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

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URL: https://www.frixlaw.com/law-library/documents/fr%3A95-26629

## Record

- **Collection:** Federal Register
- **Document type:** Notice
- **Published:** October 26, 1995
- **Citation:** 60 FR 54841

## Text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A95-26629. Public record. Not legal advice.