(Cite as: 54 FR 16384)
NOTICES
DEPARTMENT OF COMMERCE
[C-469-004]
Stainless Steel Wire Rod From Spain; Preliminary Results of Countervailing Duty Administrative Review
Monday, April 24, 1989
*16384 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. We preliminarily determine the net subsidy for the period January 1, 1987 through December 31, 1987 to be 0.42 percent ad valorem, a rate we consider de minimis. We invite interested parties to comment on these preliminary results.
EFFECTIVE DATE: April 24, 1989.
FOR FURTHER INFORMATION CONTACT: Laurie Goldman or Paul McGarr, Office of Countervailing Compliance, International Trade Administration, U.S. Department of Commerce, Washington, DC 20230; telephone: (202) 377-2786.
SUPPLEMENTARY INFORMATION:
Background
On July 28, 1988, the Department of Commerce ("the Department") published in the Federal Register (53 FR 28427) the final results of its last administrative review of the countervailing duty order on stainless steel wire rod from Spain (48 FR 52; January 3, 1983). On January 29, 1988, a Spanish exporter, Roldan S.A., requested in accordance with section 355.10 of the Commerce Regulations an administrative review of the order. We published the initiation on March 2, 1988 (53 FR 6681). 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, under the auspices of the Customs Cooperation Council, has developed a system of tariff classification based on the international harmonized system of Customs nomenclature. On January 1, 1989, the United States fully converted to the Harmonized Tariff Schedule (HTS) as provided for in section 1201 et seq. of the Omnibus Trade and Competitiveness Act of 1988. All merchandise entered, or withdrawn from warehouse, for consumption on or after that date is now classified solely according to the appropriate HTS item number(s).
Imports covered by this 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, whether or not tempered or treated or partly manufactured. During the review period, such merchandise was classified under item numbers 607.2600 and 607.4300 of the Tariff Schedules of the United States Annotated. This merchandise is currently classifiable under HTS item numbers 7221.00.00.20 and 7221.00.00.40. The review covers the period January 1, 1987 through December 31, 1987 and six programs.
Analysis of Programs
(1) Long-Term Loans Under the Concerted Action Program
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 review period. The loan was received in multiple disbursements from 1977 to 1981. Because the 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.
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. We treated the multiple disbursements as individual loans.
To calculate the benefit, we found the difference between the annual amounts of principal and interest Roldan actually paid and the annual amounts of principal and interest Roldan would have paid if it had received each disbursement at our commercial benchmark rate. We then calculated the "grant equivalent" of each disbursement by determining the present value (at the time the preferential loan was made) of the difference in annual payments that would occur during the life of the loan. Using our declining balance methodology with the long-term commercial benchmark as the discount rate, we allocated the grant equivalents *16385 over the life of the loan. We then totaled the review period benefits allocated for each disbursement.
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 0.27 percent ad valorem during the review period.
(2) Prefinancing of Exports Under Privileged Circuit Exporter Credit Program
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 percentage of lendable fundsfor the prefinancing of exports. The maximum amount of allowable funds for prefinancing of exports was 69 percent of the invoice value until July 1, 1987, when it was reduced to 61 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 compared the preferential interest rate to our commercial benchmark and applied the interest differential to the principal amounts of the loans. We used as our commercial benchmark an annual average of the "free" three-month lending 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 stainless steel wire rod to the United States during the review period. We preliminarily determine the benefit from this program to be 0.15 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 the Ministerial Order of December 17, 1984 and pursuant to Royal Decree 101/1984 of January 25, 1984, the Institute for the Diversification and Saving of Energy provides funds for investment in energy saving equipment. This program is part of the National Energy Saving Plan (PEN) and open to all energy saving projects. Roldan received a grant for energy saving equipment under this program.
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 taken advantage of this program. 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.
(4) Other Programs
We also examined the following programs and preliminarily determine that Roldan did not use them during the review period:
C. Regional Incentives Program.
Preliminary Results of Review
As a result of our review, we preliminarily determine the net subsidy for the period January 1, 1987 through December 31, 1987 to be 0.42 percent ad valorem. The Department considers any rate less than 0.50 percent to be de minimis.
The Department intends to instruct the Customs Service to liquidate, without regard to countervailing duties, all shipments of this merchandise exported on or after January 1, 1987 and on or before December 31, 1987.
The Department also intends to instruct the Customs Service to waive cash deposits of estimated countervailing duties, as provided by section 751(a)(1) of the Tariff Act, on all shipments of this merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this review. This deposit waiver shall 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 10 days of the date of publication. Any hearing, if requested, will be held 30 days after the date of publication or the last workday preceding. Any request for an administrative protective order must be made no later than 5 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) of the Tariff Act (19 U.S.C. 1675(a)(1)) and s 355.22 of the Commerce Regulations published in the Federal Register on December 27, 1988 (53 FR 52306) (to be codified at 19 CFR 355.22).
Date: April 14, 1989.
Timothy N. Bergan,
Acting Assistant Secretary for Import Administration.