64 FR 73155 December 29, 1999 

DEPARTMENT OF COMMERCE

International Trade Administration
[C-560-806]

 
Final Affirmative Countervailing Duty Determination: Certain Cut-
to-Length Carbon-Quality Steel Plate from Indonesia

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: December 29, 1999.

FOR FURTHER INFORMATION CONTACT: Eva Temkin or Richard Herring, Office 
of CVD/AD Enforcement VI, Import Administration, U.S. Department of 
Commerce, Room 4012, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone (202) 482-2786.

FINAL DETERMINATION: The Department of Commerce (the Department) 
determines that countervailable subsidies are being provided to 
producers and exporters of certain cut-to-length carbon-quality steel 
plate from Indonesia. For information on the estimated countervailing 
duty rates, please see the ``Suspension of Liquidation'' section of 
this notice.

SUPPLEMENTARY INFORMATION:

Petitioners

    The petition in this investigation was filed by Bethlehem Steel 
Corporation, U.S. Steel Group, a unit of USX Corporation, Gulf States 
Steel, Inc., IPSCO Steel, Inc., Tuscaloosa Steel Corporation, and the 
United Steel Workers of America (the petitioners).

Case History

    Since the publication of our preliminary determination in this 
investigation on July 26, 1999 (Preliminary Affirmative Countervailing 
Duty Determination and Alignment of Final Countervailing Duty 
Determination With Final Antidumping Duty Determination: Certain Cut-
to-Length Carbon-Quality Steel Plate From Indonesia, 64 FR 40457 
(Preliminary Determination)), the following events have occurred:
    On July 15, we reissued the Department's June 22, 1999 supplemental 
questionnaire to the Government of Indonesia (GOI). We received a 
response on July 22, 1999. We conducted verification of the 
countervailing duty questionnaire responses from July 28 through August 
3, 1999. Because the final determination of this countervailing duty 
investigation was aligned with the final antidumping duty determination 
(see 64 FR at 40458), and the final antidumping duty determination was 
postponed (see 64 FR 46341), the Department on August 25, 1999, 
extended the final determination of this countervailing duty 
investigation until no later than December 13, 1999 (see 64 FR 46341). 
On August 26, 1999, the Department released its verification reports to 
all interested parties. Petitioners filed comments on September 10, 
1999. Respondents made no arguments. No rebuttal briefs were filed.
    On November 23, 1999, we discontinued the suspension of liquidation 
of all entries of the subject merchandise entered or withdrawn from 
warehouse for consumption on or after that date, pursuant to section 
703(d) of the Act. See the ``Suspension of Liquidation'' section of 
this notice.

Scope of Investigation

    The products covered by this scope are certain hot-rolled carbon-
quality steel: (1) universal mill plates (i.e., flat-rolled products 
rolled on four faces or in a closed box pass, of a width exceeding 150 
mm but not exceeding 1250 mm, and of a nominal or actual thickness of 
not less than 4 mm, which are cut-to-length (not in coils) and without 
patterns in relief), of iron or non-alloy-quality steel; and (2) flat-
rolled products, hot-rolled, of a nominal or actual thickness of 4.75 
mm or more and of a width which exceeds 150 mm and measures at least 
twice the thickness, and which are cut-to-length (not in coils).
    Steel products to be included in this scope are of rectangular, 
square, circular or other shape and of rectangular or non-rectangular 
cross-section where such non-rectangular cross-section is achieved 
subsequent to the rolling process (i.e., products which have been 
``worked after rolling'')--for example, products which have been 
beveled or rounded at the edges. Steel products that meet the noted 
physical characteristics that are painted, varnished or coated with 
plastic or other non-metallic substances are included within this 
scope. Also, specifically included in this scope are high strength, low 
alloy (HSLA) steels. HSLA steels are recognized as steels with micro-
alloying levels of elements such as chromium, copper, niobium, 
titanium, vanadium, and molybdenum.
    Steel products to be included in this scope, regardless of 
Harmonized Tariff Schedule of the United States (HTSUS) definitions, 
are products in which: (1) iron predominates, by weight, over each of 
the other contained elements, (2) the carbon content is two percent or 
less, by weight, and (3) none of the elements listed below is equal to 
or exceeds the

[[Page 73156]]

quantity, by weight, respectively indicated:
1.80 percent of manganese, or
1.50 percent of silicon, or
1.00 percent of copper, or
0.50 percent of aluminum, or
1.25 percent of chromium, or
0.30 percent of cobalt, or
0.40 percent of lead, or
1.25 percent of nickel, or
0.30 percent of tungsten, or
0.10 percent of molybdenum, or
0.10 percent of niobium, or
0.41 percent of titanium, or
0.15 percent of vanadium, or
0.15 percent zirconium.

    All products that meet the written physical description, and in 
which the chemistry quantities do not equal or exceed any one of the 
levels listed above, are within the scope of these investigations 
unless otherwise specifically excluded. The following products are 
specifically excluded from these investigations: (1) products clad, 
plated, or coated with metal, whether or not painted, varnished or 
coated with plastic or other non-metallic substances; (2) SAE grades 
(formerly AISI grades) of series 2300 and above; (3) products made to 
ASTM A710 and A736 or their proprietary equivalents; (4) abrasion-
resistant steels (i.e., USS AR 400, USS AR 500); (5) products made to 
ASTM A202, A225, A514 grade S, A517 grade S, or their proprietary 
equivalents; (6) ball bearing steels; (7) tool steels; and (8) silicon 
manganese steel or silicon electric steel.
    The merchandise subject to these investigations is classified in 
the HTSUS under subheadings: 7208.40.3030, 7208.40.3060, 7208.51.0030, 
7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000, 7208.90.0000, 
7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 7211.14.0045, 
7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7225.40.3050, 
7225.40.7000, 7225.50.6000, 7225.99.0090, 7226.91.5000, 7226.91.7000, 
7226.91.8000, 7226.99.0000.
    Although the HTSUS subheadings are provided for convenience and 
Customs purposes, the written description of the merchandise under 
investigation is dispositive.

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions of the Tariff Act of 1930, as amended by 
the Uruguay Round Agreements Act (URAA) effective January 1, 1995 (the 
Act). In addition, unless otherwise indicated, all citations to the 
Department's regulations are to the current regulations as codified at 
19 C.F.R. Part 351 (1998) and to the substantive countervailing duty 
regulations published in the Federal Register on November 25, 1998 (63 
FR 65348) (CVD Regulations).

Injury Test

    Because Indonesia is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, the International Trade 
Commission (ITC) is required to determine whether imports of the 
subject merchandise from Indonesia materially injure, or threaten 
material injury to, a U.S. industry. On April 5, 1999, the ITC 
announced its preliminary finding that there is a reasonable indication 
that an industry in the United States is being materially injured, or 
threatened with material injury, by reason of imports from Indonesia of 
the subject merchandise (see Certain Cut-to-Length Steel Plate from the 
Czech Republic, France, India, Indonesia, Italy, Japan, Korea, and 
Macedonia, 64 FR 17198 (April 8, 1999)).

Period of Investigation

    The period of investigation for which we are measuring subsidies 
(the POI) is calendar year 1998.

Attribution of Subsidies

    Section 351.525 of the CVD Regulations states that the Department 
will attribute subsidies received by two or more corporations to the 
products produced by those corporations where cross ownership exists. 
According to section 351.525(b)(6)(vi) of the CVD Regulations, cross-
ownership exists between two or more corporations where one corporation 
can use or direct the individual assets of the other corporation in 
essentially the same ways it can use its own assets. The regulations 
state that this standard will normally be met where there is a majority 
voting ownership interest between two corporations. The preamble to the 
CVD Regulations identifies situations where cross ownership may exist 
even though there is less than a majority voting interest between two 
corporations: ``in certain circumstances, a large minority interest 
(for example, 40 percent) or a `golden share' may also result in cross-
ownership.'' See 63 FR 65401.
    Because we preliminarily found both Gunawan and Jaya Pari to have 
zero subsidy rates, we did not reach the question of whether the 
relationship between the companies satisfies the standard of cross-
ownership. However, in the Preliminary Determination, we stated that if 
we discovered subsidies at verification or otherwise modified our 
findings so that one or more of the companies did indeed have a subsidy 
rate for the final determination, we would consider whether there is 
cross-ownership between Gunawan and Jaya Pari and thus, whether, for 
purposes of calculating a countervailing duty rate, we should attribute 
any subsidies received by either or both companies to the products 
produced by both companies. We invited the parties to comment on 
whether the relationship between the firms satisfies our new cross-
ownership standard.
    Since the publication of our Preliminary Determination, we have 
found no evidence of subsidies having been given to either Gunawan or 
Jaya Pari; nor have we otherwise modified our findings in a way such 
that either company has a subsidy rate in this final determination. 
Moreover, we received no comments from the parties on this issue. Thus, 
the question of whether the relationship between the companies 
satisfies the standard of cross-ownership is moot for purposes of this 
investigation.

Use of Facts Available

    As discussed in detail in the Preliminary Determination, Krakatau 
failed to respond to any of the Department's questionnaires. The GOI 
provided some, although not all, of the information requested about 
Krakatau. In the Preliminary Determination, relying upon section 782(e) 
of the Act, the Department determined that based on the GOI's 
submission of some data, the administrative record was not so 
incomplete that it could not serve as a reliable basis for reaching a 
preliminary determination. Therefore, the Department used the GOI's 
data where possible, i.e., the Department relied on information 
provided by the GOI to reach a preliminary determination that Krakatau 
had not used the Rediscount Loan Program and Tax Holiday Program. The 
Department only resorted to the facts otherwise available in those 
instances where data necessary for the calculation of Krakatau's 
subsidy rate was missing. See Preliminary Determination. In addition, 
as described in detail in the Preliminary Determination, the Department 
determined that in those instances when resort to facts available was 
necessary, the use of an adverse inference was warranted under section 
776(b) of the Act because the Department determined that Krakatau 
failed to cooperate by not acting to the best of its ability in 
complying with requests for information in this investigation.

[[Page 73157]]

    After the issuance of the Preliminary Determination, the Department 
attempted to verify with the GOI that Krakatau had not used the 
Rediscount Loan Program, but was unable to do so. See Memorandum to 
David Mueller, ``Verification Report of the Government of Indonesia,'' 
dated August 26, 1999 (GOI Verification Report), public version on file 
in the Central Records Unit (CRU) (Room B-099 of the Main Commerce 
Building). We were, however, able to verify that no respondent in this 
investigation used the Tax Holiday Program.
    Section 782(e) of the Act provides that the Department shall not 
decline to consider information submitted by an interested party, if, 
among other factors, the information can be verified. Because 
information submitted by the GOI concerning Krakatau's use of the 
Rediscount Loan Program could not be verified, we have declined to 
consider it for this final determination, and find it necessary to 
resort to the facts available for this program, as well. Therefore, for 
this final determination, all components of Krakatau's subsidy rate are 
based on the facts available.
    Moreover, the Department determines that when selecting among the 
facts otherwise available for the Rediscount Loan Program, an adverse 
inference is warranted because the GOI and Krakatau have failed to 
cooperate by not acting to the best of their abilities. Krakatau and 
the GOI failed on numerous occasions to respond to the Department's 
questions. Specifically, Krakatau has failed to participate in any way 
in this investigation. The GOI responded to the Department's initial 
questionnaire, but did not respond fully to supplemental 
questionnaires, and did not respond at all to the Department's final 
questionnaire. Regarding the information that the GOI did place on the 
record in this investigation, we specifically requested in the outline 
sent to the GOI prior to verification that the GOI be prepared to 
review any files maintained on the Rediscount Loan Program, and to 
demonstrate whether Krakatau used the program for shipments of subject 
merchandise to the United States in 1998. However, at verification, GOI 
officials stated that due to the nature and volume of their files on 
this program, they were unable to present them. Thus, the Department 
was unable to verify certain information submitted by the GOI. For 
these reasons, we find that the GOI, like Krakatau, did not cooperate 
to the best of its ability in this investigation.
    Further, as stated in the Preliminary Determination, petitioners 
made new subsidy allegations with respect to Krakatau on June 7, 1999. 
The Department determined that these allegations were adequate, but as 
of the date of the Preliminary Determination, the Department had not 
had sufficient time to collect information from Krakatau and the GOI on 
the Pre-1993 Equity Infusions to Krakatau, P.T., Cold-Rolled Mill 
Indonesia (CRMI) Equity Infusions, and Two-Step Loan programs. Thus, we 
did not make preliminary determinations with respect to these programs' 
countervailability. We asked both Krakatau and the GOI to submit 
information specific to these allegations. We received no response from 
Krakatau, and the GOI stated that they did not have access to the 
relevant files.
    Therefore, because both Krakatau and the GOI have failed to provide 
information necessary for the calculation of subsidy rates for these 
newly alleged programs, pursuant to section 776(a)(2)(B) of the Act, we 
find it necessary to resort to the facts otherwise available for this 
final determination. As described in detail in the Preliminary 
Determination and above, because we have determined that both Krakatau 
and the GOI have failed to cooperate to the best of their abilities in 
this investigation, we find the use of adverse inferences necessary 
when selecting among the facts available, in accordance with section 
776(b) of the Act.
    When employing an adverse inference, the statute indicates that the 
Department may rely upon information derived from (1) the petition; (2) 
a final determination in a countervailing duty or an antidumping 
investigation; (3) any previous administrative review, new shipper 
review, expedited antidumping review, section 753 review, or section 
762 review; or (4) any other information placed on the record. See also 
section 351.308(c) of the CVD Regulations. Due to the absence of any 
other relevant information on the record, we consider the petition to 
be an appropriate source for the necessary information.
    Furthermore, the Statement of Administrative Action accompanying 
the URAA clarifies that information from the petition and prior 
segments of the proceeding is ``secondary information.'' See Statement 
of Administrative Action, accompanying H.R. 5110 (H.R. Doc. No. 103-
316) (1994) (SAA), at 870. If the Department relies on secondary 
information as facts available, section 776(c) of the Act provides that 
the Department shall, ``to the extent practicable,'' corroborate such 
information using independent sources reasonably at its disposal. The 
SAA provides that to corroborate secondary information means simply 
that the Department will satisfy itself that the secondary information 
to be used has probative value. Furthermore, the SAA explicitly states, 
``[t]he fact that corroboration may not be practicable in a given 
circumstance will not prevent [Commerce] from applying an adverse 
inference . . . .'' SAA at 870.
    As explained above, we are using the petition information as 
adverse facts available in countervailing the programs involved in this 
investigation. For a more detailed description of our treatment of 
these programs, see the program descriptions in the ``Programs 
Determined to be Countervailable'' section of this notice. Due to a 
lack of available public information, with respect to the programs for 
which we did not receive information from respondents, or for which we 
could not verify information which had been submitted, we corroborated 
the information used as adverse facts available by comparing it to the 
exhibits attached to the petition, including Krakatau's financial 
statements. In the case of the Rediscount Loan Program, we used 
information from Final Negative Countervailing Duty Determination: 
Extruded Rubber Thread From Indonesia, 64 FR 14695, (March 26, 1999) 
(ERT), where we examined the same program and found it to be 
countervailable. In addition, where calculations from the petition were 
used, we modified and adjusted the calculation of the ad valorem 
subsidy rates to conform to the Department's methodologies when 
necessary or when possible. More detailed explanations of our 
corroboration of the petition information is contained in the 
``Equityworthiness'' and ``Programs Determined to be Countervailable'' 
sections of this notice. In places where we do not explain our 
corroboration of information used, we did not find it practicable to 
corroborate the information because of a lack of reasonably available 
independent sources. However, as discussed above, a finding that it is 
not practicable to corroborate certain information, does not prevent 
the Department from using the information as adverse facts available. 
See SAA at 870.

Changes in Ownership

    In this investigation, we have examined subsidies that were 
conferred upon CRMI at a time when it was partially owned by Krakatau. 
Since that time, Krakatau has taken control over the remaining share of 
CRMI, which is presently a wholly-owned subsidiary of Krakatau. In 
change of ownership situations such as this, it is the Department's 
standard practice to

[[Page 73158]]

follow the methodology outlined in the General Issues Appendix (GIA), 
attached to the Final Affirmative Countervailing Duty Determination; 
Certain Steel Products from Austria, 58 FR 37217, 37265 (July 9, 1993), 
with respect to the treatment of subsidies received prior to the sale 
of the company. See also, Final Affirmative Countervailing Duty 
Determination: Certain Hot-Rolled Flat-Rolled Carbon-Quality Steel 
Products from Brazil, 64 FR 38741, 38745 (July 19, 1999).
    Over the course of this investigation, we repeatedly asked both 
Krakatau and the government to provide information that would allow us 
to use this methodology, but they did not. In the absence of this 
information, as adverse facts available, for equity infusions provided 
to CRMI, we treated these equity infusions as though the entire amount 
was attributable to Krakatau. Accordingly, we assigned the total amount 
of the equity infusions directly to Krakatau.

Subsidies Valuation Information

Allocation Period

    Section 351.524(d)(2) of the CVD Regulations states that we will 
presume the allocation period for non-recurring subsidies to be the 
average useful life (AUL) of renewable physical assets for the industry 
concerned, as listed in the Internal Revenue Service's (IRS) 1977 Class 
Life Asset Depreciation Range System and updated by the Department of 
Treasury. The presumption will apply unless a party claims and 
establishes that these tables do not reasonably reflect the AUL of the 
renewable physical assets for the company or industry under 
investigation, and the party can establish that the difference between 
the company-specific or country-wide AUL for the industry under 
investigation is significant.
    In this investigation, no party to the proceeding has claimed that 
the AUL listed in the IRS tables does not reasonably reflect the AUL of 
the renewable physical assets for the firm or industry under 
investigation. Therefore, according to section 351.524(d)(2) of the CVD 
Regulations, we have allocated Krakatau's non-recurring benefits over 
15 years, the AUL listed in the IRS tables for the steel industry.

Equityworthiness

    In analyzing whether a company is equityworthy, the Department 
considers whether that company could have attracted investment capital 
from a reasonable private investor in the year of the government equity 
infusion based on the information available at that time. In this 
regard, the Department has consistently stated that a key factor for a 
company in attracting investment capital is its ability to generate a 
reasonable return on investment within a reasonable period of time. In 
making an equityworthiness determination, in accordance with section 
351.507(a)(4) of the CVD Regulations, the Department may examine the 
following factors, among others:
    A. Objective analyses of the future financial prospects of the 
recipient firm or the project as indicated by, inter alia, market 
studies, economic forecasts, and project or loan appraisals prepared 
prior to the government-provided equity infusion in question;
    B. Current and past indicators of the recipient firm's financial 
health calculated from the firm's statements and accounts, adjusted, if 
appropriate, to conform to generally accepted accounting principles;
    C. Rates of return on equity in the three years prior to the 
government equity infusion; and
    D. Equity investment in the firm by private investors.
    The Department has examined Krakatau's equityworthiness for the 
period 1988 through 1992, as well as in 1995, to the extent that equity 
infusions may have been received in these years. In our preliminary 
determination, we found that Krakatau was unequityworthy in 1995. We 
received no comments from the interested parties relating to our 
analysis of Krakatau's equityworthiness. Thus, for the reasons 
specified in the Preliminary Determination, we determine that Krakatau 
was unequityworthy in 1995. See Preliminary Determination, 64 FR at 
40460.
    The Department has also examined Krakatau's equityworthiness for 
the period 1988 through 1992, to the extent equity infusions may have 
been received in these years. Because neither Krakatau nor the GOI 
responded to our repeated attempts to gather information regarding the 
new allegations pertaining to the period 1988 through 1992, we used the 
information in the petition as adverse facts available in accordance 
with section 776(b) of the Act to conclude that Krakatau was 
unequityworthy during the period 1988 through 1992. (For further 
discussion, see the ``Facts Available'' section of this notice.)
    With respect to factor A, no studies or other relevant data have 
been submitted to the record. The petition cites several press articles 
which describe Krakatau as inefficient, unprofitable, and uncompetitive 
during the years prior to 1992. See Countervailing Duty Petition, 
public version on file in the CRU. In order to corroborate the petition 
information demonstrating that Krakatau was inefficient and 
unprofitable prior to 1992, we examined the newspaper articles cited by 
the petition. We found that these independent sources did indeed 
describe Krakatau's financial and operational difficulties, thus 
corroborating a finding of unequityworthiness.
    To address factors B and C, we examined Krakatau's financial ratios 
for 1990 through 1992, provided in the petition, which show that 
Krakatau's rates of return were far less than the average rate of 
return available in Indonesia. With respect to the final factor, 
Krakatau has no private investors. Therefore, there are no private 
investments that may be used to evaluate Krakatau's equityworthiness.
    The available financial ratios, coupled with press reports used as 
adverse facts available, demonstrate that no reasonable private 
investor would have made equity investments in Krakatau during the 
period 1988 through 1992. On this basis, we find that Krakatau was 
unequityworthy during the period 1988 through 1992.
    We have also examined the equityworthiness of Krakatau's 
subsidiary, the Cold Rolling Mill of Indonesia (CRMI), in 1989 and 
1990, to the extent that equity infusions may have been received in 
these years. As discussed above, because neither Krakatau nor the GOI 
responded to our repeated attempts to gather information regarding the 
allegations pertaining to CRMI, we have relied upon the information 
provided in the petition as adverse facts available in accordance with 
section 776(b) of the Act. (For further discussion, see the ``Facts 
Available'' section of this notice.)
    Because no financial statements for CRMI for years prior to 1994 
have been available, the petition cites to several press articles to 
demonstrate CRMI's unequityworthiness. One such article, from 1989, 
quotes a government official (who was also a company official at the 
time) as stating that CRMI had failed to make a profit since being 
inaugurated in 1987. Another 1989 article reports that CRMI's money-
losing performance was caused by large debts, technical problems and 
poor sales, which led to accumulated losses of about US$120 million. At 
the same time, CRMI's estimated debt was reported to be US$485 million. 
The petition shows that CRMI's financial situation declined further in 
1990. According to press reports from 1990, the company's losses

[[Page 73159]]

increased to US$150 million and its outstanding debts grew to US$492 
million. In order to corroborate this petition information 
demonstrating CRMI's unequityworthiness, we examined the independent 
press reports cited in the petition and confirmed that they in fact 
described CRMI's operational and financial difficulties in a manner 
that supports an unequityworthy determination.
    These articles are the only evidence on the record concerning 
CRMI's equityworthiness, and suggest that no reasonable private 
investor would have deemed CRMI capable of generating a reasonable rate 
of return within a reasonable period at the time of the equity 
infusions. On this basis, we determine that CRMI was unequityworthy in 
1989 and 1990.

Equity Methodology

    In measuring the benefit from a government equity infusion, in 
accordance with section 351.507(a)(2) of the CVD Regulations, the 
Department compares the price paid by the government for the equity to 
actual private investor prices, if such prices exist. According to 
section 351.507(a)(3) of the CVD Regulations, where actual private 
investor prices are unavailable, the Department will determine whether 
the firm was unequityworthy at the time of the equity infusion. In 
these cases, private investor prices were unavailable; thus, we 
conducted equityworthy analyses. As discussed above, we have determined 
that Krakatau was unequityworthy during the period from 1988 to 1992, 
and in 1995, and that CRMI was unequityworthy from 1989 to 1990.
    Section 351.507(a)(3) of the CVD Regulations provides that a 
determination that a firm is unequityworthy constitutes a determination 
that the equity infusion was inconsistent with the usual investment 
practices of private investors. The Department will then apply the 
methodology described in section 351.507(a)(6) of the regulations, and 
treat the equity infusion as a grant. Use of the grant methodology for 
equity infusions into an unequityworthy company is based on the premise 
that an unequityworthiness finding by the Department is tantamount to 
saying that the company could not have attracted investment capital 
from a reasonable investor in the infusion year based on the available 
information.

Creditworthiness

    As discussed in the Preliminary Determination, we only initiated an 
investigation of Krakatau's creditworthiness during 1995. In the 
Preliminary Determination, based on adverse facts available, we found 
Krakatau to be uncreditworthy in 1995. We received no comments from the 
interested parties relating to our analysis of Krakatau's 
creditworthiness. Thus, for the reasons specified in the Preliminary 
Determination, we continue to find that Krakatau was uncreditworthy in 
1995. See Preliminary Determination, 64 FR at 40461.

Discount Rates and Loan Benchmarks

    For equity infusions given to Krakatau, we calculated the discount 
rates in accordance with the formula for constructing a long-term 
interest rate benchmark for uncreditworthy companies as stated in the 
Department's new regulations. See Section 351.505 (a)(3)(iii) of the 
CVD Regulations. This formula requires values for the probability of 
default by uncreditworthy and creditworthy companies. For the 
probability of default by an uncreditworthy company, we relied on the 
average cumulative default rates reported for the Caa to C-rated 
category of companies as published in Moody's Investors Service, 
``Historical Default Rates of Corporate Bond Issuers, 1920-1997,'' 
(February 1998). For the probability of default by a creditworthy 
company, we used the average cumulative default rates reported for the 
Aaa to Baa.1 Because no timely allegation of 
uncreditworthiness was made against CRMI in this investigation, no 
determination has been made regarding CRMI. Thus, we did not add an 
uncreditworthiness margin to interest rates used to calculate benefits 
received by CRMI.
---------------------------------------------------------------------------

    \1\ We note that since publication of the CVD Regulations, 
Moody's Investors Service no longer reports default rates for Caa to 
C-rated category of companies. Therefore for the calculation of 
uncreditworthy interest rates, we will continue to rely on the 
default rates as reported in Moody Investor Service's publication 
dated February 1998 (see Exhibit 28).
---------------------------------------------------------------------------

    For subsidies received by Krakatau between 1994 and 1998, we used 
the average cost of long-term fixed-rate loans in Indonesia as the 
interest rates that would have been paid by a creditworthy company, 
specifically the investment rates offered by commercial banks in 
Indonesia as reported in the Indonesian Financial Statistics of 
February 1999, attached to the GOI's April 29, 1999, questionnaire 
response, a public document on file in the CRU. In order to calculate a 
benefit for long-term allocable subsidies that were received prior to 
1994, we used interest rate data for Indonesian long-term non-
guaranteed commercial loans as published in the International Monetary 
Fund's International Financial Statistics. For 1998, since Indonesia 
experienced very high inflation during this year, we converted the 
subsidy into U.S. dollars and then applied a long-term dollar rate as 
the discount rate, specifically, the average yield to maturity on 
selected long-term Baa-rated bonds. See Memorandum to David Mueller, 
``Preliminary Analysis and Calculations,'' dated July 16, 1999 
(Preliminary Analysis Memo), public version on file in the CRU. This 
conforms with our practice in Final Affirmative Countervailing Duty 
Determination: Steel Wire Rod from Venezuela, 62 FR 55014, 55019 
(October 22, 1997).
    To calculate the benefit from the Two-Step Loan Program, because 
the loans were denominated in Austrian schillings, we used as our 
benchmark the Austrian national average government bond rate, as 
published in the International Monetary Fund's International Financial 
Statistics. While it is not our policy to use government bonds as a 
benchmark, due to the lack of record evidence in this investigation, a 
commercial lending rate was unavailable. Therefore, this is the only 
information we were able to find for a schilling benchmark. As with the 
equity infusions, we calculated the discount rates in accordance with 
the formula for constructing a long-term interest rate benchmark for 
uncreditworthy companies as stated in the Department's new regulations. 
See Section 351.505 (a)(3)(iii) of the CVD Regulations
    For the Rediscount Loan Program, we used as our benchmark the 
reported average cost of short-term fixed-rate loans in Indonesia as 
the interest rate that would be paid by a creditworthy company, 
specifically the working capital rate offered by commercial banks in 
Indonesia as reported in the Indonesian Financial Statistics of 
February 1999, attached to the GOI's April 29, 1999, questionnaire 
response, a public document on file in the CRU.

I. Programs Determined To Be Countervailable

A. 1995 Equity Infusion into Krakatau

    In the Preliminary Determination, because Krakatau did not respond 
to this allegation, we used the information and data provided in the 
petition as adverse facts available, in accordance with section 776(b) 
of the Act (see ``Facts Available'' discussion above). We corroborated 
this information in accordance with section 776(c) of the Act as 
described in the Preliminary

[[Page 73160]]

Analysis Memo. We received no comments from the interested parties 
relating to our analysis of Krakatau's 1995 equity infusion. Thus, for 
the reasons specified in the Preliminary Determination, we determine 
that this equity infusion constituted a countervailable subsidy. See 
Preliminary Determination, 64 FR at 40461.
    As explained in the ``Equity Methodology'' section above, we have 
treated equity infusions into unequityworthy companies as grants given 
in the year the infusion was received because no market benchmark 
exists. In accordance with section 351.507(c) of the CVD Regulations, 
the equity infusion is allocated as a non-recurring subsidy. We 
allocated the subsidy and converted the remaining face value of the 
infusion in 1998 into U.S. dollars using the average 1997 rupiah/dollar 
exchange rate and applied the long-term U.S. dollar uncreditworthy 
interest rate described in the ``Discount Rate'' section of this 
notice. We then divided the benefit amount allocable to the POI by 
Krakatau's estimated 1998 U.S. dollar total sales figure, which was 
calculated based on the facts available in the petitioner's submission 
and corroborated as detailed in the Preliminary Analysis Memo, public 
version on file in the CRU. On this basis, we determine the net 
countervailable subsidy to be 16.21 percent ad valorem for Krakatau.

B. Pre-1993 Equity Infusions to Krakatau

    As discussed in the Preliminary Determination, on June 7, 1999, 
petitioners alleged that the GOI had made equity infusions into 
Krakatau prior to 1993. At the time of the preliminary determination, 
the Department had not had sufficient time to collect information from 
Krakatau and the GOI on the alleged Pre-1993 Equity Infusions to 
Krakatau, and so did not make a determination with respect to this 
program's countervailability.
    After the preliminary determination, both Krakatau and the GOI were 
given an opportunity to provide information regarding these programs, 
but they did not. Therefore, in accordance with section 776(b) of the 
Act, we have used the information contained in the petition as adverse 
facts available in order to make a determination with regard to this 
program. (See ``Facts Available'' discussion above).
    According to the petitioners, the GOI provided Krakatau with equity 
infusions totaling US$765 million during the period from 1988 to 1992. 
We corroborated the assertion made in the petition by comparing it to 
the independent newspaper article cited in the petition which states 
that, ``Excluding the cold-rolled mill, government subsidies for 
Krakatau totaled Rps. 1.6 trillion (US$765 million) in the five years 
to 31 December 1992.''
    Because we have determined that Krakatau was unequityworthy during 
this period in accordance with section 776(b) of the Act, we determine 
that under section 771(5)(E)(i) of the Act, these equity infusions into 
Krakatau were not consistent with the usual investment practice of a 
private investor and confer a benefit in the amount of each infusion 
(see ``Equityworthiness'' section above). The equity infusions are 
specific within the meaning of section 771(5A)(D) of the Act because 
they were limited to Krakatau. Accordingly, we find that the equity 
granted to Krakatau during the period in question provides a 
countervailable subsidy within the meaning of section 771(5) of the 
Act.
    As explained in the ``Equity Methodology'' section above, we have 
treated equity infusions into unequityworthy companies as grants given 
in the year the infusion was received because no market benchmark 
exists. In accordance with section 351.507(c) of the CVD Regulations, 
the equity conversion is allocated as a non-recurring subsidy. Due to 
the lack of record information regarding this program, we were unsure 
of the years in which the equity was given. Therefore, we treated the 
entire amount as a grant provided in equal payments over the five-year 
period from 1988 to 1992. We allocated the subsidy and converted the 
remaining face value of the infusion in 1998 into U.S. dollars using 
the average 1997 rupiah/dollar exchange rate and applied the long-term 
U.S. dollar interest rate to uncreditworthy companies described in the 
``Discount Rate'' section of this notice. We then divided the benefit 
amount allocable to the POI by Krakatau's estimated 1998 U.S. dollar 
total sales figure, which was calculated based on the facts available 
in the petitioner's submission and corroborated as detailed in our 
Preliminary Analysis Memo. On this basis, we determine the net 
countervailable subsidy to be 16.66 percent ad valorem for Krakatau.

C. 1989 Equity Infusion to CRMI

    As discussed in the Preliminary Determination, on June 7, 1999, 
petitioners alleged that massive equity infusions were provided to 
Krakatau's subsidiary, the Cold Rolling Mill of Indonesia (CRMI). 
Krakatau owned 40 percent of CRMI's equity until 1991, when it 
purchased the remaining shares to become a 100 percent owner. 
Petitioners alleged that these 1989 and 1990 equity infusions provided 
a countervailable benefit to Krakatau based on its ownership share in 
CRMI. At the time of the preliminary determination, the Department had 
not had sufficient time to collect information from Krakatau and the 
GOI on the alleged Equity Infusions to CRMI, and so did not make a 
determination with respect to this program's countervailability. Since 
the preliminary determination, however, the Department afforded both 
Krakatau and the GOI the opportunity to provide information regarding 
these subsidy allegations. Because neither party responded to our 
questionnaires, we have used the information contained in the petition 
as adverse facts available, in accordance with section 776(b) of the 
Act. (See ``Facts Available'' discussion above).
    According to the Countervailing Duty Petition, the GOI provided 
CRMI with an equity infusion totaling US$75 million in 1989. In support 
of this allegation, the petition points to quotes from GOI officials 
regarding the cash injections. To the extent practicable, we have 
corroborated the information provided in the petition with numerous 
press articles which describe the equity infusion, provided as 
attachments to the petition. On the basis of this information, as 
adverse facts available, we determine that under section 771(5)(E)(i) 
of the Act, these equity infusions into CRMI were not consistent with 
the usual investment practices of a private investor and confer a 
benefit to CRMI in the amount of each infusion (see 
``Equityworthiness'' section above). The equity infusions are specific 
within the meaning of section 771(5A)(D) of the Act because they were 
limited to CRMI. Accordingly, we find that the equity granted to CRMI 
during the period in question provides a countervailable subsidy within 
the meaning of section 771(5) of the Act.
    As discussed in the ``Changes in Ownership'' section, above, as 
adverse facts available, we are assuming that Krakatau did not pay for 
its total acquisition of CRMI in 1991. Therefore, all of the benefit to 
CRMI would have passed through to Krakatau at the time of the 
acquisition. As explained in the ``Equity Methodology'' section above, 
we have treated equity infusions into unequityworthy companies as 
grants given in the year the infusion was received because no market 
benchmark exists. In accordance with section 351.507(c) of the CVD 
Regulations, the equity conversion is allocated as a non-

[[Page 73161]]

recurring subsidy. Therefore, we treated the entire amount as a grant 
given to Krakatau in 1989. We allocated the subsidy over 15 years, and 
applied the long-term U.S. dollar uncreditworthy interest rate 
described in the ``Discount Rate'' section of this notice. We then 
divided the benefit amount allocable to the POI by Krakatau's estimated 
1998 U.S. dollar total sales figure, which was calculated based on the 
facts available in the petitioner's submission and corroborated as 
detailed in our Preliminary Analysis Memo. On this basis, we determine 
the net countervailable subsidy to be 1.50 percent ad valorem for 
Krakatau.

D. Three-Step Equity Infusion to CRMI

    Information in the petition indicates that in 1989, an equity 
infusion of US$357 million was to be provided to CRMI in three 
installments--US$290 million, US$49 million and US$18 million. A 1990 
article corroborates that the GOI was considering an equity infusion in 
the amount of US$290 to CRMI. See Third Petition Attachment, Exhibits 
15, 48. At the time of the preliminary determination, the Department 
had not had sufficient time to collect information from Krakatau and 
the GOI on these alleged Equity Infusions to CRMI, and so did not make 
a determination with respect to this program's countervailability.
    After the preliminary determination, both Krakatau and the GOI were 
given the opportunity to provide information regarding these programs, 
but did not. Therefore, as adverse facts available, we determine that 
under section 771(5)(E)(i) of the Act, these equity infusions into CRMI 
were not consistent with the usual investment practice of a private 
investor and confer a benefit to CRMI in the amount of each infusion 
(see ``Equityworthiness'' section above). To the extent that Krakatau 
had a 40 percent stake in CRMI at the time of the infusion, and has 
full ownership presently, the benefit to CRMI is equivalent to a 
benefit to Krakatau. The equity infusions are specific within the 
meaning of section 771(5A)(D) of the Act because they were limited to 
CRMI. Accordingly, we find that the equity granted to CRMI during the 
period in question provides a countervailable subsidy within the 
meaning of section 771(5)(A) of the Act.
    As explained in the ``Changes in Ownership'' section above, as 
adverse facts available, we are assuming that all of the benefit to 
CRMI would have passed through to Krakatau at the time of the 
acquisition. As explained in the ``Equity Methodology'' section above, 
we have treated equity infusions into unequityworthy companies as 
grants given in the year the infusion was received because no market 
benchmark exists. In accordance with section 351.507(c) of the CVD 
Regulations, the equity conversion is allocated as a non-recurring 
subsidy. Therefore, we treated the entire amount as a grant. The 
information in the petition, corroborated by an independent newspaper 
article attached to the petition, indicated that the GOI was going to 
give the infusion in 1990; likewise, we have treated this equity 
infusion as a grant given to Krakatau in 1990. We allocated the subsidy 
and applied the long-term U.S. dollar interest rate described in the 
``Discount Rate'' section of this notice. We then divided the benefit 
amount allocable to the POI by Krakatau's estimated 1998 U.S. dollar 
total sales figure, which was calculated based on the facts available 
in the petitioner's submission and corroborated as detailed in our 
Preliminary Analysis Memo. On this basis, we determine the net 
countervailable subsidy to be 7.64 percent ad valorem for Krakatau.

E. Two-Step Loan Program

    Prior to the Department's preliminary determination in this 
proceeding, the petitioners alleged that the GOI had provided so-called 
``two-step loans'' to Krakatau for the construction of certain fixed 
assets. At the time of the preliminary determination, the Department 
had not had sufficient time to collect information from Krakatau and 
the GOI regarding this alleged Two-Step Loan program, and so did not 
make a determination with respect to this program's countervailability. 
Although the GOI and Krakatau were both asked repeatedly to respond to 
the Department's questions about this program, neither party provided 
any information that could be used in making a determination with 
respect to this program's countervailability. Thus, in accordance with 
section 776(b) of the Act, we have used the information provided by 
petitioner as adverse facts available. (See ``Facts Available'' 
discussion above).
    According to the petition, and corroborated by the descriptions 
contained in Krakatau's 1996 and 1997 annual reports, these two-step 
loans were drawn by Krakatau from ``credit facilities'' (i.e., lines of 
credit) in the billing currencies of its equipment suppliers, who, in 
turn, receive payment from banks appointed by lenders. According to 
Krakatau's annual reports, the loans, which were converted into rupiah 
based on the exchange rate on the drawing date, are repayable in the 
currency in which they were borrowed, Austrian schillings. Krakatau's 
annual reports indicate that Krakatau received a credit facility from 
the GOI in fiscal year (FY) 1995 for ``optimization projects for the 
slab steel plant and billet steel plant'' from which it drew down loan 
amounts in FY 1995, FY 1996, and FY 1997. For all loan amounts drawn 
under this credit facility, Krakatau pays interest at a rate of 4 
percent per annum. The first principal installment on the loan balance 
is scheduled for April 30, 2003 and last payment on October 30, 2020.
    In 1995, the year in which the credit facilities were extended, a 
lending rate of 4 percent would be inconsistent with an interest rate 
the company would have received on a comparable commercial loan 
denominated in Austrian schillings, and would thus provide a benefit 
pursuant to section 351.505(a) of the Department's regulations. (See 
the International Monetary Fund's International Financial Statistics, 
October 1999, at 110). The information provided in the petition and 
corroborated by the company's financial statements further demonstrates 
that these loans are specific because they were provided by the GOI as 
part of the financing for Krakatau's projects. There is no information 
on the record of this investigation which would indicate that the two-
step loan was provided to Krakatau pursuant to a program to which other 
companies ostensibly had access. As adverse facts available, pursuant 
to section 776(b) of the Act, we find that the loan is specific as a 
matter of law. Accordingly, we find that the two-step loan granted to 
Krakatau provides a countervailable subsidy within the meaning of 
section 771(5) of the Act.
    In order to calculate the benefit from this program, we compared 
the interest rates Krakatau paid on these two-step loans during the POI 
to the interest rates the company would have paid for comparable 
commercial loans, based on the long-term Austrian schilling loan 
benchmark for uncreditworthy companies described in the ``Discount 
Rates'' section of this notice, above. This difference was then divided 
by Krakatau's estimated sales during the POI which were calculated 
based on petition information and corroborated as detailed in the 
Preliminary Analysis Memo. On this basis, we determine the 
countervailable subsidy from this program to be 0.65 percent ad valorem 
for Krakatau.

F. Rediscount Loan Program

    In our Preliminary Determination, the Department found that 
Krakatau had not

[[Page 73162]]

used this program. This determination was based on information provided 
by the GOI; this information indicated that while Krakatau was eligible 
to receive benefits under this program, it had neither applied for nor 
received such benefits. The Department found, at the preliminary stage 
of this investigation, that the administrative record with regard to 
Krakatau was not so incomplete that it could not serve as a reliable 
basis for reaching a determination with regard to this program.
    According to section 782(e)(2) of the Act, the Department shall not 
decline to consider information submitted by an interested party if, 
among other factors, the information can be verified. We attempted to 
verify with the GOI that Krakatau had not used the Rediscount Loan 
Program, but were unable to do so. See, GOI Verification Report at 3. 
As explained in the ``Facts Available'' section of this notice, we have 
determined to resort to adverse facts available for our determination 
with regard to this program.
    Under Decree No. 132/MPP/Kep/1996 of June 4, 1996, the Ministry of 
Industry and Trade, the Ministry of Finance, and the Bank of Indonesia 
(BI) provide support for certain exporters with the goal of achieving 
diversification of the Indonesian export base. Companies designated as 
Perusahaan Eksportir Tertentu (PET) are eligible to participate in this 
program. Under the program, PETs sell their letters of credit and 
export drafts at a discount to the BI through participating foreign 
exchange banks, which are commercial banks that have obtained a license 
to conduct activities in foreign currencies. The sale of the letters of 
credit and export drafts by the PETs provides them with working capital 
at lower interest rates than they would otherwise pay on short-term 
commercial loans.
    This same program was determined to constitute an export subsidy in 
Final Negative Countervailing Duty Determination: Extruded Rubber 
Thread From Indonesia, 64 FR 14695 (March 26, 1999) (ERT).
    On the basis of this information, and in conformance with section 
776(b) of the Act, we determine that the loans provided under this 
program are countervailable in accordance with section 771(5)(A) of the 
Act. Through this program, the BI provides working capital to PETs at 
interest rates which are more favorable than those provided to non-
PETs. The benefit is the difference between the amount the borrower of 
the loan pays on the loan and the amount the borrower would pay on a 
comparable commercial loan. Finally, because the program is contingent 
upon export performance, it is an export subsidy under section 
771(5A)(B) and is, therefore, specific.
    In the ERT determination, the Department verified that the interest 
rates in effect during that investigation's POI were the Singapore 
Interbank Offering Rate (SIBOR) for PETs, and SIBOR plus 1 percent for 
non-PETs. See ERT, 64 FR at 14696. The interest rates used in the 
petition, as corroborated by the questionnaire response of the GOI were 
SIBOR for PET exporters, and SIBOR plus 1 percent for non-PET exporters 
during the first half of the POI. During the second half of the POI 
rediscount loan rates rose to SIBOR plus 3 percent for PET exporters, 
and SIBOR plus 4 percent for non-PET exporters. See Third Petition 
Amendment, Exhibit 42; see also GOI Verification at 2. Thus, we have 
used these interest rates to calculate the benefit to Krakatau. We 
compared the interest rates Krakatau paid on loans for shipments to the 
United States to the interest rates that non-PET companies would have 
had to pay for comparable commercial short-term loans. This difference 
was then divided by Krakatau's total exports sales. As adverse facts 
available, we used the estimated export sales calculated in the 
petition to calculate the subsidy rate. On this basis, we determine the 
countervailable subsidy from this program to be 5.05 percent ad valorem 
for Krakatau.
    Based on the verified information provided by respondents and the 
GOI, we determine that neither Gunawan nor Jaya Pari applied for or 
received benefits under the Rediscount Loan Program during the POI.

II. Program Determined Not To Exist

Reduction in Electricity Tariffs

    In the Preliminary Determination, the Department found no basis for 
concluding that the steel industry had received a special electricity 
discount. Moreover, based on the record evidence, the electricity 
discount was not limited to a specific enterprise, industry or group 
thereof, but was available to all industrial users in the country. 
Therefore, we preliminarily determined that the electricity discount 
program is not countervailable. (See Preliminary Determination, 64 FR 
at 40462).
    At verification, we met with officials from the government-owned 
electricity company, PLN, to discuss the tariff rates. Officials 
explained that, prior to the increase in question, the last tariff 
schedule was implemented in 1994. The President established a tariff 
increase with Decree No. 70 of 1998, because of the increased costs of 
providing electricity. The increase was to be implemented in three 
stages. However, due to the financial crisis and the instability of the 
rupiah, only the first of these three stages was actually implemented, 
in May 1998. In early 1999, with Presidential Decree No. 1, 1999, the 
second two stages were officially postponed in a decree which legalized 
the existing tariff schedule. See Exhibit 12 to the GOI's June 2, 1999, 
questionnaire response, public version on file in the CRU. Thus, the 
subsequent stages were never implemented and there were no refunds. The 
May 1998 tariff schedule is still presently in place.
    Additionally, we verified that there are no special rates for 
particular industries; all industries are charged based on industrial 
usage categories. On these bases, we find this program not to exist.

III. Program Determined To Be Not Used

    Based on the verified information provided by respondents and the 
GOI, we determine that neither Gunawan nor Jaya Pari applied for or 
received benefits from Corporate Income Tax Holidays during the POI. 
With regard to Krakatau, the facts available regarding this program 
have not changed from the preliminary determination; therefore we 
continue to find that Krakatau did not use this program during the POI.

Interested Party Comments

Comment 1: Whether the Department Should Countervail the 1989 Equity 
Infusion to CRMI, the Three-Step Equity Infusion, and the Two-Step Loan 
from the GOI

    Petitioners argue that the Department should countervail three 
subsidies to Krakatau which were outlined in the June 7, 1999 amendment 
to the petition: the 1989 Equity Infusion to CRMI, the Three-Step 
Equity Infusion, and the Two-Step Loan from the GOI. The information in 
the petition amendment was not rebutted by Krakatau or the GOI, nor did 
Krakatau or the GOI present any affirmative information regarding these 
programs in the investigation. Therefore, petitioners argue, the 
Department should apply adverse facts available in its final 
determination, in accordance with the Department's own regulations.
    Department's Position: We agree with Petitioners. In the 
Preliminary Determination, we stated that due to the lateness of the 
allegations, the parties had not been given sufficient time to provide 
information with regard to these alleged programs. However, since the

[[Page 73163]]

preliminary determination, both Krakatau and the GOI have been afforded 
opportunities to present information regarding these allegations. 
Neither Krakatau nor the GOI responded to our questions concerning 
these programs. Therefore, as discussed in detail in both the ``Use of 
Facts Available'' and ``Programs Determined to be Countervailable'' 
sections of this notice, we have applied adverse facts available in 
accordance with the Department's regulations, at 351.308(a) and with 
section 776(b) of the Act.

Comment 2: Whether the GOI has Failed Verification with Respect to the 
Rediscount Loan Subsidy

    In the Preliminary Determination, the Department found that 
Krakatau had not used rediscount loans, on the basis of the GOI's 
questionnaire responses. However, petitioners assert that the GOI had 
placed conflicting information on the record, information that should 
have been clarified at verification. As the Department was unable to 
verify this program, petitioners argue that the Department should 
resort to the use of facts available to countervail Krakatau's use of 
this program, which has been found to be countervailable in prior 
proceedings. To support their position, petitioners point to the 
verification outlines, which clearly stated that the Department would 
need to examine records maintained on Krakatau with regard to this 
subsidy. Because the Department requested that the GOI be prepared to 
present documentation at verification, petitioners argue that the GOI 
should have been fully prepared for verification.
    Simply put, petitioners argue that because officials from the GOI 
were unable to present information beyond mere assertions at 
verification that Krakatau did not use this program, the GOI failed 
verification with respect to this program and the Department is obliged 
to countervail Krakatau's use of this program as adverse facts 
available. Petitioners cite to Stainless Steel Sheet and Strip in Coils 
from Taiwan, in which the Department applied adverse facts available 
because a party was in control of necessary information but did not 
provide that information.
    Department's Position: As discussed in the ``Use of Facts 
Available'' section of this notice, above, according to section 
782(e)(2) of the Act, the Department shall not decline to consider 
information if, among other factors, that information can be verified. 
In this case, we attempted to verify with the GOI that Krakatau had not 
used the Rediscount Loan Program, but were unable to do so. At 
verification, we asked to review any records the Bank of Indonesia 
maintains with regard to the users of this program. The officials 
indicated that, although they searched their files for any information 
on Krakatau Steel and did not find anything, it was not possible to 
review each and every file to demonstrate that Krakatau did not use the 
program. See, GOI Verification Report, page 3. Moreover, the government 
officials did not propose any other way in which Krakatau's non-use 
could be adequately verified. Consequently, we agree with petitioners' 
assertion that the Department was unable to verify Krakatau's non-use 
of the rediscount loan program and we must, therefore, base our final 
determination on the facts available on the record. Additionally, as 
explained in the ``Facts Available'' section above, because we 
determined that the GOI failed to cooperate by not acting to the best 
of its ability in this investigation, we determined that an adverse 
inference is warranted when selecting among the facts available. For 
more information, see the ``Programs Determined to be Countervailable'' 
section of this notice.

Verification

    In accordance with section 782(i) of the Act, except as noted in 
the ``Facts Available'' and ``Programs Determined to Be 
Countervailable'' sections, above, we verified the information used in 
making our final determination. We followed standard verification 
procedures, including meeting with the government and company 
officials, and examining relevant accounting records and original 
source documents. Our verification results are outlined in detail in 
the public versions of the verification reports, which are on file in 
the CRU.

Suspension of Liquidation

    In accordance with section 703(d)(1)(A)(i) of the Act, we have 
calculated individual rates for each of the companies under 
investigation.
    According to section 705(5)(A)(i) of the Act, the all others rate 
normally will be ``an amount equal to the weighted average 
countervailable subsidy rates established for exporters and producers 
individually investigated, excluding any zero and de minimis 
countervailable subsidy rates and any rates determined entirely under 
section 776.'' In this case, all exporters and producers individually 
investigated have zero rates or a rate based entirely on facts 
available.
    According to section 705(5)(A)(ii) of the Act, in situations where 
the countervailable subsidy rates established for all exporters and 
producers individually investigated are zero or de minimis rates, or 
are determined entirely under section 776, the Department may use any 
reasonable method to establish an all others rate. In antidumping duty 
investigations, where petitions typically have a range of calculated 
dumping rates, the Department often bases the all others rate on a 
simple average of the petition rates in such situations. See, e.g., 
Notice of Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Plate in Coils From Italy, 64 FR 15458, 15459 (Mar. 31, 
1999). In this investigation, we do not have information from the 
petition that would allow us to calculate the all others rate in this 
fashion. Therefore, we have considered the options of using a weighted 
average of the countervailing subsidy rates of the exporters and 
producers individually examined in this investigation or a simple 
average of these same rates. Because of concerns about the potential 
disclosure of proprietary data through the use of a weighted average of 
the subsidy rates in this case, the Department has decided to use a 
simple average of the subsidy rates of the producers and exporters 
examined as the all others rate in this case.

------------------------------------------------------------------------
             Producer/exporter                    Net subsidy rate
------------------------------------------------------------------------
P.T. Krakatau Steel.......................  47.71% ad valorem
P.T. Gunawan Steel........................  0.00% ad valorem
P.T. Jaya Pari............................  0.00% ad valorem
All others rate...........................  15.90% ad valorem
------------------------------------------------------------------------

    In accordance with our preliminary affirmative determination, we 
instructed the U.S. Customs Service to suspend liquidation of all 
entries of certain cut-to-length carbon-quality steel plate from 
Indonesia which were entered, or withdrawn from warehouse, for 
consumption on or after July 26, 1999, the date of the publication of 
our preliminary determination in the Federal Register. In accordance 
with section 703(d)(3) of the Act, which provides that suspension 
ordered after the preliminary determination may not remain in effect 
for more than four months, we instructed the U.S. Customs Service to 
discontinue the suspension of liquidation for merchandise entered on or 
after November 23, 1999, but to continue the suspension of liquidation 
of entries made between July 26 and November 22, 1999.
    We will reinstate suspension of liquidation under section 706(a) of 
the Act if the ITC issues a final affirmative injury determination, and 
will require a cash deposit of estimated countervailing duties for such 
entries of merchandise in the amounts indicated above. Because the 
estimated net

[[Page 73164]]

countervailing duty rates for Gunawan and Jaya Pari are zero, these 
companies will be excluded from the suspension of liquidation, and the 
order, if one is issued.

ITC Notification

    In accordance with section 705(d) of the Act, we will notify the 
ITC of our determination. In addition, we are making available to the 
ITC all non-privileged and non-proprietary information related to this 
investigation. We will allow the ITC access to all privileged and 
business proprietary information in our files provided the ITC confirms 
that it will not disclose such information, either publicly or under an 
administrative protective order, without the written consent of the 
Assistant Secretary for Import Administration.
    If the ITC determines that material injury, or threat of material 
injury, does not exist, this proceeding will be terminated and all 
estimated duties deposited or securities posted as a result of the 
suspension of liquidation will be refunded or canceled. If, however, 
the ITC determines that such injury does exist, we will issue a 
countervailing duty order.

Destruction of Proprietary Information

    In the event that the ITC issues a final negative injury 
determination, this notice will serve as the only reminder to parties 
subject to Administrative Protective Order (APO) of their 
responsibility concerning the destruction of proprietary information 
disclosed under APO in accordance with 19 CFR 351.305(a)(3). Failure to 
comply is a violation of the APO.
    This determination is published pursuant to sections 704(g) and 
777(i) of the Act.

    Dated: December 13, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-33231 Filed 12-28-99; 8:45 am]
BILLING CODE 3510-DS-P