Viscose Rayon Staple Fiber from Sweden; Preliminary Results of Countervailing Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[C-401-056]

Viscose Rayon Staple Fiber from Sweden; Preliminary Results of

Countervailing Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of Countervailing Duty

Administrative Review.

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SUMMARY: The Department of Commerce (the Department) is conducting an

administrative review of the countervailing duty order on viscose rayon

staple fiber from Sweden for the period January 1, 1995 through

December 31, 1995. We preliminarily determine the net subsidy to be

zero percent ad valorem for Svenska Rayon AB (Svenska) for the period

January 1, 1995 through December 31, 1995. If the final results of this

review remain the same as these preliminary results, the Department

intends to instruct the U.S. Customs Service to liquidate, without

regard to countervailing duties, all shipments of the subject

merchandise from Svenska exported on or after January 1, 1995 and on or

before December 31, 1995. Interested parties are invited to comment on

the preliminary results. (See Public Comment section of this notice.)

EFFECTIVE DATE: June 6, 1997.

FOR FURTHER INFORMATION CONTACT: Stephanie Moore or Russell Morris,

Office CVD/AD Enforcement VI, Import Administration, International

Trade Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)

482-2786.

SUPPLEMENTARY INFORMATION:

Background

On May 15, 1979, the Department published in the Federal Register

(44 FR 28319) the countervailing duty order on viscose rayon staple

fiber from Sweden. On May 8, 1996, the Department published a notice of

``Opportunity to Request Administrative Review'' (61 FR 20791) of this

countervailing duty order for the period January 1, 1995 through

December 31, 1995. We received a timely request for review from the

petitioners, and we initiated the review on June 25, 1996, as published

in the Federal Register (61 FR 32771).

In accordance with 19 CFR 355.22(a), this review covers only the

producer or exporter of the subject merchandise for which a review was

specifically requested. Accordingly, this review covers Svenska. This

review also covers ten programs.

Applicable Statute

Unless otherwise indicated, all citations to the statute are

references to the provisions of the Tariff Act of 1930, as amended by

the Uruguay Round Agreements Act (URAA) effective January 1, 1995 (the

Act). The Department is conducting this administrative review in

accordance with section 751(a) of the Act.

Scope of the Review

Imports covered by this review are shipments from Sweden of regular

viscose rayon staple fiber and high-wet modulus (modal) viscose rayon

staple fiber. Such merchandise is classifiable under item number

5504.10.00 of the Harmonized Tariff Schedule (HTS). The HTS item is

provided for convenience and Customs purposes. The written description

remains dispositive.

Analysis of Programs

In its questionnaire response the Government of Sweden (GOS)

reported that Svenska benefitted from the following programs during the

period of review: (1) Investment Grants from the Working Life Fund, (2)

Recruitment Incentive, (3) Trainee Temporary Replacement, and (4)

Recruitment Subsidy. The Department has not previously examined these

programs in this case or in other Swedish cases. Therefore, for

purposes of this review, we have analyzed whether these programs confer

countervailable subsidies.

I. Programs Preliminarily Determined Not to Confer Subsidies

A. Investment Grants From the Working Life Fund

On June 7, 1989, the Swedish Parliament signed Act SFS 1989:484,

which stated that employers were obligated to pay a work environment

charge of 1.5 percent of the basic pension contribution paid by all

employers during the period September 1989 to December 1990. This

contribution was for the Working Life Fund, which is a trust held by

the Swedish National Judicial Board and managed by the National

Judicial Board for Public Lands and Funds. As stated in Decree number

1990:130, the GOS provided aid to companies from the Working Life Fund

to pay for: (1) The cost of rehabilitation measures for employees

suffering from long-term impaired health; (2) costs incurred in

[[Page 31080]]

implementing measures to reduce employee absenteeism; and (3) costs

incurred in investing in a better work environment where the employer

is not bound by existing law or statute to make such an investment. The

aid was in the form of grants which could be provided to companies in

all sectors of the economy. The last date for granting aid was March

31, 1995. However, in exceptional cases, the Fund could grant aid after

March 31, 1995 but before July 1, 1995, when the Fund was abolished.

According to the questionnaire responses, these grants were

provided to a large number of sectors in Sweden ranging from aviation,

construction, energy, and banks and insurance to forestry, land

transportation, and mining, among many others. The data in the

questionnaire response shows that Svenska received two small grants

under this program.

We preliminarily determine that this program is not limited to a

specific enterprise or industry, or group thereof as defined in section

771(5A)(D) of the Act because the benefits are provided to a large

number and wide variety of industries, and because there is no evidence

of record to indicate that the program is otherwise specific.

Therefore, we preliminarily determine that this program is not

countervailable.

B. Recruitment Incentive Program

The Recruitment Incentive Program was a temporary labor market

measure aiming to compensate companies for costs relating to recruiting

the long-term unemployed who had a lower level of competency than the

company normally would require. It was established by governmental

ordinance SFS: 1995:287. This program allowed all companies with less

than 500 employees to deduct from their payroll taxes up to 6,000 SEK

for twelve months for each new employee, hired between January 1, 1995

through May 31, 1995, who worked at least 17 hours per week. The

deduction was automatically claimed on a company's tax form. There were

no restrictions to claiming the deduction based on either location or

type of industry. The last date that a company could claim the tax

reduction was June 30, 1996. During the period of review, Svenska

claimed a small deduction under this program.

We preliminarily determine that this program is not limited to a

specific enterprise or industry, or group thereof within the meaning of

771(5A)(D) of the Act, because all companies in Sweden with less than

500 employees, regardless of the type of industry or geographic

location, can claim this tax deduction, and because there is no

evidence of record to indicate that the program is otherwise specific.

Therefore, we preliminarily determine that this program is not

countervailable.

C. Trainee Temporary Replacement

The Trainee Temporary Replacement Program, which was enacted by the

GOS under Act 1991:329 on July 1, 1991, implements a labor market

policy measure that allows employers to deduct from their social

security contributions certain expenses related to the training of

employees and the hiring of temporary replacements when those employees

are in training. The objectives of the program are: (1) To give

unemployed persons the chance of employment in temporary positions when

staff are undergoing training, (2) to help employers improve the

competence of their staff and in so doing improve the competitive

strength of the company, and (3) to reduce the company's need for

overtime when staff are undergoing training and to make future staff

recruitment easier.

The replacement employee must be referred to the employer by the

county labor board. The employer provides details of the company and

its training program as well as anticipated costs to the county labor

board, which then assigns a replacement. The employer then

automatically deducts from its social security contributions the cost

of hiring the temporary worker and certain costs related to training of

the permanent employee. According to the questionnaire response, all

companies were entitled to claim this deduction if there was a

temporary replacement employee available.

There were no restrictions to claiming the deduction based on

either location or type of industry. The deductions are accounted for

in a revenue declaration form that is submitted by the company to the

tax authorities on a regular basis. The data in the questionnaire

response shows that Svenska only claimed a small deduction under this

program.

We preliminarily determine that this program is not limited to a

specific enterprise or industry, or group thereof within the meaning of

771(5A)(D) of the Act, because all companies in Sweden, regardless of

the type of industry or geographic location, can claim these deductions

from their social security contributions when temporary replacement

workers are hired, and because there is no evidence of record to

indicate that the program is otherwise specific. Therefore, we

preliminarily determine that this program is not countervailable.

D. Recruitment Subsidy Program

The purpose of the Recruitment Subsidy Program, commenced in 1984,

is to increase employment among long-term unemployed persons. Aid is

provided to employers for a period of six months through grants

covering a maximum of 50 percent of monthly wage costs for the person

hired up to a maximum of 7,000 SEK per month. Under certain conditions,

the time period for a company to receive aid under this program can be

extended to 12 months.

The legislation states that this program is available to all

employers, except for state employers. Applications for aid are

submitted to the local employment office which decides whether aid

should be granted. Hence, depending on circumstances in each case, the

local employment offices can approve aid at a level below 50 percent of

wage costs and/or for a shorter or longer period than six months.

The GOS stated that it had no information on the distribution of

these grants; however, the subsidy rate that would be attributable to

Svenska under this program, if it were specific, would be 0.0002

percent ad valorem. A rate this small would not change the overall

subsidy rate for Svenska. Because any benefit we would calculate for

this program would not affect the overall subsidy rate, the lack of

information regarding the specificity of this program does not affect

the results of this administrative review. See, e.g., Certain Cut-to-

Length Carbon Steel Plate from Sweden; Preliminary Results of

Countervailing Duty Administrative Review, 61 FR 51683, 51686 (October

3, 1996) and Certain Cut-to-Length Carbon Steel Plate from Sweden;

Final Results of Countervailing Duty Administrative Review, 62 FR

16551, 16553 (April 7, 1997). We will reexamine this program in any

future administrative reviews of this order.

II. Programs Preliminarily Determined To Be Not Used

We examined the following programs and preliminarily determine that

the producers and/or exporters of the subject merchandise did not apply

for or receive benefits under these programs during the period of

review:

A. Manpower Reduction Grants

B. Grants for Temporary Employment for Public Works

C. Regional Development Grant

D. Transportation Grants

E. Location-of-Industry Loans

[[Page 31081]]

III. Terminated Program

Elderly Employment Compensation Program

In Viscose Rayon Fiber from Sweden; Final Results of Countervailing

Duty Administrative Review, 57 FR 12912 (April 14, 1992), the

Department found this program to be de jure specific because the

program's legislation expressly made it available only to certain

companies within the textile and apparel industries through a special

employment contribution for older workers. Svenska received its last

payment under this program in July 1982. In January 1983, the Swedish

government excluded the rayon fiber industry, including Svenska, from

eligibility to receive benefits under this program. Effective June 30,

1989, Government Resolution Number: SFS 1989:333 discontinued the

entire program.

We had determined that the grants under this program were non-

recurring. As such they were allocated over time. The last grant was

received in 1982 and was allocated over the 10-year average useful life

of assets in the rayon fiber industry, according to the ``Asset

Guideline Classes: of the Internal Revenue Service.'' Because the 10-

year benefit stream from the last grant received by Svenska ended in

1991, and because this program was discontinued in its entirety as of

June 30, 1989, we preliminarily determine that this program has been

terminated.

Preliminary Results of Review

For the period January 1, 1995 through December 31, 1995, we

preliminarily determine that no countervailable subsidies were

conferred on Svenska. If the final results of this review remain the

same as these preliminary results, the Department intends to instruct

the U.S. Customs Service (Customs) to liquidate without regard to

countervailing duties, all shipments of this merchandise exported on or

after January 1, 1995, and on or before December 31, 1995.

The Department also intends to instruct Customs to collect a cash

deposit of estimated countervailing duties of zero percent ad valorem,

as provided for by section 751(a)(1) of the Act, on all shipments of

this merchandise from Svenska, entered, or withdrawn from warehouse,

for consumption on or after the date of publication of the final

results of this administrative review.

Because the URAA replaced the general rule in favor of a

countrywide rate with a general rule in favor of individual rates for

investigated and reviewed companies, the procedures for establishing

countervailing duty rates, including those for non-reviewed companies,

are now essentially the same as those in antidumping cases, except as

provided for in section 777A(e)(2)(B) of the Act. The requested review

will normally cover only those companies specifically named. See 19 CFR

Sec. 355.22(a). Pursuant to 19 CFR Sec. 355.22(g), for all companies

for which a review was not requested, duties must be assessed at the

cash deposit rate, and cash deposits must continue to be collected, at

the rate previously ordered. As such, the countervailing duty cash

deposit rate applicable to a company can no longer change, except

pursuant to a request for a review of that company. See Federal-Mogul

Corporation and The Torrington Company v. United States, 822 F.Supp.

782 (CIT 1993) and Floral Trade Council v. United States, 822 F.Supp.

766 (CIT 1993) (interpreting 19 CFR Sec. 353.22(e), the antidumping

regulation on automatic assessment, which is identical to 19 CFR

Sec. 355.22(g)). Therefore, the cash deposit rates for all companies

except those covered by this review will be unchanged by the results of

this review.

We will instruct Customs to continue to collect cash deposits for

non-reviewed companies at the most recent company-specific or

countrywide rate applicable to the company.

Public Comment

Parties to the proceeding may request disclosure of the calculation

methodology and interested parties may request a hearing not later than

10 days after the date of publication of this notice. Interested

parties may submit written arguments in case briefs on these

preliminary results within 30 days of the date of publication. Rebuttal

briefs, limited to arguments raised in case briefs, may be submitted

seven days after the time limit for filing the case brief. Parties who

submit argument in this proceeding are requested to submit with the

argument (1) a statement of the issue and (2) a brief summary of the

argument. Any hearing, if requested, will be held seven days after the

scheduled date for submission of rebuttal briefs. Copies of case briefs

and rebuttal briefs must be served on interested parties in accordance

with 19 CFR Sec. 355.38.

Representatives of parties to the proceeding may request disclosure

of proprietary information under administrative protective order no

later than 10 days after the representative's client or employer

becomes a party to the proceeding, but in no event later than the date

the case briefs, under 19 CFR Sec. 355.38, are due. The Department will

publish the final results of this administrative review, including the

results of its analysis of issues raised in any case or rebuttal brief

or at a hearing.

This administrative review and notice are in accordance with

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

Dated: May 30, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-14868 Filed 6-5-97; 8:45 am]

BILLING CODE 3510-DS-P