[Federal Register: March 7, 2007 (Volume 72, Number 44)]
[Notices]
[Page 10163-10169]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07mr07-44]
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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 (CTL plate) from the Republic
of Korea (Korea) for the period January 1, 2005, through December 31,
2005, the period of review (POR). For information
[[Page 10164]]
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, 2007.
FOR FURTHER INFORMATION CONTACT: Jolanta Lawska or Kristen Johnson, AD/
CVD Operations, Office 3, Import Administration, International Trade
Administration, U.S. Department of Commerce, Room 4014, 14th Street and
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
3862 or (202) 482-4793, 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, 2006, 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, 71 FR 5239 (February 1,
2006). On February 28, 2006, we received a timely request for review
from Dongkuk Steel Mill Co., Ltd. (DSM), a Korean producer and exporter
of subject merchandise. On April 5, 2006, the Department initiated an
administrative review of the CVD order on CTL plate from Korea,
covering January 1, 2005, through December 31, 2005. See Initiation of
Antidumping and Countervailing Duty Administrative Reviews and Deferral
of Administrative Reviews, 71 FR 17077 (April 5, 2006).
On July 6, 2006, the Department issued a questionnaire to the
Government of Korea (GOK) and DSM. We received questionnaire responses
from DSM and the GOK on September 12, 2006.
On October 16, 2006, the Department published in the Federal
Register an extension of the deadline for the preliminary results. See
Certain Cut-to-Length Carbon Quality Steel Plate from Korea; Notice of
Extension of Time Limit for Preliminary Results of Countervailing Duty
Administrative Review, 71 FR 60689 (October 16, 2006).
On October 31, 2006, the Department issued supplemental
questionnaires to the GOK and DSM. We received questionnaire responses
from the GOK and DSM on November 27 and November 28, 2006,
respectively.
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.
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
Average Useful Life
Under 19 CFR 351.524(d)(2), we will presume the allocation period
for non-recurring subsidies to be the average useful life (AUL) of
renewable physical assets for the industry concerned as listed in the
Internal Revenue Service's (IRS) 1997 Class Life Asset Depreciation
Range System, as updated by the Department of the Treasury. The
presumption will apply unless a party claims and establishes that the
IRS tables do not reasonably reflect the company-specific AUL or the
country-wide AUL for the industry under examination and that the
difference between the company-specific and/or country-wide AUL and the
AUL from the IRS table is significant. According to
[[Page 10165]]
the IRS Tables, the AUL of the steel industry is 15 years. No
interested party challenged the 15-year AUL derived from the IRS
tables. Thus, in this review, we have allocated, where applicable, all
of the non-recurring subsidies provided to the producers/exporters of
subject merchandise over a 15-year AUL.
Benchmarks for Long-Term Loans Issued Through 2005
During the POR, DSM had outstanding long-term won-denominated and
foreign-currency denominated loans from government-owned banks and
Korean commercial banks. Based on our findings on this issue in prior
investigations and administrative reviews, we are using the following
benchmarks to calculate the subsidies attributable to respondent's
countervailable long-term loans obtained in the years 1991 through
2005:
(1) For countervailable, foreign-currency denominated loans,
pursuant to 19 CFR 351.505(a)(2)(ii), and consistent with our past
practice to date, 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 1991. See, e.g.,
Final Affirmative Countervailing Duty Determination: Stainless Steel
Sheet and Strip in Coils from the Republic of Korea, 64 FR 30636, 30640
(June 8, 1999) (Sheet and Strip Investigation); see also Final Negative
Countervailing Duty Determination: Stainless Steel Plate in Coils from
the Republic of Korea, 64 FR 15530, 15531 (March 31, 1999) (Plate in
Coils Investigation). Where no such benchmark instruments are
available, and consistent with 19 CFR 351.505(a)(3)(ii) as well as our
methodology in a prior administrative review, we rely 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 accompanying Issues and Decision Memorandum (2001
Sheet and Strip Decision Memorandum), at Section II. B ``Subsidies
Valuation Information.''
(2) For countervailable, won-denominated, long-term loans, our
practice is to use 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 Investigation, 64 FR at
15531, in which we determined that the GOK did not direct or control
the Korean domestic bond market after 1991, and that the interest rate
on 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). For
example, we note that the use of the three-year corporate bond rate
from the BOK follows the approach taken in the Plate in Coils
Investigation, 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. See Plate in Coils Investigation, 64 FR at 15531. See also 19
CFR 505(a)(3)(ii).
In accordance with 19 CFR 351.505(a)(2), our benchmarks take into
consideration the structure of the government-provided loans. For
fixed-rate loans, pursuant to 19 CFR 351.505(a)(2)(iii), we used
benchmark rates issued in the same year that the government loans were
issued. For variable-rate loans outstanding during the POR, pursuant to
19 CFR 351.505(a)(5)(i), our preference is to use the interest rates of
variable-rate lending instruments issued during the year in which the
government loans were issued. Where such benchmark instruments are
unavailable, we use weighted average interest rates of all variable
rate loans issued during the POR as our benchmark, as such rates better
reflect a variable interest rate that would be in effect during the
POR. This approach is in accordance with the Department's practice in
similar cases. See, e.g., Final Results and Partial Rescission of
Countervailing Duty Administrative Review: Stainless Steel Sheet and
Strip From the Republic of Korea, 68 FR 13267 (March 19, 2003) (2000
Sheet and Strip), and accompanying Issues and Decision Memorandum
(Sheet and Strip Decision Memorandum), at Comment 8; see also 19 CFR
351.505(a)(5)(ii).
Programs Preliminarily Determined To Confer Subsidies
1. The GOK's Direction of Credit
In the most recently completed administrative review of this CVD
order, the Department reaffirmed earlier determinations that the GOK
controlled and directed lending through year 2001. In addition, the
Department noted that neither DSM nor the GOK provided any new
information that would warrant a change in the Department's
determination. Finding that the GOK did not act to the best of its
ability, the Department employed an adverse inference and determined
that the GOK continued it direction-of-credit policies from 2002
through 2004. See, e.g., Preliminary Results of Countervailing Duty
Administrative Review: Certain Cut-to-Length Carbon-Quality Steel Plate
from the Republic of Korea, 71 FR 11397, 11399 (March 7, 2006) (2004
CTL Plate Preliminary Results) (unchanged in final results by Notice of
Final Results of Countervailing Duty Administrative Review: Certain
Cut-to-Length Carbon-Quality Steel Plate from the Republic of Korea, 71
FR 38861 (July 10, 2006)).
During the POR, DSM had outstanding loans that were received prior
to the 2002 period. As in the prior administrative review, in this
review, we asked the GOK for information pertaining to the GOK's
direction-of-credit policies for the period from 2002 through 2005. The
GOK did not provide any new or additional information that would
warrant a departure from these prior findings, 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 September 12, 2006, GOK, submission at page 9. 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 through 2005; therefore, the Department must base its
determination on facts otherwise available. See section 776(a)(2)(A) of
the Act.
Section 776(b) of the Act further provides that the Department may
use an adverse inference in applying the facts otherwise available when
a party has failed to cooperate by not acting to the best of its
ability to comply with a request for information. Section 776(b) of the
Act also authorizes the Department to use as adverse facts available
(AFA) information derived from the petition, the final determination, a
previous administrative review, or other information placed on the
record.
[[Page 10166]]
For the reasons discussed below, we determine that, in accordance
with sections 776(a)(2) and 776(b) of the Act, the use of AFA is
appropriate for the preliminary results for the determination of
direction of credit for loans received from 2002 through 2005.
In this case, the GOK refused to supply requested information that
was in its possession, even though the GOK had provided similar
information in prior proceedings. See, e.g., Final Affirmative
Countervailing Duty Determination: Certain Cut-to-Length Carbon-Quality
Steel Plate from the Republic of Korea, 64 FR 73176, 73178 (December
29, 1999) (CTL Plate Investigation). Therefore, consistent with
sections 776(a)(2)(A) and (C) of the Act, we find that the GOK did not
act to the best of its ability and, therefore, are employing an adverse
inference in selecting from among the facts otherwise available. As
AFA, we preliminarily find that the GOK's direction-of-credit policies
continued through 2005. As noted above, the GOK's direction-of-credit
policies provide a financial contribution, confer 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 government-owned banks
through 2005 are countervailable. Thus, any loans received through 2005
from domestic banks and government-owned banks that were outstanding
during the POR are countervailable, to the extent that the interest
amount paid on the loan is less than what would have been paid on a
comparable commercial loan. The Department's decision to rely on
adverse inferences when lacking a response from the GOK regarding the
direction-of-credit issue is in accordance with its practice. See,
e.g., 2004 CTL Plate Preliminary Results (unchanged in final results by
Notice of Final Results of Countervailing Duty Administrative Review:
Certain Cut-to-Length Carbon-Quality Steel Plate from the Republic of
Korea, 71 FR 38861 (July 10, 2006)).
DSM received long-term fixed- and variable-rate loans from GOK-
owned or -controlled institutions that were outstanding during the POR
and had both won- and foreign currency-denominated loans outstanding
during the POR. In accordance with 19 CFR 351.505(c)(2) and (4), we
calculated the benefit for each fixed- and variable-rate loan received
from GOK-owned or -controlled banks to be the difference between the
actual amount of interest paid on the directed loan during the POR and
the amount of interest that would have been paid during the POR at the
benchmark interest rate. We conducted our benefit calculations using
the benchmark interest rates described in the ``Subsidies Valuation
Information'' section above. For foreign currency-denominated loans, we
converted the benefits into Korean won using exchange rates obtained
from the BOK. We then summed the benefits from DMS's long-term fixed-
rate and variable-rate won-denominated loans.
To calculate the net subsidy rate, we divided DSM's total benefits
by its respective total f.o.b. sales values during the POR, as this
program is not tied to exports or a particular product. On this basis,
we preliminarily determine the net subsidy rate under the direction-of-
credit program to be 0.01 percent ad valorem for DSM.
2. Asset Revaluation Under Tax Programs Under the Tax Reduction and
Exemption Control Act (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. The
Department has previously found this program to be countervailable. For
example, in the CTL Plate Investigation, the Department determined that
this program was de facto specific under section 771(5A)(D)(iii) of the
Act because the actual recipients of the subsidy were limited in number
and the basic metal industry was a dominant user of this program. We
also determined that a financial contribution was provided in the form
of tax revenue foregone pursuant to section 771(5)(D)(ii) of the Act.
See CTL Plate Investigation, 64 FR at 73182-83. The Department further
determined that a benefit was conferred, within the meaning of section
771(5)(E) of the Act, 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. No new information, evidence of changed circumstances,
or comments from interested parties were presented in this review to
warrant any reconsideration of the countervailable status of this
program.
The benefit from this program is the difference that the
revaluation of depreciable assets has on a company's tax liability each
year. Evidence on the record indicates that DSM revalued its assets
under Article 56(2) of the TERCL in 1988. However, DSM reports that in
1998 it revalued its assets yet again. DSM states the revaluation in
1998 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 2004 (the tax return submitted during the POR). We then
multiplied this amount by the tax rate for 2004 to determine the
benefit under this program. This is the same approach the Department
used in the previous review. See 2004 CTL Plate Preliminary Results
(unchanged in final results by Notice of Final Results of
Countervailing Duty Administrative Review: Certain Cut-to-Length
Carbon-Quality Steel Plate from the Republic of Korea, 71 FR 38861
(July 10, 2006)). 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
CVD 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. GOK Infrastructure Investment at Inchon North Harbor
Under the Act on Participation of Private Investment in
Infrastructure (the Harbor Act), signed in 2000, the GOK contracts with
private companies to construct infrastructure facilities at Inchon
North Harbor. The program is designed to encourage private investment
in public infrastructure facilities at Inchon North Harbor. Because the
ownership of these facilities reverts to the GOK, the government
compensates private parties for a portion of the construction costs of
these facilities. In addition, the company is given right to operate
the facility for a certain period of time.
[[Page 10167]]
Under the Harbor Act, DSM participated in an agreement with the
Ministry of Maritime Affairs and Fisheries (``MOMAF''), under which DSM
is constructing one of 17 piers at Inchon North Harbor. According to
information submitted by the GOK, the government will retain title of
the pier. However, upon completion of the project, DSM will receive
free use of harbor facilities at Inchon Port and the right to collect
fees it chooses to from other users of the facility for a period of 50
years. At the end of the 50-year period, operating rights revert to the
GOK. Further, under the Harbor Act, the GOK compensates DSM for 30
percent of the construction costs of the facility. DSM reported
receiving payments from the GOK as reimbursements for construction
costs it incurred from the fourth quarter of 2003 through the third
quarter of 2004. As this is the first time DSM has reported receiving
benefits to the Department, the Department has not previously examined
this program.\1\
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\1\ The GOK indicated in its September 12, 2006, response that
benefits received by DSM in 2003 were inadvertently not reported
during the last POR, due to an oversight.
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DSM and the GOK claim that the reimbursements DSM received under
the program are not countervailable, ``Because this program represents
a government purchase of construction services, it does not constitute
a ``financial contribution'' under the terms of the countervailing duty
statute.'' See GOK's September 12, 2006, questionnaire response at 4;
see also DSM's September 12, 2006, questionnaire response at 38.
The record evidence indicates that the actual recipients of the
grant, whether considered on an enterprise or industry basis are
limited in number. The GOK has reported that only [six] companies
representing [four] industries received the grant. See DSM's September
12, 2006, questionnaire response at Appendix G-6-C. Therefore, we
preliminarily determine that the program is de facto specific within
the meaning of section 771(5A)(D)(iii)(I) of the Act. For purposes of
these preliminary results, we disagree with the claims of the GOK and
DSM that the GOK's payments to DSM constitute compensation for services
provided in connection with the construction of the GOK's pier. We find
that the 50-year duration of DSM's lease of the pier facility is so
long that it effectively renders DSM the owner of the facility. See the
``Average Useful Life'' section, above. We note that under the IRS 1997
Class Life Asset Depreciation Range System, the AUL of land
improvements, such as wharves and docks, is only 20 years. Therefore,
the fact that the GOK retains ``ownership'' of the pier for 50 years is
essentially meaningless. As such, we preliminary find that the GOK's
payments to DSM constitute grants that aid the construction of a
facility which, due to the lengthy duration of the lease, is
effectively owned and operated by DSM. On this basis, we preliminarily
determine that the reimbursements DSM received under the program
constitute a direct financial contribution, in the form of grants, and
confer a benefit within the meaning of sections 771(5)(D)(i) and
771(5)(E) of the Act, respectively.
On page 3 of its November 27, 2006, questionnaire response, the GOK
indicates that the payments to DSM relate to stage one pier
construction. See also GOK's September 12, 2006, questionnaire response
at Appendix G-6-C. According to the GOK, the stage one piers are
intended to handle shipments of steel scrap. See GOK's November 27,
2006, questionnaire response at page 3. The record evidence indicates
that one of DSM's main raw materials used in the production of subject
merchandise during the POR was steel scrap. See DSM's September 12,
2006, questionnaire response at 9. See also DSM's November 28, 2006,
questionnaire response at Appendix SD 9. Therefore, in accordance with
19 CFR 351.525(b)(5), we preliminarily find that the grants received by
DSM under this program are tied to the production and sales of the
subject merchandise. Accordingly, we have attributed the grants DSM has
received under this program to its production and sales of the subject
merchandise.
To calculate the benefit under this program, we first summed the
amount of payments DSM received each year under the program. In
accordance with 19 CFR 351.524(c), we are treating the grants DSM
received under the program as non-recurring. 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. The GOK provided the
total approved amount with the date of approval. 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 steel sales at the time of receipt. Because the amounts were less
than 0.5 percent of DSM's total steel sales in the year of receipt, we
expensed the grants to the year of receipt. On this basis, we
preliminarily determine that DSM's net subsidy rate under this program
to be 0.09 percent ad valorem.
4. Research and Development Under Korea Research Association of New Iron and Steelmaking Technology (KANIST) (Formerly KNISTRA)
Under the program, companies make contributions to KANIST, which
also receives contributions from the GOK. KANIST then contracts with
universities and other research institutions. Upon completion of the
projects, KANIST shares the results of the research with the companies
that participated in the projects.
The Department examined this program in the underlying
investigation. In that segment of the proceeding, the Department
determined that the GOK, through the Ministry of Commerce, Industry and
Energy (MOCIE) provided research and development 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. No new information, evidence of changed circumstances,
or comments from interested parties were presented in this review to
warrant any reconsideration of the countervailable status of this
program.
DSM reported that it participated in research and development
projects coordinated by KANIST. In these projects, DSM and other Korean
companies made contributions to KANIST, which also received
contributions from the GOK. Specifically, DSM reported that it
participated in four projects. The first project deals with the
``Elimination of Accumulated Impurities and Metal Structural Non-
detrimental Technology Development.'' DSM and the GOK made
contributions to this project from 2002 through 2006. The remaining
three projects are dedicated to the development of structural steel.
See Exhibit D-6-A, Volume II, of DSM's September 12, 2006,
questionnaire
[[Page 10168]]
response; see also Exhibit G--B-4 of the GOK's September 12, 2006,
questionnaire response. Based on the information in DSM's response, we
preliminarily determine that the projects aimed at structural steel
development are tied to non-subject merchandise. We also preliminarily
determine that the remaining research and development project is
relevant to the early stages of the production process and, therefore,
attributable to DSM's total steel sales.
In keeping with the Department's practice, we calculated the
benefits related to the project on the ``Elimination of Accumulated
Impurities and Metal Structural Non-detrimental Technology
Development'' by allocating the GOK's payments based on DSM's
contributions to the project. See 2004 CTL Plate Preliminary Results,
71 FR at 11400 (unchanged in final results by Notice of Final Results
of Countervailing Duty Administrative Review: Certain Cut-to-Length
Carbon-Quality Steel Plate from the Republic of Korea, 71 FR 38861
(July 10, 2006)). 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 amounts nor the dates of approval. Therefore, we
performed our analysis under 19 CFR 351.524(b)(2) by dividing DSM's
portion of the GOK contribution at the time of receipt by DSM's total
steel sales at the time of receipt. Using this approach, the calculated
percentages in each year were less than 0.5 percent. Therefore, we
preliminarily determine that all of the GOK's contributions were
expensed in the year of receipt. To calculate the net subsidy rate
under the program, we divided the contributions made by the GOK during
the POR that were allocated to DSM by DSM's total steel sales during
the POR. On this basis, we preliminarily calculate a net subsidy rate
for DSM 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 C.V.D. rate.
Programs Preliminarily Found To Be Not Used
1. Special Cases of Tax for Balanced Development Among Areas (TERCL
Articles 41, 42, 43, 44, and 45) (Reserve for Investment Program)
2. Electricity Discounts (VRA, VCA, ELR and DLI Programs)
3. Price Discount for DSM Land Purchase at Asan Bay
4. Local Tax Exemption on Land Outside of Metropolitan Area
5. Exemption of VAT on Anthracite Coal
Programs Preliminarily Found To Be Not Countervailable
1. Special Tax Credit for Boosting Employment
Under Articles 30-34 of the RSTA, the GOK created ``The Special Tax
Credit for Boosting Employment'' in July 2004. The program expired in
December 31, 2005. It was designed to boost employment, and tax credits
were allowed for any Korean company that met the requirements of
employing more full-time workers in 2004 and 2005 than it employed the
previous year. It provided for a credit of one million won for each
full-time worker employed in 2004 or 2005 in excess of the numbers of
full-time workers employed the previous year. DSM reported receiving
credits towards taxes payable under this program for its 2004 tax
return, the tax return submitted during the POR.
Information supplied by DSM and the GOK indicate that this tax
program is available to nearly all companies in Korea except for a
small category of specialized businesses the GOK deems ``harmful to
juveniles, affecting public morales, certain private teaching
institutes, and certain real estate businesses.'' See page 25, Exhibit
I of DSM's September 12, 2006, questionnaire. Based on information
supplied by DSM and the GOK, we preliminarily determine that this
program is not specific within the meaning of Section 771(5A)(D) of the
Act. Therefore, the Department preliminarily determines that no
countervailable benefits were conferred under this program during the
POR.
Preliminary Results of Review
In accordance with 19 CFR 351.221(b)(4)(i), we calculated a subsidy
rate for DSM for 2005. We preliminarily determine the total estimated
net countervailable subsidy rate for DSM is 0.10 percent ad valorem for
2005, 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 will instruct U.S. Customs and
Border Protection (CBP), 15 days after the date of publication of the
final results, to liquidate shipments of CTL plate from DSM, entered,
or withdrawn from warehouse, for consumption from January 1, 2004,
through December 31, 2004, without regard to countervailing duties.
Also, the Department will instruct CBP not to collect cash deposits
rate of estimated countervailing duties on shipments of CTL plate from
DSM, entered, or withdrawn from warehouse, for consumption on or after
the publication of the final results of this administrative 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.
Representatives of parties to the proceeding may request disclosure
of proprietary information under
[[Page 10169]]
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, 2007.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E7-4070 Filed 3-6-07; 8:45 am]
BILLING CODE 3510-DS-P