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,

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 viscose rayon staple fiber

from Sweden for the period January 1, 1996, through December 31, 1996.

For information on the net subsidy for Svenska Rayon AB, as well as for

all non-reviewed companies, please see the Preliminary Results of

Review section of this notice. If the final results remain the same as

the preliminary results of this 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. See Public

Comment section of this notice.

EFFECTIVE DATE: February 9, 1998.

FOR FURTHER INFORMATION CONTACT: Stephanie Moore or Eric Greynolds,

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)

482-3692 or (202) 482-6071.

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 2, 1997, the Department of Commerce (the

Department) published a notice of ``Opportunity to Request

Administrative Review'' (62 FR 24081) of this countervailing duty

order. We received timely requests for review from Courtaulds Fibers

Inc. and Lenzing Fibers Corporation (petitioners) and from Svenska

Rayon AB (Svenska). We initiated the review covering the period January

1, 1996, through December 31, 1996, on June 19, 1997 (62 FR 33395).

In accordance with 19 CFR 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 Svenska.

This review also covers six programs.

Applicable Statute and Regulations

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. In addition, unless

otherwise indicated, all citations to the Department's regulations are

to 19 CFR 355 (1997).

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

of the scope of the proceeding remains dispositive.

Facts Available

Section 776(a)(2) of the Act requires the Department to use facts

available if ``an interested party or any other person * * * withholds

information that has been requested by the administering authority * *

* under this title.'' The facts on the record show that the Government

of Sweden (GOS) did not comply with the Department's requests for

information required to conduct a specificity analysis. In the original

questionnaire, the Department requested information regarding

eligibility for and actual use of the benefits provided under the

Recruitment Subsidy Program, such as: (1) The enabling legislation, (2)

a translated blank copy of the application form submitted to receive

benefits under the program or a description of the procedures by which

an application is analyzed and eventually approved or disapproved, (3)

a list indicating the number of companies, and number and type of the

industries, which have received benefits under the program in the year

the provision of benefits was approved and each of the preceding three

years, (4) the number of companies that applied for benefits under the

program in the year the benefit was approved and each of the preceding

three years, and (5) the number of applicants that have been approved

or rejected in the year the benefit was approved and each of the

preceding three years. The GOS responded that the detailed and relevant

description of the program was provided in the 1995 review, and that

the information was still relevant because no amendments were made

regarding the rules and conditions of the program. The GOS also

provided an amount for the Recruitment Subsidy payment made to Svenska

but, the GOS did not provide to the Department any information

pertaining to the recipients of benefits under the program during the

POR or the two preceding years.

The Department's supplemental questionnaire again requested

specificity information from the GOS. The GOS responded that it is

still not possible for them to obtain data on the distribution of the

Recruitment Subsidy Program by industry.

The Department placed the enabling legislation on the record of the

current review, relying on the statement by the GOS that no amendments

were made in 1996. However, with respect to de facto specificity, the

record does not contain any information at all on the recipients of

benefits under this program during the period of review and in the

prior two years. While we understand that data on distribution of

benefits by industry may not be readily available, in this review, the

GOS did not provide any available documentation, such as a translated

copy of the application form that may have helped explain to the

Department why the information being requested could not be provided

and might have indicated the availability of some information that

could be useful in assessing specificity. In addition, the GOS elected

not to attempt to collect whatever data was available.

Section 776(b) of the Act permits the administrative authority to

use an inference that is adverse to the interests of an interested

party if that party has ``failed to cooperate by not acting to the best

of its ability to comply with a request for information.'' Such an

adverse inference may include reliance on information derived from (1)

the petition, (2) a final determination in the investigation under this

title, (3) any previous review under section 751 or determination under

section 753 regarding the country under consideration, or (4) any other

information placed on the record.

[[Page 6535]]

Because respondents were aware of the requested information but did not

comply with the Department's request for such information, we find that

respondents failed to cooperate by not acting to the best of their

ability to comply with the Department's request. Therefore, we are

using adverse inferences in accordance with section 776(b) of the Act.

The adverse inference is a finding that the Recruitment Subsidy program

is specific under section 771(5A)(D)(iii) of the Act, and that the

amount of the benefit received by Svenska constitutes a financial

contribution which benefits the recipient. As such, this aid is

countervailable.

Analysis of Programs

I. Program Preliminarily Determined to Confer Subsidies

Recruitment Subsidy Program

The purpose of the Recruitment Subsidy Program, which commenced in

1984, is to increase employment among long-term unemployed persons. Aid

is provided by the GOS 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 Swedish Kroner 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 to state employers. Applications for aid are

submitted to the local GOS 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 up to 50 percent of

wage costs and for a period up to 12 months.

We examined the specificity of the Recruitment Subsidy Program in

accordance with section 771(5A)(D) of the Act. Because the enabling

legislation does not expressly limit access to the subsidy to an

enterprise or industry, or group thereof, we examined whether the

program is de facto specific within the meaning of section

771(5A)(D)(iii) of the Act.

According to 771(5A)(D)(iii), ``a subsidy is de facto specific if

one of the following factors exist: (1) The actual recipients of the

subsidy, whether considered on an enterprise or industry basis, are

limited in number; (2) An enterprise or industry is a predominant user

of the subsidy; (3) An enterprise or industry receives a

disproportionately large amount of the subsidy; or (4) The manner in

which the authority providing the subsidy has exercised discretion in

the decision to grant the subsidy indicates that an enterprise or

industry is favored over others.''

During the period of review, Svenska received grants under the

Recruitment Subsidy Program. The GOS provided no information on actual

usage of the program by enterprise or industry nor did it identify any

other information through which the Department could analyze whether

the program is de facto specific. Accordingly, based on the facts

available, we preliminarily determine that this program is de facto

specific and, therefore, countervailable within the meaning of section

771(5A)(D)(iii). To calculate the subsidy to this company, we divided

the amount of the grants the company received during the period of

review by its total sales. On this basis, we preliminarily determine

the subsidy to be 0.06 percent ad valorem.

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. Grants for Temporary Employment for Public Works

B. Regional Development Grants

C. Transportation Grants

D. Location-of-Industry Loans

III. Program Preliminarily Determined To Be Terminated

Manpower Reduction Grants

We examined the Manpower Reduction Grants program and preliminarily

determine it to be terminated because the GOS provided documentation

that no government funds have been allocated to this program since

1982.

Preliminary Results of Review

In accordance with 19 CFR 355.22(c)(4)(ii), 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 Svenska to be

0.06 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, 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 Svenska exported on or after January 1, 1996, and on

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

company 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

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)). 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 are those established in the most recently completed

administrative proceeding, conducted pursuant to the statutory

provisions that were in effect prior to the URAA amendments. See

Viscose Rayon Staple Fiber from Sweden; Final Results of Countervailing

Duty Administrative Review, 59 FR 66940 (August 18, 1997). 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.

[[Page 6536]]

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 arguments 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 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 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: February 2, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-3199 Filed 2-6-98; 8:45 am]

BILLING CODE 3510-DS-P