Cut-to-Length Carbon Steel Plate From Belgium Preliminary Results of Countervailing Duty Review

DEPARTMENT OF COMMERCE

International Trade Administration

[C-423-806]

Cut-to-Length Carbon Steel Plate From Belgium Preliminary Results

of Countervailing Duty 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 is conducting an administrative

review of the countervailing duty order on certain steel products from

Belgium for the period January 1, 1996 through December 31, 1996. We

preliminarily determine the net subsidy to be de minimis. For

information on the net subsidy for non-reviewed companies, please see

the Preliminary Results of Review section of this notice. If the final

results remain the same as these preliminary results of administrative

review, we will instruct the U.S. Customs Service to assess

countervailing duties as detailed in the Preliminary Results of Review

section of this notice. Interested parties are invited to comment on

these preliminary results.

EFFECTIVE DATE: September 9, 1998.

FOR FURTHER INFORMATION CONTACT: Lorenza Olivas or Gayle Longest,

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 August 7, 1993, the Department published in the Federal Register

(58 FR 42749) the countervailing duty order on certain steel products

from Belgium. On August 4, 1997, the Department published a notice of

``Opportunity to Request Administrative Review'' (62 FR 41925) of this

countervailing duty order. We received a timely request for review and

we initiated the review, covering the period January 1, 1996 through

December 31, 1996, on September 25, 1997 (62 FR 50292).

In accordance with 19 CFR 351.213(b), this review covers only those

producers or exporters of the subject merchandise for which a review

was specifically requested. Accordingly, this review covers Fabrique de

Fer de Charleroi, S.A. (Fabfer). This review covers 28 programs.

On April 13, 1998, we extended the period for completion of the

preliminary results pursuant to section 751(a)(3) of the Tariff Act of

1930, as amended. See Cut-to-Length Carbon Steel Plate From Belgium;

Extension of Time Limit for Countervailing Duty Administrative Review

(63 FR 17990). The deadline for the final results of this review is no

later than 120 days from the date on which these preliminary results

are published in the Federal Register.

On August 13, 1998, Fabfer submitted a claim that the research and

development loan provided under the Economic Expansion Law of 1970

constitutes a non-actionable green-light subsidy and therefore is not

countervailable. The Government of Belgium (GOB) provided no support

for this claim, and information in the record is not sufficient to

determine whether the program under which the loan is provided

satisfies the criteria in section 771(5B)(i) of the Act. Given the

timing of Faber's claim and the deficiency of required information, we

are denying Fabfer's request for green-light status in this review.

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. All citations to the

Department's regulations reference 19 CFR Part 351 et. seq.,

Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296 (May

19, 1997), unless otherwise indicated.

[[Page 48189]]

Scope of the Review

The products covered by this review are certain cut-to-length

carbon steel plate. These products include hot-rolled carbon steel

universal mill plates (i.e., flat-rolled products rolled on four faces

or in a closed box pass, of a width exceeding 150 millimeters but not

exceeding 1,250 millimeters and of a thickness of not less than 4

millimeters, not in coils and without patterns in relief), of

rectangular shape, neither clad, plated nor coated with metal, whether

or not painted, varnished, or coated with plastics or other nonmetallic

substances; and certain hot-rolled carbon steel flat-rolled products in

straight lengths, of rectangular shape, hot rolled, neither clad,

plated, nor coated with metal, whether or not painted, varnished, or

coated with plastics or other nonmetallic substances, 4.75 millimeters

or more in thickness and of a width which exceeds 150 millimeters and

measures at least twice the thickness, as currently classifiable in the

Harmonized Tariff Schedule (HTS) under subheadings 7208.31.0000,

7208.32.0000, 7208.33.1000, 7208.33.5000, 7208.41.0000, 7208.42.0000,

7208.43.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.11.0000,

7211.12.0000, 7211.21.0000, 7211.22.0045, 7211.90.0000, 7212.40.1000,

7212.40.5000, and 7212.50.0000. Included in this review are flat-rolled

products of non-rectangular cross-section where such cross-section is

achieved subsequent to the rolling process (i.e., products which have

been ``worked after rolling'')--for example, products which have been

beveled or rounded at the edges. Excluded from these investigations is

grade X-70 plate. The HTS subheadings are provided for convenience and

U.S. Customs Service (Customs) purposes. The written description of the

scope remains dispositive.

Allocation Methodology

In British Steel plc. v. United States, 879 F.Supp. 1254 (February

9, 1995) (British Steel), the U.S. Court of International Trade (the

Court) ruled against the allocation period methodology for non-

recurring subsidies that the Department had employed for the past

decade, a methodology that was articulated in the General Issues

Appendix (58 FR 37227) appended to Final Affirmative Countervailing

Duty Determination: Certain Steel Products from Austria; 58 FR 37217

(July 9, 1993) (GIA). In accordance with the Court's decision on

remand, the Department determined that the most reasonable method of

deriving the allocation period for nonrecurring subsidies is a company-

specific average useful life (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). Accordingly, the

Department has applied this methodology to those non-recurring

subsidies that have not yet been countervailed.

Fabfer submitted an AUL calculation based on depreciation and asset

values of productive assets reported in its financial statements.

Fabfer's AUL was derived by adding depreciation charges for ten years,

and dividing these charges by the sum of average gross book value of

depreciable fixed assets for the related periods. We found this

calculation to be reasonable and consistent with our company-specific

AUL objective. Fabfer's calculation resulted in an average useful life

of 26 years. For non-recurring subsidies received prior to the POR and

which have already been countervailed based on an allocation period

established in an earlier segment of the proceeding, it is not

reasonable or practicable to reallocate those subsidies over a

different period of time. 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.

Therefore, for purposes of these preliminary results, the Department is

using the original allocation period assigned to each nonrecurring

subsidy received prior to the POR, which has already been

countervailed. See Certain Carbon Steel Products from Sweden; Final

Results of Countervailing Duty Administrative Review, 62 FR 16549

(April 7, 1997) (Carbon Steel Products from Sweden).

Analysis of Programs

I. Programs Conferring Subsidies

A. Programs Previously Determined To Confer Subsidies Cash Grants and

Interest Subsidies Under the Economic Expansion Law of 1970

The Economic Expansion Law of December 30, 1970 (1970 Law), offers

incentives to promote the establishment of new enterprises or the

expansion of existing ones which contribute directly to the creation of

new activities and new employment within designated development zones.

Although funding for programs under the 1970 Law is provided by the

GOB, the provisions of the 1970 Law are implemented and administered by

regional authorities. In the Final Affirmative Countervailing Duty

Determinations: Certain Steel Products From Belgium (Final

Determination) 58 FR 37273 (July 9, 1993), the Department found this

program countervailable because it provided benefits to enterprises or

industries or groups of enterprises or industries located in certain

regions. In this proceeding, we have received no new information or

evidence of changed circumstances to warrant reconsideration of this

finding.

Fabfer received grants between 1977 and 1985 under this program;

none were provided since the investigation. To calculate the benefit in

this review, we followed the methodology used in the Final

Determination. In that proceeding, the Department determined that,

absent the 1970 Law, most of the benefits provided under this law would

have been available under the 1959 Economic Expansion Law (the 1959

Law). The 1959 Law was found to be non-specific and, thus, not

countervailable, in Final Affirmative Countervailing Duty

Determinations: Certain Carbon Steel Products from Belgium; 47 FR

39304, (September 7, 1982). Therefore, the Department countervailed

benefits provided under the 1970 Law only to the extent that they

exceeded the benefits available under the 1959 Law.

To calculate the subsidy rate for this review, we employed the

standard grant methodology outlined in the allocation section of the

GIA and allocated the benefit from each grant over fifteen years, the

average useful life of the renewable physical assets in the steel

industry as determined under the U.S. Internal Revenue Service's Asset

Depreciation Range System. As the discount rate, we used the long-term

fixed rates of the Kredietbank for each year in which grants were

provided. We summed the benefit amounts attributable to the POR and

divided the result by Fabfer's total sales during the POR. On this

basis, we calculated a subsidy rate of 0.28 percent ad valorem.

B. Other Programs Preliminarily Determined To Confer Subsidies Research

and Development Loan Provided Under the 1970 Economic Expansion Law

Under Article 25 of the 1970 Economic Expansion Law and the October

20, 1988 Decree of the

[[Page 48190]]

Executive of the Walloon Region, assistance is provided to promote

research activities or the development of prototypes, new products or

new production in the Walloon Region. Based on the questionnaire

response, it appears that this program is funded by the GOB and

administered by the Walloon regional authority. This understanding of

the authority and funding of the 1970 Law relates only to the benefits

examined in this review and is based upon record evidence of this case.

We will seek more clarification on the administration and funding of

these benefits prior to the final results of review. The program

provides interest-free loans for up to 50 percent of the cost of the

project for large enterprises and up to 80 percent for small and medium

sized firms.

We examined the 1970 Economic Expansion Law with respect to cash

grants and interest subsidies in the Final Determination and found that

it was regionally specific because it provides incentives to promote

economic development in designated development zones (see Final

Determination at 37275). In the verification report (Memorandum to

Susan Kuhbach, ``Verification Report of the Government of Belgium,

public version on file in the Centra Records Unit (Room B-099 of the

Main Commerce Building) dated April 1, 1993 at 6, we identify research

and development as one of the types of ``incentives'' provided under

this law. We also confirm in the verification report that Fabfer is

located in a development zone. We examined the documentation provided

in this review and we did not find any indication of changed

circumstances which would warrant reconsideration of this finding.

Therefore, we preliminarily determine that this program is regionally

specific and therefore countervailable.

Under this program, Fabfer received an interest-free loan approved

in 1989 and disbursed in four installments between 1990 and 1992, which

was outstanding in the POR. To calculate the benefit on this loan we

used our long-term loan methodology and measured the cost savings in

each year the loan was outstanding using the long-term fixed rate of

the Kredietbank as the benchmark. We then took the present value of

each of these amounts as of the time the loan was disbursed and we

reallocated the present value of the yearly benefits over the life of

the loan, using our standard grant methodology and the 1989 long-term

fixed rate of the Kredietbank as the discount rate. We then divided the

amount allocated to the POR by Fabfer's total sales during the POR. On

this basis, we determine the net subsidy for this program to be 0.15

percent ad valorem.

II. Programs Preliminarily Determined Not To Confer Subsidies

1. Societe Nationale de Credite a l'Industrie (SNCI) Loans

The SNCI is a public credit institution which, through medium-and

long-term financing, encourages the development and growth of

industrial and commercial enterprises in Belgium, including the

national industries. SNCI is organized as a limited liability company

and is 50-percent owned by the Belgian government. In 1979, SNCI's

board of directors agreed to provide the GOB with the funds needed to

assist the steel industry under the 1978 restructuring plan (the Claes

Plan) and to grant loans to steel companies within the framework of the

plan and under the economic expansion laws of 1959 and 1970. In the

Final Determination, the Department determined that the SNCI loan

program was countervailable because it was limited to a specific

enterprise or industry, or group of enterprises or industries. In this

review, no new information or evidence of changed circumstances has

been submitted to warrant reconsideration of this finding.

Fabfer had two variable-interest long-term loans outstanding during

the POR: one received in 1982, the other in 1983. The interest rates

for the 1982 loan were renegotiated in 1987, 1992 and 1995. The

interest rate for the 1983 loan was renegotiated in 1988. Consistent

with Carbon Steel Products from Sweden, we calculated the benefit by

comparing the amount of interest which was paid during the review

period to the amount of interest which would have been paid at the

benchmark rate. As in the Final Determination at 37291, we used as a

benchmark the long-term fixed rates of the Kredietbank as of the last

renegotiation date of the loan. (See Final Determination at page

37291.) Because the benchmark rate was lower that the program rate, we

preliminarily determine the benefit from this program to be zero.

2. Exhibition Stands

Fabfer reported to have received grants from the GOW to pay for

exhibition stands for participation in fairs hosted in foreign

countries to promote the company's own products. The grants were

received prior to the POR and did not exceed 0.5 percent of Fabfer's

total exports in the year they were received. Therefore, in accordance

with our practice, the entire amount was expensed in the year of

receipt. On that basis, we preliminary determine the benefit from this

program during the POR is zero.

3. Promotion Brochure

Fabfer reported to have received a fixed-rate long-term loan during

the POR from GOW for the publication of advertising brochures for

international markets. We compared the interest rate paid on this loan

to the benchmark rate, the Kredietbank fixed-rate long-term rate

provided in the response. Because the loan interest rate was higher

than the benchmark rate in year the loan was approved, we preliminarily

determine that the benefit from this program during the POR is zero.

III. 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.

1. Resider Program

Petitioners alleged that Fabfer received aid from the European

Regional Development Fund under the Resider program to promote

reconversion in regions which have undergone substantial employment

losses in the steel industry. Based on the information on the record,

we preliminarily determine that Fabfer did not receive benefits from

this program during the POR.

2. European Commission-approved Grants

3. Early Retirement

4. The ``Invests''

5. SNSN

6. FSNW

7. Belgian Industrial Finance Company (Belfin) Loans

8. Government-Guaranteed Loans issued pursuant to the Economic

Expansion Laws of 1959 and 1970

9. Programs under the 1970 Law

a. Exemption of the Corporate Income Tax for Grants

b. Accelerated Depreciation Under Article 15

c. Exemption from Real Estate Taxes

d. Exemption from the Capital Registration

10. ECSC Article 54 Loans and Loan Guarantees

11. ECSC Redeployment Aid

12. European Social Funds Grants

13. Interest Rate Subsidies Provided by Copromex

14. Employment Premiums

15. Short-term Export Credit

16. New Community Instrument Loans

[[Page 48191]]

17. European Regional Development Fund Aid

18. ECSC Interest Rebates under Article 54

19. ECSC Conversion Loans under Article 56

20. ECSC Interest Rebates under Article 56

Preliminary Results of Review

In accordance with 19 CFR 351.221(b)(4)(i), we calculated an

individual subsidy rate for each producer/exporter subject to this

administrative review. For the period January 1, 1996 through December

31, 1996, we preliminarily determine the net subsidy for Fabfer to be

0.43 through December 31, 1996, we prelinarily determine the net

subsidy for Fabfer to be 0.37 percent ad valorem. As provided for in

the Act, any rate less than 0.5 percent ad valorem in an administrative

review is de minimis. Accordingly, pursuant to 19 CFR 351.106(c)(2), if

the final results of this review remain the same as these preliminary

results, the Department intends to instruct Customs to liquidate,

without regard to countervailing duties, shipments of the subject

merchandise from Fabfer exported on or after January 1, 1996 and on or

before December 31, 1996. Also, the cash deposits required for Fabfer

will be zero.

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

351.213(b). Pursuant to 19 CFR 351.212(c), 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)). 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 country-

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

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

order will be the rate established for these companies in the most

recently completed administrative proceeding conducted under the URAA.

If such a review has not been conducted, the rate established in the

most recently completed administrative proceeding pursuant to the

statutory provisions that were in effect prior to the URAA amendments

is applicable. See Final Determination. 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, 1996 through

December 31, 1996, 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.

Public Comment

Pursuant to 19 CFR 351.224(b), the Department will disclose to

parties to the proceeding any calculations performed in connection with

these preliminary results within five days after the date of

publication of this notice. Pursuant to 19 CFR 351.309, interested

parties may submit written comments in response to these preliminary

results. Case briefs must be submitted within 30 days after the date of

publication of this notice, and rebuttal briefs, limited to arguments

raised in case briefs, must be submitted no later than five days after

the time limit for filing case briefs. Parties who submit argument in

this proceeding are requested to submit with the argument: (1) A

statement of the issues, and (2) a brief summary of the argument. Case

and rebuttal briefs must be served on interested parties in accordance

with 19 CFR 351.303(f). Also, pursuant to 19 CFR 351.310, within 30

days of the date of publication of this notice, interested parties may

request a public hearing on arguments to be raised in the case and

rebuttal briefs. Unless the Secretary specifies otherwise, the hearing,

if requested, will be held two days after the date for submission of

rebuttal briefs, that is, thirty-seven days after the date of

publication of these preliminary results.

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. 351.309(c)(ii), 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 issued and published in

accordance with section 751(a)(1) and 777(i)(1) of the Act (19 U.S.C.

1675(a)(1) and 19 U.S.C. 1677f(i).

Dated: August 31, 1998.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-24172 Filed 9-8-98; 8:45 am]

BILLING CODE 3510-DS-P