(Cite as: 53 FR 9789)
NOTICES
DEPARTMENT OF COMMERCE
[C-469-004]
Stainless Steel Wire Rod From Spain; Preliminary Results of Countervailing Duty Administrative Review
Friday, March 25, 1988
*9789 AGENCY: International Trade Administration, Import Administration, Commerce.
ACTION: Notice of preliminary results of countervailing duty administrative review.
SUMMARY: The Department of Commerce has conducted an administrative review of the countervailing duty order on stainless steel wire rod from Spain. The review covers the period January 1, 1986 through December 31, 1986 and six programs.
As a result of our view, we preliminarily determine the net subsidy to be 1.26 percent ad valorem during the period of review. We invite interested parties to comment on these preliminary results.
EFFECTIVE DATE: March 25, 1988.
FOR FURTHER INFORMATION CONTACT: Susan Silver or Paul McGarr, Office of Compliance, International Trade Administration, U.S. Department of Commerce, Washington, DC 20230; telephone: (202) 377-3337.
SUPPLEMENTARY INFORMATION:
Background
On January 3, 1983, the Department of Commerce ("the Department") published in the Federal Register (48 FR 52) a countervailing duty order on stainless steel wire rod from Spain. On January 30, 1987, a Spanish exporter, Roldan, S.A., requested in accordance with 19 CFR 355.10 an administrative review of this order. We published the initiation of the administrative review on February 23, 1987 (52 FR 5479). The Department has now conducted that administrative review in accordance with section 751 of the Tariff Act of 1930 ("the Tariff Act").
Scope of Review
The United States has developed a system of tariff classification based on the international harmonized system of customs nomenclature. Congress is considering legislation to convert the United States to this Harmonized System ("HS"). In view of this, we will be providing both the appropriate Tariff Schedules of the United States Annotated ("TSUSA") item numbers and the appropriate HS item numbers with our product descriptions on a test basis, pending Congressional approval. As with the TSUSA, the HS item numbers are provided for convenience and Customs purposes. The written description remains dispositive.
We are requesting petitioners to include the appropriate HS item number(s) as well as the TSUSA item number(s) in all new petitions filed with the Department. A reference copy of the proposed Harmonized System schedule is available for consultation at the Central Records Unit, Room B-099, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230. Additionally, all Customs offices have reference copies, and petitioners may contact the Import Specialist at their local Customs office to consult the schedule.
Imports covered by the review are shipments of Spanish stainless steel wire rod which includes coiled, semi-finished, hot-rolled stainless steel products of approximately round solid cross-section, not under 0.20 inch nor over 0.74 inch in diameter, not tempered or treated, not partly manufactured, and valued over 4 cents per pound. Such merchandise is currently classifiable under TSUSA item number 607.2600. This product is currently classifiable under HS item numbers 7221.00.00.20 and 7221.00.00.40. We invite comments from all interested parties on this HS classification.
The review covers the period January 1, 1986 through December 31, 1986 and six programs. Roldan, S.A., was the only known Spanish exporter of stainless steel wire rod to the United States during the period of review.
Analysis of Programs
Under the Concerted Action Program established by Royal Decree 669/74, the Spanish government directs banks to make long-term loans to steel companies at below market rates. Such loans are provided for approximately ten years. Roldan received a long-term loan for financing new plant and equipment that had an outstanding balance during the *9790 review period. The loan was received in multiple disbursements from 1977 to 1981. Because loans under the Concerted Action Program are provided to a specific industry at rates and terms inconsistent with commercial considerations, we preliminarily determine that this loan confers a countervailable domestic subsidy.
To calculate the benefit, we treated the multiple disbursements as individual loans. We used the long-term loan methodology in the Subsidies Appendix attached to the Final Affirmative Countervailing Duty Determination and Countervailing Duty Order on Cold-Rolled Carbon Steel Flat-Rolled Products from Argentina (49 FR 18006, April 26, 1984). Roldan did not obtain any comparable commercial loans in the year in which it received the preferential long-term loan. Therefore, we used as our long-term commercial benchmark the "free" long-term (three or more years) lending rate published by the Bank of Spain in its Boletin Estadistico. Because we were unable to obtain the national average rate of return on equity to calculate the weighted cost of capital, we used the long-term commercial benchmark rate as the discount rate.
Since these loans benefit a company's total production, we allocated the benefit over the company's total sales during the review period. On this basis, we preliminarily determine the benefit from this program to be 0.33 percent ad valorem during the review period.
Until January 1, 1986, the Spanish government required banks to set aside funds for short-term operating capital loans as part of its Privileged Circuit Exporter Credit program, which provided short-term financing to exporters at preferential rates. The operating capital loans were granted for a period of up to one year. This program was phased out, pursuant to a Treasury Order of Aprl 14, 1982, and terminated effective January 1, 1986. Roldan received two loans from this program in 1985 on which interest was due during the review period. Because this program is contingent upon export performance, we preliminarily determine that it confers a countervailable benefit on exports.
To calculate the benefit, we used our short-term loan methodology as described in the Subsidies Appendix. We used as our commercial benchmark the "free" one- to-three year lending rate published in the Boletin Estadistico, the only available benchmark for short-term loans of up to one year.
Since operating capital loans are not tied to specific export transactions, we allocated the benefit over Roldan's total exports during the review period. On this basis, we preliminarily determine the benefit to be 0.18 percent ad valorem.
Because this program has been terminated effective January 1, 1986, we preliminarily determine that for this program the cash deposit of estimated countervailing duties will be zero.
As part of its Privileged Circuit Exporter Credit program, the Spanish government, under Royal Decree 2254/85 of November 20, 1985, required banks to set aside a specific percent of lendable funds for prefinancing exports. The maximum amount of allowable funds for prefinancing of exports was 85 percent of the invoice value until July 1, 1986, when it was reduced to 68 percent. The maximum term of these loans was 90 days and the interest rate ranged between 10 and 10.5 percent. Because this program is contingent upon export performance, we preliminarily determine that it confers a countervailable benefit on exports.
To calculate the benefit, we used our short-term loan methodology described in the Subsidies Appendix and applied the interest differential to the principal amounts of the loans. We used as our commercial benchmark the "free" three- month leading rate published in the Boletin Estadistico. Since Roldan was able to tie these loans to specific shipments, we allocated the benefit from loans for U.S. shipments over Roldan's exports of wire rod to the United States during the review period. We preliminarily determine the benefit from this program to be 0.75 percent ad valorem.
Because this program was terminated effective March 5, 1987, pursuant to Royal Decrees 321/1987 and 322/1987, we preliminarily determine that for this program the cash deposit of estimated countervailing duties will be zero.
Under a Ministerial Order of February 21, 1985, the Ministary of Labor and Social Security provides employment funds from the solidarity Fund for Employment. These funds are provided for "Actions that help begin employment generating projects." Roldan received a grant for investment in new plant and equipment that generated new jobs.
Eligibility for this program is not contingent upon export performance nor limited to any specific region, industry or groups of industries. The Government of Spain has provided information showing that a wide variety of industries and sectors in all regions and provinces have received employment grants from the Solidarity Fund. Therefore, because this program is not limited to a specific enterprise or industry or group of enterprises or industries, we preliminarily determine that this program does not confer a countervailable subsidy.
(5) Other Programs
We also examined the following programs and preliminarily determine that Roldan did not use them during the review period:
B. Regional Incentives Program.
Preliminary Results of Review
As a result of the review, we preliminarily determine the net subsidy to be 1.26 percent ad valorem for the period January 1, 1986 through December 31, 1986.
The Department intends to instruct the Customs Service to assess countervailing duties of 1.26 percent of the f.o.b. invoice price on all shipments of this merchandise exported on or after January 1, 1986 and on or before December 31, 1986.
The termination of two programs, operating capital loans and prefinancing of exports under the Privileged Circuit Exporter Credit program, reduces the total estimated net subsidy to 0.33 percent ad valorem, a rate we consider de minimis. Therefore, the Department intends to instruct the Customs Service to waive cash deposits of estimated countervailing duties on shipments of this merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this administrative review. This waiver will remain in effect until publication of the final results of the next administrative review.
Interested parties may submit written comments on these preliminary results within 30 days of the date of publication of this notice and may request disclosure and/or a hearing within 7 days of the date of publication. Any hearing, if requested, will be held 30 days after the date of publication or the first workday afterward. Any request for an administrative protective order must be made no later than five days after the date of publication. The Department will publish the final results of this administrative review including the results of its analysis of issues raised in any such written comments or at a hearing.
This administrative review and notice are in accordance with section 751(a)(1) *9791 of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.10.
Gilbert B. Kaplan,
Acting Assistant Secretary, Import Administration.
Date: March 21, 1988.