sector companies. The terms for payment and adjustments for inflation are negotiated with individual suppliers and are specifically indicated in contracts with suppliers. Based on this information, we have determined that the provisions for indexing accounts payable in Brazil do not confer a subsidy to state-owned steel companies.

Program to Induce Industrial Modernization of the State of Minas Gerais (PROIM)

Cold-Rolled Carbon Steel Flat Products (2000) 67 FR 9652 (3/4/02-prelim);   67 FR 62128 (10/3/02-final);   Final Memo not used

The PROIM program provides that companies that increase their production within the state of Minas Gerais may obtain a deferral of that portion of the Imposto Sobre Circulacao da Mercadoria e Servicos (ICMS) which applies to the increased production.

Purchase of Inputs From A Related Company

Carbon Steel Plate (1981) 47 FR 26310 (6/17/82-prelim);   48 FR 2568 (1/20/83-final)

Companhia Siderurgica Nacional (CSN) is a member of the SIDERBRAS group and both COSIPA and USIMINAS have purchased slab from CSN. The Deparrment found that COSIPA and USIMINAS used the slab purchased from CSN exclusively for producing hot-rolled strip and that the specifications and dimensions of this slab preclude its use in producing carbon steel plate.

Rail Rate Subsidies Based on Payment in Steel

Carbon Steel Products (1982) 49 FR 5157 (2/10/84-prelim);   49 FR 17988 (4/26/84-final)

It was alleged that Brazilian steel producers may derive independent benefits from a system of preferential rail transport rates. The steel products involved in these transactions were valued on the basis of current list prices plus a percentage based on estimated price increases expected to occur during the interim between the dates of contract and delivery. Subject to certain controls imposed by the government on all commercial transactions in Brazil, the price or value placed on steel sold to INTERBRAS by COSIPA and CSN was negotiated in accordance with CSN's and COSIPA's normal commercial practice. We determine that Brazilian steel producers do not benefit from preferential rail rates either directly or as a result of the barter arrangement involving their accounts payable to RFFSA.

Raw Materials Supplied at Government-Controlled Rates

Carbon Steel Products (1982) 49 FR 5157 (2/10/84-prelim);   49 FR 17988 (4/26/84-final)

The price controls on iron ore apply to sales by four producers of iron ore in Brazil. The producers subject to price control consistently sell iron ore at prices that are below the set maximum prices. Producers not subject to price controls sell iron ore at even lower prices. The Department determined that market forces rather than government-mandated price controls set the prices of iron ore in Brazil. Therefore, the price control do not constitute the "provision of goods or services" [section 771(5)(B)(ii) of the Act] at preferential rates and do not confer a subsidy on producers of the products under investigation.

Regional Bank Financing

Heavy Iron Construction Castings (1984) 50 FR 32462 (8/12/85-prelim);   51 FR 9491 (3/19/86-final) not used

The Fund for Development of Mining and Metallurgy (FDM) is a program administered by the BDMG and funded entirely by its own resources. The purpose of the FDM is to provide working capital to mining and metallurgy companies in the state of Minas Gerais, the center of Brazil's mining and metallurgical activities. The Department determined that loans under the FDM program are not limited to a specific enterprise or industry or group of enterprises or industries.

• PIG IRON

Exemption from payment of duties and value-added taxes on plant and equipment imported for the production of pig iron for export

Pig Iron (1980) 48 FR 6754 (2/15/83-prelim);   48 FR 31280 (7/7/83-final)

No program description available.

SUBSIDY PROGRAMS THAT HAVE BEEN TERMINATED

The subsidy programs listed below have been investigated by the Department and have been found to have been terminated based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition, you may click on the cases listed below the subsidy program title for a full explanation of the Department's analysis in each of these cases.

No Programs Listed.

PROGRAMS DETERMINED NOT TO BE USED

When potential subsidy programs are investigated and found not to be used by the companies being investigated, the Department makes no determination as to their countervailability. If you click on the subsidy program title, you will be linked to each case in which the subsidy program was referenced.

• IRON ORE

Carajas Mine Incentives

Iron Ore Pellets (1984) 50 FR 11527 (3/22/85-prelim);   51 FR 21961 (6/17/86-final) not used

It was alleged that companies benefit from special provisions for the Carajas Mine. We found that the Carajas Mine will produce only natural iron ore, not pellets. Since our investigation dealt only with iron ore pellets, we determined that these incentives do not provide benefits to the production or exportation of iron ore pellets.

• STEEL PRODUCTS

Charcoal Used in Steel Production

Carbon Steel Plate (1981) 47 FR 26310 (6/17/82-prelim);   48 FR 2568 (1/20/83-final) not used
Carbon Steel Products (1982) 49 FR 5157 (2/10/84-prelim);   49 FR 17988 (4/26/84-final) not used

It was alleged that government incentives for reforestation and the expansion of charcoal production for use as a fuel in the steel industry confer indirect subsidies to the production of carbon steel plate. The Department found that neither COSIPA nor USIMINAS use wood charcoal to produce steel. Therefore the Department determined that no benefit to carbon steel plate is conferred under this program.

Export Profits Exemption from Corporate Income Tax

Carbon Steel Products (1982) 49 FR 5157 (2/10/84-prelim);   49 FR 17988 (4/26/84-final) not used

Pursuant to Decree Laws 1158 and 1721, exporters of certain carbon steel products are eligible to participate in this program which exempts a portion of profits attributable to export revenue from income tax.

Government Privatization Assistance

Standard Pipe (1991) 57 FR 24466 (6/9/92-prelim);   57 FR 42970 (9/17/92-final) not used

No program description available.

H. Ferrovia do Aco, the "Steel Railway"

Carbon Steel Plate (1981) 47 FR 26310 (6/17/82-prelim);   48 FR 2568 (1/20/83-final) not used

It was alleged that the Brazilian Government had constructed a steel railway solely to benefit steel companies, which therefore constituted a subsidy. It was claimed that the railway was was designed to reduce the reliance on trucking and thus reduce transportation costs. Since no companies, steel or otherwise, have yet used this railway, the Department determined that no benefit was received by manufacturers, producers or exporters of carbon steel plate.

Loan From the Secretariat for Technology and Industry

Heavy Iron Construction Castings (1984) 50 FR 32462 (8/12/85-prelim);   51 FR 9491 (3/19/86-final) not used

One company had a long-term loan from the Secretariat of Technology and Industry (STI). This loan was given to the company for the purpose of developing a new process for the manufacture of "clinkers," which are used in the processing of iron ore which is used to manufacture pig iron which in turn is used in the manufacture of castings. A review of all the loan contracts and associated documents regarding this loan substantiated that the loan was given solely for this specific purpose. Because the STI loan is tied specifically to the development of a "clinker" machine, and because "clinkers" are used in the fabrication of pig iron, which the company did not produce, the Department determined that this loan was not used by the company.

Loan Through the Caixa Economica Federal

Heavy Iron Construction Castings (1984) 50 FR 32462 (8/12/85-prelim);   51 FR 9491 (3/19/86-final) not used

One comapny had a loan borrowed during the review period, from the BDMG. The funds for this loan, however, originated with the Caixa Economica Federal (CEF), a government-controlled bank in Brazil. This loan represented a pass- through of CEF's funds through the BDMG.

Subsidized Electricity Used in Steel Production

Brass Sheet and Strip (1985) 51 FR 20864 (6/19/86-prelim);   51 FR 40837 (11/10/86-final) not used
Carbon Steel Products (1984) 51 FR 39774 (10/31/86-prelim);   51 FR 829 (1/9/87-final) not used

No program description available.

SUBSIDY PROGRAMS DETERMINED NOT TO EXIST

The following subsidy programs were alleged by the petitioning industries and were investigated by the Department. However, during the investigation we found no evidence that such programs actually existed. If you click on the subsidy program title, you will be linked to each case in which the subsidy program was referenced. It is possible that while the program named did not exist, a similar program having a different name actually was investigated. If this is the case, you will find that program listed elsewhere in this library.

• STEEL PRODUCTS

BNDES Programa de Modernizacao de Siderurgia Brasilera - Fund for the Modernization of the Steel Industry

Cold-Rolled Carbon Steel Flat Products (2000) 67 FR 9652 (3/4/02-prelim);   67 FR 62128 (10/3/02-final);   Final Memo
Wire Rod (2000) 67 FR 5967 (2/8/02-prelim);   67 FR 169 (8/30/02-final);   Final Memo

No program description available.

Deferred Income Tax and Social Contribution

Certain Steel Products (1993) 57 FR 57812 (12/7/92-prelim);   58 FR 37300 (7/9/93-final)

No program description available.

Equity Infustions to COSIPA in 1992 and 1993

Hot-Rolled Carbon Steel Products (SR) (Expedited Review-no prelim); 69 FR 70655 (12/07/04-final);   Final Memo
Hot-Rolled Carbon Steel Products (1997) 64 FR 8320 (2/19/99-prelim);   64 FR 38748 (7/19/99-final);   69 FR 56040 (9/17/04-term. of susp. agreement & CVD oder);   Correction

We determined that COSIPA had not received equity infusions. Instead, all benefits were in the form of debt assumptions that were converted into equity. (See Debt-to-Equity Conversions Provided to COSIPA in 1992 and 1993)

Local Tax Incentives/Special Tax Deductions for SIDERBRAS

Carbon Steel Products (1982) 49 FR 5157 (2/10/84-prelim);   49 FR 17988 (4/26/84-final) not used
Cast Iron Pipe Fittings (1983-84) 49 FR 49319 (12/19/84-prelim);   50 FR 8755 (3/5/85-final) not used

We determined that there are no local tax measures that benefit respondents. As a result of a special concession by the government, CSN was allowed to use the losses of other companies in the SIDERBRAS group to offset its profits for income tax purposes in 1980. The government conceded this special dispensation to compensate for the fact that within the SIDERBRAS group. Some companies consistently incur losses while other are profitable. However, such benefits received by CSN on its 1980 earnings extended only through 1981, because these are tax benefit that would be allocated solely to the year of receipt. This concession was repealed shortly thereafter and this program no longer exists.

Provision of Electricity at Preferential Rates to Silicon Metal Producers in Minas Gerais

Silicon Metal (1989) 55 FR 49322 (11/27/90-prelim);   56 FR 26988 (6/12/91-final)

No program description available.