65 FR 18063, April 6, 2000
C-427-810
Sunset Review
Public Document
MEMORANDUM TO: Robert S. LaRussa
Assistant Secretary
for Import Administration
FROM: Jeffrey A. May
Director
Office of Policy
SUBJECT: Issues and Decision Memo for the Sunset Review of the
Countervailing Duty Order on Certain Corrosion-Resistant
Carbon Steel Flat Products from France; Final Results
Summary
We have analyzed the substantive responses and rebuttal comments of interested
parties in the expedited sunset review of the countervailing duty order on
certain corrosion-resistant carbon steel flat products from France. We
recommend that, for our final results, you approve the positions we have
developed in the Discussion of the Issues section of this memorandum. Below is
the complete list of the issues in this expedited sunset review for which we
received substantive responses and rebuttal comments by parties:
1. Likelihood of continuation or recurrence of countervailable subsidy
Net countervailable subsidy
Changes in program
Other factors
2. Net countervailable subsidy likely to prevail
Net countervailable subsidy from investigation
Adjustments to the subsidy
3. Nature of Subsidy
History of Order:
On July 9, 1993, the Department issued a final affirmative countervailing duty
determination on certain steel products from France.(1) During the
investigation, the Department reviewed only one company, Usinor Sacilor
("Usinor").(2) The Department determined that nine subsidy programs were
providing countervailable subsidies to Usinor at a net countervailing subsidy
rate of 15.13 percent.(3) The nine countervailable subsidy programs are as
follows:(4)
(1) Equity Infusions under Loans with Special Characteristics and
Fonds d'Intervention Siderurgique ("PACS/FIS"),
(2) Grants in the Form of Shareholders' Advances,
(3) Investment Subsidies,
(4) Grants in the Form of Cancellation of Debt,
(5) ECSC Article 54 Loans and Loan Guarantees ("ECSC 54"),
(6) Long-Term Loans From Caisse Francaise de Developpement Industriel ("CFDI"),
(7) ECSC Redeployment Aid (Article 56(2)(b)) ("ECSC 56"),
(8) Other Loan Guarantees, and
(9) Other Participative Loans.(5)
The Department published the countervailing duty order on corrosion-resistant
carbon steel flat products ("corrosion-resistant steel") from France in the
Federal Register on August 17, 1993.(6) Since that time, the Department has
conducted no administrative review of this order.
The order remains in effect for all manufacturers and exporters of the subject
merchandise.
Background:
On September 1, 1999, the Department initiated a sunset review of the
countervailing duty order on corrosion-resistant steel from France (64 FR
47767), pursuant to section 751(c) of the Tariff Act of 1930, as amended ("the
Act"). The Department received a joint Notice of Intent to Participate on
behalf of Bethlehem Steel Corp. ("Bethlehem"), Ispat Inland Inc., LTV Steel
Inc., National Steel Corp., and U.S. Steel Group (a unit of USX Corp.)
(hereinafter collectively referred to as the "domestic interested parties") on
September 10, 1999, within the deadline specified in section 351.218(d)(1)(i)
of the Sunset Regulations. In their Notice of Intent to Participate, the
domestic interested parties note that none of them is a U.S. importer of the
subject merchandise. The domestic interested parties indicate that, with the
exception of Bethlehem Steel Corp., all other domestic interested parties are
affiliated with various foreign producers and exporters of the like product.(7)
We received a complete substantive response on behalf of the domestic
interested parties on October 4, 1999,(8) within the 30-day deadline specified
in the Sunset Regulations under section 351.218(d)(3)(i). The domestic
interested parties claimed interested party status under section 771(9)(C) of
the Act, as U.S. manufacturers of the domestic like product. In their
substantive response, the domestic interested parties indicated that one or
more of them have participated in proceedings related to the order since its
inception, that they have actively participated in all remand and appellate
proceedings related to this order, and that, as a group, they remain committed
to a full participation in the instant review of the order. (See the domestic
interested parties' October 4, 1999, Substantive Response, at 3).
The Department received substantive responses from the Government of France
("GOF") and from the European Commission ("EC") on September 30, 1999 and
October 5, 1999, respectively. Both the GOF and EC indicated, in their
respective substantive responses, that they are willing to participate in the
instant review, and the EC, alone, states that, in the past, it has
participated proceedings related to the order.(9) On September 30, 1999, Usinor
and its affiliated companies, including Sollac S.A., submitted a waiver of
participation in the instant sunset review. The domestic interested parties
submitted their rebuttal comments on October 15, 1999.(10)
Because the Department did not receive a substantive response from any foreign
producer/manufacturer, or exporter of the subject merchandise as defined under
771(9)(A) of the Act, pursuant to section 351.218(e)(1)(ii)(A) of the Sunset
Regulations, the Department determined that, for the purpose of conducting a
full review, respondent interested parties' substantive responses are
inadequate. Consequently, pursuant to 19 CFR 351.218(e)(1)(ii)(C), the
Department determined to conduct an expedited, 120-day, review of
this order.
In accordance with section 751(c)(5)(C)(v) of the Act, the Department may
treat a review as extraordinarily complicated if it is a review of a transition
order (i.e., an order in effect on January 1, 1995). This review concerns a
transition order within the meaning of section 751(c)(6)(C)(i) of the Act.
Therefore, on December 22, 1999, the Department determined that the sunset
review of the countervailing duty order on corrosion-resistant steel from
France is extraordinarily complicated and extended the time limit for
completion of the final results of this review until not later than March 29,
2000, in accordance with section 751(c)(5)(B) of the Act.(11)
Discussion of the Issues
In accordance with section 751(c)(1) of the Act, the Department is conducting
this review to determine whether revocation of the countervailing duty order
would be likely to lead to continuation or recurrence of a countervailable
subsidy. Section 752(b) of the Act provides that, in making this determination,
the Department shall consider the net countervailable subsidy determined in the
investigation and subsequent reviews, and whether any change in the program
which gave rise to the net countervailable subsidy has occurred that is likely
to affect that net countervailable subsidy. Pursuant to section 752(b)(3) of
the Act, the Department shall provide to the International Trade Commission
("the Commission") the net countervailable subsidy likely to prevail if the
order is revoked. In addition, consistent with section 752(a)(6), the
Department shall provide to the Commission information concerning the nature of
the subsidy and whether the subsidy is a subsidy described in Article 3 or
Article 6.1 of the 1994 WTO Agreement on Subsidies and Countervailing Measures
("Subsidies Agreement").
Below we address the substantive responses and rebuttal comments of
interested parties.
1. Likelihood of Continuation or Recurrence of Countervailing Duty
Interested Parties' Comments:
The domestic interested parties contend that revocation of the
countervailing duty order would be likely to lead to continued unfair subsidies by
the GOF on the manufacture, production, or export of the subject merchandise.
In support of their contention, the domestic interested parties argue that
subsidies still exist and, further, that the benefit streams from some subsidies
have not been fully amortized. The domestic interested parties contend that, as a
result, Usinor is still benefitting from such subsidies. (See August 2, 1999
Substantive Response of the domestic interested parties at 3 - 11.)
Specifically, according to the domestic interested parties, there are
countervailable subsidies from which Usinor is currently benefitting. First,
the domestic interested parties contend that the CFDI Loans, ECSC
54, and ECSC 56 loans remain in existence and thus are available to Usinor. Next,
while noting that the GOF never terminated the programs, the domestic
interested parties argue that the benefits derived from 1986 and 1988 debt
write-offs of PACS/FIS continue and will continue beyond the instant review.
Moreover, the domestic interested parties argue that the Department should find
likelihood of continuation or recurrence of coutervailable subsidy based on the
facts alone that the aforementioned programs are continuing and that PACS/FIS is
not officially terminated. Id.
In addition, the domestic interested parties urge the Department to
reconsider various findings from the original investigation for the purpose of
the instant review. Specifically, the domestic interested parties contend that the
Department should not have determined that the Shareholder's
Advances were one time grants; instead, the Department should have treated them as
loans which were later canceled. Also, the domestic interested parties argue
that the Department erred in determining that Usinor was equityworthy in
1991; i.e., exchange of share for cancelled liability in 1991 was a subsidy.
Furthermore, the domestic interested parties urge the Department to
reconsider its final findings in the original investigation and determine that
the Regional Development Subsidiaries ("SODIs") are countervailable
subsidies(12) because the Department failed to correlate factually Usinor's
additional obligations with the subsidy conferred.(13) The domestic interested
parties further argue that, in reality, Usinor loaned (not just channeled)
the proceeds to the SODIs; i.e., Usinor would eventually receive the remuneration
of the GOF contribution. The domestic interested parties claim that, as matter
of fact, the GOF admitted the SODIs contribution as subsidies in its
notification to the World Trade Organization ("WTO") Committee on Subsidies and
Countervailing Measures.(14) Id.
Moreover, the domestic interested parties suggest that the
Department reverse its decision in the investigation that the National Credit Loans
(other than export loans) had not been selectively provided to Usinor and,
therefore, are not countervailable. Also, the domestic interested parties indicate
that, subsequent to the order and in different countervailing
investigations on other products,(15) the Department found a
subsidy rate of 0.11 percent from
Investment Subsidies, despite the fact that the Department initially
determined in the original investigation on this product that Usinor did not
benefit from the said program. Finally, the domestic interested parties proffer
an array of programs with which the GOF purportedly subsidized Usnior, but again
within the context of different countervailing duty orders. For example, the
domestic interested parties list Myosotis project, ESF grants, Electric Arc
Furnace Program, and Credit National Export Loans, as programs found
countervailable in different countervailing duty investigations.(16) Id.
Both the GOF and the EC present almost identical responses
pertaining to the likely effects of revocation of the order. The GOF and EC indicate
that they do not foresee any negative impact if the order were revoked. In
support of their contention, the GOF and EC cite the EC's Steel Aid Code, which
prohibits the granting of aid to the steel industry.(17) In addition, the GOF and
EC note that ECSC 54 will no longer provide benefits to Usinor when the ECSC
Treaty expires in the year 2002. The EC further notes that revocation of
the order would not change its policy of strictly prohibiting the subsidies to
the steel sector of the European Union member states. In short, the GOF and EC
contend that subsidization is unlikely to continue or recur should the order
be revoked. (See September 30, 1999, and October 5, 1999, substantive
responses of the EC and the GOF, respectively.)
In addition, the GOF and EC contend that all of the coutervailable
subsidies the Department found in the original investigation were granted long
before the privatization of Usinor in 1997, that Usinor, as a newly formed
privatized company, can no longer benefit from the subsidies granted to the
previously state-owned company and, consequently, the findings in the original
investigation are no longer valid. Similar to the domestic interested parties'
argument, but for a different purpose, the GOF and EC also attempt
to utilize findings in different countervailing duty investigations to
illustrate that the net countervailable subsidy for Usinor has dropped dramatically
since the issuance of the order.(18) Id.
On October 15, 1999, the domestic interested parties submitted
rebuttal comments arguing that a mere change from state-ownership to private-
ownership of a company does not extinguish the continuing benefit from a
countervailable subsidy, that neither the EC nor the GOF has provided evidence
demonstrating any countervailable subsidy is terminated, and that the Steel Aid
Code would not necessarily prevent the GOF from providing future
countervailable subsidies to French manufacturers/exporters of the subject merchandise because
the Steel Aid Code permits numerous kinds and amounts of subsidies which are
actionable under the Subsidies Agreements and countervailable under U.S. law.
(See domestic interested parties' October 15, 1999, rebuttal comments at
1-14.)
Department's Position:
Drawing on the guidance provided in the legislative history accompanying the
Uruguay Round Agreements Act ("URAA"), specifically the Statement of
Administrative Act ("SAA"), H.R. Doc. No. 103-316, vol. 1 (1994), the House
Report, H.R. Rep. No. 103-826, pt.1 (1994), and the Senate Report, S. Rep. No.
103-412 (1994), the Department issued its Sunset Policy Bulletin providing
guidance on methodological and analytical issues, including the basis for
likelihood determinations. The Department clarified that determinations of
likelihood will be made on an order-wide basis (see section III.A.2 of the
Sunset Policy Bulletin). Additionally, the Department normally will determine
that revocation of a countervailing duty order is likely to lead to
continuation or recurrence of a countervailable subsidy where (a) a subsidy
program continues, (b) a subsidy program has been only temporarily suspended,
or (c) a subsidy program has been only partially terminated (see section
III.A.3.a of the Sunset Policy Bulletin). Exceptions to this policy are
provided where a company has a long record of not using a program (see id. at
section III.A.3.b). Also, if the Department determines that the fully allocated
benefit stream of a countervailable subsidy is likely to continue after the end
of a sunset review, it will normally determine that the subsidy continues to
exist regardless of whether the program that gave rise to such benefit
continues to exist. (See Id. at section III.A.4.)
In addition to considering guidance on likelihood provided in the Sunset
Policy Bulletin and legislative history, section 751(c)(4)(B) of the Act
provides that the Department shall determine that revocation of an order is
likely to lead to continuation or recurrence of a countervailable subsidy where
a respondent interested party waives its participation in the sunset review. In
the instant review, the Department did not receive a response from any
respondent manufacturer/producer or exporter of the subject merchandise.(19)
Pursuant to section 351.218(d)(2)(iii) of the Sunset Regulations, this
constitutes a waiver of participation.
As noted above, in the final affirmative countervailing duty determination,
the Department determined that Usinor was benefitting from countervailable
subsidies under the PACS/FIS, Grants in the Form of Shareholders' Advances,
Investment Subsidies, Grants in the Form of Cancellation of Debt, ECSC 54,
CFDI, ECSC 56, Other Loan Guarantees, and Other Participative Loans at a
combined net subsidy rate of 15.13 percent ad valorem.
In their respective substantive responses, neither the GOF nor the EC provide
evidence indicating that the above nine programs have been terminated or that
there have been any program-wide changes. Instead, the GOF and the EC make only
indirect references with respect to the status of selected programs: the
PACS/FIS and Grants in the forms of Shareholders' Advances are no longer
provided to the French steel industry, in general, and to Usinor, in
particular, pursuant to the EC's Steel Aid Code(20) and that ECSC 54 will
expire when the ECSC Treaty expires in the year 2002. The domestic interested
parties contend that the PACS/FIS and Grants in the forms of Shareholders'
Advances were never terminated by the GOF and that they still exist. In light
of the fact that we do not have any evidence which indicates that a particular
program has been terminated, we determine that all nine programs the Department
found countervailable in the investigation continue to exist.
Therefore, because countervailable programs continue to exist and certain
respondent interested parties waived their right to participate in this review
before the Department, we determine that it is likely that such countervailable
subsidies will continue or recur if the order were revoked.
Additionally, as a result of the above find, we do not consider if necessary to address
the other factors argued by the parties.
2. Net Countervailable Subsidy Likely to Prevail
Interested Parties' Comments:
The domestic interested parties, citing the Sunset Policy Bulletin, state that
the Department should select the likely-to-prevail subsidy rate from the
original investigation, possibly revised upward in case the Department decides,
in the instant sunset review, to countervail the 1991 PACS/FIS (bonds)-to-
equity swap and to treat shareholders' advances as debts which were canceled in
1986 rather than as grants upon issuance. (See October 4, 1999, domestic
interested parties' substantive response at 10 - 11.) Neither the GOF nor the
EC makes a direct argument regarding the likely-to-prevail countervailing duty
rate. Nonetheless, both the GOF and the EC introduce results from other
countervailing duty investigations regarding similar steel products (one final,
the other preliminary) in which the Department found lower subsidy rates for
Usinor: a 5.38 percent and 5.42 percent.(21)
Department's Position:
In the Sunset Policy Bulletin, the Department stated that, consistent with the
SAA and House Report, the Department normally will select a rate from the
investigation, because that is the only calculated rate that reflects the
behavior of exporters and foreign governments without the discipline of an
order or suspension agreement in place. The Department went on to clarify that
this rate may not be the most appropriate if, for example, the rate was derived
from subsidy programs which were found in subsequent reviews to be terminated,
there has been a program-wide change, or the rate ignores a program found to be
countervailable in a subsequent review. Additionally, where the Department
determined company-specific countervailing duty rates in the original
investigation, the Department normally will report to the Commission company-
specific rates from the original investigation or where no company- specific
rate was determined for a company, the Department normally will provide to the
Commission the country-wide or all-others rate. (See Sunset Policy Bulletin at
section III.B.2.)
We disagree with the domestic interested parties' argument concerning the net
countervailable subsidy rate that is likely to prevail to the extent that they
urge the Department to revise the rate from the original investigation upward.
Section III.B.3.(g) of the Sunset Policy Bulletin explains that where the
Department has not conducted an administrative review of the order, as in the
instant case, the Department normally will not make adjustments to the net
countervailable subsidy rate determined in the original investigation. Because
we have not conducted an administrative review during which we found any
additional subsidies, termination, or program-wide changes with respect to any
of the subsidy programs investigated in the original investigation,(22) we
determine that the rates from the original investigation are probative of the
net countervailable subsidy likely to prevail were the order revoked.
When "good cause" is shown, the Department will consider, with limitations,
programs determined to provide countervailable subsidies in other
investigations/review or programs newly alleged to provide countervailable
subsidies. (See section III.C of the Sunset Policy Bulletin.) In the instant
review, neither the domestic interested parties nor the respondent interested
parties put forth "good cause" arguments although both parties introduce and
make reference to results of other investigations and the domestic interested
parties make reference to newly alleged countervailable subsidies. Therefore,
absent "good cause" arguments we are not considering subsidies found in other
investigations or newly alleged countervailing subsidies in this review.
Therefore, we determine that using the net countervailable subsidy rates from
the original investigation as the likely-to-prevail rates is appropriate. As a
result, the Department will report to the Commission the rates as contained in
the Final Results of Review section of this notice.
Nature of the Subsidy
In the Sunset Policy Bulletin, the Department stated that, consistent with
section 752(a)(6) of the Act, the Department will provide information to the
Commission concerning the nature of the subsidy and whether the
subsidy is a subsidy described in Article 3 or Article 6.1 of the Subsidies
Agreement. The domestic interested parties argue that the debt write-offs that were
not exchanged for equity, to the extent that those are considered
countervailable, qualify as direct forgiveness of debt for the purposes of Article
6.1 of the Subsidies Agreement. (See the domestic interested parties'
substantive response at 10.)
In the original investigation, the Department found no
countervailable subsidy that was contingent upon export-performance or import-substitution-
performance; viz, no subsidy falls within the purview of the Article 3 of the
Subsidies Agreement. Rather, the programs may fall under Article 6.1 of the
Subsidies Agreement. In addition, to the extent that such programs would fall
under Article 6.1(a) of the Subsidies Agreements, i.e., where the total ad
valorem subsidization exceeds 5 percent as measured in accordance with Annex
IV of the Subsidies Agreement, the Department has no information with which to
make such a calculation. Nor does the Department believe such calculation
would be appropriate in the course of a sunset review. Moreover, we note that
as of January 1, 2000, Article 6.1 has ceased to apply (see Article 31 of
the Subsidies Agreement). As such, we are only providing the Commission
the following program descriptions:
(1) PACS/FIS: This program of equity infusions was devised to
restructure Usinor and its massive debt.
(2) Grants in the Form of Shareholders' Advances: The GOF financed the
recurring needs of Usinor through shareholders' advances beginning in 1982.
These shareholders' advance carried no interest and there was no precondition
for receipt of these funds.
(3) Investment Subsidies: Under this program the French companies
would receive subsides from the GOF for the purchase of fixed assets.
Because the relevant parties did not provide sufficient information, based on best
information available, the Department determined that the Investment
Subsidies are specific rather than generally available.
(4) Grants in the Form of Cancellation of Debt: The two former private
majority shareholders of Usinor canceled a portion of debt owed to them by
Usinor. The Department found that the debt forgiveness was provided at the
direction of the GOF and, hence, countervailable.
(5) ECSC 54: Under this program, investment loans are provided by
the European Union for the purpose of purchasing new equipment or financing
modernization. Because these loans are only available to companies in steel and coal
industries, the Department found the loans countervailable.
(6) CFDI: Under this program participative loans, which were by law
available to all French companies, were issued by the CFDI. The borrower paid
a lower- than-market interest rate plus a share of future profits according
to an agreed upon formula. Because the GOF could not provide sufficient
information, the Department determined that loans under this program are de facto
limited to specific enterprise or industry and that, therefore, these loans are
countervailable to the extent that they were provided on terms inconsistent
with commercial considerations.
(7) ECSC 56: The main purpose of these grants are to assist workers
affected by the restructuring of the coal and steel industries. Because the
Department did not have information pertaining to some specific details, it
assumed that the extra government contribution relieved Usinor of an obligation
and, therefore, is countervailable in its entirety.
(8) Other Loan Guarantees: These guarantees were provided by, or
were provided to guarantee loans from, Credit National, bank syndicates in which
Credit National, participated, Caisse des Depots et Consignations,
Groupement de l'Industrie Siderurgique, FDES, the ECSC, and the European
Investment Bank. Because relevant parties did not provide sufficient information, the
Department found, based on best information available, inter alia, the fees
associated with these loan guarantees are specific rather than generally
available, and therefore, countervailable.
(9) Other Participative Loans: Because the Department had no
information regarding the category of these loans and about the programs and
because these loans were not reported, based on best information available and the
calculation of the benefit from these loans, the Department determined that
these loans are countervailable.
Final Results of Review
As a result of this review, the Department finds that revocation of
the countervailing duty order would be likely to lead to continuation
or recurrence of a countervailable subsidy at the rates listed below:
---------------------------------------------------------------
Manufacturer/Exporters Margin (percent)
---------------------------------------------------------------
Usinor 15.13
Country-wide 15.13
---------------------------------------------------------------
Recommendation
Based on our analysis of the substantive responses received, we
recommend adopting all of the above positions. If these recommendations are
accepted, we will publish the final results of review in the Federal Register.
AGREE____ DISAGREE____
________________________
Joseph A. Spetrini
Acting Assistant Secretary
for Import Administration
_________________________
(Date)
______________________________________________________________________
footnotes:
1. See Final Affirmative Countervailing Duty Determinations; Certain
Steel Products From France, 58 FR 37304 (July 9, 1993), as amended,
Coutervailing Duty Order and Amendment to Final Affirmative Countervailing Duty
Determination: Certain Steel Products From France, 58 FR 43759
(August 17, 1993), as amended, Certain Steel Products From France; Notice of
Court Decision and Suspension of Liquidation, 63 FR 1827 (January 12, 1998).
2. See Final Affirmative Countervailing Duty Determinations; Certain
Steel Products From France, 58 FR 37304 (July 9, 1993). In 1986, Usinor
and Sacilor merged into a single entity called Usinor. In the original
investigation, the Department determined that Usinor is the only respondent company.
3. In Inland Steel Industries, Inc. v. U.S., 188 F.3d 1349 (Fed.
Cir. 1999), the court affirmed several lower court decisions which had changed
the net countervailing subsidy rate to 15.13 percent from the 15.12 percent
calculated in the original investigation.
4. Although the Department also examined "Other Equity Infusions in
1979, and 1981 through 1983" claimed by the petitioner, it determined that
there were not any other equity infusions from which Usinor benefitted other than
those included in PACS/FIS.
5. See footnote 2, supra. For other subsidy programs investigated, the
Department determined that some programs fall outside the purview of
the countervailing duty law (such as Regional Development Subsidies and
Long-Term Loans From FDES, Loans From Credit National, European Investment
Bank Loans, and ESCS Research and Development Assistant Under Article 55), and
others are either not applicable to or not used by French producers/exporters
of the subject merchandise (such as ECSC Article 54 Interest Rebates, ECSC
Article 56 Conversion Loans, Guarantees and Interest Rebates, European Regional
Development Fund Loans, New Community Investment Loans, Additional
Financing from FIS and CAPA, Withdraw and Recover Order, and Grants in the
Form of Interest Rebates (Redemption Preminums)).
6. Countervailing Duty Order and Amendment to Final Affirmative
Countervailing Duty Determination: Certain Steel Products From France, 58 FR 43759
(August 17, 1993), as amended, Certain Steel Products From France; Notice of
Court Decision and Suspension of Liquidation, 63 FR 1827 (January 12, 1998). After
the Department's final determination, the International Trade Commission
determined that imports of certain hot-rolled carbon steel flat products,
certain cold- rolled carbon steel flat products, and certain cut-to-length carbon
steel plate from France did not injury the domestic industry. See Certain Flat-
Rolled Carbon Steel Products From Argentina, Australia, Austria, Belgium,
Brazil, Canada, Finland, France, Germany, Italy, Japan, Korea, Mexico, the
Netherlands, New Zealand, Poland, Romania, Spain, Sweden, and the United Kingdom,
58 FR 43905 (August 18, 1993). Consequently, the order applies to only
corrosion- resistant steel.
7. Ispat Inland Inc. is a wholly owned subsidiary of Ispat
International N. V. of the Netherlands; L-SE is 60% owned by a subsidiary of LTV Steel
Company, Inc. and 40% owned by Sumitomo of Japan; NKK of Japan owns 68.8% of
National Steel's voting stock; USS-Posoc is owned 50% by USX and 50% by
Pohang Iron and Steel of Korea; and PRO-TEC Coating Company is owned 50% by USX and
50% by Kobe Steel of Japan. (See the domestic interested parties' September 10,
1999, intent to participate at ATTACHMENT 2.)
8. Due to a fire, the Department was forced to close its operation
on October 1, 1999 (Friday), which was the deadline for filing substantive
response for this review. Thus, the domestic interested parties timely filed their
substantive response on October 4, 1999.
9. See footnote 1, supra. Although it does not so explicitly state,
the GOF also participated in the original investigation.
10. On September 20, 1999, the domestic interested parties submitted
a letter requesting a nine-day extension in the period of time in which to
file rebuttal comments to substantive response(s). The Department extended the
deadline until October 15, 1999, for all participants eligible to file rebuttal
comments.
11. See Extension of Time Limit for Final Results of Expedited Five-
Year Reviews, 64 FR 71726 (December 22, 1999).
12. The Department determined that Usinor merely channeled
contributions to the areas in order to assist in retraining of personnel who had lost
their job rather than that Usinor was being relieved of any obligations with
respect to the SODIs. (See footnote 1, supra.)
13. The domestic interested parties also argue that the Department
failed to adequately explain, in the original investigation, why it determined
that the GOF's funds with respect to SODIs did not go to support Usinor's steel
production.
14. See domestic interested parties substantive response at 6 - 7 and
Attachment 5.
15. See footnote 13 infra.
16. See Final Affirmative Countervailing Duty Determination:
Stainless Steel Sheet and Strip in Coils From France ("sheet and strip in coils"),
64 FR 30774 (June 8, 1999); and Preliminary Affirmative Countervailing Duty
Determination and Alignment of Final Countervailing Duty Determination With Final
Antidumping Duty Determination: Certain Cut-to-Length Carbon-Quality Steel Plate
From France ("cut-to-length plate"), 64 FR 40430 (July 26, 1999). The
domestic interested parties are urging the Department to incorporate its
findings in other countervailing duty investigations pertaining to different
subject merchandise into the instant review.
17. On December 18, 1996, European Union rendered Commission
Decision 2496/96 of December 18, 1996 ("the EC Decision") which entered into force on
January 1, 1999. The EC Decision prohibits its member countries from granting
aid to the steel industry except in three distinct circumstances: factory
closures, justifiable environmental reasons, and research and development
motives. (See substantive responses of the EC or GOF.)
18. The GOF and EC indicate that, in recent countervailing duty
investigations, the Department found subsidy rates of 5.38% (final
results of sheet and strip in coils) and 5.42% (preliminary determinations of
cut-to- length plate) for Usinor. (See footnote 13, supra.)
19. Particularly, the Department did not receive a substantive
response from Usinor, which is the only known exporter of the subject merchandise.
(See footnote 2, supra.) (As noted earlier, the Department received
substantive responses only from respondent governments, the GOF and the EC.)
20. See footnote 14, supra.
21. See page 4 of GOF's substantive response and footnote 17, supra.
22. We do not agree that an arm's length, fair market value
privatization automatically eliminates prior subsidies. Our practice is squarely
to the contrary. We note that in Delverde SrL v. United States, Appeal No.
99-1186 (Fed. Cir. Feb.2, 2000), the U.S. Court of Appeals for the Federal
Circuit recently ruled that the Department may not presume that non-
recurring subsidies survive a private-to-private transfer of a subsidized company's
ownership. To the extent that the Federal Circuit's ruling may be relevant to the
instant order, that decision is not final and conclusive. Specifically,
under the Federal Rules of Appellate Procedure, the time for petitioning for
rehearing in banc, or appealing, has not yet run, nor has the Federal Circuit
issued a mandate. Furthermore, we do not consider that a recent WTO panel
report, United States - Imposition of Countervailing Duties on Certain Hot-rolled
Lead and Bismuth Carbon Steel Products Originating in the United Kingdom,
Report of the Panel (WT/DS138/R), dated 23 December 1999, appeal pending under AB-
2000-1, requires the Department to alter its approach to privatization in
the instant proceeding. Because the panel report is on appeal to the WTO's
Appellate Body and therefore has not been adopted by the WTO's Dispute Settlement
Body, the United States has no obligation with respect to the panel report,
and it is premature to consider what obligations, if any, the panel report may
impose on the United States. Even if it were not premature for us to
reconsider our approach to privatization in light of the panel report, and it were
otherwise appropriate to do so, 19 U.S.C. § 3533(g)(1) provides that a
regulation or practice may not be amended, rescinded, or otherwise modified in the
implementation of such report unless and until very specific statutorily
mandated actions have been fulfilled and the appropriate congressional
committees have been consulted.