65 FR 47407, August 02, 2000
C-428-817
Sunset Reviews
Public Document
MEMORANDUM TO: Troy H. Cribb
Acting Assistant Secretary
for Import Administration
FROM: Jeffrey A. May
Director
Office of Policy
SUBJECT: Issues and Decision Memo for the Sunset Reviews of the
Countervailing Duty Orders on Certain Corrosion-Resistant
Carbon Steel Flat Products; Cold-Rolled Carbon Steel Flat
Products; and Cut-to-Length Carbon Steel Plate Products
from Germany; Final Results
Summary:
We have analyzed the case and rebuttal briefs of interested parties in the
full sunset reviews of the countervailing duty orders covering certain
corrosion-resistant carbon steel flat products ("corrosion-resistant steel
products"), cold-rolled carbon steel flat products ("cold-rolled steel
products"), and cut-to-length carbon steel plate ("cut-to-length steel
products") (collectively referred to as "steel products") from Germany. 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 these sunset reviews for which we received
comments and rebuttals by parties:
1. Likelihood of Continuation or Recurrence of Countervailable Subsidy and Net
Countervailable Subsidy Likely to Prevail
Net countervailable subsidy
Changes in programs
Other factors Net countervailable subsidy from investigation
Adjustments to the subsidy
Nature of subsidy
Statute and Regulations:
These reviews are conducted pursuant to sections 751(c) and 752 of the Act.
The Department's procedures for the conduct of sunset reviews are set forth in
Procedures for Conducting Five-year ("Sunset") Reviews of Antidumping and
Countervailing Duty Orders, 63 FR 13516 (March 20, 1998) ("Sunset
Regulations"), and in 19 CFR Part 351 (1999) in general. Guidance on
methodological or analytical issues relevant to the Department's conduct of
sunset reviews is set forth in the Department's Policy Bulletin 98:3 - Policies
Regarding the Conduct of Five-year ("Sunset") Reviews of Antidumping and
Countervailing Duty Orders; Policy Bulletin, 63 FR 18871 (April 16, 1998)
("Sunset Policy Bulletin").
Background:
On March 27, 2000, the Department of Commerce ("the Department") published a
notice of preliminary results of the full sunset reviews of the countervailing
duty orders on steel products from Germany(1) pursuant to section 751(c) of the
Tariff Act of 1930, as amended ("the Act"). In the preliminary results, noting
that some countervailable subsidies have continued over the life of the orders
and that, in the aggregate, the rate which would likely prevail if the orders
were revoked for each German steel product is above de minimis, we
preliminarily determined that the countervailable subsidy on each order is
likely to continue or recur should the respective orders be revoked. In
addition, because the Department has not conducted any administrative reviews
of the orders, we relied on rates found in the investigation in preliminarily
determining the following net countervailable subsidies, expressed as an ad
valorem percentage, that are likely to prevail if the orders were revoked: for
corrosion-resistant carbon steel flat products, a country-wide rate of 0.54
percent; for cold-rolled carbon steel flat products, a country-wide rate of
0.55 percent; for cut-to-length steel plate products, 1.62 percent for
Salzgitter AG Stahl und Technologie ("Salzgitter"), 0.51 percent for Thyssen
Krupp Stahl AG ("TKS"), and 14.84 percent for a country-wide rate (including AG
der Dillinger Hüttenwerke ("Dillinger")).
On May 19, 2000, the Government of Germany ("GOG") submitted its case brief,
and the rest of the interested parties (both domestic(2) and respondent(3))
submitted their case briefs on May 22, 2000, within the deadline specified in
19 CFR 351.309(c)(1)(i). We also received rebuttal comments from the GOG on
June 2, 2000, and from both domestic and respondent interested parties on June
5, 2000, within the deadline specified in a Department Memorandum dated May 26,
2000.(4) The Department held a hearing on June 26, 2000.
Based on additional information(5) and our analysis of the comments received,
we have made changes to our preliminary results with respect to the net
subsidies that are likely to prevail if the orders were revoked. We have
addressed the comments received below.
Discussion of the Issues
In accordance with section 751(c)(1) of the Act, the Department is conducting
these reviews to determine whether revocation of the countervailing duty orders
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
orders are revoked. In addition, consistent with section 752(a)(6) of the Act,
the Department shall provide to the Commission information concerning the
nature of the subsidy and whether the subsidy meets the criteria set forth 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 rebuttals of interested parties.
Likelihood of Continuation or Recurrence of A Countervailable Subsidy and the
Net Countervailable Subsidy That Is Likely to Prevail if the Orders Were Revoked
Interested Party Comments
Comment 1:
With respect to cut-to-length steel products, the domestic interested parties
argue that, for purposes of conducting a full (240-day) sunset review, the
Department should determine, during the relevant period, whether Dillinger's
export volumes, on average, account for more than fifty percent of the total
exports of cut-to-length steel products from Germany and, thus, whether
Dillinger provided an adequate substantive response to the Department's notice
of initiation. If the Department agrees, they further argue that the Department
must conduct an investigation to determine whether Dillinger's substantive
response to the Department's notice of initiation is adequate to warrant a full
sunset review. (See the domestic interested parties' May 22, 2000, case brief
(cut-to-length steel products) at 1-5.)
Specifically, the domestic interested parties contend that, during the
relevant period, unlike Dillinger's claim that its export volume of cut-to-
length steel products accounted for more than fifty percent of the total
imports of the subject merchandise, according to Census Bureau IM146 reports,
Dillinger's export volume of cut-to-length steel products to the United States
accounted for only a small fraction of the total imports of the subject
merchandise. The domestic interested parties claim that, however, the
Department ignored the evidence contradicting Dillinger's claim without
justification and arbitrarily decided to proceed with a full sunset review
thereby violating their statutory and procedural due process rights in the
process. Therefore, the domestic interested parties argue that the Department
should investigate the adequacy of Dillinger's substantive response and that if
the Department, as a result, determines Dillinger's response inadequate, the
Department should make its final determination based solely on the calculated
margins from the investigation and domestic interested parties' substantive
response. Id.
In its rebuttal, Dillinger contends that the domestic interested parties
acknowledge that their category(6) of the total imports from Germany includes
products outside the scope of the order. Specifically, Dillinger claims that
because the scope section in the order merely lists all tariff subheadings,
under which the subject merchandise might be classified when imported, not all
merchandise entered under those tariff subheadings are within the scope of the
order. Dillinger contends, moreover, that the domestic interested parties fail
to identify any major German manufacturer of the subject merchandise that is
not participating in these reviews. Dillinger argues, therefore, that the
domestic interested parties' allegation that Dillinger's substantive response
is inadequate to warrant a full sunset review is merely speculation and that,
on the contrary, the Department received full responses from all the potential
German manufacturers of the subject merchandise which may export cut-to-length
steel products to the United States if the countervailing duty orders were
revoked.(7) (See Dillinger's rebuttal brief at 1-3.)
Department's Response
We do not agree with the domestic interested parties arguments. As stated by
Dillinger, the domestic interested parties admit that they do not know to what
extent non-subject merchandise is part of the total export volume of the cut-to-
length steel products listed in Census Bureau IM146 reports. Therefore, we
determine that it is inappropriate for us to reverse our adequacy determination
based upon the domestic interested parties' unsubstantiated allegation.
Furthermore, in these sunset reviews, even if we were to determine that
Dillinger's substantive response was inadequate, our decision to conduct full
sunset reviews of the orders would have been within our discretion. Although
the Department's regulations provide an opportunity for an interested party who
submitted a complete substantive response to comment on the Department's
decision not to conduct a full sunset review,(8) an interested party is not
invited to comment on the Department's determination to conduct a full sunset
review.
The principal rationale for this policy is the fact that an interested party
is not prejudiced because the Department conducts a more thorough, complete
sunset review of an order as opposed to conducting an abbreviated, expedited
sunset review.(9) Furthermore, the SAA at 880, provides that the determination
of adequacy is committed to the Department's discretion. Drawing guidance from
the SAA, section 351.218(e)(1)(ii)(A) of the Department's regulations explains
that the Department will make its determination of adequacy of responses on a
case-by-case basis. Therefore, although the Department will make a final
determination based on the facts available if it decides that it received
inadequate responses to a notice of initiation from respondents,(10) the
adequacy determination, itself, lies within the Department's (and, separately,
the Commission's) discretion.
Comment 2:
The GOG argues that it showed, in another proceeding,(11) that certain
programs - such as, Joint Scheme for Regional Improvement of Economic Structure
("Joint Scheme"), the Joint Scheme-Upswing East (based on the Investment
Allowance Act of 1991 and 1996) ("Upswing East"), and the Treuhandanstalt
Assistance ("TRA/BvS") - are not specific to the steel industry but available
to all companies operating in the relevant regions, are fully compliant with
the requisites of Article 8.2(b) of Subsidies Agreement and section 771(5B)(C)
of the Act and, therefore, are not countervailable. The GOG contends that,
consequently, the Department erred in the preliminary results of these sunset
reviews by not recognizing the non-actionable status of these programs. (See
the GOG's case brief at 2-3.)
Dillinger contends that the Joint Scheme, Upswing East, and TRA/BvS fulfill
the requirements for non-actionable status under Article 8.2(b) of the
Subsidies Agreement and 771(5B)(C) of the Act and that, therefore, in its final
results, the Department should find that no countervailable subsidy under these
programs is likely to continue after the end of the sunset reviews. (See
Dillinger's case brief at 31-37.)
The German Group argues that it, together with the GOG, reasonably assumed
that the Department would accept the GOG's statements that the Joint Scheme,
Upswing East, and TRA/BvS programs constitute non-countervailable, green-light
subsidies. The German Group further argues that, alternatively, it assumed that
the Department would expressly request submission of additional evidence to
support the GOG's statements if the Department decided to reject them. The
German Group contends that, instead, the Department preliminarily rejected the
GOG's statements without notice and without providing an opportunity for the
GOG to augment its record in support of its statements. The German Group states
that in the final result, based on the GOG's newly submitted extensive evidence
regarding these green-light programs, the Department should conclude that the
Joint Scheme and Upswing East(12) are non-countervailable green-light
subsidies.(13) (See the German Group's case brief at 26-27.)
The domestic interested parties claim that because "green-light" provisions
under Article 8 of the Subsidies Agreement and section 771(5B)(C) of the Act
expire at the end of June 2000, while the final results of these sunset reviews
are not due until July 27, 2000, and because the likelihood analysis is forward
looking, the Department must disregard the green-light provisions in the
context of these sunset reviews. The domestic interested parties further state
that if the Department considers the green-light provisions no longer
applicable, not only will the GOG's rationale that some of its programs are non-
actionable because they fall within the green-light exceptions vanish, but also
the GOG's expressed attempts, using green-light provisions, to subsidize more
industries in disadvantaged regions in the future would provide additional
evidence that continuation or recurrence of countervailable subsidies is likely
if the orders were revoked. (See the domestic interested parties' case briefs
regarding cut-to-length, cold-rolled steel products and corrosion-resistant
steel products at 8-10, 8-9, respectively.)
The GOG and Dillinger urge the Department to continue to consider the
applicability of green-light provisions in the instant sunset reviews. They
argue that even if the green-light provisions expire at the end of June 2000,
it is possible that the expiration date can be extended, retroactively, at a
later date. Alternatively, they contend that because the programs in question
have qualified for non-actionable status during the entire time when Article
8.2(b) of Subsidies Agreement and the Act were in force, these programs should
be grandfathered under the new law and not affected by possible expiration of
the provisions. Furthermore, while arguing that the regional grants to former
East German states have been quite small, they stresse the unique nature of the
regional assistance to former East German states which economically continue to
lag behind the rest of Germany at a significant level. (See the GOG and
Dillinger's rebuttal briefs at 3-4 and 5-8, respectively.)
In support of the GOG's argument pertaining to possible expiration of the
green-light provisions, the German Group claims that the Department cannot
conclude that the alleged non-actionable subsidies become actionable merely
because the provisions of U.S. law may expire at the end of June 2000. This is
especially true, according to the German Group, in light of the fact that, in
the Joint Report of the Office of the United States Trade Representative
("USTR") and the United States Department of Commerce on Subsidies Enforcement,
the Department and USTR indicated that the United States could extend the
deadline with respect to the green-light provisions. (See the German Group's
Reply Brief at 6-7.)
Department's Response:
The programs in question were determined to be countervailable by the
Department (August 17, 1993)(14) before the Act was entered into force (January
1, 1995)(15) and, as noted above, the Department has not conducted any
administrative review of the orders. As such, the Department has not had an
opportunity to consider whether the above programs with respect to the subject
merchandise would have qualified under the green-light provisions. In short, we
do not know whether the Joint Scheme and Upswing East programs with respect to
cut-to-length, cold-rolled, and/or corrosion-resistant steel products
manufactured by the German steel companies under consideration were non-
actionable under the green-light provisions of Article 8.2(b) of the Subsidies
Agreement while these provisions were in force. In addition, the GOG's
contention that the Department found the programs in question met the green-
light criteria, is not accurate.(16) During that proceeding, there were no
programs found to qualify under the green-light provisions. Finally, we note
that the GOG did not notify any of these programs to the WTO Subsidies
Committee under Article 8.3 of the Subsidies Agreement claiming that the
programs qualify for non-actionable treatment under the Subsidies Agreement.
Therefore, we do not need to address or resolve the question of whether the
green light provisions of U.S. law have any applicability to the final results
of these sunset reviews. In the absence of any administrative reviews of these
orders, in which the green light status of these programs under U.S. law could
have been determined, and in the absence of WTO notification of these programs
as non-actionable subsidies, we will not determine during a sunset proceeding
whether they would have qualified as non-actionable under the green-light
provisions.
Comment 3:
Dillinger claims that the Department's Sunset Policy Bulletin and Sunset
Regulations violate section 751(d)(2) of the Act and Article 21.3 of the
Subsidies Agreement and, consequently, the preliminary results, which relied
heavily on the Sunset Policy Bulletin and the Sunset Regulations, are contrary
to law. Dillinger argues that, whereas the Act and the Subsidies Agreement
provide for the automatic termination of a countervailing duty order after five
years while putting the burden upon the domestic interested parties to prove
otherwise (i.e., subsidization is likely to continue or recur), the Sunset
Policy Bulletin and Sunset Regulations put the burden upon respondents to prove
that a countervailable subsidy is not likely to continue or recur if the order
were revoked. According to Dillinger, the Department's applications of the
Sunset Policy Bulletin and Sunset Regulations in such a manner put respondents
in an untenable position because, simply put, one cannot prove a negative. (See
Dillinger's case brief at 1-3.)
Similarly the German Group claims that the Department should revoke an order
after five years, as Article 21.3 of the Subsidies Agreement and section
751(d)(2)(A) of the Act require, unless substantial evidence of record show a
subsidy at levels higher than de minimis would be likely to continue or recur
if the order is revoked. The German Group also contends that the Department's
final results of these sunset reviews should be reasonable in light of the
facts of the case. As such, the German Group claims that if the Department
finds that the likely-to-prevail subsidy rate is de minimis, it must determine
that the countervailable subsidy is not likely to continue or recur upon
revocation of the orders. The German Group claims that because the facts of the
instant reviews do not support the proposition that subsidization will continue
at rates higher than de minimis levels, the Department should find continuation
or recurrence of countervailable subsidy is not likely if the order were
revoked and, therefore, must revoke the countervailing duty orders on cold-
rolled and corrosion-resistant steel products from Germany. (See the German
Group's case brief at 1-30.)
With respect to Dillinger's arguments, the domestic interested parties contend
that, pursuant to section 351.218(d)(3) of the Sunset Regulations, respondents
are responsible for providing evidence and arguments regarding the likely
effects of revocation of the order and regarding the likely-to-prevail rate if
the order were revoked. The domestic interested parties further argue that the
Sunset Policy Bulletin and Sunset Regulations are simply asking respondents to
produce information that is within respondents' knowledge and control to
support and explain their arguments relevant to a sunset review. The domestic
interested parties claim that, therefore, the Department's policies,
regulations, and preliminary determination in these sunset reviews, which
stipulate that the Department will revoke the order unless a subsidy would be
likely to continue or recur if the order is revoked, are consistent with the
Act and the Subsidies Agreement. (See domestic interested parties' rebuttal
reply (cut-to-length steel products) at 1-5 and 26-29.)
Similarly, as to the German Group's arguments that (1) the Department should
revoke the orders if it finds the respective rate that is likely to prevail is
de minimis and (2) (because no administrative review has been conducted by the
Department) the Department must conclude that subsidies with a de minimis rate
in the investigation will likely terminate upon revocation, the domestic
interested parties contend that the combined subsidy rates above de minimis
found in the investigation, by themselves, are sufficient to establish a
likelihood of continuation or recurrence of subsidization if the orders were
revoked. The domestic interested parties' argument is based on the fact that
the Department did not conduct any administrative review and, therefore, absent
significant evidence to the contrary, they assert, the Department usually
selects the rate from the original investigation as the likely-to-prevail rate.
The domestic interested parties argue that, accordingly, the Department must
presume that a subsidy rate above de minimis would be likely to continue or
recur if the orders were revoked unless respondents successfully carry the
burden of providing evidence that higher than de minimis rates would not be
likely to prevail if the orders were revoked. (See the domestic interested
parties' reply brief (cold-rolled and corrosion-resistant steel products) at 3-
5 and 12-14.)
Department's Response
As we have indicated in the preliminary results, these sunset reviews were
initiated pursuant to section 751(c) of the Act which was enacted to conform
with the sunset provisions of the Subsidies Agreement. The relevant regulation
pertaining to sunset reviews is 19 CFR Part 351 (1999) and guidance on
methodological or analytical issues relevant to the Department's conduct of
sunset reviews is provided in the Sunset Policy Bulletin, which in turn drew
guidance from the legislative history accompanying the URAA (see section I
(Overview) of the Sunset Policy Bulletin). As such, in reaching our preliminary
results of these reviews, we followed (and, in completing our final results of
these reviews, we are following) the aforementioned rules and regulations.
The first paragraph of section I (Overview) of the Sunset Policy Bulletin and
the "Background" section of the Sunset Regulations, citing the Act, are
explicit: both explain that countervailing duty orders should be revoked after
five years unless revocation or termination of an order would be likely to lead
to a continuation or recurrence of a countervailable subsidy. In the Preamble
to the Department's Regulations, the Department did not agree with comments
which stated that there is an internationally agreed preference for the
revocation of old orders because it did not find a basis in either the Act or
the Uruguay Round Agreements Act ("URAA") for making a presumption one way or
the other. Instead, the Department explained that all that is required under
the URAA or the Act is that the Department and the Commission periodically
review an order to determine whether the maintenance of the order is necessary
to remedy injurious countervailable subsidization.(17) Therefore, we do not
agree with Dillinger's assertion that the Subsidies Agreement or U.S. law
creates a presumption in favor of revocation of the order. Thus, we also
disagree with Dillinger's claim that our Sunset Policy Bulletin, Sunset
Regulations, and the preliminary results are contrary to the Act and the
Subsidies Agreement.
The Sunset Policy Bulletin states that the Department has the responsibility
of determining whether revocation of a countervailing duty order would be
likely to lead to a continuation or recurrence of a countervailable subsidy. In
section III.A of the Sunset Policy Bulletin, the Department delineates a set of
factors and standards it employs in determining whether revocation of a
countervailing duty would be likely to lead to continuation or recurrence of a
countervailable subsidy. The Department also explains that these factors and
standards were drawn from the Act and legislative history.
Similarly, the Sunset Regulations specify what must be included in both
domestic and respondent interested parties' submissions to the Department's
notice of initiation of a sunset review in order for them to satisfy the
adequacy provision in the Act. In addition, the Sunset Regulations allow
interested parties to submit, as provided for in the Act, other information
relevant to the review if good cause for doing so is shown. Thus, we do not
agree with respondents that the Sunset Regulations and the Sunset Policy
Bulletin impose upon respondents (or upon the domestic interested parties for
that matter) any excessive or undue burden of proof. The Department merely asks
interested parties to provide information reasonably available to them to
support their respective positions.
Comment 4:
Dillinger contends that the procedures prescribed in the Sunset Regulations
and the Sunset Policy Bulletin are more restrictive than the Act and the
Subsidies Agreement intended, especially to respondent interested parties'
disadvantage, and that, therefore, the Sunset Policy Bulletin, the Sunset
Regulations, the Department's preliminary determination of these reviews
violate the Act and the Subsidies Agreement. Specifically, Dillinger claims
that, after waiting for the domestic interested parties to file their notice of
intent to participate, it had only 20-days to prepare and submit all of its
information in the sunset reviews. Considering the fact that the Department has
330 days to complete these sunset reviews, Dillinger argues that the Department
should be more flexible and open in accepting additional information submitted
by interested parties to reflect the specific facts of an individual sunset
review (e.g., Dillinger contends that the Department should have permitted
Dillinger to incorporate calculation memoranda from the original investigation
as a part of the record of the sunset reviews). (See Dillinger's case brief at
4-7.)
The domestic interested parties contend that Dillinger had over a year to
prepare its arguments and information for purposes of these sunset reviews
because the Department published a sunset-review schedule, including the orders
under consideration, on May 14, 1998. The domestic interested parties argue
that, consequently, it is only Dillinger's fault that the Department's
calculation memoranda from the original investigation is not a part of the
record of these sunset reviews. The domestic interested parties further claim
that although the calculation memoranda are subject to a judicial protective
order and, as such, the use of the confidential version of the calculation
memoranda is prohibited in this segment of the proceeding, Dillinger still
could have introduced the memoranda in these sunset reviews in some form (e.g.,
public version) had Dillinger submitted the information in a timely manner.
(See the domestic interested parties' rebuttal brief (cut-to-length steel
products) at 28-29.)
Department's Response:
As we have indicated in the Sunset Policy Bulletin and in the Sunset
Regulations, the Department is obligated to initiate sunset reviews for all
transition orders(18) between July 1998 and December 31, 1999, and to complete
those reviews by June 30, 2001. Based on this requirement, the Department
published a schedule for the initiation of sunset reviews of transition orders
on May 14, 1998. The Department also indicated that, pursuant to section
751(c)(1) of the Act, the initiation of sunset reviews is automatic. Thus,
Dillinger knew or should have known, well before the notice of initiation of
these reviews was published, that the Department would begin the present
reviews on September 1, 1999. Moreover, Dillinger did not make a timely request
for an extension of the deadlines for filing its evidence and arguments in
these reviews. Therefore, we disagree that the schedules and deadlines for
submission of information in these sunset reviews work to the disadvantage of
respondents in general or Dillinger in particular.
With respect to Dillinger's contention that the Department should have
included in the record of these sunset reviews the calculation memoranda the
Department prepared in the original investigation, we disagree. Insofar as
Dillinger could have submitted some version of the memoranda in the sunset
reviews, we determined that, in these sunset reviews, Dillinger did not file
the information in a timely manner.
Comment 5:
Dillinger contends that, for purposes of conducting a sunset review, the
Department's practice of not considering any changes or terminations of subsidy
programs, unless such changes or terminations were found in a previous review
of the order, creates an irrebuttable evidentiary presumption thereby unfairly
limiting the weight of its submitted information in the sunset reviews.
Dillinger argues that the Department's practice of requiring an administrative
review before it considers changes or terminations in a sunset review amounts
to making the request for and completion of an administrative review by
respondent de facto prerequisites, the practice of which is not supported by
either U.S. law or the Subsidies Agreement. (See Dillinger's case brief at 7-
9.)
Dillinger claims that there are many reasons for which a respondent may not
request an administrative review of a countervailing duty order: (1) a
respondent did not export the subject merchandise after the issuance of the
order (e.g., Thyssen and Salzgitter); and/or (2) a respondent cannot bear the
financial burden associated with requesting for and partaking in an
administrative review of an order especially when its court challenge to the
Department's final results of the investigation is still pending.(19) Dillinger
concludes that, therefore, the Department has good cause to consider the GOG
and EC's arguments that significant changes have been made in the subsidy
programs reviewed in the investigation although the Department has not
conducted any administrative review since the issuance of the order. Id.
Dillinger further argues that since the purpose of providing the Commission
the net countervailable subsidy is to inform the Commission of the rate that is
likely to prevail if the order is revoked, in its preliminarily results the
Department erred by relying exclusively on the rates from the 1991
investigation without taking account of possible diminution of benefits over
time. Id. at 10-12.
Similarly, the German Group argues that (although the Department has not
conducted an administrative review) in these final results, the Department must
reflect the termination of the CIG in determining the net subsidy rate that is
likely to prevail (the German Group assumes that the Department will conclude
the CIG is terminated without any residual benefits). In so doing, the German
Group contends that the Department should conclude that the combined benefit
from the rest of the countervailable programs will remain at a de minimis level
upon revocation of the orders. In support of their claim, the German Group
tabulates what they consider the rates that are likely to prevail if the orders
were revoked: the benefit attributed to (1) IPA would be a de minimis 0.02
percent and 0.00 percent for cold-rolled and corrosion-resistant steel
products, respectively, (2) Aid for Closure would be 0.04 percent and 0.06
percent for cold-rolled and corrosion-resistant steel products, respectively,
(3) ECSC 56 would be 0.07 percent and 0.08 percent for cold-rolled and
corrosion-resistant steel products, respectively, (4) ECSC 54 would be 0.02
percent and 0.00 for cold-rolled and corrosion-resistant steel products,
respectively, and (5) Joint Scheme and Upswing East are 0.00 percent for both
cold-rolled and corrosion-resistant steel products. The German Group contends
that, as a result, the combined subsidy rate for cold-rolled and corrosion-
resistant steel products would be only 0.15 percent and 0.14 percent,
respectively; consequently, the Department must revoke the orders. (See the
German Group's case brief at 23-25 and 28-29.)
The domestic interested parties argue that the Department's practice of not
considering terminations or changes of a program asserted for the first time in
a sunset review is not to create an irrebuttable presumption; rather, the
Department's practice is based on a statutorily mandated preference for
evidence that is fully investigated and verified by the Department in other
segments of a proceeding such as investigations, changed circumstance reviews,
new shipper reviews, or administrative reviews. The domestic interested parties
further claim that Dillinger could have requested a changed circumstances
review without actually shipping the subject merchandise or could have
requested an administrative review with only a token shipment of the subject
merchandise, but that Dillinger did neither. The domestic interested parties
contend that, as such, the Department's policies and regulations do not
constitute irrebuttable evidentiary presumptions; rather, the Department's
policies and regulations merely stipulate the Department's normal practice
which reflects the express intent of Congress and which allows arguments that
the application of them are inappropriate in a particular case. (See the
domestic interested parties' rebuttal brief (cut-to-length steel products) at
30-31.)
Department's Position:
Section III.B.3 of the Sunset Policy Bulletin explains that the Department
normally will provide to the Commission the net countervailable subsidy that
was determined in the final determination in the original investigation because
that is the only calculated rate that reflects the behavior of respondents
without the discipline of an order in place. At the same time, however, the
Department acknowledges that a rate from the investigation may not be the most
appropriate if, for example, subsidy programs, from which the rate was derived,
were found in subsequent reviews to be terminated or if there has been a
program-wide change. Thus, the Department is allowed to make adjustments to the
net countervailable subsidy determined in the original investigation in certain
situations, although section III.B.3(g) of the Sunset Policy Bulletin states
that the Department normally will not make adjustments to the net
countervailable subsidy rate determined in the original investigation when the
Department has not conducted an administrative review of the order. Therefore,
we do not agree with Dillinger that we created an irrebuttalble evidentiary
presumption simply because we have a strong preference for fully investigated
and verified information over uninvestigated and unverified information. (Also
see our position with respect to Comment 12, infra). This strong preference is
reasonable in light of the fact that, in a sunset review, unlike other segments
of a proceeding, we do not conduct investigations and only rarely conduct on-
site verifications;(20) that is, the process of a sunset review primarily
relies on the previously investigated and verified results from other segments
of the proceeding.
Moreover, Dillinger could have requested an administrative review with only a
single shipment of the subject merchandise, but it chose not to. Therefore, we
do not consider that Dillinger's arguments constitute a good cause for us to
consider, in the context of these sunset reviews, the GOG's and EC's
unsubstantiated claims that significant changes have been made in various
subsidy programs.
As to the German Group's claim that, for the respective subject merchandise,
the subsidy rate that is likely to prevail if the orders were revoked is de
minimis and that, hence, we should revoke the orders, we disagree. We do not
agree with their premise that the CIG is terminated without any residual
benefits (see the Department's position with respect to Comment 7, infra);
consequently, we disagree with the German Group's conclusion that the rates
that are likely to prevail for cold-rolled and corrosion-resistant steel
products are de minimis.
Comment 6:
Dillinger expresses its general concern about the Department's treatment of
interested parties' late submissions. Specifically, Dillinger contends that the
Department erred in rejecting Dillinger's March 14, 2000, and March 17, 2000,
submissions which were filed prior to the preliminary results.(21) Dillinger
further argues that (1) the domestic interested parties did not assert that
Dillinger's submissions were either untimely or should be rejected; (2) the
Department, in the preliminary results, accepted Dillinger's submissions to the
record of the sunset reviews by addressing the issues raised in the
submissions; (3) the Department returned the submissions and striked them from
the record more than 40 days after Dillinger made its submissions; (4) the
Department did not return and strike from the record, over Dillinger's written
objection, the domestic interested parties' November 9, 1999, submission,
despite the fact that it was submitted after the deadline for filing rebuttals,
and the fact that it contained new information concerning the adequacy of the
substantive responses made by the German manufacturers of the subject
merchandise; (5) the Department permitted the domestic interested parties'
March 16, 2000, response to Dillinger's March 14, 2000, submission to remain on
the record; and (6) the Department allowed the domestic interested parties to
submit new factual information as late as April 28, 2000. (See Dillinger's case
brief at 12-15.)
In addition, Dillinger contends that the Department should allow the German
manufacturers of the subject merchandise to make the calculation memoranda from
the original investigation a part of the record in the sunset reviews.
Dillinger argues that the Department should not apply the margin from the
original investigation without relying upon the calculation memoranda. Id. at
21-22.
The domestic interested parties argue that respondents did not provide
justification for their belated submission of documents. The domestic
interested parties further argue that respondents' suggestions that the
Department already accepted, considered, and did not reject their late
submissions and that, therefore, the Department cannot now strike those
documents from the record are without legal basis. The domestic interested
parties contend that the Department should strike all the untimely filed
documents by respondents; alternatively, the domestic interested parties argue
that the Department should allow the domestic interested parties a reasonable
time to submit rebuttal information to the record. (See the domestic interested
parties' rebuttal brief (cut-to-length steel products) at 31-34.)
The domestic interested parties also argue that (1) their November 9, 1999,
submission pertaining to the adequacy of respondents' substantive response was
permissible under the Department's Regulations, (2) their March 16, 2000,
submission did not contain any new information but only raised legal issues
regarding respondents' March 14, 2000, filing, and (3) their April 28, 2000,
submission, which was filed in response to respondents' April 13, 2000, filing
requesting the Department to add confidential information to the record of the
sunset reviews, contains public information to which respondents already made
reference in their October 15, 1999, rebuttal comments. Id.
Department's Position:
Although it is our practice to take an opposing party's arguments into
consideration when we determine whether a submission is timely or otherwise
acceptable, such arguments are not necessary for us to scrutinize a party's
submission. Thus, whether the domestic interested parties commented on
Dillinger's submissions is not crucial for the Department in determining that
Dillinger's March 14 and March 17, 2000, submissions were untimely.
We disagree with Dillinger's contention that the Department accepted
Dillinger's March 14 and March 17, 2000, submissions because the Department, in
the preliminary results, addressed the issues raised in those submissions. The
Department discussed certain issues in its preliminary determination because
either the issues were raised in interested parties' substantive responses,
rebuttal comments, or the Department obtained the relevant information on its
own.(22) Therefore, in making its preliminary determination, the Department did
not accept or rely on Dillinger's March 14 and/or March 17, 2000, submissions.
Neither the statutes nor the regulations impose any time limit on the
Department's decision to return documents as untimely filed. Further, any delay
in returning Dillinger's March 14 and March 17, 2000, submissions did not in
any way prejudice Dillinger's efforts to prepare its case brief for the final
results.
The domestic interested parties' November 9, 1999, submission was not a late
submission. After the publication of the notice of initiation of a sunset
review, an interested party has 70 days to make comments on the Department's
adequacy determination.(23) Because the domestic interested parties' submission
commenting on the Department's decision to conduct a full sunset review was
within 70 days of our initiation notice of these sunset reviews, their
submission was not late. Moreover, because the Department considered that the
domestic interested parties' November 9, 1999, submission was not relevant with
respect to our adequacy determination, we did not reconsider our adequacy
determination, nor did we consider this submission in making our preliminary
determination.(24)
The domestic interested parties' March 16, 2000, submission was relevant as
long as Dillinger's March 14, 2000, submission was relevant in the instant
sunset reviews because the purpose of the domestic interested parties March 16,
2000, submission merely was to argue that the Department should not accept
Dillinger's March 14, 2000, submission. By the same token, as soon as
Dillinger's March 14, 2000, submission became irrelevant (because we returned
it), the domestic interested parties' March 16, 2000, submission arguing
against Dillinger's interpretations of the Court opinion of Delverde(25) and
WTO panel decision(26) became moot and irrelevant.
Similarly, the domestic interested parties' April 28, 2000, submission made
arguments against Dillinger's April 13, 2000, submission, in which Dillinger
made a request that the Department add the proprietary version of all
calculation memoranda relating to Preussag and Ilsenburg from the final
determination in the original countervailing duty investigation to the record
of the sunset reviews. The domestic interested parties' April 28, 2000,
submission essentially argues that the Department should not incorporate
judicially protected information into the record of the sunset reviews without
the court's permission; furthermore, their submission does not contain new
factual information. For the same reason that we did not return Dillinger's
April 13, 2000, submission (Dillinger was not submitting any new factual
information), we did not return the domestic interested parties' April 28,
2000, submission arguing against Dillinger's request.
As to Dillinger's suggestion that the Department should adjust the rate that
is likely to prevail to reflect decreasing benefits from non-recurring
countervailable subsidies, we refer Dillinger to our explanation in Comment 5.
Comment 7:
Dillinger argues that (1) all of the major subsidy programs involved in the
original investigation have been terminated and provide no further
countervailable benefits; (2) the only significant programs which remain are
those dedicated to rebuild in the disadvantaged regions of the federal states
of the former German Democratic Republic and, as such, these programs are non-
actionable pursuant to Article 8.2(b) of the Subsidies Agreement; and (3)
assistance under the ECSC Treaty plays an insignificant role in the cut-to-
length steel products industry. Dillinger concludes, therefore, that the
Department's preliminary decision finding that the German manufacturers would
continue to receive a substantial contervailable benefit after the end of these
sunset reviews is not supported by substantial evidence on the record of these
reviews. (See Dillinger's case brief at 16-40.)
Specifically, Dillinger agrees with the Department's findings in the
preliminary results that the Structural Improvement Aids Program, the Zonal
Border Area Assistance Program, and the Ruhr District Action Program have
ceased to exist and would provide no countervailable benefit after the end of
these sunset reviews. Id. at 17
With respect to the Capital Investment Grants ("CIG") and Investment Premium
Act ("IPA"), Dillinger claims that, according to the GOG, the CIG applied only
to investments made prior to January 1, 1986 and that the IPA Program applied
only to investments made prior to January 1, 1991. Dillinger contends that
these facts were acknowledged by the Department in its original investigation.
Dillinger argues that, therefore, there is no dispute that the CIG and IPA
programs are terminated and that the Department should not rely on the domestic
interested parties' unsubstantiated assertions - e.g., that Preussag admitted
receiving benefits under both programs after 1985 - to determine that the
countervailable subsidies from these two programs would be likely to continue
if the order were revoked. Furthermore, Dillinger argues that over 99 percent
of benefits Preussag received from the two programs were received prior to the
1985/86 fiscal year. Id. at 17-22.
Similarly, the German Group contends that the CIG program was terminated (as
was the Steel Investment Act/Law, on which the CIG was based) in 1985. The
German Group further contends that some German manufacturers' receipts of
payments under the CIG after 1985 do not constitute evidence that the program
was not terminated in 1985 because the Department found in the investigation
that the program provided grants with respect to assets purchased or produced
by the German manufacturers of cold-rolled and corrosion-resistant steel
products between the period July 30, 1981, through January 1, 1986. (See the
German Group's case brief at 9-13.)
The German Group argues that the amount of any payments under the CIG were so
small (less than 0.5 percent of the recipient's net sales in the year the grant
was received) that, as a result, those benefits would have been expensed in the
year they were received and that, therefore, the Department must conclude that,
in 2000, the benefit stream associated with these payments is zero (or at most
de minimis). Id.
As to "Subsidies Related to the creation of Dillinger Hutte Saarstahl AG
(DHS)" ("SVK grant"), Dillinger argues that the Department's application of a
"pass through" principle, attributing countervailable benefits afforded to
Dillinger's predecessors-in-interest to Dillinger, violates the Subsidies
Agreement.(27) Dillinger contends that a WTO dispute settlement panel,(28) the
subsequent decision of the Appellate Body of the WTO ("Appellate Report"),(29)
and the U.S. Court of Appeals for the Federal Circuit ('CAFC")(30) found the
Department's privatization methodology violated Article 10 of the Subsidies
Agreement and 19 U.S.C. § 1677(5) because the Department applied an
irrebuttable or conclusive presumption of pass-through even when a
privatization was accomplished in an arm's length transaction. Dillinger
further argues that had the Department applied its change-in-ownership
methodology according to the WTO panel and Appellate Body and determined the
SVK grant not countervailable, Dillinger's and the country-wide countervailable
subsidy for cut-to-length steel products would have been a de minimis 0.21
percent. Dillinger concludes that the Department, in its final results, should
determine that the SVK grant does not provide Dillinger with a countervailable
benefit continuing beyond the end of the sunset reviews. (See Dillinger's case
brief. at 22-25.)
Dillinger further asserts that under the Department's current regulations,
which significantly amended its practice with respect to contingent liability
interest-free loans, the Department should examine whether the non-viability of
the contingency, upon which the repayment of the SVK grant was based,
manifested itself before 1989. In other words, Dillinger urges the Department
to examine whether the circumstances prior to 1989 constitute a viable
contingency. Had the Department done so, Dillinger contends that the Department
would have found the manifestation of the non-viability of the contingency long
before 1989 and, consequently, would have determined that the vast majority of
the SVK grant was effectuated no later than 1985. Dillinger claims that,
therefore, the Department should determine that the benefit streams from the
SVK grant would not continue beyond the end of this sunset review. Id. at 28-
31.
Continuing its argument with respect to the SVK grants, Dillinger claims that
the Department erred in adopting a fifteen-year allocation period because the
Department's practice of relying on U.S. IRS tables to determine an average
useful life ("AUL"), as it was applied in non-recurring countervailable
subsidies to the German steel manufacturers in the investigation, was later
found to be defective. Dillinger suggests that, instead, for the sake of
maintaining consistency and predictability, the Department should apply an
eleven-year allocation period for the SVK grants to Dillinger as it applied the
same allocation period to Saarstahl AG for the exact same assistance in the
steel wire rod.(31) Id. at 25-28.
Dillinger contends that the Department erred in determining that the private
banks' debt forgiveness constitutes a countervailable subsidy. According to
Dillinger, the private banks acted on their own and for their own self-interest
and were not influenced or directed by the Government of Saarland or Germany.
Without the necessary action by a government authority, Dillinger further
claims that the private banks' debt forgiveness cannot be treated as a
countervailable subsidy. Therefore, Dillinger claims that the Department erred
in continuing to treat the debt forgiveness by private banks as a
countervailable subsidy. Id.
In addition, Dillinger contends that the portion of the SVK grant that was
attributed to Dillinger in the original investigation was too high and that the
Department's fifteen-year average-useful-life standard does not properly
reflect the actual useful life of productive assets in the German steel
industry; viz., the Department's fifteen-year useful life standard is too long.
Had the Department adopted a shorter average-useful-life standard,(32)
Dillinger notes that the benefit streams of the SVK grant would end before the
end of this sunset review. Dillinger contends that, hence, the Department erred
in not revising Dillinger's net subsidy rate to account for the fact that
benefit of the SVK grant declined over time. Id.
With respect to Aid for Closure of Steel Operations, ECSC Redeployment Aid
Under Article 56(2)(b) ("ECSC 56"), ECSC Article 54 Long-Term Loans ("ECSC
54"), and Interest Rebate on ECSC Article 54 Loans ("ECSC 54 Interest"),
Dillinger states that it and Illsenburg did not receive any benefit from those
programs and that Preussag and Thyssen received only minimal combined benefits
of 0.03 percent and 0.14 percent, respectively, from the Aid for Closure of
Steel Operations and ECSC 56. Dillinger argues that, therefore, these programs
cannot be considered as likely to provide a countervailable subsidy to German
manufacturers of cut-to-length steel products after the end of the sunset
reviews. Id. at 37-40.
In addition, Dillinger contends that the Department erred in finding that the
German manufacturers of cut-to-length steel products did not have a long record
of not using ECSC 54 and ECSC 54 interest programs because, in the original
investigation, the Department explicitly found that no manufacturer of the
subject merchandise received benefits under these programs. Id.
Citing sections III.B.3.(a) and III.B.3.(g) of the Sunset Policy Bulletin, the
domestic interested parties contend that, because the Department has not
conducted any administrative or changed circumstances review of the order, it
should not determine, in these sunset reviews, that the Structural Improvement
Aids Program, the Zonal Border Area Assistance Program, and the Ruhr District
Action Program have been terminated. With respect to the Structural Improvement
Aids program, the domestic interested parties further argue that the GOG does
not claim that it terminated the Structural Improvement Aids program; instead,
the GOG only claims that it terminated the legal directive that created the
program. The domestic interested parties also argue that because respondents'
statements and the implications thereof regarding the above three programs have
not been verified by the Department, the record is insufficient for the
Department to determine whether the benefits from the above programs are likely
to continue or recur. The domestic interested parties conclude, therefore, that
the Department should not adjust the net subsidy rate based on the alleged
changes in the above programs. (See domestic interested parties' rebuttal brief
(cut-to-length steel products) at 35-36.)
With respect to CIG and IPA, the domestic interested parties contend that
Dillinger, in its case brief and substantive responses (and rebuttal), admits
that the two programs provided some benefits to Preussag after December 31,
1985. The domestic interested parties further contend that, in their
substantive responses, they also presented evidence in the public record
indicating the same. These facts alone, the domestic interested parties argue,
are enough for the Department to determine that countervailable benefits from
the two programs would be likely to continue if the order were revoked.
Furthermore, according to the domestic interested parties, respondent
interested parties did not present enough facts or evidence to justify a
conclusion that the German manufacturers of the subject merchandise did not
receive benefits from the CIG and IPA after December 31, 1985. (See id. at 36-
38.)
With respect to the German Group's arguments regarding the CIG program, the
domestic interested parties argue that, based on evidence in the record of
these reviews, it is unclear whether the program has been terminated. The
domestic interested parties further argue that since some payments were made
under this program after December 31, 1985, the CIG should not be considered as
having been terminated in 1985. The domestic interested parties argue,
moreover, that respondents do not even claim that the CIG has been terminated
without any residual benefits. The domestic interested parties contend that,
instead, respondents merely speculate, without substantiating their claim, that
all payments made after 1985 were less than 0.5 percent of the recipient's net
sales in the year of receipt (and, therefore, such grants should be expensed in
the year they were received). The domestic interested parties argue that,
therefore, even if the program has been terminated, the Department cannot
adjust the rate found in the investigation on the grounds that the program has
been terminated. (See the domestic interested parties' rebuttal brief (cold-
rolled and corrosion-resistant steel products) at 2 and 9-10.)
As to Aid for Closure of Steel Operations, ECSC 56, ECSC 54, and ECSC 54
Interest, the domestic interested parties contend that respondents admit the
following: these programs still exist, and some respondents received and are
receiving benefits, albeit small, from some of the programs. The domestic
interested parties further contend that the Department found in the original
investigation that at least some manufacturers of cut-to-length steel products
received benefits from all four programs. The domestic interested parties argue
that, therefore, the Department was correct in determining, in the preliminary
results, that respondents have not demonstrated a long track record of not
using these programs. Id. at 39-41.
Department's Position:
We agree with Dillinger and the German Group's contention that according to
the Steel Investment Act/Law, 1981 (with amendments), and Investment Premium
Act, both 1969 and 1986 (with amendments), the CIG is applicable only to
investments made prior to January 1, 1986, and the IPA Program is applicable
only to investments made prior to January 1, 1991.(33) Moreover, we agree with
the domestic interested parties that certain manufacturers of the subject
merchandise received some benefits from both the CIG and IPA after January 1,
1985.(34) However, the record of these sunset reviews is not sufficient for us
to definitely conclude whether the benefits received by the German
manufacturers of the subject merchandise under the CIG and/or IPA after January
1, 1985 were less than 0.5 percent of the corresponding beneficiary's annual
net sales and, consequently, whether the benefits should be expensed in the
year they were received. Furthermore, since no administrative reviews of these
orders were conducted, we are unable to determine whether any additional
benefits under these programs were received subsequent to the period of
investigation. As a result, as we did in our preliminary results, we determine
that benefit streams from the CIG and IPA continue beyond the end of these
sunset reviews and that, therefore, a countervailable subsidy from the CIG and
IPA to manufacturers of subject merchandise would be likely if the orders were
revoked.(35)
With respect to the rest of countervailable subsidy programs, Dillinger's
arguments regarding passed-through benefits upon a change of ownership, the
AUL, transnational assistance, de minimis benefit from an individual program, a
long record of not using a program, and non-viability of the contingency are
basically the same arguments it made prior to the preliminary results of these
reviews.(36) Insofar as Dillinger is making the same claims now as it did prior
to the preliminary results, we determine that our determination in the
preliminary results should continue to apply.
As discussed above, where the Department has not conducted an administrative
review of the order, the Department normally will not make adjustments to the
net countervailable subsidy rate determined in the original investigation. Both
the Appellate Body and CAFC decisions were issued relatively late in this
proceeding. A sunset review is not the appropriate proceeding in which to
examine a complicated privatization transaction and to consider a new
privatization methodology. In light of the complexity and fact-intensive nature
of this issue, it is imperative that the issues be fully developed on the
record.
As to the domestic interested parties' contention that the Department erred in
preliminarily finding that Structural Improvement Aids Program, the Zonal
Border, and the Ruhr District have been terminated, we note that our
preliminary findings pertaining to the terminated programs were based on the
Department's findings in its original investigation. Without any administrative
reviews conducted, just as we did with respect to respondents' claims of
program changes, we are relying upon the Department's findings in the
investigation rather than on the unsubstantiated domestic interested parties'
specific allegations of discrepancies asserted in these reviews. Therefore, we
determine that the above three programs have ceased to provide any
countervailable benefits to the manufacturers of the subject merchandise.
We disagree with Dillinger's contention that the Department erred in its
preliminary determination by failing to find German manufacturers of cut-to-
length steel products have a long track record of not using programs, ECSC 54
and ECSC 54 interest because, in the original investigation, the Department
determined that manufacturers of the subject merchandise received zero benefit
from those programs. The Department did not explicitly state that manufacturers
of the cut-to-length steel products did not use these programs during the
period of investigation. On the contrary, in the investigation the Department
explicitly stated that Hoesch, Preussag, Klockner, and Thyssen received loans
under ECSC 54 interest and Preussag and Thyssen received interest rebates under
ECSC 54 interest.(37) Hence, we determine that German manufacturers of the cut-
to-length steel products do not have a long track record of not using the
program.
Therefore, we determine that, as indicated in the preliminary results, the
only programs which were found in the investigations to provide countervailable
benefits to respective German steel products subject to these reviews, that
have ceased to exist without any residual benefits are the Structural
Improvement Aids, Ruhr District, and TRA/BvS with respect to corrosion-
resistant and/or cold-rolled steel products and Zonal Area with respect to all
steel products.
Comment 8:
The German Group assumes that the Department rejected their various arguments
in the preliminary results of these reviews because their evidence was
insufficient to support their claims that some programs have been terminated,
have not been used, have only de minimis rates, or are eligible for green-light
status and thus non-countervailable. As such, the German Group contends that
the Department's failure to provide them a sufficient opportunity to submit
additional evidence to supplement an alleged deficiency in their evidence made
the Department's rejection of their arguments in the preliminary results
contrary to law. The German Group argues that this is especially true because
they reasonably believed, at the outset of these reviews, that the Department
would (1) conclude that the CIG was terminated in 1985, (2) deduct the rates
associated with the CIG from the rate which the Department considers would be
likely to prevail if the orders were revoked, (3) conclude that respondents
have a long record of not using the programs for which benefits received had
been zero or de minimis levels during the investigation (4) determine that the
likely-to-prevail rate would be de minimis, and (5) ultimately revoke the
orders. The German Group contends that, therefore, the Department contravened
the law when it published the preliminary findings without advising them, prior
to the publication, that the Department was preliminarily disagreeing with
their positions. (See the German Group's case brief at 14-17.)
The domestic interested parties, on the other hand, argue that the Department
did what it should, drawing reasonable inferences from evidence in the record
and from the final results of the investigation. The domestic interested
parties contend that, in its preliminary determination, the Department did not
resort to facts otherwise available outside the record of the sunset reviews
and that, therefore, it had no obligation to provide respondents with an
opportunity to supplement their evidence. (See the domestic interested parties'
rebuttal brief (cold-rolled and corrosion-resistant steel products) at 2 and 11-
14.)
Department's Position:
The German Group's contention, as we understand it, is that the Department
based its preliminary decision on facts otherwise available and in so doing did
not afford the German Group an opportunity to remedy their deficient
submissions. In the preliminary results, the Department did not use facts
otherwise available; rather, the Department utilized its previously published
results and evidence submitted by interested parties in reaching its
preliminary results. In the preliminary results, the Department did not suggest
that any portion of interested parties' submissions were deficient. The very
fact the Department is conducting a full sunset review of the orders implies
that the Department considered the German Group's substantive response to the
Department's notice of initiation of the sunset reviews complete and adequate
according to the standards set forth in our Sunset Regulations;(38) otherwise,
the Department would have determined the failure by a respondent interested
party to file a complete substantive response as a waiver of participation in a
sunset review and would have expedited the reviews.(39) Since we neither based
our preliminary results on facts otherwise available nor considered any party's
submission deficient, the German Group was not denied the opportunity to
provide additional information for purposes of these sunset reviews.
Comment 9:
The German Group argues that, in the final results, the Department should
reverse its preliminary determination that German manufacturers of corrosion-
resistant and/or cold-rolled steel products do not have a long record of not
using IPA, ECSC 54, Joint Scheme, and Upswing East programs. The German Group
contends that because there is no evidence in the record that German
manufacturers of the subject merchandise received benefits under these
programs, the Department should find that the German Group has a long record of
not using the programs. According to the German Group, the failure of the
domestic interested parties to request an administrative review to assert that
these programs are being used by German manufacturers of the subject
merchandise after the issuance of the orders is also an indication that the
aforementioned programs have not been used by the German Group. (See the German
Group's case brief at 21-22.)
The domestic interested parties claim that the Department found in its
original investigation that at least some German manufacturers of the subject
merchandise received benefits under IPA, ECSC 54, Joint Scheme, and Upswing
East programs and that their availability continues to date. The domestic
interested parties contend that, together with admissions of their use by
respondents, these facts support the Department's preliminary decision not to
disregard the programs for purposes of these sunset reviews. (See the domestic
interested parties' rebuttal brief (cold-rolled and corrosion-resistant steel
products) at 2 and 14-16.)
Department's Position:
As we explained in our preliminary results, we relied on the Department's
findings in the investigation to preliminarily determine that although certain
German manufacturers of corrosion-resistant and/or cold-rolled steel products
received no benefits from IPA, ECSC 54, Joint Scheme, and Upswing East
programs, they were found to have used those programs.(40) As a result, we
preliminarily determined that German manufacturers of corrosion-resistant
and/or cold-rolled steel products cannot be considered to have a long record of
not using the aforementioned programs despite the GOG's unsubstantiated claim
that German companies of the subject merchandise did not use the programs.(41)
Because the German Group's arguments subsequent to the preliminary results did
not change the Department's preliminary findings, we determine that the German
manufacturers of the subject merchandise do not have a long record of not using
the above mentioned programs and that, therefore, those programs continue to
exist with respect to the subject merchandise for corresponding German
companies.
Comment 10:
The domestic interested parties urge the Department to disregard the vast bulk
of the GOG's April 18, 2000 (received by the Department on April 25, 2000)
submissions because they consist of belatedly filed materials which were parts
of the original investigation, which belong to other proceedings, or which
constitute new information that were never verified in any Departmental
proceedings. (See the domestic interested parties' rebuttal brief (cold-rolled
and corrosion-resistant steel products) at 2 and 16.)
Department's Position:
As we explained in our letter to the GOG,(42) we decided to keep those
portions (Appendices 1, 2, and 11) of the GOG's April 18, 2000, submission
which were in the record of the original investigation. As such, they are an
integral part of the instant proceeding, and it is our practice to use
information contained from the record of the investigation, when appropriate.
At the same time, we decided to return the rest of the GOG's April 18, 2000,
submission which contained new factual information and/or materials the GOG
submitted in other proceeding(s) and to destroy those portions of the remaining
copies filed with us. Moreover, to the extent respondents make any reference to
the returned portions of the GOG's April 18, 2000, filing in their case briefs
and/or reply briefs, we have disregarded their comments in making these final
sunset determinations.
Comment 11:
The domestic interested parties claim that the Department should consider
whether their newly alleged programs provide countervailable subsidies to
German manufacturers of the subject merchandise because (1) the Department did
not conduct any administrative reviews of the orders, (2) the newly alleged
programs were introduced subsequent to the initial investigation or,
alternatively, information concerning them were not reasonably available to the
domestic interested parties during the investigation, and (3) they showed good
cause. Regarding good cause arguments, the domestic interested parties claim
the facts that the order is seven years old, that no administrative review has
been conducted since the issuance of the order, and that the GOG continues to
subsidize dying industries, together, adequately constitute good cause. (See
the domestic interested parties' case briefs (cut-to-length, cold-rolled, and
corrosion-resistant steel products) at 6-8.)
Dillinger claims that the domestic interested parties' contentions with
respect to newly alleged subsidy programs are based on inaccurate, outdated,
and irrelevant information. Dillinger further claims that the programs which
are alleged by the domestic interested parties to be new are related to the
programs that were reviewed by the Department in the investigation, related to
programs that qualify as non-actionable subsidies, or exclusively related to
companies that neither produce nor export the subject merchandise. Moreover,
Dillinger contends that the domestic interested parties did not show good cause
requiring the Department to consider newly-alleged subsidy programs. (See
Dillinger's rebuttal brief at 4.)
The German Group contends that the domestic interested parties should have
asked for an administrative review of the order if the domestic interested
parties were concerned that members of the German Group were receiving higher
subsidies than the rates found in the investigation. The German Group claims
that the Act and SAA intended that newly alleged subsidies arguments should
normally be made in the context of administrative reviews and that, since the
domestic interested parties did not show any valid reason for not requesting an
administrative review of the orders to allege new subsidies, the Department
acted properly by not considering the domestic interested parties' newly
alleged subsidies. The German Group contends that, therefore, for the final
results of these sunset reviews, the Department should conclude that the rates
found in the investigation (reduced to reflect terminated programs) are the
rates that are likely to prevail because the Department has not conducted any
administrative review of the orders and the facts and circumstances underlying
these orders demand such conclusion. (See the German Group's Reply Brief at 4-6
and 17-20.)
Department's Response
Although we agree with the German Group's claim that the Act and SAA intend
that newly alleged subsidies arguments should normally be made in the context
of administrative reviews, we agree with the domestic interested parties that
we should consider programs newly alleged to provide countervailable subsidies
if we determine that good cause exists to consider such programs. However, we
disagree with the domestic interested parties' contention that they have shown
good cause for us to consider their newly alleged countervailable programs. We
do not consider the fact that the seven-year old orders have not been subject
to any administrative reviews and the domestic interested parties' claim that
the GOG continues to subsidize dying industries, without more concrete
evidence, sufficient to constitute good cause. (See section II.C of the Sunset
Policy Bulletin.) Therefore, in making our final determination, we did not
consider the domestic interested parties' arguments that we should consider
their newly alleged countervailable programs in the sunset reviews.
Comment 12:
With respect to cold-rolled and corrosion-resistant steel products, the
domestic interested parties contend that the Department erred by preliminarily
finding that Structural Improvement Aids and Zonal Area have ceased to exist
and, consequently, subtracting rates pertaining to the two programs from the
net countervailable subsidy rate likely to prevail if the orders were revoked.
(See the domestic interested parties case briefs (cold-rolled and corrosion-
resistant steel products) at 2-5.)
Moreover, the domestic interested parties argue that the Department should
adhere to its expressed policy of reporting net countervailable subsidies that
it calculated and published in its prior determinations and should follow the
practice of not making an adjustment to the net countervailable subsidy rate
determined in the original investigation when it has not conducted any
administrative review of the order. Because, in these sunset reviews, they have
raised an issue with respect to whether the Structural Improvement Aids are
terminated, the domestic interested parties argue that the Department should
not adjust the net countervailable rate based on an assumption that the
Structural Improvement Aids program is terminated. Furthermore, although they
acknowledge that Zonal Area has been terminated, the domestic interested
parties argue that the Department should not adjust the rate because these
sunset reviews are not appropriate vehicles for adjusting the net
coutnervailable subsidy rate which the Department reports to the Commission. Id.
The German Group contends that, in the context of a sunset review, if the
Department concludes that a particular program is terminated and its benefit
stream will not continue after the end of the sunset review, the Department
must subtract the subsidy rate associated with that program in calculating the
rate the Department determines to be likely to prevail were the orders revoked.
In support of its contention, the German Group argues that, pursuant to section
III.B.3 of the Sunset Policy Bulletin, the Department normally will consider
that the rate from the investigation may not be the most appropriate in
situations such as when a program is terminated or there has been a program-
wide change. The German Group further claims that whether the Department has
conducted an administrative review is immaterial when the Department determines
that a program has been terminated - the Department's normal rule of applying
the rates from the original investigation does not apply in this instance. The
German Group states that, therefore, the Department, in reaching its
preliminary results, acted correctly by not creating a per se rule that it will
always use the rate from the investigation when the Department has not
conducted an administrative review. (See the German Group's reply brief at 1-
3.)
In their rebuttal, the domestic interested parties contend that the SAA is
explicit regarding when the Department should and should not adjust the net
countervailable subsidy rate. Specifically, the domestic interested parties
argue that when the Department has not conducted an administrative review of
the order, it normally will not make an adjustment to the rate determined in
the original investigation. According to the domestic interested parties, this
must be the case in the instant reviews, especially when the Department is
refusing to consider the domestic interested parties' claim that additional
benefits are provided under previously identified subsidy programs. The
domestic interested parties conclude that, therefore, the Department should
determine that, if the combined subsidy rate of all programs was above de
minimis in the investigation, the same net countervailable subsidy will be
likely to prevail if the orders are revoked, absent probative evidence to the
contrary developed in the investigation or in an administrative review. (See
the domestic interested parties' reply brief (cold-rolled and corrosion-
resistant steel products) at 6-8.)
Department's Response:
As the domestic interested parties indicated, in a sunset review, in providing
to the Commission the rate that is likely to prevail if the order were revoked,
the Department normally chooses the net countervailable subsidy it calculated
and published in its prior determinations.(43) In its investigation, the
Department did not determine that Structural Improvement Aids(44) and Zonal
Area(45) programs were non-recurring subsidies, therefore, any benefit received
under these programs would have been expensed in the year in which the benefit
was received; on the other hand, the Department determined that the programs
would last until 1986 and 1996, respectively. There has not been any
administrative review in which the Department found that either of these two
programs still exists (thereby reversing findings in the investigation), nor
have the domestic interested parties introduced concrete or probative evidence
which shows that any of the respondents received benefits from the two programs
after the programs' scheduled expiration dates. In short, since the issuance of
the orders, the Department has not made any determination in which it made any
finding that is contrary to the final results of the original investigation.
Therefore, we continue to accept the final results in the investigation by
determining that Structural Improvement Aids and Zonal Area programs were
terminated and that benefit stream therefrom would not last beyond the end of
these sunset reviews.(46)
Section III.B.3 of the Sunset Policy Bulletin explains that the rate from the
investigation may be inappropriate if, for example, the rate was derived from
subsidy programs which were found in subsequent reviews to be terminated. This
provision is equally pertinent in the instant reviews because, as stated above,
the Department found in its original investigation that those programs either
were terminated or were to be terminated. Thus, we have subtracted the subsidy
rates pertaining to the two terminated programs from the net subsidy rates that
are likely to prevail if the orders were revoked. We do not consider this to
represent a recalculated net subsidy rate but only an accurate reflection of
the conclusions in the investigations.
Comment 13:
Dillinger argues that the Department's practice of not revoking a
countervailing duty order even when the Department determines that the combined
benefits of all programs are de minimis severely limits the weight of a
respondent's evidence submitted in a sunset review. Dillinger contends that,
for instance, despite the fact that ECSC assistance programs were found not to
provide any significant benefits in the investigation and that the domestic
interested parties failed to show that these programs will provide any
substantial future benefits, in the preliminary determination, the Department
preliminarily refused to treat them as providing no significant continuing
benefit. Dillinger claims that this amounts to the Department impermissibly
shifting the burden of proof from the domestic interested parties to the
respondent, which is contrary to the binding treaty obligations of the United
States and, therefore, the Department's practice in this regard should be
revised. (See Dillinger's case brief at 9-10.)
The domestic interested parties claim that the Department's practice with
respect to de minimis combined benefits reflects the express intent of Congress
because the relevant provision(47) is based on the SAA and House Report on the
URAA. Moreover, the domestic interested parties further contend that this
provision allows the Department to correctly evaluate the future likely subsidy
based on the past findings and that because the Department only normally relies
on this provision, the Department's practice does not impose any irrebuttable
presumption upon respondents. (See the domestic interested parties' rebuttal
brief (cut-to-length steel products) at 30-31.)
Department's Position:
We disagree with respondents' characterization of the Department's practice
with respect to de minimis subsidies. We disagree with respondents' argument
that the Department should revoke the orders if we find that a particular
subsidy would be likely to continue but only at a de minimis rate. A de minimis
rate, by itself, does not automatically require a revocation. (See preliminary
results at 16) As such, the Department's policy does not put any severe
limitations on respondents' ability to submit evidence concerning alleged zero
or de minimis combined benefits from all relevant programs; nor does the
Department's practice have anything to do with shifting the burden of proof
from one party to another.
Comment 14:
Dillinger contends that the Department erred in its refusal to consider the
current state of the law in preliminarily determining the net subsidy and
asserts that the Department erred because it would not retroactively apply post-
WTO rules, regulations, or laws to a pre-WTO order. Dillinger argues that such
a refusal defies the purpose of the net subsidy determination in the sunset
reviews, which is to determine the future subsidy rate that is likely to
prevail if the order is revoked.
Department's Position:
First, both the GOG and the EU's arguments that a particular subsidy would not
have been found countervailable had the Department applied WTO provisions are
conjecture, not fact and, as such, not pertinent to these reviews. Second, as
to Dillinger's suggestion that, in these sunset reviews, we should apply the
Department's post-WTO regulations to change the Department's determination in
the investigation so as to conclude that the benefit stream of a particular
subsidy should have started earlier, we do not agree. Although the sunset
segment is created by the WTO agreement and thus follows post-WTO provisions,
laws, or regulations, we do not consider that it is appropriate for the
Department to retroactively change its previous results (especially those of
the original investigation) based on new provisions, laws, or regulations. If
respondents had desired that post-WTO changes in the law regarding the
identification and quantification of subsidies be taken into account, they
could have requested an administrative review subsequent to changes in the
applicable laws and regulations, but they did not. Therefore, we determine that
there is no basis to reject the Department's earlier findings in an
investigation due to subsequent changes in methodology because such changes do
not invalidate the Department's findings under the prior methodology especially
where, as here, there has been no administrative review.
Comment 15:
Dillinger contends that, in the preliminary results, the Department failed to
explain or to justify how it arrived at the conclusion that the subsidy rate
for Salzgitter is 1.62 percent. Dillinger further contends that if the
Department intends to assign Salzgitter a specific rate that is likely to
prevail if the orders were revoked, it must disclose to the parties how the
rate was calculated and provide the parties with a full opportunity to comment
upon such calculations. (See Dillinger's case brief at 15-16.)
The domestic interested parties urge the Department to disregard Dillinger's
belated request for disclosure regarding the Department's preliminary
determination of Salzgitter's likely-to-prevail rate because Dillinger did not
make such a request within ten days of the preliminary results of the sunset
reviews (or within five days of the publication thereof) pursuant to section
351.224(b) of the Department's Regulation. (See the domestic interested
parties' rebuttal brief (cut-to-length steel products) at 34.)
Department's Position:
We agree with Dillinger that we erred in assigning a specific rate to
Salzgitter. As explained in the calculation memorandum accompanying the
preliminary results, although Salzgitter is a successor-in-interest to both
Ilsenburg and Preussag, without an appropriate review, we do not have enough
information to determine a rate applicable to the successor. Therefore, we are
reporting the rates for the original respondent companies, as adjusted. This
renders moot the issue of whether Dillinger's request for the disclosure of the
calculation regarding Salzgitter's subsidy rate was untimely.
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(48) of the Subsidies Agreement.
We agree with the German Group that none of the thirteen programs that the
Department determined to confer positive countervailable benefits to German
manufacturers/exporters of the subject merchandise in its original
investigation is contingent, either solely or as one of several other
conditions, upon export performance. Thus, none of these programs falls within
the definition of an export subsidy under Article 3.1(a) of the Subsidies
Agreement.
Final Results:
We determine that revocation of the countervailing duty orders would be likely
to lead to continuation or recurrence of countervailable subsidies at the
following percentage weighted-average margins:
-------------------------------------------------------------------------
Manufacturer/Exporters Margin (percent)
-------------------------------------------------------------------------
Corrosion-resistant carbon steel flat products:
Country-wide rate .......................................... 0.54
Cold-rolled carbon steel flat products:
Country-wide rate .......................................... 0.55
Cut-to-length steel plate products:*
Ilsenburg .................................................. 0.80
Preussag ................................................... 0.77
TKS ........................................................ 0.51
Country-wide (including Dillinger) ........................ 14.84
-------------------------------------------------------------------------
*) Although Salzgitter is a successor-in-interest for both Ilsenburg and
Preussag, without an appropriate review, we cannot discern the appropriate rate
for the successor. Therefore, for Ilsenburg and Preussag, we are reporting the
rates from the original investigation, as adjusted. Dillinger takes the country-
wide rate, and TKS is the successor-in-interests of Thyssen.
Recommendation:
Based on our analysis of the comments received, we recommend adopting all of
the above positions. If these recommendations are accepted, we will publish the
final results of the sunset reviews in the Federal Register.
AGREE____ DISAGREE____
______________________
Troy H. Cribb
Acting Assistant Secretary
for Import Administration
_____________________
(Date)
_________________________________________________________________________
footnote:
1. See Certain Corrosion-Resistant Carbon Steel Flat Products; Cold-Rolled
Carbon Steel Flat Products; and Cut-to-Length Carbon Steel Plate Products From
Germany; Preliminary Results of Full Sunset Reviews, 65 FR 16176 (March 27,
2000), and accompanying Decision Memo ("preliminary results").
2. There are two distinct groups of domestic interested parties in these
reviews: with respect to cut-to-length steel products, they consist of
Bethlehem Steel Corp. ("Bethlehem") and U.S. Steel Group, a unit of USX Corp.
("USX"); and with respect to cold-rolled and corrosion-resistant steel
products, they consist of Bethlehem, Ispat Inland Inc., LTV Steel Inc.,
National Steel Corp., and USX. However, because both groups of domestic
interested parties are represented by the same counsel and because it is not
likely that any confusion may arise by not separating the two groups, for
purposes of these sunset reviews, we will use the domestic interested parties
to mean either group.
3. Dillinger and Salzgitter (collectively referred to as "Dillinger") jointly
submitted their case brief and rebuttal brief with respect to cut-to-length
steel products: TKS, Stahlwerke Bremen GmbH ("Bremen"), EKO Stahl GmbH ("EKO"),
and Salzgitter AG ("SZAG") (collectively referred to as "German Group") jointly
submitted their case brief and reply brief with respect to corrosion-resistant
and cold-rolled steel products.
4. On May 24, 2000, the domestic interested parties requested an extension of
the deadline for filing rebuttal comments to respondents' case briefs. The
Department extended the deadline until June 5, 2000 for all participants
eligible to file rebuttal comments.
5. For example, see footnote 27 and 28, infra.
6. The domestic interested parties indicate that their numbers may include
products that are not subject merchandise. (See domestic interest parties'
October 18, 1999, reply comments at Attachment 1, footnote 1.)
7. Dillinger notes that each of the German manufacturers that participated in
the original investigation or their respective successor in-interest has filed
complete responses in these reviews. (See Dillinger's rebuttal brief at 3.)
8. See 19 CFR 351.309(e) (interested parties may comment on whether an
expedited sunset review is appropriate based on the adequacy of response to the
notice of initiation.)
9. See the SAA at 880 (the purpose of the adequacy determination is just to
promote administrative efficiency).
10. See section 751(c)(3) of the Act. Also see the House Report, H.R. Rep. No.
103-826, pt.1 (1994) at 56 (if there is inadequate response to a notice of
initiation by foreign or domestic interested parties, the Department will
conduct an expedited review based on the facts available).
11. See Final Affirmative Countervailing Duty Determination: Steel Wire Rod
From Germany, 62 FR 54990 (October 22, 1997) ("steel wire rod").
12. Although they consider TRA/BvS also qualifies under green-light
provisions, the German Group leaves out TRA/BvS because the Department
preliminarily determined that German manufacturers of cold-rolled and corrosion-
resistant steel products have a consistent record of not using the TRA/BvS
program and that, therefore, the program is not likely to continue or recur
with respect to the subject merchandise if the orders were revoked.
13. The German Group bases its contention on the GOG's April 18, 2000,
submission (which the Department received on April 25, 2000), in which the GOG
includes information and/or materials which are new and/or from other
proceeding(s). Because we consider that the aforementioned information and/or
materials were submitted late (and we did not request any additional
information and/or materials from interested parties), we rejected the GOG's
submission except those items which were included in the record of the original
investigation. (See the Department's July 11, 2000, letter from Jeffrey A. May,
Office Director, Office of Policy to Mr. Konrad Scharinger Economic Counselor
Embassy of the Federal Republic of Germany.)
14. See Countervailing Duty Orders and Amendment to Final Affirmative
Countervailing Duty Determinations: Certain Steel Products From Germany, 58 FR
43756 (August 17, 1993).
15. See Overview section of the Sunset Policy Bulletin.
16. See footnote 11, supra.
17. See RULES and REGULATIONS, DEPARTMENT OF COMMERCE, International Trade
Administration 19 CFR Parts 351, 353, and 355, Antidumping Duties;
Countervailing Duties, 62 FR 27296, 27324-27325 (May 19, 1997).
18. Transition orders are antidumping and countervailing duty orders and
suspended investigations which were in effect on January 1, 1995.
19. Dillinger claims that this situation applies to its case because its court
challenge to the final results of the investigation did not end until February
1, 2000. However, Dillinger does not explain why the costs associated with an
administrative review process concurrent with pending legal challenge to the
results of the investigation is more expensive than the costs associated with
an administrative review without such legal challenge pending. (See Dillinger's
case brief at 8.)
20. See 19 C.F.R. 351.218(f)(2)(i). (In a sunset review, normally a
verification is conducted only if, in its preliminary results, the Department
determines that (1) continuation or recurrence is not likely and (2) such
determination is not based on rates determined in the investigation or
subsequent reviews.)
21. See April 25, 2000, letter from Jeffrey A. May Director, Office of Policy
to Mr. Peter L. Sultan, DeKieffer & Horgan.
22. For example, see the preliminary results at footnote 44 and 45.
23. But see our position to Comment 1, supra.
24. See id.
25. See footnote 27, infra.
26. See 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) (released Dec. 23, 1999).
27. In its case brief, Dillinger cites two new documents to support its
arguments: United States - Imposition of Countervailing Duties On Certain Hot-
Rolled Lead and Bismuth Carbon Steel Products Originating in the United
Kingdom, Report of Appellate Body (May 10, 2000); and Delverde SRL v. United
States, 202 F.3d 1360 (Fed. Cir. 2000).
28. See October 8,1999, WTO Interim Panel Finds Against U.S. CVD Rules on
Privatization, 17 Inside U.S. Trade No. 140 at 4.
29. See supra footnote 28, Appellate Report.
30. See supra footnote 27, CAFC.
31. See footnote 11, supra.
32. Dillinger indicates that the Department should adopt an 11-year allocation
period as it did in Steel Wire Rod. In this case, the Department explained that
its previous methodology of relying on US IRS based industry-specific average
useful life of assets (as was used in the investigation of the subject
merchandise) was rejected by the U.S. Court of International Trade (the
"Court") in British Steel Plc. v. United States, 879 F. Supp. 1254 (CIT 1995).
At the same time, Dillinger urges the Department to utilize the principle
enunciated in Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from
the United Kingdom; Final Results of Countervailing Duty Administrative Review,
63 FR 18367 (October 22, 1998). In this case, finding that applying different
allocation periods (15 years and 18 years) for the same subsidies in two
different proceedings involving the same company generates significant
inconsistencies, the Department harmonized two different allocation periods
into one period, 18 years. However, in this review we are dealing with
different companies and a different set of subsidies.
33. In its final results of the investigation, the Department noted the
"periods of applicability" for the Steel Investment Act/Law, 1981 (with
amendments), and Investment Premium Act, both 1969 and 1986 (with amendments)
as they were stipulated in their respective Acts. See Final Affirmative
Countervailing Duty Determinations: Certain Steel Products from Germany, 58 FR
37315, 37316-37317 (July 9, 1993). Also see Countervailing Duty Orders and
Amendment to Final Affirmative Countervailing Duty Determinations: Certain
Steel Products From Germany, 58 FR 43756 (August 17, 1993).
34. See Dillinger's October 15, 1999, rebuttal (at 4, footnote 6) and in its
May 22, 1999, case brief (at 18). See also the German Group's May 22, 2000,
case brief at 11. (The German Group states that the task for the Department in
these final results is to decide whether the benefit of CIG payments received
by German producers from 1986 to 1990 would continue beyond the end of these
sunset reviews.)
35. See section III.A.4 of the Sunset Policy Bulletin: 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 whether the program
that gave rise to such benefit continues to exist.
36. See supra footnote 1.
37. See Final Affirmative Countervailing Duty Determinations: Certain Steel
Products from Germany,
58 FR 37315, 37321(July 9, 1993) (the Department found that some loans under
ECSC 54 provided countervailable benefits and that Hoesch, Preussag, Klockner,
and Thyssen received loans under ECSC 54 without specifying for what product
each company received loans (this is relevant with respect to Preussag and
Thyssen) and whether any particular loans they received were countervailable.).
Also see Countervailing Duty Orders and Amendment to Final Affirmative
Countervailing Duty Determinations: Certain Steel Products From Germany, 58 FR
43756 (August 17, 1993).
38. See section 351.218(d)(3) of the Department's Regulation.
39. See id. at sections 351.218(d)(2)(iii) and 351.218(e)(1)(ii)(C).
40. See Certain Corrosion-Resistant Carbon Steel Flat Products; Cold-Rolled
Carbon Steel Flat Products; and Cut-to-Length Carbon Steel Plate Products From
Germany; Preliminary Results of Full Sunset Reviews, 65 FR 16176(March 27,
2000), and accompanying Decision Memo. (In the preliminary results, the
Department explained that, during the investigation, the Department found that
IPA, Upswing East, Ruhr District Action Program, ECSC 54, ECSC 54 Intrerest,
and Joint Scheme provided a zero-benefit to German manufacturers/exporters of
corrosion-resistant steel; Joint Scheme and Upswing East provided a zero-
benefit to cold-rolled; and Structural Improvement Aids, Ruhr District Action
Program, ECSC 54, and ECSC 54 Interest provided a zero-benefit to cut-to-length
steel products. However, at the same time, the Department found that those
programs were used by the respective German steel companies.) Also see footnote
35, supra.
41. See section III.A.3.b of the Sunset Policy Bulletin: if a company has a
long track record of not using a program, including during the investigation,
the mere availability of the program, by itself, will not indicate likelihood;
on the other hand, if a subsidy program continues to exist (as in this case),
company-specific or industry-specific renunciation of countervailable subsidies
under that program, by themselves, does not indicate that continuation or
recurrence of a countervailable subsidy is unlikely.
42. See July 11, 2000 letter from Jeffrey A. May Director, Office of Policy to
Mr. Konrad Scharinger Economic Counselor Embassy of the Federal Republic of
Germany.
43. See SAA at 890-891 and section 351.218(e)(2)(i) of the Department's
Regulation.
44. In the investigation the Department found that funds were provided to
cover expenses associated with layoff of employees from January 1, 1980,
through December 31, 1986, and with plant closures which occur by December 31,
1985 (or in exceptional cases by December 31, 1989). See Final Affirmative
Countervailing Duty Determinations: Certain Steel Products from Germany, 58 FR
37315, 37316 (July 9, 1993)
45. The Department found that this program would expire by 1996. See id. at
37318.
46. Also see the Department's Position to Comment 7, supra.
47. See section III.A.6.b of the Sunset Policy Bulletin.
48. Various provisions of the URAA were enacted in light of Article 6.1, 8 or
9 of the Subsidies Agreement. In recognition of the fact that the provisions of
these articles might lapse in the future, section 282(c)(5) of the URAA
required the Office of the United States Trade Representative to submit a
report to Congress no later than June 30, 2000, identifying the provisions of
U.S. law that should be repealed or modified due to such a lapse. In the
"Report to the Congress Under Section 282(c)(5) of the Uruguay Round Agreements
Act," section 752(a)(c) was identified as a provision to modify by exchanging
the reference to Article 6.1 of the Subsidies Agreement.