Preliminary Affirmative Countervailing Duty Determination: Small Diameter Circular Seamless Carbon and Alloy Steel Standard, Line and Pressure Pipe (``Seamless Pipe'') From Italy

DEPARTMENT OF COMMERCE

[C-475-815]

Preliminary Affirmative Countervailing Duty Determination: Small

Diameter Circular Seamless Carbon and Alloy Steel Standard, Line and

Pressure Pipe (``Seamless Pipe'') From Italy

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: November 28, 1994.

FOR FURTHER INFORMATION CONTACT: Thomas McGinty or Peter Wilkniss,

Office of Countervailing Investigations, Import Administration, U.S.

Department of Commerce, Room 3099, 14th Street and Constitution Avenue,

N.W., Washington, D.C. 20230; telephone (202) 482-5055 and (202) 482-

0588, respectively.

Preliminary Determination

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 of seamless pipe in Italy. For

information on the estimated net subsidies, please see the Suspension

of Liquidation section of this notice.

Case History

Since the publication of the notice of initiation in the Federal

Register (59 FR 37028, July 20, 1994), the following events have

occurred.

On July 26 and 27, 1994, respectively, we issued countervailing

duty questionnaires to the Government of Italy (``GOI'') and the

Commission of the European Communities (``EC''), in Washington, D.C.,

concerning petitioner's allegations. On August 2, 1994, the GOI

responded to the first section of our questionnaire informing us that

Dalmine S.p.A. (``Dalmine''), an Italian steel pipe producer, accounted

for more than 85 percent of Italian exports of the subject merchandise

to the United States during the POI. The GOI, the EC, and Dalmine

submitted questionnaire responses on October 3, 1994. On October 18,

1994, we issued deficiency questionnaires to these parties. We received

responses from the GOI and the EC on October 31, 1994, and from Dalmine

on November 7, 1994.

On August 24, 1994, we postponed the preliminary determination in

this investigation until November 18, 1994 (59 FR 43554, August 24,

1994).

Scope of Investigation

For the purposes of this investigation, seamless pipes are seamless

carbon and alloy (other than stainless) steel pipes, of circular cross-

section, not more than 114.3 mm (4.5 inches) in outside diameter,

regardless of wall thickness, manufacturing process (hot-finished or

cold-drawn), end finish (plain end, bevelled end, upset end, threaded,

or threaded and coupled), or surface finish. These pipes are commonly

known as standard pipe, line pipe or pressure pipe, depending upon the

application. They may also be used in structural applications.

The seamless pipes subject to this investigation are currently

classifiable under subheadings 7304.10.10.20, 7304.10.50.20,

7304.31.60.50, 7304.39.00.16, 7304.39.00.20, 7304.39.00.24,

7304.39.00.28, 7304.39.00.32, 7304.51.50.05, 7304.51.50.60,

7304.59.60.00, 7304.59.80.10, 7304.59.80.15, 7304.59.80.20, and

7304.59.80.25 of the Harmonized Tariff Schedule of the United States

(``HTSUS'').

The following information further defines the scope of this

investigation, which covers pipes meeting the physical parameters

described above:

Specifications, Characteristics, and Uses: Seamless pressure pipes

are intended for the conveyance of water, steam, petrochemicals,

chemicals, oil products, natural gas, and other liquids and gasses in

industrial piping systems. They may carry these substances at elevated

pressures and temperatures and may be subject to the application of

external heat. Seamless carbon steel pressure pipe meeting the American

Society for Testing and Materials (``ASTM'') standard A-106 may be used

in temperatures of up to 1000 degrees fahrenheit, at various American

Society of Engineers (``ASME'') code stress levels. Alloy pipes made to

ASTM standard A-335 must be used if temperatures and stress levels

exceed those allowed for A-106 and the ASME codes. Seamless pressure

pipes sold in the United States are commonly produced to the ASTM-106

standard.

Seamless standard pipes are most commonly produced to the ASTM A-53

specification and generally are not intended for high temperature

service. They are intended for the low temperature and pressure

conveyance of water, steam, natural gas, air and other liquids and

gasses in plumbing and heating systems, air conditioning units,

automatic sprinkler systems, and other related uses. Standard pipes

(depending on type and code) may carry liquids at elevated temperatures

but must not exceed relevant ASME code requirements.

Seamless line pipes are intended for the conveyance of oil and

natural gas or other fluids in pipe lines. Seamless line pipes are

produced to the API 5L specification.

Seamless pipes are commonly produced and certified to meet ASTM A-

106, ASTM A-53, and API 5L specifications. Such triple certifications

of pipes is common because all pipes meeting the stringent A-106

specification necessarily meet the API 5L and ASTM A-53 specifications.

Pipes meeting the API 5L specification necessarily meet the ASTM A-53

specification. However, pipes meeting the A-53 or API 5L specifications

do not necessarily meet the A-106 specification. To avoid maintaining

separate productions runs and separate inventories, manufacturers

triple certify the pipes. Since distributors sell the vast majority of

this product, they can thereby maintain a single inventory to service

all customers.

The primary application of ASTM A-106 pressure pipes and triple

certified pipes is in pressure piping systems by refineries,

petrochemical plants, and chemical plants. Other applications are in

power generation plants (electrical-fossil fuel or nuclear), and in

some oil field uses (on shore and off shore) such as for separator

lines, gathering lines, and metering runs. A minor application of this

product is for use as oil and gas distribution line for commercial

applications. These applications constitute the majority of the market

for the subject seamless pipes. However, A-106 pipes may be used in

some boiler applications.

The scope of this investigation includes all multiple-stenciled

seamless pipe meeting the physical parameters described above and

produced to one of the specifications listed above, whether or not also

certified to a non-covered specification. Standard, line and pressure

applications are defining characteristics of the scope of this

investigation. Therefore, seamless pipes meeting the physical

description above, but not produced to the A-106, A-53, or API 5L

standards shall be covered if used in an A-106, A-335, A-53, or API 5L

application.

For example, there are certain other ASTM specifications of pipe

which, because of overlapping characteristics, could potentially be

used in A-106 applications. These specifications include A-162, A-192,

A-210, A-333, and A-524. When such pipes are used in a standard, line

or pressure pipe application, such products are covered by the scope of

this investigation.

Specifically excluded from this investigation are boiler tubing,

mechanical tubing, and oil country tubular goods except when used in a

standard, line or pressure pipe application. Also excluded from this

investigation are redraw hollows for cold-drawing when used in the

production of cold-drawn pipe or tube.

Although the HTSUS subheadings are provided for convenience and

U.S. Customs purposes, our written description of the scope of this

proceeding is dispositive. This scope description is currently under

review and may be altered in the preliminary determination of the

companion antidumping duty investigation of seamless pipe from Italy.

Injury Test

Because Italy 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

seamless pipe from Italy materially injure, or threaten material injury

to, a U.S. industry. On August 3, 1994, the ITC preliminarily

determined that there is a reasonable indication that an industry in

the United States is being materially injured or threatened with

material injury by reason of imports from Italy of the subject

merchandise (59 FR 42286, August 17, 1994).

Petitioner

The petition in this investigation was filed by Gulf States Tubes,

a division of Quanex Corporation.

Corporate History of Respondent Dalmine

Prior to its liquidation in 1988, Finsider S.p.A. (``Finsider'')

was the holding company for all state-owned steel companies in Italy.

Dalmine was an operating company wholly owned by Finsider. After

Finsider's liquidation, a new government-owned holding company, ILVA

S.p.A. (``ILVA''), was created. ILVA took over the former Finsider

companies, among them Dalmine, which became a subsidiary of ILVA in

1989, when Finsider's shareholding in Dalmine was transferred to ILVA.

Between 1990 and 1993, Dalmine itself was restructured. Dalmine

became a financial holding company, with industrial, trading, and

service shareholdings. As part of its restructuring, Dalmine made

several asset purchases, sold two of its subsidiaries to private

parties, and closed several manufacturing facilities. As of December

31, 1993, the Dalmine Group consisted of a holding company (Dalmine

S.p.A.), four wholly-owned, and one majority-owned, manufacturing

companies, and a number of sales and service subsidiaries.

During the POI, ILVA was owned by the Istituto per la Ricostruzione

Industriale (``IRI''), a holding company which was wholly-owned by the

GOI.

Spin-offs

In its questionnaire response, Dalmine reported that between 1990

and 1991, as part of its overall restructuring process, the company

sold two ``productive units'' to private buyers. According to Dalmine,

these sales involved assets that do not produce the subject

merchandise. Based on our analysis of Dalmine's response with respect

to the productive units sold, we preliminarily determine that the

amount of potentially spun-off benefits is insignificant. Therefore, we

have not evaluated whether these benefits are attributable to sales of

the subject merchandise for purposes of this preliminary determination.

(See Final Concurrence Memorandum dated November 18, 1994.)

Equityworthiness

Petitioner has alleged that Dalmine was unequityworthy in 1989, the

year it received an indirect equity infusion from the GOI, through ILVA

S.p.A. (``ILVA''), and that the equity infusion was, therefore,

inconsistent with commercial considerations.

In its questionnaire response, Dalmine has provided evidence that

private investors, unrelated to Dalmine or the GOI, purchased a

significant percentage of the 1989 equity offering, on the same terms

as ILVA. Therefore, the Department preliminarily determines that ILVA's

purchase of Dalmine's shares was consistent with commercial

considerations. (See section 355.44(e)(1)(i) of the Proposed

Regulations.)

Creditworthiness

Petitioner has alleged that Dalmine was uncreditworthy in every

year between 1979 and 1993. In accordance with section 355.44 of the

Proposed Regulations, we examined Dalmine's current, quick, times

interest earned, and debt-to-equity ratios, in addition to its profit

margin. Based on this analysis, we preliminarily determine that Dalmine

was creditworthy from 1979 through 1993. (See Creditworthy Memorandum,

November 18, 1994). Specifically, although a number of the financial

indicators are weak for certain years, none of the indicators are weak

over the medium or long term, and when examined together on a yearly

basis, the indicators support the determination that Dalmine was

creditworthy in every year examined. In addition, Dalmine received

comparable long-term, commercial loans from private lenders in several

of the years examined. While we have based our preliminary

creditworthiness determination on the company's financial indicators,

the fact that Dalmine received a number of long-term commercial loans

during this period supports our finding.

Benchmarks and Discount Rates

Dalmine did not take out any long-term fixed rate lira denominated

loans or other debt obligations in any of the years of the government

loans under investigation. Therefore, in accordance with section

355.44(b)(4) of the Proposed Regulations, we used, as the benchmark

interest rate, the Bank of Italy reference rate. We have determined

that this rate constitutes the best approximation of the cost of long-

term borrowing in Italy and the only long-term fixed interest rate

commonly available in Italy. (See Final Affirmative Countervailing Duty

Determinations: Certain Steel Products from Italy (``Certain Steel from

Italy''), 58 FR, 37327 (July 9, 1993).)

We have also used this rate as the discount rate for allocating

over time the benefit from non-recurring grants for the same reasons as

explained in Final Affirmative Countervailing Duty Determination:

Certain Steel Products from Spain, 58 FR 37374, 37376 (July 9, 1993).

For long-term loans denominated in other currencies, we used, as

the benchmark interest rate, the average long-term fixed interest rate

denominated in the same currency. (See section E--Article 54 Loans

below.)

Calculation Methodology

For purposes of this preliminary determination, the period for

which we are measuring subsidies (the POI) is calendar year 1993. In

determining the benefits received under the various programs described

below, we used the following calculation methodology. We first

calculated the benefit attributable to the POI for each countervailable

program, using the methodologies described in each program section

below. For each program, we then divided the benefit attributable to

Dalmine in the POI by Dalmine's total sales revenue, as none of the

programs was limited to either certain subsidiaries or products of

Dalmine. Next, we added the benefits for all programs, including the

benefits for programs which were not allocated over time, to arrive at

Dalmine's total subsidy rate. Because Dalmine is the only respondent

company in this investigation, this rate is also the country-wide rate.

Consistent with our practice in preliminary determinations, when a

response to an allegation denies the existence of a program, receipt of

benefits under a program, or eligibility of a company or industry under

a program, and the Department has no persuasive evidence showing that

the response is incorrect, we accept the response for purposes of the

preliminary determination. All such responses, however, are subject to

verification. If the response cannot be supported at verification, and

the program is otherwise countervailable, the program will be

considered a subsidy in the final determination.

Based upon our analysis of the petition and the responses to our

questionnaires, we preliminarily determine the following:

I. Programs Preliminarily Determined to be Countervailable

A. Benefits Provided Under Law 675/77

Law 675/77 was enacted in 1977 to bring about restructuring and

reconversion in the following industrial sectors: (1) electronic

technology; (2) the manufacturing industry; (3) the agro-food industry;

(4) the chemical industry; (5) the steel industry; (6) the pulp and

paper industry; (7) the fashion sector; and (8) the automobile and

aviation sectors. Law 675/77 also sought to promote optimal

exploitation of energy resources, and ecological and environmental

recovery.

A primary goal of this legislation was to bring all government

industrial assistance programs under a single law. Other goals were (1)

to reorganize and develop the industrial sector as a whole; (2) to

increase employment in the South; and (3) to maintain employment in

depressed areas. Among other measures taken, the Interministerial

Committee for the Coordination of Industrial Policy (``CIPI'') was

created as a result of Law 675/77. CIPI approves individual projects in

each of the industrial sectors listed above.

Six main programs were provided under Law 675/77: (1) interest

contributions on bank loans; (2) mortgage loans provided by the

Ministry of Industry at subsidized interest rates; (3) interest

contributions on funds raised by bond issues; (4) capital grants for

projects in the South; (5) personnel retraining grants; and (6) VAT

reductions on purchases of capital goods by companies in the South.

Dalmine reported that it received benefits under items (1), (2), and

(5) above.

In its response, the GOI asserts that the steel and automobile

industries did not receive a ``disproportionate'' share of benefits

associated with interest contributions when the extent of government

investment in those industries is compared to the extent of investment

in other industries. However, in keeping with past practice, we did not

consider the level of investment in the individual industries receiving

benefits under Law 675/77. Instead, we followed the analysis outlined

in Grain-Oriented Electrical Steel and Final Affirmative Countervailing

Duty Determination: Certain Steel Products from Brazil, 58 FR 37295,

37295 (July 9, 1993), of comparing the share of benefits received by

the steel industry to the collective share of benefits provided to

other users of the programs.

According to the information provided by the GOI, the two dominant

users of the interest contribution program were (1) the Italian steel

industry which accounted for 33 percent of the benefits, and (2) the

auto industry which accounted for 34 percent of the benefits. Likewise,

with respect to the mortgage loans, the two dominant users were the

auto and steel industries which received 45 percent and 31 percent of

the benefits, respectively.

In light of the above evidence, we preliminarily determine that the

steel industry was a dominant user of both the interest contribution

and the mortgage loan programs under Law 675/77 because the steel

industry has been a dominant user of these programs. (See section

355.43(b)(2)(iii) of the Proposed Regulations.) Therefore, we

preliminarily determine that benefits received by Dalmine under these

programs are being provided to a specific enterprise or industry or

group of enterprises or industries. On this basis, we preliminarily

find Law 675/77 financing to be countervailable.

Under the interest contribution program, Italian commercial banks

provided loans to industries designated under Law 675/77. According to

the responses of the GOI and Dalmine, the interest owed by the

recipient companies was partially offset by interest contributions from

the GOI. Dalmine received bank loans with interest contributions under

Law 675/77 which were outstanding in the POI.

Because Dalmine knew that it would receive the GOI interest

contributions over the life of the loan when it obtained the loans, we

consider the contributions to constitute reductions in the interest

rates charged rather than grants (see Certain Steel from Italy at

37335).

Under the mortgage loan program, the GOI provides long-term loans

at subsidized interest rates. Dalmine received financing under this

program which was outstanding in the POI.

To determine whether these programs conferred a benefit, we

compared the effective interest rate paid by Dalmine to the benchmark

interest rate, discussed above. Based on this comparison, we

preliminarily determine that the financing provided under these

programs is inconsistent with commercial considerations, i.e., on terms

more favorable than the benchmark financing.

To calulcate the benefit from these programs, we used our standard

long-term loan methodology as described in section 355.49(c)(1) of the

Proposed Regulations. We then divided the benefit allocated to the POI

for each program by Dalmine's total sales in 1993. On this basis, we

determine the net subsidy from these programs to be 0.47 percent ad

valorem for all manufacturers, producers, and exporters in Italy of the

subject merchandise.

With respect to retraining grants provided to Dalmine under Law

675/77, it is the Department's practice to treat training benefits as

recurring grants. (See Certain Steel General Issues Appendix at 37226).

Since the only grant reported under this program was received by

Dalmine in 1986, any benefit to Dalmine as a result of this grant

cannot be attributed to the POI. Therefore, we determine that

retraining benefits provided under Law 675/77 conferred no benefit to

Dalmine during the POI.

B. Grants Under Law 193/84

According to the GOI, Articles 2, 3, and 4 of Law 193/84 provide

for subsidies to close steel plants. As stated in Art. 20 of Law N. 46

of 17/2/1982, steel enterprises, including enterprises producing

seamless pipes, welded pipes, conduits and welded pipes for water and

gas, are the recipients of these subsidies. As benefits under this

program are limited to the steel industry, we preliminary determine

that Law 193/84 is de jure specific and, therefore, countervailable. In

this investigation, information provided by Dalmine indicates that the

company received grants under Law 193/84.

To calculate the benefit during the POI, we used our standard grant

methodology (see section 355.49(b) of the Proposed Regulations). We

then divided the benefits attributable to Dalmine under Law 193/84 in

the POI by Dalmine's total sales. On this basis, we determine the

estimated net subsidy to be 0.75 percent ad valorem for all

manufacturers, producers, and exporters in Italy of the subject

merchandise.

C. Exchange Rate Guarantee Program

This program, which was enacted by Law 796/76, provides exchange

rate guarantees on foreign currency loans from the European Coal and

Steel Community (``ECSC'') and The Council of European Resettlement

Fund (``CER''). Under the program, repayment amounts are calculated by

reference to the exchange rate in effect at the time the loan is agreed

upon. The program sets a ceiling and a floor on repayment to limit the

effect on the borrower of exchange rate changes over time. For example,

if the lire depreciates five percent against the DM (the currency in

which the loan is taken out), borrowers would normally find that they

would have to repay five percent more (in lire terms). However, under

the Exchange Rate Guarantee Program, the ceiling would act to limit the

increased repayment amount to two percent. There is also a floor in the

program which would apply if the lire appreciated against the DM. The

floor would limit any windfall to the borrower.

In Grain-Oriented Electrical Steel, the Department found this

program to be not countervailable because of incomplete information

regarding the specificity of the program. The Department stated that,

because the determination was reached while lacking certain important

information, the finding of non-countervailability would not carry over

to future investigations.

In this investigation, information provided by the GOI shows that

the steel industry received 25% of the benefits under the program.

Based on this information, the Department preliminarily determines that

the steel industry was a dominant user of exchange rate guarantees

under Law 796/76 and, thus, that benefits received by Dalmine under

this law are being provided to a specific enterprise or industry or

group of enterprises or industries. (See section 355.43(b)(2)(iii) of

the Proposed Regulations.) Therefore, we preliminarily determine that

the exchange rate guarantees offered under the program are

countervailable to the extent they are provided on terms inconsistent

with commercial considerations.

Dalmine provided information that it could have purchased an

exchange rate guarantee from commercial sources. However, Dalmine's

information pertained to 1993, not to the period when the government-

provided guarantees were taken out. The GOI's response indicates that

commercial exchange rate guarantees were not available in 1986, the

year in which the loan and the guarantee were received. Therefore, we

preliminarily determine the benefit to Dalmine to be the total amount

of GOI payments on these loans made during the POI by the GOI. (Because

the amount the government will pay in any given year will not be known

until that year, benefits can only be calculated on a year-by-year

basis.) We divided the GOI's payments in 1993 by Dalmine's 1993 total

sales. On this basis, we determine the estimated net subsidy from this

program to be 0.20 percent ad valorem for all manufacturers, producers,

and exporters in Italy of the subject merchandise.

II. Programs Preliminarily Determined to be Not Countervailable

A. 1988/89 Equity Infusion

In November 1989, Dalmine completed an equity rights offering which

allowed existing shareholders to purchase 7 new shares for every 10

shares they already owned. The new shares were offered at a price of

LIT 300 per share. At that time, ILVA owned 81.7 percent of Dalmine's

equity, with the remaining 18.3 percent owned by private investors.

Pursuant to the rights offering, ILVA subscribed to its full allotment

of the new shares. The remainder of the new shares were purchased by

private shareholders. All shares were purchased at LIT 300 per share.

Petitioner argues that although Dalmine's shares were nominally

publicly traded, the vast majority of Dalmine shares were indirectly

owned by the GOI and, therefore, shares were not purchased in adequate

volume by private investors to establish a valid benchmark.

Specifically, petitioner contends that in 1991 ILVA owned 99.9 percent

of Dalmine and, therefore, Dalmine's shares were in fact not publicly

traded. Consequently, because essentially no private purchases were

being made, the market price at the time of the equity infusion cannot

serve as a valid benchmark. Furthermore, petitioner asserts that it is

highly likely that the remaining shares not purchased by ILVA were

purchased indirectly by the GOI through other holding companies.

In response to our questionnaire, Dalmine provided a list of all

purchasers of shares in the 1989 offering. There is no evidence to

indicate that the shares not purchased by ILVA were purchased by other

government controlled or owned entities, as petitioner suggests.

Moreover, the extent of ILVA's ownership in 1991 is not relevant to the

choice of a benchmark for the equity investment in 1989.

We have preliminarily determined that, because 18.3 percent of the

equity infusion was purchased by private shareholders, the sale of

these shares provides the market-determined price for Dalmine's equity.

Furthermore, in accordance with section 355.44 (e)(1) of the

Department's Proposed Regulations, we preliminarily determine that the

equity infusion is not countervailable because the market-determined

price for Dalmine's shares is not less than the price paid by ILVA for

those shares.

B. European Social Fund (``ESF'') Grants

The ESF was established by the 1957 European Economic Community

Treaty to increase employment and help raise worker living standards.

As described in Grain-Oriented Electrical Steel, the ESF receives

its funds from the EC's general budget whose main revenue sources are

customs duties, agricultural levies, value-added taxes collected by the

member states, and other member state contributions.

The member states are responsible for selecting the projects to be

funded by the EC. The EC then disburses the grants to the member states

which manage the funds and implement the projects. According to the EC,

ESF grants are available to (1) people over 25 who have been unemployed

for more than 12 months; (2) people under 25 who have reached the

minimum school-leaving age and who are seeking a job; and (3) certain

workers in rural areas and regions characterized by industrial decline

or lagging development.

The GOI has stated that the ESF grants received by Italy have been

used for vocational training. Certain regions in the South are also

eligible for private sector re-entry and retraining schemes. Since

1990, the vocational training grants have been available to unemployed

youths and long-term unemployed adults all over Italy, according to the

GOI. Before 1990, however, the GOI gave preference to certain regions

in Italy.

In Grain-Oriented Electrical Steel, we determined that this program

was not regionally specific and not otherwise limited to a specific

enterprise or industry, or group of enterprises or industries.

Furthermore, we noted that to the extent there is a regional preference

(i.e., southern Italy) in the distribution of ESF benefits, it has not

resulted in a countervailable benefit to the production of the subject

merchandise, which is produced in northern Italy.

The GOI's response in this investigation is consistent with the

information provided in Grain-Oriented Electrical Steel. Therefore, we

preliminarily determine that this program is not limited to a specific

enterprise or industry, or group of enterprises or industries and,

therefore, is not countervailable.

C. ECSC Article 54 Loans

Under Article 54 of the 1951 ECSC Treaty, the European Commission

provides loans directly to iron and steel companies for modernization

and the purchase of new equipment. The loans finance up to 50 percent

of an investment project. The remaining financing needs must be met

from other sources. The Article 54 loan program is financed by loans

taken by the Commission, which are then re-lent to iron and steel

companies in the member states at a slightly higher interest rate than

that at which the Commission obtained them.

Consistent with the Department's finding in Grain-Oriented

Electrical Steel, we preliminarily determine that this program is

limited to the iron and steel industry. As a result, loans under this

program are specific.

Of the Article 54 loans Dalmine had outstanding during the POI,

some were denominated in U.S. dollars and others were in Dutch guilders

(``NLG''). To determine whether the loans were provided on terms

inconsistent with commercial considerations, we used benchmark interest

rates for the currencies in which the loans were denominated. That is,

for the U.S. dollar loans we used the average interest rate on long-

term fixed-rate U.S. dollar loans obtained in the United States, as

reported by the Federal Reserve. For the NLG denominated loan, we used

the average long-term bond rate for private borrowers in the

Netherlands, as reported by the Organization for Economic Cooperation

and Development (``OECD'').

Because the interest rates paid on Dalmine's Article 54 loans are

higher than the benchmark interest rates, the Department preliminarily

determines that loans provided under this program are not preferential

and, therefore, not countervailable.

D. 1989 Provisional Payment in Connection With 1989 Equity Infusion

In March 1989, ILVA made a payment to Dalmine in anticipation of

purchasing new shares in Dalmine. The payment was provisional in nature

because EC authorization of the capital increase was necessary, and if

authorization was not granted, the money would have been repaid to

ILVA. The capital increase was not finalized until November 1989, due

to delays in EC approval. At that time, the payment became equity

capital.

Consistent with the Department's position in Final Affirmative

Countervailing Duty Determination: Grain-Oriented Electrical Steel from

Italy (Grain-Oriented Electrical Steel), 59 FR 18357 (April 18, 1994),

we preliminarily determine that the funds provided by ILVA to Dalmine

are countervailable.

During the period March-November 1989, Dalmine had use of the money

and paid no interest on it. Therefore, we have treated the funds

provided by ILVA to Dalmine as an interest-free short-term loan from

March 1989 to November 1989.

Because any benefit from this interest-free loan would be allocable

entirely to 1989, no benefit is attributable to the POI.

III. Programs Preliminarily Determined to be Not Used

Based on the information provided in the responses, we

preliminarily determine that the following programs were not used. This

determination is subject to verification.

1. Preferential IMI Export Financing Under Law 227/77

2. Preferential Insurance Under Law 227/77

3. Retraining Grants under Law 181/89

4. Benefits under ECSC Article 56

Verification

In accordance with section 776(b) of the Act, we will verify the

information submitted by respondents prior to making our final

determination.

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 seamless

pipe from Italy, 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.

Seamless Pipe

Country-Wide Ad Valorem Rate--1.42 percent

ITC Notification

In accordance with section 703(f) of the Act, we will notify the

ITC of our determination. 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 determination is affirmative, the ITC will make its

final determination within 45 days after the Department makes its final

determination.

Public Comment

In accordance with 19 CFR 355.38, we will hold a public hearing, if

requested, to afford interested parties an opportunity to comment on

this preliminary determination. The hearing will be held on January 18,

1995, at the U.S. Department of Commerce, Room 3708, 14th Street and

Constitution Avenue, N.W., Washington, D.C. 20230. Individuals who wish

to request 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

B099, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

Parties should confirm by telephone the time, date, and place of the

hearing 48 hours before the scheduled time.

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. In addition,

ten copies of the business proprietary version and five copies of the

nonproprietary version of the case briefs must be submitted to the

Assistant Secretary no later than January 9, 1995. Ten copies of the

business proprietary version and five copies of the nonproprietary

version of the rebuttal briefs must be submitted to the Assistant

Secretary no later than January 16, 1995. An interested party may make

an affirmative presentation only on arguments included in that party's

case or rebuttal briefs. Written arguments should be submitted in

accordance with section 355.38 of the Commerce Department's regulations

and will be considered if received within the time limits specified

above.

This determination is published pursuant to section 703(f) of the

Act (19 U.S.C. 1671b(f)).

Dated: November 18, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-29239 Filed 11-25-94; 8:45 am]

BILLING CODE 3510-DS-P