[Federal Register Volume 77, Number 184 (Friday, September 21, 2012)]
[Notices]
[Pages 58512-58524]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-23399]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

[C-580-818]


Corrosion-Resistant Carbon Steel Flat Products From the Republic 
of Korea: Preliminary Results of Countervailing Duty Administrative 
Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

[[Page 58513]]

SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the countervailing duty (CVD) order on 
corrosion-resistant carbon steel flat products (CORE) from the Republic 
of Korea (Korea) for the period of review (POR) January 1, 2010, 
through December 31, 2010. For information on the net subsidy for 
Dongbu Steel Co., Ltd. (Dongbu), Hyundai HYSCO Ltd. (HYSCO), and Pohang 
Iron & Steel Co. Ltd. (POSCO), for the companies reviewed, see the 
``Preliminary Results of Review'' section of this notice. Interested 
parties are invited to comment on these preliminary results.\1\
---------------------------------------------------------------------------

    \1\ See the ``Public Comment'' section of this notice.

---------------------------------------------------------------------------
DATES: Effective Date: September 21, 2012.

FOR FURTHER INFORMATION CONTACT: Gayle Longest, AD/CVD Operations, 
Office 3, Import Administration, International Trade Administration, 
U.S. Department of Commerce, Room 4014, 14th Street and Constitution 
Ave. NW., Washington, DC 20230; telephone: (202) 482-3338.

SUPPLEMENTARY INFORMATION:

Background

    On August 17, 1993, the Department published in the Federal 
Register the CVD order on CORE from Korea.\2\ On August 1, 2011, the 
Department published a notice of opportunity to request an 
administrative review of this CVD order.\3\
---------------------------------------------------------------------------

    \2\ See Countervailing Duty Orders and Amendments of Final 
Affirmative Countervailing Duty Determinations: Certain Steel 
Products from Korea, 58 FR 43752 (August 17, 1993).
    \3\ See Antidumping or Countervailing Duty Order, Finding, or 
Suspended Investigation: Opportunity to Request Administrative 
Review, 76 FR 45771 (August 1, 2011).
---------------------------------------------------------------------------

    On August 31, 2011, we received timely requests for review of the 
countervailing duty order from HYSCO. We also received a timely request 
for review of Dongbu, HYSCO, and POSCO, from United States Steel 
Corporation, petitioner. On October 3, 2011, the Department published a 
notice of initiation of the administrative review of the CVD order on 
CORE from Korea covering the period January 1, 2010, through December 
31, 2010.\4\
---------------------------------------------------------------------------

    \4\ See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Requests for Revocation in Part 
(Initiation), 76 FR 61076 (October 3, 2011).
---------------------------------------------------------------------------

    On October 5, 2011, the Department issued the initial questionnaire 
to Dongbu, HYSCO, POSCO, and the Government of Korea (GOK). On November 
23, 2011, November 28, 2011, November 29, 2011, and November 30, 2011, 
the Department received questionnaire responses from HYSCO, Dongbu, 
POSCO, and the GOK, respectively. On March 2, 2012, July 16, 2012, and 
July 24, 2012 the Department issued supplemental questionnaires to 
HYSCO. On March 30, 2012, July 20, 2012, and August 7, 2012, the 
Department received supplemental questionnaire responses from HYSCO.
    On March 22, 2012, the Department published in the Federal Register 
an extension of its preliminary results of the instant administrative 
review.\5\ On July 18, 2011, the Department issued an additional 
supplemental questionnaire to the GOK. On August 4, 2011 the Department 
received the supplemental questionnaire response for the GOK.
---------------------------------------------------------------------------

    \5\ See Corrosion-Resistant Carbon Steel Flat Products from the 
Republic of Korea: Notice of Extension of Preliminary Results of 
Countervailing Duty Administrative Review, 76 FR 20954 (April 14, 
2011).
---------------------------------------------------------------------------

    On December 20, 2011, petitioner submitted new subsidy allegations 
against Dongbu, HYSCO, and POSCO. On April 24, 2012, the Department 
initiated an investigation of the new subsidies allegations against 
Dongbu, HYSCO, and POSCO.\6\ On April 25, 2012, and April 27, 2012, we 
issued new subsidies questionnaire to Dongbu and POSCO, respectively. 
On May 7, 2012, we issued new subsidy questionnaires to HYSCO and the 
GOK. On May 18, 2012, the Department received a response from POSCO. On 
May 25, 2012 and June 19, 2012, the Department received responses from 
HYSCO and Dongbu. The Department issued additional questionnaires to 
HYSCO regarding the new subsidy allegations on July 16, 2012 and July 
24, 2012, and received responses from HYSCO on July 20, 2012, and 
August 2, 2012. The Department issued an additional supplemental 
questionnaire to the GOK regarding the new subsidy allegations on July 
24, 2012, and August 3, 2012, and received responses from the GOK on 
August 7, 2012, and August 15, 2012. The Department issued an 
additional supplemental questionnaire to Dongbu regarding the new 
subsidy allegations on July 17, 2012, and received Dongbu's response on 
July 27, 2012.
---------------------------------------------------------------------------

    \6\ See Memorandum to Melissa G. Skinner, Director, Office 3, 
through Eric B. Greynolds, Program Manager, from Gayle Longest, Case 
Analyst, regarding New Subsidy Allegations (April 24, 2012). This 
public document is available on IA ACCESS.
---------------------------------------------------------------------------

    In accordance with 19 CFR 351.213(b), this review covers only those 
producers or exporters for which a review was specifically requested. 
The companies subject to this review are Dongbu, HYSCO, and POSCO.

Affiliated Companies

    In the present administrative review, record evidence indicates 
that Pohang Steel Co., Ltd. (POCOS) is a majority-owned production 
facility of POSCO. Under 19 CFR 351.525(b)(6)(iii), if the firm that 
received a subsidy is a holding company, including a parent company 
with its own operations, the Department will attribute the subsidy to 
the consolidated sales of the holding company and its subsidiaries. 
Thus, we attributed subsidies received by POCOS to POSCO and its 
subsidiaries, net of intra-company sales. Dongbu reported that it is 
the only member of the Dongbu group in Korea that was involved with the 
sale of subject merchandise to the United States. HYSCO reported that 
it is a member of the Hyundai Motor Group and is affiliated with 
members of that group.\7\ Under 19 CFR Section 351.525(b)(6)(vi), if an 
input supplier and a downstream producer are cross-owned, and the 
production of the input product is primarily dedicated to production of 
the downstream product, the Department will attribute the subsidies 
received by the input producer to the combined sales of the input and 
downstream products produced by both corporations net of intra-company 
sales. HYSCO reported that there are no companies that own HYSCO shares 
which meet the standard for cross-ownership in 19 CFR 
351.525(b)(6)(vi), and all of the companies in which HYSCO owns the 
majority of shares are located outside of Korea. Id.
---------------------------------------------------------------------------

    \7\ See HYSCO's November 23, 2012, questionnaire response 
(HYSCO's November QR) at 4.
---------------------------------------------------------------------------

Scope of the Order

    Products covered by this order are certain corrosion-resistant 
carbon steel flat products from Korea. These products include flat-
rolled carbon steel products, of rectangular shape, either clad, 
plated, or coated with corrosion-resistant metals such as zinc, 
aluminum, or zinc-, aluminum-, nickel- or iron-based alloys, whether or 
not corrugated or painted, varnished or coated with plastics or other 
nonmetallic substances in addition to the metallic coating, in coils 
(whether or not in successively superimposed layers) and of a width of 
0.5 inch or greater, or in straight lengths which, if of a thickness 
less than 4.75 millimeters, are of a width of 0.5 inch or greater and 
which measures at least 10 times the thickness or if of a thickness of 
4.75 millimeters or more are of a width which exceeds 150 millimeters 
and measures at least twice the thickness. The merchandise subject to 
this order is currently classifiable in

[[Page 58514]]

the Harmonized Tariff Schedule of the United States (HTSUS) at 
subheadings: 7210.30.0000, 7210.31.0000, 7210.39.0000, 7210.41.0000, 
7210.49.0030, 7210.49.0090, 7210.49.0091, 7210.49.0095, 7210.60.0000, 
7210.61.0000, 7210.69.0000, 7210.70.6030, 7210.70.6060, 7210.70.6090, 
7210.90.1000, 7210.90.6000, 7210.90.9000, 7212.20.0000, 7212.21.0000, 
7212.29.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000, 7212.30.5000, 
7212.40.1000, 7212.40.5000, 7212.50.0000, 7212.60.0000, 7215.90.1000, 
7215.9030, 7215.90.5000, 7217.12.1000, 7217.13.1000, 7217.19.1000, 
7217.19.5000, 7217.20.1500, 7217.22.5000, 7217.23.5000, 7217.29.1000, 
7217.29.5000, 7217.30.15.0000, 7217.32.5000, 7217.33.5000, 
7217.39.1000, 7217.39.5000, 7217.90.1000 and 7217.90.5000. Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
the Department's written description of the merchandise is dispositive.

Subsidies Valuation Information

A. Benchmarks for Short-Term Financing

    For those programs requiring the application of a won-denominated, 
short-term interest rate benchmark, in accordance with 19 CFR 
351.505(a)(2)(iv), we used as our benchmark the company-specific 
weighted-average interest rate for commercial won-denominated loans 
outstanding during the POR. This approach is in accordance with 19 CFR 
351.505(a)(3)(i) and the Department's practice.\8\
---------------------------------------------------------------------------

    \8\ See, e.g., Corrosion-Resistant Carbon Steel Flat Products 
from the Republic of Korea: Final Results of Countervailing Duty 
Administrative Review, 74 FR 2512 (January 15, 2009) (Final Results 
of CORE from Korea 2006), and accompanying Issues and Decision 
Memorandum (CORE from Korea 2006 Decision Memorandum) at 
``Benchmarks for Short-Term Financing.''
---------------------------------------------------------------------------

B. Benchmark for Long-Term Loans

    During the POR, HYSCO had outstanding countervailable long-term 
won-denominated loans from government-owned banks and Korean commercial 
banks. We used the following benchmarks to calculate the subsidies 
attributable to respondents' countervailable long-term loans obtained 
through 2009:
    (1) For countervailable, won-denominated long-term loans, we used, 
where available, the company-specific interest rates on the company's 
comparable commercial, won-denominated loans. If such loans were not 
available, we used, where available, the company-specific corporate 
bond rate on the company's public and private bonds, as we have 
determined that the GOK did not control the Korean domestic bond market 
after 1991.\9\ The use of a corporate bond rate as a long-term 
benchmark interest rate is consistent with the approach the Department 
has taken in several prior Korean CVD proceedings.\10\ Specifically, in 
those cases, we determined that, absent company-specific, commercial 
long-term loan interest rates, the won-denominated corporate bond rate 
is the best indicator of the commercial long-term borrowing rates for 
won-denominated loans in Korea because it is widely accepted as the 
market rate in Korea.\11\ Where company-specific rates were not 
available, we used the national average of the yields on three -year, 
won-denominated corporate bonds, as reported by the Bank of Korea 
(BOK). This approach is consistent with 19 CFR 351.505(a)(3)(ii) and 
our practice.\12\
---------------------------------------------------------------------------

    \9\ See, e.g., Final Negative Countervailing Duty Determination: 
Stainless Steel Plate in Coils from the Republic of Korea, 64 FR 
15530, 15531 (March 31, 1999) (Stainless Steel Investigation) and 
``Analysis Memorandum on the Korean Domestic Bond Market'' (March 9, 
1999).
    \10\ See Id.; see also Final Affirmative Countervailing Duty 
Determination: Structural Steel Beams from the Republic of Korea, 65 
FR 41051 (July 3, 2000) (H Beams Investigation), and accompanying 
Issues and Decision Memorandum at ``Benchmark Interest Rates and 
Discount Rates;'' and Final Affirmative Countervailing Duty 
Determination: Dynamic Random Access Memory Semiconductors from the 
Republic of Korea , 68 FR 37122 (June 23, 2003) (DRAMS 
Investigation), and accompanying Issues and Decision Memorandum at 
``Discount Rates and Benchmark for Loans.''
    \11\ See Final Affirmative Countervailing Duty Determinations 
and Final Negative Critical Circumstances Determinations: Certain 
Steel Products from Korea, 58 FR at 37328, 37345-37346 (July 9, 
1993) (Steel Products from Korea).
    \12\ See, e.g., CORE from Korea 2006 Decision Memorandum at 
``Benchmark for Long Term Loans.''
---------------------------------------------------------------------------

    In accordance with 19 CFR 351.505(a)(2)(i), our benchmarks take 
into consideration the structure of the government-provided loans. For 
countervailable fixed-rate loans, pursuant to 19 CFR 
351.505(a)(2)(iii), we used benchmark rates issued in the same year 
that the government loans were issued.

Average Useful Life

    Pursuant to 19 CFR 351.524(d)(2), we will presume the allocation 
period for non-recurring subsidies to be the average useful life (AUL) 
of renewable physical assets for the industry concerned as listed in 
the Internal Revenue Service's (IRS) 1997 Class Life Asset Depreciation 
Range System, as updated by the Department of the Treasury. The 
presumption will apply unless a party claims and establishes that the 
IRS tables do not reasonably reflect the company-specific AUL or the 
country-wide AUL for the industry under examination and that the 
difference between the company-specific and/or country-wide AUL and the 
AUL from the IRS tables is significant. According to the IRS tables, 
the AUL of the steel industry is 15 years. No interested party 
challenged the 15-year AUL derived from the IRS tables. Thus, in this 
review, we have allocated, where applicable, all of the non-recurring 
subsidies provided to the producers/exporters of subject merchandise 
over a 15-year AUL.

I. Programs Determined To Be Countervailable

A. Promotion of Specialized Enterprises for Parts and Materials

    Under the Act on Special Measures for the Promotion of Specialized 
Enterprises for Parts and Materials (Promotion of Specialized 
Enterprises Act), the GOK shares the costs of research and development 
(R&D) projects with companies or research institutions. The goal of the 
program is to support technology development for core parts and 
materials necessary for technological innovation and improvement in 
competitiveness.\13\ The program is administered by the Ministry of 
Knowledge Economy (MKE) and Korea Evaluation Institute of Industrial 
Technology (KEIT).\14\
---------------------------------------------------------------------------

    \13\ See GOK's November 30, 2011, questionnaire response (GOK's 
November QR) at Exhibit P-1.
    \14\ Id.
---------------------------------------------------------------------------

    In accordance with Articles 3 and 4 of the Promotion of Specialized 
Enterprises Act, MKE prepares a base plan and a yearly execution plan 
for the development of the parts and materials industry.\15\ Under the 
execution plan, MKE announces to the public a detailed business plan 
for the development of parts and materials technology.\16\ This 
business plan includes support areas, qualifications, and the 
application process.\17\ According to the GOK, any person or company 
can participate in the program by preparing an R&D business plan that 
conforms with the requirements set forth in the MKE business plan.\18\ 
The completed application must then be submitted to KEIT, which 
evaluates the application and selects the projects eligible for

[[Page 58515]]

government support.\19\ After the selected application is finally 
approved by MKE, MKE and the participating companies enter into an R&D 
agreement and then MKE provides the grant.\20\
---------------------------------------------------------------------------

    \15\ See GOK's November QR at Exhibit P-1.
    \16\ Id. at 2.
    \17\ Id.
    \18\ Id.
    \19\ Id.
    \20\ Id. at 3.
---------------------------------------------------------------------------

    R&D project costs are shared by the GOK and companies or research 
institutions as follows: (1) When the group of companies involved in 
the research is made up of a ratio above two-thirds small to medium-
sized companies, the GOK provides a grant up to three-fourths of the 
project cost; (2) When the group of companies involved in the research 
is made up of a ratio below two-thirds small to medium-sized companies, 
the GOK provides a grant up to one-half of the project cost.\21\
---------------------------------------------------------------------------

    \21\ See GOK's November QR, Exhibit P-1.
---------------------------------------------------------------------------

    Upon completion of the project, if the GOK evaluates the project as 
``successful'', the participating companies must repay 40 percent of 
the R&D grant to the GOK over five years.\22\ However, if the project 
is evaluated by the GOK as ``not successful'', the company does not 
have to repay any of the grant amount to the GOK.\23\
---------------------------------------------------------------------------

    \22\ See GOK's November QR, Exhibit P-1 at 2.
    \23\ Id.
---------------------------------------------------------------------------

    In the final results of administrative review of the CVD order on 
CORE From Korea covering the period January 1, 2008, through December 
31, 2008, the Department determined that the Promotion of Specialized 
Enterprises Act was de jure specific under section 771(5A)(D)(i) of the 
Act, because it is expressly limited to (1) enterprises specializing in 
components and materials and (2) enterprises specializing in 
development of technology for components and materials.\24\ No 
information on the record of this review leads us to reconsider that 
determination and, thus, we continue to find, preliminarily, that this 
program is de jure specific within the meaning of 771(5A)(D)(i) of the 
Act. We also preliminarily find that a financial contribution was 
provided within the meaning of section 771(5)(D)(i) of the Act because 
the GOK's payments constitute a direct transfer of funds.\25\
---------------------------------------------------------------------------

    \24\ See Corrosion-Resistant Carbon Steel Flat Products from the 
Republic of Korea: Final Results of Countervailing Duty 
Administrative Review, 76 FR 3613 (January 20, 2011) (Final Results 
of CORE from Korea 2008), and accompanying Issues and Decision 
Memorandum (CORE 2008 Decision Memorandum) at ``The Act on Special 
Measures for the Promotion of Specialized Enterprises for Parts and 
Materials.''
    \25\ See Corrosion-Resistant Carbon Steel Flat Products from the 
Republic of Korea: Preliminary Results and Partial Rescission of 
Countervailing Duty Administrative Review, 75 FR 55745; 55750 
(September 14, 2010).
---------------------------------------------------------------------------

    HYSCO reported that during the POR, it was involved in one R&D 
project under this program. See HYSCO's November QR at 17. In the Final 
Results of CORE From Korea 2008, we treated a portion of the subsidy 
that does not have to be repaid as a grant and the remaining portion of 
the subsidy that may have to be repaid as a long-term, interest-free 
contingent liability loan.\26\ This approach is consistent with the 
Department's regulation and practice.\27\ We have adopted the same 
approach in these preliminary results.
---------------------------------------------------------------------------

    \26\ See Final Results of CORE from Korea 2008, 76 FR at 3613 
and CORE 2008 Decision Memorandum at ``The Act on Special Measures 
for the Promotion of Specialized Enterprises for Parts and 
Materials.''
    \27\ See 19 CFR 351.505(d)(1); see also Certain Hot-Rolled 
Carbon Steel Flat Products from India: Final Results of 
Countervailing Duty Administrative Review, 73 FR 40295 (July 14, 
2008), and accompanying Issues and Decision Memorandum at ``Export 
Promotion Capital Goods Scheme (EPCGS).''
---------------------------------------------------------------------------

    To determine the benefit from the GOK funds HYSCO received under 
the Specialized Enterprises Act program, we calculated the GOK's 
contribution for the assistance that was apportioned to HYSCO. See 19 
CFR 351.504(a). As described immediately above, we treated a portion of 
this benefit as a grant. In accordance with 19 CFR 351.524(b)(2), we 
determined whether to allocate the non-recurring benefit from the 
grants over a 15-year AUL by dividing the GOK-approved grant amount by 
the company's total sales in the year of approval. Because the approved 
amount was less than 0.5 percent of the company's total sales, we 
expensed the grant to the year of receipt, i.e., to 2010, the POR in 
this review.
    With respect to the portion of the subsidy that we are treating as 
a long-term, interest-free contingent liability loan, pursuant to 19 
CFR 351.505(d)(1) for the reasons described above, we find the benefit 
to be equal to the interest that HYSCO would have paid during the POR 
had it borrowed the full amount of the contingent liability loan during 
the POR. Pursuant to 19 CFR 351.505(d)(1), we used a long-term interest 
rate as our benchmark to calculate the benefit of a contingent 
liability interest-free loan because the event upon which repayment of 
the duties depends (i.e., the completion of the R&D project) occurs at 
a point in time more than one year after the date in which the grant 
was received. Specifically, we used the long-term benchmark interest 
rates as described in the ``Subsidies Valuation'' section of these 
preliminary results.
    To calculate the total net subsidy amount for this program, we 
summed the benefits provided under this program. Next, to calculate the 
net subsidy rate, we divided the portion of the benefit allocated to 
the POR by HYSCO's total f.o.b. sales for 2010.\28\ On this basis, we 
preliminarily determine the net subsidy rate under this program to be 
0.02 percent ad valorem for HYSCO.
---------------------------------------------------------------------------

    \28\ See 19 CFR 351.525(b)(3).
---------------------------------------------------------------------------

B. Restriction of Special Taxation Act (RSTA) Article 26

    Under RSTA Article 26, a company can claim a tax credit equal to a 
certain percentage of its investments in its facilities.\29\ According 
to the GOK, the goal of this program is to boost general national 
economic activity.\30\ In its response to the Department's October 5, 
2011, questionnaire, the GOK submitted information which indicated that 
these tax credits are expressly limited to a corporation's investments 
in facilities located outside the ``Overcrowding Control Region'' of 
the Seoul Metropolitan Area (``SMA'').\31\ Specifically, the GOK 
provided a complete translation of Article 23(1) of the Enforcement 
Decree of the RSTA in its November QR eligibility for the program is 
limited to investments made outside the Overcrowding Control Region of 
the SMA.\32\ Moreover, the GOK also stated that corporate investments 
in facilities located within the Overcrowding Control Region of the SMA 
are not eligible for credits under this tax program.\33\
---------------------------------------------------------------------------

    \29\ See GOK's November QR at Exhibit B-3.
    \30\ Id.
    \31\ Id. at Exhibit B-4.
    \32\ Id.
    \33\ Id. at Exhibit B-3.
---------------------------------------------------------------------------

    Because information provided by the GOK indicates that the tax 
credit under this program is limited by law to enterprises or 
industries within a designated geographical region within the 
jurisdiction of the authority providing the subsidy, we preliminarily 
find that this program is regionally specific in accordance with 
section 771(5A)(D)(iv) of the Tariff Act of 1930, as amended (``the 
Act'').\34\ The tax credit is a financial contribution in the form of 
revenue foregone by the government within the meaning of section 
771(5)(D)(ii) of the Act, which provides a benefit to the recipient 
equal to the difference between the taxes actually paid and the taxes 
otherwise payable in

[[Page 58516]]

the absence of this program within the meaning of 19 CFR 351.509(a)(1). 
These findings are consistent with the determinations in Bottom Mount 
Refrigerators From Korea, and 2009 Review of the Countervailing Duty 
Order on Corrosion-Resistant Carbon Steel Flat Products From Korea: 
Post-Preliminary Analysis Memorandum for Hyundai HYSCO Ltd.\35\
---------------------------------------------------------------------------

    \34\ See, e.g., Final Affirmative Countervailing Duty 
Determination: Certain Hot-Rolled Carbon Steel Flat Products from 
Thailand, 66 FR 50410 (October 3, 2001), and accompanying Issues and 
Decision Memorandum at ``Provision of Electricity for Less than 
Adequate Remuneration'' (where eligibility for a program was limited 
to users outside the Bangkok metropolitan area, we found the subsidy 
to be regionally specific under section 771(5(a)(D)(iv) of the Act).
    \35\ See Bottom Mount Combination Refrigerator-Freezers from the 
Republic of Korea: Preliminary Negative Countervailing Duty 
Determination and Alignment of Final Determination With Final 
Antidumping Determination, 76 FR 55044 (September 6, 2011) unchanged 
in Bottom Mount Combination Refrigerator-Freezers from the Republic 
of Korea: Final Affirmative Countervailing Duty Determination, 77 FR 
17410 (March 26, 2012); see also Memorandum to Ronald K. Lorentzen 
from Melissa G. Skinner, Re: 2009 Review of the Countervailing Duty 
Order on Corrosion-Resistant Carbon Steel Flat Products From Korea: 
Post Preliminary Analysis Memorandum for Hyundai HYSCO Ltd. 
(September 27, 2011) unchanged in Corrosion-Resistant Carbon Steel 
Flat Products from Korea: Final Results of Administrative Review, 77 
FR 13093 (March 5, 2012) (Final Results of CORE From Korea 2009).
---------------------------------------------------------------------------

    HYSCO and POSCO indicated that their companies used RSTA Article 26 
credits during the 2010 POR.\36\
---------------------------------------------------------------------------

    \36\ See HYSCO's November QR at 10 and Exhibit B-3 and POSCO's 
November 29, 2011 QR at 12 and Exhibits B-2, B-3, and B-4.
---------------------------------------------------------------------------

    To calculate the subsidy rate for HYSCO and POSCO during the POR, 
we divided each company's benefit, which is the tax credit claimed by 
the company under this program in its tax return filed in 2010, by the 
company's total sales during the POR. On this basis, we preliminarily 
determine the countervailable subsidy provided under this program to be 
0.06 percent ad valorem for HYSCO and 0.08 percent ad valorem for 
POSCO.

C. Asset Revaluation (TERCL Article 56(2) of the Tax Reduction and 
Exemption Control Act (TERCL)

    Under Article 56(2) of the TERCL, the GOK permitted companies that 
made an initial public offering between January 1, 1987, and December 
31, 1990, to revalue their assets at a rate higher than the 25 percent 
required of most other companies under the Asset Revaluation Act. The 
Department has previously found this program to be countervailable. For 
example, in the CTL Plate Investigation, the Department determined that 
this program was de facto specific under section 771(5A)(D)(iii) of the 
Tariff Act of 1930, as amended (the Act), because the actual recipients 
of the subsidy were limited in number and the basic metal industry was 
a dominant user of this program.\37\ We also determined that a 
financial contribution was provided in the form of tax revenue foregone 
pursuant to section 771(5)(D)(ii) of the Act.\38\ The Department 
further determined that a benefit was conferred within the meaning of 
section 771(5)(E) of the Act on those companies that were able to 
revalue their assets under TERCL Article 56(2) because the revaluation 
resulted in participants paying lower taxes than they would otherwise 
pay absent the program. Id. No new information or evidence of changed 
circumstances was presented in this review to warrant any 
reconsideration of the countervailability of this program.
---------------------------------------------------------------------------

    \37\ See Final Affirmative Countervailing Duty Determination: 
Certain Cut-to-Length Carbon-Quality Steel Plate from the Republic 
of Korea, 64 FR 73176, 73183 (December 29, 1999) (CTL Plate 
Investigation).
    \38\ Id.
---------------------------------------------------------------------------

    The benefit from this program is the difference that the 
revaluation of depreciable assets has on a company's tax liability each 
year. Evidence on the record indicates that, in 1989, POSCO made an 
asset revaluation that increased its depreciation expense. To calculate 
the benefit to POSCO, we took the additional depreciation listed in the 
tax return filed during the POR, which resulted from the company's 
asset revaluation, and multiplied that amount by the tax rate 
applicable to that tax return. We then divided the resulting benefit by 
POSCO's total free on board (f.o.b.) sales. See 19 CFR 351.525(b)(3). 
On this basis, we preliminarily determine the net countervailable 
subsidy to be 0.01 percent ad valorem for POSCO. Dongbu and HYSCO did 
not use this program during the POR.

D. Exemption of VAT on Imports of Anthracite Coal

    Under Article 106 of Restriction of Special Taxation Act (RSTA), 
imports of anthracite coal are exempt from the value added tax (VAT). 
In the Cold-Rolled Investigation, we determined that the program is de 
jure specific under section 771(5A)(D)(i) of the Act. Because the GOK 
allows for only a few items to be exempt from VAT, the items allowed to 
be imported without paying VAT are limited.\39\ We also determined that 
the VAT exemptions under the program constitute a financial 
contribution under section 771(5)(D)(ii) of the Act, as the GOK is not 
collecting revenue otherwise due, and that the exemptions confer a 
benefit under section 771(5)(E) of the Act equal to the amount of the 
VAT that would have otherwise been paid if not for the exemption. No 
new information, evidence of changed circumstances, or comments from 
interested parties was presented in this review to warrant any 
reconsideration of the countervailability of this program. Therefore, 
we preliminarily continue to find that this program is de jure specific 
within the meaning of section 771(5A)(D)(i) of the Act because it is 
limited, constitutes a financial contribution in the form of forgone 
revenue under section 771(5)(D)(ii) of the Act, and confers a benefit 
in the amount of the revenue foregone within the meaning of 771(5)(E) 
of the Act.
---------------------------------------------------------------------------

    \39\ See Cold-Rolled Decision Memorandum at ``Exemption of VAT 
on Imports of Anthracite Coal.''
---------------------------------------------------------------------------

    Dongbu and HYSCO reported that their companies did not use the 
program during the POR.\40\ POSCO imported anthracite coal during the 
POR and, therefore, received a benefit in the amount of the VAT that it 
should have otherwise paid if not for the exemption. To determine 
POSCO's benefit from the VAT exemption on these imports, we calculated 
the amount of VAT that would have been due absent the program on the 
total value of anthracite coal POSCO imported during the POR. We then 
divided the amount of this tax benefit by POSCO's total f.o.b. sales. 
Based on this methodology, we preliminarily determine the POSCO 
received a countervailable subsidy of 0.07 percent ad valorem.
---------------------------------------------------------------------------

    \40\ See HSYCO's November QR at 14 and Dongbu's November 28, 
2011, questionnaire response at 14.
---------------------------------------------------------------------------

E. Other Subsidies Related to Operations at Asan Bay: Provision of Land 
and Exemption of Port Fees Under Harbor Act

1. Provision of Land
    As explained in the Cold-Rolled Investigation, the GOK's overall 
development plan is published every 10 years and describes the 
nationwide land development goals and plans for the balanced 
development of the country. Under these plans, the Ministry of 
Construction and Transportation (MOCAT) prepares and updates its Asan 
Bay Area Broad Development Plan.\41\ The Korea Land Development 
Corporation (Koland) is a government investment corporation that is 
responsible for purchasing, developing, and selling land in the 
industrial sites.\42\
---------------------------------------------------------------------------

    \41\ See Notice of Final Affirmative Countervailing Duty 
Determination: Certain Cold-Rolled Carbon Steel Flat Products from 
the Republic of Korea, 67 FR 62102 (October 3, 2002) (Cold-Rolled 
Investigation), and accompanying Issues and Decision Memorandum 
(Cold-Rolled Decision Memorandum) at ``Provision of Land at Asan 
Bay.''
    \42\ Id.
---------------------------------------------------------------------------

    In the Cold-Rolled Investigation, we verified that the GOK, in 
setting the price per square meter for land at the Kodai Industrial 
Estate, removed the 10 percent profit component from the price

[[Page 58517]]

charged to Dongbu.\43\ In the Cold-Rolled Investigation, we further 
explained that companies purchasing land at Asan Bay must make payments 
on the purchase and development of the land before the final 
settlement. However, in the case of Dongbu, we found that the GOK 
provided an adjustment to Dongbu's final payment to account for 
``interest earned'' by the company for the pre-payments.\44\ HYSCO and 
POSCO reported that their companies did not use this program.\45\
---------------------------------------------------------------------------

    \43\ Id.
    \44\ Id.
    \45\ See HYSCO's November QR at 15 and POSCO's November QR at 
17.
---------------------------------------------------------------------------

    In the Cold-Rolled Investigation, we determined that the price 
discount and the adjustment of Dongbu's final payment to account for 
``interest earned'' by the company on its pre-payments were 
countervailable subsidies. Specifically, the Department determined that 
they were specific under section 771(5A)(D)(iii)(I) of the Act, as they 
were limited to Dongbu.\46\ Further, the Department found the price 
discount and the price adjustment for ``interest earned'' constituted 
financial contributions in the form of grants under section 
771(5)(D)(i) of the Act and conferred benefits in the amount of grants 
within the meaning of section 771(5)(E) of the Act. Id. No new 
information, evidence of changed circumstances, or comments from 
interested parties was presented in this review to warrant any 
reconsideration of the countervailability of this program. Therefore, 
we preliminarily continue to find that this program is de facto 
specific within the meaning of section 771(5A)(D)(iii)(I) of the Act 
because it is limited to Dongbu, constitutes a financial contribution 
in the form of grants under sections 771(5)(D)(i), and confers a 
benefit in the amount of the price discount and the price adjustment 
within the meaning of 771(5)(E) of the Act.
---------------------------------------------------------------------------

    \46\ Id.
---------------------------------------------------------------------------

    Consistent with the Cold-Rolled Investigation, we have treated the 
land price discount and the interest earned refund as non-recurring 
subsidies.\47\ In accordance with 19 CFR 351.524(b)(2), because the 
grant amounts were more than 0.5 percent of the company's total sales 
in the year of receipt, we applied the Department's standard grant 
methodology, as described under 19 CFR 351.524(d)(1), and allocated the 
subsidies over a 15-year allocation period. See the ``Average Useful 
Life'' section above. To calculate the benefit from these grants, we 
used as our discount rate the rates described above in the ``Subsidies 
Valuation Information'' section. We then summed the benefits received 
by Dongbu during the POR. We calculated the net subsidy rate by 
dividing the total benefit attributable to the POR by Dongbu's total 
f.o.b. sales for the POR. On this basis, we determine a net 
countervailable subsidy rate for Dongbu of 0.09 percent ad valorem for 
the POR.
---------------------------------------------------------------------------

    \47\ Id.
---------------------------------------------------------------------------

2. Exemption of Port Fees Under the Harbor Act
    Under the Harbor Act, companies are allowed to construct 
infrastructure facilities at Korean ports; however, these facilities 
must be deeded back to the government. Because the ownership of these 
facilities reverts to the government, the government compensates 
private parties for the construction of these infrastructure 
facilities. Because a company must transfer to the government its 
infrastructure investment, under the Harbor Act, the GOK grants the 
company free usage of the facility and the right to collect fees from 
other users of the facility for a limited period of time. Once a 
company has recovered its cost of constructing the infrastructure, the 
company must pay the same usage fees as other users of the 
infrastructure.
    In the Cold-Rolled Investigation, the Department found that Dongbu 
received free use of harbor facilities at Asan Bay based upon both its 
construction of a port facility as well as a road that the company 
built from its plant to its port.\48\ The Department also determined 
that Dongbu received an exemption of harbor fees for a period of almost 
70 years under this program.\49\
---------------------------------------------------------------------------

    \48\ See Cold-Rolled Decision Memorandum at ``Dongbu's Excessive 
Exemptions under the Harbor Act.''
    \49\ Id.
---------------------------------------------------------------------------

    In the Cold-Rolled Investigation, the Department found the 
exemption from the fees to be a countervailable subsidy. No new 
information, evidence of changed circumstances, or comments from 
interested parties was presented in this review to warrant any 
reconsideration of the countervailability of this program. Thus, we 
preliminarily continue to find that the program is countervailable and 
is specific under section 771(5A)(D)(iii)(I) of the Act because the 
excessive exemption period of 70 years is limited to Dongbu. Moreover, 
we preliminarily determine that the GOK is foregoing revenue that it 
would otherwise collect by allowing Dongbu to be exempt from port 
charges for up to 70 years and, thus, the program constitutes a 
financial contribution within the meaning of section 771(5)(D)(ii) of 
the Act. Further, we preliminarily determine that the exemptions confer 
a benefit under section 771(5)(E) of the Act in the amount of the port 
charges that were not collected.
    In the Cold-Rolled Investigation, the Department treated the 
program as a recurring subsidy and determined that the benefit is equal 
to the average yearly amount of harbor fee exemptions provided to 
Dongbu.\50\ For purposes of these preliminary results, we have employed 
the same benefit calculation. To calculate the net subsidy rate, we 
divided the average yearly amount of exemptions by Dongbu's total 
f.o.b. sales for the POR. On this basis, we preliminarily determine 
that Dongbu's net subsidy rate under this program is 0.02 percent ad 
valorem.
---------------------------------------------------------------------------

    \50\ Id.
---------------------------------------------------------------------------

II. Programs Preliminarily Determined Not To Confer a Benefit During 
the POR

A. Research and Development Grants Under the Industrial Technology 
Innovation Promotion Act (ITIPA)

    The GOK's Industrial Technology Innovation Promotion Act program is 
designed to foster future new industries and enhance the 
competitiveness of primary industries through fundamental technology 
development.\51\ The program is administered by MKE and the Korean 
Evaluation Institute of Industrial Technology (KEIT).\52\
---------------------------------------------------------------------------

    \51\ See Corrosion-Resistant Carbon Steel Flat Products from the 
Republic of Korea: Preliminary Results of Countervailing Duty 
Administrative Review, 76 FR 54209, 54213 (August 31, 2011) 
(Preliminary Results of CORE from Korea 2009) unchanged in Final 
Results of CORE from Korea 2009, 77 FR at 13093.
    \52\ Id.
---------------------------------------------------------------------------

    Under the Industrial Technology Innovation Promotion Act, GOK 
provides R&D grants to support the areas of transportation system, 
industrial materials, robots, biomedical equipments, clean 
manufacturing foundation, knowledge services and industry convergence 
technology.\53\
---------------------------------------------------------------------------

    \53\ Id.
---------------------------------------------------------------------------

    Pursuant to Article 11 of the Industrial Technology Innovation 
Promotion Act, KEIT prepares a basic plan for the development of 
technology, on behalf of MKE.\54\ This plan includes the R&D projects 
that are eligible, describes the application process, and designates 
the supporting documentation required.\55\ The plan is announced to the 
public.\56\ According to

[[Page 58518]]

the GOK, any person who wishes to participate in the program prepares 
an R&D business plan that meets the requirements set forth in the basic 
plan and then submits the application to the GOK's Application Review 
Committee, which then evaluates the application to determine if it 
conforms to the terms and conditions set forth in the basic plan.\57\ 
If the application is approved, MKE and the company enter into an R&D 
agreement and then MKE provides the grant.\58\
---------------------------------------------------------------------------

    \54\ Id.
    \55\ Id.
    \56\ Id.
    \57\ Id.
    \58\ Id.
---------------------------------------------------------------------------

    The costs of the R&D projects under this program are shared by the 
company (or research institution) and the GOK.\59\ Specifically, the 
grant ratio for project costs are as follows: (1) For projects with one 
small/medium-sized enterprise (SME), the GOK provides grants up to 
three-fourths of the project costs, (2) for projects with one 
conglomerate, the GOK provides grants up to one-half of the project 
costs, (3) for projects with more than two participants of which SMEs 
comprise more than two-thirds of the participant ratio, the GOK 
provides up to three-fourths of the project costs, and (4) for projects 
with more than two participants of which SMEs comprise less than two-
thirds of the participant ratio, the GOK provides up to one-half of the 
project costs.\60\
---------------------------------------------------------------------------

    \59\ Id.
    \60\ Id.
---------------------------------------------------------------------------

    When the project is evaluated as ``successful'' upon completion, 
the participating companies must repay 40 percent of the R&D grant to 
the GOK over five years.\61\ However, when the project is evaluated as 
``not successful,'' the company does not have to repay the GOK any of 
the grant amount.\62\ Id.
---------------------------------------------------------------------------

    \61\ Id.
    \62\ See Preliminary Results of CORE from Korea 2009, 76 FR at 
54213 and HYSCO's November QR at Exhibit Q-4.
---------------------------------------------------------------------------

    Prior to and during the POR, HYSCO and POSCO received grants under 
the Industrial Technology Innovation Promotion Act for R&D projects in 
which the companies participated with other firms.\63\
---------------------------------------------------------------------------

    \63\ See GOK's November QR at 16 and Q-1; HYSCO's November QR at 
17, Q-1, Q-2, and Q-3, and POSCO's November 30, 2011, QR at Exhibit 
Q-2.
---------------------------------------------------------------------------

    Concerning HYSCO, the nature of the projects for which it received 
the grants is business proprietary and cannot be discussed in this 
public notice.\64\ Based upon our review of program documents submitted 
in the response, we preliminarily determine that one grant received is 
related to the second step of the project discussed in the section 
``Research and Development Grants Under the Industrial Development Act 
(IITPA)'' in Preliminary Results of CORE from Korea 2009, in which the 
Department determined that grants received for this particular project 
under this program are attributable to non-subject merchandise.\65\ 
Upon review of the information submitted by HYSCO and the GOK, we find 
that the terms and conditions of this grant project remain unchanged 
from the Preliminary Results of CORE from Korea 2009 and preliminarily 
determine that this grant pertains specifically to production of a 
product that is not subject merchandise.\66\ Therefore, consistent with 
19 CFR 351.525(b)(5) and our past practice, we preliminarily determine 
that this grant was bestowed in connection with the production of a 
product that is not subject merchandise. Hence we did not include this 
grant in our benefit calculations. In addition, HYSCO reported 
receiving another grant during the POR for a project that is being 
performed under the ITIPA.\67\ Dividing the amount of this grant by 
HYSCO's total sales, results in a net subsidy rate that is less than 
0.005 percent ad valorem and, thus, is not numerically significant.
---------------------------------------------------------------------------

    \64\ See Memorandum to the File titled ``HYSCO's R&D Grants 
Under the ITIPA'', (August 30, 2012), of which a public version is 
on file in IA Access.
    \65\ See Preliminary Results of CORE from Korea 2009, in which 
the Department found the grant in question to be tied to the 
production of non-subject merchandise, unchanged in Final Results of 
Core from Korea 2009 and HYSCO's November QR at Exhibit Q-4.
    \66\ See Memorandum to the File titled ``HYSCO's R&D Grants 
Under the ITIPA'' (August 31, 2012), of which a public version is on 
file in IA Access.
    \67\ See HYSCO's November QR at 18.
---------------------------------------------------------------------------

    POSCO also reported receiving grants under the ITIPA prior to and 
during the POR.\68\ Dividing the sum of POSCOs total grants in each 
year by POSCO's total sales in the corresponding year results in a net 
subsidy rate that is less than 0.005 percent ad valorem. Consistent 
with the Department's practice, we find that the grants received by 
HYSCO and POSCO under this program are not measurable.\69\ 
Consequently, we preliminarily determine that it is not necessary for 
the Department to make a finding as to the countervailability of the 
grants POSCO received under this program. If a future administrative 
review of this proceeding is requested, we will further examine grants 
provided under ITIPA.
---------------------------------------------------------------------------

    \68\ See POSCO's November 30, 2011, QR at Exhibit Q-2.
    \69\ See, e.g., CORE from Korea 2006 Decision Memorandum at 
``GOK's Direction of Credit'' and Preliminary Results of CORE from 
Korea 2009, 76 FR at 54213.
---------------------------------------------------------------------------

B. R&D Grants Under the Act on the Promotion of the Development, Use, 
and Diffusion of New and Renewable Energy

    The GOK's Development of Use, and Diffusion of New and Renewable 
Energy program (formerly the Development of Alternative Energy program) 
is reportedly designed to contribute to the preservation of the 
environment, the sound and sustainable development of the national 
economy, and the promotion of national welfare by diversifying energy 
resources through promoting technological development, the use and 
diffusion of alternative energy, and reducing the discharge of gases 
harmful to humans or the environment by activating the new and 
renewable energy industry.\70\ The program is administered by the 
Ministry of Knowledge Economy (MKE), Korea Energy Management 
Corporation (KEMCO), and the Korea Institute of Energy Technology 
Evaluation and Planning (KETEP).\71\
---------------------------------------------------------------------------

    \70\ See Preliminary Results of CORE from Korea 2009, 76 FR at 
54209, 54213-54214, unchanged in Final Results of CORE from Korea 
2009.
    \71\ Id. at 54214.
---------------------------------------------------------------------------

    Under the Act on the Promotion of the Development, Use, and 
Diffusion of New and Renewable Energy (New and Renewable Energy Act), 
the GOK provides R&D grants to support the following businesses: (1) 
Electric and Nuclear Power Development, (2) Energy and Resources 
Technology Development, and (3) New and Renewable Energy Technology 
Development.\72\
---------------------------------------------------------------------------

    \72\ Id.
---------------------------------------------------------------------------

    Pursuant to Articles 5 and 6 of the New and Renewable Energy Act, 
MKE prepares a base plan and a yearly execution plan for the 
development of new and renewable energy.\73\ The base and execution 
plans are announced to the public.\74\ According to the GOK, any person 
who wishes to participate in the program prepares an R&D business plan 
and then submits the application to the KETEP, which then evaluates the 
application and selects the projects eligible for government 
support.\75\ After the selected application is finally approved by MKE, 
KEMCO, and the general supervising institute of the consortium enter 
into an R&D agreement and then MKE provides the grant through 
KEMCO.\76\
---------------------------------------------------------------------------

    \73\ Id.
    \74\ Id.
    \75\ Id.
    \76\ Id.
---------------------------------------------------------------------------

    The costs of the R&D projects under this program are shared by the 
company (or research institution) and the GOK.\77\ Specifically, the 
grant ratio for project

[[Page 58519]]

costs are as follows: (1) For large companies, the GOK provides grants 
up to one-half of the project costs, (2) for small/medium-sized 
companies, the GOK provides grants up to three-fourths of the project 
costs, (3) for a consortium,\78\ the GOK provides grants up to three-
fourths of the project costs, and (4) for others, the GOK provides 
grants up to one-half of the project costs.\79\
---------------------------------------------------------------------------

    \77\ Id.
    \78\ If the ratio of small to medium-sized companies in a 
consortium is above two-thirds, the GOK provides grants up to one-
half of the project costs. See GOK's November QR, Exhibit R-1.
    \79\ Preliminary Results of CORE from Korea 2009, 76 FR at 
54214.
---------------------------------------------------------------------------

    When the project is evaluated as ``successful'' upon completion, 
the participating companies must repay 40 percent of the R&D grant to 
the GOK.\80\ However, when the project is evaluated as ``not 
successful'', the company does not have to repay any of the grant 
amount to the GOK.\81\
---------------------------------------------------------------------------

    \80\ Id.
    \81\ Id.
---------------------------------------------------------------------------

    During the POR, HYSCO received an energy-related grant under the 
New and Renewable Energy Act for a project in which the company 
participated with other firms.\82\ HYSCO reported that the R&D grant 
under the New and Renewable Energy Act are provided with respect to 
specific projects, which are generally multi-year projects where the 
amount of funds to be provided by the GOK is set out in the project 
contract.\83\ The cost of R&D projects under this program is shared by 
the participating companies and the GOK.\84\ HYSCO points to the 
Department's prior decision concerning this project in Preliminary 
Results of CORE From Korea 2009, and reiterates its claim that the 
project for which the grant was received from the government was not 
related to subject merchandise.\85\
---------------------------------------------------------------------------

    \82\ See GOK's November QR at 17-18 and Exhibit R-1.
    \83\ See HYSCO's November QR at Exhibit R-3.
    \84\ Id.
    \85\ Id. at 19 citing to Preliminary Results of CORE from Korea 
2009, 76 FR at 54214, in which the Department found the grant in 
question to be tied to non-subject merchandise, unchanged in the 
Final Results of CORE from Korea 2009; see also Memorandum to the 
File titled ``HYSCO's R&D Grants under the Act on the Promotion of 
the Development, Use and Diffusion of New and Renewable Energy'' 
(August 24, 2011), submitted as Exhibit R-4 of HYSCO's November QR.
---------------------------------------------------------------------------

    Upon review of the information from HYSCO and the GOK, we 
preliminarily determine that the grant was bestowed specifically in 
connection with production of a product that is not subject merchandise 
and is related to the project examined in the prior administrative 
review.\86\ Therefore, consistent with 19 CFR 351.525(b)(5) and our 
past practice, we preliminarily determine that this grant is tied to 
non-subject merchandise. Hence, we preliminarily determine that the New 
and Renewable Energy Act did not confer a benefit during the POR.
---------------------------------------------------------------------------

    \86\ See Memorandum to the File titled ``HYSCO's R&D Grants 
under the Act on the Promotion of the Development, Use, and 
Diffusion of New and Renewable Energy'' (August 31, 2012) (HYSCO New 
and Renewable Energy Grant Memorandum), of which a public version is 
on file in IA Access.
---------------------------------------------------------------------------

C. Overseas Resource Development Program: Loan From Korea Resources 
Corporation (KORES)

    In Final Results of CORE From Korea 2006, the Department found that 
the GOK enacted the Overseas Resource Development (ORD) Business Act in 
order to establish the foundation for securing the long-term supply of 
essential energy and major material minerals, which are mostly imported 
because of scarce domestic resources.\87\ Pursuant to Article 11 of 
this Act, MKE annually announces its budget and the eligibility 
criteria to obtain a loan from MKE.\88\ Any company that meets the 
eligibility criteria may apply for a loan to MKE.\89\ The loan 
evaluation committee evaluates the applications, selects the recipients 
and gets approval from the minister of MKE.\90\ For projects related to 
the development of strategic mineral resources, the Korean Resources 
Corporation (KORES) lends the funds to the company for foreign 
resources development.\91\
---------------------------------------------------------------------------

    \87\ See Corrosion-Resistant Carbon Steel Flat Products from the 
Republic of Korea: Preliminary Results of Countervailing Duty 
Administrative Review, 73 FR 52315, 52326, (September 9, 2008) 
(Preliminary Results of CORE from Korea 2006), unchanged in 
Corrosion-Resistant Carbon Steel Flat Products from the Republic of 
Korea: Final Results of Countervailing Duty Administrative Review, 
74 FR 2512 (January 15, 2009) (Final Results of CORE from Korea 
2006), and accompanying Issues and Decision Memorandum at ``Programs 
Determined To Be Not Used''.
    \88\ See GOK's November QR at Exhibit S-1.
    \89\ Id.
    \90\ Id.
    \91\ Id.
---------------------------------------------------------------------------

    During the POR, as in the prior administrative review, HYSCO had 
outstanding loans from KORES for investment in a copper mine in 
Mexico.\92\ Based upon examination of the loan documents and our prior 
determination concerning these loans, we preliminarily determine that 
the KORES loans are tied to copper, which is non-subject 
merchandise.\93\ Further, we find that copper is not an input primarily 
dedicated to the production of subject merchandise.\94\ On this basis, 
we find the KORES loans are tied and attributable to non-subject 
merchandise.\95\ Therefore, we preliminarily determine that HYSCO did 
not receive a benefit from this program with respect to the subject 
merchandise during the POR.
---------------------------------------------------------------------------

    \92\ See HYSCO's November QR at 20, Exhibit 8 at 15 and HYSCO's 
March 30, 2012 QR at Exhibits 15 and 16.
    \93\ Preliminary Results of CORE from Korea 2009, 76 FR at 
54214-54215, unchanged in Final Results of CORE from Korea 2009.
    \94\ Id.
    \95\ See 19 CFR 351.525(b)(5).
---------------------------------------------------------------------------

D. Overseas Resource Development Program: Loan From Korea National Oil 
Corporation (KNOC)

    In Final Results of CORE From Korea 2007, the Department found that 
the GOK enacted the Overseas Resource Development (ORD) Business Act in 
order to establish the foundation for securing the long-term supply of 
essential energy and major material minerals, which are mostly imported 
because of scarce domestic resources.\96\ Pursuant to Article 11 of 
this Act, the MKE annually announces its budget and the eligibility 
criteria to obtain a loan from MKE.\97\ Any company that meets the 
eligibility criteria may apply for a loan to MKE.\98\ For projects that 
are related to petroleum and natural gas, the Korea National Oil 
Corporation (KNOC) lends the funds to the company for foreign resources 
development.\99\ An approved company enters into a borrowing agreement 
with KNOC for the development of the selected resource.\100\ Two types 
of loans are provided under this program: ``General loans'' and 
``success-contingent loans''. For a success-contingent loan, the 
repayment obligation is subject to the results of the development 
project. In the event that the project fails, the company will be 
exempted for all or a portion of the loan repayment obligation. 
However, if the project succeeds, a portion of the project income is 
payable to KNOC.\101\
---------------------------------------------------------------------------

    \96\ See Corrosion-Resistant Carbon Steel Flat Products from the 
Republic of Korea: Preliminary Results of Countervailing Duty 
Administrative Review, 74 FR 46100; 46107-46108 (September 8, 2009) 
(Preliminary Results of CORE from Korea 2007), and unchanged in 
Corrosion-Resistant Carbon Steel Flat Products from the Republic of 
Korea: Final Results of Countervailing Duty Administrative Review,74 
FR 55192 (October 27, 2009) (Final Results of CORE from Korea 2007).
    \97\ See GOK's November QR at Exhibit T-1.
    \98\ Id.
    \99\ Id.
    \100\ Id.
    \101\ Id.
---------------------------------------------------------------------------

    During the POR, HYSCO had outstanding loans from KNOC related to 
petroleum exploration projects.\102\ Based upon examination of the loan 
documents and our determinations concerning these loans in the prior

[[Page 58520]]

administrative review, we preliminarily determine that the KNOC loans 
are tied to petroleum exploration, which does not involve subject 
merchandise.\103\ On this basis, we find the KNOC loans are tied and 
attributable to non-subject merchandise.\104\ Therefore, we 
preliminarily determine that HYSCO did not receive a benefit from this 
program with respect to the subject merchandise during the POR. We will 
continue to examine this program in future reviews.
---------------------------------------------------------------------------

    \102\ See HYSCO's November QR at 20 and Exhibit 8 at 16 and 
HYSCO's March 30, 2012, QR at 11 and Exhibit 17.
    \103\ Preliminary Results of CORE from Korea 2009, 76 FR at 
54215 unchanged in Final Results of CORE from Korea 2009.
    \104\ See 19 CFR 351.525(b)(5).
---------------------------------------------------------------------------

E. Pre-1992 Direct Credit

    During the POR, POSCO was the only respondent company that had pre-
1992 long-term loans outstanding during the POR.\105\ Assuming, 
arguendo, that the benefit under this program is equal to the sum of 
POSCOs total interest payments made during the POR, the resulting net 
subsidy rate would be less than 0.005 percent ad valorem when 
attributed to POSCO's total sales, which is not numerically 
significant. Thus, consistent with the Department's practice, we are 
excluding this amount from the net countervailable subsidy rate.
---------------------------------------------------------------------------

    \105\ See GOK's November QR at 3 and POSCO's November QR at 9.
---------------------------------------------------------------------------

F. Document Acceptance (D/A) Financing Provided Under KEXIM's Trade 
Rediscount Program and D/A Loans issued by the KDB and Other 
Government-Owned Banks

    Under section 771(5)(B)(iii) of the Act, a subsidy can be found 
whenever the government ``makes a payment to a funding mechanism to 
provide a financial contribution, or entrusts or directs a private 
entity to make a financial contribution * * * to a person and a benefit 
is thereby conferred.'' In the CFS Investigation, we determined that 
KEXIM's trade bill rediscount program constitutes a payment to a 
funding mechanism because the rediscount ceiling KEXIM provides to 
banks participating under the program is contingent on banks 
subsequently lending the funds to exporters.\106\ Section 
771(5)(B)(iii) of the Act also states that financial contributions from 
funding mechanisms can be a subsidy only if providing the contribution 
would normally be vested in the government and the practice does not 
differ in substance from practices normally followed by the government. 
This is the ``government subsidy function'' prong of an indirect 
financial contribution. As determined in the CFS Investigation, under 
this program banks are performing a government subsidy function and, 
therefore, their loans can qualify as subsidies.\107\ Therefore, we 
find that loans from banks under the rediscount program constitute 
financial contributions within the meaning of section 771(5)(D)(i) of 
the Act and confer a benefit upon exporters, in accordance with section 
771(5)(E)(ii) of the Act, to the extent the amount exporters pay under 
the program is less than the amount they would pay on comparable 
commercial loans they could obtain on the market. Because receipt of 
the loans is contingent upon export performance, we also determine that 
KEXIM's rediscount program is specific within the meaning of section 
771(5A)(B) of the Act.
---------------------------------------------------------------------------

    \106\ See CFS Decision Memorandum at ``Export Loans by 
Commercial Banks Under KEXIM's Trade Bill Rediscounting Program.''
    \107\ See CFS Decision Memorandum at ``Export Loans by 
Commercial Banks Under KEXIM's Trade Bill Rediscounting Program.''
---------------------------------------------------------------------------

    In the CFS investigation, we further determined that D/A Loans 
issued by the KDB and other government-owned banks constitute a 
financial contribution in the form of a direct transfer of funds within 
the meaning of section 771(5)(D)(i) of the Act.\108\ In addition, we 
determined that such loans confer a benefit, in accordance with section 
771(5)(E)(ii) of the Act, to the extent the amount exporters pay under 
the program is less than the amount they would pay on comparable 
commercial loans they could obtain on the market.\109\ Because receipt 
of D/A loans is contingent upon export performance, we also determined 
that D/A loans from the KDB and other government-owned banks are 
specific within the meaning of section 771(5A)(B) of the Act.\110\
---------------------------------------------------------------------------

    \108\ See CFS Decision Memorandum at ``D/A Loans Issued by the 
KDB and Other Government-Owned Banks.''
    \109\ Id.
    \110\ Id.
---------------------------------------------------------------------------

    In the CFS Investigation, we further found that subsidies on the 
loans under KEXIM's trade bill rediscount program are tied to sales of 
subject merchandise to the United States in accordance with 19 CFR 
351.525(b)(4) and (5). Accordingly, we limited our benefit calculations 
to D/A loans issued on sales of subject merchandise to the United 
States.\111\ We preliminarily determine that there is no information on 
the record that warrants a reconsideration of the Department's prior 
findings.
---------------------------------------------------------------------------

    \111\ Id.
---------------------------------------------------------------------------

    Dongbu reported receiving short-term D/A financing from commercial 
banks that participated in KEXIM's Trade Rediscount Program and D/A 
Loans issued by the KDB and other government-owned banks during the 
POR. To calculate the benefits to Dongbu under these programs, we 
compared the amount that Dongbu paid on all of its D/A loans from 
commercial banks outstanding during the POI to the amount Dongbu paid 
on comparable commercial loans.\112\ Because loans under these programs 
are discounted (i.e., interest is paid up front at the time the loans 
are received), the effective rate paid by respondents on their D/A 
loans is a discounted rate. The benefits Dongbu received were less than 
0.005 percent of its total export sales of subject merchandise to the 
United States during the POR, which is not numerically significant. 
Therefore, we are preliminarily excluding the amount from the net 
countervailable subsidy rate. HYSCO, POSCO and POCOS did not report any 
D/A financing from commercial banks during the POR.\113\
---------------------------------------------------------------------------

    \112\ See 19 CFR 351.505(a)(2)(iv).
    \113\ See HYSCO's November QR at 16 and POSCO's November QR at 
18.
---------------------------------------------------------------------------

G. R&D Grants Under the Special Act on Balanced National Development

    During the POR, HYSCO reported that it received a research and 
development grant under the Special Act on Balanced National 
Development (National Development Act).\114\
---------------------------------------------------------------------------

    \114\ See HYSCO's March QR at 2 and 5, see also GOK's August 7, 
2012, questionnaire response (August 7 QR) at Exhibit V-1.
---------------------------------------------------------------------------

    Upon review of the information submitted by HYSCO and the GOK, we 
preliminarily determine that the grant pertains specifically to the 
production of a product that is not subject merchandise.\115\ 
Therefore, consistent with 19 CFR 351.525(b)(5), we preliminarily 
determine that the National Development Act did not confer a benefit to 
the production or export of subject merchandise during the POR. If a 
future administrative review of this proceeding is requested, we will 
reconsider whether grants provided under the National Development Act 
confer a benefit.
---------------------------------------------------------------------------

    \115\ The exact nature of the project for which the R&D grant 
was received is business proprietary information. See Memorandum to 
the File titled ``HYSCO's R&D Grants under the Act on the Promotion 
of the Special Act on Balanced National Development'' (August 31, 
2012) of which a public version is on file in IA Access.
---------------------------------------------------------------------------

H. Subsidies Related to HYSCO's 2004 Purchase of Hanbo Steel (Hanbo)

    In January 1997, Korea's then second largest steelmaker, Hanbo 
Steel, collapsed under enormous debt and entered into bankruptcy 
proceedings, falling under the receivership of the

[[Page 58521]]

Seoul Central District Bankruptcy Court (Bankruptcy Court). Petitioner 
alleged that from 1996 to 2000 the GOK provided credit, and also 
compelled Korean banks to provide credit, to Hanbo at a time when Hanbo 
was uncreditworthy.\116\ According to petitioner, these loans continue 
to benefit HYSCO during the POR. Petitioner further alleged that in the 
aftermath of Hanbo's collapse, the GOK paid off Hanbo's debts to its 
small- and medium-sized creditors in order to save them from going into 
bankruptcy themselves, resulting in debt forgiveness to Hanbo. In 
September 2004, Hanbo was purchased by a consortium consisting of HYSCO 
and INI Steel Co. through a public auction under the Bankruptcy Court's 
supervision.\117\ As a result of this sale, HYSCO acquired Hanbo's 
cold-rolled facility.\118\ Petitioner alleged that the Korea Asset 
Management Corporation, a GOK entity, held the majority of Hanbo's debt 
at the time of its sale. Petitioner further alleged that the 2004 
acquisition was not an arm's-length, fair-market-value transaction. 
Specifically, petitioner alleged that the transaction was contingent 
upon HYSCO/INI agreeing to retain Hanbo's workers for three years. 
Petitioner pointed out that under the Department's change-in-ownership 
methodology, there is a rebuttable presumption that allocable subsidies 
to a company will continue to benefit the purchaser of the company or 
its assets if the sales transaction was not at arm's length and for 
fair market value. Consequently, petitioner alleged that the 2004 
transaction did not extinguish the benefit from the debt forgiveness 
that had been provided to Hanbo, resulting in an allocable benefit to 
HYSCO during the POR.
---------------------------------------------------------------------------

    \116\ See Petitioners December 20, 2011, submission at 12.
    \117\ See HYSCO's June 19, 2012, submission at 2-3.
    \118\ Id. at 7.
---------------------------------------------------------------------------

    The Department initiated an investigation of petitioner's 
allegations.\119\ The Department's examination covers any GOK debt 
forgiveness to Hanbo from 1996 (the beginning of the 15-year AUL for 
this review) through September 2004 (the time of Hanbo's purchase), 
which could conceivably result in benefits allocable to the 2010 POR, 
as well as any GOK loans to Hanbo that are still outstanding during the 
POR, to the extent such loans were assumed by HYSCO.
---------------------------------------------------------------------------

    \119\ See Memorandum to Melissa G. Skinner, Director, Office 3, 
through Eric B. Greynolds, Program Manager, from Gayle Longest, Case 
Analyst, regarding New Subsidy Allegations (April 24, 2012).
---------------------------------------------------------------------------

    With regard to petitioner's loan allegations, the information 
submitted by HYSCO and the GOK indicates that INI/HYSCO's 2004 purchase 
of Hanbo was an asset-only purchase and, thus, no liabilities were 
transferred to INI and HYSCO as part of the sale, i.e., HYSCO did not 
assume any of Hanbo's debts.\120\ Therefore, we preliminarily find 
that, to the extent that Hanbo may have received GOK or GOK-directed 
loans, any subsidy from such loans did not benefit HYSCO during the 
POR.
---------------------------------------------------------------------------

    \120\ Questionnaire responses further indicate that Hanbo 
received operating financing between 1998 and 2002, under court 
supervision, but that the debt was gradually paid down by 2002 with 
operating income.
---------------------------------------------------------------------------

    With regard to petitioner's debt forgiveness allegations, the 
questionnaire responses from HYSCO and the GOK indicate that none of 
Hanbo's debt, including debts owed to suppliers and small- and medium-
sized firms, was forgiven in 1996.\121\ Thus, we preliminarily find 
that the only debt forgiveness at issue is any debt forgiveness 
resulting from Hanbo's bankruptcy beginning in 1997. Concerning the 
period 1997 until Hanbo's purchase in 2004, the questionnaire responses 
from the GOK and HYSCO indicate that Hanbo's debt was restructured 
pursuant to a court-supervised bankruptcy proceeding in accordance with 
Korea's Corporate Reorganization Law.\122\ For example, effective 
January 31, 1997, the bankruptcy judge forbade Hanbo from liquidating 
any of its outstanding debt, transferring ownership, or engaging in any 
settlement or waiver.\123\ During its bankruptcy, Hanbo was overseen by 
a court-approved trustee.\124\ Further, the Bankruptcy Court's approval 
was required for all of Hanbo's major actions.\125\ Finally, the 2004 
sale of Hanbo through public auction was an integral part of the 
bankruptcy process and thus, as with all the other elements in the 
bankruptcy, also subject to court approval.
---------------------------------------------------------------------------

    \121\ See HYSCO's August 2, 2012, submission at 1-2; see also 
the GOC's August 15, 2012, submission at 1.
    \122\ See HYSCO's June 19, 2012, submission at 1-4.
    \123\ Id. at Exhibit 3.
    \124\ Id. at 2.
    \125\ Id.
---------------------------------------------------------------------------

    Concerning the terms of the bankruptcy itself, Hanbo's final 
reorganization plan, as approved by the Bankruptcy Court, indicates 
that, for the purposes of restructuring Hanbo's debts, Hanbo's 
creditors were divided into five categories depending on the type of 
creditor and existence of security: Secured creditors, unsecured 
creditors, SME creditors, tax creditors, and related-party 
creditors.\126\ The documents further indicate that the repayment terms 
varied depending on the creditor group, but repayment terms were 
applied equally to creditors within the same creditor group.\127\ As a 
result of this debt restructuring, Hanbo's debts were repaid at a 
discount with proceeds from the sale of assets. This process resulted 
in debt forgiveness to the extent that the debts were not repaid in 
full.
---------------------------------------------------------------------------

    \126\ See HYSCO's June 19, 2012, submission at Exhibit 2; see 
also HYSCO's August 2, 2012, submission at 1 and Exhibit 21.
    \127\ Id.
---------------------------------------------------------------------------

    The Department addressed the issue of debt forgiveness in the 
context of bankruptcy proceedings in the final results of Stainless 
Steel from Korea, in which the Department explained that, in assessing 
the countervailability of the debt forgiveness, it examines whether: 
(1) The bankruptcy protection is generally available in the country in 
question, and (2) the bankruptcy in question was inconsistent with the 
typical practice in the country.\128\ In Stainless Steel from Korea, 
the Department found that where bankruptcy proceedings are conducted 
pursuant to law that is are generally available to all companies, and 
the particular company received no special or differential treatment in 
its bankruptcy process, debt forgiveness resulting from the bankruptcy 
procedures is not specific and, thus, not countervailable.\129\ There 
is no information on the record of the current proceeding that warrants 
reconsideration of the Department's finding that that bankruptcies are 
generally available to all companies in Korea.
---------------------------------------------------------------------------

    \128\ See Final Results of Countervailing Duty Administrative 
Review: Stainless Steel Sheet and Strip in Coils from the Republic 
of Korea, 69 FR 2113 (January 14, 2004) (Stainless Steel from 
Korea), and accompanying Issues and Decision Memorandum (Stainless 
Steel from Korea Memorandum) at Comment 4; see also Final 
Affirmative Countervailing Duty Determination and Final Negative 
Critical Circumstances Determination: Carbon and Certain Alloy Steel 
Wire Rod from Germany, 67 FR 55808, (August 30, 2002), and 
accompanying Issues and Decision Memorandum at Comment 6.
    \129\ Id.
---------------------------------------------------------------------------

    In the case of Hanbo's bankruptcy, we preliminarily find that it 
was conducted through legal proceedings generally available to all 
Korean companies.\130\ As

[[Page 58522]]

noted above, Hanbo entered into bankruptcy pursuant to Korea's 
Corporate Reorganization Law, under court receivership at the 
Bankruptcy Court, with its management and operations subject to 
supervision by a court-approved trustee. Further, there is no evidence 
that Hanbo received special or differential treatment in its bankruptcy 
process. Accordingly, the Department finds that Hanbo's debt 
restructuring was not subject to government influence resulting in 
subsidies.\131\ Consequently, in accordance with the Department's 
practice, we preliminary find that to the extent the bankruptcy 
restructuring plan for Hanbo resulted in debt forgiveness, such debt 
forgiveness was not specific, as described under section 771(5A)(D) of 
the Act and, thus, not countervailable.
---------------------------------------------------------------------------

    \130\ We find that the Hanbo bankruptcy, which was essentially a 
liquidation process, differed from debt workouts that the Department 
has examined in other Korean CVD proceedings (e.g., DRAMS from Korea 
Investigation and the CFS Investigation), which involved out-of-
court corporate restructuring agreements (CRAs) implemented by a 
body of creditors dominated by government-owned or controlled 
entities. The Department found those workouts to have been subject 
to government influence resulting in subsidies specific to the 
company or industry. See Final Affirmative Countervailing Duty 
Determination: Dynamic Random Access Memory Semiconductors from the 
Republic of Korea, 68 FR 37122 (June 23, 2003) (DRAMS from Korea 
Investigation), and accompanying Issues and Decision Memorandum 
(DRAMS Decision Memorandum) at ``Hynix Financial Restructuring and 
Recapitalization;'' see also CFS Decision Memorandum at ``Poognman 
Restructuring.''
    \131\ See DRAMS Decision Memorandum at ``Hynix Financial 
Restructuring and Recapitalization''; see also CFS Decision 
Memorandum at ``Poognman Restructuring.''
---------------------------------------------------------------------------

    Accordingly, absent any subsidy benefits that would be allocable to 
the POR, there is no need for the Department to analyze whether the 
2004 sale of Hanbo was an arm's-length, fair-market-value transaction 
pursuant to the Department's change-in-ownership methodology.

I. RSTA 22: Corporation Tax Exemption on Dividend Income From 
Investment in Overseas Resource Development

    Under RSTA Article 22, a domestic corporation, whose income for 
each business year ending before December 31, 2009, includes any 
dividend income from its investment in overseas resource development 
projects as prescribed by Presidential Decree (Enforcement Decree), is 
exempt from corporate tax for the portion of such dividend income that 
is exempted from the tax of the host country where the investment 
occurred. Article 19 of the Enforcement Decree of the RSTA prescribes 
the following investment projects as being eligible for this tax 
exemption: Agricultural products, Animal products, Fishery products, 
Forest products, and Mineral products.
    POSCO reported that it had investments in overseas resource 
development projects as prescribed by the Enforcement Decree and 
received tax exemptions in the host country for these investments.\132\ 
The tax exemptions were reflected in the tax return that POSCO filed 
during the POR. Dongbu and HYSCO reported that they did not use this 
program.
---------------------------------------------------------------------------

    \132\ See POSCO's December 2, 2011, QR at 12; see also GOK's 
November QR at 6.
---------------------------------------------------------------------------

    We preliminarily determine that the tax exemptions POSCO received 
under this program constitute a financial contribution in the form of 
revenue forgone as described under section 771(5)(D)(ii) of the Act and 
confer a benefit as described under section 771(5)(E) of the Act and 19 
CFR 351.509(a). Further, we preliminarily determine that tax exemptions 
received under this program are specific under section 771(5A)(D)(1) 
because benefits are limited to firms with investment projects 
concerning agricultural, animal, fishery, forest, and mineral products.
    Under this program, the benefit is equal to the amount of added 
income taxes that POSCO would have paid absent the program. The 
benefits POSCO received were less than 0.005 percent of its total 
sales. Therefore, we are preliminarily excluding the amount from 
POSCO's net countervailable subsidy rate.

J. Reduction in Taxes for Operation in Regional and National Industrial 
Complexes

    Under Article 46 of the Industrial Cluster Development and Factory 
Establishment Act (Industrial Cluster Act), a state or local government 
may provide tax exemptions as prescribed by the Restriction of Special 
Taxation Act.\133\ In accordance with this authority, Article 276 of 
the Local Tax Act provides that an entity that acquires real estate in 
a designated industrial complex for the purpose of constructing new 
buildings or enlarging existing facilities is exempt from the 
acquisition and registration tax. In addition, the entity is exempt 
from 50 percent of the property tax on the real estate (i.e., the land, 
buildings, or facilities constructed or expanded) for five years from 
the date the tax liability becomes effective. The exemption is 
increased to 100 percent of the relevant land, buildings, or facilities 
that are located in an industrial complex outside of the Seoul 
metropolitan area. The GOK established the tax exemption program under 
Article 276 in December 1994, to provide incentives for companies to 
relocate from populated areas in the Seoul metropolitan region to 
industrial sites in less populated parts of the country. The program is 
administered by the local tax officials of the county where the 
industrial complex is located.
---------------------------------------------------------------------------

    \133\ Pursuant to the petitioner's new subsidy allegations, the 
Department initiated an investigation of property, acquisition and 
registration tax exemptions allegedly received by POSCO, Dongbu, and 
HYSCO for their respective facilities in various locations. The 
information submitted by the respondent firms and the GOK indicates 
that these tax exemptions were received pursuant to a program under 
Article 276 of the Local Tax Act, which the Department has 
previously examined and found to be countervailable.
---------------------------------------------------------------------------

    During the POR, pursuant to Article 276 of the Local Tax Act, HYSCO 
received exemptions from the acquisition tax, registration tax, and 
property tax based on the location of its manufacturing facilities, 
Suncheon Works, in the Yulchon Industrial Complex, and its facilities 
in the Ulsan Works industrial complex designated under the Industrial 
Cluster Act.\134\ During the POR, POSCO and Dongbu received property 
reductions in connection with their facilities located in the Gwangyang 
Industrial Complex and Godae Industrial Complex, respectively. In 
addition, HYSCO, POSCO, and Dongbu received an exemption from the local 
education tax during the POR. The local education tax is levied at 20 
percent of the property tax. The property tax exemption, therefore, 
results in an exemption of the local education tax.
---------------------------------------------------------------------------

    \134\ See HYSCO's November QR at Exhibit H-2 and HYSCO's May 25, 
2012, questionnaire response (HYSCO's May QR) at 4 and Exhibit H-4.
---------------------------------------------------------------------------

    We preliminarily determine that the tax reductions constitute a 
financial contribution in the form of revenue forgone, as described 
under section 771(5)(D)(ii) of the Act, and a benefit under section 
771(5)(E) and 19 CFR 351.509(a). We further preliminarily determine 
that the property tax exemptions provided under this program are 
specific under section 771(5A)(D)(iv) of the Act because benefits are 
limited to enterprises located within designated geographical regions. 
Our findings in this regard are consistent with the Department's 
practice.\135\
---------------------------------------------------------------------------

    \135\ See, e.g., Coated Free Sheet Paper from the Republic of 
Korea: Notice of Final Affirmative Countervailing Duty 
Determination, 72 FR 60639 (October 25, 2007) (CFS Investigation), 
and accompanying Issues and Decision Memorandum (CFS Decision 
Memorandum) at ``Reduction in Taxes for Operation in Regional and 
National Industrial Complexes.''
---------------------------------------------------------------------------

    To calculate the benefit, we subtracted the amount of taxes paid by 
the firms from the amounts that would have been paid absent the 
program. To calculate the net subsidy rate, we

[[Page 58523]]

divided the total benefit by the firms' total sales. In the case of 
HYSCO, POSCO, and Dongbu, the resulting net subsidy rates were less 
than 0.005 percent ad valorem. Consistent with the Department's 
practice, we find that the benefits received under this program are not 
measurable and, therefore, we have not included any benefits under this 
program in net subsidy rates of HYSCO and POSCO.\136\
---------------------------------------------------------------------------

    \136\ See, e.g., CORE from Korea 2006 Decision Memorandum at 
``GOK's Direction of Credit.''
---------------------------------------------------------------------------

III. Programs Preliminarily Determined To Be Not Used

    The following programs were part of the petitioner's new subsidy 
allegations on which the Department initiated an investigation.\137\ 
Based on the information submitted by the GOK and the respondents, we 
preliminarily determine that these programs were not used during the 
POR.

    \137\ See Memorandum to Melissa G. Skinner, Director, Office 3, 
through Eric B. Greynolds, Program Manager, from Gayle Longest, Case 
Analyst, regarding New Subsidy Allegations (April 24, 2012).
---------------------------------------------------------------------------

 Corporate Tax Reduction for Facilities Located in the Godae 
Complex
 Income Tax Reduction for Facilities Located in the Godae 
Complex
 Cash Grants for Employees Working at Facilities in Jeollanamdo
 Training and Education Subsidies at Facilities in Jeollanamdo
 Support for New Investments in Facilities in Jeollanamdo
 Reduction in Rent for Facilities Located in Industrial 
Complexes
 Employment Subsidies for Large-Scale Investment in Ulsan
 Special Support for Large-Scale Investments in Ulsan
 Technology Development Loans for Facilities in Gwangyang 
Complex
 Foundation Loans for Facilities in Gwangyang Complex

    The Department included the following programs in its October 5, 
2011, initial questionnaire. We preliminarily determine that these 
programs were not used by the reviewed companies during the POR.

 Reserve for Research and Manpower Development Fund Under RSTA 
Article 9 (TERCL Article 8)
 RSTA Article 11: Tax Credit for Investment in Equipment to 
Development Technology and Manpower (TERCL Article 10)
 Reserve for Export Loss Under TERCL Article 16
 Reserve for Overseas Market Development Under TERCL Article 17
 Reserve for Export Loss Under TERCL Article 22
 Exemption of Corporation Tax on Dividend Income from Overseas 
Resources Development Investment Under TERCL Article 24
 Reserve for Investment (Special Cases of Tax for Balanced 
Development Among Areas Under TERCL Articles 42-45)
 Tax Credits for Specific Investments Under TERCL Article 71
 RSTA Article 94: Equipment Investment to Promote Workers 
Welfare (TERCL Article 88)
 Electricity Discounts Under the Requested Loan Adjustment 
Program
 Electricity Discounts Under the Emergency Load Reductions 
Program
 Export Industry Facility Loans and Specialty Facility Loans
 Short-Term Trade Financing Under the Aggregate Credit Ceiling 
Loan Program Administered by the Bank of Korea
 Industrial Base Fund
 Excessive Duty Drawback
 Private Capital Inducement Act
 Scrap Reserve Fund
 Special Depreciation of Assets on Foreign Exchange Earnings
 Export Insurance Rates Provided by the Korean Export Insurance 
Corporation
 Loans from the National Agricultural Cooperation Federation
 Tax Incentives from Highly Advanced Technology Businesses 
Under the Foreign Investment and Foreign Capital Inducement Act
 D/A Loans Issued by the Korean Development Bank and Other 
Government-Owned Banks
 Export Loans by Commercial Banks Under KEXIM's Trade Bill 
Rediscounting Program
 Short-term Export Financing
 Research and Development Grants Under the Industrial 
Development Act (IDA)

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, 2010, through December 
31, 2010, we preliminarily determine the net subsidy rates for HYSCO, 
POSCO, and Dongbu to be 0.08, 0.16, 0.11, percent ad valorem, 
respectively, which are de minimis rates. See 19 CFR 351.106(c)(1).
    The Department intends to issue assessment instructions to U.S. 
Customs and Border Protection (CBP) 15 days after the date of 
publication of the final results of this review. If the final results 
remain the same as these preliminary results, the Department will 
instruct CBP to liquidate without regard to countervailing duties all 
shipments of subject merchandise produced by HYSCO, POSCO, and Dongbu, 
entered, or withdrawn from warehouse, for consumption from January 1, 
2010, through December 31, 2010. The Department will also instruct CBP 
to collect cash deposits of zero percent on shipments of the subject 
merchandise produced by HYSCO, POSCO, and Dongbu entered, or withdrawn 
from warehouse, for consumption on or after the date of publication of 
the final results of this review.
    We will instruct CBP 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 companies covered by this order, but not 
examined in this review, are those established in the most recently 
completed administrative proceeding for each company. These rates shall 
apply to all non-reviewed companies until a review of a company 
assigned these rates is requested.

Disclosure and 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 the public 
announcement of this notice. We will notify parties of the schedule for 
submitting case briefs and rebuttal briefs, in accordance with 19 CFR 
351.309(c) and 19 CFR 351.309(d)(1), respectively. Parties who submit 
argument in this proceeding are requested to submit with the argument: 
(1) A statement of the issue; and (2) a brief summary of the argument. 
Parties submitting case and/or rebuttal briefs are requested to provide 
the Department copies of the public version on disk. Case and rebuttal 
briefs must be served on interested parties in accordance with 19 CFR 
351.303(f). Pursuant to 19 CFR 351.310(c), 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.
    Pursuant to 19 CFR 351.305(b)(4), 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

[[Page 58524]]

the proceeding, but in no event later than the date the case briefs, 
under 19 CFR 351.309(c)(i), 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.
    These preliminary results of review are issued and published in 
accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 
351.221(b)(4).

    Dated: September 17, 2012.
Paul Piquado,
Assistant Secretary for Import Administration.
[FR Doc. 2012-23399 Filed 9-20-12; 8:45 am]
BILLING CODE 3510-DS-P