48 FR 9899
NOTICES
DEPARTMENT OF COMMERCE
Preliminary Affirmative Countervailing Duty Determination; Certain
Carbon Steel Pipe and Tube Products From South Africa
Wednesday, March 9, 1983
*9899
AGENCY: International Trade Administration, Commerce.
ACTION: Preliminary affirmative countervailing duty determination.
SUMMARY: We have preliminarily determined that there is reason to believe or suspect that
benefits which constitute bounties or grants within the meaning of the countervailing
duty law are being provided to manufacturers, producers, or exporters in South Africa
of certain carbon steel pipe and tube products, as described in the "Scope of Investigation"
section of this notice. We estimate
the amount of the benefits to be 19.5 percent of the f.o.b. value of the merchandise for
Tubemakers of South Africa and 23.3 percent for all other South African manufacturers
of this merchandise.
Therefore, we are directing the U.S. Customs Service to suspend liquidation of all entries of the
subject merchandise which are entered, or withdrawn from warehouse, for consumption on or
after the date of publication of this notice and to require a cash deposit or bond in the amount
equal to the estimated bounties or grants. If this investigation proceeds normally, we will
make our final determination by May 23, 1983.
EFFECTIVE DATE: March 9, 1983.
FOR FURTHER INFORMATION CONTACT: Steven Morrison, Office of Investigations,
International Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230, telephone: (202) 377- 3965.
SUPPLEMENTARY INFORMATION:
Preliminary Determination
Based upon our investigation, we have preliminarily determined that there is reason to believe
or suspect that certain benefits which constitute bounties or grants within the meaning of
section 303 of the Tariff Act of 1930, as amended (the Act), are being provided to
manufacturers, producers, or exporters in South Africa of certain carbon steel pipe and
tub products, as described in the "Scope of Investigation" section of this notice. We find the net
bounty or grant to be as represented in the following table and consisting of the following
benefit amounts:
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Manufacturer (percent)
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Tubemakers of All others
South Africa (including
Brollo)
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- Export incentive program--category B ............... 0.0 3.8
- Export incentive program--category D ............... 0.0 0.0
- Iron/Steel Export Promotion Scheme ................ 19.5 19.5
- Total ............................................. 19.5 23.3
(Cite as: 48 FR 9899, *9899)
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*9900
Case History
On October 6, 1982, we received a petition from counsel for the Committee on Pipe and Tube
Imports. The Committee consists of domestic companies which produce carbon steel pipe and
tube products. The petition alleged that manufacturers, producers, or exporters in South
Africa of certain carbon steel pipe and tube products receive benefits which constitute
bounties or grants within the meaning of the countervailing duty law. We found the
petition to be sufficient, and on October 26, 1982, we initiated a countervailing duty
investigation (47 FR 49057).
Since South Africa is not a "country under the Agreement" within the meaning of section
701(b) of the Act and the merchandise under investigation is dutiable, the domestic industry
is not required to allege that, and the U.S. International Trade Commission is not required to
determine whether, imports of this product cause or threaten material injury to the U.S.
industry in question.
We presented a questionnaire in Washington, D.C., to the South African government of October
26, 1982. On November 19, 1982, we amended the scope of
investigation and published notice of this amendment in the Federal Register (47 FR 53440).
On December 10, 1982, we found that the case was extraordinarily complicated (47 FR
56377). The questionnaire response was received on January 31, 1983.
Scope of Investigation
For purposes of this investigation, the term "certain carbon steel pipe and tube products"
includes electric resistance welded (ERW) carbon steel pipes and tubes with walls not thinner
than 0.065 inch, of circular cross section, with an outside diameter of 0.375 inch or more but
not exceeding 4.5 inches, as currently provided for in items 610.3241 and 610.3244 of the
Tariff Schedules of the United States Annotated (TSUSA); ERW cold rolled carbon steel pipes
and tubes with walls not thinner than 0.065 inch or not exceeding 0.1 inch, of any circular
cross-sectional diameter with an outside diameter of 0,375 amd more, as currently provided
for in item 610.3227 of the TSUSA; and ERW carbon steel pipes and tubes of any square or
rectangular dimension with a wall thickness not less than 0.156 inch, as currently provided for
in item 610.3955 of TSUSA; and ERW carbon steel pipes and tubes not suitable for use in the
manufacture of ball or roller bearings of any square or rectangular dimension as currently
provided for in item 610.4975 of the TSUSA.
Excluded from this investigation are ERW carbon steel pipes and tubes suitable for use in
boilers, superheaters, heat exchangers condensers, feedwater heaters, or ball or rollers
bearings, or conforming to A.P.I. specifications for oil well tubing and casing, or cold drawn
pipes and tubes, or ERW carbon steel pipes and tubes imported with couplings.
Tubemakers of South Africa Limited (TOSA) and Brollo Africa Limited (Brollo) are the
only known producers of products within the scope of investigation exported to the United
States. According to responses from the respondents, no exports to the United States have
been made of pipe and tube from South Africa under item 610.3227 of the TSUSA.
Analysis of Programs
The period for which subsidization is being measured is the corporate fiscal year ending
September 30, 1982.
Based upon our analysis to date of the response and petition, we have preliminarily
determined the following:
I. Programs Preliminarily Determined to Confer Bounties or Grants to Maufacturers,
producers, or Exporters of certain Carbon Steel Pipe and Tube Products
We preliminarily determine that bounties or grants are being provided to manufacturers,
producers, or exporters in South Africa of certain steel pipe and tube products under the
programs listed below:
Export Incentive Program
The South African Department of Industries, Commerce and Tourism has a general export
incentive program, two parts of which were used in 1982. these are described below.
Category B. This program consists of a credit against income taxes of 10 percent of the
value-added component of the exported merchandise if there is a South African import duty
on such merchandise. There is an import duty on carbon steel pipe and tube products. The
value-added component is calculated by taking the average f.o.b. sales price per ton,
increasing it by the rebate received under the Iron/Steel Export Promotion Scheme (see
below), and subtracting the average raw materials costs. This figure is then multipled by 10
percent to obtain the amount of the credit. We preliminarily determine that the government of
South Africa through this category B tax credit program provides a benefit which
constitutes a bounty or grant. For programs involving income tax benefits, the Department
generally determines the value of the
bounty or grant by the value of the benefit received during the period for which subsidization
is being measured.
Brollo receives a benefit under category B which was calculated to be 3.8 percent ad valorem.
TOSA stated that it did not benefit from category B. Although we preliminarily determine the
program to confer a bounty or grant, we find the estimated net bounty or grant for the period
for which we are measuring subsidization to be 0.0 pecent ad valorem for TOSA.
Category D (Export Marketing Assistance Program). This program consists of a deduction from
Taxable income of between 175 and 200 percent of export market development expenses. As
we have found in previous investigations of this program, we preliminarily determine that the
government of South Africa through this category D tax deduction program provides a
benefit which constitutes a bounty or grant. Brollo stated that it did not benefit from this
program. Stewarts and Lloyds and its subsidiary TOSA stated that no benefit was received
because they had a tax loss. However, we understand that under this circumstance, the tax
deduction can be carrried forward. Therefore, although we preliminarily determine the
program to confer a bounty or grant, we find the estimated net bounty or grant for the period
for which we are measuring subsidization to be 0.0 percent ad valorem.
Iron/Steel Export Promotion Scheme
The Iron/Steel Export Promotion Scheme rebate a fixed percentage of the f.o.b value of
exports containing rolled, drawn, or forged steel to secondary producers if the exported
product meets a value-added criterion. It is admistered by the South African Iron and Steel
Industrial Corporation (ISCOR). The Department considers the Scheme to have provided an
export subsidy, and therefore a countervailable bounty or grant under section 303(a)(1) of the
Act. Section 771(5) of the Act equates "subsidy" with "bounty or grant" and provides
illustrative examples of
*9901
subsidies. In the legislative history of the Act, the Senate Finance Committe in discussing
section 771(5) said: "As under current law . . . a subsidy may be provided either by a
government or governmental entity, subdivision, or customs union, or by a private party or
group of private parties." Primary steel producers in South Africa manage a special fund
levied at a rate of 4 Rand per ton of steel sold in the domestic market. The South African
government does not contribute to this fund. Direct payments from the fund are provided to
exporters of fabricated articles containing iron or steel. The current value of the assistance is
19.5 percent of the f.o.b. value of the exported fabricated steel products. We have determined
that the Iron/Steel Export Promotion Scheme provides a benefit which consititutes a bounty
or grant. We have found that Brollo and TOSA take full advantage of this program on its
exports of carbon steel pipe and tube.
II. Programs Preliminarily Determined Not to Confer Bounties of Grants to Manufacturers,
producers, or Exporters of Certain Carbon Steel Pipe and Tube
We preliminarily derermine that no bounties or grants are being provided to manufacturers,
producers or exporters in South Africa of certain carbon steel pipe and tube products
under the programs listed below:
Preferential Prices for Primary Steel From ISCOR
ISCOR is South Africa's largest producer of primary steel. Over 99 percent of its stock is
owned by the government of South Africa. We have no information that ISCOR sells
primary steel to exporters at any rate other than that sold to manufacturers for domestic uses.
The respondents purchase steel from ISCOR in arm's length transactions and are not related to
ISCOR. Therefore, purchases of primary steel from ISCOR are preliminarily determined not to
confer bounties or grants.
Reduced Ocean Freight Rates
The petition alleges that South African shippers benefitted from a program for
reduced ocean freight rates if the products are disadvantaged with respect to foreign
competition. We found no evidence of ocean freight rates for carbon steel pipe and tube
products being reduced because of any program. In the Final Affirmative Countervailing
Duty Determination on Certain Steel Products from South Africa, we said, "We did find
evidence of variable ocean freight rates due to rate negotiation between shippers and carriers;
however this variability does not constitute a bounty or grant under the Act," (47 FR 39379).
Preferential Railroad Rates
The South African Transport Services (SATS), a government-owned corporation, maintains a
rate schedule that generally provides railroad rates for shipments of the pipe and tube
products under investigation destined for export that are lower than domestic rates. These
rates are charged per unit weight of cargo. The amount charged the shipper, the rate times the
weight, is subject to a minimum weight requirement. The minimum weight associated with the
export rate substantially exceeds the minimum weight for the domestic rate.
SATS has made the export rate available to all shippers after January 1, 1983, subject to the
larger minimum weight requirement applicable to this rate. We determine that the rates
afforded by SATS to exporters of certain carbon steel
pipe and tube products are not provided on terms more favorable than those for domestic
shippers and that they do not constitute a bounty or grant.
III. Program Preliminarily Determined Not To Be Used by Manufacturers, Producers, or
Exporters of Certain Carbon Steel Pipe and Tube Products
We preliminarily determine that the followng programs are not used by the manufacturers,
producers or exporters in South Africa of certain carbon steel pipe and tube products.
1/8 Export incentive program--category A
1/8 Allowances on harbor rates
1/8 Pre- and Post-shipment financing
1/8 Beneficiation allowances for base mineral processing, and
1/8 Homeland develoment
IV. Programs Preliminarily Determined To Be No Longer in Existence
We preliminarily determine that the following program is no longer in existence.
Export Incentive Program--Category C (Finance Charges Aid Scheme)
The South African government provided for a tax-free rebate to certain firms increasing the
value of their exports of all manufactured goods. The rebate was equal to 25 percent of the
interest costs for financing exports.
The progam was discontinued on April 1, 1982. There is little likelihood that there are any
exports of the subject merchandise shipped prior to that date, but not yet entered. Therefore,
the benefit, it any, received for this program in the first quarter of 1982 is not included in the
calculation of total estimated bounties or grants.
No other programs were found to confer bounties or grants.
Verification
In accordance with section 776(a) of the Act, we will verify the information relied upon for
our final determination.
Suspension of Liquidation
We are directing the U.S. Customs Service to suspend liquidation of all entries of certain
carbon steel pipe and tube products from South Africa which are entered, or withdrawn
from warehouse, for consumption on or after the date
of publication of this notice in the Federal Register, and to require a cash deposit or bond in
the amount equal to the percentage of the f.o.b. value of the merchandise indicated at the
beginning of this notice.
Public Comment
In accordance with § 355.35 of the Commerce Regulations, if requested, we will hold a public
hearing to afford interested parties an opportunity to comment on this preliminary
determination at 10:00 a.m. on April 14, 1983, at the U.S. Department of Commerce, room
3080, 14th Street and Constitution Avenue, NW., Washington, D.C. 20230. Individuals who
wish to participate in the hearing must submit a request to the Deputy Assistant Secretary for
Import Administration, Room 3099B, at the above address within 10 days of this notice's
publication. Requests should contain: (1) The party's name, address, and telephone number;
(2) the number of participants; (3) the reason for attending; and (4) a list of the issues to be
discussed. In addition, prehearing briefs in at least 10 copies must be submitted to the Deputy
Assistant Secretary by April 7, 1982. Oral presentation will be limited to issues raised in the
briefs.
All written views should be filed in accordance with 19 CFR 355.43, within 30 days of this
notice's publication, at the above address and in at least 10 copies.
Gary N. Horlick,
Deputy Assistant Secretary for Import Administration.
March 4, 1983.
[FR Doc. 83-6023 Filed 3-8-83; 8:45 am]
BILLING CODE 3510-25-M