65 FR 18973, April 10, 2000

[C-580-818]

Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat
Products From Korea: Final Results of Expedited Sunset Reviews

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

ACTION: Certain cold-rolled and corrosion-resistant carbon steel flat
products from Korea; final results of expedited sunset reviews.

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SUMMARY: On September 1, 1999, the Department of Commerce (``the
Department'') initiated sunset reviews of the countervailing duty
orders on certain cold-rolled and corrosion-resistant carbon steel flat
products from Korea (64 FR 47767) pursuant to section 751(c) of the
Tariff Act of 1930, as amended (``the Act''). On the basis of a notice
of intent to participate and adequate substantive comments filed on
behalf of domestic interested parties in each of these reviews, as well
as inadequate response from respondent interested parties, we
determined to conduct expedited sunset reviews. Based on our analysis
of the substantive comments received, we find that revocation of the
countervailing duty orders would be likely to lead to continuation or
recurrence of a countervailable subsidy. The net countervailable
subsidy rates are listed in the Final Results of Review section of this
notice.

EFFECTIVE DATE: April 10, 2000.

FOR FURTHER INFORMATION CONTACT: Martha V. Douthit or Melissa G.
Skinner, Office of Policy for Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street &
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
5050 or (202) 482-1560, respectively.

SUPPLEMENTARY INFORMATION:

Statute and Regulations

    Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (``the Act''), are references to the provisions
effective January 1, 1995,

[[Page 18974]]

the effective date of the amendments made to the Act by the Uruguay
Round Agreements Act (``URAA''). In addition, unless otherwise
indicated, all citations to the Department of Commerce's (``the
Department's'') regulations are to 19 CFR part 351 (1999). Guidance on
methodological or analytical issues relevant to the Department's
conduct of sunset reviews is set forth in the Department's Policy
Bulletin 98:3--Policies Regarding the Conduct of Five-year (``Sunset'')
Reviews of Antidumping and Countervailing Duty Orders; Policy Bulletin,
63 FR 18871 (April 16, 1998) (``Sunset Policy Bulletin'').

Background

    On September 1, 1999, the Department initiated sunset reviews of
the countervailing duty orders on certain cold-rolled and corrosion-
resistant carbon steel flat products from Korea (64 FR 47767), pursuant
to section 751(c) of the Act. We invited parties to comment. On the
basis of a notice on intent to participate and adequate substantive
responses filed on behalf of domestic interested parties in both
reviews, and inadequate response (in these cases no response) from
respondent interested parties, we determined to conduct expedited (120-
day) sunset reviews, in accordance with 19 CFR 351.218(e)(1)(ii)(C).
The Department has conducted these sunset reviews in accordance with
sections 751 and 752 of the Act.
    In accordance with section 751(c)(5)(C)(v) of the Act, the
Department may treat a review as extraordinarily complicated if it is a
review of a transition order (i.e., an order in effect on January 1,
1995). These reviews concern transition orders within the meaning of
section 751(c)(6)(C)(i) of the Act. Therefore, on December 22, 1999,
the Department determined the sunset reviews of the countervailing duty
orders on certain cold-rolled and corrosion-resistant carbon steel flat
products from Korea to be extraordinarily complicated, and, extended
the time limit for completion of the final results of these reviews
until not later than March 29, 2000, in accordance with section
751(c)(5)(B) of the Act.\1\
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    \1\ See Extension of Time Limit for Final Results of Five-Year
Reviews, 64 FR 71726 (December 22, 1999).
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Scope of Review

    The products covered by these orders are certain cold-rolled and
corrosion-resistant carbon steel flat products as described below.
Although the Harmonized Tariff Schedule of the United States (``HTS'')
subheadings are provided for convenience and customs purposes, our
written descriptions of the scope of these proceedings are dispositive.

Certain Cold-Rolled Carbon Steel Flat Products

    The products covered by this order include cold-rolled (cold-
reduced) carbon steel flat-rolled products, of rectangular shape,
neither clad, plated nor coated with metal, whether or not painted,
varnished or coated with plastics or other nonmetallic substances, in
coils (whether or not in successively superimposed layers) and of a
width of 0.5 inch or greater, or in straight lengths which, if of a
thickness less than 4.75 millimeters, are of a width of 0.5 inch or
greater and which measures at least 10 times the thickness or if of a
thickness of 4.75 millimeters or more are of a width which exceeds 150
millimeters and measures at least twice the thickness, as currently
classifiable in the HTS under item numbers 7209.11.0000, 7209.12.0030,
7209.12.0090, 7209.13.0030, 7209.13.0090, 7209.14.0030, 7209.14.0090,
7209.21.0000, 7209.22.0000, 7209.23.0000, 7209.24.1000, 7209.24.5000,
7209.31.0000, 7209.32.0000, 7209.33.0000, 7209.34.0000, 7209.41.0000,
7209.42.0000, 7209.43.0000, 7209.44.0000, 7209.90.0000, 7210.70.3000,
7210.90.9000, 7211.30.1030, 7211.30.1090, 7211.30.3000, 7211.30.5000,
7211.41.1000, 7211.41.3030, 7211.41.3090, 7211.41.5000, 7211.41.7030,
7211.41.7060, 7211.41.7090, 7211.49.1030, 7211.49.1090, 7211.49.3000,
7211.49.5030, 7211.49.5060, 7211.49.5090, 7211.90.0000, 7212.40.1000,
7212.40.5000, 7212.50.0000, 7217.11.1000, 7217.11.2000, 7217.11.3000,
7217.19.1000, 7217.19.5000, 7217.21.1000, 7217.29.1000, 7217.29.5000,
7217.31.1000, 7217.39.1000, and 7217.39.5000. Included in this order
are flat-rolled products of nonrectangular cross-section where such
cross-section is achieved subsequent to the rolling process (i.e.,
products which have been ``worked after rolling'')--for example,
products which have been bevelled or rounded at the edges. Excluded
from this order is certain shadow mask steel, i.e., aluminum-killed,
cold-rolled steel coil that is open-coil annealed, has a carbon content
of less than 0.002 percent, is of 0.003 to 0.012 inch in thickness, 15
to 30 inches in width, and has an ultra flat, isotropic surface.

Certain Corrosion-Resistant Carbon Steel Flat Products

    The merchandise covered by this order includes flat-rolled carbon
steel products, of rectangular shape, either clad, plated, or coated
with corrosion-resistant metals such as zinc, aluminum, or zinc-,
aluminum-, nickel- or iron-based alloys, whether or not corrugated or
painted, varnished or coated with plastics or other nonmetallic
substances in addition to the metallic coating, in coils (whether or
not in successively superimposed layers) and of a width of 0.5 inch or
greater, or in straight lengths which, if of a thickness less than 4.75
millimeters, are of a width of 0.5 inch or greater and which measures
at least 10 times the thickness or if of a thickness of 4.75
millimeters or more are of a width which exceeds 150 millimeters and
measures at least twice the thickness, as currently classifiable in the
HTS under item numbers 7210.31.0000, 7210.39.0000, 7210.41.0000,
7210.49.0030, 7210.49.0090, 7210.60.0000, 7210.70.6030, 7210.70.6060,
7210.70.6090, 7210.90.1000, 7210.90.6000, 7210.90.9000, 7212.21.0000,
7212.29.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000, 7212.30.5000,
7212.40.1000, 7212.40.5000, 7212.50.0000, 7212.60.0000, 7215.90.1000,
7215.90.5000, 7217.12.1000, 7217.13.1000, 7217.19.1000, 7217.19.5000,
7217.22.5000, 7217.23.5000, 7217.29.1000, 7217.29.5000, 7217.32.5000,
7217.33.5000, 7217.39.1000, and 7217.39.5000. Included in this order
are flat-rolled products of nonrectangular cross-section where such
cross-section is achieved subsequent to the rolling process (i.e.,
products which have been ``worked after rolling'')-- for example,
products which have been bevelled or rounded at the edges. Excluded
from this order are flat-rolled steel products either plated or coated
with tin, lead, chromium, chromium oxides, both tin and lead (``terne
plate''), or both chromium and chromium oxides (``tin-free steel''),
whether or not painted, varnished or coated with plastics or other
nonmetallic substances in addition to the metallic coating. Excluded
from this order are clad products in straight lengths of 0.1875 inch or
more in composite thickness and of a width which exceeds 150
millimeters and measures at least twice the thickness. Also excluded
from this order are certain clad stainless flat-rolled

[[Page 18975]]

products, which are three-layered corrosion-resistant carbon steel
flat-rolled products less than 4.75 millimeters in composite thickness
that consist of a carbon steel flat-rolled product clad on both sides
with stainless steel in a 20%-60%-20% ratio.

Analysis of Comments Received

    All issues raised in the substantive responses by parties to these
sunset reviews are addressed in the ``Issues and Decision Memorandum''
(``Decision Memo'') from Jeffrey A. May, Director, Office of Policy,
Import Administration, to Robert S. LaRussa, Assistant Secretary for
Import Administration, dated March 29, 2000, which is hereby adopted by
this notice. The issues discussed in the attached Decision Memo include
the likelihood of the continuation or recurrence of a countervailable
subsidy, the net countervailable subsidy likely to prevail were the
orders revoked, and the nature of the subsidy. Parties can find a
complete discussion of all issues raised in these reviews and the
corresponding recommendations in this public memorandum which is on
file in the Department's Central Record Units, Room B-099.
    In addition, a complete version of the Decision Memo can be
accessed directly on the Web at www.ita.doc.gov/import__admin/records/
frn. The paper copy and electronic version of the Decision Memo are
identical in content.

Final Results of Reviews

    As a result of these reviews, the Department finds that revocation
of the countervailing duty orders would likely lead to continuation or
recurrence of a countervailable subsidy at the rates listed below:

------------------------------------------------------------------------
                                                               Net
                                                         countervailable
              Producers/exporters/product                    subsidy
                                                            (percent)
------------------------------------------------------------------------
Cold-rolled carbon steel flat products: All Korean                3.95
 producers/exporters
Corrosion-resistant carbon steel flat products: All               2.69
 Korean producers/exporters
------------------------------------------------------------------------

Nature of the Subsidy

    In the Sunset Policy Bulletin, the Department states that,
consistent with section 752(a)(6) of the Act, the Department will
provide to the Commission information concerning the nature of the
subsidy, and whether the subsidy is a subsidy described in Article 3 or
Article 6.1 of the Subsidies Agreement. Because the benefits received
in some of the programs were contingent on exports, these programs fall
within the definition of an export subsidy under Article 3.1(a) of the
Subsidies Agreement. The remaining programs, outside the export subsidy
definition under Article 3.1(a) could be found to be inconsistent with
Article 6 if the net countervailable subsidy exceeds 5 percent, as
measured in accordance with Annex IV of the Subsidies Agreement. The
Department, however, has no information with which to calculate whether
the net countervailable subsidy exceeds 5 percent, as measured in
accordance with Annex IV of the Subsidies Agreement, nor do we believe
it appropriate to attempt such a calculation in the course of a sunset
review. Therefore, we are providing the Commission the following
program descriptions.

(1) Government Equity Infusions in Pohang Iron & Steel Company, Ltd.

    Government equity infusions bestow a countervailable benefit when
they occur on terms inconsistent with commercial considerations. See 19
U.S.C. 1677(5)(A)(1988). In the investigation, the Department
determined subsidy rates of 0.13 percent and 0.07 percent for certain
cold-rolled carbon steel flat products and certain corrosion-resistant
carbon steel flat product, respectively.

(2) Loans Inconsistent With Commercial Considerations/Preferential
Access to Foreign Loans

    This benefit is conferred through a disproportionately high volume
of loans to the steel industry at rates that are substantially below
Korea's generally available commercial interest rates. In the
investigation, the Department determined subsidy rates of 2.94 percent
and 1.83 percent for certain cold-rolled and certain corrosion-
resistant carbon steel flat products, respectively.\2\
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    \2\ On October 1, 1999, the Court of Appeals for the Federal
Circuit issued an opinion affirming-in-part and reversing-in-part
the Department's determination in this investigation. AK Steel Corp.
et al. v. United States 192 F. 3d 1367 (CAFC Oct. 1, 1999). In that
litigation, the court reviewed the Department's determination with
respect to the following programs: foreign and domestic loans and
government infrastructure assistance for POSCO's integrated steel
mill at Kwangyang Bay including POSCO's exemption from the payment
of dockyard fees. The case has been remanded to the Court of
International Trade. Thus, the CAFC's decision is not yet final and
conclusive.
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(3) Government Infrastructure Assistance for POSCO's Integrated Steel
Mill at Kwangyang Bay

    The Korean government's infrastructure development at Kwangyang Bay
constituted a specific and countervailable subsidy to POSCO because
POSCO was found to be the predominant user of the infrastructure. In
the investigation, the Department determined subsidy rates of 0.58
percent and 0.30 percent for certain cold-rolled and certain corrosion-
resistant carbon steel flat products, respectively.

(4) Dockyard Fees

    In the investigation, we determined that POSCO enjoys the use of 15
berths in the Kwangyang Bay port facility at no charge. The GOK
normally charges a user fee, or dockyard fee, for the use of berths at
all of Korea's ports. Thus, we determined the free use of 15 berths by
POSCO in the Kwangyang Bay Industrial Estate constitutes a
countervailable benefit. The Department determined subsidy rates of
0.01 percent and less than 0.005 percent for certain cold-rolled and
certain corrosion-resistant carbon steel flat products, respectively.

(5) Reserve for Export Loss

    Under Article 22 of the Tax Exemption and Reduction Control Act
(TERCL), a corporation engaged in export activities can establish a
reserve amounting to the lesser of one percent of foreign exchange
earnings or 50 percent of net income for the respective tax year. This
program confers a benefit that constitutes an export subsidy because it
provides a deferment, contingent upon export performance, of direct
taxes. In the period of investigation, the Department determined that
Dongbu, POSCO, and Union received benefits under this program. In the
investigation, the Department determined subsidy rates of 0.03 percent,
and 0.06 percent for certain cold-rolled and certain corrosion-
resistant carbon steel flat products, respectively.\3\
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    \3\ See Preliminary Affirmative Countervailing Duty
Determinations and Alignment of Final Countervailing Duty
Determinations with Final Antidumping Duty Determinations: Certain
Steel Products from Korea, 57 FR 57761 (December 7, 1992)
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(6) Reserve for Overseas Market Development

    This program operates in a similar fashion to Article 22 of the
TERCL described above. This program constitutes an export subsidy
because benefits under the program are contingent upon export
performance. In the investigation, the Department determined subsidy
rates of 0.04 percent and 0.09 percent for certain cold-rolled and
certain corrosion-resistant carbon steel flat products, respectively.

[[Page 18976]]

(7) Unlimited Deduction of Overseas Entertainment Expense

    Under Article 18-2 of the Corporation Tax Act and supporting
legislation, entertainment expenses for domestic clients and foreign
clients are eligible to be deducted from taxable income. The amount
that can be deducted for domestic entertainment expenses is subject to
a ceiling according to an established formula and depending on the
amount of any overseas entertainment expenses claimed. There is no cap
on overseas entertainment expenses. Because entertainment expense
deductions are unlimited only for overseas clients, this program
confers benefits which constitute export subsidies, to the extent that
the overseas expenses claimed are greater than those which would have
been allowed using the domestic cap formula. In the investigation, the
Department determined a subsidy rate of less than 0.005 percent for
both certain cold-rolled and certain corrosion-resistant carbon steel
flat products.

(7) Reserve for Investment

    This reserve fund program operates in the same manner as reserves
for export loss and overseas market development described above.
However, because this program provides benefits only to those
industries that use certain production facilities outside of
metropolitan Seoul, this program is a regional subsidy. In the
investigation, the Department determined subsidy rates of 0.03 percent
and 0.02 percent for certain cold-rolled and certain corrosion-
resistant carbon steel flat products, respectively.

(8) Duty Drawback

    The Government of Korea establishes an authorized loss rate for raw
materials used in the manufacture of exported goods. Duty drawback
includes the amount of duty remitted on the authorized loss or wastage
for the raw materials. Duty drawback for loss or wastage only becomes
countervailable when the allowance for this loss or wastage is
unreasonable or excessive. Here, we found the duty drawback was not
excessive and, therefore, was not countervailable with regard to POSCO.
However, Union Steel was found to benefit from this program. The
Department, therefore, calculated estimated net subsidies of 0.01
percent for both certain cold-rolled and corrosion carbon steel flat
products.

(9) Preferential Utility Rates

    In the investigation, the Department determined that
countervailable benefits were provided to the steel industry with
respect to certain discounts applied to electricity charges for certain
firms. The Department determined subsidy rates of 0.03 percent and 0.02
percent for certain cold-rolled and certain corrosion-resistant carbon
steel flat product, respectively.

(10) Short-Term Export Financing

    The Department determined that during the period of investigation,
Pohang Coated Steel Company (``POCOS''), was the only respondent to
receive short-term loans contingent on exports. The calculated
estimated net ad valorem subsidies was less than 0.005 percent for both
certain cold-rolled and corrosion-resistant carbon steel flat products.
    This notice also serves as the only reminder to parties subject to
administrative protective orders (``APO'') of their responsibility
concerning the return or destruction of proprietary information
disclosed under APO in accordance with 19 CFR 351.305 of the
Department's regulations. Timely notification of the return or
destruction of APO materials or conversions to judicial protective
order is hereby requested. Failure to comply with the regulations and
terms of an APO is a violation which is subject to sanction.
    We are issuing and publishing these determinations and notice in
accordance with sections section 751(c), 752, and 777(i) of the Act.


Dated: March 29, 2000.

Joseph A. Spetrini,
Acting Assistant Secretary 
   for Import Administration.



[FR Doc. 00-8819 Filed 4-7-00; 8:45 am]
BILLING CODE 3510-DS-P