NOTICES
DEPARTMENT OF COMMERCE
[C-469-004]
Stainless Steel Wire Rod From Spain; Final Results of Countervailing Duty Administrative Review
Thursday, July 28, 1988
*28427 AGENCY: International Trade Administration, Import Administration, Commerce.
ACTION: Notice of final results of countervailing duty administrative review.
SUMMARY: On March 25, 1988, the Department of Commerce published the preliminary results of its administrative review of the countervailing duty order on stainless steel wire rod from Spain. We have now completed that review and determine the net subsidy to be 1.42 percent ad valorem during the period January 1, 1986 thorugh December 31, 1986.
EFFECTIVE DATE: July 28, 1988.
FOR FURTHER INFORMATION CONTACT: Terri Ann Benny 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 March 25, 1988, the Department of Commerce ("the Department") published in the Federal Register (53 FR 9789) the preliminary results of its administrative review of the countervailing duty order on stainless steel wire rod from Spain (48 FR 52, January 3, 1983). The Department has now completed that administrative review in accordance with section 751 of the Tariff Act of 1930 ("the Tariff Act").
Scope of Review
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 item number 607.2300 of the Tariff Schedules of the United States Annotated and under item numbers 7221.00.00.20 and 7221.00.00.40 of the Harmonized System.
The review covers the period January 1, 1986 through December 31, 1986 and six programs: (1) Long-term loans under the Concerted Action Program, (2) Privileged Circuit Exporter Credit ("PCEC") program operating capital loans, (3) PCEC prefinancing of exports, (4) a grant from the Solidarity Fund for Employment, (5) capital grants, and (6) regional incentives. Roldan, S.A., was the only known Spanish exporter of stainless steel wire to the United States during the period of review.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the preliminary results. We received comments from Roldan, S.A.
Comment 1: Roldan points out that, in calculating the benefit from operating capital loans, the Department made a clerical error and allocated the benefit over total wire rod exports when in fact total exports should have been used.
Department's Position: We agree. We have revised our calculation accordingly and determine the benefit from this program to be 0.07 percent ad valorem.
Comment 2: Roldan claims that the Department's use of a national average benchmark rate for measuring the benefit from official prefinancing credits under the PCEC program is unjustified. While the program set a maximum for the percent of the invoice value that could be used to meet the bank's lending requirements under this program, Roldan points out that the interest rate the bank charged for these PCEC credits was no lower than the interest rate it charged for financing the remaining portion of the export invoice value. Therefore, because there is no interest rate differential between the PCEC rate and the commercial rate, there is no subsidy. Further, because of Roldan's "substantial commercial solvency" and the fact that the bank collects a substantial fee for the conversion of the foreign exchange involved in the export transactions, it is logical to expect Roldan's commercial rate to be substantially lower than the national average benchmark rate used by the Department.
Department's Position: The Department's practice is to use a national- average interest rate as the benchmark for measuring the benefit from government-directed short-term loans. Roldan, in arguing against this practice and for a company-specific benchmark, presented the Department with information on the commercial rate of only three export loans, all from the same bank. Roldan also had 25 other PCEC loans, from four other banks, to finance exports of the subject merchandise to the United States. With the exception of PCEC loans and the commercial loans to finance the remaining portion of the export transactions, Roldan had no other short-term loans.
In choosing a benchmark for measuring the benefit from government-directed short-term loans, we attempt to determine the rate firms would have paid absent the government program. This benchmark "should reflect the predominant alternative sources of short-term financing available to an average firm." (See, e.g., Oil Country Tubular Goods from Argentina; Final Results of Countervailing Duty Administrative Review (52 FR 846, January 9, 1987).) The rate paid by a firm on some of its export loans is not a sufficient measure of these alternatives. In this case, especially, the existence of a government program that requires banks to set aside a specific percent of lendable funds for prefinancing exports may have a considerable impact on the rates charged for all export loans. Therefore, we have used as our benchmark published data from official government statistics on the average lending rate for all types of short-term loans, not just export loans.
While re-examining Roldan's claim, we discovered two errors in calculating the level of benefits under this program. The first was a translation error. In our preliminary results, we used as our benchmark for loans of up to three months a 13.61 percent interest rate published in the Boletin Estadistico. This rate is actually for mortgages from savings and loan institutions. The correct benchmark rate for this program is 14.31 percent, which is the general free rate for loans of one to ninety day duration published in the Boletin Estadistico.
The second error concerns the benefits from three loans that were erroneously excluded from our calculations in the preliminary results because the principal on the loans was repaid outside the review period. However, interest was paid on these loans during the review period. Since we consider benefits from preferential loans to occur when interest is paid, we have included these loans in our calculations. *28428 By making these two corrections, we determine the benefit from this program to be 1.02 percent ad valorem during the period of review.
Final Results of Review
After considering all comments received, we determine the net subsidy to be 1.42 percent ad valorem for the period January 1, 1986 through December 31, 1986.
The Department will instruct the Customs Service to assess countervailing duties of 1.42 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 estimated net subsidy to 0.33 percent ad valorem, a rate the Department considers de minimis. Therefore, the Department will 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 this notice. This deposit waiver shall remain in effect until publication of the final results of the next administrative review.
This administrative review and notice are in accordance with section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.10.
Date: July 25, 1988.
Jan W. Mares,
Assistant Secretary, Import Administration.