Saudi Arabia - Subsidy Programs Aimed at Industrial Sectors

SAUDI ARABIA

SUBSIDY PROGRAMS AIMED AT INDUSTRIAL SECTORS
Last Reviewed December 31, 2000

Effective February 15, 2000, Import Administration began publishing "Decision Memos" to reduce the size of antidumping and countervailing duty Federal Register notices. In cases in which a decision memo was published, you will find a link to the memo listed below.

In addition, in the following programs, in instances below in which a proceeding was a Sunset Review, you will see the letters SR after the product name.

COUNTERVAILABLE SUBSIDY PROGRAMS

The subsidy programs listed below have been investigated by the Department and have been found to be "countervailable" based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition, you may click on the cases listed below the subsidy program title for a full explanation of the Department's analysis in those cases.

STEEL PRODUCTS

Government Equity Infusions in Hadeed

Carbon Steel Wire Rod (1984) 50 FR 47788 (11/20/85-prelim); 51 FR 4206 (2/3/86-final)

The government provided equity infusions to Hadeed. We determined that Hadeed was equityworthy when the equity infusions were provided. Therefore, we determined that the equity infusions were provided on terms inconsistent with commercial considerations.

Government Loan to Hadeed through the PIF

Carbon Steel Wire Rod (1991) 58 FR 58537 (11/2/93-prelim); 59 FR 58814 (11/15/94-final)
Carbon Steel Wire Rod (1990) 56 FR 66847 (12/26/91-prelim); 57 FR 8303 (3/9/92-final)
Carbon Steel Wire Rod (1988/89) 56 FR 28866 (6/25/91-prelim); 56 FR 48158 (9/24/91-final)
Carbon Steel Wire Rod (1987) 55 FR 49932 (12/3/90-prelim); 56 FR 26652 (6/10/91-final)
Carbon Steel Wire Rod (1984) 50 FR 47788 (11/20/85-prelim); 51 FR 4206 (2/3/86-final)

The Government of Saudi Arabia provided a start-up loan to Hadeed through the Public Investment Fund (PIF). The PIF was established in 1971 to provide loans for major projects. We determined that PIF loans are provided to a specific enterprise or industry, or group of enterprises or industries. Therefore, we determined that the PIF loan was countervailable.

Government Provision of Equipment to Hadeed

The government built a bulk ship unloader and conveyor belt system for Hadeed. This system, which was built exclusively for Hadeed's use, unloads iron ore at the Jubail port and transports it to Hadeed's mill. The ship unloader and conveyor system was leased exclusively to Hadeed under an agreement which that said that Hadeed must make annual payments over 20 years to cover the cost of the system as well as a commission fee. We determined that this lease agreement can be characterized as a long-term loan because the transaction amounts to a loan covering the cost of the equipment plus borrowing charges. Because this long-term loan was limited to a specific enterprise, we determined that this loan is countervailable.

SABIC's Transfer of SULB shares to HADEED

SABIC was established in 1976 by the Government of Saudi Arabia as an industrial development corporation. SABIC has been the majority shareholder in HADEED since the steel company's inception in 1979. In 1982, SABIC acquired all of the remaining shares in the Steel Rolling Company (SULB), a Saudi producer of steel reinforcing bars of which SABIC had been the majority shareholder since 1979. In December 1982, SABIC decided to transfer its shares in SULB to HADEED in return for new HADEED stock. Through the stock transfer, SULB became a wholly-owned subsidiary of HADEED. We determined that HADEED was unequityworthy in December 1982 and that the transfer of SABIC's shares in SULB to HADEED in exchange for additional shares in HADEED was inconsistent with commercial considerations.

SUBSIDY PROGRAMS FOUND TO BE NOT COUNTERVAILABLE

The subsidy programs listed below have been investigated by the Department and have been found to be "not countervailable" based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition, you may click on the cases listed under the subsidy program title for a full explanation of the Department's analysis in each case where the subsidy program has been examined.

STEEL PRODUCTS

Certain Tax Benefits to Hadeed

Carbon Steel Wire Rod (1984) 50 FR 47788 (11/20/85-prelim); 51 FR 4206 (2/3/86-final)

All Saudi corporations are liable to pay Zakat, a religious tax. A corporation's Zakat liability is based on its net worth at the end of the year. For joint ventures with foreign partners, the Zakat liability attaches only to the Saudi-owned portion of the company's equity. The foreign partner pays income tax, not Zakat, on its pro- rata share of the joint venture's net profits at a progressive rate from 25 to 45 percent. Moreover, under Article 7 of the Foreign Capital Investment Law, there is a 10-year income tax holiday for industrial projects with foreign capital. This tax holiday applies only to income taxes that would be owed by foreign owners. It does not apply to the Zakat liability of the Saudi owners. Since all industries must pay the Zakat, we determined that tax benefits are not provided by the Zakat.

SUBSIDY PROGRAMS THAT HAVE BEEN TERMINATED

The subsidy programs listed below have been investigated by the Department and have been found to have been terminated based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition, you may click on the cases listed below the subsidy program title for a full explanation of the Department's analysis in each of these cases.

No programs listed.

SUBSIDY PROGRAMS THAT HAVE NOT BEEN USED

When potential subsidy programs are investigated and found not to be used by the companies being investigated, the Department makes no determination as to their countervailability. If you click on the cases listed under the subsidy program title, you will be linked to each case in which the subsidy program was referenced.

STEEL PRODUCTS

Preferential Provision of Services by SABIC

No program description available.

SABIC Loan Guarantees to Hadeed

Carbon Steel Wire Rod (1988/89) 56 FR 28866 (6/25/91-prelim); 56 FR 48158 (9/24/91-final) not used
Carbon Steel Wire Rod (1987) 55 FR 49932 (12/3/90-prelim); 56 FR 26652 (6/10/91-final) not used
Carbon Steel Wire Rod (1984) 50 FR 47788 (11/20/85-prelim); 51 FR 4206 (2/3/86-final) not used

We determined that SABIC may have provided loan guarantees to SULB, a subsidiary of Hadeed. We examined the financial statements of Hadeed and SULB and correspondence with SULB's major creditors and found that neither SULB nor Hadeed had received loan guarantees from SABIC. We, therefore, determine that loan guarantees were not used by Hadeed or its subsidiary during the period of review.

SUBSIDY PROGRAMS DETERMINED NOT TO EXIST

The following subsidy programs were alleged by the petitioning industries and were investigated by the Department. However, during the investigation we found no evidence that such programs actually existed. If you click on the cases listed under the subsidy program title, you will be linked to each case in which the subsidy program was referenced. It is possible that, while the program named did not exist, a similar program having a different name actually was investigated. If this is the case, you will find that program listed elsewhere in this library.

No programs listed.