Certain Carbon Steel Products from Sweden; Final Results of Countervailing Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[C-401-401]

Certain Carbon Steel Products from Sweden; 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.

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SUMMARY: On December 3, 1996, the Department of Commerce (``the

Department'') published in the Federal Register its preliminary results

of administrative review of the countervailing duty order on Certain

Carbon Steel Products from Sweden for the period January 1, 1994

through December 31, 1994 (61 FR 64062; December 3, 1996). The

Department has now completed this administrative review in accordance

with section 751(a) of the Tariff Act of 1930, as amended. For

information on the net subsidy for the reviewed company, and for all

non-reviewed companies, please see the Final Results of Review section

of this notice. We will instruct the U.S. Customs Service to assess

countervailing duties as detailed in the Final Results of Review

section of this notice.

EFFECTIVE DATE: April 7, 1997.

FOR FURTHER INFORMATION CONTACT: Gayle Longest or Lorenza Olivas,

Office of 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

Pursuant to 19 C.F.R. 355.22(a), this review covers only those

producers or exporters of the subject merchandise for which a review

was specifically requested. Accordingly, this review covers SSAB

Svenskt Stal AB (``SSAB''), the sole known producer/exporter of the

subject merchandise during the review period. This review also covers

the period January 1, 1994 through December 31, 1994, and 10 programs.

We published the preliminary results on December 3, 1996 (61 FR

64062). We invited interested parties to comment on the preliminary

results. We received no comments from any of the parties.

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 of certain carbon

steel products from Sweden. These products include cold-rolled carbon

steel, flat-rolled products, whether or not corrugated, or crimped:

whether or not pickled, not cut, not pressed and not stamped to non-

rectangular shape; not coated or pleated with metal and not clad; over

12 inches in width and of any thickness; whether or not in coils.

During the review period, such merchandise was classifiable under the

Harmonized Tariff Schedule (HTS) item numbers 7209.11.0000,

7209.12.0000, 7209.13.0000, 7209.21.0000, 7209.22.0000, 7209.23.0000,

7209.24.5000, 7209.31.0000, 7209.32.0000, 7209.33.0000, 7209.34.0000,

7209.41.0000, 7209.43.0000, 7209.44.0000, 7209.90.0000, 7211.30.5000,

7211.41.7000 and 7211.49.5000. The HTS item numbers are provided for

convenience and customs purposes. The written description remains

dispositive.

Allocation Methodology

In the past, the Department has relied upon information from the

U.S. Internal Revenue Service on the industry-specific average useful

life (``AUL'') of assets in determining the allocation period for

nonrecurring grant benefits. See General Issues Appendix appended to

Final Countervailing Duty Determination; Certain Steel Products from

Austria, 58 FR 37217, 37226 (July 9, 1993) (``General Issues

Appendix''). However, in British Steel plc. v. United States, 879 F.

Supp. 1254 (CIT 1995) (``British Steel''), the U.S. Court of

International Trade (``the Court'') ruled against this allocation

methodology. In accordance with the Court's remand order, the

Department calculated a company-specific allocation period for

nonrecurring subsidies based on the AUL of non-renewable physical

assets. This remand determination was affirmed by the Court on June 4,

1996. British Steel, 929 F. Supp. 426, 439 (CIT 1996).

The Department has decided to acquiesce to the Court's decision

and, as such, we intend to determine the allocation period for

nonrecurring subsidies using company-specific AUL data where reasonable

and practicable. In the preliminary results (61 FR 64062), the

Department preliminarily determined that it is reasonable and

practicable to allocate all new nonrecurring subsidies (i.e., subsidies

that have not yet been assigned an allocation period) based on a

company-specific AUL. However, if a subsidy has already been

countervailed based on an allocation period established in an earlier

segment of the proceeding, it does not appear reasonable or

[[Page 16550]]

practicable to reallocate that subsidy over a different period of time.

In other words, since the countervailing duty rate in earlier segments

of the proceeding was calculated based on a certain allocation period

and resulting benefit stream, redefining the allocation period in later

segments of the proceeding would entail taking the original grant

amount and creating an entirely new benefit stream for that grant. Such

a practice may lead to an increase or decrease in the total amount

countervailed and, thus, would result in the possibility of over-

countervailing or under-countervailing the actual benefit. The

Department preliminarily determined that a more reasonable and accurate

approach is to continue using the allocation period first assigned to

the subsidy. We invited the parties to comment on the selection of this

methodology and to provide any other reasonable and practicable

approaches for complying with the Court's ruling. We received no

comments on this issue.

In the current review, there are no new subsidies. All of the

nonrecurring subsidies currently under review were provided prior to

the period of review (``POR''); allocation periods for these grants

were established during prior segments of this proceeding. Therefore,

for purposes of these final results, the Department is using the

original allocation period assigned to each nonrecurring subsidy.

Privatization and Sale of Productive Units

SSAB is the only company that produces and exports the subject

merchandise from Sweden. SSAB has sold several productive units and the

company was partially privatized twice, in 1987 and in 1989. During the

review period, SSAB was completely privatized.

In Final Affirmative Countervailing Duty Determinations: Certain

Steel Products from Sweden, 58 FR 37385 (July 9, 1993) (``Final

Determination''), the Department found that SSAB had received

countervailable subsidies prior to the sale of the productive units and

the two partial privatizations. Further, the Department found that a

private party purchasing all or part of a government-owned company can

repay prior subsidies on behalf of the company as part or all of the

sales price (see General Issues Appendix, 58 FR at 37262 (July 9,

1993)). Therefore, to the extent that a portion of the sales price paid

for a privatized company can be reasonably attributed to prior

subsidies, that portion of those subsidies will be extinguished.

To calculate a rate for the subsidies that were allocated to the

spin-offs, i.e., productive units that were sold, we first determined

the amount of the subsidies attributable to each productive unit by

dividing the asset value of that productive unit by the total asset

value of SSAB in the year of the spin-off. We then applied this ratio

to the net present value (``NPV''), in the year of the spin-off, of the

future benefit streams from all of SSAB's prior subsidies allocable to

the POR. The future benefit streams at the time of the sale of each

productive unit reflect the Department's allocation over time of prior

subsidies to SSAB in accordance with the declining balance methodology

(see e.g., Final Affirmative Countervailing Duty Determination: Fresh

Chilled Atlantic Salmon from Norway, 56 FR 7678; 7679 (February 25,

1991)), and reflect also the prior spin-offs of SSAB productive units.

We next estimated the portion of the purchase price which

represents repayment of prior subsidies by determining the portion of

SSAB's net worth that was accounted for by subsidies. To do that, we

divided the face value of the allocable subsidies received by SSAB in

each year from fiscal year 1979 through fiscal year 1993 by SSAB's net

worth in the same year. We calculated a simple average of these ratios,

which was then multiplied by the purchase price of the productive unit.

Thus, we determined the amount of the purchase price which represents

repayment of prior subsidies. This amount was subtracted from the

subsidies attributed to the productive unit at the time of sale to

arrive at the amount of subsidies allocated to the productive unit

being spun-off.

To calculate the subsidies remaining with SSAB after privatization,

we performed the following calculations. We first calculated the NPV of

the future benefit stream of the subsidies at the time of the sale of

the shares taking into account the spin-offs. Next, we estimated the

portion of the purchase price which represents repayment of prior

subsidies in accordance with the methodology described in the

``Privatization'' section of the General Issues Appendix at 37259. This

amount was then subtracted from the amount of the NPV eligible for

repayment, and the result was divided by the NPV to calculate the ratio

representing the amount of subsidies remaining with SSAB.

To calculate the benefit provided to SSAB in the POR, where

appropriate, we multiplied the benefit calculated for 1994, adjusted

for sales of productive units, by the ratio representing the amount of

subsidies remaining with SSAB after privatization. We then divided the

results by the company's total sales in 1994.

Analysis of Programs

Based upon our analysis of the information on the record, we

determine the following:

I. Programs Previously Determined to Confer Subsidies

We did not receive any comments on the following programs from the

interested parties; however, our review of the record uncovered a

clerical error in our preliminary calculations. In our calculation of

the subsidies remaining with SSAB after its privatization, we

inadvertently took the face value of the subsidies in calculating the

future benefit stream from the nonrecurring subsidies at the time of

the sale. Instead, we should have calculated their net present value,

which is the methodology set forth in the General Issues Appendix, to

determine the amount of subsidies remaining with SSAB and the amount of

subsidies repaid at the time of the sale. Accordingly, for these final

results, we have adjusted our calculations to reflect the net present

value of the remaining stream of benefits from the nonrecurring

subsidies. The corrected rates are listed below.

1. Equity Infusions

In the preliminary results, we found that this program conferred

countervailable subsidies on the subject merchandise. We did not

receive any comments on this program from interested parties; however,

due to the clerical error explained above, the net subsidy for this

program has changed from 0.53 percent ad valorem to 0.51 percent ad

valorem for SSAB.

2. Structural Loans

In the preliminary results, we found that this program conferred

countervailable subsidies on the subject merchandise. We did not

receive any comments on this program from interested parties; however,

due to the clerical error explained above, the net subsidy for this

program has changed from 0.27 percent ad valorem to 0.26 percent ad

valorem for SSAB.

3. Forgiven Reconstruction Loans

In the preliminary results, we found that this program conferred

countervailable subsidies on the subject merchandise. We did not

receive any comments on this program from interested parties; however,

due to the clerical error explained above, the net subsidy for this

program has changed

[[Page 16551]]

from 1.18 percent ad valorem to 1.14 percent ad valorem for SSAB.

II. Programs Found Not to Confer Subsidies

A. Research & Development (R&D) Loans and Grants.

B. Fund for Industry and New Business R&D.

In the preliminary results, we found these programs did not confer

subsidies during the POR. We did not receive any comments on these

programs from the interested parties, and our review of the record has

not led us to change our findings from the preliminary results.

III. Programs Found To Be Not Used

In the preliminary results, we found that the producer/exporter of

the subject merchandise did not apply for or receive benefits under the

following programs:

A. Regional Development Grants.

B. Transportation Grants.

C. Location-of Industry Loans.

We did not receive any comments on these programs from the

interested parties, and our review of the record has not led us to

change our findings from the preliminary results.

IV. Program Found To Be Terminated

In the preliminary results, we found the following program to be

terminated and that no residual benefits were being provided:

Mining Exploration Grants.

We did not receive any comments on this program from the interested

parties, and our review of the record has not led us to change our

findings from the preliminary results.

Final Results of Review

In accordance with 19 CFR 355.22(c)(7)(ii), we calculated an

individual subsidy rate for each producer/exporter subject to this

administrative review. As a result of correcting the clerical errors in

the preliminary results, we determine the net subsidy for SSAB to be

1.91 percent ad valorem for the period January 1, 1994 through December

31, 1994.

We will instruct the U.S. Customs Service (``Customs'') to assess

countervailing duties as indicated above. The Department will also

instruct Customs to collect cash deposits of estimated countervailing

duties in the percentages detailed above of the f.o.b. invoice price on

all shipments of the subject merchandise from the reviewed company,

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 country-

wide 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

355.22(a). Pursuant to 19 CFR 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 353.22(e), the antidumping regulation on automatic

assessment, which is identical to 19 CFR 355.22(g), the countervailing

duty regulation on automatic assessment). Therefore, the cash deposit

rates for all companies except SSAB 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 country-

wide rate applicable to the company. Accordingly, the cash deposit

rates that will be applied to non-reviewed companies covered by this

order are those established in the most recently completed

administrative proceeding conducted pursuant to the statutory

provisions that were in effect prior to the URAA amendment. See Certain

Carbon Steel Products from Sweden; Final Results of Countervailing Duty

Administrative Review, 61 FR 5378 (February 12, 1996). These rates

shall apply to all non-reviewed companies until a review of a company

assigned these rates is requested. In addition, for the period January

1, 1994 through December 31, 1994, the assessment rates applicable to

all non-reviewed companies covered by this order are the cash deposit

rates in effect at the time of entry.

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 C.F.R. 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 C.F.R.

355.22(c)(8).

Dated: March 28, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-8842 Filed 4-4-97; 8:45 am]

BILLING CODE 3510-DS-P