71 FR 11397, March 7, 2006
DEPARTMENT OF COMMERCE
International Trade Administration
(C-580-837)
Notice of Preliminary Results of Countervailing Duty
Administrative Review: Certain Cut-to-Length Carbon-Quality Steel Plate
from the Republic of Korea
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) is conducting an
administrative review of the countervailing duty (CVD) order on certain
cut-to-length carbon-quality steel plate (CLT plate) from the Republic
of Korea (Korea) for the period January 1, 2004, through December 31,
2004, the period of review (POR). For information on the net subsidy
rate 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: March 7, 2006.
FOR FURTHER INFORMATION CONTACT: Tipten Troidl or Eric B. Greynolds,
AD/
[[Page 11398]]
CVD Operations, Office 3, Import Administration, International Trade
Administration, U.S. Department of Commerce, Room 4014, 14\th\ Street
and Constitution Avenue, NW, Washington, DC 20230; telephone: (202)
482-1767 or (202) 482-6071, respectively.
SUPPLEMENTARY INFORMATION:
Background
On February 10, 2000, the Department published in the Federal
Register the CVD order on CTL plate from Korea. See Notice of Amended
Final Determination: Certain Cut-to-Length Carbon-Quality Steel Plate
from India and the Republic of Korea; and Notice of Countervailing Duty
Orders: Certain Cut-to-Length Carbon-Quality Steel Plate from France,
India, Indonesia, Italy, and the Republic of Korea, 65 FR 6587
(February 10, 2000) (CTL Plate Order). On February 1, 2005, the
Department published a notice of opportunity to request an
administrative review of this CVD order. See Antidumping or
Countervailing Duty Order, Finding, or Suspended Investigation;
Opportunity to Request Administrative Review, 70 FR 5136 (February 1,
2005). On February 28, 2005, we received a timely request for review
from Dongkuk Steel Mill Co., Ltd. (DSM), a Korean producer and exporter
of subject merchandise. On March 23, 2005, the Department initiated an
administrative review of the CVD order on CTL plate from Korea,
covering January 1, 2004, through December 31, 2004. See Initiation of
Antidumping and Countervailing Duty Administrative Reviews and Requests
for Revocation in Part, 70 FR 14643 (March 23, 2005).
On May 16, 2005, the Department issued a questionnaire to the
Government of Korea (GOK) and DSM. We received questionnaire responses
from DSM and the GOK on July 15, 2005. On September 27, 2005, we issued
supplemental questionnaires to the GOK and DSM; the responses were
received on October 11, 2005, from the DSM and on October 17, 2005,
from the GOK. On February 22, 2006, we issued a second supplemental to
DSM and received a response on February 24, 2006.
On October 13, 2005, the Department published in the Federal
Register an extension of the deadline for the preliminary results. See
Notice of Extension of Time Limits for Preliminary Results of
Countervailing Duty Administrative Review: Certain Cut-to-Length
Carbon-Quality Steel Plate from Korea, 70 FR 59722 (October 13, 2005).
In accordance with 19 CFR 351.213(b), this review covers only those
producers or exporters for which a review was specifically requested.
The only company subject to this review is DSM. This review covers 19
programs.
Scope of Order
The products covered by the CVD order are certain hot-rolled
carbon-quality steel: (1) universal mill plates (i.e., flat-rolled
products rolled on four faces or in a closed box pass, of a width
exceeding 150 mm but not exceeding 1250 mm, and of a nominal or actual
thickness of not less than 4 mm, which are cut-to-length (not in coils)
and without patterns in relief), of iron or non-alloy-quality steel;
and (2) flat-rolled products, hot-rolled, of a nominal or actual
thickness of 4.75 mm or more and of a width which exceeds 150 mm and
measures at least twice the thickness, and which are cut-to-length (not
in coils). Steel products to be included in the scope of the order are
of rectangular, square, circular or other shape and of rectangular or
non-rectangular cross-section where such non-rectangular cross-section
is achieved subsequent to the rolling process (i.e., products which
have been ``worked after rolling'')--for example, products which have
been beveled or rounded at the edges. Steel products that meet the
noted physical characteristics that are painted, varnished or coated
with plastic or other non-metallic substances are included within this
scope. Also, specifically included in the scope of the order are high
strength, low alloy (HSLA) steels. HSLA steels are recognized as steels
with micro-alloying levels of elements such as chromium, copper,
niobium, titanium, vanadium, and molybdenum. Steel products to be
included in this scope, regardless of Harmonized Tariff Schedule of the
United States (HTSUS) definitions, are products in which: (1) iron
predominates, by weight, over each of the other contained elements; (2)
the carbon content is two percent or less, by weight; and (3) none of
the elements listed below is equal to or exceeds the quantity, by
weight, respectively indicated: 1.80 percent of manganese, or 1.50
percent of silicon, or 1.00 percent of copper, or 0.50 percent of
aluminum, or 1.25 percent of chromium, or 0.30 percent of cobalt, or
0.40 percent of lead, or 1.25 percent of nickel, or 0.30 percent of
tungsten, or 0.10 percent of molybdenum, or 0.10 percent of niobium, or
0.41 percent of titanium, or 0.15 percent of vanadium, or 0.15 percent
zirconium. All products that meet the written physical description, and
in which the chemistry quantities do not equal or exceed any one of the
levels listed above, are within the scope of this order unless
otherwise specifically excluded. The following products are
specifically excluded from the order: (1) products clad, plated, or
coated with metal, whether or not painted, varnished or coated with
plastic or other non-metallic substances; (2) SAE grades (formerly AISI
grades) of series 2300 and above; (3) products made to ASTM A710 and
A736 or their proprietary equivalents; (4) abrasion-resistant steels
(i.e., USS AR 400, USS AR 500); (5) products made to ASTM A202, A225,
A514 grade S, A517 grade S, or their proprietary equivalents; (6) ball
bearing steels; (7) tool steels; and (8) silicon manganese steel or
silicon electric steel.
The merchandise subject to the order is currently classifiable
under the HTSUS under subheadings: 7208.40.3030, 7208.40.3060,
7208.51.0030, 7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000,
7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030,
7211.14.0045, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000,
7225.40.3050, 7225.40.7000, 7225.50.6000, 7225.99.0090, 7226.91.5000,
7226.91.7000, 7226.91.8000, 7226.99.0000.
Although the HTSUS subheadings are provided for convenience and
customs purposes, the written description of the merchandise covered by
the order is dispositive.
SUBSIDIES VALUATION INFORMATION
A. Allocation Period
In CTL Plate Investigation, the Department determined that the
Average Useful Life (AUL) listed in the IRS table reasonably reflects
the AUL of renewable physical assets for the firm or industry under
investigation. See Final Affirmative Countervailing Duty Determination:
Certain Cut-to-Length Carbon-Quality Steel Plate from the Republic of
Korea, 64 FR 73176, 73177 (December 29, 1999) (CTL Plate
Investigation). No interested parties have claimed that the AUL of 15
years is unreasonable. Therefore, in accordance with 19 CFR
351.524(d)(2), we continue to allocate DSM's non-recurring subsidies
over 15 years.
B. Benchmarks for Loans and Discount Rate
Benchmark for Long-Term Loans issued through 2004
During the POR, DSM had both won- and foreign currency denominated
long-term loans outstanding which they
[[Page 11399]]
received from government-owned banks, and Korean commercial banks.
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
2004:
(1) For foreign-currency denominated loans, pursuant to 19 CFR
351.505(a)(2)(i), our preference is to use the company-specific
weighted-average foreign currency-denominated interest rates on the
company's loans from foreign bank branches in Korea, foreign
securities, and direct foreign loans received after April 1999. We note
that these benchmarks are consistent with the decisions in Plate in
Coils and Stainless Steel Sheet and Strip, in which the Department
determined that the GOK did not control access to foreign currency
loans from Korean branches of foreign banks. See Final Negative
Countervailing Duty Determination: Stainless Steel Plate in Coils from
the Republic of Korea, 64 FR 15530, 15533 (March 31, 1999) (Plate in
Coils) and Final Affirmative Countervailing Duty Determination:
Stainless Steel Sheet and Strip in Coils from the Republic of Korea, 64
FR 30636, 30642 (June 8, 1999) (Stainless Steel Sheet and Strip). For
variable-rate loans outstanding during the POR, pursuant to 19 CFR
351.505(a)(2)(i), our preference is to use, as the benchmark, an
interest rate of a lending instrument issued during the POR; and for
fixed-rate loans, pursuant to 19 CFR 351.505(a)(2)(iii), our preference
is to use a benchmark rate issued in the same year that the loan was
issued. However, no such benchmark instruments were available, and
consistent with our methodology in 2001 Sheet and Strip we relied on
the lending rates as reported by the IMF's International Financial
Statistics Yearbook. See Final Results and Partial Rescission of
Countervailing Duty Administrative Review: Stainless Steel Sheet and
Strip in Coils from the Republic of Korea, 69 FR 2113 (January 14,
2004) (2001 Sheet and Strip), and the ``Subsidies Valuation
Information'' section of the accompanying Issues and Decision
Memorandum (2001 Sheet and Strip Decision Memorandum).
(2) For won-denominated long-term loans, we used the company-
specific corporate bond rate on the company's public and private bonds.
We note that this benchmark is consistent with our 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 the
interest rate on domestic bonds may serve as an appropriate benchmark
interest rate.
Programs Preliminarily Determined To Be Countervailable
1. The GOK's Direction of Credit
The Department determined in H-Beams that the Korean steel industry
received a disproportionate amount of long-term financing as a result
of the GOK's effective control and direction of government loans,
government-directed long-term commercial loans, and government-directed
foreign loans. See Final Affirmative Countervailing Duty Determination:
Structural Steel Beams from the Republic of Korea, 65 FR 41051 (July 3,
2000) (H-Beams) and the ``The GOK's Direction of Credit Policies''
section of the accompanying Issues and Decision Memorandum (H-Beams
Decision Memorandum). Thus, the Department determined that the GOK's
direction of credit policies were specific to the Korean steel industry
through 1991 pursuant to section 771(5A)(D)(iii) of the Tariff Act of
1930, as amended (the Act). The Department further determined that the
provision of long-term loans provided a financial contribution and a
benefit within the meaning of sections 771(5)(D)(i) and 771(5)(E)(ii)
of the Act, respectively. Id.
In other Korean CVD proceedings, the Department determined that the
GOK controlled and directed lending through year 2001\1\. DSM had
outstanding loans that were received prior to the 2001 period. DSM did
not provide any new information that would warrant a change in our
methodology, therefore we continue to find that this program provides a
countervailable subsidy for loans from government-owned or controlled
banks through 2001.
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\1\ The Department determined in the following cases that the
GOK controlled or directed credit to the steel industry: (1992
through 1997) Plate in Coils, 64 FR at 15332 and Stainless Steel
Sheet and Strip, 64 FR at 30641, (1998) H-Beams Decision Memorandum
at ``The GOK's Direction of Credit'' section, (1999) 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 ``The GOK's
Direction of Credit'' section of the accompanying Issues and
Decision Memorandum (1999 Sheet and Strip Decision Memorandum),
(2000) Notice of Final Affirmative Countervailing Duty
Determination: Certain Cold-Rolled Carbon Steel Flat Products from
the Republic of Korea, 67 FR 62101 (October 3, 2002) (Cold-Rolled
from Korea) and ``The GOK's Direction of Credit'' section of the
accompanying Issues and Decision Memorandum, (Cold-Rolled Decision
Memorandum), and (2001) 2001 Sheet and Strip Decision Memorandum at
``The GOK's Direction of Credit'' section.
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DSM had outstanding loans during the POR that it received from
government-owned or controlled lending institutions between 2002 and
2004. We asked the GOK for information pertaining to the GOK's
direction of credit policies for the period between 2002 and 2004. The
GOK did not provide any additional information, stating instead that,
``the Government of Korea continues to believe that the evidence
demonstrates that there has been no direction of credit to the Korean
steel industry. Nevertheless, the Department has consistently found
that long-term loans received by Korean steel producers were the result
of the Korean Government's direction, despite the Government's repeated
submission of evidence to the contrary. . . Consequently, in this
review, the Government will not contest the Department's findings on
direction of long-term loans.''
See July 15, 2005 GOK submission at page 11. Because the GOK withheld
the requested information on its lending policies, the Department does
not have the necessary information on the record to determine whether
the GOK has continued its direction of credit policies from 2002
through 2004; therefore, the Department must base its determination on
facts otherwise available. See section 776(a)(2)(A) of the Act. In
making determinations based on facts available, the Department may
resort to adverse inferences if it finds that a respondent has failed
to cooperate to the best of its ability in complying with the
Department's requests for information. See section 776(b) of the Act.
In this case, the GOK refused to supply requested information which was
in its possession and which it had provided in the past. See Plate in
Coils and CTL Plate Investigation. Therefore, the Department finds that
the GOK did not act to the best of its ability and is employing an
adverse inference in selecting from among the facts otherwise
available. See also, ``The GOK's Direction of Credit'' section in the
2001 Sheet and Strip Decision Memorandum. As adverse facts available,
we therefore, find that the GOK's direction of credit policies
continued from 2002 through 2004. As noted above, the GOK's direction
of credit policies provide a financial contribution and a benefit, and
are specific pursuant to sections 771(5)(D)(i), 771(5)(E)(ii), and
771(5A)(D)(iii) of the Act, respectively. Therefore, we preliminarily
find that lending from domestic banks and from government-owned banks
during the 2002 and 2004 period are countervailable. Therefore, any of
DSM's loans received during 2002 and 2004 from domestic banks and
[[Page 11400]]
government-owned banks that were outstanding during the POR are
countervailable.
DSM received long-term fixed and variable rate loans from GOK-owned
or controlled institutions that were outstanding during the POR. DSM
had both won- and foreign currency denominated loans outstanding during
the POR. We calculated the benefit for each as follows:
Won-Denominated Loans:
There is no information on the record of this review that indicates
that DSM received a benefit from any special repayment terms (i.e.,
abnormally long grace periods or maturities, etc.) on their long-term,
fixed-rate loans. Therefore, in accordance with 19 CFR 351.505(c)(2),
to calculate the benefit for both fixed- and variable-rate loans
received from GOK-owned or controlled banks, we used the difference
between the interest payments on the directed loans and the benchmark
interest payments. For benchmark information see ``Subsidies Valuation
Information'' section of this notice. We then summed the benefits from
DSM's long-term fixed- and variable-rate won-denominated loans.
Foreign Currency Denominated Loans:
DSM did not have foreign currency denominated loans outstanding
during the POR which could be used for benchmark purposes. For the
foreign currency denominated loans we used the lending rates as
reported by the IMF's Financial Statistics Yearbook. See ``Subsidies
Valuation Information'' section above.
To calculate the benefit, we used the difference between the
interest payments that DSM made and the benchmark interest payments. As
the interest payments were in foreign currencies, we multiplied the
benefit amount by the exchange rate to establish a Korean won benefit.
To calculate the total benefit for all directed credit, we added
the benefit received from foreign currency loans in Korean won to the
benefit received from won-denominated loans. Because this program is
not tied to exports, we used total sales as the denominator. We then
divided the total benefit by DSM's total f.o.b. sales value during the
POR. On this basis, we determine the countervailable subsidy to be 0.04
percent ad valorem for DSM.
2. Asset Revaluation under Tax Programs under the Tax Reduction and
Exemption Control Act (TERCL) Article 56(2)
During the investigation, the Department determined that DSM
benefitted from the revaluation of its assets pursuant to TERCL Article
56(2). See CTL Plate Investigation, 65 FR at 73182-73183. The
Department determined that this program was specific under section
771(5A)(D)(iii) of the Act, and that a financial contribution was
provided in the form of tax revenue foregone pursuant to 771(5)(D)(ii)
of the Act. Id. Moreover, the Department determined that a benefit was
conferred on those companies that were able to revalue their assets
under TERCL Article 56(2) because the revaluation resulted in
participants paying fewer taxes than they would otherwise pay absent
the program. Id. See also 771(5)(E) of the Act.
In 1998 DSM revalued its assets. This revaluation was not pursuant
to TERCL Article 56(2) and, according to the GOK, was consistent with
Korean Generally Accepted Accounting Principles (GAAP). DSM claims that
the asset revaluations that were adopted in 1988 under Article 56(2) of
TERCL were superseded when it revalued its assets in 1998. Hence, the
1988 asset revaluation would only affect the calculation of
depreciation costs for tax years prior to 1998. However, there were
certain assets that were not revalued in 1998. For those assets which
were not revalued in 1998, we identified the total amount of the change
in depreciation expense attributable to the 1988 asset revaluation for
2003, (the tax return submitted during the POR). We then multiplied
this amount by the tax rate for 2003 to determine the benefit under
this program. As this program is not tied to exports we used the
benefit amount as the numerator and DSM's total sales as the
denominator. Using this methodology, we preliminarily determine the
countervailable subsidy from this program to be less than 0.005 percent
ad valorem, which, according to the Department's practice, is
considered not measurable and is not included in the calculation of the
countervailing duty rate. See, e.g., Notice of Preliminary Results of
Countervailing Duty Administrative Review: Certain Softwood Lumber
Products from Canada, 70 FR 33088, 33091 (June 7, 2005).
3. Research and Development under Korea Research Association of New
Iron and Steelmaking Technology (KANIST) (formerly KNISTRA)
During the CTL Plate Investigation, the Department determined that
the GOK, through the Ministry of Commerce, Industry and Energy (MOCIE)
provided R&D grants to support numerous projects designed to foster the
development of efficient technology for industrial development. See CTL
Plate Investigation, 64 FR at 73185. We found this program to be
specific as the grants were provided directly to respondents and their
affiliates that are steel-related, and that the grants provided a
financial contribution. Id. see also sections 771(5A)(D)(ii) and
771(5)(D)(i) of the Act. Moreover, pursuant to section 771(5)(E) of the
Act, the Department determined that the benefit was the amount of the
GOK's contribution allocated to the percentage of the company's
contribution and was conferred at the time of receipt. Pursuant to 19
CFR 351.524(b)(2), the Department allocates non-recurring benefits
provided under a particular subsidy program to the year in which the
benefits are received if the total amount approved under the subsidy
program is less that 0.5 percent of the relevant sales of the firm in
question, during the year in which the subsidy was approved. However,
neither the GOK nor DSM provided the total approved amount nor the date
of approval. Therefore, for the preliminary results, the Department
performed the 0.5 percent test by dividing DSM's portion of the GOK
contribution at the time of receipt by DSM's total sales at the time of
receipt. Using this approach, the calculated percentages were less than
0.5 percent. Therefore, pursuant to 19 CFR 351.524(b)(2), we expensed
all of the GOK grants provided under the program to the respective
years or receipt. Based on this methodology, we preliminarily
determined that for the GOK's contributions made in 2002 and 2003, the
benefits were expensed during the years of receipt and, therefore, are
not subject to this review. For those grants that were received during
the 2004 POR, we preliminarily determine that they were fully expensed
in the year of receipt. We, therefore, preliminarily calculate a rate
of 0.01 percent ad valorem.
[[Page 11401]]
Programs Preliminarily Determined Not To Be Used
1. Special Cases of Tax for Balanced Development Among Areas (TERCL
Articles 41, 42, 43, 44, and 45
In past Korean cases, the Department determined that Korean
manufacturing companies using facilities outside the Seoul metropolitan
area benefit from programs falling under the category of special cases
of tax for balanced development among areas and includes TERCL Articles
41, 42, 43, 44, and 45. DSM stated that it did not claim any tax
reductions or exemptions under these articles during the POR.
Therefore, we preliminarily determine that DSM did not use this program
during the POR.
2. Price Discount for DSM Land Purchase at Asan Bay
In the CTL Plate Investigation the Department determined that the
GOK forewent revenue that it normally would have collected on land sold
to DSM. See CTL Plate Investigation, 64 FR at 73184. The Department
determined that the reduced fees and waived management fees constituted
a countervailable subsidy. The Department determined that this program
was specific under section 771(5A)(D)(iii)(I) of the Act, as it was
specific to DSM. Id. Moreover, the Department determined that the GOK
provided a financial contribution pursuant to section 771(5)(D)(ii) of
the Act, because it forewent revenue. Id. Pursuant to section 771(5)(E)
of the Act, the benefit was equal to the amount of fees that DSM did
not pay to the GOK. While this is a non-recurring benefit, the amount
of the benefit was less than 0.5 percent of DSM's total sales and was,
therefore, expensed during the year of receipt which was prior to the
POR of this administrative review. Id.
DSM was also initially exempted from the acquisition tax and
registration tax on its purchase of land at Asan Bay. In addition, DSM
was initially exempted from payment of the education tax and special
tax for rural development. These exemptions were conditioned on DSM's
constructing facilities within three years of purchase. DSM claims that
as it did not construct any facilities at Asan Bay within the required
three years of its land purchase, and, thus, it was required in 2002 to
pay the acquisition and registration taxes from which it had previously
been exempted. See DSM's July 15, 2005, submission page 32. Based on
this information, we preliminarily find that DSM did not use this
program during the POR.
In addition to the above programs, the next twelve programs were
also not used.
3. Requested Load Adjustment (RLA)
4. Local Tax Exemption on Land Outside of Metropolitan Area
5. Exemption of VAT on Anthracite Coal
6. Emergency Load Reduction Program (ELR)
7. Private Capital Inducement Act (PCIA)
8. Social Indirect Capital Investment Reserve Funds (TERCL Article 28)
9 Energy-Savings Facilities Investment Reserve Funds (TERCL Article 29)
10. Industry Promotion and Research and Development Subsidies
a. Highly Advanced National Project Fund
b. Steel Campaign for the 21\st\ Century
11. Export Insurance Rates Provided by the Korean Export Insurance
Corporation
12. Export Industry Facility Loans (EIFL) and Speciality Facility Loans
13. Scrap Reserve Fund
14. Excessive Duty Drawback
Program Previously Found Not To Be Countervailable
1. TERCL and the Restriction of Special Taxation Act (RSTA)
In Cold-Rolled from Korea, the Department found that tax credits
under RSTA Articles 24 and 25 (TERCL Articles 25 and 26) are not
countervailable for investments made after April 10, 1998. Id. The tax
credits DSM claimed under RSTA Articles 24 and 25 were related to
investments made after April 10, 1998; therefore, we preliminarily find
that the tax credits claimed under RSTA Articles 24 and 25 are not
countervailable.
Program Preliminarily Found to be not Countervailable
1. Electricity Discounts under Direct Load Interruption (DLI)
During the POR, both Korea Electric Power Corporation (KEPCO) and
Korea Energy Management Corporation (KEMCO) administered the DLI
program. The DLI program was established in 2001 and governed by the
Regulation of Electricity Supply Options. The GOK describes the program
as a long-term demand side management strategy for curtaining
electricity during peak demand periods. The DLI program is designated
for general, industrial and educational customers who agree to allow
the supply of at least 300 kilowatts of electricity to their plants to
be interrupted during peak demand periods. By agreeing to allow the
possible interruption of service to occur during July and August, a
company receives a rebate from either KEPCO or KEMCO. If a company
applies for and participates in the DLI program, KEPCO/KEMCO installs
equipment to control the usage of electricity during the designated
periods, at KEPCO/KEMCO's discretion. The company is compensated for
giving up an assured electricity supply by a flat fee that is paid in
July and August regardless of whether the supply is interrupted.
Moreover, the participating company receives an additional fee based on
the actual interruptions in the electricity supplied to it, if any. The
additional fees depend on the amount of advance warning to the customer
and the extent of the interruption of electricity supply.
During the POR, DSM's Inchon plant used this program in conjunction
with KEPCO and DSM's Pohang plant had an agreement under the program
with KEMCO. DSM's Pusan plant did not use this program during the POR.
KEPCO installed equipment at DSM's Inchon plant, allowing it to
control the usage of electricity at KEPCO's discretion; and KEMCO
installed equipment in DSM's Pohang plant, allowing KEMPCO to control
the usage at the Pohang plant. During the POR, DSM received
compensation from KEPCO and KEMCO in exchange for foregoing an assured
electricity supply during July and August.
KEPCO bases the standard electricity rates it charges DSM on a
published tariff schedule. The electricity rates for the Pohang (Plate
Mill and Section Mill) and Inchon plants were based on the ``Industrial
Service-C/High Voltage Power-B/Option III'' tariff schedule. The
electricity rates applicable to DSM's Pohang (Steel Center) were based
on the ``Industrial Service-B/High Voltage Power-A/Option II'' tariff
schedule.
In conducting the Department's investigation of the DLI electricity
program, the Department must determine whether the program is specific
within the meaning of section 771(5A) of the Act. We preliminarily
determine that the DLI program is not de jure specific within the
meaning of sections 771(5A)(D)(i) and (ii) of the Act, because (1) it
is not based on exportation (2) it is not contingent on the use of
domestic goods over imported goods, and (3) the legislation and/or
regulations do not expressly limit the access to the subsidy to an
enterprise or industry, as a matter of law.
As the Department is preliminarily determining that the DLI program
is not de jure specific, it must then examine the program under section
771(5A)(D)(iii) of the Act. If the Department finds that one of the
following factors exist, then the program is de facto specific.
[[Page 11402]]
(I) The actual recipients of the subsidy, whether considered on an
enterprise or industry basis, are limited in number.
(II) An enterprise or industry is a predominant user of the
subsidy.
(III) An enterprise or industry receives a disproportionately large
amount of the subsidy.
(IV) The manner in which the authority providing the subsidy has
exercised discretion in the decision to grant the subsidy indicates
that an enterprise or industry is favored over others.
Pursuant to section 771(5A)(D)(iii)(I) of the Act, the Department
preliminarily finds that under DLI program, the actual recipients of
the subsidy are not limited in number, as there are many users of the
program that fall into 31 industries. See GOK's July 15, 2005,
submission at Exhibit G-4-M.
Sections 771(5A)(D)(iii)(II) and (III) of the Act direct the
Department to examine whether an enterprise or an industry is a
predominant user of the subsidy or receives a disproportionately large
amount of the subsidy. Although the steel industry received a greater
monetary benefit from the program than did other participants, that is
not determinative of whether the steel industry was a dominant user or
received disproportionate benefits. For example, in CTL Plate
Investigation, the Department found that respondent steel companies
were not dominant or disproportionate users of a similar electricity
program. See CTL Plate Investigation, 64 FR at 73186. The Department
also stated that ``the fact that certain companies are necessarily
large consumers of electricity does not make an electricity program
providing tariff reductions to those companies countervailable.'' Id.
Furthermore, the U.S. Court of International Trade (CIT) upheld the
Department's decision in Bethlehem Steel Corp. v. United States, 140
F.Supp 2d 1354 (CIT 2001). The CIT found that the Department's
methodology was reasonable and reflected the commercial realities of
the industry in question. Id, at 1369.
Consistent with our finding in CTL Plate Investigation, we
preliminarily determine that although the steel industry is a large
consumer of electricity and, therefore, a large recipient of the tariff
reduction, this does not support a conclusion that the percentage of
the benefits DSM or the steel industry received were disproportionately
high or that the company or the industry was a dominant user.
Accordingly, we preliminarily find that the DLI program is not de facto
specific and is, therefore, not countervailable.
Preliminary Results of Review
In accordance with 19 CFR 351.221(b)(4)(i), we calculated a subsidy
rate for DSM for 2004. We preliminarily determine the total estimated
net countervailable subsidy rate for DSM is 0.05 percent ad valorem for
2004, which is de minimis. See 19 CFR 351.106(c)(1).
If the final results of this review remain the same as these
preliminary results, the Department intends to instruct U.S. Customs
and Border Protection (CBP), within 15 days of publication of the final
results, to liquidate shipments of certain cut-to-length carbon-quality
steel from DSM, entered, or withdrawn from warehouse, for consumption
from January 1, 2004, through December 31, 2004, at 0.00 percent. Also,
the Department intends to instruct CBP to require a new cash deposit
rate for estimated countervailing duties of 0.00 percent for all
shipments of certain cut-to-length carbon-quality steel plate from DSM,
entered, or withdrawn from warehouse, for consumption on or after the
publication of the final results of this administrative review. The
Department will issue appropriate instructions directly to CBP within
15 days of the final results of this review.
We will instruct CBP 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
are those established in the most recently completed administrative
proceeding. See CTL Plate Order, 65 FR 6589. These rates shall apply to
all non-reviewed companies until a review of a company assigned these
rates is requested.
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(b)(1),
interested parties may submit written arguments in response to these
preliminary results. Unless otherwise indicated by the Department, case
briefs must be submitted within 30 days after the date of publication
of this notice, and rebuttal briefs, limited to arguments raised in
case briefs, must be submitted no later than five days after the time
limit for filing case briefs. See 19 CFR 351.309(c)(1)(ii). Parties who
submit written arguments in this proceeding are requested to submit
with the written 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, that is, 37 days after the date
of publication of these preliminary results.
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)(1)(ii), are due. The
Department will publish the final results of this administrative
review, including the results of its analysis of arguments made in any
case or rebuttal briefs.
This administrative review is issued and published in accordance
with sections 751(a)(1) and 777(i)(1) of the Act.
Dated: February 28, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E6-3174 Filed 3-6-06; 8:45 am]
BILLING CODE 3510-DS-S