Notice of Initiation of Countervailing Duty Investigations: Certain Cut-To-Length Carbon-Quality Steel Plate From France, India, Indonesia, Italy, and the Republic of Korea

DEPARTMENT OF COMMERCE

International Trade Administration

[C-427-817, C-533-818, C-560-806, C-475-827, C-580-837]

Notice of Initiation of Countervailing Duty Investigations:

Certain Cut-To-Length Carbon-Quality Steel Plate From France, India,

Indonesia, Italy, and the Republic of Korea

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: March 16, 1999.

FOR FURTHER INFORMATION CONTACT: Eric Greynolds (France), at (202) 482-

6071; Robert Copyak (India), at (202) 482-2209; Kathleen Lockard

(Indonesia), at (202) 482-1168; Kristen Johnson (Italy), at (202) 482-

4406; and Stephanie Moore (Republic of Korea), at (202) 482-3692,

Import Administration, U.S. Department of Commerce, Room 1870, 14th

Street and Constitution Avenue, NW, Washington, DC 20230.

Initiation of Investigations

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 CFR part 351 (1998) and to the substantive

countervailing duty regulations published in the Federal Register on

November 25, 1998 (63 FR 65348).

The Petitions

On February 16, 1999, the Department of Commerce (the Department)

received petitions filed in proper form on behalf of U.S. Steel Group,

a Unit of USX Corporation, Bethlehem Steel Corporation, Gulf States,

Inc., IPSCO Steel Inc., Tuscaloosa Steel Corporation, and the United

Steelworkers of America (the petitioners). Tuscaloosa Steel Corporation

is not a petitioner to the countervailing duty investigations involving

France and Italy. Supplements to the petitions were filed

[[Page 12997]]

on February 22, 24, 25, 26, March 2, and 4, 1999.

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

that manufacturers, producers, or exporters of certain cut-to-length

carbon-quality steel plate (CTL plate or subject merchandise) in

France, India, Indonesia, Italy, and Republic of Korea (Korea) receive

countervailable subsidies within the meaning of section 701 of the Act.

The Department finds that petitioners filed the petitions 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 each of the

countervailing duty investigations, which they are requesting the

Department to initiate (see Determination of Industry Support for the

Petitions below).

Scope of the Investigations

The products covered by this scope are certain hot-rolled carbon-

quality steel: (1) Universal mill plates (i.e., flat-rolled products

rolled on four faces or in a closed box pass, of a width exceeding 150

mm but not exceeding 1250 mm, and of a nominal or actual thickness of

not less than 4 mm, which are cut-to-length (not in coils) and without

patterns in relief), of iron or non-alloy-quality steel; and (2) flat-

rolled products, hot-rolled, of a nominal or actual thickness of 4.75

mm or more and of a width which exceeds 150 mm and measures at least

twice the thickness, and which are cut-to-length (not in coils).

Steel products to be included in this scope are of rectangular,

square, circular or other shape and of rectangular or non-rectangular

cross-section where such non-rectangular 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. Steel products that meet the noted

physical characteristics that are painted, varnished or coated with

plastic or other non-metallic substances are included within this

scope. Also, specifically included in this scope are high strength, low

alloy (HSLA) steels. HSLA steels are recognized as steels with micro-

alloying levels of elements such as chromium, copper, niobium,

titanium, vanadium, and molybdenum.

Steel products to be included in this scope, regardless of

Harmonized Tariff Schedule of the United States (HTSUS) definitions,

are products in which: (1) Iron predominates, by weight, over each of

the other contained elements, (2) the carbon content is two percent or

less, by weight, and (3) none of the elements listed below is equal to

or exceeds the quantity, by weight, respectively indicated:

1.80 percent of manganese, or

1.50 percent of silicon, or

1.00 percent of copper, or

0.50 percent of aluminum, or

1.25 percent of chromium, or

0.30 percent of cobalt, or

0.40 percent of lead, or

1.25 percent of nickel, or

0.30 percent of tungsten, or

0.10 percent of molybdenum, or

0.10 percent of niobium, or

0.41 percent of titanium, or

0.15 percent of vanadium, or

0.15 percent zirconium.

All products that meet the written physical description, and in

which the chemistry quantities do not equal or exceed any one of the

levels listed above, are within the scope of these investigations

unless otherwise specifically excluded. The following products are

specifically excluded from these investigations: (1) Products clad,

plated, or coated with metal, whether or not painted, varnished or

coated with plastic or other non-metallic substances; (2) SAE grades

(formerly AISI grades) of series 2300 and above; (3) products made to

ASTM A710 and A736 or their proprietary equivalents; (4) abrasion-

resistant steels (i.e., USS AR 400, USS AR 500); (5) products made to

ASTM A202, A225, A514 grade S, A517 grade S, or their proprietary

equivalents; (6) ball bearing steels; (7) tool steels; and (8) silicon

manganese steel or silicon electric steel.

The merchandise subject to these investigations is classified in

the HTSUS under subheadings: 7208.40.3030, 7208.40.3060, 7208.51.0030,

7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000, 7208.90.0000,

7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 7211.14.0045,

7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7225.40.3050,

7225.40.7000, 7225.50.6000, 7225.99.0090, 7226.91.5000, 7226.91.7000,

7226.91.8000, 7226.99.0000.

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 petitions, we discussed the scope with the

petitioners to ensure that the scope in the petitions accurately

reflects the merchandise for which the domestic industry is seeking

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

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

to raise issues regarding product coverage. In particular, we seek

comments on the specific levels of alloying elements set out in the

description above, the clarity of grades and specifications excluded

from the scope, and the physical and chemical description of the

product coverage. The Department encourages all parties to submit such

comments by March 29, 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, DC.

20230. 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 determinations.

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 February 26,

1999, the Department held consultations with representatives of the

governments of France, Italy, and the Delegation of the European

Commission (EC). On March 2, 1999, consultations were held with

representatives of the government of India. On March 8, 1999,

consultations were held with representatives of the government of

Indonesia. See the March 8, 1999, memoranda to the file regarding these

consultations (public documents on file in the Central Records Unit of

the Department of Commerce, Room B-099).

Determination of Industry Support for the Petitions

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

[[Page 12998]]

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.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 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 the scope as defined in the

petition. Moreover, the petitioners do not offer a definition of

domestic like product distinct from the scope of the investigations.

In this case, ``the article subject to investigation'' includes

certain products which have not previously been included within the

scope of investigations involving cut-to-length carbon steel products.

To this end, the Department has reviewed reasonably available

information to determine whether the products within the scope of the

investigations constitute one or more than one domestic like

product(s).

Some steel products classified as alloy steels based on the HTSUS

are recognized as carbon steels by the industry and/or the marketplace.

For example, The Book of Steel, a 1996 publication by Sollac, a flat-

rolled steel division of Usinor, one of the largest steel companies in

the world, identifies HSLA as falling within categories of plain carbon

sheet steels (see chapter 44). Also, Carbon and Alloy Steels, published

in 1996 by ASM International, a major materials society, indicates that

HSLA steels are not considered to be alloy steels, but are in fact

similar to as-rolled mild-carbon steel and are generally priced by

reference to the base price for carbon steels (see page 29). Carbon and

Alloy Steels also distinguishes between carbon-boron and alloy-boron

steels; the former may contain boron at levels which would classify it

as alloy under the HTSUS, but would not classify it as an alloy steel

commercially because, unlike the alloy-boron steels, higher levels of

other alloying elements are not specified (see, e.g., pages 159 and

161).

The Department has considered that, with respect to certain steel

products, such as HSLA, the petitioners indicate that these steel

products are manufactured by similar processes, are priced from similar

bases, are marketed in comparable ways, and are used for similar

applications as carbon steels.

Further, we confirmed this description with product experts at the

Department and the ITC. Other than the fact that the AISI technically

defines alloy steels based on alloy levels comparable to those in the

HTSUS, none of the individuals cited reasons why the products in

question might be treated as distinct from cut-to-length carbon steels.

For these reasons, the Department determines that for purposes of these

investigations, the domestic like product definition is the single

domestic like product defined in the ``Scope of the Investigations''

section above.

Based on our analysis of the information and arguments presented to

the Department and the information independently obtained and reviewed

by the Department, we have determined that there is a single domestic

like product which is defined in the ``Scope of Investigations''

section above. Moreover, the Department has determined that the

petitions (and subsequent amendments to the petitions) and supplemental

information obtained through Department research contain adequate

evidence of industry support and, therefore, polling is unnecessary.

The Department received no opposition to the petitions. For all

countries, the petitioners established industry support representing

over 50 percent of total production of the domestic like product.

Therefore, for these investigations, petitioners have established a

level of support for the petitions commensurate with the statutory

requirements. Accordingly, the Department determines that the petitions

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

section 702(b)(1) of the Act. See the March 8, 1999, memoranda to the

file (for each country) regarding the initiation of each investigation

(public documents on file in the Central Records Unit of the Department

of Commerce, Room B-099).

Injury Test

Because France, India, Indonesia, Italy, and Korea are ``Subsidies

Agreement Countries'' within the meaning of section 701(b) of the Act,

section 701(a)(2) applies to these investigations. Accordingly, the ITC

must determine whether imports of the subject merchandise from these

countries materially injure, or threaten material injury to, a U.S.

industry.

Allegations and Evidence of Material Injury and Causation

The petitions 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 subsidized

imports of the subject merchandise. Petitioners explained that the

industry's injured condition is evident in the declining trends in net

operating profits, net sales volumes, profit-to-sales ratios, and

capacity utilization. The allegations of injury and causation are

supported by relevant evidence including business proprietary data from

the petitioning firms and U.S. Customs import data. 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 the March 8, 1999, memoranda to the

file (for each country) regarding the initiation of each investigation

(public documents on file in the Central Records Unit of the Department

of Commerce, Room B-099).

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 Investigations

The Department has examined the petitions on CTL plate from France,

India, Indonesia, Italy, and Korea and found that they comply with the

[[Page 12999]]

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 CTL plate from these countries receive subsidies. See the

March 8, 1999, memoranda to the file (for each country) regarding the

initiation of each investigation (public documents on file in the

Central Records Unit of the Department of Commerce, Room B-099).

A. France

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 France:

Government of France Programs

1. 1986 Write-off of Steel Amortization Fund Debts (PACs)

2. 1986 Write-off of Steel Intervention Fund (FIS) Bonds

3. 1988 Write-off of Steel Intervention Fund (FIS) Bonds

4. 1986 Write-off of Shareholder's Advances

5. 1994 Purchase of Power Plant for Excessive Remuneration

6. Investment Operating Subsidies

7. Soft Loans from Credit Lyonnais

8. Grants for Funding of Myosotis Project

9. Advances for Electric Arc Furnace Technology

10. Caisse Francaise de Developpement Industriel (CFDI) Loans

11. Shareholder Guarantees

12. Subsidies Provided Directly to GTS Industries

European Commission Programs

1. ECSC Loans under Article 54

2. ECSC Article 56 Funding

3. European Regional Development Fund

4. Resider and Resider II

5. European Social Fund

Petitioners allege that Usinor was uncreditworthy in each year 1980

through 1995. In the Final Affirmative Countervailing Duty

Determination: Certain Steel Products from France, 58 FR 37304 (July 9,

1993) (Certain Steel 1993), Usinor was found uncreditworthy in years

1982 through 1988, and creditworthy 1989 through 1991. Petitioners

provided sufficient information to believe or suspect that Usinor was

uncreditworthy in years 1992 through 1995. Thus for the years 1982

through 1988, and 1992 through 1995, we will investigate whether Usinor

was uncreditworthy in 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 producers and exporters of the subject

merchandise in France:

1. 1991 Infusion Via Credit Lyonnais

In 1991, the state-owned Credit Lyonnais (CL) purchased a 20

percent share of Usinor for FF 2.5 billion. In (Certain Steel 1993) and

the Final Affirmative Countervailing Duty Determination: Certain Hot

Rolled Lead and Bismuth Carbon Steel Products from France, 58 FR 6221

(January 27, 1993) (Lead and Bismuth), the Department determined that

Usinor was equityworthy and found the investment not countervailable.

The Department determined not to initiate in the Notice of Initiation

of Countervailing Duty Investigations: Stainless Steel Sheet and Strip

in Coils From France, Italy, and the Republic of Korea, 63 FR 37539

(July 13, 1998) (Stainless Steel). Although petitioners claim to submit

new information on this program, the information is the same as

submitted in Stainless Steel. Petitioners also argue that the holding

in Aimcor Alabama v. United States, 871 F. Supp. 447 (CIT 1994), which

is incorporated into the new CVD regulations, compels us to initiate on

this program. Though Stainless Steel preceded the new regulations,

Aimcor was considered when we declined to initiate. Therefore, we are

not including this program in our investigation.

2. 1991 PACs Write-Off

In 1991, Usinor converted FF 2.8 billion of PAC liabilities into

common stock held by the Government of France (GOF). Petitioners allege

that this constituted a countervailable benefit in the form of debt

forgiveness. In Certain Steel 1993 and Lead and Bismuth, we determined

that this transaction was a debt-to-equity swap, and because we found

Usinor equityworthy in 1991, this program was not countervailable.

Thus, we declined to initiate in Stainless Steel. Again, petitioners

contest the 1991 equityworthy finding but, aside from citing press

reports of the poor financial state of Usinor at the time, they do not

supply sufficient new information or evidence of changed circumstances

to warrant reinvestigating this program. Therefore, we are not

including this program in our investigation.

3. 1995 Capital Infusion

Petitioners allege that the GOF forewent revenue otherwise due when

it allowed Usinor to keep FF 5 billion resulting from the issuance of

additional Usinor shares to private investors prior to its partial

privatization. Petitioners argue that, at the time of the sale, Usinor

was 100 percent government-owned and, therefore, all of the revenue

resulting from the sale should have remained with the GOF. Petitioners

argue that this sale constituted a financial contribution in the form

of a direct cash grant or failure to collect revenue otherwise due in

which the purchase by Stable Shareholders (i.e. the GOF) of shares at

about the same time played a meaningful, but ancillary, role in the

private investors' decision to purchase Usinor shares. Petitioners

further argue that, in the event that the Department does not deem this

program to be a grant, it can be viewed as an infusion by private

parties acting at the behest of the GOF at a time when Usinor was

unequityworthy. In Stainless Steel, we declined to initiate on these

purchases of Usinor shares by the Stable Shareholders. No new

information has been provided in this petition to warrant a

reexamination of our decision not to initiate in Stainless Steel.

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

4. GOF Advances for SODIs

Regional development subsidiaries (SODIs) were established by

Usinor and Sacilor in 1983, to assist in the retraining of laid-off

personnel. Petitioners allege that the SODI advances to Usinor from

1991 through 1994 are countervailable. In Certain Steel 1993, we

determined that the program was not tied to steel production and that

it did not relieve Usinor of any obligations that it would otherwise

incur with respect to the retraining of laid-off personnel and thus, it

was not countervailable. As new evidence, petitioners cite to the 1997

European Union (EU) notification to the WTO of the SODI program for

1995, claiming that it represents the EU's confirmation that SODI

constitutes a subsidy program under the SCM agreement. However, we note

that the EU's report to the WTO states that none of the GOF's SODI

advances went to Usinor. Therefore, we are not including this program

in our investigation.

5. 1987 through 1990 Write-off of Shareholder's Advances

Petitioners allege that Usinor received additional shareholder

advances during the years 1987 through 1990. They further allege that

these advances were written off in 1991, and thus constitute

countervailable debt forgiveness. We note that this allegation is the

same as

[[Page 13000]]

the allegation under the GOF Advances for SODIs program (discussed

above) and that these two allegations concern the same program;

petitioners own source documentation indicates that these two programs

are, in fact, one program. Furthermore, in the Preliminary Affirmative

Countervailing Duty Determination: Certain Steel Products from France

and Alignment of Final Countervailing Duty Determination With Final

Antidumping Duty Determinations: Certain Steel Products from France,

(57 FR 57785) (December 7, 1992), the Department referred to this

program as Shareholder Advances After 1986 and classified it as a

program for which more information was needed. In Certain Steel 1993,

this program was determined to be not countervailable under the name

Regional Development Subsidiaries (SODIs). Therefore, we are not

including this program in our investigation.

6. Credit National Loans

Petitioners allege that the GOF's Credit National (CN) selectively

funnels subsidized loans to the steel industry, and that any CN loans

outstanding during the POI are countervailable. In Certain Steel 1993,

we found that the loans were not provided on either a de jure or de

facto specific basis. Petitioners claim that new evidence indicates

that CN loan terms vary depending on the recipient and thus, we should

investigate whether Usinor or the French steel industry received

subsidized loans on a specific basis. The information that petitioners

have submitted is not sufficient to revisit the Department's previous

determination on this program because it does not indicate that CN

offered subsidized loans to the steel industry on a specific basis.

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

7. Fonds de Developpement Economique et Social (FDES) Loans

Petitioners allege that in 1991, Usinor received subsidized loans

from the GOF under the FDES program. In Certain Steel 1993, the

Department found that, although the loans were specifically provided to

the steel industry, after comparing interest actually paid to interest

that would have been paid at the benchmark interest rate, the 1991

loans conferred no benefit. Thus, we declined to initiate in Stainless

Steel. Petitioners provide no new information or evidence of changed

circumstances indicating that Usinor has obtained any new loans or to

prompt a reexamination of the loans and benchmark from the previous

investigation.

B. India

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 India:

1. Passbook Scheme

2. Duty Entitlement Passbook Scheme

3. Import Licenses

a. Advance Licenses

b. Advanced Intermediate Licenses

c. Special Imprest Licenses

4. Special Import Licenses

a. Special Import License for Quality

b. Special Import License for Star Trading Houses

5. Export Promotion Capital Goods Scheme

6. Pre-shipment and Post-shipment Export Financing

7. Government of India (GOI) Loans through the Steel Development Fund

8. Loan Guarantees from the GOI

9. Tax Exemption for Export Profits

We are not including in our investigation the following program

alleged to be benefitting producers and exporters of the subject

merchandise in India:

Possible Conversion of Steel Development Fund Loans into Equity in the

Steel Authority of India Limited (SAIL)

The petition contains a news article dated December 1998, which

indicates that India's steel ministry favors a proposal by SAIL to

convert SAIL's Steel Development Fund loans into equity. The petition

does not contain information as to whether such an agreement has been

finalized. Absent information that any agreement occurred during the

period of investigation (1998), this is not an issue for purposes of

this investigation.

C. Indonesia

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 Indonesia:

1. Bank of Indonesia Rediscount Loans

2. Corporate Income Tax Holidays

3. Reduction in Electricity Tariffs

4. 1995 Equity Infusion into Krakatau

We are also investigating whether Krakatau was uncreditworthy in

1995, the year in which the company received the alleged equity

infusion.

D. Italy

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 Italy:

Government of Italy Programs

1. Equity Infusions into Italsider/Nuova Italsider

2. Equity Infusions into ILVA

3. Debt Forgiveness in Connection with the 1981 Restructuring Plan

4. Debt Forgiveness in Connection with the 1988 Restructuring Plan

5. Debt Forgiveness Given in the Course of Privatization in Connection

with the 1993-1994 Restructuring Plan

6. Additional Debt Forgiveness in Course of Privatization

7. Unpaid Portion of Payment Price for ILP

8. Grants to ILVA

9. Working Capital Grants to ILVA in 1993

10. Grants to ILVA to Cover Closure and Liquidation Expenses as Part of

the 1993-1994 Privatization Plan

11. Grants to Riva/ILP

12. Interest Grants for ``Indirect Debts'' under Law 750/81

13. Lending from the Ministry of Industry under Law 675/77

14. Loans with Interest Contributions under Law 675/77

15. Capital Grants to Nuova Italsider under Law 675/77

16. Personnel Retraining under Law 675/77

17. VAT Reductions under Law 675/77

18. Closure Payments under Law 481/94 and its Predecessor Law

19. Closure Grants under Laws 46 and 706

20. Early Retirement Benefits

21. Decree Law 120/89

Regional Programs

22. Capital Grants

23. Law 488/92

24. Law 341/95 Tax Concessions

25. Exemptions from Taxes

26. Interest Rate Reductions under Law 902

27. Interest Contributions under the Sabatini Law

28. Urban Redevelopment Packages under Law 181/89

29. Exchange Rate Guarantees under Law 796/76

30. Export Marketing Grants under Law 394/81

European Commission Programs

1. ECSC Loans under Article 54

2. Interest Rebates on ECSC Article 54 Loans

3. ECSC Conversion Loans, Interest Rebates, Restructuring Grants, and

Traditional and Social Aid under Article 56

[[Page 13001]]

4. ERDF Aid

5. Resider and Resider II

6. European Social Fund

We are also investigating whether ILVA/ILP and their predecessor

companies were uncreditworthy in the years 1977 through 1994. In the

Final Affirmative Countervailing Duty Determinations: Certain Steel

Products from Italy, 58 FR 37327 (July 9, 1993), (Certain Steel from

Italy), we found that ILVA and its corporate predecessors were

uncreditworthy in each year 1977 through 1991. In the Final Affirmative

Countervailing Duty Determination: Grain-Oriented Electrical Steel From

Italy, 59 FR 18357 (April 18, 1994), (Electrical Steel), we found that

ILVA and its corporate predecessors were uncreditworthy in each year

1978 through 1992. In the Final Affirmative Countervailing Duty

Determination: Certain Stainless Steel Wire Rod from Italy, 63 FR

40,474 (July 29, 1998), (Wire Rod), we found that ILVA and its

corporate predecessors were uncreditworthy in each year 1985 through

1993. Thus, for the years 1977 through 1994, we will investigate

whether the companies were uncreditworthy in the years in which

petitioners have alleged non-recurring countervailable subsidies.

We are not including in our investigation the following program

alleged to be benefitting producers and exporters of the subject

merchandise in Italy:

Social Security Exemptions

Petitioners allege that employers in the southern Mezzogiorno

region were entitled to a full or partial exemption from social

security contributions for workers that represented an addition to the

company's labor force. Petitioners provide documentation that producers

of the subject merchandise had their eligibility for the program

suspended in 1986. Petitioners also point out that social security

benefits were to be phased out by December 1997. In Certain Steel

Italy, we treated social security exemptions as non-recurring benefits.

However, in the Final Affirmative Countervailing Duty Determination:

Certain Pasta from Italy, 61 FR 30288, 30293 (June 14, 1996) (Pasta), a

subsequent determination to Certain Steel Italy, we determined that

social security exemptions are recurring benefits. Because our

methodology treats these benefits as recurring, along with the fact

that producers of the subject merchandise had their eligibility for the

program suspended in 1986, and these benefits were to be phased out

before the period of investigation (1998) began, no benefit to

producers of the subject merchandise would have been conferred during

the period of investigation. Therefore, we are not including this

program in our investigation.

E. Korea

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. POSCO's Two-Tiered Pricing Structure to Domestic Customers

2. GOK Directed Credit Programs

a. Pre-1992 Directed Credit

b. Post-1991 Directed Credit

3. Private Capital Investment Act (PCIA)

4. Kwangyang Bay

a. GOK Infrastructure Investments at Kwangyang Bay Pre-1992

b. GOK Infrastructure Investments at Kwangyang Bay Post-1991

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

(TERCL)

a. Technical Development Reserve Funds (Article 8)

b. Tax Credit for Technology and Manpower Development Expenses

(Article 9)

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

Manpower/Investment Tax Credit (Article 10)

d. Tax Credits for Vocational Training (Article 18)

e. Tax Credit for Investment in Productivity Improvement Facilities

(Article 25)

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

g. Tax Credits for Temporary Investments (Article 27)

h. Tax Credits for Specific Investments (Article 71)

i. Reserve for Export Loss (Article 16)

j. Reserve for Overseas Market Development (Article 17)

k. Exemption of Corporation Tax on Dividend Income from Overseas

Resources Development Investment (Article 24)

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

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

n. Mining Investment Reserve Funds (Article 95)

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. Free Trade Zones (FTZs) at Pusan and Kwangyang

11. Excessive Duty Drawback

12. Dockyard Fees (Port Facility Fees)

13. Preferential Utility Rates

14. Scrap Reserve Fund

15. Export Insurance Rates By The Korean Export Insurance Corporation

16. Short-Term Export Financing

17. Korean Export-Import Bank Loans

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

19. Loans from the Energy Savings Fund

We are not including in our investigation the following programs

alleged to be benefitting producers and exporters of the subject

merchandise in Korea:

1. Infrastructure at Asan Bay and Regional Tax Subsidies for Industries

Located at Asan Bay

Petitioners allege that the GOK is providing various infrastructure

benefits to steel companies that relocate to Asan Bay, and that Dongkuk

Steel Mill Co., Ltd. (Dongkuk Steel), a producer/exporter of the

subject merchandise, is reportedly relocating to Asan Bay. In addition,

petitioners allege that companies located in the Posung Industrial

Complex located in Asan Bay are eligible for numerous tax subsidies.

Petitioners cite a July 1998 report which states that Asan Bay ``is now

emerging as Korea's steel mecca'' attracting companies such as Dongkuk

Steel. However, press reports submitted in the petition, state that

Dongkuk Steel shut down its plant in Pusan in December 1998, and plans

to shift production to its Pohang and Inchon plants. Thus, the

information provided in the petition does not indicate that Dongkuk

Steel has moved, built or shifted production facilities to Asan Bay.

Therefore, we are not initiating an investigation on programs

specifically related to Asan Bay.

2. Overseas Investment Loss Reserve Funds (Article 23)

Petitioners note that Article 23 permits a company to include the

reserve for overseas business losses in the general losses in the

current taxable year. Petitioners allege that this program is an export

incentive, as the amount of the allowable loss is limited to a set

percentage of foreign exchange receipts from overseas business. In the

Final Affirmative Countervailing Duty

[[Page 13002]]

Determinations and Final Negative Critical Circumstances

Determinations: Certain Steel Products from Korea, 58 FR 37338 (July 9,

1993), the Department determined that this program was not

countervailable. Petitioners have not provided any new information or

evidence of changed circumstances that warrants reconsideration of that

final determination. Therefore, we are not initiating an investigation

on this program.

3. Industry Promotion and Research and Development Subsidies

a. Environmental Engineering and Technology Development.

b. Industrial Development Fund.

Petitioners allege that POSCO and Dongkuk Steel are benefitting

from industrial promotion funds and research and development subsidies.

Petitioners' allegations regarding these two programs are based on the

importance of the steel industry to the Korean economy, rather than on

information regarding the eligibility criteria or usage of these two

programs. The information provided in the petition does not indicate

that the programs are de jure or de facto specific to the steel sector.

Therefore, we are not initiating an investigation on these programs.

4. Special Depreciation for Energy Saving and Productivity Promotion

Petitioners state that this program allows Korean exporters to

claim a special depreciation charge for energy-savings facilities.

Petitioners state that POSCO's 1994 SEC Prospectus recorded ``special

depreciation charges'' for energy-saving and productivity promotion

facilities and equipment. Note (4) of POSCO's 1994 SEC Prospectus

specifically states that pursuant to a change in Korean GAAP (General

Accounting Principles), ``special depreciation will no longer be

allowed for financial reporting purposes, commencing in 1994.''

Moreover, petitioners have not provided any evidence indicating POSCO

took special depreciation after 1993. Therefore, we are not

investigating this program.

5. Tax Credit for Equipment Investment to Promote Workers' Welfare--

Article 88 (Article 72-2 and 90, prior to 1995)

Petitioners allege that Korean steel producers are benefitting from

several tax programs, including Articles 72-2 and 90. In support of

their allegation, petitioners note that in the 1997 Stainless Steel

Plate verification report for POSCO dated January 27, 1999, the

Department reported that POSCO used tax credits under Articles 72-2 and

90.

However, the Department has not previously found these articles to

be countervailable. Furthermore, petitioners did not make any

allegations regarding the specificity of these articles, nor did they

provide any supporting information. Therefore, we are not initiating an

investigation on 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 France, India, Indonesia, Italy, and 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

Sec. 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

these initiations.

Preliminary Determination by the ITC

The ITC will determine by April 2, 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 certain cut-to-length carbon-quality steel plate from

France, India, Indonesia, Italy, and Korea. A negative ITC

determination for any country will result in the investigation being

terminated with respect to that country; otherwise, the investigations

will proceed according to statutory and regulatory time limits.

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

Dated: March 8, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-6295 Filed 3-15-99; 8:45 am]

BILLING CODE 3510-DS-P