Final Affirmative Countervailing Duty Determination: Structural Steel Beams From the Republic of Korea

AGENCY:

Import Administration, International Trade Administration Department of Commerce.

ACTION:

Notice of final affirmative countervailing duty investigation.

SUMMARY:

On December 14, 1999, the Department of Commerce (the Department) published in the Federal Register its preliminary results of the countervailing duty investigation of structural steel beams from the Republic of Korea for the period January 1, 1998, through December 31, 1998.

Based on our analysis of the comments received, we have made changes to the net subsidy rates. Therefore the net subsidy rates in the Final Determination differ from those of the Preliminary Determination. The final net subsidy rates for the reviewed companies are listed below in the “Suspension of Liquidation” section of this notice.

EFFECTIVE DATE:

July 3, 2000.

FOR FURTHER INFORMATION CONTACT:

Eric B. Greynolds or Tipten Troidl, Office of AD/CVD Enforcement VI, Import Administration, U.S. Department of Commerce, Room 4012, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone (202) 482-2786.

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are references to the provisions of the Tariff Act of 1930, as amended by the Uruguay Round Agreements Act (URAA) effective January 1, 1995 (the Act). In addition, unless otherwise indicated, all citations to the Department's regulations are to the current regulations as codified at 19 CFR part 351 (1999).

Background

On December 14, 1999, the Department published the results of its Preliminary Determination in the investigation of structural steel beams from the Republic of Korea. See Preliminary Negative Countervailing Duty Determination and Alignment of Final Countervailing Duty Determination With Final Antidumping Duty Determination: Structural Steel Beams From the Republic of Korea, 64 FR 69731 (December 14, 1999) (Preliminary Determination). We invited interest parties to comment on the Preliminary Determination. On June 14, 2000, case briefs were submitted by respondents and petitioners. Also, on June 14, 2000, petitioners withdrew their January 13, 2000, request for a hearing. No other interested party requested a hearing. On June 19, 2000, rebuttal briefs were submitted by petitioners and respondents.

This investigation covers three manufactures/exporters: Kangwon Industries Ltd. (Kangwon), Inchon Iron and Steel Co., Ltd. (Inchon), and Dongkuk Steel Mill Co., Ltd. (DSM). This investigation also covers four trading companies: Hyosung Corporation (Hyosung), Sampyo Corporation (Sampyo), Hyundai Corporation (Hyundai), and Dongkuk Industries Co. (DKI). This investigation covers the period January 1, 1998, through December 31, 1998, and thirty-four programs.

Scope of the Investigation

For purposes of this investigation, the products covered are doubly-symmetric shapes, whether hot-or cold-rolled, drawn, extruded, formed or finished, having at least one dimension of at least 80 mm (3.2 inches or more), whether of carbon or alloy (other than stainless) steel, and whether or not drilled, punched, notched, painted, coated, or clad. These products (Structural Steel Beams) include, but are not limited to, wide-flange beams (W shapes), bearing piles (HP shapes), standard beams (S or I shapes), and M-shapes.

All products that meet the physical and metallurgical descriptions provided above are within the scope of this investigation unless otherwise excluded. The following products, are outside and/or specifically excluded from the scope of this investigation: Structural steel beams greater than 400 pounds per linear foot or with a web or section height (also known as depth) over 40 inches.

The merchandise subject to these investigations is classified in the Harmonized Tariff Schedule of the United States (HTSUS) at subheadings: 7216.32.0000, 7216.33.0030, 7216.33.0060, 7216.33.0090, 7216.50.0000, 7216.61.0000, 7216.69.0000, 7216.91.0000, 7216.99.0000, 7228.70.3040, 7228.70.6000.

Although the HTSUS subheadings are provided for convenience and Customs purposes, the written description of the merchandise under investigation is dispositive.

Verification

In accordance with section 782(i) of the Act, we verified the information used in making our Final Determination. We followed standard verification procedures, including meeting with government and company officials, and examining relevant accounting records and original source documents. Our verification results are outlined in detail in the public versions of the verification reports, which are on file in the Central Records Unit of the Department of Commerce (Room B-099).

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to this countervailing duty investigation are addressed in the “Issues and Decision Memorandum” (Decision Memorandum) from Holly A. Kuga, Acting Deputy Assistant Secretary, Import Administration, to Troy H. Cribb, Acting Assistant Secretary for Import Administration, dated June 26, 2000, which is hereby adopted by this notice. A list of issues which parties have raised and to which we have responded is in the Decision Memorandum and is attached to this notice as Appendix I. Parties can find a complete discussion of all issues raised in this investigation and the corresponding recommendations in this public memorandum, which is on file in room B-099 of the Main Commerce Building. In addition, a complete version of the Decision Memorandum can be accessed directly on the World Wide Web at www.ita.doc.gov/import_admin/records/frn,, under the heading “Republic of Korea.” The paper copy and electronic version of the Decision Memorandum are identical in content.

Changes Since the Preliminary Determination

Based on our analysis of the record and comments received, we have made certain changes to the net subsidy rate. As a result of the changes, the net subsidy rates of Kangwon and DSM are above de minimis. All changes made since the Preliminary Determination are discussed in the relevant sections of the Decision Memorandum.

Suspension of Liquidation

In accordance with section 703(d)(1)(A)(i) of the Act, we calculated an individual subsidy rate for Kangwon, Inchon, and DSM, manufacturers of subject merchandise. We determine that the total estimated net subsidy rates are as follows:

With respect to Inchon, its estimated net countervailable subsidy rate is de minimis. Therefore, we determine that no countervailable subsidies are being provided to Inchon for its production or exportation of structural steel beams. In accordance with section 705(c)(5)(A)(i) of the Act, we calculated an all-others rate, which is an amount equal to the weighted-average countervailable subsidy rates established for exporters and producers individually investigated, excluding any zero and de minimis countervailable subsidy rates. On this basis, we determined the all-others rate listed in the table above. Because Inchon has a de minimis rate, it will be excluded from any suspension of liquidation.

In accordance with section 705(c)(1)(C) of the Act, we will instruct the U.S. Customs Service to suspend liquidation under section 703(d) of the Act for all entries of subject merchandise from Korea, except for Inchon, which are entered or withdrawn from warehouse, for consumption on or after the date of the publication of this notice in the Federal Register, and will require a cash deposit of estimated countervailing duties for such entries of the merchandise in the amounts indicated above. If the ITC determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or canceled.

ITC Notification

In accordance with section 705(d) of the Act, we will notify the ITC of our determination. In addition, we are making available to the ITC all non-privileged and non-proprietary information related to this investigation. We will allow the ITC access to all privileged and business proprietary information in our files, provided that the ITC confirms that it will not disclose such information, either publicly or under an administrative protective order, without the written consent of the Assistant Secretary for Import Administration.

If the ITC determines that material injury, or threat of material injury, does not exist, these proceedings will be terminated. If however, the ITC determines that such injury does exist, we will issue a countervailing duty order.

Return or Destruction of Proprietary Information

In the event that the ITC issues a final negative injury determination, this notice will serve as the only reminder to parties subject to Administrative Protective Order (APO) of their responsibility concerning the destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Failure to comply is a violation of the APO.

This determination is published pursuant to sections 705(d) and 777(i) of the act.

Appendix I—Issues Discussed in Decision Memorandum

Methodology and Background Information

I. Subsidies Valuation Information

A. Allocation Period

B. Treatment of Subsidies Received by Trading Companies

C. Benchmark Interest Rates and Discount Rates

D. Creditworthiness

Analysis of Programs

I. Programs Conferring Subsidies

A. The Government of Korea's (GOK) Direction of Credit Policies

1. The GOK's Credit Policies Through 1991

2. The GOK's Credit Policies from 1992 Through 1998

B. Debt Restructuring for Kangwon

C. Reserve for Export Loss Under Article 16 of the Tax Exemption and Reduction Control Act (TERCL)

D. Reserve for Overseas Market Development Under Article 17 of the TERCL

E. Investment Tax Credits Under Article 25 of the TERCL

F. Asset Revaluation Under Article 56(2) of the TERCL

G. Electricity Discounts Under the Requested Load Adjustment Program

H. Scrap Reserve Fund

I. Export Industry Facility Loans (EIFLs)

J. Special Cases of Tax for Balanced Development in Selected Areas Under Article 43 of the TERCL

II. Programs Determined To Be Not Countervailable

A. Tariff Reductions on Imported Machinery Equipment

III. Programs Determined To Be Not Used

A. Private Capital Inducement Act

B. Tax Credit in Equipment to Develop Technology and Manpower Under Article 10 of the TERCL

C. Tax Credits for Vocational Training Under Article 18 of the TERCL

D. Exemptions of Corporate Tax on Dividend Income from Overseas Resources Development Resources Act Under Article 24 of the TERCL

E. Tax Credits for Investments in Specific Facilities Under Article 26 of the TERCL

F. Tax Credits for Temporary Investments Under Article 27 of the TERCL

G. Social Indirect Capital Investment Reserve Funds Under Article 28 of the TERCL

H. Energy-Savings Facilities Investment Reserve Funds Under Article 29 of the TERCL

I. Tax Credits for Specific Investments Under Article 71 of the TERCL

J. Mining Investment Reserve Funds Under Article 95 of the TERCL

K. Grants Under the Technology Development Promotion Act

L. Highly Advanced National Project Fund Industry Technology Development Fund

M. Short-Term Export Financing

N. Korean Export-Import Bank Loans

O. Tax Incentives for Highly Advanced Technology Businesses

P. Special Depreciation of Assets Based on Foreign Exchange Earnings

Q. Steel Campaign for the 21st Century

R. Excessive Duty Drawback

S. Reserve for Investment

T. Export Insurance Rates By The Korean Export Insurance Corporation

U. Special Cases of Tax for Balanced Development among Areas (TERCL Articles 41, 42, 44, and 45)

V. Reserve for Investment

W. Overseas Resource Development Loan

IV. Analysis of Comments

Comment 1: Kangwon's Creditworthiness from 1991 through 1998

Comment 2: Countervailability of Kangwon's Debt for Equity Swap

Comment 3: Department Selection of Benchmarks

Comment 4: Calculation Errors in Preliminary Determination

Comment 5: The Suspension of Kangwon's Interest Payments Following the Company's Debt Restructuring and Its Affect on Kangwon's Benefit Calculations

Comment 6: The Department's Finding Regarding Direction of Credit to the Steel Industry Is Not Supported By Substantial Evidence Or Otherwise in Accordance With Law

Comment 7: Whether the Department Must Find a “Casual Nexus” to Determine Direction of Credit to the Steel Industry Countervailable

Comment 8: Countervailability of the Tariff Reductions on Imported Machinery Equipment Program