Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices 41933

merchandise in the amounts indicated

below. This suspension will remain in

effect until further notice.

Company Ad Valorem Rate

CIL—16.04 percent

All Others—16.04 percent

ITC Notification

In accordance with section 703(f) of

the Act, we will notify the ITC of our

determination. In addition, we are

making available to the ITC all

nonprivileged and nonproprietary

information relating to this

investigation. We will allow the ITC

access to all privileged and business

proprietary information in our files,

provided 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 our final determination is

affirmative, the ITC will make its final

determination within 45 days after the

Department makes its final

determination.

Public Comment

In accordance with 19 CFR 355.38, we

will hold a public hearing, if requested,

to afford interested parties an

opportunity to comment on this

preliminary determination. The hearing

will be held on September 22, 1997, at

the U.S. Department of Commerce,

Room 3708, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20230. Individuals

who wish to request a hearing must

submit a written request within 30 days

of the publication of this notice in the

Federal Register to the Assistant

Secretary for Import Administration,

U.S. Department of Commerce, Room

1874, 14th Street and Constitution

Avenue, N.W., Washington, DC 20230.

Parties should confirm by telephone the

time, date, and place of the hearing 48

hours before the scheduled time.

Requests for a public hearing should

contain: (1) The party’s name, address,

and telephone number; (2) the number

of participants; (3) the reason for

attending; and (4) a list of the issues to

be discussed. In addition, eight copies

of the business proprietary version and

three copies of the nonproprietary

version of the case briefs must be

submitted to the Assistant Secretary no

later than September 8, 1997. Eight

copies of the business proprietary

version and three copies of the

nonproprietary version of the rebuttal

briefs must be submitted to the

Assistant Secretary no later than

September 15, 1997. An interested party

may make an affirmative presentation

only on arguments included in that

party’s case or rebuttal briefs. Parties

who submit an 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. Written arguments should be

submitted in accordance with 19 CFR

351.309 and will be considered if

received within the time limits specified

above.

If this investigation proceeds

normally, we will make our final

determination by October 14, 1997.

This determination is published

pursuant to sections 703(f) and 777(i) of

the Act.

Dated: July 28, 1997.

Jeffrey P. Bialos,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–20489 Filed 8–1–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[C–122–827]

Preliminary Affirmative Countervailing

Duty Determination: Steel Wire Rod

From Canada

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce

EFFECTIVE DATE: August 4, 1997.

FOR FURTHER INFORMATION CONTACT:

Robert Bolling or Rick Johnson, Office of

AD/CVD Enforcement, Office IX, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, Room 1874, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone:

(202) 482–1386, or 482–0165.

Preliminary Determination

The Department preliminarily

determines that countervailable

subsidies have been provided to SidbecDosco (Ispat) Inc. (see ‘‘Corporate

History’’) a producer and exporter of

steel wire rod from Canada. We have

also preliminarily determined that

Ivaco, Inc. (Ivaco) and Stelco, Inc.

(Stelco) received no countervailable

subsidies. For information on the

estimated countervailing duty rates, see

the Suspension of Liquidation section of

this notice.

Case History

Since the publication of the notice of

initiation in the Federal Register (62 FR

13866, March 24, 1997) the following

events have occurred:

On April 1, 1997, we issued a

questionnaire to the Government of

Canada (GOC), the Government of

Quebec (GOQ), Sidbec-Dosco (Ispat) Inc.

(Sidbec-Dosco (Ispat)), Stelco, Inc.

(Stelco) and Ivaco, Inc. (Ivaco). On May

2, 1997, we postponed the preliminary

determination in this investigation until

July 28, 1997 (62 FR 25172, May 8,

1997). On May 27, we received

responses from the GOC, GOQ, SidbecDosco (Ispat), Stelco, and Ivaco. On June

13, 1997, we issued a supplemental

questionnaire to respondents.

Additionally, on June 13, 1997, we

issued a questionnaire to the

Government of Ontario (GOO). We

received responses on July 2, 1997 from

respondents GOC, GOO, Sidbec-Dosco

(Ispat), Stelco, and Ivaco. On July 3,

1997, we received the GOQ’s response

to this questionnaire. On July 10, 1997,

we issued a second supplemental

questionnaire to the GOC, GOQ, GOO,

and Sidbec-Dosco (Ispat). We received

responses on July 17, 1997.

On June 6, 1997, petitioners alleged

that Sidbec, Inc., the government-owned

company which was the parent

company to Sidbec-Dosco, Inc., during

the period in which the alleged

subsidies were granted, received

subsidies from the GOC and the GOQ

which benefitted the subject

merchandise. Petitioners requested that

the Department include these new

subsidy allegations in its investigation

of steel wire rod from Canada.

On July 1, 1997, we initiated an

investigation on these additional

subsidy allegations and issued

questionnaires to Sidbec, Inc., the GOC

and GOQ on July 2, 1997. We received

responses to this questionnaire on July

16, 1997.

Scope of Investigation

The products covered by this

investigation are certain hot-rolled

carbon steel and alloy steel products, in

coils, of approximately round cross

section, between 5.00 mm (0.20 inch)

and 19.0 mm (0.75 inch),inclusive, in

solid cross-sectional diameter.

Specifically excluded are steel products

possessing the above noted physical

characteristics and meeting the

Harmonized Tariff Schedule of the

United States (HTSUS) definitions for

(a) stainless steel; (b) tool steel; (c) high

nickel steel; (d) ball bearing steel; (e)

free machining steel that contains by

weight 0.03 percent or more of lead,

0.05 percent or more of bismuth, 0.08

percent or more of sulfur, more than 0.4

percent of phosphorus, more than 0.05

percent of selenium, and/or more than

0.01 percent of tellurium; or (f) concrete

reinforcing bars and rods.
41934 Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices

The following products are also

excluded from the scope of this

investigation:

Coiled products 5.50 mm or less in

true diameter with an average partial

decarburization per coil of no more than

70 microns in depth, no inclusions

greater than 20 microns, containing by

weight the following: carbon greater

than or equal to 0.68 percent; aluminum

less than or equal to 0.005 percent;

phosphorous plus sulfur less than or

equal to 0.040 percent; maximum

combined copper, nickel and chromium

content of 0.13 percent; and nitrogen

less than or equal to 0.006 percent. This

product is commonly referred to as

‘‘Tire Cord Wire Rod.’’

Coiled products 7.9 to 18 mm in

diameter, with a partial decarburization

of 75 microns or less in depth and

seams no more than 75 microns in

depth; containing 0.48 to 0.73 percent

carbon by weight. This product is

commonly referred to as ‘‘Valve Spring

Quality Wire Rod.’’

The products under investigation are

currently classifiable under subheadings

7213.91.3000, 7213.91.4500,

7213.91.6000, 7213.99.0030,

7213.99.0090, 7227.20.0000, and

7227.90.6050 of the HTSUS. Although

the HTSUS subheadings are provided

for convenience and customs purposes,

our written description of the scope of

this investigation is dispositive.

The Applicable Statute

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 effective January 1,

1995, (the ‘‘Act’’).

Injury Test

Because Canada is a ‘‘Subsidies

Agreement Country’’ within the

meaning of section 701(b) of the Act, the

International Trade Commission (ITC) is

required to determine whether imports

of steel wire rod from Canada materially

injure, or threaten material injury to, a

U.S. industry. On April 30, 1997, the

ITC published its preliminary

determination finding that there is a

reasonable indication that an industry

in the United States is being materially

injured or threatened with material

injury by reason of imports from Canada

of the subject merchandise (62 FR

23485).

Petitioners

The petition in this investigation was

filed by Connecticut Steel Corp., CoSteel Raritan, GS Industries, Inc.,

Keystone Steel & Wire Co., North Star

Steel Texas, Inc., and Northwestern

Steel and Wire (the petitioners), six U.S.

producers of wire rod.

Corporate History

Sidbec, Inc. was established by the

GOQ in 1964. In 1968, Sidbec, Inc.

acquired Dominion Steel and Coal

Corporation Limited, a steel producer,

and later changed the name to SidbecDosco, Inc. The GOQ owned 100

percent of Sidbec, Inc.’s stock, and

Sidbec, Inc. owned 100 percent of

Sidbec-Dosco Inc.’s stock, until

privatization in 1994.

In 1976, Sidbec Inc., British Steel

Corporation, and Quebec Cartier Mining

Company entered into a joint venture to

mine and produce iron ore concentrates

and iron oxide pellets. The company

they formed was Sidbec-Normines Inc.

(Normines), of which Sidbec, Inc.

owned 50.1%. These mining activities

were shut down in 1984.

Sidbec-Dosco (Ispat) operates steel

making facilities in Contrecoeur,

Montreal and Longueuil, Quebec. Until

1987, all of the facilities at Longueuil

and a good portion of the facilities in

Contrecouer were owned by Sidbec, Inc.

and leased to Sidbec-Dosco, Inc. In

1987, Sidbec, Inc. reorganized in order

to consolidate all steel-related assets

under its wholly-owned subsidiary

Sidbec-Dosco, Inc. On August 17, 1994,

Sidbec-Dosco, Inc. was sold to Beheeren Beleggingsmaatschappij Brohenco

B.V. (Brohenco), which is whollyowned by Ispat-Mexicana, S.A. de C.V.

(Ispat Mexicana), thus becoming SidbecDosco (Ispat). Currently, Sidbec, Inc.

continues to be 100% owned by the

GOQ.

Because Sidbec, Inc.’s financial

statements were consolidated including

both its mining and steel manufacturing

activities, and because the alleged

subsidies under investigation were

granted through Sidbec, Inc., we are

treating Sidbec, Inc., Sidbec-Dosco, Inc.

and Sidbec-Normines as one entity for

the purposes of determining benefits to

the subject merchandise from alleged

subsidies. For purposes of this

investigation, we are collectively

referring to Sidbec, Inc., Sidbec-Dosco,

Inc., and Sidbec-Normines as ‘‘Sidbec’’.

Subsidies Valuation Information

Period of Investigation: The period for

which we are measuring subsidies (the

‘‘POI’’) is the calendar year 1996.

Allocation Period: In the past, the

Department has relied upon information

from the U.S. Internal Revenue Service

on the industry-specific average useful

life of assets, in determining the

allocation period for nonrecurring

subsidies. See General Issues Appendix

appended to Final Countervailing Duty

Determination; Certain Steel Products

from Austria (58 FR 37217, 37226; July

9, 1993). However, in British Steel plc.

v. United States, 879 F. Supp. 1254 (CIT

1995) (British Steel), the U.S. Court of

International Trade (the Court) ruled

against the allocation methodology. In

accordance with the Court’s remand

order, the Department calculated a

company-specific allocation period for

nonrecurring subsidies based on the

average useful life (AUL) of nonrenewable physical assets. This remand

determination was affirmed by the Court

on June 4, 1996. See British Steel, 929

F. Supp. 426, 439 (CIT 1996).

In this investigation, the Department

has followed the Court’s decision in

British Steel. Therefore, for the purposes

of this preliminary determination, the

Department has calculated a companyspecific AUL.

Based on information provided by

Sidbec, Inc. and Sidbec-Dosco (Ispat)

regarding Sidbec’s depreciable assets,

the Department has preliminarily

determined the appropriate allocation

period for Sidbec. We are unable to

provide the specific AUL for Sidbec due

to the proprietary nature of data from

Sidbec-Dosco (Ispat). Therefore, for the

calculation of Sidbec’s AUL, see,

Memorandum to The File: Calculation

of AUL Period, dated July 22, 1997,

which is in the public file (public

version) in the Central Records Unit,

Room B–099 of the Department of

Commerce.

Because we have preliminarily

determined that Ivaco and Stelco were

not the recipients of non-recurring

subsidies, we have not calculated an

AUL for either company.

Equityworthiness: In analyzing

whether a company is equityworthy, the

Department considers whether or not

that company could have attracted

investment capital from a reasonable,

private investor in the year of the

government equity infusion based on

information available at that time. In

this regard, the Department has

consistently stated that a key factor for

a company in attracting investment

capital is its ability to generate a

reasonable return on investment within

a reasonable period of time.

In making an equityworthiness

determination, the Department

examines the following factors, among

others:

1. Current and past indicators of a

firm’s financial condition calculated

from that firm’s financial statements and

accounts;

2. Future financial prospects of the

firm including market studies, economic

forecasts, and projects or loan

appraisals;
Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices 41935

3. Rates of return on equity in the

three years prior to the government

equity infusion;

4. Equity investment in the firm by

private investors; and

5. Prospects in the world for the

product under consideration.

For a more detailed discussion of the

Department’s equityworthiness

methodology, see General Issues

Appendix, (58 FR at 37239 and 37244).

Petitioners have alleged that Sidbec,

Inc. and Sidbec-Dosco, Inc. were

unequityworthy for the period 1982

through 1992. Therefore, petitioners

allege that any equity infusions received

during those years would not have been

provided by a reasonable private

investor and therefore conferred a

countervailable benefit within the

meaning of section 771(5)(E)(i) of the

Act. In this case, we initiated an

investigation of Sidbec-Dosco Inc.’s

equityworthiness for the years 1982

through 1988. See Memorandum from

The Team to Joseph A. Spetrini dated

March 18, 1997, Re: Initiation of

Countervailing Duty Investigation: Steel

Wire Rod from Canada (March Initiation

Memo), which is in the public file in the

Central Records Unit, Room B–099 of

the Department of Commerce.

Additionally, on July 1, 1997, we

initiated an investigation of Sidbec’s

equityworthiness for the period 1982

through 1992. See Memorandum from

The Team to Joseph A. Spetrini dated

July 1, 1997, Re: Initiation of

Countervailing Duty Investigation: Steel

Wire Rod from Canada (July Initiation

Memo), which is in the public file

(public version) in the Central Records

Unit, Room B–099 of the Department of

Commerce. Because we are treating

Sidbec, Inc., Sidbec-Dosco Inc., and

Sidbec-Normines as one entity for the

purpose of determining benefits to the

subject merchandise from alleged

subsidies, we have limited our analysis

of the equityworthiness of Sidbec to a

review of Sidbec, Inc.’s financial data.

See Final Affirmative Countervailing

Duty Determinations; Certain Steel

Products from France (58 FR 37304, July

9, 1993).

Throughout the period 1982 to 1985,

Sidbec, Inc. reported substantial losses.

Although Sidbec, Inc. reported a profit

from 1986 through 1990, the profits

were not of such a magnitude to offset

the substantial losses suffered from 1982

through 1985. Additionally, Sidbec, Inc.

again sustained substantial losses in

1991 and 1992. Return on equity was

either negative or not meaningful (due

to a negative equity balance) in every

year from 1984 through 1988, and in

1991, and 1992. Additionally, for the

years 1984 through 1988, 1991, and

1992 Sidbec, Inc. had a negative debtto-equity ratio, which indicated the

company’s liabilities exceed the

company’s assets. Furthermore, Sidbec,

Inc.’s debt-to-equity ratio in 1989 and

1990 was significantly high. Therefore,

as a result of our analysis, we

preliminarily determine Sidbec, Inc. to

be unequityworthy from 1982 to 1992.

Equity Methodology: In measuring the

benefit from a government equity

infusion to an unequityworthy

company, the Department compares the

price paid by the government for the

equity to a market benchmark, if such a

benchmark exists, i.e., the price of

publicly traded shares of the company’s

stock or an infusion by a private

investor at the time of the government’s

infusion (the latter may not always

constitute a proper benchmark based on

the specific circumstances in a

particular case).

Where a market benchmark does not

exist, the Department has determined in

this investigation to continue to follow

the methodology described in the

General Issues Appendix. Following

this methodology, equity infusions

made into an unequityworthy firm are

treated as grants. Using the grant

methodology for equity infusions into

an unequityworthy company is based on

the premise that an unequityworthiness

finding by the Department is

tantamount to saying that the company

could not have attracted investment

capital from a reasonable investor in the

infusion year based on the available

information.

Creditworthiness: When the

Department examines whether a

company is creditworthy, it is

essentially attempting to determine if

the company in question could obtain

commercial financing at commonly

available interest rates. If a company

receives comparable long-term financing

from commercial sources, that company

will normally be considered

creditworthy. In the absence of

comparable commercial borrowings, the

Department examines the following

factors, among others, to determine

whether or not a firm is creditworthy:

1. Current and past indicators of a

firm’s financial health calculated from

that firm’s financial statements and

accounts;

2. The firm’s recent past and present

ability to meet its costs and fixed

financial obligations with its cash flow;

and

3. Future financial prospects of the

firm including market studies, economic

forecasts, and projects or loan

appraisals.

For a more detailed discussion of the

Department’s creditworhiness criteria,

See, e.g., Final Affirmative

Countervailing Duty Determination:

Certain Steel Products from France, 58

FR 37304, (July 9, 1993) and Final

Affirmative Countervailing Duty

Determination: Certain Steel Products

from the United Kingdom, 58 FR 37393

(July 9, 1993).

Petitioners have alleged that Sidbec,

Inc. and Sidbec-Dosco, Inc. were

uncreditworthy from 1977 through

1993. In this case, we initiated an

investigation of Sidbec-Dosco, Inc.’s

creditworthiness for the years 1982 and

1984 through 1988. March Initiation

Memo. Additionally, on July 1, 1997, we

initiated an investigation of Sidbec’s

creditworthiness for the period 1984

through 1993. July Initiation Memo. We

have limited our analysis to Sidbec,

Inc.’’s creditworthiness and to the

period 1980–1992, because petitioners

did not allege that Sidbec, Inc. or

Sidbec-Dosco received any subsidies

beyond 1992. To determine the

creditworthiness of Sidbec, Inc. during

the period 1982 (the year of the first

alleged subsidy in the AUL period)

through 1992 (the year of the last

alleged subsidy in the AUL period), we

have evaluated certain liquidity and

debt ratios, i.e., quick, current, times

interest earned, and debt-to-equity, on a

consolidated basis. For the period 1982

through 1985, the company consistently

incurred substantial losses. Despite the

fact that Sidbec, Inc. reported a profit

from 1986 through 1990, the company

was still thinly capitalized and had a

high debt-to-equity ratio. Additionally,

the interest coverage ratio was negative

for the years 1991 and 1992 and the

liquidity ratios (i.e., quick and current

ratio) indicated that the company may

have had difficulty in meeting its shortterm obligations. Based on our analysis,

we preliminarily determine that Sidbec,

Inc. was uncreditworthy for the years

1982 through 1992.

Discount Rates: Respondents did not

provide company-specific information

relevant to the appropriate discount

rates to be used in calculating the

countervailable benefit for nonrecurring grants and equity infusions in

this investigation. For the preliminary

determination, we were unable to find

long-term corporate rates (i.e., loans or

bonds). Currently, we are still seeking

information on long-term rates, and, if

we find this information, we will

consider it in our final determination.

Accordingly, we have used the longterm government bond rate in Canada

published in the International Monetary

Fund (IMF) International Financial

Statistics Yearbook as the discount rate,

plus a risk premium (because we have

preliminarily determined Sidbec to be
41936 Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices

uncreditworthy), for each year in which

there was a non-recurring

countervailable subsidy.

Privatization Methodology: In the

General Issues Appendix, we applied a

new methodology with respect to the

treatment of subsidies received prior to

the sale of a company (privatization).

Under this methodology, we estimate

the portion of the purchase price

attributable to prior subsidies. We

compute this by first dividing the

privatized company’s subsidies by the

company’s net worth for each year

during a period beginning with the

earliest point at which non-recurring

subsidies would be attributable to the

POI (i.e., a period equal to the companyspecific allocation period) and ending

one year prior to the privatization. We

then take the simple average of the ratio

of allocable subsidies received by the

company in each year over the

company’s net worth in that year. The

simple average of the ratios of subsidies

to net worth serves as a reasonable

surrogate for the percent that subsidies

constitute of the overall value (i.e., net

worth of the company). Next, we

multiply the average ratio by the

purchase price to derive the portion of

the purchase price attributable to

repayment of prior subsidies. Finally,

we reduce the benefit streams of the

prior subsidies by the ratio of the

repayment amount to the net present

value of all remaining benefits at the

time of privatization.

In the current investigation, we are

analyzing the privatization of SidbecDosco in the year 1994.

Based upon our analysis of the

petition and the responses to our

questionnaires, we determine the

following:

I. Programs Preliminarily Determined

To Be Countervailable

A. 1988 Debt-to-Equity Conversion

Petitioners allege that Sidbec-Dosco,

Inc. received a debt-to-equity

conversion from either the GOC or the

GOQ in 1988 based on Sidbec-Dosco,

Inc.’s 1988 Annual Report. In its

supplemental response, Sidbec-Dosco

(Ispat) stated that a portion of Sidbec

Inc.’s debt was converted into Sidbec,

Inc. capital stock in 1988. Sidbec-Dosco

(Ispat) stated that the debt consisted of

four loans provided to Sidbec, Inc. by

the GOQ during the period 1982–1985,

plus accrued interest. Sidbec-Dosco

(Ispat) explained that every two years

the GOQ had extended the maturity date

for these loans for another two years.

According to the GOQ, it converted four

of Sidbec, Inc.’s debt instruments into

equity in Sidbec Inc. in 1988 in order to

improve Sidbec-Dosco Inc.’s economic

profile, for the purpose of making it

more attractive for privatization,

partnership, or investment. In the GOQ

Act which authorized this debt

conversion, Sidbec, Inc. was authorized

to acquire an equivalent amount in

shares of Sidbec-Dosco, Inc.

We have concluded that, consistent

with our equity methodology, benefits

to Sidbec, Inc. occurred at the point

when the debt instruments (i.e., loans)

were converted to capital stock. As

discussed above, we have preliminarily

determined that Sidbec, Inc. was

unequityworthy from 1982 through

1992. As a result, we consider the

conversion of debt to capital stock in

1988 to constitute an equity infusion

inconsistent with the usual investment

practice of private investors.

When receipt of benefits under a

program is not contingent upon

exportation, the Department must

determine whether the program is

specific to an enterprise or industry, or

group of enterprises or industries.

Under the specificity analysis, the

Department examines both whether a

government program is limited by law

to a specific enterprise or industry, or

group thereof (i.e., de jure specificity),

and whether the government program is

in fact limited to a specific enterprise or

industry, or group thereof (i.e., de facto

specificity), See Section 771(5A)(D) of

the Act. We preliminarily determine the

1988 debt-to-equity conversion to be

specific, because it was provided to a

specific enterprise or industry, Sidbec,

Inc.

For these reasons, we preliminarily

determine that the 1988 debt-to-equity

conversion constitutes a countervailable

subsidy within the meaning of section

771(5) of the Act.

Consistent with the equity

methodology, we followed our standard

declining balance grant methodology for

allocating the benefits from the equity

infusion stemming from the debt-toequity conversion. We then reduced the

benefit stream by applying the

privatization calculation described in

the Privatization section of the General

Issue Appendix, 58 FR at 37262–3. We

divided the benefit by Sidbec-Dosco

(Ispat) total sales. On this basis, we

calculated an estimated net subsidy for

this program of 3.31 percent ad valorem

for Sidbec-Dosco (Ispat).

B. 1984–1992 Equity Infusions

According to information provided in

Sidbec-Dosco (Ispat)’s response, the

GOQ provided an infusion of capital to

Sidbec Inc. in each year from 1984 to

1992. Additionally, the GOQ stated that

it assumed the responsibility for certain

financial charges of Sidbec-Normines,

which had been shut down in 1984, and

paid those charges through

contributions to Sidbec, Inc. as they

came due. Since we have preliminarily

determined that Sidbec Inc. was

unequityworthy from 1982 through

1992, we consider that these equity

infusions were inconsistent with the

usual investment practice of private

investors and constituted specific

financial contributions in which a

benefit was conferred.

Furthermore, the Department has

stated in the past that ‘‘subsidies do not

diminish or disappear upon the closure

of certain facilities but rather are spread

throughout, and benefit, the remainder

of the company’s operations.’’ General

Issues Appendix, 58 FR at 37269.

Therefore, given that these equity

infusions relate to Sidbec Inc.’s closed

mining operations, we preliminarily

determine that these equity infusions

benefit the subject merchandise.

We analyzed whether the receipt of

these equity infusions were specific ‘‘in

law or fact’’ within the meaning of

section 771(5A) of the Act. We

preliminarily determine these equity

infusions to be specific, because they

were provided to a specific enterprise or

industry, Sidbec, Inc.

For these reasons, we preliminarily

determine that the equity infusions

received by Sidbec from 1984 to 1992

constitutes countervailable subsidies

within the meaning of section 771(5) of

the Act.

Consistent with the equity

methodology, we followed our standard

declining balance grant methodology for

allocating the benefits from these equity

infusions. We then reduced the benefit

stream by applying the privatization

calculation described in the

Privatization section of the General

Issues Appendix, 58 FR at 37262–3. We

divided the total benefit by SidbecDosco (Ispat) total sales. On this basis,

we calculated an estimated net subsidy

for this program of 5.25 percent ad

valorem for Sidbec-Dosco (Ispat).

C. 1983–1992 Grants

Based on information provided in

Sidbec-Dosco (Ispat)’s responses, Sidbec

Inc. received a grant in each year from

1983 to 1992 from the GOQ to

compensate for the interest expenses

incurred by Sidbec, Inc. to finance the

discontinued operations of its mining

activities. The receipt of these grants

occurred as follows: (1) Sidbec, Inc.

paid its share of the interest and

principal, as it came due, on loans that

were taken out to finance SidbecNormines; (2) Sidbec, Inc. then issued

statements to the GOQ for these
Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices 41937

amounts relating to the discontinued

mining operations; and (3) the GOQ,

after obtaining the necessary budgetary

authority, issued checks to Sidbec, Inc.

to cover these expenses. According to

the GOQ, to process a request for these

funds, approval was needed from four

agencies (i.e., the Quebec Ministry of

Industry and Commerce, the Treasury

Board, the National Assembly and the

Executive Counsel). Once the approval

process was completed, the GOQ issued

a decree providing funding to Sidbec,

Inc. (or its subsidiaries). See July 3, 1997

GOQ response, Exhibit H.

As these grants related to Sidbec Inc.’s

closed mining operations, we

preliminarily determine that they

benefitted Sidbec Inc.’s remaining

operations, which include the subject

merchandise. See General Issues

Appendix, 58 FR at 37269.

We analyzed whether the receipt of

these grants was specific ‘‘in law or

fact,’’ within the meaning of section

771(5A) of the Act. These grants were

not received as part of any wider

government program. Instead, they were

provided by the GOQ for the sole

purpose of paying debt incurred by

Sidbec-Normines, Sidbec, Inc.’s

unsuccessful mining operation.

Therefore, we preliminarily determine

these grants to be specific under section

771(5A)(D) of the Act.

For these reasons, we preliminarily

determine that the grants Sidbec, Inc.

received constitute countervailable

subsidies within the meaning of section

771(5) of the Act.

The GOQ has claimed these benefits

were recurring in nature, in that they

were granted automatically based on

Quebec’s having previously assumed

responsibility for the finance charges

pertaining to the discontinued mining

operations. However, for each year’s

grant to cover the finance charges, the

GOQ had to seek budgetary authority

prior to issuing Sidbec’s grant.

Therefore, government approval was

necessary prior to receipt of each

individual subsidy. Moreover, the

benefits from the program were clearly

exceptional, and once the financial

charges were paid off, the program did

not continue into the future. The

Department has stated that ‘‘the element

of ‘‘government approval’’ relates to the

issue of whether the program provides

benefits automatically, essentially as an

entitlement, or whether it requires a

formal application and/or specific

government approval prior to the

provision of each yearly benefit. The

approval of benefits under the latter

type of program cannot be assumed and

is not automatic.’’ General Issues

Appendix, 58 FR at 37226. Therefore,

we preliminarily determine these grants

to be non-recurring benefits and have

allocated them over Sidbec’s AUL.

To calculate the countervailable

subsidy, we followed our standard

declining balance grant methodology, as

discussed above. We reduced the benefit

stream by applying the privatization

calculation described in the

Privatization section of the General

Issues Appendix, 58 FR at 37262–3. We

divided the benefit attributable to the

POI by Sidbec-Dosco (Ispat) sales during

the same period. On this basis, we

determine the countervailable subsidy

for this program to be 0.99 percent ad

valorem for Sidbec-Dosco (Ispat).

II. Programs Preliminarily Determined

To Be Not Countervailable

A. Canadian Steel Trade Employment

Congress Skill Training Program

The GOC, through the Human

Resources Development Canada (HRDC)

and provincial regional governments

provide financial support to privatesector-led human resource projects

through the Sectoral Partnerships

Initiative (SPI). SPI has been active in

over eighty Canadian industrial sectors,

including steel through the Canada Steel

Trade and Employment Congress

(CSTEC). CSTEC’s activities are divided

into two types of assistance: 1) worker

adjustment assistance, for unemployed

steel workers; and 2) skills training

assistance, for currently employed

workers.

With regard to the worker adjustment

assistance, funds flowing from HRDC do

not go to the companies, but rather to

unemployed workers in the form of

assistance for retraining costs or income

support.

With regard to training, the GOC

maintains that CSTEC provides funds

only for what it describes as ‘‘additional

training.’’ Additional training is training

that is over-and-above ‘‘established

training’; essentially, it is training the

company would provide even without

CSTEC funding. The amount of

‘‘additional training’’ required

determines the amount of CSTEC

funding from the government. The GOC

matches 50 percent of the amount of

‘‘additional training’’ in the annual

training plans and budgets up to the

maximum allowable contribution.

However, other information in the

GOC’s questionnaire response suggests

that the GOC funding supports both

‘‘established training’’ and ‘‘additional

training’’; the cost of the ‘‘additional

training’’ is merely an element in the

formula which determines the GOC’s

funding level. In addition, regardless of

whether the company would have

provided the training at issue without

CSTEC funding, it remains clear that

this program provides for the training of

currently employed steel workers and

therefore benefits the steel industry.

According to the GOC and CSTEC

documents on the record, CSTEC rules

prohibit the use of CSTEC funds for

assistance that the companies are

required to provide by law or under a

collective bargaining agreement, or

would have provided in the absence of

CSTEC funding. Based on the record

information, we preliminarily determine

that funds received by Sidbec-Dosco

(Ispat), Stelco and Ivaco from CSTEC for

worker adjustment and training

purposes did not provide

countervailable benefits during the POI,

as record evidence shows these

companies were not relieved of any

obligations.

B. 1987 Grant to Sidbec-Dosco, Inc.

Petitioners alleged that in 1987,

Sidbec-Dosco, Inc. received a grant from

the GOQ. In its questionnaire response,

Sidbec-Dosco (Ispat) stated that the

GOQ did not provide a contribution in

1987. Additionally, the GOQ stated in

its questionnaire response that it did not

provide a grant July 24, 1997 to SidbecDosco, Inc. in 1987.

Sidbec-Dosco (Ispat) described the

circumstances concerning the 1987

debt-to-equity conversion in its business

proprietary response of July 2, 1997.

Based on the information provided

therein, (see, the Department’s

Memorandum to The File: Programs

that the Department of Commerce has

Determined to be Non-Countervailable,

dated July 28, 1997 which is in the

public file (public version) in the

Central Records Unit, Room B–099 of

the Department of Commerce), we

preliminarily determine that no

countervailable benefits were conferred

through this program.

C. 1987 Debt-to-Equity Conversion

Petitioners alleged that, in 1987,

Sidbec-Dosco, Inc. received an equity

infusion from either the GOC or GOQ.

Specifically, petitioners stated that

Sidbec, Inc. (which was wholly-owned

by the GOQ) converted loans to SidbecDosco, Inc. into Sidbec-Dosco, Inc.

shares. Both the GOC and the GOQ

stated in their respective responses that

they did not provide a debt-to-equity

conversion for Sidbec-Dosco, Inc. or

Sidbec, Inc. in 1987.

Sidbec-Dosco (Ispat) described the

circumstances concerning the 1987

debt-to-equity conversion in its business

proprietary response of July 2, 1997.

Based on the information provided

therein, (see, the Department’s
41938 Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices

Memorandum to The File: Programs

that the Department of Commerce has

Determined to be Non-Countervailable,

dated July 28, 1997 which is in the

public file (public version) in the

Central Records Unit, Room B–099 of

the Department of Commerce), we

preliminarily determine that no

countervailable benefits were conferred

through this program.

III. Programs Preliminarily Determined

To Be Not Used

A. Industrial Development of Quebec

The Industrial Development of

Quebec (IDQ) is a law administered by

the Societe de Developpement

Industriel du Quebec (SDI), a Quebec

agency that funds a wide range of

industrial development projects in

many industrial sectors. Under Article

2(a) of the IDQ, SDI provided funding to

help companies utilize modern

technologies in order to ‘‘increase

efficiency and exploit the natural

resources of Quebec.’’ See GOQ July 3,

1997 response at page 12. Specifically,

grants are in the form of interest rebates

to finance the project. SDI would review

a company’s application to determine

whether the project met the purpose of

Article 2(a) and whether the company

had the financial and technical ability to

carry out the project. The GOQ reported

that the IDQ was available to any

manufacturing company in Quebec. The

criteria for selection were: (1) the rate of

growth in the product market that the

proposed project would serve; (2) the

productivity of the firm applying for the

grant; and (3) the potential for the

project to serve markets outside of

Quebec. However, in 1982, GOQ

rescinded Article 2(a) authorizing SDI to

provide these grants.

Ivaco received funding in 1984 and

1985 which had been authorized under

Article 2(a) prior to the program’s

rescission in 1982. With respect to the

grants received by Ivaco under this

program, we analyzed the total amount

of funding Ivaco received in each year,

and we have determined that the

benefits Ivaco recovered under this

program for each year constituted a de

minimis portion (i.e., less than 0.5

percent) of total sales value, and

therefore should be expensed in each

year they were received. Accordingly,

we preliminarily determine that this

program has not conferred a

countervailable subsidy to Ivaco during

the POI.

B. Contributed Surplus

On July 1, 1997, we initiated an

investigation on petitioners’ allegation

that C$ 51.7 million in contributed

surplus constituted a countervailable

subsidy. On July 16, 1997, we received

Sidbec-Dosco (Ispat)’s response to our

questionnaire. Sidbec-Dosco (Ispat)

stated that this contributed surplus was

related to a capital expenditure program

for fixed assets, and all of the assistance

was received prior to 1980.

Additionally, the GOQ stated in its

response that Sidbec, Inc. received these

funds from the GOQ and the GOC prior

to Sidbec, Inc.’s AUL period. The GOC

stated in its response that its database

does not contain any record of financial

assistance provided to Sidbec, Inc. in

1982 or 1983.

Therefore, based on record

information about this alleged subsidy,

we preliminarily determine that these

funds did not provide countervailable

benefits during the POI.

C. Payments Against Accumulated

Grants Receivable

On July 1, 1997, we initiated an

investigation on petitioners’ allegation

that C$ 43.8 million in Payments against

accumulated grants receivable

constituted a countervailable subsidy.

On July 16, 1997, we received SidbecDosco (Ispat)’s response to our

questionnaire. Sidbec-Dosco (Ispat)

stated that these grants receivable are

included in the amount of grants that

went to the discontinued mining

operations of Sidbec-Normines.

Therefore, based on record

information about these grants

receivable, we preliminarily determine

that these funds did not provide

countervailable benefits during the POI.

IV. Programs for Which Additional

Information Is Required

A. 1982 Assistance to Sidbec-Dosco, Inc.

Petitioners alleged that in 1982,

Sidbec-Dosco, Inc. received an infusion

of emergency funds, either in the form

of a grant or an equity infusion, from the

GOQ. In its questionnaire and

supplemental questionnaire responses,

Sidbec-Dosco (Ispat) stated that neither

Sidbec-Dosco, Inc. nor Sidbec, Inc.

received funds in the form of equity

infusions from either the GOC or the

GOQ during 1982. Likewise, both the

GOC and the GOQ stated in their

respective responses that they did not

provide any infusions in the form of

equity to either Sidbec-Dosco, Inc. or

Sidbec, Inc. in 1982. However, during

our review of the questionnaire

responses, the GOC, GOQ, Sidbec, Inc.

and Sidbec-Dosco (Ispat) did not

provide an affirmative statement stating

the neither the GOC or GOQ provided

grants to either Sidbec, Inc. or SidbecDosco, Inc. in 1982. Therefore, we are

still seeking information on this alleged

program and the countervailability of

this program will be addressed in our

final determination.

Verification

In accordance with section 782(i) of

the Act, we will verify the information

submitted by respondents prior to

making our final determination.

Suspension of Liquidation

In accordance with section

703(d)(1)(A)(i) of the Act, we have

calculated individual rates for each of

the companies under investigation. As

noted above, Ivaco and Stelco reported

that they both received funds under the

CSTEC program. However, we have

preliminarily determined that the

CSTEC program is not countervailable.

Additionally, we have determined that

the IDQ program did not constitutes a

countervailable subsidy, because the

benefit would be de minimis.

To calculate the all others rate, we

weight-averaged the individual

company rates by each company’s

exports of the subject merchandise to

the United States. However, because

Stelco and Ivaco’s rates are zero, we are

using Sidbec-Dosco (Ispat)’s rate as the

All Others rate.

In accordance with section 703(d) of

the Act, we are directing the U.S.

Customs Service to suspend liquidation

of all entries of steel wire rod from

Canada, except those of Ivaco and

Stelco, 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 to

require a cash deposit or bond for such

entries of the merchandise in the

amounts indicated below. Because the

estimated net subsidy for Ivaco and

Stelco is de minimis they are exempt

from the suspension of liquidation. This

suspension will remain in effect until

further notice.

Manufacturers/exporters

Ad valorem rate

(percent)

Sidbec-Dosco (Ispat) ...................... 9.55

Ivaco, Inc. ....................................... 0

Stelco, Inc. ...................................... 0

All Others ........................................ 9.55

ITC Notification

In accordance with section 703(f) of

the Act, we will notify the ITC of our

determination. In addition, we are

making available to the ITC all nonprivileged and nonproprietary

information relating to this

investigation. We will allow the ITC
Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices 41939

access to all privileged and business

proprietary information in our files,

provided 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 our final determination is

affirmative, the ITC will make its final

determination within 45 days after the

Department makes its final

determination.

Public Comment

In accordance with 19 CFR 355.38, we

will hold a public hearing, if requested,

to afford interested parties an

opportunity to comment on this

preliminary determination. The hearing

will be held on September 22, 1997, at

the U.S. Department of Commerce,

Room 3708, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20230. Individuals

who wish to request a hearing must

submit a written request within 30 days

of the publication of this notice in the

Federal Register to the Assistant

Secretary for Import Administration,

U.S. Department of Commerce, Room

1874, 14th Street and Constitution

Avenue, N.W., Washington, DC 20230.

Parties should confirm by telephone the

time, date, and place of the hearing 48

hours before the scheduled time.

Requests for a public hearing should

contain: (1) The party’s name, address,

and telephone number; (2) the number

of participants; (3) the reason for

attending; and (4) a list of the issues to

be discussed. In addition, eight copies

of the business proprietary version and

three copies of the nonproprietary

version of the case briefs must be

submitted to the Assistant Secretary no

later than September 8, 1997. Eight

copies of the business proprietary

version and three copies of the

nonproprietary version of the rebuttal

briefs must be submitted to the

Assistant Secretary no later than

September 15, 1997. An interested party

may make an affirmative presentation

only on arguments included in that

party’s case or rebuttal briefs. Written

arguments should be submitted in

accordance with 19 CFR 355.38 and will

be considered if received within the

time limits specified above. 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. If this

investigation proceeds normally, we

will make our final determination by

October 14, 1997.

This determination is published

pursuant to sections 703(f) and 777(i) of

the Act.

Date: July 28, 1997.

Jeffrey P. Bialos,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–20490 Filed 8–1–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[C–307–814]

Preliminary Affirmative Countervailing

Duty Determination: Steel Wire Rod

From Venezuela

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: August 4, 1997.

FOR FURTHER INFORMATION CONTACT:

Christopher Cassel, Robert Copyak, or

Richard Herring, Office of CVD/AD

Enforcement VI, Import Administration,

U.S. Department of Commerce, Room

1874, 14th Street and Constitution

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

telephone (202) 482–2786.

Preliminary Determination

The Department preliminarily

determines that countervailable

subsidies are being provided to CVGSiderurgica del Orinoco (SIDOR), a

producer and exporter of steel wire rod

from Venezuela. For information on the

estimated countervailing duty rates,

please see the Suspension of

Liquidation section of this notice.

Case History

Since the publication of the notice of

initiation in the Federal Register (62 FR

13866, March 24, 1997), the following

events have occurred. On April 2, 1997,

we issued our initial countervailing

duty questionnaires concerning

petitioners’ allegations to the

Government of Venezuela (GOV) and

SIDOR. On May 2, 1997, we postponed

the preliminary determination of this

investigation until July 28, 1997 (62 FR

25172, May 8, 1997). We received

responses to our initial questionnaires

from the GOV and SIDOR on May 28,

1997. On June 18, 1997, we issued

supplemental questionnaires to the

parties. Responses to these

supplemental questionnaires were

submitted on July 3, 1997, from SIDOR

and on July 9, 1997, from the GOV.

Additional information was also

requested from SIDOR and the GOV on

July 15, 1997. On July 21, 1997, SIDOR

and the GOV submitted their response

to our July 15, 1997, request for

additional information. On July 25,

1997, we issued another supplemental

questionnaire to SIDOR and the GOV.

On June 17, 1997, we initiated an

examination of whether electricity was

provided to SIDOR for less than

adequate remuneration during the

period of investigation. See

Memorandum from The Team to Jeffrey

P. Bialos, dated June 17, 1997, Re:

Countervailing Duty Investigation of

Steel Wire Rod from Venezuela:

Initiation of New Subsidy Allegation,

which is in the public file of the Central

Records Unit, Room B–099 of the

Department of Commerce. Because of

the late date of this initiation, we are

still seeking additional information on

whether this program conferred a

countervailable subsidy on the

production/exportation of the subject

merchandise. Therefore, the

countervailability of this program will

be addressed in our final determination.

In addition, during our review of the

questionnaire responses, we discovered

that SIDOR may be receiving

countervailable subsidies under the

GOV’s Exporter Policy program (REFE).

However, additional information is still

being sought on this program.

Accordingly, the countervailability of

the REFE will be addressed in our final

determination.

Scope of Investigation

The products covered by this

investigation are certain hot-rolled

carbon steel and alloy steel products, in

coils, of approximately round cross

section, between 5.00 mm (0.20 inch)

and 19.0 mm (0.75 inch), inclusive, in

solid cross-sectional diameter.

Specifically excluded are steel products

possessing the above noted physical

characteristics and meeting the

Harmonized Tariff Schedule of the

United States (HTSUS) definitions for

(a) stainless steel; (b) tool steel; (c) high

nickel steel; (d) ball bearing steel; (e)

free machining steel that contains by

weight 0.03 percent or more of lead,

0.05 percent or more of bismuth, 0.08

percent or more of sulfur, more than 0.4

percent of phosphorus, more than 0.05

percent of selenium, and/or more than

0.01 percent of tellurium; or f) concrete

reinforcing bars and rods.

The following products are also

excluded from the scope of this

investigation:

Coiled products 5.50 mm or less in

true diameter with an average partial

decarburization per coil of no more than

70 microns in depth, no inclusions

greater than 20 microns, containing by

weight the following: carbon greater