DEPARTMENT OF COMMERCE

(C-580-818)

Preliminary Affirmative Countervailing Duty Determinations and Alignment of

Final Countervailing Duty Determinations with Final Antidumping Duty Determinations: Certain Steel Products from Korea

Monday, December 7, 1992

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

EFFECTIVE DATE: December 7, 1992.

FOR FURTHER INFORMATION CONTACT: Kris Campbell or Michael Rill, Office of Antidumping Compliance, U.S. Department of Commerce, room 3099, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-4794 or 482-4733, respectively.

Preliminary Determinations and Alignments

The Department preliminarily determines that 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 certain steel products.

For information on the estimated net subsidies, please see the Suspension of Liquidation section of this notice. On November 24, 1992, in accordance with section 705(a)(1) of the Tariff Act of 1930, as amended (the Act) (19 U.S.C. 1671d(a)(1)), petitioners in the above-referenced investigations requested that we align the due date for the final countervailing duty determinations with that of the final antidumping duty determinations for certain steel products. Accordingly, we are aligning these final determinations. Therefore, the final countervailing duty determinations are now due not later than April 12, 1993.

Case History

Since the publication of the notice of initiation and postponement of preliminary determinations in the Federal Register (57 FR 32970, July 24, 1992), the following events have occurred.

On August 10, 1992, we issued a questionnaire to the Government of Korea (GOK). On August 20, 1992, we received a partial response from the GOK indicating the proper responding companies in these investigations.

On October 2-8, 1992, we received responses from the GOK, respondent steel producers POSCO, Union, Dongbu, and Dongkuk, and respondent trading companies Daewoo, Dongbu Corporation, Dongkuk Industries, Hyosung, Hyundai, Keoyang, Samsung, Ssangyong, and Sunkyong. See the Respondents section, below, for a list of respondent companies for each class or kind of merchandise subject to these investigations. On October 21, 1992, we issued a supplemental/deficiency questionnaire to respondents. We received responses to this questionnaire on November 5, 1992. On October 30, 1992, we requested responses from certain producers and sellers of the subject merchandise that are related to the companies under investigation. We received these responses on November 13, 1992. We are not considering these related companies for the purposes of this preliminary determination, but will include them in our final determination.

Scope of Investigations

The products covered by these investigations, certain flat-rolled steel products, constitute the following four separate "classes or kinds" of merchandise, as found in Appendix 1 to this notice:

1. Certain hot-rolled carbon steel flat products,
2. Certain cold-rolled carbon steel flat products,
3. Certain corrosion-resistant steel flat products, and
4. Certain cut-to-length carbon steel plate.

Injury Test

Because Korea is a "country under the Agreement" within the meaning of section 701(b) of the Act, the U.S. International Trade Commission (ITC) is required to determine whether imports of certain steel products from Korea materially injure, or threaten material injury to, U.S. industries. On August 21, 1992, the ITC preliminarily determined that there is a reasonable indication that industries in the United States are being materially injured or threatened with material injury by reason of imports from Korea of the subject merchandise (57 FR 38064, August 21, 1992).

Respondents

The GOK is a respondent for each class or kind of merchandise subject to these investigations. The following is a list of the selected respondent companies for each class or kind of merchandise subject to these investigations:

-Certain Hot-Rolled Carbon Steel Flat Products: POSCO
-Certain Cold-Rolled Carbon Steel Flat Products: POSCO, Union and Dongbu
-Certain Corrosion-Resistant Carbon Steel Flat Products: POSCO, Union and Dongbu
-Certain Cut-To-Length Carbon Steel Plate: POSCO and Dongkuk

Analysis of Programs

For purposes of these preliminary determinations, the period for which we are measuring subsidies (the period of investigation (POI)), is 1991.

In determining the benefits received under the various programs described below, we used the following calculation methodology. We first calculated a country-wide rate for each program. This rate comprised the ad valorem benefit received by each firm weighted by each firm's share of exports, separately for each class or kind of merchandise, to the United States. The rates for all programs were then summed to arrive at a country-wide rate for each class or kind of merchandise.

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Based upon our analysis of the petition and the responses to our questionnaires, we preliminarily determine the following:

Specificity

When receipt of benefits under a program is not contingent upon exportation, the Department must determine whether the program is specific to an enterprise or industry, or group of enterprises or industries. Under the specificity analysis, the Department examines both whether a government program is limited by law to a specific enterprise or industry, or group thereof (i.e., de jure specificity) and whether the government program is in fact limited to a specific enterprise or industry, or group thereof (i.e., de facto specificity). See 19 U.S.C. 1677(5)(B). In s 355.43(b)(2) of the Department's proposed regulations (Countervailing Duties; Notice of Proposed Rulemaking and Request for Public Comments 54 FR 23366 (May 31, 1989) (Proposed Rules)), the Department has set forth the factors that may be considered in determining whether there is specificity:

(i) The extent to which a government acts to limit the availability of a program;

(ii) The number of enterprises, industries, or groups thereof that actually use a program;

(iii) Whether there are dominant users of a program, or whether certain enterprises, industries, or groups thereof receive disproportionately large benefits under a program; and

(iv) The extent to which a government exercises discretion in conferring benefits under a program.

See also Final Affirmative Countervailing Duty Determination: Certain Softwood Lumber Products from Canada 57 FR 22570 (May 28, 1992).

Equityworthiness

Petitioners have alleged that POSCO was unequityworthy during 1978-80, and, therefore, that equity infusions received during those years were inconsistent with commercial considerations. The Department has previously ruled that POSCO was unequityworthy during these years. See, Final Affirmative Countervailing- Duty Determination: Cold-Rolled Carbon Steel Flat Products from Korea, 49 FR 47284 (1984) ("Flat Products"). The respondents have not challenged this finding. Accordingly, we will adhere to the 1984 determination concerning the unequityworthiness of POSCO during these years.

Equity Methodology

According to s 355.49(e) of the Proposed Rules, the Department measures the benefit of equity investments in "unequityworthy" firms by comparing the national average rate of return on equity with the company's rate of return on equity during each year of the allocation period. The difference in these amounts, the so-called rate of return shortfall (RORS), is then multiplied by the amount of the equity investment to determine the countervailable benefit in the given year.

The Department has preliminarily concluded that the RORS methodology does not provide an accurate measure of the benefits arising from government equity investments in unequityworthy companies. When the Department finds that a company is unequityworthy and, hence, that the government's equity investment is inconsistent with commercial considerations, we are effectively finding that the company could not attract share capital from a reasonable investor. When a company is in such poor financial condition that it cannot attract capital, any capital it receives benefits the company as if it were a grant and no earnings of the company in subsequent years should be used to offset the benefit.

Moreover, in calculating the company's rate of return, no adjustment is made to eliminate the effect of past or current subsidies. Therefore, those subsidies that increase the company's rate of return serve to reduce the amount of the subsidy arising from government equity investments in subsequent years. In addition, this method does not compensate for the effect of prior year results on equity in subsequent years, thus measuring the rate of return against an equity other than that invested in the transaction in question.

For these reasons, we have preliminarily determined that equity investments in unequityworthy companies will be treated as grants given in the year of the equity investment. Accordingly, we will value the benefits using the grant methodology described below.

Where a market-determined benchmark price for equity exists, we will continue to use that benchmark to determine whether the government's purchase of equity confers a subsidy and to measure the amount of the subsidy.

Grant Methodology

Our policy with respect to grants is (1) to expense recurring grants in the year of receipt, and (2) to allocate non-recurring grants over the average useful life of assets in the industry, unless the sum of grants provided under a particular program is less than 0.5 percent of a firm's total or export sales (depending on whether the program is a domestic or export subsidy) in the year in which the grant was received. See, e.g., Final Affirmative Countervailing Duty Determination; Fresh and Chilled Atlantic Salmon from Norway (Salmon from Norway), 56 FR 7678 (February 25, 1991). We have considered the grants provided under the programs described below to be non-recurring, unless otherwise noted, because the recipient cannot expect to receive benefits on an ongoing basis from review period to review period. See, Final Affirmative Countervailing Duty Determination; Certain Fresh Atlantic Groundfish from Canada, 51 FR 10041 (March 24, 1986). (In this regard, we are reexamining the approach to distinguishing recurring from non-recurring benefits set forth in the three-part test found in the preamble of the Proposed Rules.) Therefore, we have allocated the benefits over 15 years, which the Department considers to be reflective of the average useful life of assets in the steel industry (see, s 355.49(b)(3) of the Proposed Rules).

The benefit from each of the grant programs discussed below was calculated using the declining balance methodology described in the Department's Proposed Rules (see s 355.49(b)(3)) and used in prior investigations (see, e.g., Salmon from Norway). For the discount rate used in these calculations, we used, whenever possible, each company's actual cost for long-term, fixed-rate debt. If a company did not report this cost, or when a company had no long-term borrowing in the year in which the grant was approved, we used the national average long-term interest rate. If a company was uncreditworthy in the year in which the grant was approved, we added a risk premium to the benchmark interest rate in accordance with s 355.44(b)(6)(iv) the Proposed Rules.

A. Programs Preliminarily Determined To Be Countervailable

We preliminarily determine that subsidies are being provided to manufacturers, producers, or exporters in Korea of certain flat-rolled steel products under the following programs:

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Government equity infusions bestow a countervailable benefit when they occur on terms inconsistent with commercial considerations. See s 355.44(e) of the Proposed Rules. In 1984, we determined that POSCO was unequityworthy, i.e., not a reasonable commercial investment, during 1978 and 1980. See, Flat Products at 47286. Neither POSCO nor the Government of Korea contests the Department's previous determination. Because we determined previously that POSCO was unequityworthy in these years and because there is no new information to repudiate this determination, we preliminarily determine that POSCO was unequityworthy during 1978 and 1980. As such, we preliminarily determine that the 1978 and 1980 equity infusions from the Government of Korea, through the Ministry of Finance and the Korea Development Bank, bestow a countervailable benefit on POSCO.

To calculate the benefit, we used the grant methodology as described in s 355.49(b)(1) of the Department's Proposed Rules. As the discount rate, we used POSCO's cost of long-term, fixed-rate debt, described in the loan section below. We then divided the benefit attributable to the POI by POSCO's total sales. On this basis, we calculated estimated net ad valorem subsidies of 0.16 percent for certain hot-rolled carbon steel products, 0.13 percent for certain cold-rolled carbon steel products, 0.10 percent for certain carbon steel cut- to-length plate, and 0.07 percent for certain corrosion-resistant carbon steel products.

According to respondents, there is no government direction, control, regulation or involvement in the distribution of funds or the assumption of interest on loans to the steel industry, with the exception of the allocation of funds to small and medium enterprises. The GOK states that its role is limited to the execution of nation-wide financial policies to control Korea's inflation and promote investment.

With respect to this allegation, we are investigating whether the GOK directs commercial banks and/or other Korean lending institutions to extend credit to the steel industry at preferential rates, or on terms or in quantities that otherwise demonstrate preferential treatment of this sector.

The following institutions play a significant role in the extension of credit in the Korean economy:

a. Bank of Korea

The Bank of Korea (BOK) performs the typical functions of a central bank, serving as issuer of bank notes and coins, banker to the banking sector, banker to the government, controller of the money supply, and supervisor of banking operations under the instructions of the Monetary Board, its policy-making organ. The Bank has the authority to set maximum interest rates on deposits and loans of banking institutions and to control the volume of bank credit directly in periods of pronounced monetary expansion. Respondents assert that since 1982, direct credit control through credit ceilings for individual banks was replaced by an indirect control system that relied more on open market operations and reserve requirements.

b. Development Institutions

Korean Development Bank--The Korea Development Bank (KDB) was created by the Korea Development Bank Act in 1954 with capital wholly subscribed by the government. The original purpose was to finance industrial and agricultural projects necessary for economic rehabilitation. The KDB has traditionally supported the development of export industries and of heavy and chemical industries, including the steel industry. Its major financial activities are: (1) Medium- and long-term loans (more than one year maturity); (2) investment in the form of underwriting of corporate bonds and stock, and (3) loan payment guarantees to help finance industrial projects.

Export-Import Bank of Korea--The Export-Import Bank of Korea was created in 1976 under the authority of the Export-Import Bank of Korea Act. The Export-Import Bank finances exports of capital goods, provides technical services and overseas investments, and extends credit to foreign governments and others for importing goods and technical services for Korea. Respondents have stated that the Export-Import Bank does not extend export financing for the export of the subject merchandise.

c. Commercial Banks

Commercial banks are deposit money banking institutions established and operated according to the provisions of the General Banking Act as well as to orders, instructions, and regulations issued by the Monetary Board under the Bank of Korea Act. Significant commercial banks include Cho Hung Bank, Commercial Bank of Korea, Korea First Bank, Hanil Bank, and the Bank of Seoul & Trust Co.

d. Specialized Banks

In the early 1960s through the 1980s, the GOK introduced "specialized banks" to facilitate financial support for underdeveloped or strategically important sectors, including the Small & Medium Industry Bank (renamed the Industrial Bank of Korea in 1987), Citizens National Bank, and Korea Housing Bank. Specialized banks, like commercial banks, function as deposit money banks.

3. Foreign Banks

Beginning in the 1960s, foreign banks were allowed to open branch offices in Korea. As of June, 1990, there were 67 foreign bank branches, including 23 U.S., 14 Japanese, 5 British, and 7 French banks.

f. Non-bank Financial Institutions

Nonbank financial institutions (NBFIs) consist of savings institutions including the trust accounts of banking institutions, mutual savings and finance companies, credit unions, mutual credit facilities, and postal savings; investment companies comprising investment and finance companies and merchant banking corporations; and life insurance companies. Bank of Korea, Financial System in Korea, December 1990, at 55. (The BOK also includes development institutions, discussed above, in this category.)

NBFIs were introduced in the 1970s and experienced rapid growth throughout the 1980s. In its response, the GOK cited the same BOK publication (at 64): "Investment and finance companies were first established in 1972 with the promulgation of the Short-term Financing Business Act, to develop money markets and to attract funds from the curb market." GOK October 8, 1992 response at 30. The BOK also reports that business sector bank borrowings declined from 38 percent of total borrowings in the first half of the 1970s to 25 percent in the

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There are three primary issues that must be analyzed in order to determine if the steel industry has received medium- and long-term credit that constitutes a countervailable subsidy:

(1) Whether the GOK controls, either directly or indirectly, the lending institutions in Korea or their lending policies;

(2) Whether the loans were provided to the steel industry on a selective basis; and

(3) Whether the provision of the loans resulted in a countervailable benefit.

Government Control of the Korean Financial System

In our original and supplemental questionnaires, we asked the GOK and respondent steel companies a number of questions regarding the extent to which the GOK controls the lending practices of the institutions discussed above. Statements made by the GOK and respondent companies concerning this question have displayed a lack of internal consistency within the responses and in comparison with statements made by the GOK and respondents in other contexts.

Government control is not an issue for loans that were issued pursuant to GOK programs, e.g., Export Industry Facility Loans, Special Facility Loans, which are provided by the government-owned specialized banks and development banks. It is self-evident that the GOK regulates these sources of funds and determines which companies or individuals are eligible to receive loans from these programs.

Regarding other sources of funds, the GOK originally maintained that "(n)o acts, government directives or programs exist to direct credit to strategic industries." GOK response at 19. However, the Korea Development Bank Act, a copy of which was provided in an attachment to the original GOK response, specifically instructs the Korea Development Bank to lend to the Iron and Steel Industry when loans are not readily available from other financial institutions in Korea. Moreover, a prospectus filed by POSCO with the U.S. Securities and Exchange Commission in 1992 conflicts with the above statement by the GOK. The prospectus maintains that "(e)conomic, financial, and business priorities can be influenced by the Government through its control of approvals and licenses and through the allocation of credit." POSCO SEC Prospectus at A-2 (emphasis added).

The GOK further stated in its original response that direction of credit to small and medium enterprises is "the only direction of credit in the Korean financial market." GOK response at 19. However, the GOK's original response also included the BOK's 1991 Annual Report, which states at 18, "* * * the Bank operated its rediscount policy with accent being placed on the restraint of lending to non-manufacturing sectors." The Annual Report also states, at 32, that the expansion of loans and discounts by the BOK to financial institutions was "* * * mainly due to the strengthened support given to small and medium enterprises and the increased equipment loans to firms producing export goods or basic materials and parts for import-substitution." Furthermore, when asked in the supplemental questionnaire about preferential rediscount ratios, the GOK acknowledged that it directs credit to the manufacturing sector in preference to service industries. GOK November 5, 1992 supplemental response at 4.

There are additional discrepancies between statements made by the GOK in its questionnaire response and a variety of credible sources, including the Korean government itself, concerning the subject of GOK control over the commercial banking system. Although commercial banks in Korea are nominally private, there is a substantial body of evidence that suggests the GOK continues to exercise extensive control over the operations of these banks, through, inter alia, the appointment of directors and managers of the commercial banks, the strict control of interest rates, and the selection of strategic industries to which the commercial banks are directed to lend.

In response to questions concerning the extent of government control over the commercial banking system, the GOK replied, "The Korean government does not exercise control over the appointment or dismissal of officials for commercial banking institutions." GOK response at 23. However, included in the original GOK response is the BOK's Financial System in Korea, which, in explaining the rapid growth of NBFIs, states, "A further contribution * * * has come from the relatively higher interests rates permitted to (NBFIs) and greater degree of autonomy in management compared with the banking institutions." Financial System in Korea, at 55. Furthermore, the Korea Development Institute, which petitioners note is administered by the GOK, stated in May, 1992, that the GOK is still engaged in the "selection of bank presidents." Korea Development Institute, "Liberalization of Korean Financial Market", May 1992, at 47.

In fact, Korean law number 139 ("The Bank Act"), which, according to documents supplied in the GOK response was last amended on December 31, 1991, and which applies to "all banking institutions operating in the Republic of Korea," provides the GOK's Monetary Board with extensive authority over the allocation of credit, including the authority to disapprove all loans above a specified amount, and the ability to "fix and restrict a total amount of loans or guarantee or acceptance of obligations" with respect to a particular business group.

The direct and indirect control exerted by the GOK over the commercial banking system in Korea is further confirmed by an independent report published by the Organization for Economic Co-operation and Development (OECD), which states that "Control by the (Ministry of Finance) goes beyond the mere monitoring and supervisory functions usually exercised by official bodies and has included allocation of financial resources and setting of interest rates." OECD, Financial Market Trends, number 47, October 1990, at 21. The report further states that, "Due to the policy of favouring particular targeted sectors, the banks have relied heavily upon central bank discounting facilities; * * *" Id. at 22.

An independent report by the World Bank also confirms the role of the GOK in the allocation of credit. The report states:

The promotion of the (heavy and chemical industries) sector was supported by a broad range of policy instruments, including import protection and fiscal preferences. But the intervention which mattered most, and had the greatest impact on industrial incentives and structure, was the allocation of credit. Government relied heavily on its control of the entire credit system and provided "strategic" industries preferential access at substantially subsidized rates.

World Bank, Korea: Managing the Industrial Transition, 1988, at 39.

Although this report goes on to state that the GOK began to liberalize the financial system in the 1980s, it observes that " * * * large borrowers probably continue to have wider borrowing options, despite their high indebtedness, because the banks, and by extension the Government, became risk- sharing partners in the course of the 1970s and have yet to extricate themselves," and further, " * * * there are lingering effects of the distorted system of industrial

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The GOK began to liberalize interest rates on both commercial bank and NBFI lending on December 5, 1988. GOK original response at 28. The BOK's Economic Statistics Yearbook for 1991 does not report any interest rates after that date, stating that market interest rates prevailed from that point forward. However, the BOK's 1991 Annual Report states that interest rates are to be liberalized incrementally following a four-stage plan, that the first stage did not begin until November 21, 1991, and that the final stage would not be completed until 1996. BOK Annual Report at 16. Therefore, some sort of government control over interest rates was in effect for most forms of available credit throughout the POI.

Finally, petitioners have placed on the record a considerable body of evidence suggesting that the tendency in Korea toward control by the GOK over commercial banks, despite the well-publicized attempt at liberalization of the banking system in 1988, is continuing. The current head of the Bank of Korea, Mr. Cho Soon, noted in 1991 that the Korean financial system remains the area where what he refers to as Korea's "rigged price system" remains most evident Department of Treasury Memorandum, April 1, 1991, at 1. Numerous business journals have reported on this topic. For example, in April, 1992, The Economist stated, "Officials at the all powerful finance ministry tell bankers to whom they should lend money. As a result big and politically favored companies get their loans at regulated rates." The Economist, April 4, 1992, at 100.

Accordingly, we preliminarily determine that bank lending funds within the Korean commercial banking system are effectively controlled by the GOK. However, government control over these sources of funds is not a sufficient reason to determine that resources provided pursuant to these programs are subsidies within the meaning of the countervailing duty law. The loans in question must be specifically directed to the steel industry and must provide a countervailable benefit.

Selectivity of Loans Provided to the Steel Industry

In 1984, the Department found that medium- and long-term loans were not provided to the iron and steel industry on a selective basis. See, Final Affirmative Countervailing Duty Determination: Cold-Rolled Carbon Steel Flat Products From Korea; and Final Negative Countervailing Duty Determination; Carbon Steel Structural Shapes From Korea, 49 FR 47284, 47289 (1984) ("Steel Products"). In that determination, we stated, "(a)bsent a finding that these key or major industries receive a disproportionate share of the medium- and long-term loans available in Korea, we cannot conclude that the Korean government is directing credit to the steel industry." Id. (emphasis added). In that notice, we compared the share of loans received by the basic metals sector (of which the iron and steel industry is the predominant group) with the share of GNP accounted for by the steel industry. We determined that, "over the last 15 years, the steel industry has accounted for approximately 6 to 13 percent of GNP. During the same period the basic metals sector * * * received 5 to 8 percent of medium- and long-term loans." Id. Our determination of non- selectivity was based in part upon the finding that the iron and steel industry had not received a disproportionate amount of loans.

In the current investigation petitioners have asserted, and the GOK has acknowledged, that our disproportionality test in 1984 significantly overestimated the percentage of GNP/GDP comprised by the steel industry. GOK response at 35. The GOK has also supplied figures that demonstrate that this industry has received a volume of loans over the last 15 years that in percentage terms has consistently remained two to four times higher than the share accounted for by iron and steel in the country's GDP. The fact that this industry receives a disproportionate amount of loans, relative to its output as a percentage of GDP, is therefore not in dispute.

The GOK and respondents argue that this calculation does not take into account the fact that certain industries consume more fixed capital per unit of output and will therefore require more loans. Respondents compare the iron and steel industry, which they assert consumes a high amount of fixed capital relative to other industries and is therefore a "capital-intensive" industry, with the textiles industry, which they maintain is not a capital-intensive industry: "(F)or example, the capital/output ratio for steel is much higher than it is for textiles and one should expect more lending and investment per unit of output for steel." GOK response at 37.

We used the data supplied by respondents, which was taken from various Bank of Korea Economic Statistics Yearbooks from 1976-1991, to confirm that the iron and steel industry consumes more fixed capital relative to its share of GDP than the textiles industry, and may therefore be considered more capital- intensive. We also analyzed certain industries, such as electricity, gas and water, that are more capital-intensive than the iron and steel industry according to the statistics provided by the GOK. We then compared the percentage of loans received by each industry to its share of GDP.

Following the argument advanced by the GOK and respondents, we would expect to find a positive correlation between the capital-intensity of an industry and the amount of loans received by that industry. For instance, we would expect the textiles industry to receive a smaller percentage of loans in proportion to its share of GDP than the iron and steel industry. However, the data supplied by the GOK failed to demonstrate conclusively this correlation between the relative capital-intensity of an industry and the amount of loans it received relative to its share of GDP. Although certain capital-intensive industries received a higher proportion of loans relative to their share of GDP, certain other industries that were more capital-intensive than the iron and steel industry received a smaller proportion of loans to GDP and vice-versa.

The fact that the steel industry receives a higher percentage of loans than it accounts for in GDP does not per se require a finding that this industry has been provided with selective treatment. However, this information, in connection with other evidence that the steel industry is a favored industry, as shown below, supports the allegation that respondents have received selective treatment.

As discussed, the GOK denies that it directs credit to any but small and medium enterprises. However, funds provided pursuant to program loans whose funds are sourced by the KDB are provided under the auspices of a government institution that is mandated to provide the iron and steel industry with access to loans when they are not available elsewhere (according to the KDB 1991 Annual Report, the iron and steel industry received over 20 percent of new loans in 1991). This ensures that the steel industry does not have to resort to borrowing from NBFIs, where interest rates are less regulated and therefore higher, or the curb market, an unofficial money market with interest rates significantly above those charged by government lending institutions and commercial banks (see below).

The loan portfolios of the four respondent steel companies, particularly POSCO, speak for

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The majority of the dealings that the steel companies have with the NBFIs is for purposes of underwriting corporate securities. The BOK reports that the share of corporate bonds as a source of the business sector's total external fund raising increased dramatically in the 1980s. Financial System in Korea at 102. However, the BOK also reports that the first stage of the liberalization of corporate bond rates only began on November 21, 1991. Annual Report at 18. Therefore, along with the rest of their long-term debt, the overwhelming majority of the steel companies' corporate securities outstanding during the POI were subject to interest rate ceilings.

Regarding the curb market, the GOK reported that it maintains no statistics on the size or significance of the curb market. Yet a report published for the World Bank cites the BOK as the source for estimates of curb market interest rates from 1974 to 1985. See petitioners' November 20, 1992 submission, exhibit D-4. Further, although the Department discounted the size of the curb market in Industrial Belts and Components and Parts Thereof: Final Negative Countervailing Duty Determination, 54 FR 15513 (1989), evidence on the record strongly suggests that the curb market continues to be a vital form of financing in the Korean economy. For instance:

Commercial banks now account for just 35% of total deposits, compared with almost 50% in 1985. They have lost market share to short-term finance and insurance companies, the "kerb" market of informal private borrowing and to speculation in real estate. All are too diverse to control easily.

Financial Post, 1991.

In addition, the Foreign Broadcast Information Service Daily Report, citing an article in the Hanguk Kyongje Sinmun newspaper, stated in 1992, "(t)he private loan market is said to move hundreds of billions of won of cash at a time." FBIS Daily Report, Northeast Asia, July 30, 1992, at 16. Finally, the BOK can provide selective benefits through the setting of various rediscount ratios (i.e., the percentage of a commercial loan that is eligible for refinancing by the BOK) to influence lending institutions in Korea. Information on the record indicates that rediscount ratios may have been used to influence the extension of preferential loans to the steel industry that were outstanding during the POI.

The GOK stated in its response to our supplemental questionnaire that the rediscount policy of the BOK is generally directed to providing resources to manufacturers and that since February 1, 1989, rediscounts have only been permitted for loans to small and medium enterprises. The GOK maintains that loans to large companies and companies that belong to a group, which includes all of the respondents in the current investigation, have been ineligible for refinancing since this time. However, information supplied by the GOK in its supplemental response also suggests that in the period before February 1, 1989, foreign trade financing for exports of large companies was eligible for rediscounts of 30 percent of the amount of the loan. Since respondents have loans outstanding that were received prior to this date, we have assumed as best information available that the respondents have outstanding long-term export loans for which the BOK provided a rediscount ratio that was higher than that provided for comparable domestic loans.

Even for loans granted after February 1, 1989, the BOK's Annual Report indicates that loans and discounts by the BOK increased for " * * * firms producing export goods or basic materials * * *," both of which categories could include the steel industry. Annual Report at 32.

Based on this evidence, we preliminarily determine that the GOK has provided the steel industry with preferential access to medium- and long-term credit from government and commercial banking institutions.

Measurement of the Benefit

We evaluated the effect of the GOK's allocation of credit to the steel industry by measuring the difference between the steel industry's current cost of borrowing and what the industry's average cost of borrowing would be absent the government allocation of credit. As discussed, the overwhelming majority of the steel industry's outstanding long-term debt is from institutions whose interest rates are regulated. If the steel industry had borrowed proportionately from all the institutions that comprise the principal sources of borrowing for the business sector in Korea, according to various GOK publications, its average cost of borrowing would have been higher.

We do not have accurate information on the exact amount of long-term loans provided by the various financial institutions in Korea. However, data form the GOK's Ministry of Finance give the composition of financial savings in Korea, expressing the percentage of deposits at commercial banks and the percentage at NBFIs. We have used this information as the best estimate of the percentage of commercial bank loans and the percentage of NBFI loans. If the two sources of funds made up less than 100 percent, we assumed as the best information available that the difference between the total of commercial bank and NBFI lending and 100 percent was made up of curb market loans.

We derived interest rates from the BOK's Economic Statistics Yearbook, various issues, the International Monetary Fund's International Financial Statistics, and from data provided by petitioners.

On this basis, we calculated estimated net ad valorem subsidies of 4.42 percent for certain hot-rolled carbon steel products, 3.60 percent for certain cold-rolled carbon steel products, 3.24 percent for certain carbon steel cut- to-length plate, and 2.42 percent for certain corrosion-resistant carbon steel products.

The GOK acknowledges that the Ministry of Finance (MOF) exercises oversight on foreign capital through the Foreign Capital Inducement Act as part of the GOK's economic policy, particularly with respect to balance of payments concerns, but states that the guidelines for approval do not indicate selective treatment for respondents. The GOK states that it does not currently approve direct foreign currency loans; however, the respondent steel

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The MOF periodically issues guidelines in accordance with the "Loan Contract" section of the Foreign Capital Inducement Act. The GOK explains that a company must be able to negotiate a direct foreign currency loan with the creditor at or below a set ceiling established by the MOF. If the company cannot negotiate a loan with an interest rate below the ceiling, it cannot borrow on foreign currency markets. The GOK and POSCO state that POSCO is able to borrow extensively on foreign currency markets because it is a creditworthy company that is able to negotiate loans at or below the MOF ceiling. The GOK maintains that the MOF guidelines concerning the ceiling rate apply equally to all companies.

However, there is conflicting information concerning the existence, and preferential application, of MOF restrictions other than the interest rate ceiling. In its supplemental response the GOK states, "MOF guidelines only establish guidelines above which loans would not be approved." GOK November 5, 1992 supplemental response at 24. However, the original GOK response mentions "certain use criteria" that a company must meet in order to gain MOF approval for the foreign loans in question. The GOK has informed us that one justification for its approval process is "to ensure that foreign capital is put to good use." GOK response at 38. Further, in discussing the application process for MOF approval, the original response states that after the MOF reviews the legal requirements of the application, it transfers the application "to the relevant Ministry, if necessary, for further review." GOK response at 42. The sample "Application for Approval of Loan Contract" submitted by the GOK in its original response requires information concerning the purpose of the foreign loan and the products to which the foreign loan pertains, in addition to basic information concerning the interest rate negotiated between the Korean borrower and the foreign lender.

In determining whether a government policy may be considered to constitute selective treatment for purposes of the countervailing duty law, the Department is required to determine whether benefits are provided to a specific enterprise or industry, or group of enterprises or industries, on either a de jure or a de facto basis. See, section 771(5)(A) of the Act. As noted above, and as acknowledged by the GOK in its original response, government approval of direct foreign currency loans is not contingent merely upon the ability of the Korean borrower to negotiate an interest rate with a foreign lender that is below the ceiling set by the MOF guidelines, but instead depends upon a number of factors that range from the use of the loan (particularly with respect to the type of product manufactured) to whether "the relevant ministry" gives the application a favorable review. We must accordingly analyze whether the direct foreign loan approval process has resulted in the conferral of selective benefits to the respondent steel companies.

The data that is currently available to us suggest that the GOK has enforced its guidelines in a manner that provides the steel industry with de facto selective treatment under this program. The steel industry has received a volume of direct foreign loans that is significantly higher than any other industry in Korea.

According to foreign loan borrowing statistics supplied by the GOK, the iron and steel industry has received approximately 60 percent of all foreign loans to the manufacturing sector since 1986.

The disparity between the volume of foreign loans that the GOK has approved for use by the steel industry and the amount of direct foreign borrowing permitted to the rest of the manufacturing sector has received comment from a variety of reputable sources. For example, in the latter part of 1988, the Financial Times noted the POSCO was "the first Korean borrower this year to tap the international loans market in such size."Financial Times, August 30, 1988. Reuters also commented, "This year, only Pohang Iron and Steel Co. Ltd. got Seoul's approval to borrow abroad." Reuters, October 13, 1988.

Respondents have not contested the fact that the GOK has permitted the iron and steel industry to borrow on foreign loan markets to a far greater extent than any other segment of the manufacturing sector since 1986, and have submitted data that corroborate this proposition. Nor have they denied that foreign loans are generally provided at interest rates significantly below the prevailing effective rates in Korea. Respondents' argument that the foreign loans in question do not provide a countervailable benefit rests instead on the supposition that the benefit was not provided by the GOK (which did not supply the funds to the steel industry) but was instead provided by the foreign lenders. The GOK cites s 355.44(o) of the Proposed Rules in support of its contention that the Department will not find a benefit to be countervailable if it is provided by an international institution and not by the government of the country in which the subject merchandise is produced or from which the merchandise is exported.

However, the benefit that is alleged with respect to direct foreign borrowings is preferential access to loans that are not generally available to Korean borrowers, not the actual funding of these loans. It is the GOK that is providing this preferential access, and this preference confers a countervailable benefit to the extent that the iron and steel industry has available a significantly greater volume of funds at lower interest rates than it would have absent this government preference. The preferential access conferred by the GOK effectively channels foreign bank funds to the Korean steel industry on a disproportionate basis.

Although we will investigate this allegation further at verification and in preparation for our final determination, the preponderance of evidence available to us at this time suggests that the steel industry has received de facto selective treatment in the form of preferential access to foreign loans.

The benefits from this program were calculated using the same methodology as that used in the section concerning loans inconsistent with commercial considerations (see above). The ad valorem rates for these two programs are combined and listed in the previous section.

The GOK states that it constructed the following infrastructure at the Kwangyang Bay Industrial Estate: A port facility, roads, a railroad, and an industrial water facility. In addition, it acknowledges that POSCO is the primary user of the infrastructure at Kwangyang Bay. However, the GOK argues that the infrastructure does not convey a countervailable benefit to POSCO because the GOK has constructed numerous industrial estates throughout Korea. It asserts that,

---page 57768---

We have consistently held that selective treatment and a potential countervailable subsidy exist where benefits under a program are provided, or are required to be provided, in law or in fact, to a specific enterprise or industry or a group of enterprises or industries. With regard to infrastructure, we used the three-pronged test described in section 355.43(b)(4) of the Department's Proposed Rules to determine whether such infrastructure is specific. The provision of basic infrastructure does not confer a countervailable subsidy when the following three conditions are met: (1) The government does not limit who moves into the area where the infrastructure has been built, (2) the infrastructure that has been built is in fact used by more than a specific enterprise or industry, or group of enterprises or industries, and (3) those that locate there have equal access or receive the benefits of the infrastructure on the basis of neutral criteria. Conversely, in the absence of an affirmative finding for each of the three prongs, we will determine that the infrastructure is specific.

With regard to the first prong, the GOK readily acknowledges that it limits the companies that can locate in the industrial estate. In its response to the Department's questionnaire, the GOK stated that "certain industries are inappropriate for the Kwangyang Bay estate." See, GOK questionnaire response at 50. The GOK does claims, however, that these companies can locate in a different, more appropriate industrial estate if they are denied access to Kwangyang Bay, and that no limitations exist with regard to locating in industrial estates in general, only in those industrial estates which are not appropriate for that company.

For purposes of determining the existence of a countervailable benefit under the government provision of infrastructure, the Department examines the limitations established by the government with regard to the particular industrial estate under investigation. Because the GOK does in fact limit which companies move into Kwangyang Bay, we preliminarily determine that the first prong of the infrastructure test is not met.

With regard to the second prong, both POSCO and the GOK report that POSCO is the primary user of the infrastructure at Kwangyang Bay. The GOK even states in its response that "the vast majority of the goods shipped into and out of the port are by POSCO." See, GOK questionnaire response, at 53. Based on this information, we preliminarily determine that the infrastructure is in fact used primarily by POSCO, and, therefore, is not used by more than a specific enterprise or industry, or group of specific enterprises or industries. Therefore, the second prong is not met.

The GOK did not provide sufficient information pertaining to equal access to the infrastructure by the companies currently located in the Kwangyang Bay industrial estate. Therefore, as BIA, we preliminarily determine that the third prong is not met.

We conclude that the provision of infrastructure at Kwangyang Bay to POSCO fails to satisfy all prongs as set forth in the Department's Proposed Rules. Therefore, we preliminarily determine that the provision of infrastructure at the Kwangyang Bay port facility to POSCO is countervailable.

To measure the benefit, we used the grant methodology as described in s 355.49(b)(1) of the Proposed Rules. See also, Final Affirmative Countervailing Duty Determination: Fresh Atlantic Groundfish from Canada, 51 FR 10041 (March 24, 1986). We treated the costs of constructing the infrastructure incurred by the GOK as nonrecurring grants, where the year of receipt was the year in which the costs were incurred. As the discount rate, we used POSCO's cost of long- term, fixed-rate debt, described in the loan section above. We then divided the benefit attributable to the POI by POSCO's total sales. On this basis, we calculated estimated net ad valorem subsidies of 0.77 percent for certain hot- rolled carbon steel products, 0.61 percent for certain cold-rolled carbon steel products, 0.46 percent for certain carbon steel cut-to-length plate, and 0.32 percent for certain corrosion-resistant carbon steel products.

Dockyard Fees

Although petitioners did not specifically allege the provision of dockyard fees at a preferential rate in the petition, evidence indicates that POSCO enjoys the use of fifteen berths in the Kwangyang Bay port facility at no charge.

Both POSCO and the GOK reported in their questionnaire responses that POSCO uses fifteen berths (8 raw material and 7 finished goods berths) free of charge, and that POSCO is the only company located in Kwangyang Bay that does not pay dockyard fees for the use of these berths. Other users of the berths are required to pay dockyard fees as set out in the GOK Tariff Schedules. Therefore, because POSCO is the only company entitled to such a privilege, the program is, in fact, limited to POSCO. Because this privilege is limited to POSCO and because the privilege alleviates the company of costs it would otherwise have had to pay absent the privilege, we preliminarily determine that the free use of fifteen berths by POSCO in Kwangyang Bay constitutes a countervailable benefit.

To measure the benefit, we multiplied the rate that POSCO would have had to pay during the period of investigation by the value of the ship's cargo in the berth. As best information available, we used the approximate value of POSCO's raw material and finished goods inventories at Kwangyang Bay as the value of the ship's cargo in the fifteen berths under investigation. We then divided the benefit attributable to the POI by POSCO's total sales. On this basis, we calculated estimated net ad valorem subsidies of 0.15 percent for certain hot- rolled carbon steel products, 0.12 percent for certain cold-rolled carbon steel products, 0.09 percent for certain carbon steel cut-to-length plate, and 0.06 percent for certain corrosion-resistant carbon steel products.

The following producers and exporters of the subject merchandise received benefits under this program during the POI; Dongbu, POSCO, Union, Daewoo, Dongbu Corporation, and Dongkuk Industries.

We preliminarily determine that this export reserve program confers a benefit that constitutes an export subsidy because it provides a deferment, contingent upon export performance, of direct taxes. To calculate the benefit conferred by this program, we followed the methodology that was previously

---page 57769---

On this basis, we calculated estimated net ad valorem subsidies of 0.01 percent for certain hot-rolled carbon steel products, 0.03 percent for certain cold-rolled carbon steel products, 0.01 percent for certain carbon steel cut- to-length plate, and 0.06 percent for certain corrosion-resistant carbon steel products.

The following producers and exporters of the subject merchandise received benefits under this program during the POI: Dongbu, Union, Daewoo, Dongbu Corporation, Dongkuk Industries, Hyosung, Hyundai, Samsung, Ssangyong, and Sunkyung.

We preliminarily determine that this export reserve program confers a benefit that constitutes an export subsidy because it provides a deferment, contingent upon export performance, of direct taxes. The benefits from this program were calculated using the same methodology as that used for the reserve for export loss (see above) and the ad valorem rates for these two programs are provided in the previous section.

The GOK acknowledges that only domestic entertainment expenses are subject to a ceiling, which is based on the amount of a company's paid-in capital and its sales volume. The following trading companies claimed overseas entertainment expenses during the relevant tax year: Daewoo, Dongbu Corporation, Hyosung, Hyundai, Samsung, Ssangyong, and Sunkyung. The only producer of the subject merchandise that claimed this expense during the relevant tax year was Union. Respondents argue that, to the extent that this program provides any countervailable benefits, they should be measured by the difference between the overseas entertainment expenses claimed and the capped expenses claimed in the domestic market.

Because entertainment expense deductions are unlimited only for export business activities, we preliminarily determine that this program confers benefits that constitute countervailable subsidies for those companies that were allowed to deduct all overseas entertainment expenses but whose domestic entertainment expenses incurred exceeded the cap and were therefore partially taxed. Hyosung, Ssangyong and Sunkyung's domestic entertainment expenses did not exceed the cap for tax year 1990. Therefore, since these companies were allowed to deduct all entertainment expenses, both domestic and overseas, we find that they did not receive any benefits under this program during the POI.

To calculate the countervailable benefit from this program, we determined the amount of entertainment expenses that would have been allowed if overseas entertainment expenses had not been factored out of the cap formula. We then subtracted this amount from the total amount of domestic and overseas entertainment expenses actually claimed and multiplied the result by the corporate income tax rate provided by respondents.

On this basis, we calculated estimated net ad valorem subsidies of less than 0.005 percent for all classes or kinds.

B. Programs Preliminarily Determined Not To Be Countervailable

We preliminarily determine that the following programs do not provide subsidies to manufacturers, producers, or exporters in Korea of certain flat- rolled steel products under the following programs:

The GOK contends that, although all producers subject to this investigation qualified for and received drawback of duties on imported inputs, these rebates applied only to inputs that are physically incorporated into the exported merchandise. The GOK states that Chapter 3-C(5) of the Industrial Advancement Administration's (IAA) internal guidelines mandates that only physically incorporated raw materials may receive drawback.

In addition, respondent steel producers stated that, with respect to the subject merchandise, they did not receive any duty drawback for items that were not physically incorporated into the finished product.

With respect to the allegation that respondent companies received duty drawback on recoverable or resalable scrap, the GOK states that the IAA factors recoverable scrap into the calculation of the usage rates based on the economic value of the scrap, and that this is done for all products under Korea's duty drawback regime. The IAA periodically (approximately every three years) conducts surveys of producers of exported products in order to obtain raw material input usage rates for manufacturing one unit of output. In situations where production methods are similar and technology relatively stable, the IAA issues an average input usage rate. However, the GOK states that if a producer becomes appreciably more

---page 57770---

The Department has previously determined that duty drawback is allowed for certain products that are not physically incorporated into the exported items under the Korean duty drawback system. See, Stainless Steel Cooking Ware, 51 FR 42867, 42870 (1986). Accordingly, in our supplemental questionnaire we asked the GOK whether the standard cited in the IAA's internal guidelines, whereby only physically incorporated raw materials are eligible for drawback, applies to all products exported from Korea or is limited to the subject merchandise. The GOK responded that this standard applies to all merchandise exported from Korea and that it was issued in April, 1985.

Consistent with the Subsidies Code of the General Agreement on Tariffs and Trade, the Department does not consider duty drawback provided on goods that are physically incorporated into the exported product, making normal allowance for waste, to be a countervailable subsidy. See, s 355.44(i)(4)(i) in the Department's Proposed Rules. Respondents have stated that none of the producers subject to this investigation received duty drawback on inputs that were not physically incorporated into the exported product. The GOK has further stated that it prevents the receipt of drawback on excessive waste/scrap by factoring recoverable scrap into the calculation of the usage rates based on the economic value of the scrap. In previous investigations of the Korean duty drawback system, we have found that when recoverable scrap is factored into the usage rate, the relevant loss and waste rates are not excessive. See, Industrial Belts, 54 FR 15513, 15516 (1989). Accordingly, we preliminarily determine that no subsidy has been provided to producers of the subject merchandise under the Korean duty drawback system.

C. Programs Preliminarily Determined Not To Be Used

We preliminarily determine that the following programs were not used by manufacturers, producers, or exporters in Korea of certain flat-rolled steel products:

1. Tax incentive for a factory located in an agricultural and industrial area
2. Special depreciation as a tax deductible cost contingent on exports
3. Short-term export financing
4. Export credit from the Export-Import Bank of Korea

D. Programs Preliminarily Determined Not to Exist

We preliminarily determine that the following programs do not exist:

1. Preferential port charges--iron and steel industry rehabilitation order
2. Insurance benefits
3. Preferential utility rates--iron and steel industry rehabilitation order

Programs for Which We Require More Information

1. Government Assistance for the Construction of POSCO's Integrated Steel Mill at Kwangyang Bay

Petitioners allege that the Korean government heavily subsidized the construction (land, buildings, property and equipment) of POSCO's mill at Kwangyang Bay. In particular, Petitioners assert that the government has provided POSCO with land for its Kwangyang facility either at preferential rates or at no cost to POSCO.

The GOK and POSCO respond that POSCO bought the majority of the land in question, using the local government as its agent. We asked the GOK to comment on the regularity of the practice of using the local government as a purchasing agent and to cite other examples of this occurrence; the GOK only cited another circumstance where POSCO had used the local government in this manner, for its Pohang facility. The GOK did not cite any examples where a local government had acted as the purchasing agent for a prospective buyer of land other than POSCO. For documentation that POSCO actually paid for the land, POSCO provided the local government's payment request. This document shows that to date POSCO has made a partial, but not full, payment for the land; the document requests the payment of several billion won. Accordingly, we will further investigate whether POSCO has made full payment for the land and whether the price paid is reflective of a market-based sale.

Petitioners allege that the Korean government provided POSCO with a specific exemption from the requirements for asset revaluation by allowing POSCO to revalue in 1982 and 1988/1989, despite a requirement in the Asset Revaluation Act that restricts a corporation that has previously revalued its assets from revaluing again until the wholesale price index has risen 25 percent from the time of the previous revaluing. Korea's wholesale prices increased by 5.09 percent between 1982 and 1989. Petitioners maintain that this revaluation has allowed POSCO to declare a higher amount of tax deductible depreciation than it otherwise would have.

The GOK contends that POSCO's 1989 revaluation occurred pursuant to TERCL Article 56-2 (Special Treatment for Revaluation of Assets at the Time of Going Public), which allows a company that is making an initial public offering to revalue its assets without the necessity of meeting the requirement in the Asset Revaluation Act of a 25 percent change in the wholesale price index since the company's last revaluation. POSCO was partially privatized in 1988, a process that culminated in the listing of POSCO's shares on the Korea Stock Exchange on June 10, 1988. Article 56-2 was enacted on November 28, 1987, and applied to all companies making an initial public offering from January 1, 1987 until the provision was abolished effective December 31, 1990.

The GOK notes that during this period 316 companies were newly listed on the Korea stock exchange, of which 252 revalued their assets. Pursuant to TERCL Article 56-2, companies that listed on the Korea Stock Exchange between January 1, 1987 and December 31, 1988 (as was the case with POSCO) had until December 31, 1989 to revalue their assets. A company that listed its stock after December 31, 1988 had to revalue its assets prior to being listed on the stock exchange. The GOK argues that POSCO acted in accordance with this provision because it listed its shares in June of 1988, and the results of the investigation report on its revaluation were reported to the GOK on September 29, 1989.

We preliminarily determine that the timing of the revaluation was not granted on a selective basis, due to the fact that over two-hundred other companies have revalued under TERCL Article 56-2. However, we require further information concerning the magnitude of the revaluation and whether the methodology used in the revaluation was performed in accordance with standard Korean accounting principles.

Petitioners allege that POSCO, under the Law for the Promotion of Income

---page 57771---

The GOK states that Article 110-3 of the Local Tax Act previously exempted POSCO from the two percent acquisition tax on immovable property acquired for its Kwangyang Bay facilities. However, the GOK notes that this provision was terminated on December 26, 1988, and the POSCO did not receive any benefits during the POI from prior exemptions granted under this provisions. According to the GOK, the benefit from this program was immediate since the tax that did not have to be paid was due when the property was acquired. The GOK further states that no successor laws have been passed since the termination of this provisions that confer an exemption from the acquisition tax in rural areas.

It is unclear at this time whether this tax is of the nature of a recurring or nonrecurring benefit. If the benefit is nonrecurring, we would treat it as a grant and amortize the benefit provided that the ad valorem rate exceeds 0.5 percent of the firm's total sales. We will seek further information concerning the nature of this benefit at verification and in preparation for our final determination.

Verification

In accordance with section 776(b) of the Act, we will verify the information used in making our final determinations.

Suspension of Liquidation

In accordance with section 703(d) of the Act, we are directing the U.S. Customs Service to suspend liquidation of all entries of certain flat-rolled steel products from Korea, which are entered or withdrawn from warehouse, for consumption on or after the date of the publication of this notice in the Federal Register, and to require a cash deposit or bond for such entries of the merchandise in the amounts indicated below. This suspension will remain in effect until further notice.

Certain Hot-Rolled Carbon Steel Flat Products

County-Wide Ad Valorem Rate--5.51

Certain Cold-Rolled Carbon Steel Flat Products

Country-Wide Ad Valorem Rate--4.49

Certain Corrosion-Resistant Carbon Steel Flat Products

Country-wide Ad Valorem Rate--2.93

Certain Cut-To-Length Carbon Steel Plate

Country-Wide Ad Valorem Rate--3.90

ITC Notification

In accordance with section 703(f) of the Act, we will notify the ITC of our determinations and alignments. In addition, we are making available to the ITC all nonprivileged and nonproprietary information relating to this investigation. We will allow the ITC access to all privileged and business proprietary 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 Investigations, Import Administration.

If our final determinations are affirmative, the ITC will make its final determinations within 45 days after the Department makes its final determinations.

Public Comment

Interested parties who wish to request or participate in a hearing must submit a written request within ten days of the publication of this notice in the Federal Register to the Assistant Secretary for Import Administration, U.S. Department of Commerce, room B-099, 14th Street and Constitution Avenue, NW., Washington, DC 20230. Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; (3) the reason for attending; and (4) a list of the issues to be discussed. Since investigations involving the same classes or kinds of merchandise subject to these investigations from various other countries are currently being conducted, we will publish a briefing and hearing schedule in the Federal Register after receipt of all requests for hearings in these investigations.

These determinations and alignments are published pursuant to sections 703(f) and 705(d) of the Act (19 U.S.C. 1671b(f)).

Dated: November 27, 1992.

Alan M. Dunn,

Assistant Secretary for Import Administration.

Appendix 1

Scope of the Investigations

The products covered by these investigations, certain steel products, constitute the following four separate, "classes or kinds" of merchandise, as outlined below.

Although the Harmonized Tariff Schedule of the United States (HTS) subheadings are provided for convenience and customs purposes, our written descriptions of the scope of these proceedings are dispositive.

We have received comments from petitioners regarding the types of coil included in the scope of the certain hot-rolled carbon steel flat products investigation, the certain cold-rolled carbon steel flat products investigation, and the certain corrosion resistant carbon steel flat products investigation. We are considering these comments and will address this issue at the final determination.

Certain Hot-Rolled Carbon Steel Flat Products

These products include hot-rolled carbon steel flat products, of solid rectangular (other than square) cross section, of rectangular shape, neither clad, plated nor coated with metal, whether or not painted, varnished or coated with plastics or other nonmetallic substances, in coils, or in straight lengths which are less than 4.75 millimeters in thickness and of a width measuring at least 10 times the thickness, as currently classifiable in the HTS under item numbers 7208.11.0000, 7208.12.0000, 7208.13.1000, 7208.13.5000, 7208.14.1000, 7208.14.5000, 7208.14.5000, 7208.21.1000, 7208.21.5000, 7208.22.1000, 7208.22.5000, 7208.23.1000, 7208.23.5030, 7208.23.5090, 7208.24.1000, 7208.24.5030, 7208.24.5090, 7208.34.1000, 7208.34.5000, 7208.35.1000, 7208.35.5000, 7208.35.5000, 7208.44.0000, 7208.45.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.12.0000, 7211.19.1000, 7211.19.5000, 7211.22.0090, 7211.29.1000, 7211.29.3000, 7211.29.5000, 7211.29.7030, 7211.29.7060, 7211.29.7090, 7211.90.0000, 7212.40.1000, 7212.40.5000, and 7212.50.0000.

Certain Cold-Rolled Carbon Steel Flat Products

These products include cold-rolled (cold-reduced) carbon steel flat products, of solid rectangular (other than square) cross section, of rectangular shape, neither clad, plated nor coated with metal, whether or not painted, varnished or coated with plastics or other nonmetallic substances, in coils, or in straight lengths which, if of a thickness less than 4.75 millimeters, are of a width measuring at least 10 times the thickness or if of a thickness of 4.75 millimeters or more are of a width which exceeds 150 millimeters and measures at least twice the thickness, as currently classifiable in the HTS under item numbers 7209.11.0000, 7209.12.0030, 7209.12.0090, 7209.13.0030, 7209.13.0090, 7209.14.0030, 7209.14.0090, 7209.21.0000, 7209.22.0000, 7209.23.0000, 7209.24.1000, 7209.24.5000, 7209.31.0000, 7209.32.0000, 7209.33.0000, 7209.34.0000, 7209.41.0000, 7209.42.0000, 7209.43.0000, 7209.44.0000, 7209.90.0000, 7210.70.3000, 7210.90.9000, 7211.30.1030, 7211.30.1090, 7211.30.3000, 7211.30.5000, 7211.41.1000, 7211.41.3030, 7211.41.3090, 7211.41.5000, 7211.41.7030, 7211.41.7060, 7211.41.7090, 7211.49.1030, 7211.49.1090, 7211.49.3000, 7211.49.5030, 7211.49.5060, 7211.49.5090, 7211.90.0000, 7212.40.1000, 7212.40.5000, and 7212.50.0000.

Certain Corrosion-Resistant Carbon Steel Flat Products

These products include flat-rolled carbon steel products, of solid rectangular (other than square) cross section, of rectangular shape, either clad, plated, or coated with corrosion-resistant metals such as zinc,

---page 57772---

Certain Cut-to-Length Carbon Steel Plate

These products include hot-rolled carbon steel universal mill plates (i.e., flat-rolled products rolled on four faces or in a closed box pass, of a width exceeding 150 millimeters but not exceeding 1,250 millimeters and of a thickness of not less than 4 millimeters, not in coils and without patterns in relief) or solid rectangular (other than square) cross section, of rectangular shape, neither clad, plated nor coated with metal, whether or not painted, varnished, or coated with plastics or other nonmetallic substances; and certain hot-rolled carbon steel flat products in straight lengths, of solid rectangular (other than square) cross section, of rectangular shape, not rolled, neither clad, plated, nor coated with metal, whether or not painted, varnished, or coated with plastics or other nonmetallic substances, 4.75 millimeters or more in thickness and of a width which exceeds 150 millimeters and measures at least twice the thickness, as currently classifiable in the HTS under items numbers 7208.31.0000, 7208.32.0000, 7208.33.1000, 7208.33.5000, 7208.41.0000, 7208.42.0000, 7208.43.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.11.0000, 7211.12.0000, 7211.21.0000, 7211.22.0045, 7211.90.0000, 7212.40.1000, 7212.40.5000, and 7212.50.0000.