Notice of Initiation of Countervailing Duty Investigation: Structural Steel Beams From the Republic of Korea

DEPARTMENT OF COMMERCE

International Trade Administration

[C-580-842]

Notice of Initiation of Countervailing Duty Investigation:

Structural Steel Beams From the Republic of Korea

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: August 3, 1999.

FOR FURTHER INFORMATION CONTACT: Eric B. Greynolds at (202) 482-6071 or

Tipten Troidl at (202) 482-1767, Office of CVD/AD Enforcement VI,

Import Administration, International Trade Administration, U.S.

Department of Commerce, Room 1870, 14th Street and Constitution Avenue,

N.W., Washington, D.C. 20230.

[[Page 42089]]

Initiation of Investigation

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (the Act) by the

Uruguay Round Agreements Act (URAA). In addition, unless otherwise

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

regulations codified at 19 C.F.R. Part 351 (1998) and to the

substantive countervailing duty regulations published in the Federal

Register on November 25, 1998 (63 FR 65348).

The Petition

On July 7, 1999, the Department of Commerce (the Department)

received petitions filed in proper form on behalf of Northwestern Steel

and Wire Co., Nucor-Yamato Steel Co., TXI-Chaparral Steel Co., and the

United Steelworkers of America AFL-CIO (the petitioners). Supplements

to the petitions were filed on July 22 and 23, 1999.

In accordance with section 702(b)(1) of the Act, petitioners allege

that manufacturers, producers, or exporters of structural beams from

the Republic of Korea (Korea) received countervailable subsidies within

the meaning of section 701 of the Act.

The Department finds that petitioners filed the petition on behalf

of the domestic industry because they are interested parties as defined

under sections 771(9)(C) and (D) of the Act. The petitioners have

demonstrated sufficient industry support with respect to this

countervailing duty investigation, which they are requesting the

Department to initiate (see Determination of Industry Support for the

Petition below).

Scope of the Investigation

For purposes of this investigation, the products covered are

doubly-symmetric shapes, whether hot-or cold-rolled, drawn, extruded,

formed or finished, having at least one dimension of at least 80 mm

(3.2 inches or more), whether of carbon or alloy (other than stainless)

steel, and whether or not drilled, punched, notched, painted, coated,

or clad. These products (Structural Steel Beams) include, but are not

limited to, wide-flange beams (W shapes), bearing piles (HP shapes),

standard beams (S or I shapes), and M-shapes.

All products that meet the physical and metallurgical descriptions

provided above are within the scope of this investigation unless

otherwise excluded. The following products, are outside and/or

specifically excluded from the scope of this investigation:

Structural steel beams greater than 400 pounds per linear

foot or with a web or section height (also known as depth) over 40

inches.

In addition to the above exclusion, petitioners have requested that

the Department exclude certain special section I-shapes. See Exhibit 5

of the petition, submitted on July 7, 1999, see also Attachment A of

the July 23, 1999 petition amendment. The Department is currently

considering this exclusion request, and attempting to define the

request using physical, mechanical, and chemical criteria.

The merchandise subject to these investigations is classified in

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

subheadings: 7216.32.0000, 7216.33.0030, 7216.33.0060, 7216.33.0090,

7216.50.0000, 7216.61.0000, 7216.69.0000, 7216.91.0000, 7216.99.0000,

7228.70.3040, 7228.70.6000. Although the HTSUS subheadings are provided

for convenience and Customs purposes, the written description of the

merchandise under investigation is dispositive.

During our review of the petition, we discussed the scope with the

petitioners to ensure that the scope in the petition accurately

reflects the product for which the domestic industry is seeking relief.

Moreover, as we discussed in the preamble to the Department's

regulations (62 FR 27323), we are setting aside a period for parties to

raise issues regarding product coverage. The Department encourages all

parties to submit such comments by August 16, 1999. Comments should be

addressed to Import Administration's Central Records Unit at Room 1870,

U.S. Department of Commerce, 14th Street and Constitution Avenue, NW,

Washington, D.C. 20230. Any product coverage comment filed must be

filed for the record of each structural steel beam investigation (i.e.,

commentors must file all coverage comments on the record of the

investigations for structural steel beams from Germany, Japan, South

Korea (both antidumping and countervailing duty investigations) and

Spain). The period of scope consultations is intended to provide the

Department with ample opportunity to consider all comments and consult

with parties prior to the issuance of the preliminary determination.

Consultations

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

invited representatives of the Government of Korea (GOK) for

consultations with respect to the petition filed. The GOK declined to

hold consultations with the Department regarding the petition, but on

July 20, 1999, submitted a letter to the Department expressing

opposition to the petition.

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 produce 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. While both the Department and the ITC

must apply the same statutory definition regarding the domestic like

product (section 771(10) of the Act), 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 (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 Therefore from Japan: Final

Determination; Rescission of Investigation and Partial Dismissal of

Petition, 56 FR 32376, 32380-81 (July 16, 1991).

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

product which 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 domestic

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

[[Page 42090]]

the scope as defined in the petition. Moreover, petitioners do not

offer a definition of domestic like product distinct from the scope of

the investigation.

The domestic like product referred to in the petition is 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 to be inaccurate.

The Department has, therefore, adopted the domestic like product

definition set forth in the petition.

In this case, the Department has determined that the petition and

supplemental information to the petition contain adequate evidence of

sufficient industry support (see Attachment to the Initiation Checklist

Re: Industry Support, July 27, 1999). Producers and workers supporting

the petition represent over 50 percent of total production of the

domestic like product. Therefore, polling was not necessary.

Accordingly, the Department determines that these petitions are

filed on behalf of the domestic industry within the meaning of section

702(b)(1) of the Act.

Injury Test

Because Korea is a ``Subsidies Agreement Country'' within the

meaning of section 701(b) of the Act, section 701(a)(2) applies to this

investigation. Accordingly, the ITC must determine whether imports of

the subject merchandise from Korea materially injure, or threaten

material injury to, a U.S. industry.

Allegations and Evidence of Material Injury and Causation

Petitioners allege that the U.S. industry producing the domestic

like product is being materially injured, and is threatened with

material injury, by reason of the individual and cumulated imports of

the subject merchandise sold at less than NV. Petitioners explained

that the industry's injured condition is evident in the declining

trends in output and net operating profits. The allegations of injury

and causation are supported by relevant evidence including U.S. Customs

import data, lost sales, and pricing information. The Department

assessed the allegations and supporting evidence regarding material

injury and causation and determined that these allegations are

supported by accurate and adequate evidence and meet the statutory

requirements for initiation (see Attachments to Initiation Checklist,

Re: Material Injury, July 27, 1999).

Allegations 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 Investigation

The Department has examined the petition on structural steel beams

from Korea 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 a countervailing duty investigation to determine

whether manufacturers, producers, or exporters of structural beams from

Korea receive subsidies. See the July 27, 1999, memorandum to the file

regarding the initiation of this investigation (public documents on

file in the Central Records Unit of the Department of Commerce, Room B-

099).

We are including in our investigation the following programs

alleged in the petition to have provided countervailable subsidies to

producers and exporters of the subject merchandise in Korea:

1. GOK Directed Credit Programs

a. Pre-1992 Directed Credit

b. Post-1991 Directed Credit

2. Debt Restructuring for Kangwon Industries

3. Private Capital Investment Act (PCIA)

4. Tax Programs Under the Tax Reduction and Exemption Control Act

(TERCL)

a. Technical Development Reserve Funds (Article 8)

b. Tax Credit for Investment in Equipment to Develop Technology and

Manpower/Investment Tax Credit (Article 10)

c. Reserve for Export Loss (Article 16)

d. Reserve for Overseas Market Development (Article 17)

e. Tax Credits for Vocational Training (Article 18)

f. Exemption of Corporation Tax on Dividend Income from Overseas

Resources Development Investment (Article 24)

g. Tax Credit for Investment in Productivity Improvement Facilities

(Article 25)

h. Tax Credits for Investment in Specific Facilities (Article 26)

i. Tax Credits for Temporary Investments (Article 27)

j. Social Indirect Capital Investment Reserve Funds (Article 28)

k. Energy-Saving Facilities Investment Reserve Funds (Article 29)

l. Tax Credits for Specific Investments (Article 71)

m. Mining Investment Reserve Funds (Article 95)

5. Reserve for Investment

6. Asset Revaluation Pursuant to TERCL Article 56(2)

7. Special Cases of Tax for Balanced Development among Areas (TERCL

Articles 41, 42, 43, 44, and 45)

8. Industry Promotion and Research and Development Subsidies

a. Promotion Fund for Science and Technology

b. Highly Advanced National Project Fund

c. Steel Campaign for the 21st Century

9. Overseas Resource Development (Loans and Grants) Programs

10. Excessive Duty Drawback

11. Electricity Discounts

12. Scrap Reserve Fund

13. Export Insurance Rates By The Korean Export Insurance Corporation

14. Short-Term Export Financing

15. Korean Export-Import Bank Loans

16. Export Industry Facility Loans (EIFL) and Specialty Facility Loans

17. Loans from the Energy Savings Fund

18. Tax Incentives for Highly Advanced Technology Businesses

19. Special Depreciation of Assets Based on Foreign Exchange Earnings

Petitioners have also alleged that Kangwon was uncreditworthy from

1991 through 1998. Based upon the information provided by petitioners,

including financial ratios, we are initiating an investigation of

Kangwon's creditworthiness for the years 1991 through 1998.

We are not including in our investigation the following programs

alleged to be benefitting producers and exporters of the subject

merchandise in Korea:

1. Tax Credit for Technology and Manpower Development Expenses (Article

9 of TERCL)

Petitioners alleged that producers and exporters of the subject

merchandise may be benefitting from this program. However, we have

decided not to initiate an investigation of this program. We recently

examined this program in the Final Affirmative Countervailing Duty

Determination: Stainless Steel Sheet and Strip in Coils From the

Republic of Korea, 64 FR 30636 (June 8, 1999) (Sheet and Strip). In

Sheet and Strip, we found this program not countervailable. See Sheet

and Strip, 64 FR at 30645-6. Petitioners have provided no new

information or

[[Page 42091]]

evidence of changed circumstances to warrant a reexamination of this

program.

2. Free Trade Zones (FTZs)

In 1997, the GOK announced its intention of establishing FTZs in

the ports of Pusan and Kwangyang. Petitioners allege that special

concessions, such as various tax and customs incentives, apply only to

companies in GOK-designated FTZs thereby bestowing regionally specific

subsidies on companies located in these zones. However, petitioners

point out, neither Inchon nor Kangwon is located in the ports scheduled

to be designated as FTZs by the GOK. Moreover, petitioners do not

provide any evidence in support of their contention that the GOK may

have expanded the FTZ program to include ports where Inchon and Kangwon

have operations. Therefore, we are not initiating an investigation of

this program.

Distribution of Copies of the Petitions

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

the public version of the petition have been provided to the

representatives of Korea. We will attempt to provide copies of the

public version of the petition to all the exporters named in the

petition, as provided for under section 351.203(c)(2) of the

Department's regulations.

ITC Notification

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

this initiation.

Preliminary Determination by the ITC

The ITC will determine by August 23, 1999, whether there is a

reasonable indication that an industry in the United States is

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

imports of structural steel beams from Korea. A negative ITC

determination will result in the investigation being terminated;

otherwise, the investigation will proceed according to statutory and

regulatory time limits.

This notice is published pursuant to section 777(i) of the Act.

Dated: July 27, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-19920 Filed 8-2-99; 8:45 am]

BILLING CODE 3510-DS-P