64 FR 48374 September 3, 1999
DEPARTMENT OF COMMERCE
International Trade Administration
[C-580-602]
Final Results of Expedited Sunset Review: Top-of-the-Stove
Stainless Steel Cookware From South Korea
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of expedited sunset review: top-of-the-
stove stainless steel cookware from South Korea.
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SUMMARY: On February 1, 1999, the Department of Commerce (``the
Department'') initiated a sunset review of the countervailing duty
order on top-of-the-stove stainless steel cookware from South Korea (64
FR 4840) pursuant to section 751(c) of the Tariff Act of 1930, as
amended (``the Act''). On the basis of a notice of intent to
participate and an adequate substantive response filed on behalf of
domestic interested parties and inadequate response (in this case, no
response) from respondent interested parties, the Department determined
to conduct an expedited review. As a result of this review, the
Department finds that revocation of the countervailing duty order would
be likely to lead to continuation or recurrence of a countervailable
subsidy. The net countervailable subsidy and the nature of the subsidy
are identified in the Final Results of Review section of to this
notice.
FOR FURTHER INFORMATION CONTACT: Darla D. Brown or Melissa G. Skinner,
Office of Policy for Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street & Constitution
Ave.. NW., Washington, D.C. 20230; telephone: (202) 482-3207 or (202)
482-1560, respectively.
EFFECTIVE DaTE: September 3, 1999.
Statute and Regulations
This review was conducted pursuant to sections 751(c) and 752 of
the Act. The Department's procedures for the conduct of sunset reviews
are set forth in Procedures for Conducting Five-year (``Sunset'')
Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516
(March 20, 1998) (``Sunset
[[Page 48375]]
Regulations''). Guidance on methodological or analytical issues
relevant to the Department's conduct of sunset reviews is set forth in
the Department's Policy Bulletin 98:3--Policies Regarding the Conduct
of Five-year (``Sunset'') Reviews of Antidumping and Countervailing
Duty Orders; Policy Bulletin, 63 FR 18871 (April 16, 1998) (``Sunset
Policy Bulletin'').
Scope
The merchandise subject to this countervailing duty order is top-
of-the-stove stainless steel cookware (``cookware'') from Korea. The
subject merchandise is all non-electric cooking ware of stainless steel
which may have one or more layers of aluminum, copper or carbon steel
for more even heat distribution. The subject merchandise includes
skillets, frying pans, omelette pans, saucepans, double boilers, stock
pots, dutch ovens, casseroles, steamers, and other stainless steel
vessels, all for cooking on stove top burners, except tea kettles and
fish poachers.
Excluded from the scope of the order is stainless steel oven ware
and stainless steel kitchen ware. Certain stainless steel pasta and
steamer inserts and certain stainless steel eight-cup coffee
percolators are within the scope (63 FR 41545 (August 4, 1998) and 58
FR 11209 (February 24, 1993), respectively).
Moreover, as a result of a changed circumstances review, the
Department revoked the order on Korea with regards to certain stainless
steel camping ware that (1) is made of single-ply stainless steel
having a thickness no greater than 6.0 millimeters; and (2) consists of
1.0, 1.5, and 2.0 quart saucepans without handles and with lids that
also serve as fry pans (62 FR 32767, June 17, 1997).
Cookware is currently classifiable under Harmonized Tariff Schedule
(``HTS'') item numbers 7323.93.00 and 9604.00.00. The HTS item numbers
are provided for convenience and Customs purposes only. The written
description remains dispositive.
History of the Order
The countervailing duty order on cookware from Korea was published
in the Federal Register on January 20, 1987 (52 FR 2140). In the
original investigation, the Department determined that the following
six programs administered by the Government of Korea (``GOK'')
conferred bounties:
(1) Short-Term Export Financing under the Export Financing
Regulations and Foreign Trade Financing Regulations (hereinafter
``Short-Term Export Financing'')--0.38 percent ad valorem;
(2) Export Tax Reserve under Articles of the Act Concerning the
Regulation of Tax Reduction and Exemption (hereinafter ``Export Tax
Reserve'')--0.01 percent ad valorem;
(3) Unlimited Deduction of Overseas Entertainment Expenses under
Article 18-2 of the Corporation Tax Law (hereinafter ``Unlimited
Entertainment Expense Deductions'')--0.01 percent ad valorem;
(4) Loans to Promising Small and Medium Enterprises (hereinafter
``Small Business Loans'')--0.11 percent ad valorem;
(5) Exemption from the Acquisition Tax under the Law for the
Promotion of Income Sources in Rural Areas (hereinafter ``Acquisition
Tax Exemption'')--0.07 percent ad valorem; and
(6) Duty Drawback on Non-Physically Incorporated Items and
Excessive Loss Rates under the Duty Drawback System (hereinafter ``Duty
Drawback Programs'')--0.20 percent ad valorem.1
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\1\Final Affirmative Countervailing Duty Determination; Certain
Stainless Steel Cooking Ware from the Republic of Korea, 51 FR 42867
(November 26, 1986).
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The Department calculated that these programs conferred a total net
subsidy of 0.78 percent ad valorem for all Korean manufacturers,
producers, or exporters, except Woo Sung Company Ltd. and Dae Sung
Industrial Company Ltd. As a result of de minimis net subsidies found
for Woo Sung Company Ltd. and Dae Sung Industrial Company Ltd., these
two Korean producers/exporters were excluded from the
order.2
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\2\ Countervailing Duty Order; Certain Stainless Steel Cooking
Ware from the Republic of Korea, 52 FR 2140 (January 20, 1987).
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Since the original investigation, the Department has conducted no
administrative reviews of the order. The order, therefore, remains in
effect for all known manufacturers and exporters of the subject
merchandise from Korea, except two: Woo Sung Company Ltd. and Dae Sung
Industrial Company Ltd.
Background
On February 1, 1999, the Department initiated a sunset review of
the countervailing duty order on cookware from Korea (64 FR 4840),
pursuant to section 751(c) of the Act. The Department received a Notice
of Intent to Participate on behalf of the Stainless Steel Cookware
Committee, whose current members are Regal Ware, Inc., All-Clad
Metalcrafters, Inc., and Vita Craft Corp. (collectively, the
``Committee''), on February 16, 1999, within the deadline specified in
section 351.218(d)(1)(i) of the Sunset Regulations. Pursuant to section
771(9)(E) of the Act, the Committee claimed interested party status as
an association of U.S. manufacturers of a domestic like product. In
addition, the Committee's individual members claimed domestic
interested party status pursuant to section 771(9)(C) of the Act, as
domestic producers of a like product. The Department received a
complete substantive response from the Committee on March 3, 1999,
within the 30-day deadline specified in the Sunset Regulations under
section 351.218(d)(3)(i). We did not receive a substantive response
from any respondent interested party. As a result, pursuant to 19 CFR
351.218(e)(1)(ii)(C), the Department determined to conduct an
expedited, 120-day, review of this order.
The Department determined that the sunset review of the
countervailing duty order on cookware from Korea is extraordinarily
complicated. In accordance with section 751(c)(5)(C)(v) of the Act, the
Department may treat a review as extraordinarily complicated if it is a
review of a transition order (i.e., an order in effect on January 1,
1995). (See section 751(c)(6)(C) of the Act.) Therefore, on June 7,
1999, the Department extended the time limit for completion of the
final results of this review until not later than August 30, in
accordance with section 751(c)(5)(B) of the Act.3
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\3\ See Porcelain-on-Steel Cooking Ware From the People's
Republic of China, et. al.: Extension of Time Limit for Final
Results of Five-Year Reviews, 64 FR 30305 (June 7, 1999).
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Determination
In accordance with section 751(c)(1) of the Act, the Department
conducted this review to determine whether revocation of the
countervailing duty order would be likely to lead to continuation or
recurrence of a countervailable subsidy. Section 752(b) of the Act
provides that, in making this determination, the Department shall
consider the net countervailable subsidy determined in the
investigation and subsequent reviews, and whether any change in the
program which gave rise to the net countervailable subsidy has occurred
that is likely to affect that net countervailable subsidy. Pursuant to
section 752(b)(3) of the Act, the Department shall provide to the
International Trade Commission (``the Commission'') the net
countervailable subsidy likely to prevail if the order is revoked. In
addition, consistent with section 752(a)(6), the Department shall
[[Page 48376]]
provide the Commission information concerning the nature of each
subsidy and whether the subsidy is a subsidy described in Article 3 or
Article 6.1 of the 1994 WTO Agreement on Subsidies and Countervailing
Measures (``Subsidies Agreement'').
The Department's determinations concerning continuation or
recurrence of a countervailable subsidy, the net countervailable
subsidy likely to prevail if the order is revoked, and nature of the
subsidy are discussed below. In addition, the Committee's comments with
respect to each of these issues are addressed within the respective
sections below.
Continuation or Recurrence of a Countervailable Subsidy
Drawing on the guidance provided in the legislative history
accompanying the Uruguay Round Agreements Act (``URAA''), specifically
the Statement of Administrative Action (``the SAA''), H.R. Doc. No.
103-316, vol. 1 (1994), the House Report, H.R. Rep. No. 103-826, pt.1
(1994), and the Senate Report, S. Rep. No. 103-412 (1994), the
Department issued its Sunset Policy Bulletin providing guidance on
methodological and analytical issues, including the basis for
likelihood determinations. The Department clarified that determinations
of likelihood will be made on an order-wide basis (see section III.A.2
of the Sunset Policy Bulletin). Additionally, the Department normally
will determine that revocation of a countervailing duty order is likely
to lead to continuation or recurrence of a countervailable subsidy
where (a) a subsidy program continues, (b) a subsidy program has been
only temporarily suspended, or (c) a subsidy program has been only
partially terminated (see section III.A.3.a of the Sunset Policy
Bulletin). Exceptions to this policy are provided where a company has a
long record of not using a program (see section III.A.3.b of the Sunset
Policy Bulletin).
In addition to considering the guidance on likelihood cited above,
section 751(c)(4)(B) of the Act provides that the Department shall
determine that revocation of the order would be likely to lead to
continuation or recurrence of a countervailable subsidy where a
respondent interested party waives its participation in the sunset
review. Pursuant to the SAA, at 881, in a review of a countervailing
duty order, when the foreign government has waived participation, the
Department shall conclude that revocation of the order would be likely
to lead to continuation or recurrence of a countervailable subsidy for
all respondent interested parties.4 In the instant review,
the Department did not receive a substantive response from the foreign
government or from any other respondent interested party. Pursuant to
section 351.218(d)(2)(iii) of the Sunset Regulations, this constitutes
a waiver of participation.
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\4\ See 19 CFR 351.218(d)(2)(iv).
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In their substantive response, the Committee argued that the GOK
continues to confer countervailable subsidies to Korean producers/
exporters of stainless steel cookware. The Committee identified the six
programs administered by the GOK and determined in the original
investigation to confer bounties or grants. Further, the Committee
pointed out that, in its final countervailing duty determination, the
Department calculated that these programs conferred a total net subsidy
of 0.78 percent ad valorem for all Korean manufacturers, producers, or
exporters, except Woo Sung Company Ltd. and Dae Sung Industrial Company
Ltd.
Of these six programs, the Committee argued that five continue to
confer countervailable subsidies to Korean producers/exporters. The
Committee cited to the November, 1998, preliminary affirmative
countervailing duty determination with respect to stainless steel sheet
and strip in coils from Korea and argued that the short-term export
financing, export tax reserve, small business loans, acquisition tax
exemption, and the duty drawback programs continue to exist and confer
countervailable benefits.5 Additionally, the Committee noted
that in that same preliminary determination, the Department determined
that the unlimited deduction of overseas entertainment expenses program
had been terminated. The Committee argued that if, in the final
determination, the Department finds that the program has been
terminated and is not likely to be reinstated, the Department should
determine that the program will not provide a countervailable subsidy
if the order were revoked. The Committee maintained, however, that the
Department should determine that revocation of the countervailing duty
order on Korea would likely result in the continuation of a
countervailable subsidy on the basis of the continued existence of five
of the original six programs.
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\5\See Preliminary Affirmative Countervailing Duty
Determination: Stainless Steel Sheet and Strip in Coils from the
Republic of Korea, 63 FR 63884 (November 17, 1998).
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As noted above, in our final determination, the Department
determined that the programs in question conferred a bounty or grant,
the net amount of which was calculated to be 0.78 percent ad valorem
for Korean exporters/producers. The Department has conducted no
administrative reviews of this outstanding countervailing duty order.
We agree with the Committee that the Korean programs, with the
exception of one,6 remain in place. Based on the continued
existence of programs found to provide countervailable subsidies, the
fact that the foreign government and other respondent parties waived
their right to participate in this review before the Department, and
absent argument and evidence to the contrary, the Department determines
that it is likely that a countervailable subsidy will continue if the
order is revoked.
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\6\ As noted by the Committee, the Department determined that
the Article 18-2(5) of the Corporate Tax Law, which provided that
Korean exporters could deduct overseas entertainment expenses
without limit, was repealed by revisions to the law dated December
29, 1995 (see Final Affirmative Countervailing Duty Determination:
Stainless Steel Sheet and Strip in Coils From the Republic of Korea,
64 FR 30636, 30650 (June 8, 1999)).
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Net Countervailable Subsidy
In the Sunset Policy Bulletin, the Department stated that,
consistent with the SAA and House Report, the Department normally will
select a rate from the investigation as the net countervailable subsidy
likely to prevail if the order is revoked because that is the only
calculated rate that reflects the behavior of exporters and foreign
governments without the discipline of an order or suspension agreement
in place. The Department noted that this rate may not be the most
appropriate rate if, for example, the rate was derived from subsidy
programs which were found in subsequent reviews to be terminated, if
there has been a program-wide change, or if the rate ignores a program
found to be countervailable in a subsequent administrative review. (See
section III.B.3 of the Sunset Policy Bulletin.) Additionally, where the
Department determined company-specific countervailing duty rates in the
original investigation, the Department normally will report to the
Commission company-specific rates from the original investigation or
where no company-specific rate was determined for a company, the
Department normally will provide to the Commission the country-wide or
``all others'' rate. (See section III.B.2 of the Sunset Policy
Bulletin.)
In their substantive response, the Committee argued that the
countervailing duty rate likely to prevail if the order on cookware
from Korea is
[[Page 48377]]
revoked would be at least as large as that existing at the time of the
original order. The Committee argued that as the rate determined in the
original investigation is the only calculated rate which reflects the
behavior of exporters without the discipline of the order in place, the
Department's policy provides that it normally will select this rate to
provide to the Commission. Noting that five of the six programs found
to provide subsidies in the original investigation continue to exist,
the Committee maintained that the Department should include the subsidy
rates it originally determined when calculating the net countervailable
subsidy in this sunset review.
The Committee also argued that the Act requires the Department to
consider programs, in addition to those considered in the original
investigation, determined in other reviews or investigations to provide
countervailable subsidies. The Committee argued that the Department
should consider the dual pricing scheme in which the GOK mandates that
POSCO, the government-owned steel producer, sell stainless steel to
domestic producers at a price below the international market price.
This program is referred to as POSCO's Two-Tiered Pricing Structure to
Domestic Customers. The Committee argued that Korean manufacturers of
stainless steel cookware are potential beneficiaries of this pricing
scheme because they may purchase a significant amount of their
stainless steel requirements from POSCO--the largest stainless steel
producer in Korea. Further, the Committee argued that this pricing
scheme was not in existence in January 1987, when the order on cookware
was issued. In conclusion, the Committee argued that given the
significance of this program, 7 it is imperative that the
Department include this program in calculating the net countervailable
subsidy likely to prevail if the order is revoked.
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\7\ Citing to the Department's preliminary determination in
Stainless Sheet and Strip, 63 FR at 63897, the Committee asserts
that this program was found to provide one respondent a
countervailable subsidy of 5.51 percent ad valorem.
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As discussed in the Sunset Policy Bulletin, the Department normally
will report to the Commission an original subsidy rate as adjusted to
take into account terminated programs, program-wide changes, and
programs found to be countervailable in subsequent reviews. Although no
administrative review has been conducted of the order on cookware from
Korea, we agree with the Committee that the program for the unlimited
deduction of overseas entertainment expenses has been
terminated.8 Further, we agree with the Committee that all
other programs found in the original investigation to provide
countervailable subsidies continue to exist.
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\8\ See footnote 6.
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Referring to section 752(b)(2) of the Act, the Sunset Policy
Bulletin provides that if the Department determines that good cause is
shown, the Department will consider other factors in sunset reviews.
Specifically, the Department will consider programs determined to
provide countervailable subsidies in other investigations or reviews,
but only to the extent that such programs (a) can potentially be used
by the exporters or producers subject to the sunset review and (b) did
not exist at the time that the countervailing duty order was issued
(see section III.C.1). Additionally, the Sunset Policy Bulletin
provides that if the Department determines that good cause is shown,
the Department will also consider programs newly alleged to provide
countervailable subsidies, but only to the extent that the Department
makes an affirmative countervailing duty determination with respect to
such programs and with respect to the exporters or producers subject to
the sunset review (see section III.C.2). Both sections specify that the
burden is on interested parties to provide information or evidence that
would warrant consideration of the subsidy program in question.
In the recent final affirmative countervailing duty determination
on stainless steel sheet and strip in coils from Korea, the Department
found that POSCO sold hot-rolled stainless steel coil, which was the
main input into stainless steel sheet and strip in coils, to the
respondents in that investigation. Additionally, the Department found
that POSCO charged a lower price to domestic customers that purchase
steel for further processing into products that are exported than to
domestic customers for products that will be consumed in Korea. As a
result, the Department determined that POSCO's two-tiered pricing
scheme constitutes an export subsidy under section 771(5A)(B) of the
Act and provides a financial contribution to exporters under section
771(5)(D) of the Act. The Department measured the benefit provided to
respondents from this program by dividing the price savings
9 of respondents by the value of respondents' exports. On
this basis, the Department found company-specific countervailable
subsidy rates of 0.87 and 2.36 percent ad valorem.
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\9\ The price savings were calculated by comparing the prices
charged by POSCO to respondents for domestic production to the
prices charged by POSCO to respondents for export production (see
Final Affirmative Countervailing Duty Determination: Stainless Steel
Sheet and Strip in Coils From the Republic of Korea, 64 FR 30636,
30647 (June 8, 1999)).
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As noted above, the Department will only consider other factors
under section 752(b)(2) of the Act where it determines good cause for
such consideration has been shown. Additionally, the Sunset Regulations
specify that the Department normally will consider such other factors
only where it conducts a full sunset review. In this case, although the
Committee argues that producers of cookware may benefit from this
program because the producers are likely to purchase stainless steel
from POSCO, we have no information that cookware producers actually
benefit from this program. As stated in the SAA at 889, the more
appropriate vehicle for consideration of new subsidies is an
administrative review pursuant to section 751(a) of the Act, which the
Committee did not request. Therefore, we are not considering this
program for the purpose of this review.
As a result of the termination of one program since the imposition
of the order, the Department determines that using the net
countervailable subsidy rate as determined in the original
investigation is no longer appropriate. Further, as noted above,
because the Department has not conducted an administrative review of
this order, no other programs have been found to provide cookware
producers/exporters a countervailable subsidy. Therefore, we have
adjusted the net countervailable subsidy from the original
investigation by subtracting the subsidy from the unlimited
entertainment expense deductions program which the Department found
terminated. (See calculation memo of August 24, 1999.)
Nature of the Subsidy
In the Sunset Policy Bulletin, the Department stated that,
consistent with section 752(a)(6) of the Act, the Department will
provide information to the Commission concerning the nature of the
subsidy and whether it is a subsidy described in Article 3 or Article
6.1 of the Subsidies Agreement. The Committee did not specifically
address this issue in their substantive response.
Because the benefits received under four of the remaining five
programs is contingent upon exports, these programs fall within the
definition of an export subsidy under Article 3.1(a) of the Subsidies
Agreement. The
[[Page 48378]]
remaining program, although not falling within the definition of an
export subsidy under Article 3.1(a) of the Subsidies Agreement, could
be found to be inconsistent with Article 6 if the net countervailable
subsidy exceeds 5 percent, as measured in accordance with Annex IV of
the Subsidies Agreement. The Department, however, has no information
with which to make such a calculation, nor do we believe it appropriate
to attempt such a calculation in the course of a sunset review. Rather,
we are providing the Commission the following program descriptions.
(1) Because only exporters are eligible to use short-term export
financing under the Foreign Trade Regulations, short-term export
financing falls within the definition of an export subsidy under
Article 3.1(a) of the Subsidies Agreement.
(2) The program for export tax reserves under Articles 22, 23, and
24 or the Act Concerning the Regulation of Tax Reduction and Exemption
was found to confer benefits which constitute export subsidies because
they provide a deferral, contingent upon exports, of direct taxes.
Therefore, this program falls within the definition of an export
subsidy under Article 3.1(a) of the Subsidies Agreement.
(3) The program providing for small business loans to ``promising''
companies on the basis that they were exporting companies, was found to
be a countervailable export subsidy to the extent that the loans were
provided at preferential interest. Because companies qualified for
these loans on the basis of export performance, this program falls
within the definition of an export subsidy under Article 3.1(a) of the
Subsidies Agreement.
(4) Because the Duty Drawback Program provides for duty drawback on
items not physically incorporated into exported articles and because
the duty drawback for loss or wastage on physically incorporated items
is unreasonable or excessive, we found the program to confer a
countervailable export subsidy. As such, this program falls within the
definition of an export subsidy under Article 3.1(a) of the Subsidies
Agreement.
(5) Exemption from the acquisition tax under the Law for the
Promotion of Income Sources in Rural Areas is limited to companies
located in certain regions of the country and therefore, may fall
within the definition of an actionable subsidy under Article 6.1 of the
Subsidies Agreement.
Final Results of Review
As a result of this review, the Department finds that revocation of
the countervailing duty order on cookware from Korea would be likely to
lead to continuation or recurrence of countervailable subsidies. The
country-wide net countervailable subsidy likely to prevail if the order
were revoked is 0.77 percent ad valorem. 10
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\10\ As noted above, due to de minimis net subsidies found for
Woo Sung Company Ltd. and Dae Sung Industrial Company Ltd., these
two Korean producers/exporters were excluded from the order. .
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This notice serves as the only reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 351.305 of the Department's regulations.
Timely notification of return/destruction of APO materials or
conversion to judicial protective order is hereby requested. Failure to
comply with the regulations and the terms of an APO is a sanctionable
violation.
This five-year (``sunset'') review and notice are in accordance
with sections 751(c), 752, and 777(i)(1) of the Act.
Dated: August 30, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-23035 Filed 9-2-99; 8:45 am]
BILLING CODE 3510-DS-P