[Federal Register Volume 64, Number 103 (Friday, May 28, 1999)]
[Notices]
[Pages 28978-28982]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-13687]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-357-004]
Preliminary Results of Full Sunset Review: Carbon Steel Wire Rod
From Argentina
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of full sunset review: Carbon
steel wire rod from Argentina.
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SUMMARY: On November 2, 1998, the Department of Commerce (``the
Department'') initiated a sunset review of the suspended countervailing
duty investigation on carbon steel wire rod from Argentina (63 FR
58709) pursuant to section 751(c) of the Tariff Act of 1930, as amended
(``the Act''). On the basis of a notice of intent to participate filed
on behalf of the domestic industry and substantive comments filed on
behalf of the domestic industry and respondent interested parties, the
Department is conducting a full review. As a result of this review, the
Department preliminarily finds that termination of the suspended
countervailing duty investigation would be likely to lead to
continuation or recurrence of a countervailable subsidy. The net
countervailable subsidy and the nature of the subsidy are identified in
the ``Preliminary Results of Review'' section of this notice.
FOR FURTHER INFORMATION CONTACT: Scott E. Smith or Melissa G. Skinner,
Office of Policy for Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th & Constitution,
Washington, D.C. 20230; telephone: (202) 482-6397 or (202) 482-1560,
respectively.
EFFECTIVE DATE: May 28, 1999.
Statute and Regulations
This review is being conducted pursuant to sections 751(c) and 752
of the Act. The Department's procedures for the conduct of sunset
reviews are set forth in Procedures for Conducting Five-year
(``Sunset'') Reviews of Antidumping and Countervailing Duty Orders, 63
FR 13516 (March 20, 1998) (``Sunset Regulations'') and in 19 C.F.R.
Part 351 (1998) in general. Guidance on methodological or analytical
issues relevant to the Department's conduct of sunset reviews is set
forth in the Department's Policy Bulletin 98:3--Policies Regarding the
Conduct of Five-year (``Sunset'') Reviews of Antidumping and
Countervailing Duty Orders; Policy Bulletin, 63 FR 18871 (April 16,
1998) (``Sunset Policy Bulletin'').
Scope
The merchandise subject to this suspended countervailing duty
investigation is carbon steel wire rod, both high carbon and low
carbon, manufactured in Argentina and exported, directly or indirectly
from Argentina to the United States. The term ``carbon steel wire rod''
covers a coiled, semi-finished, hot-rolled carbon steel product of
approximately round solid cross section, not under 0.02 inches nor over
0.74 inches in diameter, not tempered, not treated, and not partly
manufactured, and valued at over 4 cents per pound. As of the
publication of the last administrative review,1 the
merchandise subject to this order was classifiable under item numbers
7213.20.00, 7213.31.30, 7213.39.00, 7213.41.30, 7213.49.00, and
7213.50.00
[[Page 28979]]
of the Harmonized Tariff Schedule of the United States (``HTSUS'').
Although the HTSUS subheadings are provided for convenience and Customs
purposes, the written description remains dispositive.
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\1\ See Carbon Steel Wire Rod from Argentina; Final Results of
Countervailing Duty Administrative Review, 56 FR 40309 (August 14,
1991).
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History of the Investigation
On July 14, 1982, the Department issued a preliminary affirmative
countervailing duty determination with respect to imports of carbon
steel wire rod from Argentina.2 In the preliminary
determination, the Department found a total export subsidy of 13.80
percent ad valorem, based on two programs: 10.33 percent under the
``reembolso'' (tax rebate on exports) and 3.36 percent under pre-
financing of exports through dollar-indexed pesos.
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\2\ See Carbon Steel Wire Rod from Argentina; Preliminary
Affirmative Countervailing Duty Determination, 47 FR 30539 (July 14,
1982).
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On September 27, 1982, the Department suspended the countervailing
duty investigation on the basis of a suspension agreement by the
Government of Argentina to eliminate all benefits which the Department
found to be bounties or grants on exports to the United States of the
subject merchandise.3 Specifically, the Government of
Argentina agreed, through its Ministry of Economy, that: (1) it would
not provide to manufacturers, producers, or exporters of carbon steel
wire rod, any reembolso payment constituting a bounty or grant, as
determined by the Department, (2) the Central Bank would not provide
preferential dollar-indexed pre-export financing, and (3) no new or
equivalent benefits would be granted. In the notice announcing the
suspension agreement, the Department identified a change since the
preliminary determination with respect to the reembolso. Specifically,
the Department stated that, of the total 10 percent reembolso, the
portion that constituted an allowable rebate is 7.60 percent and the
over rebate to be eliminated as a condition of the suspension agreement
is currently 2.40 percent.
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\3\ See Carbon Steel Wire Rod from Argentina; Suspension of
Investigation, 47 FR 42393, (September 27, 1982).
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In conjunction with the administrative review of the period
September 27, 1982 through December 31, 1982, the suspension agreement
was revised to clearly specify the scope of the agreement and include
renunciation of a program not included in the original investigation,
that was subsequently found countervailable in other investigations
involving products from Argentina.4 Specifically, the
suspension agreement was revised to clarify that both high carbon and
low carbon were within the scope of the agreement. Further, the
Ministry of Economy agreed that the Central Bank would not provide
post-shipment financing for exports under Circular OPRAC 1-9. The
Department has conducted one additional administrative review of this
suspended countervailing duty investigation covering the period January
1, 1989 through December 1, 1989.5 The Department found that
both the Government of Argentina and Acindar Industria Argentina de
Aceros S.A. (``Acindar'') had complied with the terms of the suspension
agreement.
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\4\ See Carbon Steel Wire Rod from Argentina; Final Results of
Countervailing Duty Administrative Review and Revised Suspension
Agreement, 51 FR 44649 (December 11, 1986).
\5\ See Carbon Steel Wire Rod from Argentina; Final Results of
Countervailing Duty Administrative Review, 56 FR 40309 (August 14,
1991).
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Background
On November 2, 1998, the Department initiated a sunset review of
the suspended countervailing duty investigation on carbon steel wire
rod from Argentina (63 FR 58709), pursuant to section 751(c) of the
Act. The Department received a Notice of Intent to Participate on
behalf of Co-Steel Raritan (formerly Raritan River Steel), GS
Industries, Inc., and North Star Steel (collectively ``the domestics'')
on November 16, 1998, within the deadline specified in section
351.218(d)(1)(i) of the Sunset Regulations. Each company claimed
interested party status under section 771(9)(C) of the Act. We received
complete substantive responses on behalf of the Argentine Republic,
Acindar, and the domestics on December 2, 1998, within the 30-day
deadline specified in the Sunset Regulations under section
351.218(d)(3)(i).
In its substantive response, the domestics stated that all three
domestic producers participated as petitioners in the original
investigation and the administrative reviews for the periods of
September 27, 1982, through December 31, 1982, and January 1, 1989,
through December 31, 1989.
In its substantive response, the Embassy of Argentina stated that
the Argentine Republic was a participant in the original countervailing
duty proceeding and in all of the administrative reviews of the
suspension agreement. The Argentine Republic qualifies as an interested
party under section 771(9)(B) of the Act. In its substantive response,
Acindar claimed interested party status under section 771(9)(A) of the
Act, as an Argentine producer of carbon steel wire rod. Further,
Acindar stated that, as far as it is aware, Acindar accounted for one
hundred percent of the total exports of Argentine subject merchandise
to the United States during each of the five calendar years preceding
the year of publication of the notice of initiation.
On December 7, 1998, we received rebuttal comments from the
domestics. We did not receive rebuttal comments from the Argentine
Republic or Acindar. On the basis of complete substantive responses
from the Argentine Republic and Acindar to the notice of initiation,
and in accordance with section 351.218(e)(2) of the Sunset Regulations,
the Department is conducting a full review.
The Department determined that the sunset review of the suspended
countervailing duty investigation on carbon steel wire rod from
Argentina is extraordinarily complicated. In accordance with section
751(c)(5)(C)(v) of the Act, the Department may treat a review as
extraordinarily complicated if it is a review of a transition order
(i.e., an order in effect on January 1, 1995). (See section
751(c)(6)(C) of the Act.) Therefore, on January 15, 1999, the
Department extended the time limit for completion of the preliminary
results of this review until not later than May 23, 1999, in accordance
with section 751(c)(5)(B) of the Act.6
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\6\ See Carbon Steel Wire Rod from Argentina: Extension of Time
Limit for Preliminary Results of Five-Year Reviews, 64 FR 9475
(February 26, 1999).
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Determination
In accordance with section 751(c)(1) of the Act, the Department is
conducting this review to determine whether termination of the
suspended countervailing duty investigation would be likely to lead to
continuation or recurrence of a countervailable subsidy. Section 752(b)
of the Act provides that, in making this determination, the Department
shall consider the net countervailable subsidy determined in the
investigation and subsequent reviews, and whether any change in the
program which gave rise to the net countervailable subsidy has occurred
that is likely to affect that net countervailable subsidy. Pursuant to
section 752(b)(3) of the Act, the Department shall provide to the
International Trade Commission (``the ITC'') the net countervailable
subsidy likely to prevail if the order is revoked. In addition,
consistent with section 752(a)(6), the Department shall provide the ITC
information concerning the
[[Page 28980]]
nature of the subsidy and whether the subsidy is a subsidy described in
Article 3 or Article 6.1 of the Subsidies Agreement.
The Department's preliminary determinations concerning continuation
or recurrence of a countervailable subsidy, the net countervailable
subsidy likely to prevail if the order is revoked, and nature of the
subsidy are discussed below. In addition, parties' comments with
respect to each of these issues are addressed within the respective
sections.
Continuation or Recurrence of a Countervailable Subsidy
Party Comments
In its substantive response, the domestics stated that the three
programs identified in the suspension agreement, as amended--the
``reembolso'' (an over-rebate of indirect taxes on exports), pre-
financing through dollar-indexed pesos, and post-shipment financing of
exports under Circular OPRAC 1-9--still exist. The domestics refer to
the final results of administrative review of the countervailing duty
order on oil country tubular goods from Argentina as evidence that the
programs continue to exist.7
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\7\ See Oil Country Tubular Goods From Argentina; Final Results
of Countervailing Duty Administrative Review, 62 FR 55589 (October
27, 1997) and Oil Country Tubular Goods From Argentina; Preliminary
Results of Countervailing Duty Administrative Review, 62 FR 32307
(June 13, 1997) (``OCTG'').
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Acindar argued that countervailable subsidies would not be likely
to continue or resume if the suspended investigation were terminated
for two reasons. First, Acindar argued that there is currently no U.S.
authority to maintain the suspension agreement in effect. Citing to the
1997 revocation of the countervailing duty orders on leather, wool, oil
country tubular goods, and carbon steel cold-rolled flat products from
Argentina,8 Acindar asserted that by revoking those orders
without consideration of the current status of countervailable
subsidies, the Department was following the dictates of the Federal
Circuit in Ceramica.9 Acindar argued that the principles of
Ceramica apply equally to suspension agreements entered into without
the benefit of a preliminary injury determination. Further, Acindar
stated that according to Ceramica, ``Section 1303 ceases to operate as
authority for countervailing duties on goods imported after a country
has become a `country under the Agreement.' 64 F.3d at 1582.'' Thus,
Acindar argued, the Department may only maintain a countervailing duty
regime under Section 1671, which requires a preliminary injury
determination. Therefore, since no injury determination underpins the
suspension agreement, the United States should terminate the suspension
agreement.
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\8\ See Substantive response of Acindar, page 3 (December 2,
1998) and Leather from Argentina, Wool from Argentina, Oil Country
Tubular Goods from Argentina, and Carbon Steel Cold-rolled Flat
Products from Argentina, Final Results of Changed Circumstance
Reviews, 62 FR 41361 (August 1, 1997) (``Leather'').
\9\ See Substantive response of Acindar, page 3 (December 2,
1998) and Ceramica Regiomontana v. United States, 64 F.3d 1579 (Fed.
Cir. 1995) (``Ceramica'').
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Second, Acindar noted that in the most recent administrative
review, the Department found that Argentina was in compliance with the
suspension agreement. Acindar stated that there is no reason to assume
that it would start receiving, or that the Argentine Government would
start confering on Acindar, benefits that the Department determines to
constitute countervailable subsidies. The Argentine Republic did not
address this issue.
In their rebuttal comments, the domestics stated that neither
Ceramica nor Leather addressed the issue of suspension agreements.
Rather, the domestics point out that the Federal Circuit focused on the
Department's ability to assess duties, not the ability to administer a
suspension agreement or resume a suspended investigation. The domestics
stated that since the Department's sunset review will reactivate this
investigation, and Argentina is now a ``country under the Agreement,''
the special regime for a simultaneous injury and sunset review set
forth in 19 U.S.C. 1677b and 19 CFR 207.46 should apply to this case.
The domestics concluded that, for the reasons stated in their
substantive response, the Department should find that subsidization is
likely to recur at the rate determined in the preliminary investigation
(as adjusted for new subsidies).
Department's Determination
Drawing on the guidance provided in the legislative history
accompanying the Uruguay Round Agreements Act (``URAA''), specifically
the Statement of Administrative Action (``the SAA''), H.R. Doc. No.
103-316, vol. 1 (1994), the House Report, H.R. Rep. No. 103-826, pt. 1
(1994), and the Senate Report, S. Rep. No. 103-412 (1994), the
Department issued its Sunset Policy Bulletin providing guidance on
methodological and analytical issues, including the basis for
likelihood determinations. The Department clarified that determinations
of likelihood will be made on an order-wide basis (see section III.A.2
of the Sunset Policy Bulletin). Additionally, the Department normally
will determine that revocation of a countervailing duty order or
termination of a countervailing duty investigation is likely to lead to
continuation or recurrence of a countervailable subsidy where (a) a
subsidy program continues, (b) a subsidy program has been only
temporarily suspended, or (c) a subsidy program has been only partially
terminated (see section III.A.3.a of the Sunset Policy Bulletin).
Exceptions to this policy are provided where a company has a long
record of not using a program (see section III.A.3.b of the Sunset
Policy Bulletin).
With respect to Acindar's argument that, based on Ceramica, the
Department must terminate the suspension agreement, we disagree.
Rather, we agree with the domestics that Ceramica addresses the issue
of the Department's authority to assess countervailing duties on
imports that did not receive an injury test. However, in this case, the
Department is not assessing countervailing duties and, in fact,
terminated the suspension of liquidation as a result of the conclusion
of the suspension agreement. Since the administration of the suspension
agreement does not include the assessment of duties, the principles of
Ceramica do not apply.
On the basis of information submitted during this sunset review, we
have no reason to believe that any of the three programs covered by the
suspension agreement have been eliminated by the Government of
Argentina. In their substantive responses, neither the Government of
Argentina nor Acindar argued that the programs had been terminated.
Rather, Acindar argued that the government and Acindar have been
complying with the terms of the suspension agreement. As noted above,
the terms of the suspension agreement do not require the termination of
the programs found countervailable. Rather, the terms of the agreement
merely provide that the Government of Argentina (through the Ministry
of Economy and Central Bank) shall not provide pre-export and post-
shipment financing on exports of carbon steel wire rod and shall not
provide any reembolso payments constituting a bounty or grant to
manufacturers, producers, or exporters of carbon steel wire rod.
In their substantive response, the domestics relied on the final
results issued in 1997 in the administrative review covering OCTG and
the period January 1, 1991 through September 19, 1991, as support for
their assertion that
[[Page 28981]]
the three programs continue to exist. Consistent with the findings in
the latest administrative review of the suspension agreement, in the
review on OCTG the Department found that the pre-export financing
program was totally suspended on March 8, 1991, by Communique A-1807.
In the OCTG review, the Department found the post-export financing was
not used. However, in the latest review of the suspension agreement,
the Department found that the post-export financing was also totally
suspended on March 8, 1991, by Communique A-1807. With respect to the
reembolso, in the administrative review of OCTG, the Department found
that the legal structure of the reembolso program was changed by Decree
1011/91 in May 1991. Specifically, the Department found that the rebate
system was changed to cover only the reimbursements of indirect local
taxes and does not cover import duties, except reimbursement of duties
paid on imported products which are re-exported. Additionally, the
Department found that the rates of reimbursement were reduced by 33
percent for all products and, for OCTG that reduction was from 12.5 to
8.3 percent. Despite the changes found in the programs, we have no
evidence that the programs have been terminated.
The SAA at 888, states that temporary suspension or partial
termination of a subsidy program also will be probative of continuation
or recurrence of countervailable subsidies, absent significant evidence
to the contrary. As noted above, neither the Government of Argentina,
nor Acindar, provided any argument or evidence that any of the three
programs have been terminated. Therefore, absent evidence to the
contrary, the Department preliminarily determines that termination of
the suspended countervailing duty investigation would likely result in
the recurrence of countervailable subsidies.
Net Countervailable Subsidy
Party Comments
In their substantive response, the domestics asserted that the
Department should find the base countervailing duty rate likely to
prevail if the suspended investigation is terminated to be the rate
calculated in the preliminary determination of the original
investigation--13.70 percent, as adjusted to reflect likely benefits
under the post-export financing program. The domestics stated that this
approach would be consistent with the SAA, Sunset Policy Bulletin, and
section 752(b)(1)(B) of the Act.
As noted above, Acindar argued that the countervailable subsidy
rate that is likely to prevail if the agreement is terminated is zero.
Acindar supported this argument by noting that both the government and
Acindar have complied with the terms of the suspension agreement.
Further, Acindar asserted that there is no reason to assume that
Acindar would start receiving, or the Argentine Government would start
conferring on Acindar, countervailable subsidies if the investigation
were terminated.
Department's Determination
In the Sunset Policy Bulletin, the Department stated that,
consistent with the SAA and House Report, ``the Department normally
will select a rate ``from the investigation, because that is the only
calculated rate that reflects the behavior of exporters and foreign
governments without the discipline of an order or suspension agreement
in place.' '' The Department went on to clarify that, in a sunset
review where the Department did not issue a final determination because
the investigation was suspended and continuation was not requested, the
Department may provide to the Commission the net countervailable
subsidy that was determined in the preliminary determination in the
original investigation (see Section III.B.1 of the Sunset Policy
Bulletin). The Department noted that the rate from the original
investigation may not be the most appropriate rate if, for example, the
rate was derived from subsidy programs which were found in subsequent
reviews to be terminated, there has been a program-wide change, or the
rate ignores a program found to be countervailable in a subsequent
administrative review. (See section III.B.3 of the Sunset Policy
Bulletin).
We agree with the domestics that, in the original investigation,
the Department preliminarily found the net subsidy to be 13.70 percent.
However, as noted above, the Department revised the subsidy rate
attributable to the reembolso program at the time it concluded the
suspension agreement. Specifically, the Department found that 7.6
percent of the 10 percent reembolso constituted an allowable rebate and
the overrebate, the amount to be eliminated as a condition of the
suspension agreement, was 2.40 percent. Therefore, it is appropriate to
reduce the export subsidy attributable to the reembolso from the
preliminary 10.44 percent to 2.40 percent. Thus, the net subsidy found
in the original investigation was actually 5.36 percent, the sum of
3.36 percent from pre-financing of exports through dollar-indexed pesos
and 2.40 percent from the reembolso.
Consistent with the Department's Sunset Policy Bulletin and section
752(b)(1)(B) of the Act, the domestics requested that the Department
adjust the net countervailable subsidy from the preliminary
determination to reflect the likely benefits under the post-export
financing program, the renunciation of which was included in the
revised suspension agreement on the basis that it had been found
countervailable in countervailing duty investigations on two other
Argentine products. The domestics did not specify, however, how, or on
what basis, the Department should determine the likely benefits under
this program. As a result, we have not adjusted the subsidy to reflect
an amount for post-export financing.
Finally, as noted above, in the final results of administrative
review on OCTG from Argentina, the Department found that the legal
structure of the reembolso program had been changed in May 1991, by
Decree 1011/91. Not only had the rebate system been changed to cover
only the reimbursement of indirect local taxes and reimbursement of
duties paid on imported products which are re-exported, but the rate of
reimbursement was reduced by 33 percent for all products. While such a
change could potentially have an effect on the level of countervailable
subsidy, if any, attributable to the reembolso, we have no basis to
determine whether this change would have an effect on exports of carbon
steel wire rod. Therefore, we have not made any adjustment for this
program-wide change.
Nature of the Subsidy
In the Sunset Policy Bulletin, the Department stated that,
consistent with section 752(a)(6) of the Act, the Department will
provide information to the ITC concerning the nature of the subsidy and
whether it is a subsidy described in Article 3 or Article 6.1 of the
Subsidies Agreement. Neither of the parties specifically addressed this
issue.
Because receipt of the benefits provided under the reembolso, pre-
export financing, and post-export financing programs, are contingent
upon export, each program falls within the definition of an export
subsidy under Article 3.1(a) of the Subsidies Agreement.
Preliminary Results of Review
As a result of this review, the Department finds that termination
of the suspended countervailing duty investigation would be likely to
lead to recurrence of a countervailable subsidy. The net
countervailable subsidy is 5.36
[[Page 28982]]
percent ad valorem. Additionally, each of the three programs
(reembolso, pre-export financing, and post-export financing) are
subsidies within the meaning of Article 3 of the Subsidies Agreement.
Any interested party may request a hearing within 30 days of
publication of this notice in accordance with 19 CFR 351.310(c). Any
hearing, if requested, will be held on July 17, 1999. Interested
parties may submit case briefs no later than July 10, 1999, in
accordance with 19 CFR 351.309(c)(1)(i). Rebuttal briefs, which must be
limited to issues raised in the case briefs, may be filed not later
than July 15, 1999. The Department will issue a notice of final results
of this sunset review, which will include the results of its analysis
of issues raised in any such comments, no later than September 28,
1999.
This five-year (``sunset'') review and notice are in accordance
with sections 751(c), 752, and 777(i)(1) of the Act.
Dated: May 21, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-13687 Filed 5-27-99; 8:45 am]
BILLING CODE 3510-DS-P