[Federal Register: September 10, 2002 (Volume 67, Number 175)]
[Page 57395-57404]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-580-835]
Preliminary Results, Intent to Partially Rescind and Postponement
of Final Results of Countervailing Duty Administrative Review:
Stainless Steel Sheet and Strip in Coils from the Republic of Korea
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results, intent to partially rescind and
postponement of final results of countervailing duty administrative
review.
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SUMMARY: The Department of Commerce (the Department) is conducting an
administrative review of the countervailing duty (CVD) order on
[[Page 57396]]
stainless steel sheet and strip in coils from the Republic of Korea for
the period January 1, 2000, through December 31, 2000. For information
on the net subsidy for the reviewed company, see the ``Preliminary
Results of Review'' section of this notice. Interested parties are
invited to comment on these preliminary results. (See the ``Public
Comment'' section of this notice).
EFFECTIVE DATE: September 10, 2002.
FOR FURTHER INFORMATION CONTACT: Tipten Troidl or Carrie Farley, Office
of AD/CVD Enforcement VI, Group II, Import Administration, U.S.
Department of Commerce, Room 4012, 14th Street and Constitution Avenue,
NW., Washington, DC 20230; telephone (202) 482-2786.
SUPPLEMENTARY INFORMATION:
Background
On August 6, 1999, the Department published in the Federal Register
the CVD order on stainless steel sheet and strip in coils from the
Republic of Korea. See Amended Final Determination: Stainless Steel
Sheet and Strip in Coils From the Republic of Korea; and Notice of
Countervailing Duty Orders: Stainless Steel Sheet and Strip From
France, Italy and the Republic of Korea, 64 FR 42923 (August 6, 1999).
On August 1, 2001, the Department published an opportunity to request
an administrative review of this CVD order. See Antidumping or
Countervailing Duty Order, Finding, or Suspended Investigation;
Opportunity to Request an Administrative Review, 66 FR 39729 (August 1,
2001). We received a timely request for review of Inchon Iron and Steel
Co. (Inchon) and Sammi Steel Co. (Sammi), from petitioners. On October
1, 2001, the Department published in the Federal Register a notice
initiating an administrative review of the countervailing duty order on
stainless steel sheet and strip in coils from the Republic of Korea,
covering the period of review (POR) January 1, 2000 through December
31, 2000. See Initiation of Antidumping and Countervailing Duty
Administrative Reviews and Requests for Revocation in Part, 66 FR 49924
(October 1, 2001). On December 20, 2001, the Department received
questionnaire responses from the Government of Korea (GOK), Inchon and
Sammi. On April 24, 2002, the Department published in the Federal
Register, an extension of the preliminary results deadline. See
Stainless Steel Sheet and Strip in Coils From the Republic of Korea:
Extension of Preliminary Results of Countervailing Duty Administrative
Review, 67 FR 20093. On August 12 and 19, 2002, we received
supplemental responses from respondents.
In accordance with 19 CFR 351.213(b), this review covers only those
producers or exporters for which a review was specifically requested.
The companies subject to this review are Inchon and Sammi. This review
covers 17 programs.
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
regulations are references to the provisions codified at 19 CFR part
351 (2001).
Extension of Time Limits for Final Results
Under 19 CFR 351.213(h)(2), the Department finds that it is not
practicable to complete the review within the normal time period
allocated under 19 CFR 351.213(h)(1); therefore, we are extending the
final results from 120 days to 180 days after the publication of the
preliminary results. The reason for this extension is due to
extenuating circumstances related to the complexity of this case.
Specifically, the additional time will be needed to examine the change
of fixed-rate loan methodology, the issue of cross-ownership of Inchon
and Sammi, and Inchon's purchase of POSCO's inputs for less than
adequate remuneration. As we cannot fully resolve these issues until
after verifying the submitted information and examining comments
submitted by interested parties, we will be unable to complete the
final results by December 29, 2002. Therefore, the Department will
issue its final results no later than 180 days after the publication of
the preliminary results of this review.
Scope of Review
For purposes of this review, the products covered are certain
stainless steel sheet and strip in coils. Stainless steel is an alloy
steel containing, by weight, 1.2 percent or less of carbon and 10.5
percent or more of chromium, with or without other elements. The
subject sheet and strip is a flat-rolled product in coils that is
greater than 9.5 mm in width and less than 4.75 mm in thickness, and
that is annealed or otherwise heat treated and pickled or otherwise
descaled. The subject sheet and strip may also be further processed
(e.g., cold-rolled, polished, aluminized, coated, etc.) provided that
it maintains the specific dimensions of sheet and strip following such
processing.
The merchandise subject to this review is classified in the
Harmonized Tariff Schedule of the United States (HTSUS) at subheadings:
7219.13.00.30, 7219.13.00.50, 7219.13.00.70, 7219.13.00.80,
7219.14.00.30, 7219.14.00.65, 7219.14.00.90, 7219.32.00.05,
7219.32.00.20, 7219.32.00.25, 7219.32.00.35, 7219.32.00.36,
7219.32.00.38, 7219.32.00.42, 7219.32.00.44, 7219.33.00.05,
7219.33.00.20, 7219.33.00.25, 7219.33.00.35, 7219.33.00.36,
7219.33.00.38, 7219.33.00.42, 7219.33.00.44, 7219.34.00.05,
7219.34.00.20, 7219.34.00.25, 7219.34.00.30, 7219.34.00.35,
7219.35.00.05, 7219.35.00.15, 7219.35.00.30, 7219.35.00.35,
7219.90.00.10, 7219.90.00.20, 7219.90.00.25, 7219.90.00.60,
7219.90.00.80, 7220.12.10.00, 7220.12.50.00, 7220.20.10.10,
7220.20.10.15, 7220.20.10.60, 7220.20.10.80, 7220.20.60.05,
7220.20.60.10, 7220.20.60.15, 7220.20.60.60, 7220.20.60.80,
7220.20.70.05, 7220.20.70.10, 7220.20.70.15, 7220.20.70.60,
7220.20.70.80, 7220.20.80.00, 7220.20.90.30, 7220.20.90.60,
7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and 7220.90.00.80.
Although the HTSUS subheadings are provided for convenience and U.S.
Customs Service (Customs) purposes, the Department's written
description of the merchandise is dispositive.
Excluded from the scope of this review are the following: (1) Sheet
and strip that is not annealed or otherwise heat treated and pickled or
otherwise descaled, (2) sheet and strip that is cut to length, (3)
plate (i.e., flat-rolled stainless steel products of a thickness of
4.75 mm or more), (4) flat wire (i.e., cold-rolled sections, with a
prepared edge, rectangular in shape, of a width of not more than 9.5
mm), and (5) razor blade steel. Razor blade steel is a flat rolled
product of stainless steel, not further worked than cold-rolled (cold-
reduced), in coils, of a width of not more than 23 mm and a thickness
of 0.266 mm or less, containing, by weight, 12.5 to 14.5 percent
chromium, and certified at the time of entry to be used in the
manufacture of razor blades. See Chapter 72 of the HTSUS, ``Additional
U.S. Note'' 1(d).
The Department has determined that certain specialty stainless
steel products are also excluded from the scope of this order. These
excluded products are described below:
[[Page 57397]]
Flapper valve steel is defined as stainless steel strip in coils
containing, by weight, between 0.37 and 0.43 percent carbon, between
1.15 and 1.35 percent molybdenum, and between 0.20 and 0.80 percent
manganese. This steel also contains, by weight, phosphorus of 0.025
percent or less, silicon of between 0.20 and 0.50 percent, and sulfur
of 0.020 percent or less. The product is manufactured by means of
vacuum arc remelting, with inclusion controls for sulphide of no more
than 0.04 percent and for oxide of no more than 0.05 percent. Flapper
valve steel has a tensile strength of between 210 and 300 ksi, yield
strength of between 170 and 270 ksi, plus or minus 8 ksi, and a
hardness (Hv) of between 460 and 590. Flapper valve steel is most
commonly used to produce specialty flapper valves in compressors.
Also excluded is a product referred to as suspension foil, a
specialty steel product used in the manufacture of suspension
assemblies for computer disk drives. Suspension foil is described as
302/304 grade or 202 grade stainless steel of a thickness between 14
and 127 microns, with a thickness tolerance of plus-or-minus 2.01
microns, and surface glossiness of 200 to 700 percent Gs. Suspension
foil must be supplied in coil widths of not more than 407 mm, and with
a mass of 225 kg or less. Roll marks may only be visible on one side,
with no scratches of measurable depth. The material must exhibit
residual stresses of 2 mm maximum deflection, and flatness of 1.6 mm
over 685 mm length.
Certain stainless steel foil for automotive catalytic converters is
also excluded from the scope of this review. This stainless steel strip
in coils is a specialty foil with a thickness of between 20 and 110
microns used to produce a metallic substrate with a honeycomb structure
for use in automotive catalytic converters. The steel contains, by
weight, carbon of no more than 0.030 percent, silicon of no more than
1.0 percent, manganese of no more than 1.0 percent, chromium of between
19 and 22 percent, aluminum of no less than 5.0 percent, phosphorus of
no more than 0.045 percent, sulfur of no more than 0.03 percent,
lanthanum of between 0.002 and 0.05 percent, and total rare earth
elements of more than 0.06 percent, with the balance iron.
Permanent magnet iron-chromium-cobalt alloy stainless strip is also
excluded from the scope of this order. This ductile stainless steel
strip contains, by weight, 26 to 30 percent chromium, and 7 to 10
percent cobalt, with the remainder of iron, in widths 228.6 mm or less,
and a thickness between 0.127 and 1.270 mm. It exhibits magnetic
remanence between 9,000 and 12,000 gauss, and a coercivity of between
50 and 300 oersteds. This product is most commonly used in electronic
sensors and is currently available under proprietary trade names such
as ``Arnokrome III.'' \1\
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\1\ ``Arnokrome III'' is a trademark of the Arnold Engineering
Company.
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Certain electrical resistance alloy steel is also excluded from the
scope of this order. This product is defined as a non-magnetic
stainless steel manufactured to American Society of Testing and
Materials (ASTM) specification B344 and containing, by weight, 36
percent nickel, 18 percent chromium, and 46 percent iron, and is most
notable for its resistance to high temperature corrosion. It has a
melting point of 1390 degrees Celsius and displays a creep rupture
limit of 4 kilograms per square millimeter at 1000 degrees Celsius.
This steel is most commonly used in the production of heating ribbons
for circuit breakers and industrial furnaces, and in rheostats for
railway locomotives. The product is currently available under
proprietary trade names such as ``Gilphy 36.''\2\
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\2\ ``Gilphy 36'' is a trademark of Imphy, S.A.
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Certain martensitic precipitation-hardenable stainless steel is
also excluded from the scope of this order. This high-strength, ductile
stainless steel product is designated under the Unified Numbering
System (UNS) as S45500-grade steel, and contains, by weight, 11 to 13
percent chromium, and 7 to 10 percent nickel. Carbon, manganese,
silicon and molybdenum each comprise, by weight, 0.05 percent or less,
with phosphorus and sulfur each comprising, by weight, 0.03 percent or
less. This steel has copper, niobium, and titanium added to achieve
aging, and will exhibit yield strengths as high as 1700 Mpa and
ultimate tensile strengths as high as 1750 Mpa after aging, with
elongation percentages of 3 percent or less in 50 mm. It is generally
provided in thicknesses between 0.635 and 0.787 mm, and in widths of
25.4 mm. This product is most commonly used in the manufacture of
television tubes and is currently available under proprietary trade
names such as ``Durphynox 17.''\3\
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\3\ ``Durphynox 17'' is a trademark of Imphy, S.A.
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Finally, three specialty stainless steels typically used in certain
industrial blades and surgical and medical instruments are also
excluded from the scope of this review. These include stainless steel
strip in coils used in the production of textile cutting tools (e.g.,
carpet knives).\4\ This steel is similar to ASTM grade 440F, but
containing, by weight, 0.5 to 0.7 percent of molybdenum. The steel also
contains, by weight, carbon of between 1.0 and 1.1 percent, sulfur of
0.020 percent or less, and includes between 0.20 and 0.30 percent
copper and between 0.20 and 0.50 percent cobalt. This steel is sold
under proprietary names such as ``GIN4 HI-C.'' The second excluded
stainless steel strip in coils is similar to AISI 420-J2 and contains,
by weight, carbon of between 0.62 and 0.70 percent, silicon of between
0.20 and 0.50 percent, manganese of between 0.45 and 0.80 percent,
phosphorus of no more than 0.025 percent and sulfur of no more than
0.020 percent. This steel has a carbide density on average of 100
carbide particles per square micron. An example of this product is
``GIN5'' steel. The third specialty steel has a chemical composition
similar to AISI 420 F, with carbon of between 0.37 and 0.43 percent,
molybdenum of between 1.15 and 1.35 percent, but lower manganese of
between 0.20 and 0.80 percent, phosphorus of no more than 0.025
percent, silicon of between 0.20 and 0.50 percent, and sulfur of no
more than 0.020 percent. This product is supplied with a hardness of
more than Hv 500 guaranteed after customer processing, and is supplied
as, for example, ``GIN6.''
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\4\ This list of uses is illustrative and provided for
descriptive purposes only.
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Sammi Steel Company and Cross-ownership with Inchon
According to section 351.525(b)(6)(vi) of the CVD Regulations,
cross ownership exists between two 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. Normally, this
standard will be met where there is a majority voting ownership
interest between two corporations. On December 6, 2000, Inchon became
the majority shareholder of Sammi with 68 percent of Sammi's shares.
However, Sammi remained under court receivership throughout the POR,
and until March 23, 2001.
The CVD Regulations acknowledge that control can be exercised by
one corporation over another even when that one corporation does not
hold majority voting ownership. See Countervailing Duties; Final Rule,
63 FR 65348, 65401 (November 25, 1998), preamble to CVD Regulations.
The percentage of shares, therefore, is not a dispositive indicator of
cross ownership between companies. Accordingly, it is also possible,
under certain
[[Page 57398]]
extraordinary circumstances, that a corporation holding majority
ownership in another corporation may not be in a position to exercise
control over that corporation's assets. We therefore requested
additional information from the GOK, Inchon and Sammi, to determine
whether Inchon was in a position to control and direct the use of
Sammi's assets during the POR.
Sammi filed for bankruptcy prior to the POR and came under court
receivership prior to and throughout the POR. Under Korea's Company
Reorganization Act, the authority for management control, the right to
operate the company's business, management, and disposition of the
company's property rests exclusively with the court or with the
receiver appointed by the court. The information on the record
demonstrates that the control of Sammi and the ability to use and
direct the company's assets were held by the court and the court
appointed receiver throughout the POR. Therefore, while Inchon held 68
percent of Sammi's shares, it was not in the position to control
Sammi's assets until March 23, 2001, when Sammi's court receivership
ended. Therefore, we find preliminarily that cross ownership as defined
under section 351.525(b)(6)(vi) of the CVD Regulations did not exist
between Inchon and Sammi during the POR.
Partial Rescission
As noted above, we initiated an administrative review of Sammi.
According to the response, Sammi produced subject merchandise but did
not export subject merchandise to the United States during calendar
year 2000, the POR. However, Sammi provided a complete response to the
Department's questionnaire because it was affiliated with Inchon. An
affiliated company must provide a questionnaire response if cross-
ownership exists and the affiliated company produces the subject
merchandise. It is the Department's practice not to review a
respondent, in this case Sammi, that has not exported subject
merchandise to the United States during the POR. Therefore, because we
preliminarily find no cross ownership between Sammi and Inchon, in
accordance with 19 CFR 351.213(d)(3), we intend to rescind the review
with respect to Sammi because it made no sales or shipments of subject
merchandise to the United States during the review period. If, in the
final determination, we find that Sammi is not cross owned by Inchon,
See Sammi Steel Company and Cross Ownership with Inchon above, we will
rescind the administrative review of Sammi.
Subsidies Valuation Information
Benchmarks for Long-term Loans: During the POR, Inchon had both
won-denominated and foreign currency-denominated long-term loans
outstanding which it received from government-owned banks, Korean
commercial banks, overseas banks, and foreign banks with branches in
Korea.
In the Final Negative Countervailing Duty Determination: Stainless
Steel Plate in Coils from the Republic of Korea, 64 FR at 15532 (March
31, 1999) (Plate in Coils) and in the Final Affirmative Countervailing
Duty Determination: Stainless Steel Sheet and Strip in Coils From the
Republic of Korea, 64 FR at 30641 (June 8, 1999) (Sheet and Strip), the
Department examined the GOK's direction of credit policies for the
period 1992 through 1997. Based on new information gathered during the
course of those investigations, the Department determined that the GOK
controlled directly or indirectly the lending practices of most sources
of credit in Korea between 1992 and 1997. In the Final Affirmative
Countervailing Duty Determination: Certain Cut-to Length Carbon-Quality
Steel Plate From the Republic of Korea, 64 FR at 73180 (December 29,
1999) (CTL Plate) the Department determined that the GOK still
exercised substantial control over lending institutions in Korea during
1998. In the Final Results and Partial Rescission of Countervailing
Duty Administrative Review: Stainless Steel Sheet and Strip in Coils
from the Republic of Korea, 67 FR 1964 (January 15, 2002) (1999 Sheet
and Strip), and accompanying Issues and Decision Memorandum (1999 Sheet
and Strip Decision Memo) at ``the GOK's Direction of Credit'' section,
we found that the GOK had control over the lending institutions during
1999. As such, because no new factual information has been placed on
the record, we preliminarily find direction of credit countervailable
through 2000, the POR of this current administrative review.
Based on our findings on this issue in prior investigations, we are
using the following benchmarks to calculate the subsidies attributable
to respondent's long-term loans obtained in the years 1992 through
2000:
(1) For countervailable, foreign-currency denominated loans, we
used, where available, the company-specific weighted-average U.S.
dollar-denominated interest rates on the company's loans from foreign
bank branches in Korea.
(2) For countervailable won-denominated long-term loans, where
available, we used the company-specific corporate bond rate on the
company's public and private bonds. We note that this benchmark is
based on the decision in Plate in Coils 64 FR at 15531, in which we
determined that the GOK did not control the Korean domestic bond market
after 1991, and that domestic bonds may serve as an appropriate
benchmark interest rate. Where unavailable, we used the national
average of the yields on three-year corporate bonds, as reported by the
Bank of Korea (BOK). We note that the use of the three-year corporate
bond rate from the BOK follows the approach taken in Plate in Coils, in
which we determined that, absent company-specific interest rate
information, the corporate bond rate is the best indicator of a market
rate for won-denominated long-term loans in Korea. Id.
Benchmarks for Short-Term Financing: For those programs that
require the application of a short-term won-denominated interest rate
benchmark, we used as our benchmark a company-specific weighted-average
interest rate for commercial won-denominated loans outstanding during
the POR.
Treatment of Subsidies Received by Trading Companies: We required
responses from trading companies because the subject merchandise may be
subsidized by means of subsidies provided to both the producer and the
exporter of the subject merchandise. Subsidies conferred on the
production and exportation of subject merchandise benefit the subject
merchandise even if the merchandise is exported to the United States by
a trading company rather than by the producer itself. Therefore, the
Department calculates countervailable subsidy rates on the subject
merchandise by cumulating subsidies provided to the producer with those
provided to the exporter. During the POR, Inchon exported subject
merchandise to the United States through a trading company, Hyundai
Corporation (Hyundai). We required the trading company to provide a
response to the Department with respect to the export subsidies under
review.
Under section 351.107(b)(1) of the Department's regulations, when
the subject merchandise is exported to the United States by a company
that is not the producer of the merchandise, the Department may
establish a ``combination'' rate for each combination of an exporter
and supplying producer. However, as noted in the Preamble to the
regulations, there may be situations in which it is not appropriate or
practicable to establish combination rates when the subject
[[Page 57399]]
merchandise is exported by a trading company. See Antidumping Duties;
Countervailing Duties; Final Rule, 62 FR 27296, 27303 (May 19, 1997).
In such situations, the Department will make exceptions to its
combination rate approach on a case-by-case basis. Id.
We preliminarily determine that it is not appropriate to establish
combination rates, with respect to this review. This determination is
based on two main facts: first, the majority of the subsidies conferred
upon the subject merchandise were received by the producer; second, the
level of subsidies conferred upon the individual trading company with
regard to the subject merchandise is insignificant.
Instead, we have continued to calculate a rate for the producer of
subject merchandise that includes the subsidies received by the trading
company. To reflect those subsidies that are received by the exporter
of the subject merchandise in the calculated ad valorem subsidy rate,
we calculated the benefit attributable to the subject merchandise. We
then factored that amount into the calculated subsidy rate for the
relevant producer. In each case, we determined the benefit received by
the trading company from each export subsidy program, and weighted the
average of the benefit amounts by the relative share of the trading
company's value of exports of the subject merchandise to the United
States. We then added these calculated ad valorem subsidies to the
subsidies calculated for the producer of subject merchandise. Thus, for
each of the programs below, the listed ad valorem subsidy rate includes
countervailable subsidies received by both the producer and the trading
company.
I. Programs Conferring Subsidies
A. The GOK's Direction of Credit
The Department previously determined in the Final Affirmative
Countervailing Duty Determination: Structural Steel Beams from the
Republic of Korea, 65 FR 41051 (July 3, 2000) (H-beams), and
accompanying Issues and Decision Memorandum (H-Beams Decision Memo) at
section ``The GOK's Credit Policies through 1991'', that the provision
of long-term loans via the GOK's direction of credit policies was
specific to the Korean steel industry through 1991 within the meaning
of section 771(5A)(D)(iii) of the Act. Also in H-Beams, we determined
that the provision of these long-term loans through 1991 provided a
financial contribution that resulted in the conferral of a benefit,
within the meaning of sections 771(5)(D)(i) and 771(5)(E)(ii) of the
Act, respectively. Id.
In H-beams, the Department also determined that the GOK continued
to control directly and indirectly the lending practices of most
sources of credit in Korea through 1998, and that the GOK's regulated
credit from domestic commercial banks and government-controlled banks
such as the Korea Development Bank (KDB) was specific to the steel
industry. Id. Furthermore, the Department determined in H-Beams that
these regulated loans conferred a benefit on the producer of the
subject merchandise to the extent that the interest rates on these
loans were less than the interest rates on comparable commercial loans
within the meaning of section 771(5)(E)(ii) of the Act. Id. In the
final determination of CTL Plate, 64 FR at 73180, the Department
determined that the GOK continued to control, directly and indirectly,
the lending practices of sources of credit in Korea in 1998, and the
Department continued to find this for 1999. See 1999 Sheet and Strip
Decision Memo at section ``The GOK's Direction of Credit''.
We provided the GOK with the opportunity to present new factual
information concerning the government's credit policies through 2000,
the POR, which we would consider along with our findings in the prior
investigations. The GOK did not provide any new factual information on
this program that would lead us to change our determination in the
current administrative review. Therefore, for purposes of these
preliminary results, we continue to find lending from domestic banks
and from government-owned banks, such as the KDB, to be countervailable
through 2000.
With respect to foreign sources of credit, in Plate in Coils, 64 FR
at 15533, and Sheet and Strip, 64 FR at 30642, we determined that
access to foreign currency loans from Korean branches of foreign banks
(e.g., branches of U.S.-owned banks operating in Korea) did not confer
countervailable subsidies to the recipient as defined by section 771(5)
of the Act, and, as such, credit received by respondents from these
sources was found not to be countervailable. We based this decision
upon the fact that credit from Korean branches of foreign banks was not
subject to the government's control and direction. Thus, in Plate in
Coils and Sheet and Strip, we determined that respondent's loans from
these banks could serve as an appropriate benchmark to establish
whether access to regulated foreign sources of credit conferred a
benefit on respondents. As such, we preliminarily determine that
lending from this source continues to be not countervailable, and,
where available, loans from Korean branches of foreign banks continue
to serve as an appropriate benchmark to establish whether access to
regulated foreign currency loans from domestic banks confers a benefit
upon respondents.
Inchon received long-term fixed and variable rate loans from GOK
owned/controlled institutions that were outstanding during the POR. In
order to determine whether these GOK directed loans conferred a
benefit, we compared the interest rates on the directed loans to the
benchmark interest rates detailed in the ``Subsidies Valuation
Information'' section of this notice.
Won-Denominated Loans: For certain loans, the repayment schedules
did not remain constant during the lives of the respective loans.
Therefore, in these preliminary results, we have calculated the benefit
from these loans using the Department's variable rate methodology.
Regarding the calculation of the benefit on countervailable, fixed-rate
loans, in past cases the Department has employed the ``grant
equivalent'' methodology, as described in section 351.505(c)(3) of the
CVD Regulations, when the government-provided loan and the comparison
loan have dissimilar grace periods or maturities, or where the
repayment schedules have different shapes (e.g., declining balance
versus annuity style). See, e.g., Sheet and Strip, CTL Plate, and H-
Beams.
In these preliminary results, the Department is revising its
application of the grant equivalent methodology discussed in
351.505(c)(3) of the CVD Regulations. We note that section
351.505(c)(2) of the CVD Regulations states that the Department ``will
normally calculate the subsidy amount to be assigned to a particular
year by calculating the difference in interest payments for that year,
(i.e., the difference between the interest paid by the firm in that
year on the government-provided loan and the interest the firm would
have paid on the comparison loan).'' We also note that, in reference to
paragraph (c)(2), the Preamble of the Department's CVD Regulations
states that in situations where the benefit from a long-term, fixed
rate loan stems solely from a concessionary interest rate, it is not
necessary to engage in the grant equivalent methodology. See 63 FR at
65369. Thus, the CVD Regulations and the Preamble direct the Department
to default to a simple comparison of interest payments made during the
POR when calculating the benefit from a long-term, fixed rate loan.
[[Page 57400]]
The Preamble goes on to describe those situations in which the
Department shall deviate from the ``simple, default methodology,'' and
instead employ the grant equivalent methodology. The Preamble states
that, ``[b]ecause a firm may derive a benefit from special repayment
terms, in addition to any benefit derived from a concessional interest
rate,'' the Department will calculate the benefit using the grant
equivalent methodology. See 63 FR at 65369.
There is no information on the record of these preliminary results
that indicates that Inchon derived a benefit from any special repayment
terms (i.e., abnormally long grace periods or maturities, etc.) on its
long-term, fixed-rate loans. Therefore, in accordance with section
351.505(c)(2) of the CVD Regulations, we are calculating the benefit
that Inchon received on its long-term, fixed-rate loans by comparing
the amount of interest paid on the loan during the POR to the amount of
interest that would have been paid during the POR on a comparable,
commercial loan. We invite parties to comment on this issue in the
final results.
To calculate the countervailable subsidy benefit, we first derived
the benefit amounts attributable to the POR for the company's fixed and
variable rate loans, and then summed the benefit amounts from the
loans.
Foreign-Currency Denominated Loans: We used the same methodology as
set out in the won-denominated loan section above. We compared the
interest rates on the directed loans to the benchmark interest rates
detailed in the ``Subsidies Valuation Information'' section of this
notice. Inchon had both variable and fixed rate long term loans.
To determine the total benefit for all directed credit, we added
the benefit derived from foreign currency loans to the benefit derived
from won denominated loans and divided the total benefit by Inchon's
total f.o.b. sales value during the POR. On this basis, we
preliminarily determine the countervailable subsidy to be 0.76 percent
ad valorem for Inchon.
B. Article 16 of the Tax Exemption and Reduction Control Act (TERCL):
Reserve for Export Losses
Under Article 16 of the TERCL, a domestic person engaged in a
foreign-currency earning business 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. Losses accruing from the
cancellation of an export contract, or from the execution of a
disadvantageous export contract, may be offset by returning an
equivalent amount from the reserve fund to the income account. Any
amount that is not used to offset a loss must be returned to the income
account and taxed over a three-year period, after a one-year grace
period. All of the money in the reserve is eventually reported as
income and subject to corporate tax either when it is used to offset
export losses or when the grace period expires and the funds are
returned to taxable income. The deferral of taxes owed amounts to an
interest-free loan in the amount of the company's tax savings. This
program is only available to exporters. According to information
provided by respondents, this program was terminated on April 10, 1998,
and no new funds could be placed in this reserve after January 1, 1999.
However, Inchon still had an outstanding balance in this reserve during
the POR.
In Sheet and Strip, 64 FR at 30645, we determined that this program
was specific as it constituted an export subsidy under section
771(5A)(B) of the Act because the use of the program is contingent upon
export performance. We also determined that this program provided a
financial contribution within the meaning of section 771(5)(D)(i) of
the Act in the form of a loan. See 64 FR 30645. No new information or
evidence of changed circumstances has been presented to cause us to
revisit this determination. Thus, we preliminarily determine that this
program constitutes a countervailable export subsidy.
To determine the benefit conferred by this program, we calculated
the tax savings by multiplying the balance amount of the reserve as of
December 31, 1999, as filed during the POR, by the corporate tax rate
for 1999. We treated the tax savings on these funds as a short-term
interest-free loan. See 19 CFR 351.509. Accordingly, to determine the
benefit, we multiplied the amount of tax savings for Inchon by its
respective weighted-average interest rate for short-term won-
denominated commercial loans for the POR, as described in the
``Subsidies Valuation Information'' section, above. We then divided the
benefit by the respective total f.o.b. export sales. On this basis, we
preliminarily calculated a countervailable subsidy of less than 0.005
percent ad valorem for Inchon.
For our final determination, we will consider whether the
methodology the Department has traditionally applied to these types of
Korean tax programs accurately quantifies the benefit conferred by
these tax reserves. As noted above, the Department has treated these
tax reserve programs as providing a deferral of tax liability. That is,
in Year X a company places funds into a reserve account and these funds
are, therefore, not taxed in Year X. However, three years later when
the funds in the tax reserve are returned to taxable income, income
taxes are paid on these funds in Year X plus three. Therefore, we have
considered the tax savings on these funds to benefit the company in the
form of an interest-free loan. However, if the company is in a tax loss
situation and does not pay any taxes on income in the year in which the
funds are refunded to the income account, the funds placed into the tax
reserve are never taxed. Under this scenario, the company, instead of
being provided with a deferral of tax liability on these reserve funds,
may have been provided with a complete exemption of tax liability on
these funds. Therefore, we will carefully analyze this methodological
issue for the final determination. We also invite interested parties to
comment on this issue.
C. Article 17 of the TERCL: Reserve for Overseas Market Development
Under Article 17 of the TERCL, a domestic person engaged in a
foreign trade business is allowed to establish a reserve fund equal to
one percent of its foreign exchange earnings from its export business
for the respective tax year. Expenses incurred in developing overseas
markets may be offset by returning from the reserve, to the income
account, an amount equivalent to the expense. Any part of the fund that
is not placed in the income account for the purpose of offsetting
overseas market development expenses must be returned to the income
account over a three-year period, after a one-year grace period. The
balance of this reserve fund is not subject to corporate income tax
during the grace period. However, all of the money in the reserve is
eventually reported as income and subject to corporate tax either when
it offsets export losses or when the grace period expires. The deferral
of taxes owed amounts to an interest-free loan equal to the company's
tax savings. This program is only available to exporters. Although
Inchon did not use this program during the POR, it exported subject
merchandise through Hyundai, which used this program during the POR.
In CTL Plate, 64 FR at 73181, we determined that the Reserve for
Overseas Market Development program is specific under section
771(5A)(B) of the Act because use of the program is contingent upon
export performance. We also determined that this program provides a
financial contribution within the meaning of section 771(5)(D)(i) of
[[Page 57401]]
the Act in the form of a loan. The benefit provided by this program is
the tax savings enjoyed by the companies. Respondents have not provided
any new information to warrant reconsideration of this determination.
Therefore, we continue to find this program countervailable.
To determine the benefit conferred by this program, we calculated
the tax savings by multiplying the balance amount of the reserve as of
December 31, 1999, by the corporate tax rate for 1999. We treated the
tax savings on these funds as a short-term interest-free loan.
Accordingly, to determine the benefit, we multiplied the amount of tax
savings by Hyundai's weighted-average interest rate for short-term won-
denominated commercial loans for the POR. Using the methodology for
calculating subsidies received by trading companies, which also is
detailed in the ``Subsidies Valuation Information'' section of this
notice, we calculate a countervailable subsidy of less than 0.005
percent ad valorem for Inchon.
D. Technical Development Fund (RSTA Article 9, Formerly TERCL Article
8)
On December 28, 1998, the TERCL was replaced by the Tax Reduction
and Exemption Control Act (RSTA). Pursuant to this change in law, TERCL
Article 8 is now identified as RSTA Article 9. Apart from the name
change, the operation of RSTA Article 9 is the same as the previous
TERCL Article 8 and its Enforcement Decree.
This program allows a company operating in manufacturing or mining,
or in a business prescribed by the Presidential Decree, to appropriate
reserve funds to cover the expenses needed for development or
innovation of technology. These reserve funds are included in the
company's losses and reduce the amount of taxes paid by the company.
Under this program, capital good and capital intensive companies can
establish a reserve of five percent, while companies in all other
industries are only allowed to establish a three percent reserve.
In CTL Plate, 64 FR 73181, we determined that this program is
specific because the capital goods industry is allowed to claim a
larger tax reserve under this program than all other manufacturers. We
also determined that this program provides a financial contribution
within the meaning of section 771(5)(D)(i) of the Act in the form of a
loan. The benefit provided by this program is the differential two
percent tax savings enjoyed by the companies in the capital goods
industry, which includes steel manufacturers. Id. No new information,
or evidence of changed circumstances, were presented in this review to
warrant any reconsideration of the countervailability of this program.
Therefore, we continue to find this program to be countervailable.
Record evidence indicated that Inchon did not contribute funds to this
reserve during the POR, but it did carry a balance. Thus, to calculate
the benefit on the balance, we compared the amount that it would have
paid if it had only claimed the three percent tax reserve with the tax
reserve amount as claimed under five percent. Next, we calculated the
amount of the tax savings earned through the use of this tax reserve
during the POR and divided that amount by Inchon's total f.o.b. sales
during the POR. On this basis, we preliminarily determine a net
countervailable subsidy of less than 0.005 percent ad valorem for
Inchon.
E. Asset Revaluation: TERCL Article 56(2)
Under Article 56(2) of the TERCL, the GOK permitted companies that
made an initial public offering between January 1, 1987, and December
31, 1990, to revalue their assets at a rate higher than the 25 percent
required of most other companies under the Asset Revaluation Act. In
CTL Plate, we found this program countervailable. See 64 FR at 73183.
No new information, or evidence of changed circumstances, were
presented in this review to warrant any reconsideration of the
countervailability of this program.
To calculate the benefit from the program we reviewed the effect
that the difference of the revaluation of depreciable assets had on
Inchon's tax liability each year. We multiplied the additional
depreciation in the tax return filed during the POR, which resulted
from the company's asset revaluation, by the tax rate applicable to
that tax return. We then divided the benefit by Inchon's total f.o.b.
sales. Accordingly, the net subsidy for this program is less than 0.005
percent ad valorem for Inchon.
F. Electricity Discounts Under the Requested Load Adjustment Program
(RLA)
With respect to the Requested Load Adjustment (RLA) program, the
GOK introduced this discount in 1990, to address emergencies in Korea
Electric Power Company's (KEPCO's) ability to supply electricity. Under
this program, customers with a contract demand of 5,000 kW or more, who
can curtail their maximum demand by 20 percent or suppress their
maximum demand by 3,000 kW or more, are eligible to enter into an RLA
contract with KEPCO. Customers who choose to participate in this
program must reduce their load upon KEPCO's request, or pay a surcharge
to KEPCO.
Customers can apply for this program between May 1 and May 15 of
each year. If KEPCO finds the application in order, KEPCO and the
customer enter into a contract with respect to the RLA discount. The
RLA discount is provided based upon a contract for two months, normally
July and August. Under this program, a basic discount of 440 won per kW
is granted between July 1 and August 31, regardless of whether KEPCO
makes a request for a customer to reduce its load. During the POR,
KEPCO granted Inchon electricity discounts under this program.
In Sheet and Strip, 64 FR at 30646, the Department found this
program to be specific under section 771(5A)(D)(iii)(I) of the Act
because the discounts were distributed to a limited number of
customers. Inchon did receive discounts during the POR, therefore we
find that a financial contribution is provided to Inchon under this
program within the meaning of section 771(5)(D)(ii) of the Act in the
form of revenue foregone by the government. The benefit provided under
this program is a discount on a company's monthly electricity charges.
Respondents have not provided any new information to warrant
reconsideration of this determination. Therefore, we continue to find
this program countervailable.
Because the electricity discounts provide recurring benefits, we
have expensed the benefit from this program in the year of receipt. To
measure the benefit from this program, we summed the electricity
discounts which Inchon received from KEPCO under the RLA program during
the POR. We then divided that amount by Inchon's total f.o.b. sales
value for 2000. On this basis, we determine a net countervailable
subsidy of 0.01 percent ad valorem for Inchon.
G. POSCO's Provision of Steel Inputs for Less Than Adequate
Remuneration
POSCO is the only Korean producer of hot-rolled stainless steel
coil (hot-rolled coil), which is the main input into the subject
merchandise. During the POR, POSCO sold hot-rolled coil to Inchon for
products that were consumed in Korea, as well as hot-rolled coil, to
produce exports of the subject merchandise. In CTL Plate, which covered
calendar year 1998, the Department determined that the GOK, through its
ownership and control of POSCO, set prices of steel inputs used
[[Page 57402]]
by the Korean steel industry for less than adequate remuneration. See
64 FR at 73184. Thus, in CTL Plate, the Department found this program
to be countervailable.
Prior to 1999, POSCO set different prices depending on whether the
input was to be used to produce products for domestic consumption or
export consumption. Respondent claims that in May 1999, POSCO
eliminated its two-tiered pricing system and established unit prices
applicable for sales to all customers, thereby removing the aspect of
the program that constituted a countervailable subsidy. However, we
find that this change in pricing policies does not impact the
determination made by the Department in CTL Plate, 64 FR at 73184-85.
In CTL Plate, the Department did not determine that the difference in
pricing between domestic and export consumption constituted a
countervailable subsidy. Instead, the Department found that the prices
charged by POSCO were for less than adequate remuneration. Id. at
73185. Therefore, the fact that POSCO now only charges one price to the
Korean steel industry for steel inputs does not affect the
determination as to whether a good or service has been provided for
less than adequate remuneration. The Department must still examine the
prices charged to Inchon by POSCO for hot rolled coil to determine
whether the prices are still for less than adequate remuneration.
Under section 351.511(a)(2) of the CVD Regulations, the adequacy of
remuneration is determined by comparing the government price to a
market determined price based on actual transactions in the country in
question. Such prices could include prices stemming from actual
transactions between private parties, actual imports, or, in certain
circumstances, actual sales from competitively run government auctions.
During the POR, Inchon also imported hot-rolled coil; therefore, we are
using Inchon's actual import prices of hot-rolled coil as our basis of
comparison to the price at which Inchon purchased hot-rolled coil from
POSCO. Based upon this comparison, we preliminarily determine that
POSCO sold hot-rolled coil to Inchon for less than adequate
remuneration.
In the Notice of Preliminary Affirmative Countervailing Duty
Determination and Alignment of Final Countervailing Duty Determination
with Final Antidumping Duty Determination: Certain Cold-Rolled Carbon
Steel Flat Products from the Republic of Korea, 67 FR at 9693, (March
4, 2002), we stated that we are reviewing the issue of whether this
program is an untied domestic subsidy. However, for purposes of these
preliminary results, we continue to find this program tied to subject
merchandise. The Department will collect additional information prior
to the final results. We invite comments from interested parties on
this issue.
The GOK has argued in this proceeding that POSCO underwent
privatization in September 2000, and, thus, cannot possibly sell HR
coil to Inchon at less than adequate remuneration at the behest of the
GOK. It further contends that POSCO's privatization constitutes a
program-wide change pursuant to section 351.526 of the CVD Regulations.
In 1999 Sheet and Strip, the Department determined that the information
on the record was insufficient to determine whether a program-wide
change occurred with respect to this program. We also noted that
because of the long history and ties between the GOK and POSCO, the
September 29, 2000, partial change in ownership must be carefully
analyzed.
In Sheet and Strip, the Department relied upon a number of factors
to determine that the GOK controlled POSCO. For example, we found that
the GOK was the largest shareholder of POSCO and that the GOK's
shareholdings of POSCO were ten times larger than the next largest
shareholder. In order to further maintain its control over POSCO, the
GOK enacted a law which required that no individual shareholder except
the GOK could exercise voting rights in excess of three percent of the
company's common stock. This same requirement was placed into POSCO's
Articles of Incorporation. In addition, the Chairman of POSCO was also
a former Deputy Prime Minister and Minister of the GOK's Economic
Planning Board, and was appointed as POSCO's president by the Korean
President (i.e., by the GOK). Half of POSCO's outside directors were
appointed by the GOK. The appointed directors of POSCO included a
Minister of Finance, the Vice Minister of Commerce and Industry, the
Minister of Science and Technology, and a Member of the Bank of Korea's
Monetary Board. POSCO was also only one of three companies designated a
``Public Company'' by the GOK. See Sheet and Strip, 64 FR at 30642-43.
In this current administrative review, the respondents have made a
similar claim that POSCO's change in ownership removes the GOK's
control of POSCO which was found for this program in CTL Plate and in
Sheet and Strip. The respondents have placed additional information on
the record of this review regarding a program-wide change under section
351.526 of the CVD Regulations. In particular, the GOK and POSCO have
placed information on the record which they claim indicates that many
of the elements of control cited to in Sheet and Strip have changed.
According to this information, the GOK, through the government-owned
Industrial Bank of Korea (IBK), currently holds only 3.02 percent of
POSCO's shares. According to the GOK, all of POSCO's shares are common
shares and have equal voting rights. The GOK also reports that the
Seoul Bank holds 1.47 percent of POSCO's shares. The Seoul Bank became
government-owned as a result of the financial crisis in Korea. However,
the GOK states that the shares listed for Seoul Bank are shares the
bank holds on behalf of its customers in trust accounts. Shares held in
these trust accounts are not in the possession of, or controlled by,
the bank, but belong to its customers.
POSCO also states that the restrictions that no individual other
than the GOK can exercise voting rights in excess of three percent have
been removed. Under the Securities and Exchange Act, a company
designated as a ``public company'' was not permitted to have individual
shareholders exercising voting rights in excess of three percent of the
company's common shares. This legal requirement applied to POSCO until
September 26, 2000. As part of POSCO's privatization process, the GOK
removed POSCO's designation as a ``public company'' on that date.
Accordingly, any legal limits on individual shareholder's voting rights
or ownership in POSCO ceased on September 26, 2000. POSCO's Articles of
Incorporation also included this restriction on the acquisition of
shares. According to POSCO, although its Articles of Incorporation had
not been implemented during the POR, once the GOK eliminated the
restrictions on the acquisition of shares, POSCO was in effect no
longer a public company.
According to information on the record, POSCO has seven standing
directors and eight outside directors on its Board of Directors who are
elected for terms of three years and may be re-elected. The directors
are elected at the General Meeting of Shareholders, which usually take
place in March of each year. Further, none of POSCO's current standing
directors are either current or former government officials. With
respect to the outside directors, five candidates were recommended by
each of the five largest shareholders, which include the IBK and Seoul
Bank, and three candidates were recommended by the Board of Directors.
There were changes to the Board of Directors during
[[Page 57403]]
the General Meeting of Shareholders which occurred during the POR; two
outside directors that were former government officials resigned and
were replaced.
For the purposes of this preliminary determination, we continue to
countervail POSCO's sales of hot-rolled coil as in the 1999 Sheet and
Strip review. In that review, we compared monthly delivered weighted-
average prices. However, due to the lack of complete monthly data or
quarterly data on this record, we find that it is more appropriate to
only compare prices in the months in which Inchon had both domestic and
import purchases. We compared Inchon's import prices to prices charged
by POSCO to find the price differential (per month). In our comparison
we used delivered weighted-average prices charged by POSCO to Inchon
for hot-rolled coils and delivered weighted-average prices Inchon paid
for imported hot-rolled coil, by grade of hot-rolled coil, making due
allowance for factors affecting comparability. We then weight averaged
the price differentials by the quantity of imports to derive a single
weight averaged price differential. To derive the benefit we multiplied
the single weight averaged price differential by the total quantity of
inputs purchased from POSCO during the POR. Next, we divided the amount
of the price savings by the f.o.b. sales value of merchandise produced
using hot-rolled coils. On this basis, we determine that Inchon
received a countervailable subsidy of 4.32 percent ad valorem from this
program during the POR.
During verification we plan to closely examine whether or not the
GOK continues either directly or indirectly to control POSCO's pricing
policy in the Korean domestic market. We invite interested parties to
comment on this issue.
H. Tax Credit for Investments in Productivity Improvement Facilities
Under Restriction of Special Taxation (RSTA) Article 24
Under Korean tax laws, companies in Korea are allowed to claim
investment tax credits for various kinds of investments. If the
investment tax credits cannot all be used at the time they are claimed,
then the company is authorized to carry them forward for use in
subsequent years. Until December 28, 1998, these investment tax credits
were provided under the Tax Reduction and Exemption Control Act
(TERCL). On that date, TERCL was replaced by the Restriction of Special
Taxation Act (RSTA). Pursuant to this change in the law, investment tax
credits received after December 28, 1998, were provided under the
authority of RSTA.
During the POR, Inchon earned or used tax credits for investments
in productivity increasing facilities (RSTA Article 24, previously
TERCL Article 25). If a company invested in foreign-produced facilities
(i.e., facilities produced in a foreign country), the company received
a tax credit equal to either three or five percent of its investment.
However, if a company invested in domestically-produced facilities
(i.e., facilities produced in Korea), it received a ten percent tax
credit. Under section 771(5A)(C) of the Act, a program that is
contingent upon the use of domestic goods over imported goods is
specific, within the meaning of the Act. Because Korean companies
received a higher tax credit for investments made in domestically-
produced facilities, in CTL Plate, 63 FR at 73182, we determined that
these investment tax credits constituted import substitution subsidies
under section 771(5A)(C) of the Act. In addition, because the GOK
forewent the collection of tax revenue otherwise due under this
program, we determined that a financial contribution is provided under
section 771(5)(D)(ii) of the Act. The benefit provided by this program
was a reduction in taxes payable. Therefore, we determined that this
program was countervailable.
According to the response of the GOK, the government has changed
the manner in which these investment tax credits are determined.
Pursuant to amendments made to TERCL, which occurred on April 10, 1998,
the distinction between investments in domestic and imported goods was
eliminated for the tax credits for investments in productivity
increasing facilities (RSTA 24). According to the response of the GOK,
for investments made after April 10, 1998, there is no longer a
difference between domestic-made and foreign-made facilities. The
current tax credit is five percent for all of these investments.
Because the distinction between investments in domestic and
foreign-made goods was eliminated for investments made after April 10,
1998, we preliminarily determine that the tax credits received pursuant
to these investment programs for investments made after April 10, 1998,
are no longer countervailable. However, record evidence indicates that
companies can still carry forward and use the tax credits for
investments earned under the countervailable aspects of the TERCL
program before the April 10, 1998, amendment to the tax law. Therefore,
we continue to find the use of investment tax credits earned on
domestic investments made before April 10, 1998, to be countervailable.
Inchon claimed tax credits under RSTA 24 that originated when there
was a distinction between purchasing domestic facilities and imported
facilities. To calculate the benefit from this investment tax credit,
we examined the amount of tax credits Inchon deducted from its taxes
payable for the 1999 fiscal year income tax return, which was filed
during the POR. We first determined the amount of the tax credits
claimed which were based upon investments in domestically-produced
facilities. We then calculated the additional amount of tax credits
received by the company because it earned tax credits of ten percent on
such investments instead of a three or five percent tax credit. Next,
we calculated the amount of the tax savings earned through the use of
this tax credit during the POR and divided that amount by Inchon's
total f.o.b. sales during the POR. On this basis, we preliminarily
determine a net countervailable subsidy of 0.12 percent ad valorem.
II. Programs Preliminarily Determined To Be Not Used
A. Investment Tax Credits Under RSTA Article 10, 18, 26, 27 and 71 of
TERCL
B. Loans From the National Agricultural Cooperation Federation
C. Tax Incentives for Highly-Advanced Technology Businesses Under the
Foreign Investment and Foreign Capital Inducement Act
D. Reserve for Investment Under Article 43-5 of TERCL
E. Export Insurance Rates Provided by the Korean Export Insurance
Corporation
F. Special Depreciation of Assets on Foreign Exchange Earnings
G. Excessive Duty Drawback
H. Short-Term Export Financing
I. Export Industry Facility Loans
Preliminary Results of Review
In accordance with 19 CFR 351.221(b)(4)(i), we calculated an
individual subsidy rate for the producer/exporter subject to this
administrative review. For the period January 1, 2000 through December
31, 2000, we preliminarily determine the net subsidy for Inchon to be
5.21 percent ad valorem.
If the final results of this review remain the same as these
preliminary results, the Department intends to instruct Customs to
assess countervailing duties as indicated above. The Department also
intends to instruct Customs to collect cash deposits of estimated
countervailing
[[Page 57404]]
duties as indicated above as a percentage of the f.o.b. invoice price
on all shipments of the subject merchandise from reviewed companies,
entered, or withdrawn from warehouse, for consumption on or after the
date of publication of the final results of this review.
Because the URAA replaced the general rule in favor of a country-
wide rate with a general rule in favor of individual rates for
investigated and reviewed companies, the procedures for establishing
countervailing duty rates, including those for non-reviewed companies,
are now essentially the same as those in antidumping cases, except as
provided for in section 777A(e)(2)(B) of the Act. The requested review
will normally cover only those companies specifically named. See 19 CFR
351.213(b). Pursuant to 19 CFR 351.212(c), for all companies for which
a review was not requested, duties must be assessed at the cash deposit
rate, and cash deposits must continue to be collected, at the rate
previously ordered. As such, the countervailing duty cash deposit rate
applicable to a company can no longer change, except pursuant to a
request for a review of that company. See Federal-Mogul Corporation and
The Torrington Company v. United States, 822 F.Supp. 782 (CIT 1993) and
Floral Trade Council v. United States, 822 F.Supp. 766 (CIT 1993)
(interpreting 19 CFR 353.22(e), the antidumping regulation on automatic
assessment, which is identical to 19 CFR 351.212(c)(ii)(2)). Therefore,
the cash deposit rates for all companies except those covered by this
review will be unchanged by the results of this review.
We will instruct Customs to continue to collect cash deposits for
non-reviewed companies at the most recent company-specific or country-
wide rate applicable to the company. Accordingly, the cash deposit
rates that will be applied to non-reviewed companies covered by this
order will be the rate for that company established in the most
recently completed administrative proceeding conducted under the URAA.
If such a review has not been conducted, the rate established in the
most recently completed administrative proceeding pursuant to the
statutory provisions that were in effect prior to the URAA amendments
is applicable. See Final Affirmative Countervailing Duty Determination:
Stainless Steel Sheet and Strip in Coils from the Republic of Korea, 64
FR 30636 (June 8, 1999). These rates shall apply to all non-reviewed
companies until a review of a company assigned these rates is
requested. In addition, for the period January 1, 2000 through December
31, 2000, the assessment rates applicable to all non-reviewed companies
covered by this order are the cash deposit rates in effect at the time
of entry.
Upon completion of this administrative review, the Department will
determine, and the Customs Service shall assess, countervailing duties
on all appropriate entries. In accordance with 19 CFR 351.212(b)(2), we
have calculated a company-specific assessment rate for merchandise
subject to this review. The Department will issue appropriate
assessment instructions directly to the Customs Service within 15 days
of publication of the final results of review. If these preliminary
results are adopted in the final results of review, we will direct the
Customs Service to assess the resulting assessment rates against the
entered customs values for the subject merchandise on each of the
company's entries during the review period.
Verification
We find that there are numerous issues that require verification;
such as, the allegation of a program-wide change and Inchon's possible
cross-ownership of Sammi. Therefore, the Department will verify the
information submitted by respondents in accordance with section
782(i)(3) of the Act and 351.307(b)(iv) of the CVD Regulations.
Public Comment
Pursuant to 19 CFR 351.224(b), the Department will disclose to
parties to the proceeding any calculations performed in connection with
these preliminary results within five days after the date of the public
announcement of this notice. Pursuant to 19 CFR 351.309, interested
parties may submit written comments in response to these preliminary
results. Unless otherwise indicated by the Department, case briefs must
be submitted within 14 days after the release of the verification
reports. Rebuttal briefs, which are limited to arguments raised in case
briefs, must be submitted no later than five days after the time limit
for filing case briefs, unless otherwise specified by the Department.
Parties who submit argument in this proceeding are requested to submit
with the argument: (1) A statement of the issue, and (2) a brief
summary of the argument. Parties submitting case and/or rebuttal briefs
are requested to provide the Department copies of the public version on
disk. Case and rebuttal briefs must be served on interested parties in
accordance with 19 CFR 351.303(f). Also, pursuant to 19 CFR 351.310,
within 30 days of the date of publication of this notice, interested
parties may request a public hearing on arguments to be raised in the
case and rebuttal briefs. Unless the Secretary specifies otherwise, the
hearing, if requested, will be held two days after the date for
submission of rebuttal briefs.
Representatives of parties to the proceeding may request disclosure
of proprietary information under administrative protective order no
later than 10 days after the representative's client or employer
becomes a party to the proceeding, but in no event later than the date
the case briefs, under 19 CFR 351.309(c)(ii), are due. The Department
will publish the final results of this administrative review, including
the results of its analysis of issues raised in any case or rebuttal
brief or at a hearing.
This administrative review is issued and published in accordance
with sections 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 1675(a)(1)
and 19 U.S.C. 1677f(i)(1)).
Dated: September 3, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-22997 Filed 9-9-02; 8:45 am]
BILLING CODE 3510-DS-P