Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From the United Kingdom; Final Results of Countervailing Duty Administrative Review

DEPARTMENT OF COMMERCE

[C-412-811]

Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From

the United Kingdom; Final Results of Countervailing Duty Administrative

Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Final Results of Countervailing Duty Administrative

Review.

-----------------------------------------------------------------------

SUMMARY: On May 10, 1995, the Department of Commerce (the Department)

published in the Federal Register its preliminary results of

administrative review of the countervailing duty order on Certain Hot-

Rolled Lead and Bismuth Carbon Steel Products from the United Kingdom

for the period September 17, 1992, through December 31, 1993. We have

completed this review and determine the net subsidy to be 20.33 percent

ad valorem for Allied Steel and Wire Limited (ASW Limited), and 7.03

percent ad valorem for all other companies for the period September 17,

1992, through December 31, 1992; we further determine the net subsidy

to be 20.33 percent ad valorem for ASW Limited, 2.68 percent ad valorem

for United Engineering Steels (UES), and 9.76 percent ad valorem for

all other companies for the periods January 1, 1993, through January

14, 1993, and March 22, 1993, through December 31, 1993. We will

instruct the U.S. Customs Service to assess countervailing duties as

indicated above.

EFFECTIVE DATE: October 26, 1995.

FOR FURTHER INFORMATION CONTACT: Melanie Brown or Christopher Cassel,

Office of Countervailing Compliance, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W., Washington, D.C. 20230;

telephone: (202) 482-4406; (202) 482-4847.

SUPPLEMENTARY INFORMATION:

Background

On May 10, 1995, the Department published in the Federal Register

(60 FR 24833) the preliminary results of its administrative review of

the countervailing duty order on Certain Hot-Rolled Lead and Bismuth

Carbon Steel Products from the United Kingdom. The Department has now

completed this administrative review in accordance with section 751 of

the Tariff Act of 1930, as amended (the Act).

We invited interested parties to comment on the preliminary

results. On

[[Page 54842]]

June 9, 1995, case briefs were submitted by the Government of the

United Kingdom (UKG) and UES, a producer of the subject merchandise

which exported hot-rolled lead and bismuth carbon steel products to the

United States during the review period (respondents), and Inland Steel

Bar Co. and USS/Kobe Steel Co. (petitioners). On June 16, 1995,

rebuttal comments were submitted by UES and by petitioners.

On July 28, 1995, UES presented an additional argument with respect

to the preliminary results. Although it was made after the deadline for

submission of briefs and rebuttal briefs in this review, UES'

submission was prompted by an event which occurred after those

deadlines, and' which according to UES, allegedly affects the results

of this review. That event was the Department's remand determination,

filed with the Court of International Trade (CIT) on July 17, 1995, in

a related case. See Remand Determination on the General Issue of

Privatization: Certain Carbon Steel Products from the United Kingdom

(July 17, 1995) (Privatization Remand Determination). Thus, the

Department determined that it was appropriate to consider UES' argument

and allow interested parties to respond to it. Petitioners submitted

their rebuttal argument on August 18, 1995.

The review covers the period September 17, 1992, through December

31, 1993. The review involves two companies accounting for virtually

all shipments to the United States of the subject merchandise during

the review period, and fifteen programs.

Applicable Statute and Regulations

The Department is conducting this administrative review in

accordance with section 751(a) of the Act. Unless otherwise indicated,

all citations to the statute and to the Department's regulations are in

reference to the provisions as they existed on December 31, 1994.

However, references to the Department's Countervailing Duties; Notice

of Proposed Rulemaking and Request for Public Comments, 54 FR 23366

(May 31, 1989) (Proposed Regulations), are provided solely for further

explanation of the Department's countervailing duty practice. Although

the Department has withdrawn the particular rulemaking proceeding

pursuant to which the Proposed Regulations were issued, the subject

matter of these regulations is being considered in connection with an

ongoing rulemaking proceeding which, among other things, is intended to

conform the Department's regulations to the Uruguay Round Agreements

Act. See 60 FR 80 (Jan. 3, 1995).

Scope of the Review

Imports covered by this review are hot-rolled bars and rods of non-

alloy or other alloy steel, whether or not descaled, containing by

weight 0.03 percent or more of lead or 0.05 percent or more of bismuth,

in coils or cut lengths, and in numerous shapes and sizes. Excluded

from the scope of this review are other alloy steels (as defined by the

Harmonized Tariff Schedule of the United States (HTSUS) Chapter 72,

note 1 (f)), except steels classified as other alloy steels by reason

of containing by weight 0.4 percent or more of lead or 0.1 percent or

more of bismuth, tellurium, or selenium. Also excluded are semi-

finished steels and flat-rolled products. Most of the products covered

in this review are provided for under subheadings 7213.20.00.00 and

7214.30.00.00 of the HTSUS. Small quantities of these products may also

enter the United States under the following HTSUS subheadings:

7213.31.30.00, 60.00; 7213.39.00.30, 00.60, 00.90; 7214.40.00.10,

00.30, 00.50; 7214.50.00.10, 00.30, 00.50; 7214.60.00.10, 00.30, 00.50;

and 7228.30.80. Although the HTSUS subheadings are provided for

convenience and for Customs purposes, our written description of the

scope of this proceeding is dispositive.

Best Information Available for ASW Limited

Section 776(c) of the Act requires the Department to use best

information available (BIA) ``whenever a party or any other person

refuses or is unable to produce information requested in a timely

manner and in the form required, or otherwise significantly impedes an

investigation''.

In determining what rate to use as BIA, the Department follows a

two-tiered methodology. The Department normally assigns lower BIA rates

for those respondents who cooperated in an administrative review and

rates based on more adverse assumptions for respondents who did not.

See Final Affirmative Countervailing Duty Determinations; Certain Steel

Products from Mexico, 58 FR 37352, 37361 (July 9, 1993).

In this review ASW Limited did not respond to the Department's two

requests for information; therefore, we are assigning ASW Limited a

rate based on BIA. The rate we are applying is 20.33 percent ad

valorem. This rate reflects the rate ASW Limited received in the

investigation (see Final Affirmative Countervailing Duty Determination:

Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from the

United Kingdom, 58 FR 6237, 6243 (January 27, 1993)) (Lead Bar). To

this rate we added the weighted average rate calculated in this review

for the Inner Urban Areas Act, since this program was not examined by

the Department during the investigation.

Calculation Methodology for Assessment and Cash Deposit Purposes

We calculated the net subsidy on a country-wide basis by first

calculating the subsidy rate for each company subject to the

administrative review. We then weight-averaged the rate received by

each company using as the weight its share of total UK exports to the

United States of subject merchandise. To determine the value of the

exports of ASW Limited based on BIA (see Best Information Available for

ASW Limited, above), we subtracted the value of UES' exports of subject

merchandise to the United States from the total value of merchandise

imported under the HTSUS numbers which cover the merchandise subject to

this order, as reported in the U.S. IM-146 import statistics.

We then summed the individual companies' weight-averaged rates to

determine the subsidy rate from all programs benefitting exports of

subject merchandise to the United States. Since the country-wide rate

calculated using this methodology was above de minimis, as defined by

19 CFR Sec. 355.7 (1994), for both 1992 and 1993, we proceeded to the

next step, and examined the net subsidy rate calculated for each

company to determine whether individual company rates differed

significantly from the weighted-average country-wide rate, pursuant to

19 CFR Sec. 355.22(d)(3).

For 1992, ASW Limited had a significantly different net subsidy

rate pursuant to 19 CFR Sec. 355.22(d)(3). This company is treated

separately for assessment purposes for the 1992 period. All other

companies are assigned the country-wide rate for this period. For 1993,

both ASW Limited and UES had significantly different net subsidy rates

pursuant to 19 CFR Sec. 355.22(d)(3). These companies are both treated

separately for assessment and cash deposit purposes for the 1993

period. All other companies are assigned the country-wide rate for this

period.

Analysis of Programs

Based upon analysis of the questionnaire responses, verification,

and written comments from the interested parties we determine the

following:

[[Page 54843]]

I. Programs Conferring Subsidies

A. Allocation of Subsidies From British Steel Corporation to UES

UES is a joint venture company formed in 1986 by British Steel

Corporation (BSC) and Guest, Keen & Nettlefolds (GKN). In return for

shares in UES, BSC contributed a major portion of its Special Steels

Business and GKN contributed its Brymbo Steel Works and its forging

business. BSC was wholly owned by the UKG at the time the joint venture

was formed; BSC was privatized in 1988 and now bears the name British

Steel plc (BS plc).

In the preliminary results of this review, we allocated to UES a

portion of the subsidies previously bestowed on BSC under the following

programs:

1. Equity Infusions

2. Regional Development Grant Program

3. National Loan Finds Loan Cancellation

4. European Coal and Steel Community (ECSC) Article 54 Loans/Interest

Rebates

For a complete explanation of the methodology used to allocate

subsidies from BSC to UES, see Preliminary Results of Administrative

Review: Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from

the United Kingdom, 60 FR 24833, 24834-35 (May 10, 1995). Our analysis

of the comments submitted by the interested parties, summarized below,

has not led us to change our findings in the preliminary results.

B. Inner Urban Areas Act

In the preliminary results of this review, we found the Inner Urban

Areas Act to be countervailable. Our analysis of the comments submitted

by the interested parties, summarized below, has not led us to change

this finding.

II. Program Found Not to Confer Subsidies

In the preliminary results of this review, we found ECSC Article 55

Assistance to be non-countervailable. Our analysis of the comments

submitted by the interested parties, summarized below, has not led us

to change these findings.

III. Programs Found Not to be Used

In the preliminary results of this review, we found that

respondents did not apply for or receive benefits under the following

programs during the period of review:

A. New Community Instrument Loans

B. ECSC Article 54 Loan Guarantees

C. NLF Loans

D. ECSC Conversion Loans

E. European Regional Development Fund Aid

F. Article 56 Rebates

G. Regional Selective Assistance

H. ECSC Article 56(b)(2) Redeployment Aid

I. BRITE/EuRAM II

Our analysis of the comments submitted by the interested parties,

summarized below, has not led us to change our findings.

Analysis of Comments

Comment 1: Petitioners argue that the Department should calculate

the rate of cash deposit of estimated countervailing duties based on

UES' current status as a wholly owned subsidiary of BS plc. Because BS

plc purchased all shares in UES previously owned by GKN on March 6,

1995, UES' cash deposit rate should be adjusted to reflect the purchase

and should be applied to both UES and BS plc.

Petitioners claim that revising the cash deposit rate as suggested

is within the Department's authority. They claim that the Department

could accurately estimate the cash deposit rate either by (1)

allocating all of the subsidies given to BSC over the combined

production of UES and BS plc, and using the result as the cash deposit

rate for the BS plc-UES pairing; or, (2) setting the cash deposit rate

for the BS plc-UES pairing at the rate found in the Final Affirmative

Countervailing Duty Determination: Certain Steel Products From the

United Kingdom, 58 FR 37393 (July 9, 1993); or, (3) estimating the

countervailing duty rate by calculating the 1992 subsidy benefit and

adding back the adjustment for repayment of subsidies.

Petitioners argue that unlike antidumping duty reviews, the statute

does not require use of the rate established in the review as the

deposit rate. This suggests that the Department may adjust the deposit

rate as necessary to estimate the countervailing duty most likely to be

assessed in future periods. Petitioners further argue that the need for

an accurate estimation of the 1995 deposit rate in this proceeding is

not obviated by the fact that a subsequent administrative review will

determine an exact assessment rate for 1995, taking into account the

purchase in question.

UES argues that the countervailing duty deposit rate for UES may

not be increased over the net subsidy found in this administrative

review. They maintain that the Department's practice (as specified in

the Proposed Regulations) calls for establishing a different cash

deposit rate only when ``program-wide changes'' have occurred

subsequent to the review period and before the preliminary results of

review are published. Moreover, UES argues, the Proposed Regulations

specify that program-wide changes may not be limited to an individual

firm or firms, and must be ``effectuated by an official act, such as

the enactment of a statute, regulation or decree.'' BS plc's

acquisition of GKN's shares does not meet any of these requirements,

according to UES.

UES also notes that in the investigation of lead and bismuth bar

from Brazil, the Department specifically rejected arguments made by

respondents that a change in the ownership of a company should be

considered as a program-wide change that should affect the cash deposit

rate. If the privatization of a company is not a program-wide change,

then surely the purchase of shares also is not a program-wide change

that requires the adjustment of the cash deposit rate. According to

UES, petitioners fail to show that the mere acquisition of shares in

UES by BS plc changes the liability for countervailing duties that

would otherwise attach to the production of lead bar by UES. Finally,

UES maintains that the Department cannot establish a cash deposit rate

for BS plc because BS plc has not had the opportunity to participate in

this proceeding or to submit comments on this issue as required by both

U.S. international obligations and the Department's regulations.

Department's Position: Contrary to petitioners' arguments, the

Department has no basis in this review to adjust UES' cash deposit rate

to account for BS plc's acquisition. First, because this event occurred

well after the review period, the Department did not seek to examine it

during the review. Thus, there is no information in the record from

which the Department could determine whether or how to adjust the cash

deposit rate. Second, while a cash deposit rate may differ from the

assessment rate, the regulations provide for establishing a different

cash deposit rate only in particular circumstances. Specifically,

section 355.50(a) of the Department's Proposed Regulations mandates

consideration only when a change is program-wide and measurable.

Section 355.50(b) of the Proposed Regulations defines ``program-wide

change'' as a change ``[n]ot limited to an individual firm or firms''

and ``[e]ffectuated by an official act, such as the enactment of a

statute, regulation, or decree, or contained in the schedule of an

existing statute, regulation or decree.'' BS plc's acquisition of GKN's

shares in UES is limited to an individual firm or firms, namely BS plc,

UES and GKN.

[[Page 54844]]

In the Final Affirmative Countervailing Duty Determination: Certain

Hot-Rolled Lead and Bismuth Carbon Steel Products From Brazil, 58 FR

6213, 6220 (January 27, 1995), the Department stated: ``[w]e do not

consider that privatization, in and of itself constitutes a program-

wide change, or that a privatization program is the type of program

contemplated for consideration under . . . the Proposed Regulations.''

BS plc's acquisition of GKN's shares in UES does not represent a

privatization; it is only a sale of shares. Such a transaction does not

constitute a program-wide change. Because the event in question does

not constitute a program-wide change, the question of whether the

change can be measured (the second criteria delineated in the Proposed

Regulations) becomes a moot issue. Moreover, the position argued by

petitioners that the new rate should apply to the UES and BS plc

``pairing'' becomes moot as well.

Comment 2: Petitioners argue that the Department should calculate

the countervailing duty rate without adjusting for the repayment of

subsidies. Petitioners take issue with the repayment methodology

arguing that it leads to absurd results. Namely, because BSC (a

subsidized company) and GKN (an unsubsidized company) contributed the

same value of assets for each share of UES they received, it would be

illogical to assert that the amount received by BSC includes repayment

for past subsidies while the amount received by GKN for assets of the

same value does not. Moreover, if the repayment is included, then BSC

did overpay for its UES shares, and the overpayment constitutes a

subsidy.

Petitioners note that the only available alternative, to consider

the subsidies as part of the value of the Special Steels division, has

already been rejected by the Department in the Certain Steel cases. At

that time, the Department stated that treating the assets themselves as

the subsidy violates the longstanding principle that the subsidy is

measured upon the receipt of the benefit, not upon the use of the

benefit.

UES argues that the Department has properly determined that a

subsidy repayment occurred when UES acquired productive facilities from

BSC. As the Department explained in its remand determination, ``the

Department used the term `repayment' in Certain Steel in a broader

context to include situations where subsidies are `allocated' between

the seller and the entity being sold.'' Remand Determination: Certain

Hot-Rolled Lead and Bismuth Carbon Steel Products from the United

Kingdom (October 12, 1993) (Lead Bar Remand Determination) at 4-6.

Department's Position: We disagree with petitioners' reasoning.

Petitioners appear to imply that repayment of subsidies is in addition

to the agreed-upon value of the assets. The Department has never stated

or implied that. Instead, the Department's repayment methodology is

intended to determine the portion of the sales price of the productive

unit (in this case, the Specialty Steels Division) which represents

repayment of prior subsidies bestowed on the seller of the productive

unit (in this case, BSC), when that seller has been found to have

received subsidies. See General Issues Appendix appended to the Final

Countervailing Duty Determination: Certain Steel Products from Austria,

58 FR 37217, 37259 (July 9, 1993) (General Issues Appendix).

According to the Department's methodology, when the productive unit

is sold, a portion of the sales price is deemed to repay a portion of

the outstanding subsidies, which remain with the seller. This

methodology is simply used to allocate the subsidies between the seller

and the buyer. As the Department explained in its remand determination,

``[w]hen a productive unit is sold by a company which continues to

operate (such as BSC), the potentially allocable subsidies which could

have traveled with the productive unit, but did not because they were

accounted for as part of the purchase price, simply stay with the

selling company.'' Lead Bar Remand Determination at 5. To the extent

that GKN received the same ``payment'' for the assets it contributed to

UES, the Department has not applied its repayment methodology because

there were no allegations during the investigation or in this review

that GKN had received subsidies prior to the formation of UES.

Comment 3: Petitioners refer the Department to the arguments they

made with respect to the underlying investigation of Lead Bar before

the CIT in Inland Steel Bar Co. v. United States (Inland Steel) by

submitting their December 6, 1993, Brief in Support of Plaintiffs' Rule

56.2 Motion for Judgment on the Agency Record and their March 15, 1994,

Reply Brief. Petitioners allege in these court briefs that the

Department improperly reallocated back to BSC a portion of the

subsidies properly chargeable to UES. The briefs also allege that the

statute requires the use of sales ratios rather than asset ratios in

allocating subsidies, and the Department's use of asset ratios was an

improper exercise of Departmental discretion.

Department's Position: The arguments presented in the briefs have

already been considered and rejected by the Department in the Lead Bar

Remand Determination. In this proceeding, petitioners have not

submitted any new evidence or arguments which would warrant

reconsideration of these issues.

Comment 4: UES argues that since the Department has published

notice of the CIT's decision in Inland Steel, 858 F. Supp. 179 (Ct.

Int'l Trade 1994), the Department is legally prohibited from taking

action inconsistent with that decision. In Inland Steel, the CIT found

that ``[w]ith no countervailable benefit surviving the arm's length

transaction between BSC and UES, there is no benefit conferred to UES

and, therefore, no countervailable subsidy within the meaning of 19

U.S.C. 1677(5).'' Therefore, UES argues that there is no basis for the

Department's determination that UES, an independent company that paid

fair market value for its assets, is subsidized as a result of funds

provided to BSC. Moreover, the CIT found in Aimcor et al. v. United

States, 871 F. Supp. 447, 451 (Ct. Intl. Trade 1994) (Aimcor) that in

order for the Department to find a countervailable subsidy, it must be

demonstrated that the bounty or grant ``went to the manufacture,

production, or export of the merchandise in question.'' According to

UES, this decision also makes it clear that the countervailing duty

statute does not permit the Department simply to presume that one

company's production benefits from funds received by another company,

absent substantial evidence that the benefit was ``passed through'' to

the company under investigation.

Petitioners argue that Federal Circuit and CIT holdings support the

Department's practice of waiting for a conclusive court decision before

changing the rate of cash deposit of estimated duties. They note that

Federal Circuit cases (e.g., Timken) have authorized the Department to

wait until issuance of a ``conclusive'' decision (one that ends all

chance of appeal, e.g., a final decision by the Federal Circuit or

final decisions by the CIT that are not appealed) before liquidating

entries or changing the rate of cash deposit of estimated

countervailing duties.

Moreover, petitioners argue that rather than supporting the CIT's

decision in Inland Steel, Aimcor supports the Department's conclusion

that changes in ownership do not affect countervailability. Petitioners

further maintain that in this case, unlike the situation in Aimcor, at

the time the

[[Page 54845]]

subsidies were bestowed on BSC, the Specialty Steels Division was part

of BSC, rather than a partially owned subsidiary.

Department's Position: The Department is not required to follow a

CIT opinion that is before the U.S. Court of Appeals for the Federal

Circuit. According to the Federal Circuit's opinion in Timken Co. v

United States, 893 F.2d 337, 339 (Fed. Cir. 1990) (Timken), an appealed

CIT decision is not a ``final court decision'' within the meaning of 19

U.S.C. 1516a(e). Further, under Melamine Chemicals, Inc. v. United

States, 732 F. 2d 924 (Fed. Cir. 1984) and NTN Bearing Corp. v. United

States, 892 F.2d 1004 (Fed. Cir. 1989), the administrative handling of

entries (including collection of estimated duties), should not be

altered by court decisions, except for suspension of liquidation, until

the issuance of such a final court decision. Because the appeal of the

final countervailing duty determination on certain hot-rolled lead and

bismuth carbon steel products from the United Kingdom is still pending

before the Federal Circuit, there is not yet a final court decision

which the Department is required to follow.

With respect to respondents'' privatization argument that there is

no basis for determining that UES is subsidized as a result of funds

provided to BSC, they have presented no new evidence that would warrant

reconsideration of the Department's determination that past subsidies

bestowed upon BSC passed-through to UES. The arguments presented by UES

have been previously and thoroughly addressed by the Department. See

e.g., Lead Bar 58 FR at 6238; General Issues Appendix 58 FR at 37259

and Lead Bar Remand Determination. Thus, the Department's preliminary

results remain unchanged with respect to this issue.

Comment 5: UES argues that the Department has improperly allocated

the benefit of alleged subsidies over a period representing the average

useful life (AUL) of assets in the steel industry; the Department's

amortization of subsidies using the AUL method is contrary to law and

unsupported by substantial evidence. UES further argues that the CIT

has found that the AUL methodology is arbitrary and bears no necessary

relationship to the benefit from the subsidy funds (see British Steel

plc v. United States, 879 F. Supp. 1254, 1293-99 (Ct. Int'l Trade 1995)

British Steel)). Thus, the Department should abandon this approach.

Petitioners note that British Steel is pending and that the

Department should not decide the appropriate allocation period in this

case until this issue has been resolved by the CIT. Moreover,

petitioners note that UES suggests no alternative to the 15-year

allocation period.

Department's Position: The Department has already considered and

rejected respondent's arguments in prior determinations. See e.g., Lead

Bar 58 FR at 6245 and General Issues Appendix 58 FR at 37225. UES has

not submitted new arguments or evidence that would lead us to

reconsider the AUL method. It is the Department's position that

although the actual duration of the benefit is not identifiable, the

Department must nevertheless choose a reasonable period over which to

allocate grants and equity infusions. The competitive position of any

company ultimately depends upon its productive activity; without

production, there are no other commercial and competitive factors that

are relevant for a manufacturing enterprise. Further, the statute

focuses on benefits to production of the subject merchandise. A

company's renewable physical assets are absolutely essential to

production; and renewable physical assets have a determinable average

useful life. The AUL has competitive significance because the renewal

of physical assets is essential to production. The Department therefore

concludes that the AUL of the renewable physical assets provides a

reasonable approximation of the commercial and competitive benefits for

all non-recurring subsidies, not just subsidies spent on acquiring

renewable physical assets.

In addition, we agree with petitioners with respect to British

Steel. There has not been a final and conclusive court ruling on the

general issue of allocation. Therefore, absent new facts, the

Department is applying the AUL methodology.

Comment 6: The UKG argues that the Department should reverse its

preliminary finding concerning the grants under the Inner Urban Areas

Act (IUAA). The UKG argues that the aid granted under the IUAA is

assistance ``to be used for environmental improvement (i.e.,

beautification of industrial areas).'' Thus, the UKG concludes, such

assistance is not a subsidy ``provided with respect to the manufacture,

production or exportation of merchandise,'' within the meaning of

Aimcor, and therefore should not be treated as a countervailable

subsidy. Moreover, according to the UKG, such assistance does not

confer a benefit that gives rise to a competitive advantage as required

by Cabot Corp. v. United States, 9 CIT 389, 494-495, 620 F. Supp. 722,

729 (1985) (Cabot) and British Steel Corp. v. United States, 9 CIT 85,

95, 605 F. Supp. 286, 194 (1985) (1985 British Steel).

Department's Position: The statute and the Department's regulations

require the Department to countervail a subsidy that is limited in law

to an enterprise or industry or group thereof located in a particular

region. In the case of a program conferring a grant, such as the IUAA,

a countervailable benefit exists in the amount of the grant. See

section 771(5) of the Act and sections 355.43(b)(3) and 355.44(a) of

the Proposed Regulations. In the preliminary results of review, we

determined that aid under the IUAA was limited to enterprises located

in selected regions of the United Kingdom. We also determined that the

grant was bestowed upon UES Ltd., a manufacturer and exporter of the

subject merchandise.

The UKG appears to be arguing that the assistance is tied

specifically to beautification and not to the production or exportation

of merchandise. We disagree with this analysis. The IUAA provides

assistance for environmental improvement (i.e. beautification of

industrial areas) and economic regeneration. In the grant approval

notification documents to UES, the UKG specified that the 1988 funds

were for recladding the Templeborough plant buildings and the 1992

funds were for repairing, cleaning, and painting a service gantry which

is part of the plant facility. Thus, the stated purpose of these grants

was for maintenance of production facilities. The grants benefit the

entire operation of the company and are appropriately allocated to

total sales of the company. Just because a benefit is not tied directly

to production does not mean that it does not provide a benefit to the

company's operations and thus to all merchandise produced by that

company, including subject merchandise. Accordingly, we disagree with

the UKG's contention that the grant in question does not confer a

benefit that gives rise to a competitive advantage per the court's

decision in Cabot and 1985 British Steel.

In addition, the fact that the grant received by UES Ltd. under

this program was ``to be used for environmental beautification'' is not

dispositive for purposes of our analysis. ``[T]he statute requires the

Department to countervail an allocated share of the subsidies received

by producers, regardless of their effect.'' General Issues Appendix 58

FR at 37260. The statute does not direct the Department to consider the

use to which subsidies are put or to measure their effect on the

recipient's subsequent performance. See

[[Page 54846]]

General Issues Appendix 58 FR at 37260-61.

The UKG incorrectly relies on Aimcor in support of its proposition

that the aid granted under the IUAA ``should not be treated as a

countervailable subsidy.'' In Aimcor, the Department found, and the CIT

affirmed, that the purchase of FESILVEN's stock by CVG, the parent

company of FESILVEN, did not constitute a countervailable subsidy.

FESILVEN was the sole producer and exporter of the subject merchandise,

ferrosilicon. The Department found ``an insufficient identity of

interests to warrant treating CVG and FESILVEN as a single entity,''

and thus determined that CVG's purchase of FESILVEN's stock ``did not

result in a bounty or grant because no benefit inured to FESILVEN in

the transaction.'' 871 F. Supp. at 450. Thus, the issue before the

Court in Aimcor was not the purpose or use of the subsidy at hand, but

whether any benefit was ``attributable'' (i.e., assigned or allotted)

to a related producer/exporter of the subject merchandise. If so, the

Department must countervail such subsidies.

Comment 7: UES argues that the Department's preliminary

determination is inconsistent with the Department's recent remand

determination in British Steel. In the preliminary results, the

Department determined that a portion of the countervailable subsidies

previously bestowed on BSC traveled with its Specialty Steels Division

when this division was spun-off to form UES. In the remand

determination, the Department found that the Specialty Steels Division

was not a corporate entity capable of receiving a subsidy and thus no

subsidies could have followed it to UES. See Privatization Remand

Determination at 41. Thus, UES argues, the Department is double-

counting these subsidies and countervailing them both with respect to

the merchandise covered by the countervailing duty order on Certain

Carbon Steel Products from the United Kingdom and the merchandise

covered by the instant countervailing duty order.

Petitioners argue that respondents misread the Department's remand

determination, and note that the Department did not concede that UES

received no subsidies, but rather the Department's findings were based

on best information available. As explained in the Privatization Remand

Determination, British Steel's failure to provide the information

necessary to determine the portion of BSC's subsidies allocable to UES

resulted in the Department's finding that all of BSC's subsidies

remained with BSC. On the issue of double-counting of subsidies,

petitioners argue that both British Steel and UES should properly

deposit estimated countervailing duties until the courts decide which

company is liable. Furthermore, petitioners note that the general issue

of compliance with CIT decisions that are on appeal has been addressed

and disposed of by the CIT in Inland Steel, and by the Federal Circuit,

which has held that ``an appealed CIT decision is not a `final court

decision' within the plain meaning of 19 U.S.C. 1516a(e).'' Timken.

Department's Position: During the remand proceedings in British

Steel, the Department noted that the Court's decision and its

instructions for analyzing the spin-off of the Specialty Steels

Division resulted in a remand determination which was inconsistent with

other determinations in related cases, specifically, the instant case.

The Department stated that ``[t]o the extent that the Department's

implementation of the Court's opinion leads to ``inconsistent

determinations,'' we note that we have registered our disagreement with

the Court's opinion and that the general issue of privatization and

pre-privatization spin-offs, including the UES spin-off, is on appeal

to the United States Court of Appeal for the Federal Circuit.''

(Privatization Remand Determination at 41). The Privatization Remand

Determination is currently pending before the CIT. Furthermore, the

appeal of Inland Steel Bar Co. v. the United States is pending before

the Court of Appeals for the Federal Circuit. In accordance with the

Federal Circuit's reasoning in Timken, since there is no ``final''

court decision, we are not instituting any changes in the privatization

and spin-off methodology.

Final Results of Review

In accordance with 19 CFR 355.22(b)(1), an administrative review

``normally will cover entries or exports of merchandise during the most

recently completed reporting year of the government of the affected

country.'' However, because this is the first administrative review of

this countervailing duty order, in accordance with 19 CF 355.22(b)(2),

it covers the period, and the corresponding entries, ``from the date of

suspension of liquidation * * * to the end of the most recently

completed reporting year of the government of the affected country.''

This period is September 17, 1992 through December 31, 1993. Because

the reporting year of the UKG is the calendar year, we calculated a

separate net subsidy for each year, 1992 and 1993.

Further, during the 1993 calendar year, certain entries were not

subject to suspension of liquidation. The Department issued its

preliminary affirmative countervailing duty determination on September

17, 1992 (57 FR 42974). Pursuant to section 705 of the Act and Article

5.3 of the GATT Subsidies Code, the Department cannot require

suspension of liquidation for more than 120 days without the issuance

of a countervailing duty order. Accordingly, the Department instructed

Customs to terminate the suspension of liquidation of the subject

merchandise entered, or withdrawn from warehouse, for consumption on or

after January 15, 1993. The Department reinstated suspension of

liquidation and the cash deposit requirement for entries made on or

after March 22, 1993, the date of publication of the countervailing

duty order. Thus, merchandise entered on or after January 15, 1993, and

before March 22, 1993, is to be liquidated without regard to

countervailing duties.

For the period September 17, 1992, through December 31, 1992, we

determine the net subsidy to be 20.33 percent ad valorem for ASW

Limited and 7.03 percent ad valorem for all other companies. For the

periods January 1, 1993, through January 14, 1993, and March 22, 1993,

through December 31, 1993, we determine the net subsidy to be 20.33

percent ad valorem for ASW Limited, 2.68 percent ad valorem for UES,

and 9.76 percent ad valorem for all other companies.

Thus, the Department will instruct the U.S. Customs Service to

assess the following countervailing duties:

----------------------------------------------------------------------------------------------------------------

Rate

Period Manufacturer/exporter (percent)

----------------------------------------------------------------------------------------------------------------

September 17, 1992-December 31, 1992.......... ASW Limited........................................ 20.33

All other companies................................ 7.03

[[Page 54847]]

January 1, 1993-January 14, 1993.............. ASW Limited........................................ 20.33

UES................................................ 2.68

All other companies................................ 9.76

March 22, 1993-December 31, 1993.............. ASW Limited........................................ 20.33

UES................................................ 2.68

All other companies................................ 9.76

----------------------------------------------------------------------------------------------------------------

The Department will also instruct the U.S. Customs Service to

collect a cash deposit of estimated countervailing duties of 20.33

percent of the f.o.b. invoice price on all shipments of the subject

merchandise from ASW Limited, 2.68 percent of the f.o.b. invoice price

on all shipments of the subject merchandise from UES, and 9.76 percent

of the f.o.b. invoice price on all shipments of the subject merchandise

from all other companies, except Glynwed (which was excluded from the

order during the original investigation), entered, or withdrawn from

warehouse, for consumption on or after the date of publication of the

final results of this review.

This notice serves as a 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 355.34(d). Timely written 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 administrative review and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.

Dated: October 19, 1995.

Paul L. Joffe,

Deputy Assistant Secretary for Import Administration.

[FR Doc. 95-26629 Filed 10-25-95; 8:45 am]

BILLING CODE 3510-DS-P