Notice of Initiation of Countervailing Duty Investigations: Steel Wire Rod from Germany, Trinidad and Tobago, Canada and Venezuela

DEPARTMENT OF COMMERCE

[C-428-823, C-274-803, C-122-827, and C-307-814]

Notice of Initiation of Countervailing Duty Investigations: Steel

Wire Rod from Germany, Trinidad and Tobago, Canada and Venezuela

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: March 24, 1997.

FOR FURTHER INFORMATION CONTACT: Roy A. Malmrose (Germany), Vince Kane

(Trinidad and Tobago), Robert Bolling (Canada) and Chris Cassel

(Venezuela), Import Administration, U.S. Department of Commerce, Room

3099, 14th Street and Constitution Avenue, NW., Washington, DC 20230;

telephone (202) 482-5414, 482-2815, 482-1386 and 482-4847,

respectively.

Initiation of Investigations

The 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 effective January 1, 1995 (the Act).

The Petition

On February 26, 1997, the Department of Commerce (the Department)

received a petition filed in proper form by Connecticut Steel Corp.,

Co-Steel Raritan, GS Industries, Inc., Keystone Steel & Wire Co., North

Star Steel Texas, Inc. and Northwestern Steel and Wire Co. (the

petitioners), six U.S. producers of wire rod. Supplements to the

petitions were filed on March 4, 10, 11, 12, 13, 14, 17, and 18, 1997.

In accordance with section 701(a) of the Act, petitioners allege

that manufacturers, producers, or exporters of the subject merchandise

in Germany, Trinidad and Tobago, Canada and Venezuela receive

countervailable subsidies.

The petitioners state that they have standing to file the petition

because they are interested parties, as defined under section 771(9)(C)

of the Act.

Determination of Industry Support for the Petition

Section 702(b)(1)of the Act requires that a petition be filed on

behalf of the domestic industry. Section 702(c)(4)(A) of the Act

provides that a petition meets this requirement if the domestic

producers or workers who support the petition account for: (1) at least

25 percent of the total production of the domestic like product; and

(2) more than 50 percent of the production of the domestic like product

produced by that portion of the industry expressing support for, or

opposition to, the petition.

Section 771(4)(A) of the Act defines the ``industry'' as the

producers of a domestic like product. Thus, to determine whether the

petition has the requisite industry support, the statute directs the

Department to look to producers and workers who account for production

of the domestic like product. The International Trade Commission (ITC),

which is responsible for determining whether ``the domestic industry''

has been injured, must also determine what constitutes a domestic like

product in order to define the industry. However, while both the

Department and the ITC must apply the same statutory definition of

domestic like product, they do so for different purposes and pursuant

to separate and distinct authority. In addition, the Department's

determination is subject to limitations of time and information.

Although this may result in different definitions of the like product,

such differences do not render the decision of either agency contrary

to the law.1

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\1\ See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp.

639, 642-44 (CIT 1988); High Information Content Flat Panel Displays

and Display Glass Therefor from Japan: Final Determination;

Rescission of Investigation and Partial Dismissal of Petition, 56 FR

32376, 32380-81 (July 16, 1991).

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Section 771(10) of the Act defines domestic like product as ``a

product that is like, or in the absence of like, most similar in

characteristics and uses with, the article subject to an investigation

under this title.'' Thus, the reference point from which the like

product analysis begins is ``the article subject to an investigation,''

i.e., the class or kind of merchandise to be investigated, which

normally will be the scope as defined in the petition.

The petition refers to the single domestic like product defined in

the ``Scope of Investigation'' section, above. The Department has no

basis on the record to find the petition's definition of the domestic

like product clearly inaccurate. In this regard, we have found no basis

on which to reject petitioners' representations that there are clear

dividing lines, in terms of characteristics or uses, between the

product under investigation on the one hand and, on the other hand,

other carbon and alloy coiled steel products. The Department has,

therefore, adopted the like product definition set forth in the

petition. In this case, petitioners established industry support

representing approximately 75 percent of the production of the domestic

like product.

[[Page 13867]]

On March 12, 1997, the Department held consultations with

representatives of the Government of Canada (GOC) and the Government of

Quebec (GOQ) pursuant to 702(b)(4)(ii), during which they submitted

certain information with respect to industry support for the petition

(See March 18, 1997 memos to the file regarding these consultations and

Consultations section, below). On March 13, 1997, Stelco Inc. (Stelco),

a producer of wire rod in Canada, alleged that the petition covering

imports from Canada did not contain information concerning support from

domestic coiled bar producers. Stelco argued that domestic bar

producers' support was necessary because petitioners' March 4, 1997,

submission specifically included ``other coiled products known in the

industry as `bar.' '' Accordingly, Stelco argued that the Department

should poll the industry in order to evaluate the question of industry

support.

The Department has determined that the petition contained adequate

evidence of sufficient industry support and that polling is therefore

unnecessary. Petitioners established industry support representing

approximately 75 percent of the production of the domestic like

product, which percentage includes the coiled bar. The GOC, GOQ and

Stelco did not allege and have not demonstrated that coiled bar is a

separate domestic like product requiring a separate determination as to

industry support. Further, we note that both the American Iron and

Steel Institute and HTSUS statistics treat coiled bars and coiled rods

as one category. Because it is reasonable to find a single domestic

like product for purposes of evaluating industry support in these

circumstances, petitioners are well within the statutory requirements

for industry support--both among all producers and among producers

expressing an opinion--for the single like product covered by the

petition. Finally, the Department notes that the inclusion or exclusion

in industry support calculations of ``tire cord'' wire rod--which is

excluded from the scope of these proceedings--does not materially

affect petitioners' approximate support level of 75 percent (see

Antidumping Initiation Checklist, dated March 18, 1997, and found in

the official file in Room B-099). Accordingly, the Department

determines that the petition is filed on behalf of the domestic

industry within the meaning of section 732(b)(1) of the Act.

Injury Test

Because Germany, Trinidad and Tobago, Canada and Venezuela are

``Subsidies Agreement Countries'' within the meaning of section 701(b)

of the Act, Title VII of the Act applies to this investigation.

Accordingly, the U.S. International Trade Commission (ITC) must

determine whether imports of the subject merchandise from Germany,

Trinidad and Tobago, Canada and Venezuela materially injure, or

threaten material injury to, a U.S. industry.

Consultations

Pursuant to Section 702(b)(4)(A)(ii) of the Act, the Department

invited representatives of the relevant foreign governments for

consultations with respect to the petitions filed. On March 12, 13 and

17, consultations were held with representatives from Canada; Trinidad

and Tobago; and the European Commission (EC) and Germany, respectively.

On March 14 and 17, 1997, we received submissions from the GOQ and the

GOC.

Scope of the Investigation

The products covered by these investigations are certain hot-rolled

carbon steel and alloy steel products, in coils, of approximately round

cross section, between 5.00 mm (0.20 inch) and 19.0 mm (0.75 inch),

inclusive, in solid cross-sectional diameter. Specifically excluded are

steel products possessing the above noted physical characteristics and

meeting the Harmonized Tariff Schedule of the United States (HTSUS)

definitions for (a) Stainless steel; (b) tool steel; (c) high nickel

steel; (d) ball bearing steel; (e) free machining steel that contains

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

bismuth, 0.08 percent or more of sulfur, more than 0.4 percent of

phosphorus, more than 0.05 percent of selenium, and/or more than 0.01

percent of tellurium; or (f) concrete reinforcing bars and rods.

The following products are also excluded from the scope of these

investigations:

Coiled products 5.50 mm or less in true diameter with an

average partial decarburization per coil of no more than 70 microns in

depth, no inclusions greater than 20 microns, containing by weight the

following: Carbon greater than or equal to 0.68 percent; aluminum less

than or equal to 0.005 percent; phosphorous plus sulfur less than or

equal to 0.040 percent; maximum combined copper, nickel and chromium

content of 0.13 percent; and nitrogen less than or equal to 0.006

percent. This product is commonly referred to as ``Tire Cord Wire

Rod.''

Coiled products 7.9 to 18 mm in diameter, with a partial

decarburization of 75 microns or less in depth and seams no more than

75 microns in depth; containing 0.48 to 0.73 percent carbon by weight.

This product is commonly referred to as ``Valve Spring Quality Wire

Rod.''

The products under investigation are currently classifiable under

subheadings 7213.91.3000, 7213.91.4500, 7213.91.6000, 7213.99.0030,

7213.99.0090, 7227.20.0000, and 7227.90.6050 of the HTSUS. Although the

HTSUS subheadings are provided for convenience and customs purposes,

our written description of the scope of these investigations is

dispositive.

Allegation of Subsidies

Section 702(b) of the Act requires the Department to initiate a

countervailing duty proceeding whenever an interested party files a

petition, on behalf of an industry, that (1) alleges the elements

necessary for an imposition of a duty under section 701(a), and (2) is

accompanied by information reasonably available to petitioners

supporting the allegations.

Initiation of Countervailing Duty Investigations

The Department has examined the petitions on wire rod from Germany,

Trinidad and Tobago, Canada and Venezuela and found that it complies

with the requirements of section 702(b) of the Act. Therefore, in

accordance with section 702(b) of the Act, we are initiating

countervailing duty investigations to determine whether manufacturers,

producers, or exporters of wire rod from these countries receive

subsidies.

A. Germany

Petitioners have made specific subsidy allegations with respect to

two German wire rod producers: Saarstahl and Hamburger Stahlwerke

(HSW). We are including in our investigation the following programs

alleged in the petition to have provided subsidies to producers of the

subject merchandise in Germany:

1. Saarstahl Debt Forgiveness

2. Assumption of Saarstahl's Guaranteed Debt

3. Saarstahl's Private Bank Debt Forgiveness/Assurances of Liquidity

Provided to Private Banks

4. Post-Bankuptcy Assistance to Saarstahl

5. Worker Assistance under Article 56 of the European Coal and Steel

Community

6. 1984 Assistance to HSW

7. 1984 State Aid to HSW

[[Page 13868]]

8. 1984 Loan Guarantee to HSW

9. 1994 Assistance to HSW

We note that the EC has ordered repayment of the 1994 assistance to

HSW. Consultations with representatives of the EC indicate that the

assistance is being repaid, regardless of the fact that the EC decision

is under appeal. We intend to look into this possibility.

Petitioners allege that Saarstahl was uncreditworthy from 1986 to

present, and in prior years if the Department should deem such years

relevant. However, petitioners only allege non-recurring

countervailable subsidies in 1989 and 1993-1996. Therefore, we will

only examine Saarstahl's creditworthiness in these years.

Petitioners also allege that Saarstahl was unequityworthy from 1986

to present, and in prior years if the Department should deem such years

relevant. However, petitioners provide no information that Saarstahl

received equity infusions in the relevant years. Therefore, we will not

examine Saarstahl's equityworthiness in our investigation.

Petitioners allege that HSW was uncreditworthy and unequityworthy

from 1984 to 1994. However, petitioners only allege non-recurring

countervailable subsidies in 1984 and 1994. For those years in which

non-recurring subsidies were not alleged we will not examine HSW's

creditworthiness and equityworthiness.

B. Trinidad and Tobago

We are including in our investigation the following programs

alleged in the petition to have provided subsidies to producers of the

subject merchandise in Trinidad and Tobago:

1. Government Equity Infusions in the Iron and Steel Corporation of

Trinidad and Tobago (ISCOTT) over the Period 1983 though 1990 for

Investment in Plant, Loss Coverage, Debt Service, or Other Purposes

2. Ongoing Government Support of ISCOTT from 1989-1994

During this period ISCOTT's assets were leased by a private

company, Caribbean Ispat, Ltd. (Ispat). Information provided by

petitioners indicates that the government of Trinidad and Tobago

assumed the debt incurred by ISCOTT prior to the lease. We intend to

investigate the assumption of debt and any other ongoing support to the

production of wire rod during the leasing period.

3. Preferential Natural Gas Prices

4. Preferential Electricity Rates

5. Loan Guarantee from the Trinidad and Tobago Electric Commission

6. Preferential Terms for the Point Lisas Lease

7. Tax Credits for Exports

8. Export Promotion Allowance for Tax Purposes

9. Corporate Tax Exemption under the Fiscal Incentives Act

10. Import Duty Concessions under Section 56 of the Customs Act

Petitioners have alleged that ISCOTT was uncreditworthy and

unequityworthy during the years 1980-1995. We are not investigating

creditworthiness or equityworthiness in the years prior to 1983. In

Carbon Steel Wire Rod From Trinidad and Tobago: Final Affirmative

Countervailing Duty Determination and Countervailing Duty Order (49 FR

480, January 4, 1984) (1984 final), we determined that investments in,

and loans to the company were on terms consistent with commercial

considerations. Petitioners have not provided any new evidence to lead

us to change our previous determination. With respect to the period

1983 to 1990, we will investigate whether ISCOTT was creditworthy or

equityworthy during the years in which petitioners have alleged non-

recurring countervailable subsidies.

We are not including in our investigation the following programs

alleged to be benefitting the production of the subject merchandise in

Trinidad and Tobago:

1. ISCOTT's Rent-Free Use of a Dock Facility

In 1984, the Department determined that ISCOTT's rent-free use of a

dock facility was countervailable. Press reports filed with the

petition indicate that Ispat has been paying a rental fee for this

facility. (See petition Exhibit 9 B-7.) Petitioners assume that this

rental fee is preferential but offer no support for their assumption.

Therefore, we are not including this program in our investigation.

2. Exemption From the Value Added Tax (VAT)

Petitioners allege that companies exporting at least 80 percent of

production may receive an exemption from the VAT on manufacturing

inputs. Because exemptions from VAT or rebates of VAT paid on inputs

used to produce for export are regarded as permissible, we are not

including this program in our investigation.

3. Trinidad and Tobago Free Trade Zones

The petition documents the existence of free trade zones in

Trinidad and Tobago established under the Free Trade Zones (Amendment)

Act of 1995. Certain of the benefits available to companies within the

zones appear to be countervailable. However, as described in the

petition, Ispat's plant is adjacent to, and not within, the designated

free zone; therefore petitioners have not demonstrated that it is

eligible for these benefits.

C. Canada

Petitioners have made specific subsidy allegations with respect to

only one Canadian wire rod producer: Sidbec-Dosco, Inc. We are

including in our investigation the following programs alleged in the

petition to have provided subsidies to producers of the subject

merchandise in Canada:

1. 1982 Assistance to Sidbec-Dosco

2. Assistance to Reduce Sidbec-Dosco's Accumulated Deficit during the

period 1984 to 1986

3. Sidbec-Dosco Debt-to-Equity Conversion in 1987

4. Sidbec Dosco Debt-to-Equity Conversion in 1988

5. 1987 Grant to Sidbec-Dosco

Petitioners allege that Sidbec-Dosco was uncreditworthy during the

years 1977-1988. We will investigate the creditworthiness of Sidbec-

Dosco in 1982 and 1984-1988. These are the years in which we will be

investigating the receipt of non-recurring subsidies.

We are not including in our investigation at this time the

following program alleged to be benefitting producers of the subject

merchandise in Canada:

Assistance Prior to 1982

Petitioners allege that Sidbec-Dosco received some form of

assistance prior to 1982. In addition, petitioners allege that Sidbec-

Dosco was uncreditworthy and unequityworthy during this period.

Although we found sufficient evidence to investigate whether Sidbec-

Dosco was subsidized in 1982 (see the program listed under item (1)

above), for assistance which may have been provided earlier,

petitioners only cite to a 1982 news article which states that Sidbec-

Dosco had been provided a certain amount of funds from either the GOC

or GOQ since Sidbec-Dosco's inception. Sidbec-Dosco was founded in

1964, and petitioners provided no evidence or indication of when during

the 1964 to 1982 period these other funds may have been provided to the

company. In particular, petitioners provided no evidence that any of

these funds--whatever their precise nature might be--were provided to

Sidbec-Dosco during or after 1977, i.e., the allocation period captured

by petitioners' allegation of a company-

[[Page 13869]]

specific 20 years average useful life of assets for Sidbec-Dosco.

Consequently, we do not have sufficient information to initiate an

investigation of a specific program based on this allegation of

assistance.

D. Venezuela

We are including in our investigation the following programs

alleged in the petition to have provided subsidies to producers of the

subject merchandise in Venezuela:

1. Government Equity Infusions in SIDOR in 1977, 1978, 1981, 1982 and

1983

2. Government Conversion of SIDOR's Debt to Equity in 1981, 1986, 1989

and 1992

3. Government Guarantees of SIDOR's Private Debt in 1987 and 1988

4. 1990 Government Loan to SIDOR

5. Government Provision of Iron Ore for less than Adequate Remuneration

6. Preferential Tax Incentives Under Decree 1477

Petitioners also allege that SIDOR was uncreditworthy in the

following years: 1977, 1978, 1981-1983, 1986-1990 and 1992. We will

investigate SIDOR's creditworthiness in each of these years because

these are the years in which we will be investigating either government

equity infusions, loans or loan guarantees.

Distribution of Copies of the Petition

In accordance with section 702(b)(4)(A)(i) of the Act, copies of

the public version of the petitions have been provided to the

representatives of Germany, Trinidad and Tobago, Canada and Venezuela.

We will attempt to provide copies of the public version of the

petitions to all the exporters named in the petition.

ITC Notification

Pursuant to section 702(d) of the Act, we have notified the ITC of

these initiations.

Preliminary Determination by the ITC

The ITC will determine by April 14, 1997, whether there is a

reasonable indication that an industry in the United States is being

materially injured, or is threatened with material injury, by reason of

imports from Germany, Trinidad and Tobago, Canada and Venezuela of wire

rod. Any ITC determination which is negative will result in the

investigations being terminated; otherwise, the investigations will

proceed according to statutory and regulatory time limits.

This notice is published pursuant to Section 702(c)(2) of the Act.

Dated: March 18, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-7356 Filed 3-21-97; 8:45 am]

BILLING CODE 3510-DS-P