82-927

NOTICES

DEPARTMENT OF COMMERCE

Final Affirmative Countervailing Duty Determination: Carbon Steel Wire
Rod From France

Monday, September 27, 1982

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AGENCY: International Trade Administration, Commerce.

ACTION: Final Affirmative Countervailing Duty Determination: Carbon Steel Wire Rod
from France.

SUMMARY: We have determined that certain benefits which constitute subsidies within
the meaning of the countervailing duty law are being provided to manufacturers,
producers, or exporters in France of carbon steel wire rod, as described in the "Scope of
the Investigation" section of this notice. However, the estimated net subsidy for
Normandie on wire rod is de minimis. Therefore, the suspension of liquidation ordered in
our preliminary affirmative countervailing duty determination concerning wire rod
from Normandie shall be terminated. All estimated countervailing duties shall be
refunded and all appropriate bonds shall be released. The estimated net subsidy for
Sacilor is indicated under the "Suspension of Liquidation" section of this notice. The U.S.
International Trade Commission (ITC) will determine within 45 days of the publication of
this notice whether these imports are materially injuring, or threatening to materially
injure, a U.S. industry.

EFFECTIVE DATE: September 27, 1982.

FOR FURTHER INFORMATION CONTACT: Nicholas C. Tolerico, Office of Investigations,
Import Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230,
telephone: (202) 377-4036.

SUPPLEMENTARY INFORMATION:

Final Determination

Based upon our investigation, we have determined that certain 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 France of carbon
steel wire rod, as described in the "Scope of Investigation" section of this notice. The
following programs are found to confer subsidies:
Preferential financing including equity infusions

Grants

Certain labor-related aid

Research and development
We determine the net subsidy to be the amount indicated for each firm in the "Suspension
of Liquidation" section of this notice.

Case History

On February 8, 1982, we received a petition from counsel for Atlantic Steel Corp.,
Georgetown Steel Corp., Georgetown Texas Steel Corp., Keystone Consolidated, Inc., Korf
Industries, Inc., Penn-Dixie Steel Corp., and Raritan River Steel Co., filed on behalf of the
U.S. industry producing carbon steel wire rod. The petitioners alleged that certain
benefits which constitute subsidies within the meaning of section 701 of the Act are being
provided, directly or indirectly, to the manufacturers, producers, or exporters in
France of carbon steel wire rod. Counsel for petitioners alleged that "critical
circumstances" exist, as defined in section 703(e) of the Act. We found the petitions to
contain sufficient grounds upon which to initiate a countervailing duty investigation,
and on March 1, 1982, we initiated a countervailing duty investigation (47 FR 5739).
Since France is a "country under the Agreement" within the meaning of section 701(b) of
the Act, an injury determination is required for this investigation. Therefore, we notified
the ITC of our initiation. On March 26, 1982, the ITC preliminarily determined that there
is a reasonable indication that imports of carbon steel wire rod from France are
materially injuring, or threatening to materially injure, a U.S. industry (47 FR 13927). We
presented questionnaires concerning the allegations to the Delegation of the Commission
of the European Communities and to the government of France in Washington, D.C. On
May 7, 1982, we received the responses to the questionnaires. A supplemental response
was received on may 25, 1982. On July 8, 1982, we issued our preliminary determination
in this investigation (47 FR 30553). This stated that the government of France was
providing its manufacturers, producers, or exporters of carbon steel wire rod with
benefits which constitute subsidies. The programs preliminarily determined to bestow
countervailable benefits were:

Export credit insurance

Preferential financing including equity infusions

Grants

Regional development incentives

Certain labor-related aid

ECSC worker housing loans

Research and development

Scope of the Investigation

For the purpose of this investigation, the term "carbon steel wire rod" covers a coiled,
semi-finished, hot-rolled carbon steel product of approximately round solid cross
section, not under 0.02 inch nor over 0.74 inch in diameter, not tempered, not treated,
and not partly manufactured, and valued over 4 cents per pound, as currently provided
for in item 607.17 of the Tariff Schedules of the United States.
Societe des Acieries et Laminoirs de Lorraine ("Sacilor"), Socie>= 1te
Metallurgique de Normandie ("Normandie"), and Union Siderurgique du Nord et
de l'Est de la France

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("Usinor") are the only known producers in France of the
subject product exported to the United States.
The period for which we are measuring subsidization is the 1981 calendar year. Sacilor
and Normandie, which produced and exported carbon steel wire rod to the United States
in 1981, operate by calendar year. Usinor did not export carbon steel wire rod to the
United States in 1981, and therefore was not sent a questionnaire.

Analysis of Programs

In their responses, the government of France and the Delegation of the Commission of
the European Communities provided data for the applicable periods. Additionally, we
received information from Sacilor and Normandie.
Sacilor owns a substantial number of shares in Societe Lorraine de Laminage
Continu (Sollac), which produces steel products, but does not produce wire rod. Sacilor's
capital ownership of Sollac is 64.29 percent.
Sollac, in turn, owns 50 percent of Societe Lorraine et Meridionale de
Laminage Continu (Solmer), which also produces various steel products but not wire rod.
Benefits to Sacilor as a corporate entity except for loss coverage and debt cancellation are
allocated over the value of Sacilor's total steel sales, which include its share of Sollac's and
Solmer's production. Benefits to Sacilor for loss coverage and debt cancellation are
allocated over total corporate sales.
Mines de Soumont (Soumont) is Normandie's wholly-owned iron-mining facility. Soumont
sells its entire iron ore production to Normandie at cost. Soumont, therefore, does not
function as an independent, profit-seeking company, but instead exists only to provide an
essential raw material to Normandie. Therefore, preferential loans and grants to Soumont
constitute countervailable benefits to Normandie, and such benefits are allocated over
the total value of Normandie's steel production.
Throughout this notice, general principles and conclusions of law applied by the
Department of Commerce to the facts of the current investigation concerning carbon steel
wire rod are described in detail in Appendices 2-4, which appear with the notice of "Final
Affirmative Countervailing Duty Determination: Carbon Steel Wire Rod from
Belgium," in this issue of the Federal Register.
Based upon our analysis of the petition, responses to our questionnaires, and our
verification and oral and written comments by interested parties, we determine the
following:

I. Programs Determined To Confer Subsidies

We have determined that subsidies are being provided under the programs listed below to
manufacturers, producers, or exporters in France of carbon steel wire rod.

A. Preferential Financing Including Equity Infusions

Petitioners alleged preferential financing in the form of low-interest loans and loan
guarantees, and the conversion of accumulated debt into Loans of Special Characteristics.
A number of organizations of the French government and of the European Communities
(EC) have issued loans and/or loan guarantees to the French steel industry. The majority
of these loans were provided by the following institutions:

Fonds de Developpement Economique et Social (FDES)

Created by the French Parliament in 1955, FDES is a fund which provides loans to
businesses and corporations in order to further the French government's economic,
social, industrial, and regional development objectives. The fund, which is actually a line
item in the French government budget, is approved every year by Parliament.
As FDES is not an organization but rather a budgetary item, it is administered by the
Ministry of Finance. Loan applications are filed with the Ministry of Finance, but the
decision to issue a loan rests with the FDES Board, which is composed of government
ministers and career civil servants whose agencies are involved in economic policy.
A semi-public financial institution, Credit National, disburses FDES funds to
recipients approved by the Ministry of Finance (see discussion on Credit National
below).
FDES loans are always part of a global financial package, as other lenders, such as
government credit institutions and public and private banks, participate in the funding of
a project (an FDES loan never covers the entire cost of a project). Usually, loans are
secured by a mortgage or a pledge. We were advised by the government of France that
FDES lending rates were consistently lower than commercial rates.
There is some evidence which suggests that FDES loans are available to all industries and
regions. At verification, we requested French government authorities to provide sample
FDES loan applications and agreements, and to specify the criteria on which these loans
were actually granted. The French government was unwilling to provide this information.
In light of this refusal, we cannot conclude that these loans were generally available.
Therefore, we consider these loans to confer subsidies within the meaning of the
countervailing duty law to the extent that they were provided at preferential,
below-market rates.

Credit National (CN)

Credit National is a semi-public credit institution with special legal status, which
issues medium- and long-term loans to French industry, including the steel industry.
Loans funds are raised by offering bonds in the public marketplace. These bonds are
guaranteed by the government of France.
Credit National acted as the conduit through which FDES loans were granted to the
steel industry. The French government, either directly or through Cre>= 1dit National,
also guarantees some loans to the steel companies. In addition, Credit National has
participated in bank loans to the steel industry through means such as the provision of
rediscount privileges to the banks, which in effect constitute a guarantee.
In most cases, Credit National acts only as part of a loan syndicate. The terms of any
loans Credit National makes on behalf of the French government are set by the French
government. We verified that CN loans to the French steel industry were made with
government backing and that Credit National's operating budget is financed by the
French government.
There is some evidence suggesting that CN loans are available to all industries and
regions. At verification, we requested French government authorities to arrange a
meeting with CN officials, to provide sample loan applications, and to specify the criteria
on which these loans were actually granted. Since these requests were refused, we were
unable to establish that these loans were not given at the direction of the government of
France or that CN loans are generally available. Therefore, we consider these loans to
confer subsidies within the meaning of the countervailing duty law, to the extent that
they are provided at preferential, below-market rates. Similarly, we find the bank loans in
which Credit National participated to confer subsidies within the meaning of the
countervailing duty law to the extent that they were provided at preferential,
below-market rates.

*42424

Caisse des Depots et Consignations (CDC)

CDC is a government institution that invests funds deposited in the Caisses d'Epargne (the
French savings banks), pension funds, and insurance company deposits. CDC makes both
short- and long-term loans to various industries, including steel. During verification, we
requested an interview with CDC from French government officials, in order to determine
whether CDC loans were generally available. This request was refused. Therefore, we were
unable to establish that CDC loans were not given to the steel industry in particular at the
specific direction of the government. In light of the above, we cannot conclude that CDC
loans were generally available. Therefore, we consider these loans to confer subsidies
within the meaning of the countervailing duty law to the extent that they were
provided at preferential, below-market rates.

European Coal and Steel Community (ECSC) and European Investment Bank (EIB)
Loans and Loan Guarantees

For the reasons discussed in Appendix 3, ECSC industrial investment loans and
guarantees and EIB loans and loan guarantees confer countervailable benefits to the
extent that the loan was made at a preferential interest rate, or that the guarantee enabled
the loan recipient to obtain a preferential interest rate.

Groupement de l'Industrie Siderurgique (GIS)

GIS was founded in 1946 as a corporation whose sole shareholders were 45 steel
companies. The purpose of GIS was to raise money for capital projects of the steel
companies. By floating debt instruments in the public marketplace, GIS raised monies to
lend to the companies at a rate equal to the rate being paid on bonds issued to the public,
plus operating expenses. Five percent of the funds received were left on deposit with GIS
to cover individual steel company defaults. Funds were raised in France, other EC
countries, and abroad. GIS bonds are backed by unconditional guarantees of the
companies, with each company being liable to the bondholders for the sums loaned to it
by GIS. No loans have been issued by GIS since 1978, and no principal from previous
loans remained outstanding on the steel companies' books in 1981.

Specialized Financial Institutions

A number of private, cooperative financial institutions emerged after World War II to
raise capital for various sectors of French industry. By floating bond issues, these
cooperative institutions raised capital and made loans to their member companies,
including steel companies. Since 1978, none of these institutions has floated bonds or
loaned funds to the steel industry. These institutions include:
--Groupement Interprofessionnel Financier Antipollution (GIFIAP): environmental
protection;
--Groupement pour le Financement de la Region de Fos (GIFOS): development of the
Fos area near Marseille;
--Groupement des Industries de Materiaux de Construction (GIMAT): construction
materials;
--Groupement pour le Financement des Economies d'Energie (GENERCO): energy
conservation;
--Groupement d'Equipement pour le Traitement des Minerais de Fer (GETRAFER):
processing of iron ore.
Because these are private, cooperative institutions that issued loans at non- preferential
rates, we find that those loans issued prior to 1978 with principal still outstanding in 1981
do not confer any countervailable benefits.
Our treatment of loans and loan guarantees provided at preferential rates by FDES,
Credit National, bank syndicates in which Credit National participated, CDC, the
ECSC and the EIB is outlined in sections d (i) and (ii) below. Because loans from the GIS
and the other specialized financial institutions were not issued after 1978, we did not find
them countervailable except when they were converted into Loans of Special
Characteristics ("Pre>= 3ts a Caracteristiques Speciales" or PACS), as outlined
in section d (iii).
We have discussed preferential financing conferred upon Normandie and Sacilor
separately as follows:
1. Sacilor. a. The 1978 Rescue Plan. By 1978, the French steel industry had been
experiencing severe financial difficulties for a number of years. Sacilor was unable to pay
its debts. In September 1978, the government of France instituted a major
recapitalization and restructuring program for the steel industry, hereinafter referred to
as the "Rescue Plan."
A primary financial goal of the restructuring was the reduction of the company's debt
service burden. This was accomplished in three ways.
First, the banks refunded a certain amount of interest to Sacilor over a five- year period
beginning in 1978. Because these refunds were provided under the government-directed
Rescue Plan, and were grants to a specific enterprise, we determine that they confer
countervailable benefits. For our treatment of these refunds, refer to section d(iv).
Second, the private holding company Marine-Wendel cancelled a portion of Sacilor's
debt. Because this forgiveness of debt was provided at the direction of the government,
we determine that it confers a countervailable benefit. For our treatment of this debt, see
section d (v).
Third, the loans from Credit National, FDES, the Caisse des Depots et
Consignations, the GIS, and the other specialized financial institutions, were also
converted into PACS. Marine-Wendel converted a portion of its loans to Sacilor into
PACS. The PACS bear an interest rate of 0.1 percent until 1983, when they are scheduled
to be renegotiated. Principal repayments are suspended until 1983 or whenever the
company returns to profitability, whichever is sooner. In addition to the initial 1978
conversions, PACS were also issued between 1979 and 1981. Under the Rescue Plan,
Sacilor services both the PACS and other debt owed to Marine-Wendel, CDC, and the
FDES. The French government created two institutions to service the debt, including
PACS, owed to the remaining lenders. These Institutions are the Caisse d'Amortissement
pour l'Acier (CAPA), and the Groupement des Emprunts Collectifs de la Siderurgie
(GECS).
CAPA was created to service the debt owed to Credit National, the GIS, and the other
specialized financial institutions. CAPA was initially funded by the French government,
state-owned institutional investors, and the Caisse Des De>= 1pots et Consignations.
CAPA services the debt through interest payments on PACS, loans from the French
Treasury, and borrowings on the financial markets, which are guaranteed by the French
government.
The GECS was created because the French government determined that the holders of
bonds issued by the GIS and the other specialized financial institutions should be
protected from losses. CAPA reimburses the GECS with the funds it has raised as
described above. The GECS then makes principal and interest payments to the
bondholders.
Because the PACS were created under the government-directed Rescue Plan and are
specific to the steel companies, we find that they confer countervailable benefits. Our
treatment of these PACS is outlined in section d(iii).
b. Equity Infusions. Two equity infusions were made in Sacilor through which the French
government became a shareholder in the company. The first

*42425

infusion was made
in 1979 under the Rescue Plan, when funds were provided in exchange for stock by CDC,
the banks, GIS, FDES, and Credit National. The second infusion was made in 1981,
when PACS held by FDES were cancelled in exchange for stock.
Equity participation by the government is not a subsidy per se. Petitioners alleged,
however, that government infusions of equity into Sacilor were made at a time when these
infusions were not consistent with commercial considerations. We conclude that this, in
fact, was the case because of the critical financial condition of the company at the time the
infusions occurred (as described in the "Creditworthiness Issue" section below).
Therefore, a subsidy potentially exists.
Because the providers of the infusions received stock in exchange for cash, we calculated
average stock prices for the period preceding the infusions. We then compared the market
value of the new stock issued with the actual value to the company of the equity infusion.
Since the actual value was greater than the market value, we determine that the equity
infusions conferred a countervailable benefit. The difference is considered to be a grant
and is allocated over 15 years, the average useful life of capital assets (see grants section
in Appendix 2). For our treatment of equity infusions, refer to section d (iv) and (v)
below.
c. Creditworthiness. Petitioners alleged that Sacilor is uncreditworthy. In our preliminary
determination, we found that, for purposes of this investigation, Sacilor became
uncreditworthy by the end of 1975. Upon further examination of the relevant data, we
determine that, although Sacilor had a deteriorating financial situation through 1977, it
was still in a position to obtain credit from private lenders on terms consistent with
commercial considerations without government involvement.
By 1978, Sacilor's financial situation had become so critical that the government of
France intervened with the Rescue Plan described above, under which most of Sacilor's
debt was converted into PACS. Our analysis of Sacilor's financial statements revealed a
pattern of significant operating losses each year from 1975 through 1981 (from a low of
FF 1.1 billion in 1979 to a high of FF 2.6 billion in 1981). Sacilor has had increasingly high
debt/equity ratios in every one of those years. In light of Sacilor's inability by 1978 to
raise funds without the French government's heavy involvement in the company, and the
continuing deterioration of the company's financial position, we consider Sacilor to have
been uncreditworthy since 1978 for the purposes of this investigation.
d. Calculation of Countervailable Benefits. Preferential loans and loan guarantees, PACS,
and equity infusions have been treated in the following five ways:

i. Preferential Loans and Loan Guarantees Issued Prior to 1978. The subsidy rate for any
loan and loan guarantee from CDC, FDES, Credit National, bank syndicates in which
Credit National participated, the ECSC, and the EIB that was made prior to 1978 for
which principal was still outstanding in 1981, and which was made at a rate below the
commercial benchmark for a comparable loan in the year of issue, is calculated according
to the general methodology for loans and loan guarantees outlined in Appendix 2. For
France, we used as the commercial benchmark the monthly financial statistics on
secondary market yields of private bonds published by the Organization for Economic
Cooperation and Development (OECD). For the discount rate, we used the average annual
yield of public and semi-public sector bonds on the secondary market as published by the
OECD. Using the method outlined in Appendix 2, we computed a subsidy of 0.000
percent ad valorem for Sacilor.

ii. Preferential Loans and Loan Guarantees Issued Since 1978. Because we consider
Sacilor to have been uncreditworthy since 1978, loans and loan guarantees issued since
then by CDC, FDES, Credit National, bank syndicates in which Credit National
participated, the ECSC, and the EIB, with principal still outstanding during 1981, are
treated as loans to a company considered to be uncreditworthy. Using the equity
methodology for loans to uncreditworthy companies (see Appendix 2), we compared the
national average rate of return on equity in France with the rate realized in 1981 by
Sacilor on its investments. To prevent countervailing a higher amount than if the loan had
been an outright grant to the company, we compared the 1981 benefit of these loans
under the equity methodology used for loans to uncreditworthy companies, with the
result under the grant methodology described in Appendix 2. We computed a subsidy of
1.791 percent ad valorem.

iii. Loans and Loan Guarantees Converted into PACS. The benefits of Sacilor's PACS were
calculated using the equity methodology for loans to uncreditworthy companies as
described in part (b) above and as outlined in Appendix 2. In calculating the benefit of
loans that were converted into PACS, we did not include those PACS that were
subsequently cancelled in exchange for stock. These are discussed in section d (v) below.
We calculated a subsidy rate of 6.450 percent ad valorem.
iv. Loss Coverage. Since the cash infusions in exchange for stock and the interest refunds
are not tied to capital assets or explicitly earmarked, we consider these funds available to
cover cash-based losses.
We assume that when a company running large cash-based losses receives funds, these
funds will be used to meet immediate obligations such as wages, materials, and interest
expenses, which are items normally expensed in one year. Based on the above, we are
expensing the funds in the year in which they were received to cover the losses of the
previous year.
We calculated the annual cash losses as explained in Appendix 2, and compared the funds
received to the previous year's losses. In making this comparison, we considered interest
refunds before the cash infusions in exchange for equity.
For those years in which the amounts received exceeded losses, except 1981, we treated
the excess as follows:

In the case of interest refunds, we treated the excess as a grant and allocated it over
15 years, the average useful life of capital assets;

In the case of cash infusions made in 1979 in exchange for stock, we calculated
average stock prices for the period preceding the infusions (because the providers of the
infusions received stock in exchange for cash). We then compared the market value of the
new stock issued with the actual value to the company of the equity infusion. As the
actual value was greater than the market value, we treated the difference as a grant and
allocated it over 15 years, the average useful life of capital assets (see grants section in
Appendix 2).
For 1981, the period for which we are measuring subsidization, we treated the entire
amount as a grant for loss coverage, and expensed it in the year received.
We calculated the 1981 countervailable benefits, and allocated them over the total value
of Sacilor's sales to calculate an ad valorem subsidy rate of 0.183 percent.

v. Cancellation of Debt. In 1978, pursuant to the government-directed Rescue Plan,
Marine-Wendel cancelled part of Sacilor's debt. Because it did not receive anything in
return for this

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cancellation, we treated the amount cancelled as a grant, and
allocated it over 15 years, the average useful life of capital assets (see grants section in
Appendix 2).
At the end of 1981, the government of France cancelled PACS owed to it by Sacilor in
exchange for additional shares in Sacilor. At that time, the government's share of
ownership reached approximately 90 percent. As stated above, Sacilor has been
uncreditworthy since 1978. Therefore, it is doubtful that the government's action was
consistent with commercial considerations.
Since Sacilor's stock was traded on the Paris Bourse at the time the French government
announced its intention to cancel its PACS for equity (see equity section in Appendix 2),
we calculated average stock prices for the period immediately preceding the
government's action. We then compared the average stock price with the actual value to
the company of the government's equity infusion. As the actual value was greater than the
market value, we treated the difference as a grant and allocated it over 15 years, the
average useful life of capital assets (see grants section in Appendix 2). We then applied the
1981 net benefit over the value of all sales, and computed an ad valorem subsidy of 4.845
percent.
2. Normandie. The subsidy amounts for loans made by FDES, Credit National and the
ECSC to Normandie, at rates below the commerical benchmark for a comparable loan in
the year of issuance and still outstanding in 1981, are calculated according to the
methodology outlined in Appendix 2 in the section dealing with preferential loans and
loan guarantees for creditworthy companies. We compared what Normandie would have
paid in 1981 on a comparable commercial loan with what the company actually paid on
preferential loans in that year. To determine what Normandie would have paid on a
comparable commercial loan, we used as the commercial benchmark the monthly
financial statistics on secondary market yields of private bonds published by the
Organization for Economic Cooperation and Development (OECD). For the discount rate
we used the average annual yield on the secondary market of public and semi-public
sector bonds as published by the OECD. Accordingly, we found a subsidy of 0.283 percent
ad valorem.

B. Grants

In 1980, the French government authorized a grant to Normandie which was apparently
tied to the industrial use of the LBE process converter. Funds were received by
Normandie in 1981. Because the amount authorized and received was less than $50
million, we allocated the grant over the average useful life of capital assets as explained in
Appendix 2 and allocated the 1981 amount over Normandie's total steel production to
calculate an ad valorem subsidy of .001 percent.

C. Certain Labor-Related Aid: Sacilor

French corporations have certain statutory and contractual obligations to pay severance
to their employees in case of interruption or cessation of employment. There are several
French government early retirement plans designed to compensate for the effects of
large-scale layoffs. The plan designed to cover all industries is the Fonds National de
1'Emploi (FNE). Because of the significant problems faced by the steel industry with
respect to restructuring, early retirement and layoff agreements were negotiated between
certain steel companies and the labor unions.
These are the Convention de Protection Sociale of June 1977 (CPS), which applies to
engineers and executives of the steel industry, and the Convention Generale de
Protection Sociale of July 1979 (CGPS), which applies to all other steel industry workers.
Under these special steel agreements, workers laid off between the ages of 55 and 60 must
retire. This is the "anticipated cessation of activity" plan which is financed in the same
manner as the FNE; that is, by government, employer, and employee contributions to the
unemployment fund, and government contributions financed by company payments.
Workers between the ages of 50 and 55 who are laid off fall under the "dispensation of
activity" plan. Under this plan, the workers are still under contract to the company but
their salaries are paid by the government. While the companies are under no contractual
or statutory obligation to pay wages to laid-off workers, they do have contractual and
statutory obligations to pay severance to laid-off workers. Since the workers who are laid
off at age 50 continue to receive wages, the companies' requiremrnt to pay severance is
deferred until the worker reach age 55. The benefit to the steel companies is the difference
between the liability accrued in each year for severance pay and the actual expense
incurred in each year for severance pay.
We considered this benefit to be a grant to Sacilor. Because the benefit is less than one
percent of the total value of 1981 steel production, and is tied to an item normally
expensed in one year, we allocated the 1981 benefit over the total value of Sacilor's 1981
steel sales, and calculated a subsidy rate of 0.947 percent ad valorem.

D. Research and Development (R&D)

Research and development for the French steel industry is conducted by the Institut de
Recherches de la Siderurgie Francaise (IRSID). IRSID was established by the
French steel companies, which underwrite the major portion of IRSID's budget. However,
according to IRSID's 1980 annual report, the French government contributed at least
three percent of IRSID's yearly budget, and the ECSC contributed ten percent.
At verification, w were not allowed to meet with IRSID officials and were not provided
with a 1981 annual report or any IRSID official documents. For this reason, and because
we were told that the results of IRSID research were not released to the public, and that
the research is industry specific, we consider that portion of IRSID's budget funded by the
government of France to be countervailable. However, we find that R&D funding
provided to IRSID by the ECSC is not countervailable, as the results of the ECSC-funded
research are made publicly available by the ECSC. To calculate the 1981 countervailable
benefit, we are using IRSID's 1980 annual report as the best information available. The
French government's share of IRSID's budget is 3 percent. We applied this amount to the
total value of 1980 French steel sales, because the benefits of the research were available
to all steel companies that are members of IRSID. We calculated a net subsidy for all
products and all companies of 0.007 percent ad valorem.

II. Programs Determined Not To Be Subsidies

We have determined that subsidies are not being provided under the following programs
to manufacturers , producers, or exporters in France of carbon steel wire rod.

A. Export Credit Insurance

The Compagnie Francaise d'Assurance pour le Commerce Exterieur (COFACE) is a
government corporation that provides export insurance to cover commercial, political,
exchange rate fluctuation and inflation risks. For our preliminary determination, we
reviewed COFACE's 1980 annual report (the most recent report available) and found that,
while the company showed an overall profit, its insurance activities operated at a deficit.
Revenues

*42427

from financial and real estate investments allowed COFACE to offset
the operating deficit on insurance. Our preliminary review of the annual reports for
1976-1980 revealed a pattern of yearly operating deficits on insurance activities that
were offset by revenues from investments. However, we reviewed the 1981 data and
verified that only the political risk program suffered losses, not the commercial risk
program. We also verified that premiums for COFACE's commercial risk insurance
program exceeded losses incurred by that program. Consequently, we have determined
that COFACE export insurance does not confer a subsidy with respect to exports to the
United States.

B. Vocational Training Assistance

We verified that the only vocational training assistance programs utilized by the
respondents during 1981 were provided through the European Social Fund (ESF), the
Fonds National de l'Emploi (FNE) and the Association de Formation de l'Est (AFOREST), a
regional training organization operating under the auspices of the regional Chamber of
Commerce and financed by dues from members.
In our preliminary determination, we assumed that these programs were aimed at
retraining steelworkers for jobs within the steel industry. However, we verified that the
vocational training programs are aimed at retraining workers for jobs other than steel
production. For those workers subsequently reemployed in the steel industry, we found
that they were reemployed in jobs not related to steel production. Therefore, we have
determined that these programs do not confer subsidies under the countervailing
duty law.

C. ECSC Worker Housing Loans

For the reasons described in Appendix 3, we reverse our preliminary determination that
these loans confer a subsidy on steel companies whose workers receive them, and
determine instead that they do not.

D. Certain Labor-Related Aid: Normandie

Normandie received labor assistance in the form of reimbursements from FNE for
payments to laid-off workers. Because assistance from FNE is generally available we
determine that it does not constitute a countervailable benefit.

E. Research and Development Assistance

Three government organizations provided a small amount of R&D funding to French steel
companies included in this investigation:

Agence Nationale de Valorisation de la Recherche (ANVAR): a public corporation
which is designed to support innovation and enhance research;

Direction Generale de la Recherche Scientifique et Technique (DGRST): a
subdivision of the Ministry of Research and Technology; and

Agence de l'Informatique (ADI): a public corporation which promotes the use of
computer technology.
We verified that R&D funding was not awarded on a regional or industry- specific basis,
and that research results were made publicly available. Therefore, we have determined
that the amounts received through these programs do not confer subsidies within the
meaning of the Act.

F. Energy Assistance

The French steel companies involved in this investigation received a few small grants
from the Agence pour les Economies d'Energie (AEE). The AEE is a government agency,
created in 1974, that provides grants to foster energy efficiency. Grants received from the
agency may have to be repaid if target efficiency levels are not met. Early in 1982, the
AEE was merged with several other agencies to form the Agence Francaise pour la
Maitrise de l'Energie (AFME). We verified that these grants were not provided on a
regional or industry-specific basis. Therefore, we have determined that the amounts
received from AEE by the steel companies included in this investigation do not confer
subsidies.

G. Regional Anti-Pollution Agencies

Created by Law No. 64-1245 of 1964, these regional agencies, known generally as
"Agences Financieres de Bassin," provide incentives for the installation of
anti-pollution devices. We believe that these programs are generally available, and do not
benefit a specific group of industries. The agencies' operations are funded by dues from
industrial users. In return, they award bonuses and loans to combat pollution.
In addition, the dues paid to these agencies by the steel companies involved in this
investigation exceeded the amounts that they received. For these reasons, we find that
the funds received do not confer subsidies.

H. Assistance to Improve Working Conditions

One of the steel companies involved in this investigation indicated that it had received a
small grant from the Agence Nationale pour l'Ameloiration des Conditions de Travail
(ANACT). ANACT is a public corporation, established in 1973, to promote better working
conditions. Because ANACT funds are not granted on a regional or industry-specific basis,
we find that the amounts provided do not confer subsidies.

I. Assistance to Coal Suppliers

In our preliminary determination, we found that subsidies to French coal producers did
not bestow a countervailable benefit upon the production, manufacture or exportation of
French steel.
Between the preliminary determination and this final determination, we analyzed and
verified aspects of the French coal subsidy program as it applies to steel. Based upon the
verified information in the records of this investigation, we find that this program does
not confer a countervailable benefit on French steel producers for the following reasons.
Benefits bestowed upon the manufacturer of an input do not necessarily flow down to the
purchaser of that input if the sale is transacted at arm's length. In an arm's length
transaction, the sellers generally attempt to maximize their revenue by charging as high a
price as the market will bear. Where the price charged in an arm's length transaction for a
subsidized input exceeds the market price for that input, we do not believe that any
portion of the subsidy flows to the purchasers of the subsidized input. On the other hand,
where the price of a subsidized input is lower than the market price, part or all of the
subsidy may well be used to allow the subsidized manufacturer to undercut the market
price. If so, then part or all of the subsidy does flow to the purchaser of the subsidized
input; without at least part of that subsidy the subsidized manufacturer could not
undercut the market price, and the purchaser would consequently pay the higher market
price to the unsubsidized manufacturers.
These principles apply to French coal sales as follows. We find that the price charged for
French coal does not undercut the market price. Absent special circumstances
warranting a contrary conclusion, French steel producers apparently do not benefit from
French coal subsidies as long as

*42428

the price for French coal does not undercut the
market price.
Further consideration is warranted, however, for one special circumstance. The
government of France directly or indirectly owns all French coal producers and
partially owns Sacilor. The issue arises whether transactions between them are conducted
on an arm's-length basis. We do not believe that government ownership per se confers a
subsidy, or that common government ownership of separate companies necessarily
precludes arm's-length transactions between them. To determine whether coal sales
between government- owned coal and steel producers appear to have been consummated
on arm's-length terms, we considered whether the government-owned coal producers
sold to the government-owned steel producers at the prevailing market price. We found
that French coal producers did charge the prevailing market prices. On this basis, we
conclude that coal subsidies were not conferred on steel producers as a result of
government ownership.
Regarding the allegation that the French steel industry indirectly benefits from German
government assistance provided to the coal industry in the Federal Republic of Germany,
we do not consider such assistance to confer a countervailable benefit on the French steel
industry for the reasons outlined in Appendix 2.
The ECSC provides various production and marketing grants to ECSC coal and coke
producers. However, we do not consider this assistance to confer a countervailable
benefit on the French steel industry for the reasons described in Appendix 3.

J. Relocation and Moving Benefits

A number of employees have been relocated from Sacilor, to Solmer's plant at
Fos-sur-Mer near Marseilles. The workers' relocation and moving expenses were initially
financed by advances from Sacilor to Solmer. The workers were reimbursed with ECSC
funds channeled through the Fonds National de l'Emploi (FNE), which were forwarded to
Solmer by the workers. Solmer in turn repaid Sacilor.
We have determined that because Solmer does not make the product under investigation
this transaction did not benefit the production of wire rod, and is therefore not
countervailable with respect to wire rod.

III. Programs Determined Not To Be Used

We have determined that the following programs which were listed in the notice of
"Initiation of Countervailing Duty Investigation" are not used by the manufacturers,
producers, or exporters in France of carbon steel wire rod.

A. Regional Development Incentives

The government of France provides a series of tax and non-tax regional incentives to
French and foreign businesses to establish new, or to expand existing, businesses in
certain French regions.
The Delegation a l'Amenagement du Territoire et a l'Action Re>=
1gionale (DATAR) coordinates the programs of various government agencies and
ministries. For incentive purposes, France is divided into four zones. Each zone, or part
of a zone, is eligible for different types or levels of assistance. The assistance includes
development grants, non-industrial grants, research and development grants,
decentralization indemnities, and job training subsidies.
We have no evidence that DATAR provided any benefits to the steel companies involved
in this investigation.

B. Special Fund for Industrial Adaption

Petitioners alleged that French steel companies received grants and preferential loans
through the Fonds Special d'Adaptation Industrielle (FSAI). FSAI was established in
1978 to promote job creation and industrial diversification in the steel, textile,
shipbuilding and coal regions of France. We have no evidence that the steel companies
included in this investigation received benefits from FSAI.

C. Export Financing

In France, exports may be financed or guaranteed through the Commission
Interministerielle des Garanties et du Credit au Commerce Exterieur and the
Banque Francaise due Commerce Exterieur (BFCE). We have no evidence that the
steel companies involved in this investigation availed themselves of any of these
programs.

D. European Regional Development Funds (ERDF)

This program is described in Appendix 3. We found no evidence that any company under
investigation received ERDF funds.

IV. Petitioners' Comments

Comment 1: Counsel for petitioners argue that a more thorough investigation should be
done with respect to Marine-Wendel's forgiveness of debt to Sacilor.
DOC Position: During verification, we requested additional information concerning
Marine-Wendel's actions in relation to the debt owed to it by Sacilor. We also reviewed
Marine-Wendel's participation in the Rescue Plan. Our determination in regard to
Marine-Wendel's actions is included in the "Preferential Financing" section of this notice.
Comment 2: Counsel for petitioners argue that all domestic subsidies in a country should
be countervailed, even if they are available to all industries.
DOC Position: See Appendix 4.
Comment 3: Counsel for petitioners argue that the time period to use in determining if
critical circumstances exist is the period before the petitions are filed.
DOC Position: See Appendix 4.
Comment 4: Counsel for petitioners argue that for purposes of critical circumstances
domestic subsidies should be considered in determining whether there is a subsidy
inconsistent with the Agreement.
DOC Position: See Appendix 4.
Comment 5: Counsel for petitioners allege that imports from France were "massive" in
the sense of section 703(e) of the Act.
DOC Position: See Appendix 4.
Comment 6: Counsel for petitioners argue that, in our preliminary determination, the use
of the same discount rate for creditworthy and uncreditworthy companies understates
the present value of the subsidy.
DOC Position: See Appendix 2.
Comment 7: Counsel for petitioners argue that ECSC subsidies to coal benefit French steel
companies and are therefore countervailable.
DOC Position: See Appendix 3.
Comment 8: Counsel argues that French government subsidization of coal producers
confers subsidies on French steel producers.
DOC Position: For the reasons indicated above in the "Assistance to Coal Suppliers"
section, we have determined that subsidies conferred by the French government on coal
producers do not pass through to steel producers.
Comment 9: Counsel for petitioners contends that the Department overestimated the
value of Sacilor shares received by the Government of France. Lacking the ability to
determine a realistic value of this stock, the Department should attribute no value
whatsoever to it.
DOC Position: We used Sacilor's stock market value as the best information available to
make a reasonable valuation of company shares, as discussed in Appendix 2.
Comment 10: Counsel for petitioners disagrees with our addition of Sollac's

*42429

and
Solmer's values of production in the calculation of ad valorem subsidies.
DOC Position: In our final determination we have used the total value of Sacilor's steel
sales, which includes Sacilor's share of Sollac's and Solmer's steel production, for subsidy
programs attributable to Sacilor's entire steel production. See Appendix 2.
Comment 11: Counsel for petitioners contends that any control which Sacilor has
exercised over Normandie since the initiation of the case should be reflected in this
determination.
DOC Position: At the moment, our best information is that Normandie has not yet
concluded an arrangement with Sacilor. If a merger does take place between Sacilor and
Normandie, however, Normandie will be assessed any wire rod deposit rate applicable to
Sacilor. A merger between Normandie and any other company would result in the
application of the "All Others" deposit rate to Normandie, which is equal to Sacilor's rate.
Comment 12: Counsel for petitioners asserts that benefits attributable to Sollac and
Solmer should be included in the rate for Sacilor because Sollac and Solmer produce
billets.
DOC Position: Our best information indicates that Sollac and Solmer do not produce
billets.

V. Respondents' Comments

Comment 1: Counsel contend that Credit National is not a government credit
institution, but a private bank subject to normal commercial practices, and that CN loans
and loan guarantees are not industry-specific.
DOC Position: We agree, as indicated in the section on preferential financing above, that
there is some evidence to suggest that Credit National loans are available to all
industries. However, the government of France would not provide us with the criteria on
which the loans were based. We were not allowed to meet with Credit National
officials or to view sample Credit National,loan applications. Therefore, we were not
satisfied that CN loans were not industry-specific, and that they were not subsidies.
With regard to Credit National's legal status, France's foremost authority in
administrative law, Professor Andre de Laubadere, states in his "Traite
Elementaire de Droit Administratif" (Librairie Generale de Droit et de
Jurisprudence, Paris, 1966, vol. 3):
(pp. 439-440)
"Un troisieme groupe d'organismes est constitue par les Instituts spe>=
1cialises que l'on denomme frequemment 'auxiliaires' ou encore 'allies' . . .
du Tresor et dont l'intervention est nee du fait qu'elle porte sur des secteurs dont
la rentabilite n'est pas suffisante pour attirer les credits bancaires. Mais ces
instituts sont eux-memes tres divers:
(* * *)
"D'autres sont des societes de droit prive, mais dotees d'un statut
particulier qui les soumet a un controle etroit de l'Etat et qui conduit a
les appeler generalement organismes para- ou semi- publics (Credit National,
etc.)."
(pp. 448-449)
"A cote des etablissments publics (* * *), on recontre des institutions
financieres specialisees qui jouent un role anologue et qui, quoique
privees, occupent encore une place dans les institutions de l'Etat-banquier parce
qu'elles servant egalement d'intermediaires ou relais pour le Tresor; elles
recoivent du reste, en raison de ce ro>= 3les, des dotations de l'Etat et comportent,
de sa part, des controles tre>= 2s particuliers qui les font qualifier d'organismes
'para-publics' ou 'semi- publics'.
"Ce sont notamment le Credit National (* * *).
"Le cas du Credit National est particulierement interessant car il * * * illustre
la montee du role bancaire de l'Etat.
"(* * *) le Credit National est devenu un instrument de financement de l'industrie par
des prets a long et moyen terme mais il est, a cet e>= 1gard, un moyen de
realiser une politique de prets des pouvoirs publics, un relais de l'Etat.
"Il en resulte un caractere complexe de cette institution aussi bien en ce qui
concerne sa structure que son role:
"En ce qui concerne sa structure, le Creit National est une societe anonyme de
droit prive dont le capital a ete souscrit par les principaux etablissements
de credit et par les plus importantes entreprises industrielles francaises. Mais
l'Etat possede des pre>= 1rogatives exorbitantes sur son organisation et son
fonctionnement: le pre>= 1sident du conseil d'administration et les deux directeurs sont
nommes par decret; deux des censeurs, charges des fonctions de
surveillance, sont nommes par le ministre des Finances et sont, en fait, le directeur du
Tre>= 1sor et les directeur de la Caisse des Depots.
"Quant a son role, le Credit National, s'il est une banque, est une banque
chargee d'une mission d'interet general. Ce trait est accentue par
l'importance actuelle du role du Creit National comme distributeur de fonds du
F.D.E.S. et comme auxiliaire de l'execution du Plan. Sans doute, certains prets
sont consentis par le Credit National sur sa seule decision, lorsqu'ils proviennent
de fonds propres; mais d'autres prets sont consentis soit apres avis
spontanement demande au Commissariat du Plan, soit sur decision
prealable du Conseil de direction du F.D.E.S.; ces derniers sont ceux qui sont
effectues a l'aide des fonds du F.D.E.S. transitant par le Credit National; ils
constitutent la partie la plus importante des operations de celui-ci."

(Translation)

(pp. 439-440)
"A third group of organizations comprises the Specialized Institutions, which are
frequently labelled as 'auxilaries' or 'allies' * * * of the Treasury, and whose intervention
was brought about by the fact that it bears on areas the profitability of which is
inadequate to attract bank loans. These institutions, however, are themselves very
diverse in nature:
(* * *)
"Others are private corporations under a special legal status that submits them to tight
state control and causes them to be generally referred to as par- or semi-public
organizations (Credit National, etc.)."
(pp. 448-449)
"In addition to public entities (* * *), one also encounters specialized financial institutions
which play a similar part and which, although they are private, also fit within the
framework of the Banker-State because they also serve as intermediaries or relays for the
Treasury; besides, they receive, because of this role, funds from the State which entail
very particular controls by the State, which causes them to be called 'para-public' or
'semi- public' organizations.
"Among these are Credit National (* * *).
"The case of Credit National is particularly interesting as it * * * illustrates the
ever-growing role of the State as a banker.
"(* * *) Credit National has become a financing instrument for industry through
medium- and long-term loans, but it is, in this regard, a means for the implementation of
the government's lending policy, a relay of the State.
"As a consequence, this institution presents complex characteristics as regards its
structure as well as its role: "With respect to its structure, Creit National is a private
corporation whose capital stock was subscribed by the principal credit institutions and
the largest French industrial corporations. The State, however, possesses exorbitant
rights of oversight with regard to its organization and activities: its president and both
executive directors are appointed by government decree; two of its four censors, which
supervise the organization's activities, are appointed by the Minister of Finance and are
actually the Director of the Treasury and the Director of the Caisse des Depots (et
Consignations).
With respect to its role, Credit National * * * is a bank entrusted with a mission of
general interest. This is emphasized by Credit National's role as a conduit for F.D.E.S.
funds and as an auxiliary to the implementation of the (Five-Year) Plan. It is true that
certain loans are granted by Credit National on its own, when they are backed by
Credit National's own funds; other loans, however, are granted either after seeking the
National Planning Board's opinion, either by a prior decision of the F.D.E.S. executive
board; the latter loans are those made with F.D.E.S. money transiting through Cre>= 1dit
National; they constitute the larger part of its operations."
These excerpts demonstrate that although Credit National is legally a private
corporation, it was created by a special law, the majority of its stockholders are
state-owned banks and financial institutions, and the

*42430

government of France
exercises tight control over Credit National's operations. Further, Credit National
does not make loans under purely commercial considerations and acts as an agent of the
government of France.
Comment 2: Counsel argue that FDES loans are not made on a regional basis, and
therefore are not countervailable.
DOC Position: As indicated above in the section on preferential financing, there is some
evidence to suggest that FDES loans are available to all regions. However, FDES is a
government fund administered by the French Treasury. The government of France
would not provide us with the criteria on which the loans were based. Therefore, we are
not satisfied that FDES loans were not regional and that they did not confer subsidies.
Comment 3: Counsel for Sacilor argues that the Rescue Plan was not instituted by the
government of France, but rather was the product of negotiations between Sacilor and
its creditors, and that because the Rescue Plan was consistent with rational commercial
policies, there were no countervailable benefits from either the PACS or other elements of
the Plan.
Counsel contend that the creditors acted reasonably, based on their conclusion that
Sacilor would return to profitability as a result of the Rescue Plan.
Counsel for Sacilor further contends that "Sacilor's borrowing capacity, and thence its
creditworthiness, was restored" as a result of the Rescue Plan.
DOC Position: We concur that the negotiations that led to the Rescue Plan included
Sacilor's creditors. However, this point is immaterial because the result of the
negotiations was substantial government intervention in the steel companies' financing,
which was the intent of the creditors. Further, normal commercial considerations do not
usually involve government intervention to the extent of the Rescue Plan.
With respect to the second argument, the creditors' forecast of return to profitability
hinged on the guarantees given by the government of France that the steel companies
would be relieved of the responsibility of servicing their debt. Those circumstances are
not consistent with commercial considerations.
With regard to the Rescue Plan, we are not in a position to determine its success or failure;
however, we do note that Sacilor continued to sustain persistent, heavy losses and show
unfavorable financial ratios in succeeding years when loans were made, up to the present
time. Therefore, for purposes of this investigation, Sacilor remains uncreditworthy.
Comment 4: Counsel contends that Sacilor is creditworthy because it received loans from
both nationalized and private banks through 1980.
Counsel for Sacilor argues that the Department should not have used hindsight in deciding
whether the lenders acted in accordance with commercial considerations.
DOC Position: In our preliminary determination, we found Sacilor to have been
uncreditworthy since the end of 1975. Upon further examination of the relevant data, we
determined that, although Sacilor had a deteriorating financial situation through 1977, it
was still in a position to obtain credit from private lenders on terms consistent with
commercial considerations without government involvement.
Even though Sacilor received loans from private banks after 1978, most of these loans
were given with express government guarantees, and thus are not evidence of the ability
of the firm to raise funds on its own, and several were made at the express request of the
government to the banks.
Beginning with the 1978 Rescue Plan, there has been an obvious pattern of French
government direction of funds into the steel industry. We judge that the funds poured into
Sacilor have been the result of French government targeting, and absent that targeting,
Sacilor could not have obtained the funds on an arm's length, commercial basis, in view of
the heavy persisting losses and the unfavorable financial ratios. Consequently, we
determine that Sacilor remained uncreditworthy from 1978 into the period for which
subsidies are being measured.
With regard to the hindsight argument, we reiterate that our assessment of the
creditworthiness of the companies for any given year is based on conditions at that time,
and not hindsight (see Appendix 2).
Comment 5: Counsel for Sacilor argues that, when PACS are properly viewed as equity,
the debt/equity ratio decreases to an acceptable level, and that PACS are at least as
valuable to the creditors as the loans that they replaced.
DOC Position: We consider the PACS to be debt, because they are actually called loans
("Prets a Caracteristiques Speciales"), bear interest, albeit at a very
special rate, and must be repaid when the recipients return to profitability. Accordingly,
they should not be included in the equity side of the debt/equity ratio. As discussed
earlier, we calculated the benefit of PACS using the equity methodology for loans to
uncreditworthy companies outlined in Appendix 2.
Comment 6: Counsel for Sacilor argues that premiums paid over market value of stock are
common in takeovers where the objective is to gain control over the company. Counsel
also asserts that the French securities market is notoriously inefficient because it is a thin
market, and cites four examples of premiums for stock in companies with losses.
DOC Position: We agree that in a commercial takeover by private investors, premiums
may be paid over the stock market price. However, in this instance we are not dealing
with a commercial undertaking, but rather with a French government nationalization of
the steel companies, which were not in a financial condition where a "control premium"
would be expected in a commercial context (see Appendix 2).
As described in Petitioner's Comment 9, we used Sacilor's stock market prices as best
information available to make a fair valuation of the company's shares, for the reasons
described above and in Appendix 2.
Comment 7: Counsel for Sacilor contends that Sollac's and Solmer's benefits should not be
aggregated with Sacilor's.
DOC Position: We agree with counsel. Neither Solac nor Solmer produces wire rod and
benefits to them are therefore not attributable to Sacilor's wire rod production. However,
benefits to Sacilor's total steel production were allocated over total steel sales; benefits to
the corporate entity as a whole (e.g., loss coverage) were allocated to Sacilor's total sales.
See Appendix 2.
Comment 8: Counsel for Normandie contends that COFACE's commercial risk and political
risk insurance programs should be considered separately, as the former operates at a
profit and the latter at a loss. Normandie's exports to the United States are insured under
the commercial risk program exclusively.
DOC Position: We agree with counsel's argument, and have taken it into account in section
II-A of this notice.
Comment 9: Counsel argues that, as Sacilor's obligation to pay severance to laid-off
workers is contractual rather than statutory, there can be no subsidy. He also contends
that Sacilor's contractual agreement was to serve as a conduit for government largesse.
DOC Position: We determine that the steel companies do have contractual and statutory
obligations to pay serverance to laid-off workers.

*42431

We agree with counsel for Sacilor that the companies have contractual
obligations to their workers. We find these contractual obligations to be legally binding.
We agree that the companies serve as conduits for the distribution of certain funds, and
we are not countervailing against them in this respect.
Comment 10: Counsel for Sacilor alleges that the interest rates chosen as benchmarks for
our preliminary determination often exceeded the official rates. Counsel argues that rates
in excess of those published by the OECD are arbitrary.
DOC Position: We are using the rates published by the OECD in this final determination.
Comment 11: Counsel for Sacilor asserts that our preliminary determination treats funds
received by Sacilor from FNE and AFOREST as subsidies. Counsel states that the funds
received from FNE for relocation and moving expenses and retraining of workers did not
benefit in any manner Sacilor. Sacilor was at no time under any legal or contructual
obligation to retrain these employees.
DOC Position: We agree that the retraining and relocation of workers did not provide any
benefits to Sacilor, for the reasons stated in section II-B and II- J of this notice.
Comment 12: Counsel for respondents assert that the allegedly new methodology used in
the preliminary determination should be rejected for failure to follow proper
administrative procedures.
DOC Position: See Appendix 4.
Comment 13: Counsel for respondents argue that the methodology used in the
preliminary determination to calculate the benefits of loans and equity infusions is
incorrect.
DOC Position: Neither counsel for petitioners nor counsel for respondents provided
convincing reasons for adopting their suggestions. For further information, see Appendix
2.
Comment 14: Counsel argue that the grants methodology which involves the imputation
of a future value designed to reflect the time value of money is a violation of the
prohibitions in Article IV, 3 of the GATT; Article IV, 2 of the Subsidies Code; and Section
701(a) and Section 703(d)(2) of the Act, against imposing countervailing duties in
excess of subsidies.
DOC Position: See Appendix 4.
Comment 15: Counsel argues that no standards have been articulated for determining
creditworthiness.
DOC Position: See Appendix 2.
Comment 16: Counsel contends that, because the Rescue Plan is akin to a Chapter XI
reorganization proceeding under U.S. bankruptcy law, it is not countervailable.
DOC Position: See Appendix 4.
Comment 17: Counsel for Sacilor argues that the assumption of financing costs is not
countervailable. Relying on the illustrative list of domestic subsidies contained in section
771(5)(B) of the Act, he argues that only the assumption of operational costs is
countervailable. In addition, he argues that because the accounting definition of
"operating costs" does not include interest- related revenues and expenses, we should not
countervail the provision by the government of funds which relieve a business of its
interest obligations.
DOC Position: We disagree. Any preferential absorption by a government of a cost of
doing business--be it wages, materials, taxes on income, or interest expenses--can give
rise to a subsidy, as recognized in subsection 771(5)(B)(iv) of the Act. We find that a
subsidy to relieve debt expenses is an assumption of a cost of manufacture, production,
or distribution within the meaning of subsection 771(5)(B)(iv), and is therefore
countervailable. Although subsection 771(5)(B)(iii) of the Act lists as an example of a
subsidy "funds * * * to cover operating losses," this illustrative example does not permit
us to ignore the language of subsection 771(5)(B)(iv).
Comment 18: Counsel for Sacilor contends that the success of GIS in floating bond issues
is proof of the creditworthiness of his client.
DOC Position: In his response to our questionnaire, counsel indicated that GIS has not
floated any issues nor made any loans since 1978, in our judgment the year Sacilor
became uncreditworthy.
In addition, Sacilor's GIS loans were converted to PACS because Sacilor was unable to
repay them under their original terms.
Comment 19: Counsel states that equity subsidies were accepted by Sacilor as a holding
company and not tied to any particular division or activity, and therefore should be
allocated over total consolidated revenues.
DOC Position: It is the Department's judgment that the 1981 equity subsidies were
conversions of loans tied to steel production, and consequently are allocated over total
value of steel production. However, 1979 equity subsidies were considered under loss
coverage and allocated over total sales.
Comment 20: Counsel maintains that because United States imports from Sacilor have
declined, and because no export subsidies were found, critical circumstances should not
be found to apply to his client.
DOC Position: For our determination regarding critical circumstances see the section
below.

Negative Determination of Critical Circumstances

Petitioners alleged that imports of carbon steel wire rod under investigation present
"critical circumstances." Under section 355.29 and 355.33(b) of the Department's
regulations, critical circumstances exist when the alleged subsidies include an export
subsidy inconsistent with the Agreement, and there have been massive imports of the
class or kind of merchandise which is the subject of the investigation over a relatively
short period.
We have not found any export subsidies in this investigation. Therefore, critical
circumstances do not exist in this investigation on carbon steel wire rod from France.

Verification

In accordance with section 776(a) of the Act, we verified the data used in making our final
determination. During this verification, we followed normal procedures, including
inspection of documents, discussions with government officials and on-site inspection of
manufacturers' operations and records.

Administrative Procedures

The Department has afforded interested parties an opportunity to present oral views in
accordance with its regulations (19 CFR 355.35). A public hearing was held on July 12,
1982. In accordance with the Department's regulations (19 CFR 355.34(a)), written views
have been received and considered.

Suspension of Liquidation

As explained in this notice, we have determined that no countervailable benefits are
being provided to Normandie, because the amount of the estimated net subsidy during
the period for which we are measuring subsidization is 0.291 percent ad valorem, which is
de minimis. The suspension of liquidation ordered in our preliminary affirmative
countervailing duty determination for Normandie shall be terminated upon
publication of this notice. All estimated countervailing duties shall be refunded, and
all appropriate bonds shall be released in accordance with � 355.33(g) of the Department
of Commerce Regulations (19 CFR 355.33(g)). The suspension of liquidation ordered in
our preliminary affirmative countervailing duty

*42432

determination for Sacilor
shall remain in effect until further notice. The estimated net subsidy is as follows:

----------------------------------------------------------------------------
Manufacturer/producer/exporter Ad valorem rate (percent)
----------------------------------------------------------------------------
Sacilor:
Carbon Steel Wire Rod ............................................... 14.223
Normandie:
Carbon Steel Wire Rod ................................................ 0.000
All Other Maufacturers/Producers/Exporters:
Carbon Steel Wire Rod ............................................... 14.223
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We are directing the United States Customs Service to require a cash deposit or bond in
the amount indicated above for each entry of the subject merchandise entered on or after
the date of publication of this notice in the Federal Register. Where the manufacturer is
not the exporter, and the manufacturer is known, the rate for that manufacturer shall be
used in determining the amount of cash deposit or bond. If the manufacturer is unknown,
the rate for all other manufacturers/producers/exporters shall be used.

ITC Notification

In accordance with section 705(d) of the Act, we will notify the ITC of our determination.
In addition, we are making available to the ITC all non- privileged and non-confidential
information relating to this investigation. We will allow the ITC 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 within 45 days of the publication of this notice whether these
imports are materially injuring, or threatening to materially injure, a U.S. industry. If the
ITC determines that material injury, or threat of material injury, does not exist, this
proceeding will be terminated and all securities posted or cash deposited as a result of the
suspension of liquidation will be refunded or cancelled. If, however, the ITC determines
that such injury does exist, within 7 days of notification by the ITC of that determination,
we will issue a countervailing duty order, directing Customs officers to assess
countervailing duty on carbon steel wire rod from France entered, or withdrawn
from warehouse, for consumption after the suspension of liquidation, equal to the net
subsidy determined or estimated to exist as a result of the annual review process
prescribed by section 751 of the Act. The provision of section 707(a) of the Act will apply
to the first directive for assessment.
Dated: September 21, 1982.

Lawrence J. Brady,

Assistant Secretary for Trade Administration.

[FR Doc. 82-26459 Filed 9-24-82; 8:45 am]

BILLING CODE 3510-25-M