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[C-580-504]

Offshore Platform Jackets and Piles From the Republic of Korea

Monday, April 7, 1986

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AGENCY: Import Administration, International Trade Administration, Commerce.

ACTION: Notice.

SUMMARY: We determine that certain benefits which constitute subsidies within the meaning of the countervailing duty law are being provided to manufacturers, producers, or exporters in the Republic of Korea (Korea) of offshore platform jackets and piles. Because of the unique nature of the subject merchandise, we are calculating platform specific rates. The estimated net subsidy is 8.73 percent ad valorem for Platform Harvest, 0.15 percent ad valorem for Platform Esther, 3.22 percent ad valorem for Platform Julius, and 4.42 percent ad valorem for all other platforms.

We have notified the U.S. International Trade Commission (ITC) of our determination. If the ITC determines that imports of offshore platform jackets and piles materially injure, or threaten material injury to, a U.S. industry, we will direct the U.S. Customs Service to resume the suspension of liquidation of offshore platform jackets and piles from Korea and to require a cash deposit on entries or withdrawals from warehouse for consumption equal to 3.22 percent ad valorem for Platform Julius and 4.42 percent ad valorem for all other platforms not investigated. Platform Harvest was entered before our preliminary determination and has already been liquidated. Platform Ester was entered after our preliminary determination but before we discontinued our suspension of liquidation.

EFFECTIVE DATE: April 7, 1986.

FOR FURTHER INFORMATION CONTACT:Rick Herring, Office of Investigations, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 377-0187.

SUPPLEMENTARY INFORMATION:

Final Determination

Based upon our investigation, we determine that certain benefits which constitute subsidies within the meaning of section 701 of the Tariff Act of 1930, as amended (the Act), are being provided to manufacturers, producers, or exporters in Korea of offshore platform jackets and piles. For purposes of this investigation, the following programs are found to confer subsidies.

- Export Credit Financing from the Export-Import Bank of Korea

- Accelerated Depreciation under Article 25 of the "Act Concerning the Regulation of Tax Reduction and Exemption"

- Tax Incentives for Exporters under Articles 22, 23, and 24 of the "Act Concerning the Regulation of Tax Reduction and Exemption"

We determine the estimated net subsidy to be 8.73 percent ad valorem for Platform Harvest, 0.16 percent ad valorem for Platform Ester and 3.22 percent ad valorem for Platform Julius. If this investigation results in a final countervailing duty order, the cash deposit rate for all other imported platforms will be 4.42 percent ad valorem.

Case History

On April 19, 1985, we received a petition in proper form from the Kaiser Steel Corporation and the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers filed on behalf of the U.S. producer(s) and workers producing offshore platform jackets and piles for sale in the U.S. West Coast market. The petitioners subsequently amended the petition to allege, in the alternative, that it was filed on behalf of U.S. producers and workers in the national U.S. market. In compliance with the filing requirements of s 355.26 of the Commerce Regulations (19 CFR 355.26), the petition alleged that manufacturers, producers, or exporters in Korea of offshore platform jackets and piles directly or indirectly receive benefits which constitute subsidies within the meaning of section 701 of the Act, and that these imports materially injure, or threaten material injury to, a U.S. industry.

We found that the petition contained sufficient grounds upon which to initiate a countervailing duty investigation, and on May 9, 1985, we initiated the investigation (50 FR 20253). We stated that we expected to issue a preliminary determination by July 15, 1985.

Since Korea is a "country under the Agreement" within the meaning of section 701(b) of the Act, an injury determination is required for this investigation. Therefore, we notified the ITC of our initiation. On June 3, 1985, the ITC determined that there is a reasonable indication that these imports materially injure a U.S. industry.

We presented a questionnaire concerning the allegations to the government of Korea in Washington, DC on May 20, 1985. On June 24, 1985, we received responses to our questionnaire from the government of Korea, Daewoo Shipbuilding and Heavy Machinery Ltd. and Daewoo Corporation (the manufacturer and exporter of Platforms Harvest and Esther), and Hyundai Heavy Industries Co. Ltd. and Hyundai Corporation (the manufacturer and exporter of Platform Julius).

The Department has received letters and comments from several U.S. importers of platform jackets and piles from Korea claiming that the petition was not filed on behalf of the U.S. industry producing platform jackets and piles. However, we have not received any opposition from any members of the domestic industry.

On July 19, 1985, we published our preliminary determination that benefits constituting subsidies within the meaning of the countervailing duty law were being provided to manufacturers, producers, or exporters in Korea of off-shore platform jackets and piles from Korea (50 FR 29461). In that notice we stated that if this investigation proceeded normally, we would make our final determination by September 30, 1985. However, on July 25, 1985, petitioners filed a request to extend the deadline date for a final determination in the countervailing duty investigation to correspond to the date of the final determination in the antidumping investigation of offshore platform jackets and piles from Korea. On August 29, 1985, we published notice in the Federal Register (50 FR 35108) extending the date of the final determination pursuant to section 705(a)(1) of the Act, as amended by section 606 of the Trade and Tariff Act of 1984. In keeping with Article 5, paragraph 3 of the Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade (the Subsidies Code), the Department instructed the U.S. Customs Service to discontinue suspension of liquidation for all entries on or after November 15, 1985.

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On November 21, 1985, we received a request from respondents in the antidumping duty investigations of offshore platform jackets and piles from Korea and Japan that the final determinations be postponed as provided for in section 735(a)(2)(A) of the Act, until March 31, 1986. Accordingly, the countervailing duty investigation was also postponed until March 31, 1986, to correspond to the antidumping cases.

Our notice of preliminary determination gave interested parties an opportunity to submit oral and written views. Petitioners and respondents requested a hearing, but both parties subsequently withdrew their requests. On February 12 and 21, 1986, we received written views from interested parties and have taken them into consideration in this determination.

On July 9, 1985, petitioners alleged that government equity infusions into Daewoo Shipbuilding and Heavy Machinery (Daewoo Shipbuilding) were made on terms inconsistent with commercial considerations. They also alleged that Daewoo Shipbuilding was uncreditworthy and that the company received benefits from loans from the Korea Development Bank because of extended grace periods on principal repayments. On August 8, 1985, we presented supplemental questionnaires to the government of Korea, Daewoo Shipbuilding, Daewoo Corporation, Hyundai Corporation, and Hyundai Heavy Industries. We received responses to the supplemental questionnaires on August 23 and 26, 1985.

During the course of this investigation, we found that another contract for the subject merchandise was awarded to Daewoo Shipbuilding and Daewoo Corporation. This contract was awarded after the date of initiation, but the project (Platform Esther) was scheduled to enter the United States before the date of our final determination. We sought additional information on Platform Esther in our supplemental questionnaire.

We conducted verification in Korea from September 23 to October 10, 1985.

Scope of Investigation

The products covered by this investigation are steel jackets (templates) and/or piles for offshore platforms, subassemblies thereof that do not require removal from a transportation vessel and further U.S. onshore assembly, and appurtenances attached to the jackets and piles. These products constitute the supporting structures which permanently affix offshore drilling and/or production platforms to the ocean floor. Appurtenances include grouting systems, boat landings, pre-installed conductor pipes and similar attachments. These jackets and piles are currently classified in the Tariff Schedules of the United States (TSUS) under item 652.97.

Analysis of Programs

Throughout this notice, we refer to certain general principles applied to the facts of the current investigation. These principles are described in the "Subsidies Appendix" attached to the notice of "Cold-Rolled Carbon Steel Flat- Rolled Products from Argentina: Final Affirmative Countervailing Duty Determination and Countervailing Duty Order," which was published in the April 26, 1984, issue of the Federal Register (49 FR 18006).

During the period 1983 through the first quarter of 1985, two Korean firms were awarded contracts for construction of offshore platform jackets and piles for export to the United States: Daewoo Corporation and Daewoo Shipbuilding (collectively referred to as Daewoo) and Hyundai Corporation and Hyundai Heavy Industries (collectively referred to as Hyundai). The two platforms are Platform Harvest and Platform Julius. We learned that a third contract was awarded to Daewoo in April 1985, for Platform Esther.

For purposes of this determination, we investigated only the manufacturers and exporters of these platforms and we calculated the subsidy conferred upon the three platforms, Harvest, Julius and Esther. This is a departure from our normal investigation practice of choosing a historical period and calculating subsidies bestowed on the total output of exports during that period.

In this case, the normal practice does not apply. Once a contract for a platform is awarded, it can take fourteen months to construct, and then, after it is entered into the United States, payment terms are extended for up to ten years. Also, as noted above, there have been only three contracts awarded to Korean firms in two years. Therefore, were we to choose 1984, for example, as the period for measuring subsidization, there would be no exports of the subject merchandise.

The nature of the platform market (including the infrequency, high value, and length of production contracts) prevents us from fully countervailing the benefits granted to the subject merchandise using our normal methodology. We not only lack a period representative of the total subsidy bestowed on total exports of the subject merchandise, but there is also an absence of a reasonable expectation of continuous production and future export of the subject merchandise to the United States. However, in this case we can directly tie specific subsidy programs, particularly long-term post-export financing, to specific benefits on particular platforms. Therefore, the nature of the platform market and our ability to tie specific subsidy programs to particular platforms means that we can calculate the subsidy conferred on Platform Harvest, Julius, and Esther. This is a specific exception from our normal practice and should not be construed as a movement away from our policy of calculating subsidies on a country-wide basis. We have chosen these particular sales because they constitute entries of the merchandise that are potentially liable for countervailable duties. However, during the course of this investigation, we discovered that Platform Harvest was formally entered on May 28, 1985, and was liquidated on December 20, 1985. Since Harvest entered through Customs before our preliminary determination and was liquidated before our final determination, we are not establishing a duty deposit rate for Platform Harvest. However, we are using the subsidy which was conferred on Harvest in the determination of the cash deposit rate for all future entries, other than the platforms which we investigated.

Based upon our analysis of the petition, the responses to our questionnaires submitted by the government of Korea, Daewoo Shipbuilding, Daewoo Corporation, Hyundai Heavy Industries, Hyundai Corporation, our verification of those responses, and comments submitted by interested parties, we determine the following:

I. Programs Determined To Confer Subsidies

We determine that subsidies are being provided to manufacturers, producers, or exporters in Korea of offshore platform jackets and piles under the following programs:

A. Export Credit Financing From the Export-Import Bank of Korea
Petitioners allege that U.S. purchasers of the subject merchandise receive preferential buyers' credits from the Export-Import Bank of Korea (KXMB). Petitioners also allege that National Investment Fund loans provided through the KXMB are used to finance exports of the subject merchandise on a deferred payment basis and at below-market interest rates.

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Regarding the National Investment Fund (NIF), the government of Korea established the National Investment Fund in 1973. The NIF is a source of funds for banks to loan. NIF funds are used to finance development or to finance exports on a deferred payment basis. The only deferred export financing utilizing NIF funds is wholly administered by the KXMB. The NIF is not a specific export loan program but rather a source of funding within the KXMB's Export Credit Financing program.

NIF loans are also provided through commercial and government banks. A number of Korea Development Bank (KDB) loans made to Daewoo Shipbuilding have been made with NIF money. These loans are discussed in the section "Programs Determined Not To Confer Subsidies."

The KXMB inaugurated on July 1, 1976, under the authority of the Export-Import Bank of Korea Act (Law No. 2122; July 28, 1969). The purpose of this Act is to promote the sound development of the national economy and economic cooperation with foreign countries by extending financing for export and import transactions, overseas investments, and development of natural resources abroad.

The KXMB has provided two types of export credit: (1) A pre-delivery loan to cover the period of construction of the project, and (2) a deferred export credit in the form of a post-delivery loan for ten years including a two-year grace period. To be eligible for deferred export credit, the following criteria must be met by the exporter: (1) the contract on the sale must require a minimum 15 percent cash payment by the foreign purchaser; (2) the requested financing cannot exceed a ten-year period for loans greater than U.S. $1,000,000; and (3) the requested financing cannot be at interest rates below the KXMB's lending rates.

For pre-delivery financing, interest is pre-paid quarterly beginning at the time each principal installment is drawn down and extending throughout the life of the loan. The principal of the pre-delivery loan is repaid in one lump sum at the time of acceptance of delivery. Post-delivery financing is repaid semi- annually over an eight-year period beginning two years after disbursement of the loan. Interest on the post-delivery loan is paid semi-annually. The KXMB requires that the borrower obtain Medium- and Long-Term Credit Risk Insurance for post-delivery financing. For our determination on the Export Credit Insurance program, see the section "Programs Determined Not to Confer Subsidies."

Daewoo and Hyundai received pre- and post-delivery financing for Platform Harvest and Platform Julius, respectively, from the KXMB. We verified that KXMB financing was not received on Platform Esther. The financing was in the form of seller's credits, rather than buyer's credits as alleged by the petitioners; i.e., the lending was direct to the manufacturer/exporter. Daewoo received all of its financing at a fixed interest rate of nine percent, while Hyundai received its pre-delivery loan at a fixed interest rate of nine percent and its post-delivery loan at a fixed interest rate of ten percent. These are dollar-denominated loans.

To determine if KXMB pre-delivery financing was provided on preferential terms, we sought the cost to Daewoo and Hyundai of comparable alternative commercial financing. The pre-delivery loans are usually 13 to 14 months in duration, therefore, we did not deem it appropriate to use the swap rate (see discussion below on post-delivery financing) which we used as the benchmark to measure the benefit conferred by the ten-year post-delivery loans.

For Platform Harvest, Daewoo received co-financing by a commercial bank to cover the construction costs not financed by the KXMB. This loan carried a floating interest rate which was based on a spread over the London Interbank Offered Rate (LIBOR).

To determine if the KXMB pre-delivery loan was made on preferential terms, we compared the interest rate of the co-financing loan to the interest rate of the KXMB pre-delivery loan. We made this comparison on each date on which interest was paid on the KXMB pre-delivery loan, since the co-financing loan carried a variable interest rate. Based on this, we determine that the KXMB pre-delivery loan was made on preferential terms.

We used the interest rate on the co-financing loan, even though it is a variable rate loan, because it represents the actual commercial alternative used by Daewoo to finance the construction of Platform Harvest. Also, because the KXMB pre-delivery loan in question was paid prior to our preliminary determination, we were able to determine the rates Daewoo would have had to pay using the variable commercial interest rate. Therefore, we believe that the co-financing loan is the most appropriate benchmark to use for the pre-delivery loan, despite the fact that we are comparing fixed and variable rate loans.

Hyundai also received co-financing from a commercial bank, with an interest rate spread over LIBOR, to finance construction costs of Platform Julius not covered by the KXMB pre-delivery financing. However, since the pre-delivery loan is still outstanding on Platform Julius, we cannot use the same methodology as used in calculating the benfit on the KXMB pre-delivery loan received by Daewoo to finance the construction of Platform harvest. That methodology is inappropriate because we cannot speculate on future LIBOR rates to coincide with future interest payments on the KXMB pre-delivery loan. Therefore, as best information available, we took the interest rate Hyundai would have paid based on the interest rate of the co-financing loan. We calculated this as the LIBOR rate in effect on the date of the commitment of the commercial bank to co-finance the construction of Platform Julius, plus the spread over the LIBOR rate as specified by the co-financing loan. We then treated this as a fixed rate for the duration of the KXMB pre-delivery loan. Comparing that interest rate to the interest rate received on the KXMB pre- delivery loan, we determine that the KXMB pre-delivery loan was made on preferential terms. Since the pre-delivery loan received by Hyundai for Platform Julius does not have to be paid off until the platform is exported, we assumed that the length of the pre-delivery loan for Platform Julius will be the same length as the loan for Platform Harvest.

We believe that because of the duration of the pre-delivery loan, the benchmark constructed under this methodology more accurately reflects the benefits to be conferred upon Platform Julius than the use of the swap interest rate which we are using to measure the benefits of the ten-year post-delivery loans, or the use of the interest rate on 90-day commercial paper, which is the rate suggested by respondents.

To calculate the benefit on the KXMB pre-delivery loan to Daewoo for Platform Harvest, we took the difference between each interest payment made at the nine percent KXMB interest rate and what Daewoo would have paid at the interest rate charged by the commercial co-financing bank. Since we calculated the benefit based on actual interest payments, and these payment were made at the nominal interest rate of nine percent, our benchmark is also at a nominal interest rate. To calculate the benefit on the KXMB pre-delivery loan to Hyundai for Platform Juilius, we took the difference between the nine percent KXMB interest rate and the interest rate charged on the co-financing loan set on the date of the commercial bank's

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commitment to provide co-financing. We then multiplied that difference by the amount of the KXMB pre-delivery loan to calculate the amount of the benefit. We took these benefit amounts and divided by he contract value of the respective platform to calculate an estimated net subsidy of 0.61 percent ad valorem for the KXMB pre-delivery loan on Platform Harvest and 0.27 percent ad valorem for the KXMB pre-delivery loan on Platform Julius.

In order to determine if KXMB post-delivery financing was provided on preferential terms, we sought the cost to Daewoo and Hyundai of comparable alternative, fixed-interest, dollar-denominated, commercial financing. Since these are long-term loans, we first reviewed the credit histories of both of the companies. We found that both have received commercial long-term dollar- denominated loans, but all were at variable interest rates. We also learned that there are no established commercial fixed-rate dollar loans available in Korea. However, we discovered that there is a well-established international market available to companies that wish to swap variable-rate dollar obligations for fixed-rate dollar obligations, and that Daewoo has participated in this market. Based on the fact that one of the producers of the subject merchandise has used the swap market on several occasions, and on a careful review of information we obtained regarding all alternative sources of long- term, fixed-interest, dollar-denominated, commercial financing, we determine that, absent the availability of the KXMB financing, both Daewoo and Hyundai could have obtained long-term fixed-interest, dollar-denominated, commercial post-delivery financing for the projects under investigation in the swap market.

The effective fixed interest rate for a company which wants to swap out of a floating rate obligation and into fixed rate is based on (1) the prevailing fixed-interest yield of its swap partner (this is called the referenced fixed rate); (2) the swap partner's desired spread below LIBOR; (3) the annualized arrangement fee for the swap (usually a bank will arrange the swap); (4) the note issuance facility fee (to underwrite the Euronotes); and (5) the cost over LIBOR of the company's floating rate funds. For the referenced fixed rate on the swap rate for Daewoo, we went to the international bond market to select an appropriate fixed-interest rate of a potential swap partner. We selected bonds with a six- to a seven-year maturity to correspond to the effective average maturity of the KXMB loans. The source of the bond information was Euromoney. The reference fixed rate on the swap for Hyundai is based on long- term bonds as reported by the Wall Street Journal. Hyundai received post- delivery commercial co-financing on Platform Julius. We used the spread over LIBOR of that loan to determine the cost over LIBOR of the company's floating rate funds. We used that same spread, as best information available, as the cost over LIBOR to determine Daewoo's cost of floating rate funds. We used the information submitted on the record to determine the costs of the other three components used in the calculation of the swap interest rate. Based on that information, we were able to determine the fixed-interest financing costs which each company would have had to bear after a swap.

A comparison of these rates with those of the companies' KXMB post- delivery loans indicates that, in the case of both loans to both companies, the KXMB export financing rates are less. Because this financing is contigent upon export and the rates of interest charged are less than that on comparable commercial financing, we determine that the post-delivery loans from the KXMB confer benefits which constitute export subsidies.

Under our normal methodology for allocating the benefits of long-term loans, benefits are deemed to begin accruing at the time of the first cashflow effect and continue through the life of the loan. Therefore, if we were measuring subsidization in calendar year 1984, for example, and the first interest payment would not be made until 1985, then we would find no benefits conferred upon exports of the subject merchandize in 1984. Instead, the benefits of the loan would be allocated to exports in 1985 and each year thereafter for as long as the loan was outstanding.

The use of our standard long-term methodology is not appropriate in this case because of the nature of the platform jackets and piles market. In the first place, the loans in question can be tied to specific platforms. Secondly, allocating the benefits over the life of the loan would mean that we might not capture, and countervail, all the benefit conferred upon these exports. This is because the platforms would be imported into the United States and their entries liquidated by U.S. Customs ten years before the last interest payments would be made on the KXMB loans, i.e., ten years before the last countervailable benefits would be conferred upon the products.

In order to capture the full benefit conferred by each of the KXMB post- delivery loans, we measured the difference in the present value of the repayment stream on the KXMB post-delivery loans and the repayment stream on swap market financing. This amount was divided by the contract value of the respective platform. Using this methodology, we calculated an estimated net subsidy of 7.97 percent ad valorem for Platform Harvest and 2.72 percent ad valorem for Platform Julius for the KXMB post-delivery loans.

B. Accelerated Depreciation Under Article 25 of the "Act Concerning the Regulation of Tax Regulation and Exemption"
Petitioners alleged that manufacturers and exporters of the subject merchandise receive accelerated depreciation under this program.

Article 25 of the "Act Concerning the Regulation of Tax Reduction and Exemption" permits a firm earning more than 50 percent of its total proceeds in a business year from foreign exchange to increase its normal depreciation by 30 percent. If the corporation has received less than 50 percent of its total proceeds from foreign exchange, it can still claim some accelerated depreciation, determined by a formula based on the firm's foreign exchange earnings and total business earnings. Of the firms manufacturing or exporting the products under investigation, only Hyundai Heavy Industries, the manufacturer of Platform Julius, used accelerated depreciation under this program. Because the use of accelerated depreciation is contingent upon export performance, we determine that this program confers benefits which constitute export subsidies.

Under our normal methodology for determining the benefits from export- related accelerated depreciation, we would calculate the subsidy based on the tax savings received during the period of review and then we would divide the taxing savings by the amount of export sales during the same period. For the same reasons described supra regarding KXMB financing, however, the use of our standard methodology is not appropriate in this case. Hyundai Heavy Industries will record no export sales income from Platform Julius until it files its taxes in 1986 and 1987. The most recent year in which taxes have been filed is 1984. Therefore, none of the tax savings in 1984 derive from, or are attributable to, sales of the subject merchandise to the United States.

In order to capture and countervail all of the tax benefits attributable to

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Platform Julius, we should calculate the present value of the benefits that will accrue in 1986 and 1987. Obviously, it is impossible to make this calculation in 1985 because we do not know how much or whether accelerated depreciation will be claimed. Therefore, believing it to be the only reasonable alternative methodology available to us, we have instead calculated the benefit that would have accrued in 1984 (the most recent year for which we have all the necessary data) had the entire sales income earned from Platform Julius been reported in that year. Using this methodology, we calculated an estimated net subsidy of 0.15 percent ad valorem for Platform Julius.

C. Tax Incentives for Exporters Under Articles 22, 23, and 24 of the "Act Concerning the Regulation of Tax Reduction and Exemption"
Petitioners alleged that manufacturers and exporters of the subject merchandise receive tax benefits under Articles 22, 23 and 24 of the "Act Concerning the Regulation of Tax Reduction and Exemption" which provide for the deduction from taxable income of a number of different reserves relating to export activities. These reserves cover export losses, overseas market development and price fluctuation losses.

Under Article 22, a corporation may establish a reserve amounting to one percent of the foreign exchange earnings or 50 percent of net income in the applicable period, whichever is smaller. If certain export losses occur, they are offset from the reserve fund. If there are no offsets for export losses, the reserve is returned to the income account and taxed, after a one-year grace period, over a three-year period.

Under Article 23, governing overseas market development, a corporation may establish a reserve fund amounting to one percent of its foreign exchange earnings in the export business for the respective business year. Expenses incurred in developing overseas markets are offset from the reserve fund. Like the export loss reserve fund, if there are no offsets for expenses, the reserve is returned to the income account and taxed, after a one-year grace period, over the next three years.

A price fluctuation reserve fund may be established under Article 24. Under this article, a corporation may establish reserves equivalent to five percent of the book value of the products and works in progress which will be exported by the close of the business year. This reserve may be used to offest losses incurred from the fluctuation of prices for export goods. These losses may be offset by returning an amount equivalent to those losses to the income account. If not utilized, the reserve is returned to the income account the following business year.

The balance in all three reserve funds is not subject to corporate tax, although all moneys in the reserve funds are eventually reported as income and subject to corporate tax either when they offset export losses, are used to develop overseas markets, or when the grace period expires. Daewoo Corporation claimed reserves under Articles 22 and 23 and Hyundai Heavy Industries claimed reserves under Article 22. We determine that these export reserve programs confer benefits which constitute export subsidies because they provide a deferral of direct taxes specifically related to export performance.

As with the previous program, our normal methodology for calculating the benefit arising from these tax deferrals does not apply in this case. This is because the deferrals currently being enjoyed are not derived from sales of the subject merchandise to the United States. Nor can we anticipate that there will be imports in each of the years that deferrals attributable to these sales are in effect. Therefore, to calculate the benefits received under this program applicable to the products under investigation, we first took one percent of the value of the platform contract and treated it as if it were placed into the respective reserve fund based on when the company would enter the contract value as sales revenue in its accounting records. For Daewoo Corporation, the entire one percent was treated as if it were put into each of the tax-free reserves on the date of shipment of the platform. Hyundai Heavy Industries recognizes income progressively during the period of construction rather than in one lump-sum on a single date and, thus, the one percent of the contract was divided into two reserves.

Because these export reserve funds constitute a deferral of tax liabilities, we treat the tax savings on these funds as short-term interest-free loans. Thus, we took the tax savings on one percent of the contract value (or that portion of the contract treated as sales revenue) for the platform in the year in which it would be treated as sales revenue and treated it as an interest- free loan, rolled over in each year that taxes would be deferred. We compared the zero-interest to the interest that would be paid in each year had the money been borrowed from commercial sources. We used as our benchmark the average interest rate on commercial short-term loans in Korea which we determine to be 11.50 percent. The source of our benchmark determination is the Bank of Korea's Monthly Statistical Bulletin. In November 1984, the ceiling on interest rates for short-term loans was raised to 11.50 percent. Commercial banks can charge interest rates from 10 to 11.50 percent. In meetings with the Korea Development Bank, the Bank of Korea, and two commercial banks, we were told that commercial banks will usually charge the ceiling rate of 11.50 percent of all their lending. We necessarily assumed that the benchmark interest rate would extend into the future periods. We then calculated the present value of the benefits in each of the years in which there would be a tax savings accruing to the respective reserve fund. The total benefit for each of the reserve funds was allocated over the contract value of the respective platform. Using this methodology, we calculated an estimated net subsidy of 0.15 percent ad valorem for Platform Harvest and Platform Esther and 0.08 percent ad valorem for Platform Julius.

II. Programs Determined Not to Confer Subsidies

A. Government Provision of Equity Into Daewoo Shipbuilding
The KDB has provided equity into Daewoo Shipbuilding from 1978 through 1980. The KDB also provided equity into Daewoo Shipbuilding in 1984. Petitioners alleged that these equity provisions were made on terms inconsistent with commercial considerations.

The Korea Shipbuilding and Engineering Company (KSEC) began building a shipyard facility at Okpo Island in the 1970's. In 1978, with only 30 percent of the shipyard constructed, KSEC, citing management and construction difficulties, notified the KDB that it was pulling out of the operations and that it intended to declare bankruptcy. The KDB was the major creditor bank of KSEC, holding the majority of loans outstanding to that company. At that time, the KDB sught a new company to take over the Okpo facilities and to complete construction of the shipyard, so that the KDB could recover the loans that it had provided in the construction of the shipyard.

The Daewoo Group performed a feasibility study to determine the future commercial prospects of the operations and based on this study, entered into a joint venture with the KDB. The Daewoo Group also agreed to guarantee the repayment of loans to the KDB which had been extended to KSEC by the bank. In late 1978 Daewoo Shipbuilding was incorporated. The Daewoo Group

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maintained majority ownership of the company, and it and the KDB purchased common stock of Daewoo Shipbuilding on the same terms. Equity investments were made by the KDB and the Daewoo Group, on the same terms between 1978 and 1980. These investments were used for the construction of the shipyard which was completed during 1981. Several equity investments of the KDB were made through the conversion of debt. These conversions were on the same basis as the investments made by the Daewoo Group.

Requests were made to the KDB for additional equity infusions between 1981 and 1983, but he KDB declined. During this period, the Daewoo Group continued to purchase new stock in Daewoo Shipbuilding, thus increasing its control of the company. Another request to the KDB was made in 1984 and this time the KDB did decide to provide additional equity purchases into Daewoo Shipbuilding.

We have consistently held that government provision of equity does not per se confer a subsidy. Government equity purchases bestow countervailable subsidies only when they occur on terms inconsistent with commercial considerations. In making a determination on whether Daewoo Shipbuilding was equityworthy, we analyzed feasibility studies, the actions of commercial investors into the company, and the company's financial statements. Based on this examination, we determine that KDB's equity infusions were made on the same terms as private investors (the Daewoo Group) and that Daewoo Group's infusions are an appropriate benchmark for measuring whether KDB's equity infusions were consistent with commercial considerations. Because KDB's and Daewoo Group's investments were made on the same terms, we determine that the KDB's equity infusions into Daewoo Shipbuilding are not countervailable.

B. Export Credit Insurance by the Export Import Bank of Korea
Petitioners allege that the Korean government makes substantial contributions to the export credit insurance program of the KXMB and that this program is not self-supporting, thus providing countervailable benefits to producers of the subject merchandise.

The KXMB operates an export insurance program which provides commercial, political and managerial risk insurance. A separate budget for this program is maintained by the KXMB. Hyundai Corporation and Daewoo Corporation have both applied for commercial risk insurance. Purchase of this insurance is compulsory on all loans provided by the KXMB.

To be a subsidy, a government-operated export insurance program has to charge premiums which are inadequate to cover the long-term operating costs and losses of the program. We verified that the premiums charged to exporters allow the KXMB to cover its losses and its long-term operating expenses. Therefore, we determine that this program does not constitute a subsidy.

C. Korea Development Bank Loans to Daewoo Shipbuilding
Petitioners alleged that Daewoo Shipbuilding received benefits from NIF loans because of extended grace periods on repayment of principal from the KDB. Petitioners also alleged that these loans provided countervailable benefits to Daewoo Shipbuilding because the company was uncreditworthy from its inception through 1984.

We learned in meetings with commercial banks in Korea that grace periods are typically tied to the company's cash flow. For loans used for infrastructure development, the grace period is based on the period of construction, plus generally one additional business year. Commercial banks will also look at the expected cash flow from the development. The standard grace period for long- term borrowing for such development is around four years. Therefore, we determine that these loans are not countervailable because the length of the grace periods are not inconsistent with commercial considerations.

Regarding the uncreditworthy allegation, we determine Daewoo Shipbuilding to be creditworthy because a significant portion of its loans in each year since its inception have been provided by a multitude of commercial banks.

III. Programs Determined Not To Be Used

We have determined that manufacturers, producers, or exporters in Korea of offshore platform jackets and piles did not use the following programs:

A. Short-term Export Financing
Petitioners alleged that the manufacturers and exporters receive preferential export financing under the Export Financing Regulations. We verified that this program was not used by manufacturers and exporters of the subject merchandise.

B. Special Depreciation Under Article 11 of the "Act Concerning the Regulation of the Tax Reduction and Exemption"
Petitioners alleged that certain designated industries receive preferential depreciation benefits under Article 11. We verified that assets used to construct jackets and piles did not receive accelerated depreciation under Article 11.

C. Export Guarantees From Export-Import Bank of Korea
Petitioners alleged that producers of the subject merchandise receive advance payment export guarantees and performance export guarantees from the KXMB. We verified that the jackets and piles covered by this investigation have not received such guarantees from the KXMB.

Petitioners' Comments

Comment 1: Petitioners contend that there existed essentially one loan from KXMB that was rolled over upon delivery of Platform Harvest, rather than two separate (one pre-delivery and one post-delivery) loans.

DOC Position: We disagree. We verified that for Platform Harvest, Daewoo received pre-delivery and post-delivery financing from the KXMB and that these were two separate loans. For a discussion of the KXMB financing, see the section of the notice on "Export Credit Financing from the Export-Import Bank of Korea."

Comment 2: Petitioners argue that the most reasonable commercial alternative to, and, thus, the appropriate benchmark for Daewoo's post-delivery loan from the KXMB, would be a ten-year bond or a ten-year commercial bank loan rather than an interest rate swap.

DOC Position: In determining the benefit received from preferential long-term loans, we examine the actual loan history of the company at the time of receipt of the loan in question. The KXMB loans in question are ten-year loans with fixed rates of interest. The Korean companies did not have any fixed-rate dollar loans at the time of receipt of the KXMB loans. The companies did have a wide array of long-term dollar loans from commercial banks, but these loans were made at variable interest rates and, therefore, according to our long-term loan methodology, did not provide the preferred method for measuring the benefits conferred upon the exported platforms by the KXMB fixed rate loans.

Petitioners have argued that Daewoo and Hyundai have not used interest rate swaps for financing of the subject

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merchandise. This is correct. These companies have financed exports by obtaining co-financing from commercial banks, and the rates provided by these banks have been on a variable basis, i.e., LIBOR plus a spread. This has been their alternative method of export financing, not the use of bonds. However, as stated above, we prefer not to measure a long-term fixed-rate loan against a variable-rate long-term loan. To compensate for this methodological problem, we have turned to the interest swap market to calculate an appropriate fixed interest rate to allow us to measure the benefit of the KXMB loans.

We verified that the international swap market is available to companies in Korea wishing to exchange floating interest rate obligations for long-term dollar fixed interest rate obligations. We also verified that Daweoo has participated in this swap market. Therefore, we believe that, absent KXMB financing, Daewoo and Hyundai could have obtained long-term fixed-interest dollar-denominated commercial financing for the projects under investigation in the swap market.

We reject petitioners' argument that we should use a ten-year bond rate to measure the KXMB loans. Daewoo and Hyundai have not used such an instrument to finance their exports; they have always used loans.

Comment 3: Petitioners argue that the Department should use the rates on ten- year bonds as the basis of determining the referenced fixed rate used in calculating the cost of Daewoo's swap interest rate.

DOC Position: We disagree. We used the rates on bonds of six to seven years' duration as the basis of determining the referenced fixed rate because the length of these bonds corresponded to the effective maturity of the KXMB post- delivery loan.

Comment 4: Petitioners argue that in determining the cost of Daewoo's swap interest rate, the Department should select 0.50 percent as the swap partner's desired spread below LIBOR.

DOC Position: We disagree. We selected 0.25 percent as the swap partner's desired spread below LIBOR in calculating Daewoo's cost in an interest swap transaction. If its swap partner would normally be able to receive a loan with a floating interest rate of LIBOR plus 0.25, a spread below LIBOR of 0.25 in an interest swap would provide a net savings of 0.50 to the swap partner. This is the average savings which usually must be present for each participant to agree to the swap transaction.

Comment 5: Petitioners claim that the feasibility studies submitted by respondents during verification should be rejected because they were submitted too late for the record, and because they were all prepared by the government Korea or Daewoo, i.e., not by an independent source.

DOC Position: We believe that petitioners had an adequate amount of time to comment on all information which was used in making our final determination. We also disagree with petitioners' contention that we should reject the feasibility studies conducted by both the government of Korea and Daewoo. Daewoo is a private commercial enterprise, and we believe it is reasonable that a private commerical enterprise may use its own feasibility studies as a basis for making a commercial investment. Also, because these studies were prepared in 1978 and 1984, they were clearly not written for the purposes of this investigation.

Comment 6: Petitioners submit that the financial state of Daewoo Shipbuilding immediately prior to the 1984 equity investment indicates that the company was not considered to be a reasonable investment.

DOC Position: We disagree. Daewoo Shipbuilding was formed in 1978 and was constructing the shipyard through 1981 and expanding the facilities in 1982. In 1983, the company made a profit, which increased in 1984. In 1984, the KDB and the Daewoo Group made equity investments on the same terms. Therefore, we determined that the equity investment of the KDB in 1984 was made on terms consistent with commercial considerations.

Comment 7: Petitioners argue that the 1984 investment in Daewoo Shipbuilding should be countervailable because it was based on national policy interests rather than on commercial considerations.

DOC Position: Regarding the decision of a government to provide equity into a company, we examine whether a commercial investor would have made the same decision. The fact that a government may make an equity investment for a different purpose than a private commercial investor, does not mean that the investment was made on terms inconsistent with commercial considerations.

Comment 8: Petitioners maintain that the 1984 investment constituted a conversion of debt to equity and that it should therefore be countervailed as being inconsistent with commercial considerations.

DOC Position: The 1984 government investment was not a conversion of debt into equity. Regardless, we found KDB's equity infusions into Daewoo Shipbuilding to be consistent with commercial considerations, as discussed in the section "Programs Determined Not To Confer Subsidies."

Comment 9: Petitioners argue that Daewoo Shipbuilding received preferential long-term loans from the KDB and from the NIF and that these loans should be countervailed with respect to all of Daewoo's sales, regardless of Daewoo's ultimate use of the funds.

DOC Position: We found these loans not be countervailable.

Comment 10: Petitioners contend that Daewoo Shipbuilding is receiving long- term preferential financing, which is countervailable regardless of whether the company is creditworthy, because loans terms include longer than commercially available grace periods on repayment of principal.

DOC Position: We determined that the grace periods were provided on terms consistent with commercial banking practices in Korea.

Comment 11: Petitioners contend that respondents have been non-responsive regarding the interest payment schedules between 1977 and 1983 on loans from the KDB.

DOC Position: We did not ask respondents to provide such information. Because the long-term loans in question carry variable interest rates, we are only concerned with the interest rates on the loans during our period of review. The interest rates of the loans in question during that period were consistent with commercial considerations, and therefore, no countervailable benefits are found.

Comment 12: Petitioners contend that ITA should investigate further an apparent loan to Hyundai Heavy Industries from the fund for Expanding Export Facilities.

DOC Position: The Fund for Expanding Export Facilities was established in 1973 and was abolished in 1982. Eligibility for these loans was limited to manufacturers building facilities for producing export goods or raw materials, and purchasers of ocean-going vessels used for the fish export industry. Hyundai Heavy Industries received a loan from this funding source which is still outstanding. The loan contract specified the purpose of the loan and the loan was not received in relationship to the construction of platform jackets and piles.

Comment 13: Because the loan from the Fund for Expanding Export Facilities are provided exclusively to exporters, petitioners argue against ITA's conclusion that Export Facility Loans are generally available and thus, not countervailable in Korea.

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DOC Position: We have never concluded that loans from the Fund for Expanding Export Facilities are not countervailable because they are not limited to a group of enterprises or industries. We found that loans from this Fund were not countervailable because the interest rate on such loans was the same as the interest rate on comparable domestic long-term loans; see our Final Affirmative Countervailing Duty Determination; Oil Country Tubular Goods from Korea (49 FR 46776). In that investigation, we did determine that since loans from commercial banks and specialized banks, including loans made from the Fund for Expanding Export Facilities, were provided to all sectors and industries in the Korea, and because the steel industry did not receive a disproportionate share of loans, that there was no government direction of credit.

Comment 14: Petitioners maintain that loans which Daewoo Shipbuilding received from the KDB for tourist facility development are countervailable since they are targeted to a specific industry.

DOC Position: Tourist facility loans are provided for hotel construction in Korea. Since the loans received by Daewoo Shipbuilding for tourist facility development are not related to the manufacture of offshore jackets and piles, they confer no countervailable benefit upon the subject merchandise.

Comment 15: Petitioners argue that the short-term interest rate used to calculate the tax benefits to Daewoo under Articles 22 and 23 may understate the actual benefit received, and that we should use a weighted-average interest rate on all short-term domestic credit, including the curb market.

DOC Position: We treat the export tax reserves available under Articles 22 and 23 as interest-free loans and we use the interest rate on short-term loans in Korea to measure the benefit conferred by these tax reserves. In Oil Country Tubular Goods, we used the weighted-average cost of all domestic short-term credit to measure the preference built into the government's rediscount mechanism for short-term export loans. In that investigation, we still used the ten percent interest rate on short-term loans to measure the benefit provided by the export tax reserves. In this investigation, we are using the interest rate on those same loans.

Comment 16: Petitioners argue that benefits should be calculated to include both the 1984 incentives under Article 22 to Hyundai Heavy Industries as well as the 1984 incentive under Article 23 to Hyundai Corporation.

DOC Position: We calculated a benefit for every tax reserve which was used by each company and which could possibly be applied to exports of platform jackets and piles. Article 23, which was used by Hyundai Corporation, was only used in connection with ship exports.

Comment 17: Petitioners claim that the Article 25 benefits claimed by Daewoo on its Pusan factory should be spread over Daewoo's total sales and countervailed.

DOC Position: We disagree. The Pusan factory is not involved in the manufacture of offshore platform jackets and piles. It is our practice that when we can verify that benefits are tied to the production of merchandise other than the subject merchandise, we do not include them in our subsidy determination.

Comment 18: Petitioners contend that Hyundai Heavy Industries' claim for Article 11 special depreciation should be countervailed, even if the division in the company which produces platforms did not make use of this program.

DOC Position: We verified that Article 11 depreciation was only used for Hyundai Heavy Industries' shipbuilding operations. No assets used in the construction of platform jackets and piles benefitted from Article 11 depreciation. It is our practice that when we can verify that benefits are tied to the production of merchandise other than the subject merchandise, we do not include them in our subsidy determination.

Comment 19: Petitioners argue that because respondents have failed to provide complete details on the short-term export financing, ITA should use best information available and countervail such financing.

DOC Position: We disagree and have determined that short-term exports loans were not used.

Comment 20: Petitioners claim that Daewoo would have had to rely on its own allegedly poor credit standing, rather than on the creditworthiness of Texaco due to the holding of Texaco promissory notes, in obtaining alternate commercial financing for a post-delivery loan.

DOC Position: We disagree. As part of the sale of Platform Harvest, Daewoo received promissory notes from Texaco which, if it so desired, could be used as a basis to obtain alternative commercial financing.

Respondent's Comments

Comment 1: Respondents state that interest rate swaps were used in Korea at the time of Daewoo's post-delivery loan.

DOC Position: We verified that interest rates swaps were being used in Korea in 1984.

Comment 2: Respondents argue that because Korean manufacturers and exporters of the subject merchandise have renounced use of KXMB export credits for all contracts entered into on or after April 19, 1985, the Department should exclude the subsidy from this program from the duty deposit rate.

DOC Position: Verified information shows that of the three platforms examined, two received KXMB financing. Platform Ester, which was contracted for after April 19, 1985, did not receive financing. However, because this was a relatively small platform for which financing was not as necessary as for the larger platforms, the absence of financing is not a good indicator of whether this subsidy program is being used.

Furthermore, we believe that a suspension agreement under section 704 of the Act would have been the appropriate framework in which to take into account the renunciation of KXMB export credits. Section 704 includes detailed and comprehensive conditions and procedures, which would be undercut by the approach which respondents, and several importers, suggest. We note that, although respondent did, at one point in this investigation, propose a suspension agreement under section 704(b)(1), based upon the complete elimination of the subsidy, they did not offer to eliminate the subsidy attributable to counteravailable programs other than KXMB export financing.

Further, we would adjust the deposit rate only to reflect program-wide changes. Since this renunciation is by the firms rather than a change in the operation of the program, we believe it to be inappropriate to adjust the deposit rate. Jackets and piles continue to be eligible for such financing, whether or not the manufacturers choose to use the program. Thus, we can best estimate future use through historical practice. We note that if another platform is imported before any eventual 751 review, and the review shows that the renunciation remained in effect, the duty posted plus interest will be refunded to the importer. At that time, the non-use of KXMB financing will be reflected in the assessment and cash deposit rate for any other platforms subsequently imported.

Comment 3: Respondents argue that since platform Harvest has been liquidated, the Department should not establish a duty deposit rate for the platform.

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DOC Position: We agree and have not set a duty deposit rate for Platform Harvest. However, we did calculate a subsidy rate for Platform Harvest and used that rate in our calculation of the "all other" cash deposit rate.

Comment 4: Regarding the calculation of the swap rate, respondents argue that the Department overstated the alleged subsidy on post-delivery loans by including a spread above LIBOR on the company's Euronote financing; they contend that with the use of Texaco's promissory notes, Daewoo could have received such financing at LIBOR. Respondents also argue that we selected a referenced fixed rate which is too long.

DOC Position: We believe that we selected an appropriate spread over LIBOR and referenced rate in our calculation of the swap interest rate. The referenced fixed rate, which we used in calculating the swap costs for Daewoo, was based on six- to seven-year bonds. The terms of these bonds correspond to the effective maturity of the KXMB loan. The spread over LIBOR, which we selected and computed in the swap costs, was based on the spread over LIBOR of the co- financing loan received by Hyundai. Daewoo did not receive co-financing on the post-delivery loan for Platform Harvest and, therefore, we did not have a company and project specific spread over LIBOR for Daewoo. Moreover, like Daewoo, the co-financing loan received by Hyundai involved the use of promissory notes. We believe that it is more accurate to use the actual financing of one of the exporters of the subject merchandise as the basis of determining the costs incurred by a swap, than to speculate on the rate Daewoo could have received if it had used Texaco's promissory notes to receive Euronote financing.

Comment 5: Respondents argue that the Department should use a 90-day commercial paper rate as the benchmark for KXMB pre-delivery financing.

DOC Position: We disagree. The interest rate on a 90-day loan instrument is not as accurate a benckmark to measure a loan which is over a year in duration as the co-financing loans which are of a comparable duration to the KXMB pre- delivery loans. As a further note, we believe that if the companies could have used less expensive 90-day commercial paper to finance the construction of the platforms, they would have done so. Instead, both Hyundai and Daewoo used loans to co-finance the construction of the two platforms.

Comment 6: Respondents argue that the Department should base the calculations of the alleged benefits of the KXMB pre-delivery loans on actual outstanding principal balances, not on the face value of the loans.

DOC Position: We have done so. For Platform Harvest, we calculated the benefit based on actual interest payments made on the pre-delivery loan. Similarly, for Paltform Julius, we estimated the draw-down on the principal of the pre-delivery loan based on the actual draw-down schedule of the loan received for Platform Harvest.

Comment 7: Respondents argue that the Department should use the full contract values as the denominator in its calculations.

DOC Position: For the calculation of the subsidy of the KXMB loans, we did use the contract value of the platforms, which included transportation costs, because the amount of KXMB financing is based on the contract value of the project.

Comment 8: Respondents argue that Article 25 did not provide benefits to Platform Julius.

DOC Position: In 1984, the offshore engineering division of Hyundai Heavy Industries, the division which constructs platform jackets and piles, was reorganized into the Hyundai Offshore and Engineering Company (HONECO). In 1985, it again became part of Hyundai Heavy Industries, but HONECO did file separate tax returns for 1984. In its 1984 tax return, HONECO did not claim accelerated depreciation under Article 25. When HONECO was the offshore engineering division of Hyundai Heavy Industries in the previous year, Article 25 depreciation was claimed by all divisions, and thus for assets which are used in the construction of platform jackets and piles. Since the offshore engineering division is now back as a part of Hyundai Heavy Industries, and since in the past two years' tax return filings, all divisions of Hyundai Heavy Industries claimed Article 25 accelerated depreciation, we are calculating a benefit for Platform Julius under this program.

Comments of Texaco Inc. (Texaco)

Comment 1: Texaco argues that respondents' renunciation of KXMB financing amounts to an agreement to eliminate the subsidy completely, and provides the basis for the Department to suspend this investigation.

DOC Position: Renunciation of one program, where other counteravailable programs exists and are being used, does not provide a basis for the Department to suspend an investigation. Section 704 of the Act provides for the suspension of an investigation. The standards set forth in section 704 for such a suspension have not been met by respondents in this investigation.

Comment 2: Texaco contends that, if the Department chooses not to suspend this investigation, it should nevertheless set the duty deposit rate at an amount which does not include benefits attributable to KXMB financing.

DOC Position: We disagree. See our response to Resondents' Comment 2.

Comments of Chevron U.S.A., Inc. (Chevron)

Comment 1: Chevron supports the request of respondents that the Department acknowledge their renunciation of KXMB financing, and argues that the duty deposit rate should be set at an amount exclusive of such financing.

DOC Position: We disagree. See our response to Respondents' Comment 2.

Comments of Cities Service Oil and Gas Corp. (Cities Service)

Comment 1: Cities Service argues that the Department overstated the benefits Hyundai received from pre-delivery KXMB financing because the swap market rate is an inappropriate benchmark for such short-term credit covering the construction period.

DOC Position: For purposes of measuring the benefit conferred by the KXMB pre- delivery loan, we did not use the swap market rate for our final determination. We used the interest rate of the co-financing loan which was received from a commercial bank, which we consider a more appropriate benchmark.

Comment 2: Cities Service maintains that benefits received under Articles 25 should be excluded from the subsidy calculation because they were not used by Hyundai in the construction of the products under investigation.

DOC Position: We disagree. See our response to Respondents' Comment 8.

Verification

In accordance with section 776(a) of the Act, we verified the data used in making our final determination. During this verification, we followed normal verification procedures, including inspection of documents and ledgers, and tracing the information in the responses to source documents, accounting ledgers, and financial statements.

Suspension of Liquidation

In accordance with our preliminary countervailing duty determination published on July 19, 1985, we directed the U.S. Customs Service to suspend liquidation on the products under

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investigation and to require that a cash deposit or bond be posted equal to the estimated net subsidy. The countervailing duty final determination was extended to coincide with the final antidumping duty determinations on the same products from Korea and Japan, pursuant to section 606 of the Trade and Tariff Act of 1984 (section 705(a)(1) of the Act). Under Article 5, paragraph 3 of the Subsidies Code, provisional measures cannot be imposed for more than 120 days. Thus, we cannot impose a suspension of liquidation on the subject merchandise for more than 120 days without final determinations of subsidization and injury. Therefore, on November 15, 1985, we instructed the U.S. Customs Service to discontinue the suspension of liquidation on the subject merchandise entered on or after November 15, 1985.

We will reinstate suspension of liquidation if the ITC issues a final affirmative determination. If we issue a final countervailing duty order, we will instruct Customs Officers to collect a cash deposit of 3.22 percent ad valorem for Platform Julius; no cash deposit will be required for Platform Harvest since it has already been liquidated; and all other entries of the subject merchanise will be required to make a cash deposit of 4.42 percent ad valorem (which is a weighted-average of the amount of subsidies conferred upon Platforms Harvest, Julius and Esther). Platform Esther was entered after our preliminary determination and before we instructed Customs to discontinue suspension of liquidation of future entries. We will direct Customs not to proceed with liquidation of Platform Esther until the final duty is determined under section 751 of the Act.

ITC Notification

In accordance with section 705(c) of the Act, we will notify the ITC of our determination. In addition, we are making available to the ITC all nonprivileged and nonconfidential information relating to this investigation. We will allow the ITC access to all privileged and confidential information in our files, provided the ITC confirms that it will not disclose such information, either publicly or under an administrative protective order, without the written consent of the Deputy Assistant Secretary for Import Administration.

The ITC will determine whether these imports materially injure or threaten material injury to a U.S. industry 45 days after the date of publication of this notice. If the ITC determines that material injury, or the threat of material injury, does not exist, this proceeding will be terminated and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or cancelled. If, however, the ITC determines that injury exists, we will issue a countervailing duty order, directing Customs officers to assess a countervailing duty on offshore platform jackets and piles from Korea entered, or withdrawn from warehouse, for consumption as described in the "Suspension of Liquidation" section of this notice.

This notice is published pursuant to section 705(d) of the Act (19 U.S.C. 1671d(d)).

Paul Freedenberg,

Assistant Secretary for Trade Administration.

March 31, 1986.