47 FR 39345
NOTICES
DEPARTMENT OF COMMERCE
Final Affirmative Countervailing Duty Determinations; Certain Steel Products
From the Federal Republic of Germany
Tuesday, September 7, 1982
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AGENCY: International Trade Administration, Commerce.
ACTION: Final affirmative countervailing duty determinations.
SUMMARY: We have determined that certain benefits which constitute subsidies within the
meaning of the countervailing duty law are being provided to manufacturers, producers, or
exporters in the Federal Republic of Germany (FRG) of certain steel products, as described in
the "Scope of Investigations" section of this notice. The estimated net subsidy for each firm and for
each
product is indicated under the "Suspension of Liquidation" section of this notice. The estimated net
subsidy on the steel products under investigation produced by each of 7 companies is de minimis.
However we have not excluded the products of one of these companies from these determinations
for reasons stated in the "Suspension of Liquidation" section of this notice. With respect to the
products of the other 6 companies, the suspension of liquidation ordered in our preliminary
affirmative countervailing duty determinations shall be terminated. All estimated
countervailing duties shall be refunded and all appropriate bonds shall be released with
respect to imports of the products under investigation from the 7 companies for which we have
determined de minimis estimated net subsidies. The U.S. International Trade Commission (ITC) will
determine within 45 days of the publication of this notice whether these imports are materially
injuring, or threatening to materially injure, a U.S. industry.
EFFECTIVE DATE: September 7, 1982.
FOR FURTHER INFORMATION CONTACT:
Mary S. Clapp, Office of Investigations, Import Administration, International Trade
Administration, U.S. Department
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of Commerce, 14th Street and
Constitution Avenue, NW., Washington, D.C. 20230, telephone: (202) 377-2438.
SUPPLEMENTARY INFORMATION:
Final Determinations
Based upon our investigations, we have determined that certain benefits which constitute subsidies
within the meaning of section 701 of the Tariff Act of 1930, as amended (the Act), are being
provided to manufacturers, producers, or exporters in the FRG of certain steel products, as
described in the "Scope of Investigations" section of this notice. The following programs are found
to provide benefits which constitute subsidies:
Investment Premium Act--Articles 1, 2, and 3.
Joint Scheme: Improvement of Regional Economic Structure (partially countervailable).
Capital infusion--Peine-Salzgitter.
European Coal and Steel Community (ECSC) loan guarantees.
ECSC loans.
ECSC loan guarantees.
ECSC interest rebates.
Labor assistance from ECSC rehabilitation aids.
ECSC research and development (capital equipment).
European Investment Bank (EIB) loans.
Special case--Rochling.
Special case--Dillinger.
We have determined the estimated net subsidy to be the amount indicated for each firm and for
each product in the "Suspension of Liquidation" section of this notice. The estimated net subsidy for
each firm and for each product is indicated under the "Suspension of Liquidation" section of this
notice. The estimated net subsidy on the steel products under investigation produced by each of 7
companies is de minimis. However we have not excluded the products of one of these companies
from these determinations for reasons stated in the "Suspension of Liquidation" section of this
notice. With respect to the products of the other 6 companies, the suspension of liquidation
ordered in our preliminary affirmative countervailing duty determinations shall be
terminated. All estimated countervailing duties shall be refunded and all appropriate bonds
shall be released with respect to imports of the products under investigation from the 7 companies
for which we have determined de minimis estimated net subsidies.
Case History
On January 11, 1982, we received petitions from United States Steel
Corporation; counsel for Bethlehem Steel Corporation; and counsel for Republic Steel Corporation,
Inland Steel Company, Jones & Laughlin Steel, Inc., National Steel Corporation, and Cyclops
Corporation (the Five), filed on behalf of the U.S. industry producing carbon steel structural
shapes, hot-rolled carbon steel plate, hot-rolled carbon steel sheet and strip, and cold-rolled
carbon steel sheet and strip. The petitions alleged that certain benefits which constitute subsidies
within the meaning of section 701 of the Act are being provided, directly or indirectly, to the
manufacturers, producers, or exporters in the FRG of the steel products listed above. Counsel for
Bethlehem Steel Corporation and counsel for the Five alleged that "critical circumstances" exist, as
defined in section 703(e) of the Act. We found the petitions to contain sufficient grounds upon
which to initiate countervailing duty investigations, and on February 1, 1982, we initiated
countervailing duty investigations (47 FR 5741).
Since the FRG is a "country under the Agreement" within the meaning of section 701(b) of the Act,
injury determinations are required for these investigations. Therefore, we notified the ITC of our
initiations. On February 26, 1982, the ITC preliminarily determined that there is a reasonable
indication that these imports are materially injuring, or threatening to materially injure, a U.S.
industry.
We presented questionnaires concerning the allegations to the Delegation of
the Commission of the European Communities and to the government of the FRG in Washington,
D.C. On April 30, 1982 we received the responses to the questionnaires. Supplemental responses
were received on May 17, 1982. On June 10, 1982, we issued our preliminary determinations in
these investigations (47 FR 26321).
We stated in our preliminary determinations that the government of the FRG was providing
benefits which constitute subsidies to its manufacturers, producers, or exporters of certain steel
products. The programs preliminarily determined to bestow subsidies were:
FRG government investment grants (referred to in this notice as Investment Premium Act).
State government grants.
FRG/state investment grants (referred to in this notice as Joint Scheme: Improvement of Regional
Economic Structure.
Research and development grants.
Regional labor program
ECSC loans, including housing loans.
ECSC loan guarantees.
Capital infusions by the FRG.
Special case--Rochling.
This determination was amended on July 30, 1982, pursuant to an order of the
Court of International Trade, to include the estimated net subsidy provided under the coking coal
production assistance program (47 FR 33728).
Scope of the Investigations
The products covered by these investigations are:
Carbon steel structural shapes.
Hot-rolled carbon steel plate.
Hot-rolled carbon steel sheet and strip.
Cold-rolled carbon steel sheet and strip.
The products are fully described in Appendix 1 which appears with the notice of "Final Affirmative
Countervailing Duty Determinations: Certain Steel Products from Belgium," in this issue of
the Federal Register. The product definition of hot-rolled carbon steel sheet and strip has been
amended since the initiation of these investigations (47 FR 5739-49).
AG der Dillinger Huttenwerke (Dillinger), Thyssen AG (Thyssen), Stahlwerke Peine-Salzgitter AG (P
& S), Klockner-Werke AG (Klockner), Stahlwerke Rochling- Burbach GmbH (Rochling), Hoesch
Werke AG (Hoesch), Krupp Stahl AG (Krupp), and Otto Wolff AG (Otto Wolff) are the only known
producers and exporters in the FRG of the subject products which were exported to the United
States. The period for which we are measuring subsidization is the calendar year 1981,
except for Thyssen, Klockner, and P & S, for which we are using their fiscal year, October 1, 1980 to
September 30, 1981.
Analysis of Programs
In their responses, the government of the FRG and the Delegation of the Commission of the
European Communities provided data for the applicable periods. Additionally, we received
information from the following firms, which produced and exported the following products under
investigation, which were exported to the United States:
Firms and Carbon Steel Products
Dillinger--Hot-rolled carbon steel plate
Thyssen--Carbon steel structural shapes, hot-rolled carbon steel plate, hot- rolled carbon steel
sheet and strip, and cold-rolled carbon steel sheet and strip
P & S--Carbon steel structural shapes, hot-rolled carbon steel plate, hot- rolled carbon steel sheet
and strip,
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and cold-rolled carbon steel sheet and strip
Klockner--Carbon steel structural shapes, hot-rolled carbon steel plate, hot-
rolled carbon steel sheet and strip, and cold-rolled carbon steel sheet and strip
Hoesch--Carbon steel structural shapes, hot-rolled carbon steel plate, hot- rolled carbon steel
sheet and strip, and cold-rolled carbon steel sheet and strip
Krupp--Carbon steel structural shapes, hot-rolled carbon steel plate, hot- rolled carbon steel sheet
and strip, and cold-rolled carbon steel sheet and strip
Otto Wolff--Cold-rolled carbon steel sheet and strip
Rochl did not submit a response but is known to be a producer and exporter of the carbon steel
structural shapes under investigation, which were exported to the United States. Therefore, for
Rochling we are applying a rate which is based, in part, on the highest rate calculated for individual
programs. Our calculations for Rochling are discussed in the "Programs Determined to Confer
Subsidies" section of this notice.
Throughout this notice, general principles and conclusions of law applied by the Department of
Commerce to the facts of the current investigations concerning certain steel products are
described in detail in Appendices 2-4, which appear with the notice of "Final Affirmative
Countervailing Duty Determinations: Certain Steel Products from Belgium," in this issue of
the Federal Register. Based upon our analysis of the petitions, responses to our
questionnaires, our verification, and oral and written comments by interested parties, we have
determined the following.
I. Programs Determined To Confer Subsidies
We have determined subsidies are provided under the following programs to manufacturers,
producers, or exporters in the FRG orf carbon steel structural shapes, hot-rolled carbon steel plate,
hot-rolled carbon steel sheet and strip, and cold-rolled carbon steel sheet and strip:
A. Federal Programs.
1. Investment Premium Act, Articles 1, 2, and 3. Domestic investors building
new, or expanding existing, operations in certain regions of the FRG receive cash reimbursements
from the FRG tax authority based on a percentage of capital investment costs. These
reimbursements are available to industries situated in the "zonal border areas" adjacent to the
German Democratic Republic, as well as other areas which are economically depressed. Under the
Investment Premium Act investors have a legal claim to reimbursements once the eligibility
requirements are satisfied. In principle, all industries meeting the requirements receive the
reimbursements and no industrial sector in the regions covered by the Investment Premium Act
benefits more than any other. However, because articles 1, 2, and 3 of the Investment Premium Act
limit assistance to regions with depressed economic structures,
there is a regional preference and, therefore, the reimbursements are countervailable.
Subsidy amounts were determined by using the grants methodology described in Appendix 2. The
discount rates used in the calculations were based on the annual average FRG government bond
yields reported by the Organization for Economic Cooperation and Development (OECD). The
subsidies were then allocated over the value of total steel sales of the companies in 1981 to
determine the ad valorem subsidy for 1981.
Companies Receiving Benefits:
P & S. Under Articles 1, 2, and 3 of the Investment Premium Act, we calculated an ad valorem
subsidy rate of 0.182 percent to P & S.
Dillinger. Under Articles 1, 2, and 3 of the Investment Premium Act, we calculated an ad valorem
subsidy rate of 0.0001 percent to Dillinger.
2. Joint Scheme: Improvement of Regional Economic Structure. This Joint Scheme combines equal
portions of federal and state funds that are provided by the budgets of those two levels of
government. The funds are used to reimburse companies for capital investment costs up to certain
ceilings, usually between 10 and 25 percent of investment costs. In the preliminary determinations
we referred to this program as the "Improvement of Regional Trade."
State governments administer the program and make the decisions on whether to grant an investor
assistance under the Joint Scheme. Investors have no legal
claim on the funds and once the annual budgetary allocation is exhausted, no further applications
are considered. Of the funds disbursed, no sector of industry within a state receives any preference.
We verified that the state government of North Rhine Westphalia (NRW) allocated the Joint Scheme
funds in that state without sectoral preference. However, the federal portion is allocated by the
Bundestag according to a discretionary apportionment formula which assigns to each region a
percentage of the total funds available.
Federal funds are disbursed on a state-by-state basis and then they are matched by state budgetary
allocations. Since the federal funds are allocated using a specific and unequal regional
apportionment formula, we find that the federal portion of the Joint Scheme operates on a
regionally preferential basis and, therefore, constitutes a subsidy within the meaning of the Act.
We treated the loan and grants that the government of the FRG provided to Krupp, under the Joint
Scheme program, according to the appropriate methodologies described in Appendix 2, we
compared the interest rate on the loan with the German corporate bond yield as reported by the
OECD, which we used as our benchmark. This rate was the best available in the absence of any
published, long-term rates for commercial loans. For the grant we used as the discount rates the
German government bond yields as reported by the OECD and estimated the average life of capital
assets for the steel industry to be 15
years. The resulting amounts were allocated across the value of total steel sales for the company.
Companies Receiving Benefits:
Krupp. Under this program we calculated ad valorem subsidy rates of 0.001 percent for the loan
and of 0.004 for the grants to Krupp.
3. Capital Infusion--Peine-Salzgitter. According to sections 291-307 of the German Stock
Corporation Law, profit transfer agreements may be entered into whereby a subsidiary company
transfers both its profits and losses to its parent. Salzgitter AG (SAG), a government-owned holding
company, has established transfer agreements with many of its subsidiaries, including P & S. This
account, comprised of accumulated profits and capital infusions, is used to cover the consolidated
losses of SAG, including the losses transferred to SAG from its subsidiaries which participate in the
profit transfer agreement. We do not consider a transfer agreement with a government controlled
company a subsidy per se. In this case, however, when losses are transferred, they are covered by
a free reserve account at SAG which received capital infusions from the FRG. Therefore, to the
extent the government subsidizes SAG, we believe this arrangement establishes a mechanism for
passing subsidies through SAG to P & S.
The actual replacement of losses occurs in the year after the loss is incurred and the amount of loss
coverage actually given never exceeds the amount of the previous year's losses.
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Thus we consider this arrangement between SAG and P & S as a means for covering losses on a
continuing basis. The fact that the transfers of losses are charged agains the free reserve in a
subsequent year is merely an administrative convenience.
In 1981, P & S incurred losses, which were not transferred to SAG until May of 1982. Furthermore,
P & S incurred no losses in 1980 which would have been transferrable to SAG in 1981. Since
P & S had no occasion to draw on the free reserve in 1981, it received no countervailable benefit
through SAG in that year. However, it may reasonably be assumed that P & S is continuing to
receive benefits under its arrangement with SAG. Any countervailable benefits flowing to the
company which occur outside the period for which we are measuring subsidization would be
included in an annual review following the issuance of countervailing duty orders in these
investigations.
B. ECSC Programs. 1. Loans from the ECSC. For the reasons described in Appendix 3, we determine
that ECSC loans from borrowings by the ECSC on world capital markets confer subsidies to the
extent that they are made at preferential rates. To calculate the subsidy we used the loan
methodology described in Appendix 2. The benchmark used is the corporate bond yield reported
by the OECD based on the currency in which the loan was denominated. The rate was the best
available in the absence of any published, long-term
rates for commercial loans. In the particular case where a company was able to obtain a
comparable loan from a commercial lender, we compared EECSC loans with the commercial loans
to determine any interest rate benefit. We allocated the subsidies over the value of each company's
total steel sales.
Companies Receiving Benefits:
P & S. Under this program we calculated an ad valorem subsidy rate of 0.053 percent to P & S.
Otto Wolff. Under this program we calculated an ad valorem subsidy rate of 0.015 percent to Otto
Wolff.
Thyssen. Under this program we calculated an ad valorem subsidy rate of 0.029 percent to
Thyssen.
Krupp. Under this program we calculated an ad valorem subsidy rate of 0.047 percent to Krupp.
Dillinger. Under this program we calculated an ad valorem subsidy rate of 0.055 percent to
Dillinger.
Hoesch. Under this program we calculated an ad valorem subsidy rate of 0.025 percent to Hoesch.
Klockner. Under this program we calculated an ad valorem subsidy rate of 0.032 percent to
Klockner.
2. ECSC loan guarantees. For reasons described in Appendix 3 we determined that ECSC loan
guarantees confer subsidies to the extent that they enable a
company to receive preferential rates. We determined that the interest rate given to P & S under its
loan guarantee was not preferential and yielded no benefit. No other company in the FRG received
benefits under this program.
3. Labor Assistance from the ECSC Rehabilitation Aids. As described in Appendix 3, grants from the
ECSC under this program are used to assist the resettlement and retraining of steel workers within
and outside the steel industry as well as to provide some unemployment and early retirement aids.
For the reasons described in Appendix 3, we have determined that these grants confer
countervailable benefits to the products under investigation where they relieve respondents of
expenses they would ordinarily incur in the normal course of business. We are countervailing
20.05 percent of the total grants bestowed in 1981 because 20.05 percent of the ECSC budget for
1981 was financed by government contributions.
We allocated the subsidy for each company across the value of that company's total steel sales.
Because we considered that the grant was used for an item which is relatively small and is normally
expensed in the year received, we allocated the entire amount to the year of receipt (as described
in Appendices 2 and 3).
Companies Receiving Benefits:
Hoesch. Under this program we calculated an ad valorem subsidy rate of 0.014 percent to Hoesch.
Thyssen. Under this program we calculated an ad valorem subsidy rate of 0.000002 percent to
Thyssen.
4. Interest Rate Rebates. The ECSC provides interest rate rebates on all or part of loans it makes to
companies. The rebate, in the form of a reduced rate, is granted on the condition that some of the
new jobs created will be reserved primarily for workers made redundant in ECSC industries.
For the reasons described in Appendix 3, we consider 20.05 percent of the interest rebates
received in 1981, on loans which benefited steel production, to be countervailable. To arrive at our
ad valorem rates we allocated the countervailable amount over the total value of sales of steel
products by each steel company for 1981. As indicated in Appendix 2, we treated the subsidy as an
expense item, and allocated it exclusively to the year of receipt of the benefit.
Companies Receiving Benefits:
Thyssen. Under this program we calculated an ad valorem subsidy rate to Thyssen of 0.006
percent.
Dillinger. Under this program we calculated an ad valorem subsidy rate to Dillinger of 0.007
percent.
D. European Investment Bank (EIB). The EIB is described in Appendix 3. In the FRG we learned that
one company, Dillinger, had received an EIB loan. Article 130 of the Treaty of Rome states that the
EIB grants loans and furnishes
guarantees first and foremost for projects promoting development of areas confronted with
economic difficulties. Because of this regional preference we have determined that preferential
loans provided by the EIB confer countervailable subsidies within the meaning of the Act.
Only one company in the FRG, Dillinger, received EIB loans but since the interest rate was not
preferential we have determined that it received no countervailable benefit.
E. ECSC Research and Development (Capital Equipment). The purchase of capital equipment by a
steel company with funds from ECSC R & D grants is partially countervailable as explained in
Appendix 3. Two companies in the FRG purchased capital equipment with ECSC R & D grants,
Dillinger and P & S.
Companies Receiving Benefits:
Dillinger. Under this program we calculated an ad valorem subsidy rate of 0.088 percent to
Dillinger.
P & S. Under this program we calculated an ad valorem subsidy rate of 0.001 percent to P & S.
F. Special Case--Rochling. Rochling did not respond to our questionnaire. Therefore, we have
determined that all the above programs, from which the petitioners alleged that Rochling
benefited, are subsidies for Rochling. Subsidies were calculated on the basis of the best information
available. In calculating these subsidies we used the highest rate calculated for each
program which was used by other companies under these investigations.
These programs and ad valorem subsidy rates for Rochling are:
TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT DISPLAYABLE
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Where we found that the purpose of a program was expressly to assist Rochling, we calculated
subsidies on the basis of publicly available company data.
The FRG program specific to Rochling provided loans that were conditionally repayable,
depending on future profits. Because profits were unlikely, we regarded the benefits as grants and
calculated subsidies using the grant methodology in Appendix 2. We allocated the calculated
benefit over 15 years, the average life of capital assets in the steel industry.
We allocated the resulting subsidies across the total value of Rochling's steel sales. The benchmark
used in the calculations is based on the FRG government bond yield as reported by the OECD. We
determined an ad valorem subsidy of 0.876 percent on these conditionally repayable loans.
The total ad valorem subsidy rate calculated for Rochling is 1.131 percent.
G. Special Case--Dillinger. Counsel for Dillinger requested that we consider production for the
account of Dillinger by Solmer and Sollac, French "cost- companies," as products of Dillinger.
Solmer and Sollac produced hot-rolled carbon steel sheet and strip and cold-rolled carbon steel
sheet and strip for Dillinger's account. Counsel for Dillinger stated that Solmer and Sollac are
really acting as integral extensions of Dillinger's production operations. We have determined that
the Solmer and Sollac production for Dillinger is carbon steel sheet and strip of French origin.
For a more detailed explanation of this situation, refer to the notice of "Final Affirmative
Countervailing Duty Determinations: Certain Steel Products from France" in this issue of the
Federal Register. Products sold by Dillinger but produced in France are not included in this
suspension of liquidation.
II. Programs Determined Not To Confer Subsidies
We have determined subsidies are not being provided under the following programs to
manufacturers, producers, or exporters in the FRG of carbon steel structural shapes, hot-rolled
carbon steel plate, hot-rolled carbon steel sheet and strip, and cold-rolled carbon steel sheet and
strip:
A. Federal Programs. 1. Investment Premium Act--articles 4, 4a, and 4b. The Investment Premium
Act was described in part in the "Programs Determined to Confer Subsidies" section of this notice.
Benefits under articles 4, 4a, and 4b of the Investment Premium Act are generally available to all
industries in the FRG without regard to sector or location. We reviewed the eligibility requirements
as stated in FRG administrative regulations.
Our analysis of the payments under articles 4, 4a, and 4b revealed that
reimbursements granted under these sections were to domestic producers throughout the FRG for
research and development projects, for investments in energy production and distribution, and for
the general promotion of capital investments. There is no regulatory or administrative directive or
guideline which indicates that any specific industry or group of industries or a particular
geographical region is preferred. Some steel companies in these investigations have received
reimbursements.
Based on these facts and the reasons in Appendix 4, we have determined that benefits provided to
the steel companies under articles 4, 4a and 4b of the Investment Premium Act are not preferential
and, therefore, do not constitute subsidies within the meaning of the Act.
2. Federal Ministry of Research and Technology (BMFT). The BMFT provides grants for research
and development projects that conform to the policies and objectives of the FRG, including
expanding scientific knowledge and the competitive position of the FRG economy, improvement of
living and working conditions, and the conservation and preservation of natural resources.
Organized into Directorates General, the BMFT funds projects in three basic areas of research: 1)
energy and environmental protection, 2) information and production technologies, and 3)
aerospace technology, transportation, medicine and biology. Any FRG industry interested in
conducting research under one of these Directorates General may apply there for funding and
project approval.
Under the "General Program on Raw Materials Research" (a subgroup of the Directorate General for
energy and environment), the iron and steel industry has participated in a number of R & D
projects funded by the BMFT.
BMFT guidelines stipulate that the results of funded R & D projects must be made publicly available.
This is done through the publication of articles in scientific journals and BMFT research reports.
In our preliminary determinations, we found the BMFT R & D grants to be countervailable. At that
time, it was our understanding that funds were set aside specifically for use by the iron and steel
industry, and that research results were available only to firms in the FRG. Information obtained
during the course of these investigations now indicates that funds are not allocated by industrial
sector, but by area of general research applicability. Additionally, research results are available to
any interested party, not only in the FRG, but worldwide. Inasmuch as the BMFT funds are not
allocated by specific industrial sector, and the results of research projects are generally available,
we now find that these R & D grants do not constitute subsidies within the meaning of the Act.
3. Federal Environment Agency, Umweltbundesamt (UBA). The UBA manages federal government
funds which can be provided as reimbursement for up to 50 percent of a company's investment in
air pollution equipment. The investment must be for a demonstration project and the technology
must be transferable to comparable existing facilities.
We have determined that UBA pollution control funds do not confer countervailable benefits
because we have verified that they are allocated across a broad spectrum of industries ranging
from chemicals to food and beverages. Further, all industries receive similar reimbursements for
similar portions of pollution control projects funded by the UBA.
4. Labor Assistance. The Labor Promotion Act of 1969 provides FRG steel companies with labor
assistance pursuant to articles 54, 49, 41, 47, 91 and 97 which is part of a national manpower
policy.
a. Article 54. This article provides employers with loans relating to costs incurred for training
hard-to-place employees.
b. Article 49. This program provides funds for costs incurred in training workers in need of training
to update outmoded skills.
c. Articles 41 and 47. We verified that these articles provide for training assistance, in the form of
direct payments to employees, which will enable workers to change jobs through the improvement
of skills.
d. Article 91. Funding provided by this article goes to an employing company to reimburse its
expenses for training unemployed workers sent to it for that purpose by public employment
offices.
e. Article 97. This program provides employers with funds to hire more than the required number
of older people, thus reducing the level of unemployment among the elderly.
Conclusions
Benefits under these programs are available to all industries or employees in all industries in the
FRG, regardless of location or sector. Therefore, we have
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determined that these benefits do not constitute subsidies within the meaning of the Act.
In the preliminary determinations we treated Article 91 as conferring subsidies (under the heading
"Regional Labor Program") because we believed the reason for providing funds was to assist
particular geographical regions. In our verification we learned that the qualifications for assistance
was an unemployment level (6 percent or above), and that the regional designation was in
administrative convenience. Because assistance under this article is part of a national policy to
relieve unemployment and is not targeted to specific regions or industries as such, we do not now
consider it is conferring a subsidy within the meaning of the Act.
B. Federal Loan Guarantees. The FRG guarantees loans made by commerical lenders to industrial
firms under this program: "Domestic Guarantees of the Federal Government to Promote Trade and
Industry." They are provided according to budgetary legislation and are meant to serve broad
national social and
economic objectives not realizable without such financial guarantees. Such guarantees enable
companies to borrow at rates lower than they would otherwise pay. Since the loan guarantees are
available on equal terms to all industrial borrowers in the FRG, and since our investigation
indicates that no specific industry, group of industries, or industries in particular regions are the
main beneficiaries of these guarantees, we have determined that these loan guarantees are not
countervailable.
C. State Programs. 1. North Rhine-Westphalia--Research and Development. The NRW government
has an "Action Program for the Ruhr District" which is an overall program of assistance, to
industries, funded entirely by the NRW government. Steel companies under investigation have
participated in a sub- program of the Action Program entitled "Technology Program Steel," which
focuses on R & D.
The main objective of the sub-program is to provide R & D funds to projects with innovative
features. There are no specific eligibility criteria or application forms. The state allocates the funds
based on the merits of the proposals.
During verification, we learned that once fund allocations are approved by the state, the projects
and the funding levels are publicly announced. Any reports generated by the project and any
patents that result from technological innovations must also be publicly announced and made
publicly available.
We have determined that R & D funds provided for projects under the "Technology Program Steel"
are not subsidies because the results must be made publicly available. Therefore, they convey no
specific benefit to the recipients of the funds.
In the preliminary determinations we found this part of the Action Program to provide
countervailable benefits because we believed the research results were available only to FRG
companies. Our verification established the results were also publicly available. Therefore, these
funds are not countervailable under the Act.
2. North Rhine-Westphalia--Labor Programs. a. Unemployed Young People. Training facilities
situated in the state of NRW are eligible for assistance. Emphasis is placed on increasing the number
of young people trained in existing training facilities.
b. Trade Apprenticeships for Young People. Under this program, training facilities in the state of
NRW receive assistance only if they provide additional places for young females in technical trade
positions.
c. Places for Young People Without Apprecticeships. This program provides assistance to training
facilities in the state of NRW which create training positions for youths.
d. Jobs for Disabled Persons. Investment grants are given by the state government through the
Landschaftsverbank Westfalen-Lippe and
Landschaftsverbank Rheinland as an incentive to firms which voluntarily create more jobs for the
disabled.
Conclusions
Steel companies under investigation received funds under these programs. These state labor
assistance programs are available on equal terms to all industries in the relevant political
subdivision and are not specific to an industry or a group of industries. For this reason, we have
determined that benefits under these programs do not constitute subsidies within the meaning of
the Act.
3. North Rhine-Westphalia--Worker Housing Program. Under the state's program for the
"Promotion of Building of Houses" of December 23, 1977, housing construction loans are made
available at concessionary interest rates. Steel companies use this source of funds for construction
of residential housing for their employees. The program specifies the type and capacity of the units
to be built and the qualifications of the occupants. To further assist the occupants, the same
program provides grant funds to the builders of homes in compensation for reducing their rental
charges. The program is open to all applicants regardless of type of firm or industry or location
within the state. Therefore, we have determined that the funds received under this
program are not subsidies within the meaning of the Act.
4. North Rhine-Westphalia--Pollution Control Grants. The state of NRW provides partial funding for
installing pollution control equipment through direct grants to firms whose plants need to meet
new environmental standards. Steel companies under investigation received funds under this
program. While the program is open to firms in any industry with pollution problems, applicants
must demonstrate the financial ability to undertake these projects. We have determined that this
program does not confer benefits which constitute subsidies on the products under investigation
because the allocation of state funds for the program is for all industries located in the state of
NRW, and is not to specific industries or to companies in particular regions within the state.
5. Neidersachsen--Investment Grants. The state of Niedersachsen provides assistance through
investment premium grants under a rationalization program to improve the state's basic economic
structure. Grants may be made of up to 7.5 percent of the qualified amount of a project or to a
maximum of DM 15 million. the program is open to all commercial and industrial enterprises
within Neidersachsen, but applicants have no legal right to the funds. Steel companies under these
investigations received funds under this program. Since we verified that the grants are not
allocated to specific industries or regions, we find the program not to confer benefits which
constitute subsidies on the products under investigation within the meaning of the Act.
We preliminarily determined that this program and the preceding NRW program were
countervailable because we believed then that they were targeted at specific industries. Our
verification revealed that this is not the case, and that the funds are allocated across a number of
different industries.
D. Other FRG Programs. 1. European Recovery Program (ERP). This program began with the
Marshall Plan for the postwar rehabilitation of Western Europe. ERP funds are reserved exclusively
for industrial rehabilitation and promotion. The source of funds for this program is a system of
principal and interest repayments from Marshall Plan loans. A committee, which includes
members of the government, directs the
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allocation of ERP funds according to the guidelines of the ERP Special Fund. These guidelines,
adopted annually, state eligibility criteria, application procedures and use of ERP funds. The terms
and conditions of ERP loans are published in the Federal Journal. Steel companies in these
investigations received funds under this program.
We verified that ERP funds are disbursed to all branches of industry and that no specific industry,
group of industries or industries in particular regions is the main beneficiary of these funds.
Therefore, we have determined that this program does not confer benefits which constitute
subsidies within the meaning of the Act.
2. Loans From Credit Institutions Controlled by the FRG. The Kreditanstalt fur
Weideraufbau was established as part of the national recovery program after World War II. This
credit institution is approximately 80 percent owned by the FRG and 20 percent owned by the
state. The bank offers long-term commercial development loans to industries at interest rates
lower than those available from comparable commercial loans. In the preliminary determinations,
we stated that this program was not used. During the verification we learned Hoesch received loans
from this source.
Information developed during the verification indicates that this institution makes loans available
without regard to specific industries or regions. Therefore, we do not find benefits it may confer to
be subsidies on the products under investigation within the meaning of the Act.
D. German Coal Subsidies--Final Negative Determinations. In the preliminary determinations, we
found that production assistance paid to FRG producers of coking coal did not bestow a
countervailable benefit upon the production, manufacture or exportation of FRG steel. The sole
ground cited for that determination was that FRG coking coal is not used solely by the FRG steel
industry, but instead is used in significant amounts by many FRG industries (e.g., by the chemical
and nonferrous metal industries and for home heating). Therefore, we concluded that subsidization
of FRG coking coal could not be considered subsidization of a specific enterprise or industry (other
than the coal industry) within the meaning of section 771(5)(B) of the Act (47 FR 26325).
Subsequently, Republic Steel Corporation sought judicial review of this finding under section
516A(a)(1)(B) of the Act. The government conceded for the purposes of the litigation that the
rationale stated in the preliminary determinations for the conclusion that the program was not
countervailable was not supported by the administrative record as of the date of the preliminary
determinations, June 10, 1982. On July 29, 1982, at the government's request, the court remanded
the case to the Department and instructed it to calculate the amount of the countervailable benefit
preliminarily attributable to the FRG coking coal price support program for each
manufacturer/producer/exporter, and to add it to the amount of the countervailable subsidies
previously determined. On July 30, 1982, the Department issued amended preliminary
determinations, effective June 17, 1982, which found preliminarily that the FRG coking coal price
support subsidy was 1.76 percent ad valorem (47 FR 33728, August 4, 1982).
Between the preliminary determinations and these final determinations, we have analyzed and
verified the FRG coal subsidy program as it applies to steel. Based upon the verified information in
the records of these investigations, we find that production assistance paid to producers of coking
coal used by the iron and steel industry does not confer a countervailable benefit on either
non-FRG or FRG steel producers.
As we stated in Appendix B to "Preliminary Affirmative Countervailing Duty
Determinations, Certain Steel Products from Belgium" reached on June 10 (47 FR 26309), benefits
bestowed upon the manufacturer of an input do not flow down to the purchaser of that input if the
sale is transacted at arm's length. In an arm's length transaction, the seller generally attempts to
maximize its total revenue by charging as high a price and selling as large a volume as the market
will bear.
These principles apply to FRG coal sales as follows. With respect to sales of FRG coal outside the
FRG, the price charged for subsidized FRG coal certainly does not undercut the freely available
market price. We note that the FRG Government is required by the Treaty of Paris of 1951 to obtain
the approval of the EC for any FRG production assistance to its coal industry. Commission Decision
(73/287/ECSC) of July 25, 1973 states that the EC cannot and does not sanction production
assistance to coal mining by member states if it reduces the price below the world market price.
Therefore, non-FRG purchasers of subsidized FRG coal do not benefit from FRG coal subsidies.
In support of this conclusion, we note that if non-FRG steel producers did benefit from FRG coal
subsidies, they would attempt to purchase FRG coal rather than unsubsidized coal from other
sources, including the United States, since there is no restriction on their ability to do so. The fact
that they purchase significant amounts of unsubsidized United States coal indicates that
the subsidies on FRG coal do not flow to non-FRG coal consumers.
Moreover, it is extremely unlikely that the FRG Government would significantly subsidize non-FRG
coal consumers unless compelled to do so by obligations with respect to the European
Communities. Since there is no evidence of such obligation, we have concluded that the FRG
Government is not in fact subsidizing non-FRG coal consumers.
With respect to sales of FRG coal within the FRG, on the other hand, the issue is more complicated
for two reasons: (1) the FRG government restricts the importation of coal into the FRG; and (2)
some FRG steel producers are related to Ruhrkohle, the major subsidized coal producer. With
respect to the coal import restrictions, the issue is whether the comparison of prices for FRG coal
with prices for non-FRG coal remains valid if FRG manufacturers cannot ordinarily buy non-FRG
coal. But for the import restrictions, FRG purchasers of subsidized FRG coal would not be
considered subsidized themselves unless the price of FRG coal undercuts the market price of coal.
We have been advised formally by the government of the FRG that the restrictions on the
importation of coal into the FRG are inseparbly linked with the benefits paid to the FRG coal
industry; and that the present restrictions on importation of coal would not exist in the absence of
such benefits to the coal industry so long as the cost of producing coal in the FRG remains
significantly above world market price levels. As the FRG government has
clearly stated, "It is not possible to discontinue the payment of assistance (to the coal industry) and
maintain the ban on imports at the same time." To do so "would burden the FRG steel industry with
the competitive disadvantages raised by difficult conditions in FRG coal deposits as well as with the
costs for FRG coal."
The coal subsidies and coal import restrictions are thus part and parcel of a comprehensive
program designed to assist the FRG coal industry, from which FRG steel producers receive no
benefits. In fact, the FRG steel producers are thereby prevented from buying coal at world prices,
and required to pay a slight premium. Production assistance to the FRG coal industry benefits that
industry alone and does not operate to benefit the manufacture or production of
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steel. Therefore, under any reasonably foreseeable conditions, restrictions on the purchase of coal
by FRG steel producers cannot properly be viewed as an offset impermissibly used in calculating
net subsidies to FRG steel producers. The offset issue simply does not arise since, on the basis of
verified information currently available to us, there is no "gross subsidy" (from which an "offset"
would occur) to the FRG steel producers resulting from FRG subsidization of coal. As previously
noted, the other complication of the issue of sales of FRG coal within the FRG is the fact that some
FRG steel producers are related to Ruhrkohle, the subsidized FRG coal producer. In view of this
relationship, further consideration is required to determine whether
FRG coal subsidies flow to related FRG coal consumers, even where we believe they do not flow to
unrelated coal consumers, both FRG and non-FRG. Based on the verified facts of these
investigations, we have concluded that even FRG coal consumers related to Ruhrkohle do not
benefit from FRG subsidization of coal. In the first place, there appears to be no price
discrimination within the FRG between sales to purchasers related to Ruhrkohle and sales to
unrelated purchasers. Therefore, the fact of relationship does not detract from the arm's length
nature of the transfer price.
Moreover, we have determined that any benefits to FRG steel producers by dint of their partial
ownership of Ruhrkohle occurred approximately fifteen years ago, and were dissipated prior to the
period for which we are measuring subsidies. By the 1960's the operation of FRG coal mines had
become uneconomic, and their owners--including steel producers--tried to close them down in
1967-69. In accord with its energy policy, however, the FRG government compelled mine owners
to continue operating the mines. Ruhrkohle was formed. The coal mine owners were relieved of the
cost of shutting down the mines, and certain liabilities of the coal companies were assumed by the
government. Insofar as a steel producer partially owns Ruhrkohle, it shared these benefits.
However, both of these benefits were dissipated prior to the period for which we are measuring
subsidies. Therefore, we conclude that even steel producers related to Ruhrkohle are not
subsidized as a result of FRG subsidization of Ruhrkohle.
In support of this conclusion, we note that the FRG steel producers have consistently opposed the
requirement to continue to operate the FRG coal mines and to buy FRG coal. We conclude that if
the related FRG steel producers were benefiting from the FRG government's comprehensive plan to
subsidize coal and restrict imports, they would not be so opposed.
Clearly then, the structure of the German coal subsidy system is such as to restrict any benefits to
the coal industry itself and provide no advantages to purchasers of German coal, wherever located.
If any broader benefits flow from the subsidies in German coal, such benefits apply equally to all
consumers in the world, including the U.S. steel industry. Such subsidies may operate to increase
worldwide supply relative to worldwide demand and thereby lower the world market price of coal
on a uniform basis for all coal purchasers. This universal benefit cannot be viewed as a subsidy to
one coal purchaser vis-a-vis another such purchaser.
For the above reasons, we have determined that non-FRG steel producers and FRG steel producers
unrelated to Ruhrkohle do not benefit from production assistance paid to producers of coking coal
used by the iron and steel industry. Although it is a more difficult judgment, we also have
determined, based upon the verified facts of these investigations, that FRG steel producers related
to Ruhrkohle do not benefit from coking coal production assistance.
In addition to the above described FRG coking coal production assistance, some FRG steel
producers receive rebates of a portion of the cost of transporting coal to their facilities. We have
determined that these rebates are funded by contributions of the FRG steel companies, and
therefore do not confer countervailable benefits.
E. ECSC Programs.
1. ECSC Research and Development. For the reasons described in Appendix 3, we have determined
that, ECSC R & D funds do not confer any benefits which are subsidies within the meaning of the law.
2. ECSC Housing Loans. For the reasons described in Appendix 3, we have determined that ECSC
housing loans do not confer any subsidies on the respondent steel companies.
III. Programs Determined Not To Be Used
We have determined that the following programs which were listed in the notice of "Preliminary
Affirmative Countervailing Determinations, Certain Steel Products from the Federal Republic of
Germany" are not used by the manufacturers, producers, or exporters of the products subject
to these investigations:
A. ECSC Industrial Reconversion Loans. The program is described in Appendix 3.
B. The European Regional Development Fund (ERDF). The ERDF is described in Appendix 3. Based
upon our investigations, we have determined that no company under investigation received ERDF
funds.
C. State Government Loan Guarantees. State governments provide guarantees to commercial
lenders on loans to industry. Our verification indicated that no steel firm under investigation
carried on its books in 1981 any loans guaranteed by state governments. Therefore, we have
determined that this program has not been used in the period for which we are measuring
subsidization.
IV. Petitioners' Comments
Comment 1
Bethlehem claims that FRG steel companies with an interest in Ruhrkohle benefit from government
coal subsidies, and those coal subsidies effectively reduce the price of coking coal below world
market price.
DOC's Position
The Department's position on this issue is described in the "Programs
Determined Not to Confer Subsidies" section of this notice.
Comment 2
Petitioners argue that the Department should have considered FRG coal subsidies to subsidize all
steel companies purchasing that coal, both FRG and non-FRG, because the intent of the coal
subsidies is to stabilize coal supplies to the ECSC steel industry and to insure that industry against
the risk of adverse price developments on the world market. Petitioners claim that without this
subsidized coal, the ECSC steel companies would have had to pay higher world market prices.
DOC's Position
For the reasons indicated supra, we believe the possible effects on world coking coal prices of the
hypothetical absence of FRG subsidization of its coal industry are too speculative. However, were
coal prices to rise, we believe that they would rise throughout the world. There is no reason to
believe that prices would rise more for European purchasers of coal than for non-European
purchasers.
As also indicated in detail supra, we believe that the real economic effect of
FRG subsidies is to penalize, not to assist, the FRG steel companies. The FRG coal policy forces the
FRG steel
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companies to pay a slight premium for their coal purchases above the world market price.
Non-FRG purchasers of subsidized FRG coal are not similarly penalized, but certainly they receive
no demonstrable price advantage. These issues are discussed in Appendix 2.
Comment 3
Petitioners reject the Department's view that a party receiving a benefit on the production of its
merchandise is not assumed to share that benefit with an unrelated purchaser. They maintain that a
party may market its products at a lower price than it would be able to charge absent the subsidy in
order to secure or hold on to a larger share of the market, and thus to increase its profitability by
realizing lower unit costs and increased unit sales.
DOC's Position
We agree that there is more than one way to seek to achieve maximum profitability. In these
investigations, in fact, assistance to coal has been provided to enable some coal companies to sell
below their cost of production.
However, the FRG coal companies do not sell below the prices of coal in Europe and elsewhere. In
fact, the FRG steel producers are required to pay a slight but significant premium for FRG coal.
Under these circumstances, we disagree with petitioners' argument that the FRG steel companies
are indirectly subsidized through FRG coal subsidies.
Comment 4
Petitioners argue that the ECSC and the FRG government, through an "intense program of
coordinated subsidy financing," have assisted the FRG coal and steel industries in order to sustain
production at cost efficient levels, in significant part by producing for export.
DOC's Position
Although the arguments seem ambiguous, we believe that petitioners mean to imply that the FRG
and ECSC coal assistance programs constitute an export subsidy for steel. If so then we disagree,
since in both cases coal assistance is provided without the establishment of any condition
concerning the exportation of steel produced using that coal.
Comment 5
Petitioners maintain that since Ruhrkohle is owned by the major FRG steel companies, it has a
"focused purpose in passing on the benefit of the coal subsidies to the steel producers."
DOC's Position
To the contrary, our verified information indicates that the FRG steel companies opposed the
formation of Ruhrkohle and sought instead to discontinue operation of their uneconomic coal
mines. The FRG government effectively mandated the establishment of Ruhrkohle, not to benefit
the steel companies (which were opposed to its formation), but instead to facilitate national energy
policies and to maintain employment for coal miners.
Comment 6
Petitioners object to the Department's alleged requirement that a subsidy be demonstrated to
confer an unfair competitive advantage. Petitioners imply that in so doing, the Department is
usurping the jurisdiction of the ITC which is authorized to determine injury.
DOC's Position
Under the Act, the Department is required to determine whether respondents have received
subsidies within the meaning of the Act. To do so, the Department seeks to determine whether or
not respondents have received directly or indirectly an economic benefit. Whereas this is
relatively easy in the case of the direct bestowal of a grant, it is quite difficult with regard to
indirect subsidies allegedly conferred through the subsidization of inputs used in a final product. In
this more complex area, we believe the Department must consider whether there is an economic
benefit to manufacturers of the final product from subsidies bestowed on manufacturers of an
individual input. This is quite distinct from the ITC's determination whether imports of the final
product into the United States injure a United States industry. The Department therefore disagrees
with petitioners on this issue.
Comment 7
Petitioners argue that the Department has effectively considered the FRG coal import restrictions
as an offset to FRG subsidies to coking coal passed on to the FRG steel industry in the form of lower
prices for FRG coking
coal. They argue that the FRG import restrictions, a government imposed disadvantage to the FRG
steel producers, are like the disadvantage imposed by government regulations mandating strict
environmental control standards.
DOC's Position
We would agree that where a government imposes generally applicable regulations and then
preferentially exempts some but not all industries from those regulations, a potentially
countervailable benefit is bestowed upon the industries so exempted. The FRG coal situation is
quite different. The FRG restrictions on the importation of coking coal impose disadvantages only
on consumers of coking coal; it is this very same group which is effectively relieved of that
disadvantage through the FRG government assistance to its coking coal industry. The preferential
element involved in petitioners' environmental regulations example is entirely missing from the
FRG coal situation.
Petitioners' environmental regulations example does make a valuable point. If a government were
to impose strict, generally available regulations and then universally to exempt anyone from them,
the economic effect of the government activity would be completely neutral. One action simply
renders the other null and void. This is what we believe is happening with respect to the FRG steel
industry. The FRG government assists its coking coal industry, and assures it continued
maintenance through restrictions on the importation of coking coal into the FRG. Simultaneously
and inseparably it ensures that the FRG steel producers will not bear much of the cost of subsidies
to FRG coal by allowing them to purchase FRG coking coal at prices nearly down to world market
levels. The effect of assistance to the FRG coal producers and restrictions on the importation of
coal into the FRG are largely neutral to the FRG steel makers. The effect on them is that they are
required to pay a slight but significant premium for the price of coal used in their steel making
operations.
Comment 8
Petitioners argue that the FRG effectively assumes the costs of an input of steel production.
DOC's Position
So long as the price of FRG coking coal exceed the market price in Europe and elsewhere, we do not
believe that the record indicates any assumption by the FRG government of the cost of coking coal
for the FRG steel producers. Absent the FRG government's system of support for th FRG coal
industry, the FRG steel industry could aquire foreign coal at world market prices.
Comment 9
Petitioners suggest that FRG import restrictions would remain in place should the FRG government
discontinue assistance to its coal producers.
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DOC's Position
We note that the FRG government itself has indicated that "it is not possible to discontinue the
payment of assistance (to the coal industry) and maintain the ban on imports at the same time."
Comment 10
Petitioners claim that the proper way to value the commercial benefit to the recipient of grants and
loans is to examine each individual company's cost of capital, i.e., the average cost of equity and
debt when computing the cost of grants and the average cost of debt capital when computing the
cost for loans.
DOC's Position
We based our discount rate on annual government bond yields, for the reasons described in
Appendix 2.
Comment 11
Petitioners claim that DOC should have found certain ECSC programs to constitute subsidies even if
they were financed through levy funding. The ECSC borrows to finance its programs and there is
not differentiation between those programs funded by levy and those funded by debt. The DOC
should not have disaggregated the ECSC levies in determining the subsidies conferred under each
program. Petitioners state that the ECSC is a quasi-governmental organization, created to aid the
economic development of the steel and coal industries, rather than a commercial entity as the
respondents claim.
DOC's Position
The treatment of levy funded programs of the ECSC is discussed in Appendix 3.
Comment 12
Petitioners claim that an immediate return on an investment is not necessary. However, when the
FRG government injected funds into SAG, it should have been under terms that were consistent
with commercial practice. In fact, the FRG received no additional return on its investment in SAG.
DOC's Position
We do not consider the government ownership of a company, as such, to be a subsidy. However,
we did consider the capital infusion into SAG to constitute a grant for purposes of loss coverage
and, therefore, a subsidy as discussed in the "Programs Determined to Confer Subsidies" section of
this notice.
Comment 13
Petitioners stated that our preliminary calculations regarding preferential loans should have taken
suppliers' credit into account. They also believed we used the wrong benchmarks.
DOC's Position
These issues are discussed in Appendix 2.
IV. Respondents' Comments
Comment 1
Respondents argue that FRG coking coal production assistance is not a subsidy because if offers no
unfair competitive advanatge; the FRG users of coking coal pay more than the equivalent world
market price for coking coal.
DOC's Position
As indicated in detail supra, we agree.
Comment 2
Respondents argue that FRG coking coal assistance is not conferred upon a specific group of
industries, since only 63 percent of coking coal produced in the FRG is used in German steel blast
furnaces. (The remaining 37 percent is sold to non-German steel producers in the EC.)
DOC's Position
We disagree. The vast majority of FRG coking coal is used by the steel industry in the FRG or other
countries, and most of it used within the FRG.
Comment 3
Respondents argue that if there were no subsidization of the FRG coal industry, neither would there
be a ban on imports of coal into the FRG.
DOC's Position
As indicated in detail supra, we agree.
Comment 4
Respondents argue that the FRG government coal programs are part of its overall energy policy
and programs.
DOC's Position
We have noted and considered the FRG government's submission on this issue. The fact that these
programs are part of the FRG government's energy program would not per se preclude them from
being considered subsidies.
Comment 5
Respondents argue that they pay more for their coal than would otherwise be the case if the FRG
coal assistance program and import restrictions were not in effect.
DOC's Position
As indicated in detail supra, we agree. Largely on this basis we have determined that FRG
assistance to its coal producers does not indirectly subsidize either FRG steel producers or
non-FRG steel producers.
Comment 6
Respondents argue that even if the FRG entered the world market for coal and world coal prices
were driven up, they would be the same to all purchasers.
DOC's Position
We have no firm basis upon which to predict possible effects on world coal prices caused by
cessation of FRG subsidization of its coal industry.
Comment 7
Counsel for P & S claims that it has not received any subsidies resulting from government capital
infusions into the free reserve account of SAG. The assumption of P & S's losses by SAG is part of a
profit transfer agreement commonly found in the German corporate structure.
DOC's Position
When government funds are infused during a year in which there is a loss transfer, we view it as a
pass-through from the government to the subsidiary and therefore a subsidy as discussed in the
"Programs Determined to Be Subsidies" section of this notice.
Comment 8
Respondents claim that federal and state environmental grants should not be considered
countervailable subsidies because they are not directly related to the production, manufacture, or
exportation of the products under investigation and are not industry specific.
DOC's Position
The federal and state environmental grants are generally available to industry throughout the FRG
and the individual states of the FRG respectively. Therefore, we determine that they do not confer a
benefit which constitutes a subsidy within the meaning of the Act.
Comment 9
Respondents claim that articles 4, 4a and 4b of the Investment Premium Act are not regionally
preferential and that articles 1, 2 and 3 show no regional preference because the areas of eligibility
are determined by economic conditions which change periodically.
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Therefore, the Investment Premium Act does not constitute a subsidy under the Act.
DOC's Position
Articles 4, 4a and 4b provide benefits which are generally available to all industry and therefore,
do not constitute subsidies.
Benefits provided under articles 1, 2, and 3 are given on a regional basis and therefore confer
countervailable benefits.
Comment 10
Respondents claim that the BMFT does not fund research on an industry sectoral basis. Its
relationship with the steel industry is such that it pays firms to perform the research. Those firms
provide the research results to the BMFT, and the BMFT publishes reports which are made publicly
available.
DOC's Position
For the reasons stated in the "Programs Determination Not to Confer Subsidies" section of this
notice, we find the funds provided by the BMFT for R & D projects not to confer benefits which
constitute subsidies within the meaning of the Act.
Comment 11
Krupp claims that the R & D grants to it for technology development were part of the state of
North-Rhine Westphalia research program which is not industry specific and, therefore, are not
subsidies.
DOC's Position
As discussed in the "Programs Determined Not To Confer Subsidies" section of this notice, we found
that the results of the R & D are publicly available and, therefore, we determine that the program
does not confer benefits.
Comment 12
Respondents claim that the federal and state labor program funds are generally available, and
therefore, benefits conferred under these programs do not constitute subsidies.
DOC's Position
DOC concurs with respondents and finds that these programs do not confer benefits which
constitute subsidies within the meaning of the Act.
Comment 13
Respondents claim that the ECSC housing loans benefit the workers, not the companies and,
therefore, they do not constitute a subsidy.
DOC's Position
A full discussion of this issue is contained in Appendix 3.
Comment 14
Respondents stated that our preliminary calculations regarding preferential loans utilized
benchmarks that were inapplicable because they were for short- term commercial loans of
relatively small amounts.
DOC's Position
These issues are discussed in Appendix 2.
Negative Determination of Critical Circumstances
Bethlehem Steel Corporation and the Five alleged that imports of carbon steel structural shapes,
hot-rolled carbon steel plate and hot-rolled carbon steel sheet and strip, and cold-rolled carbon
steel sheet and strip present "critical circumstances." Under section 355.29 and 355.33(b) of the
Department's Regulations, critical circumstances exist when the alleged subsidies include an
export subsidy inconsistent with the Agreement and there have been massive imports of the class
or kind of merchandise which is the subject of the investigation over a relatively short period.
We have not found any export subsidy in these investigations. Therefore, "critical circumstances"
do not exist in the investigations for carbon steel structural shapes, hot-rolled carbon steel plate
and hot-rolled carbon steel sheet and strip, and cold-rolled carbon steel sheet and strip.
Verification
In accordance with section 776(a) of the Act, we verified the data used in making our final
determinations. During the verification, we followed normal procedures, including inspection of
documents, discussions with government officials and on-site inspection of manufacturers'
operations and records.
Administrative Procedures
The Department has afforded interested parties an opportunity to present oral views in accordance
with its regulations (19 CFR 355.35). A Public hearing was held on July 8, 1982. In accordance with
the Department's regulations (19 CFR 355.34(a)), written views have been received and
considered.
Suspension of Liquidation
The suspension of liquidation ordered in our preliminary affirmative countervailing duty
determinations shall remain in effect with regard to P & S and Rochling until further notice. The
estimated net subsidy for P & S, Rochling, and manufacturers/producers/exporters who are not
named in this notice has been amended, since our preliminary determinations. The estimated net
subsidy for each firm and for each product under investigation is as follows:
TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT DISPLAYABLE
As explained above, we have determined that a subsidy is being provided to P & S. The amount of
the estimated net subsidy during the period for which we are measuring subsidization is 0.235
percent which is de minimis. However, because
it is likely that P & S will continue to receive benefits under its arrangement with SAG as described
in the "Programs Determined to Confer Subsidies" section of this notice, the products subject to this
investigation produced by P & S are not being excluded from these final affirmative
countervailing duty determinations. All estimated countervailing duties deposited
subsequent to the preliminary determinations on entries of merchandise manufactured by P & S
shall be refunded, and the appropriate bonds shall be released.
TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT DISPLAYABLE
The estimated net subsidy for Dillinger is 0.150 percent, for Klockner is 0.032 percent, for Krupp is
0.051 percent, for Otto Wolff is 0.015 percent, for Hoesch is 0.039 percent, and for Thyssen is
0.035 percent. These are de minimis. Accordingly, the products subject to these investigations
produced by these 6 companies are being excluded from these determinations.
The suspension of liquidation ordered in our preliminary affirmative countervailing duty
determinations shall be terminated with respect to these firms. All estimated countervailing
duties shall be refunded and all appropriate bonds shall be released for entries of the products
under investigation manufactured by these firms.
TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT DISPLAYABLE
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Where the manufacturer is not the exporter, and the manufacturer is known, the rate for that
manufacturer shall be used in
determing the cash deposit or bond amount. If the manufacturer is unknown, the rate for all other
manufacturers/producers/exporters shall be used.
Where a company specifically listed above has not exported a particular product during the period
for which we are measuring subsidization, the cash deposit or bond amount shall be based on the
highest rate for products that were exported by that company. We are directing the U.S. Customs
Service to require a cash deposit or bond in the amount indicated above for each entry of the
subject merchandise entered on or after the date of publication in Federal Register.
ITC Notifications
In accordance with section 705(d) of the Act, we will notify the ITC of our determinations. In
addition, we are making available to the ITC all non- privileged and non-confidential information
relating to these investigations. We will allow the ITC access to all privileged and confidential
information in our files, provided the ITC confirms that it will not diclose such information, either
publicly or under an administrative protective order, without the written consent of the Deputy
Assistant Secretary for Import Administration. The ITC will determine within 45 days of the
publication of this notice whether these imports are materially injuring, or threatening to
materially injure, a
U.S. industry. If the ITC determines that material injury, or threat of material injury, does not
exist, this proceeding will be terminated and all cash deposits or securities posted as a result of the
suspension of liquidation will be refunded or cancelled. If, however, the ITC determines that such
injury does exist, within 7 days of notification by the ITC of that determination, we will issue a
countervailing duty order, directing Customs officers to assess a countervailing duty
on certain steel products from the FRG entered or withdrawn from warehouse, for consumption
after the suspension of liquidation, equal to the estimated net subsidy determined to exist as a
result of the annual review process prescribed by section 751 of the Act. The provisions of section
707(a) of the Act will apply to the first directive for assessment.
This notice is published pursuant to section 705(d) of the Act and § 355.33 of the Department of
Commerce Regulations (19 CFR 355.33).
Dated: August 24, 1982.
Gary N. Horlick,
Acting Assistant Secretary for Trade Administration.
[FR Doc. 82-23879 Filed 8-31-82; 8:45 am]
BILLING CODE 3510-25-M