[Federal Register Volume 62, Number 165 (Tuesday, August 26, 1997)]
[Notices]
[Pages 45229-45232]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-22687]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-475-821]


Notice of Initiation of Countervailing Duty Investigation: 
Certain Stainless Steel Wire Rod (``SSWR'') from Italy

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

EFFECTIVE DATE: August 26, 1997.

FOR FURTHER INFORMATION CONTACT: Kathleen Lockard or Kelly Parkhill, 
Office of CVD/AD Enforcement VI, International Trade Administration, 
U.S. Department of Commerce, Room 3099, 14th Street and Constitution 
Avenue, NW, Washington, DC 20230; telephone (202) 482-2786.

Initiation of Investigation

The 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 
amended by the regulations published in the Federal Register on May 19, 
1997 (62 FR 27295).

The Petition

    On July 30, 1997, the Department of Commerce (the Department) 
received a petition filed in proper form by AL Tech Speciality Steel 
Corp., Carpenter Technology Corp., Republic Engineered Steels, Talley 
Metals Technology, Inc., and United Steelworkers of America, AFL-CIO/
CLC (the petitioners). Supplements to the petition were filed on August 
6, 13, 14, and 15, 1997.
    In accordance with section 701(a) of the Act, the petitioners 
allege that producers and/or exporters of SSWR in Italy receive 
countervailable subsidies. The petitioners state that they have 
standing to file the petition because they are interested parties, as 
defined under section 771(9)(C) of the Act.

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (1) At least 
25 percent of the total production of the domestic like product; and 
(2) more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who account for production 
of the domestic like product. The International Trade Commission 
(``ITC''), which is responsible for determining whether ``the domestic 
industry'' has been injured, must also determine what constitutes a 
domestic like product in order to define the industry. While both the 
Department and the ITC must apply the same statutory provision 
regarding the domestic like product (section 771(10) of the Act), they 
do so for different purposes and pursuant to separate and distinct 
authority. In addition, the Department's determination is subject to 
limitations of time and information. Although this may result in 
different definitions of the domestic like product, such differences do 
not render the decision of either agency contrary to the 
law.<SUP>1</SUP>
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    \1\ See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp. 
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays 
and Display Glass Therefor from Japan: Final Determination; 
Rescission of Investigation and Partial Dismissal of Petition, 56 FR 
32376, 32380-81 (July 16, 1991).
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    Section 771(10) of the Act defines domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition.
    The petition refers to the single domestic like product defined in 
the ``Scope of Investigation'' section, below. The Department has no 
basis on the record to find the petition's definition of the domestic 
like product to be inaccurate. In this regard, we have found no basis 
on which to reject petitioners' representations that there are clear 
dividing lines, in terms of

[[Page 45230]]

characteristics and uses, between the product under investigation and 
other coiled steel products. The Department has, therefore, adopted the 
domestic like product definition set forth in the petition. In this 
case, petitioners established industry support substantially above the 
statutory requirement. Accordingly, the Department determines that the 
petition is filed on behalf of the domestic industry within the meaning 
of section 702(b)(1) of the Act.

Scope of Investigation

    For purposes of this investigation, certain SSWR comprises products 
that are hot-rolled or hot-rolled annealed and/or pickled and/or 
descaled rounds, squares, octagons, hexagons or other shapes, in coils, 
that may also be coated with a lubricant containing copper, lime or 
oxalate. SSWR is made of alloy steels containing, by weight, 1.2 
percent or less of carbon and 10.5 percent or more of chromium, with or 
without other elements. These products are manufactured only by hot-
rolling or hot-rolling, annealing, and/or pickling and/or descaling, 
and are normally sold in coiled form, and are of solid cross-section. 
The majority of SSWR sold in the United States is round in cross-
sectional shape, annealed and pickled, and later cold-finished into 
stainless steel wire or small-diameter bar.
    The most common size for such products is 5.5 millimeters or 0.217 
inches in diameter, which represents the smallest size that normally is 
produced on a rolling mill and is the size that most wire drawing 
machines are set up to draw. The range of SSWR sizes normally sold in 
the United States is between 0.20 inches and 1.312 inches in diameter. 
Two stainless steel grades SF20T and K-M35FL are excluded from the 
scope of the investigation. The chemical makeup for the excluded grades 
are as follows:

                                                                                                                
----------------------------------------------------------------------------------------------------------------
                                                                                                                
----------------------------------------------------------------------------------------------------------------
                                                      SF20T                                                     
----------------------------------------------------------------------------------------------------------------
Carbon...............................  0.05 max...............  Chromium...............  19.00/21.00            
Manganese............................  2.00 max...............  Molybdenum.............  1.50/2.50              
Phosphorous..........................  0.05 max...............  Lead...................  Added (0.10/0.30)      
Sulfur...............................  0.15 max...............  Tellurium..............  Added (0.03 min)       
Silicon..............................  1.00 max...............                                                  
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                                                     K-M35FL                                                    
----------------------------------------------------------------------------------------------------------------
Carbon...............................  0.015 max..............  Nickel.................  0.30 max               
Silicon..............................  0.70/1.00..............  Chromium...............  12.50/14.00            
Manganese............................  0.40 max...............  Lead...................  0.10/0.30              
Phosphorous..........................  0.04 max...............  Aluminum...............  0.20/0.35              
Sulfur...............................  0.03 max...............                                                  
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    The products under investigation are currently classifiable under 
subheadings 7221.00.0005, 7221.00.0015, 7221.00.0030, 7221.00.0045, and 
7221.00.0075 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheadings are provided for convenience 
and customs purposes, the written description of the scope of this 
investigation is dispositive.
    As we discussed in the preamble to the new regulations (62 FR at 
27323), we are setting aside a period for interested parties to raise 
issues regarding product coverage. The Department encourages all 
interested parties to submit such comments by September 15, 1997. 
Comments should be addressed to Import Administration's Central Records 
Unit at Room 1874, U.S. Department of Commerce, Pennsylvania Avenue and 
14th Street, NW., Washington, DC 20230. This period of scope 
consultation is intended to provide the Department with ample 
opportunity to consider all comments and consult with parties prior to 
the issuance of the preliminary determination.

Consultations

    On August 13, 1997, pursuant to Section 702(b)(4)(A)(ii) of the 
Act, the Department held consultations with representatives of the 
European Commission (``EC'') and the Government of Italy (``GOI'') with 
respect to the petition.

Injury Test

    Because Italy is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, the U.S. International Trade 
Commission (``ITC'') must determine whether imports of the subject 
merchandise from Italy materially injure, or threaten material injury 
to, a U.S. industry.

Allegation of Subsidies

    Section 702(b) of the Act requires the Department to initiate a 
countervailing duty proceeding whenever an interested party files a 
petition, on behalf of an industry, that (1) alleges the elements 
necessary for an imposition of a duty under section 701(a), and (2) is 
accompanied by information reasonably available to petitioners 
supporting the allegations.

Initiation of Countervailing Duty Investigation

    The Department has examined the petition on SSWR from Italy and 
found that it complies with the requirements of section 702(b) of the 
Act. Therefore, in accordance with section 702(b) of the Act, we are 
initiating a countervailing duty investigation to determine whether 
producers and/or exporters of SSWR from Italy receive subsidies.

Company Histories

    Petitioners have made specific subsidy allegations with respect to 
three Italian SSWR producers: Cogne Acciai Speciali CAS S.r.l. 
(``Cogne''), Acciaierie di Bolzano S.p.A. (``Bolzano'') and Acciaierie 
Valbruna S.r.l. (``Valbruna'').
    Cogne was a subsidiary of the ILVA Group (or its precursors) until 
1993, at which time it was privatized and sold to the Marzorati Group. 
ILVA and its precursors were subsidiaries of the Istituto per la 
Ricostruzione Industriale (``IRI''), which, in turn, was owned by the 
GOI. In a stock swap approved in 1991, 22.4 percent of Cogne was 
transferred to Falck, the privately-owned parent company of Bolzano, in 
return for shares accounting for 44.8 percent of Bolzano. In 1993, ILVA 
reacquired Falck's shares of Cogne and returned the Bolzano shares to 
Falck.
    Bolzano was 100 percent owned and controlled by Falck between 1982-
1991 and 1993-1995. In a stock swap approved in 1991, 44.8 percent of 
Bolzano was acquired by ILVA, and Falck's share of the company dropped 
to 55.2 percent. As discussed above, Falck

[[Page 45231]]

reacquired these shares in 1993 when it returned the shares of Cogne to 
ILVA. In 1995, Bolzano was sold to Valbruna.
    Valbruna is owned and controlled by the Gruppo Amenduni. Valbruna 
now owns and controls 100 percent of Bolzano.

Equityworthiness

    In the July 30, 1997 petition, petitioners alleged that ILVA was 
unequityworthy from 1982 through 1994; Cogne was unequityworthy from 
1982 through 1996; Bolzano was unequityworthy from 1990 through 1996; 
and Falck was unequityworthy from 1992 through 1994. However, on August 
13, 1997, petitioners clarified that they are not alleging any 
previously uninvestigated equity infusions other than the equity 
infusion provided to ILVA in 1992 and approved by the EC in 1993. As 
petitioners only allege corresponding equity infusions for ILVA in 
1982, 1984 through 1988, and 1991 through 1993, we will not examine 
ILVA's equityworthiness in 1983 and 1989 through 1990.

Creditworthiness

    Petitioners allege ILVA was uncreditworthy from 1982 through 1994; 
Cogne was uncreditworthy from 1982 through 1996; Bolzano was 
uncreditworthy from 1990 through 1996; and Falck was uncreditworthy 
from 1992 through 1994. We will investigate ILVA's creditworthiness 
from 1982 through 1994, Cogne's creditworthiness from 1994 through 
1996, Bolzano's creditworthiness from 1995 through 1996 and Falck's 
creditworthiness from 1992 through 1994 to the extent government equity 
infusions, loans or loan guarantees were provided in those years.

Programs

    We are including in our investigation the following programs 
alleged in the petition to have provided subsidies to producers and 
exporters of the subject merchandise in Italy:
Government of Italy Programs
1. Debt Forgiveness: Finsider-to-ILVA Restructuring (predecessor 
companies)
2. Equity Infusions to ILVA and Precursor Companies
3. Debt Forgiveness: 1981 Restructuring Plan
4. 1992 Equity Infusions to ILVA (Approved by the EC in 1993)
5. ILVA Pre-Privatization Assistance and Debt Forgiveness
6. R&D Grants
7. Law 481/94 and Precursors
8. Decree Law 120/89
9. Deliberazione: Law 46 Grants for Technological Innovation
10. Law 675
    a. Interest Grants on Bank Loans
    b. Mortgage Loans
    c. Interest Contributions on IRI Loans
    d. Personnel Retraining Aid
11. Law 193/84 Programs
12. Grants and Loans for Reduction of Production Capacity: Laws 46 and 
706
13. Law 796/76 Exchange Rate Guarantees
14. Law 227/77 Export Loans and Remission of Taxes
15. Law 394/81 Export Marketing Grants and Loans
16. Law 451/94 Early Retirement Assistance
17. Subsidies for Operating Expenses and ``Easy Term'' Funds
Regional Programs of the Government of Italy
1. Law 488/92 and Legislative Decree 96/93
2. Law 341/95 and Circolare 50175/95
Programs of Regional Governments
1. Valle d'Aosta Regional Assistance Associated With the Sale of Cogne 
Including Laws 1/96 and 28/96
2. Valle d'Aosta Regional Law 16/88 Modifying Law 33/73
3. Valle d'Aosta Regional Law 64/92
4. Valle d'Aosta Regional Law 12/87
5. Valle d'Aosta Regional Law 3/92
6. Bolzano/Trentino Alto-Adige Regional Assistance Associated with the 
Sale of Bolzano
7. Provincial Grants/Loans Provided to Bolzano <SUP>2</SUP>
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    \2\ We note that the EC has ordered repayment of the Provincial 
Grants/Loans provided to Bolzano. During consultations, the EC 
stated that the assistance will be repaid even though the EC 
decision is under appeal. In the investigation, we intend to look 
into the possibility that the assistance has been repaid.
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8. Bolzano Law 44/92
European Commission Programs
1. European Coal and Steel Community (ECSC) Article 54 Loans
2. Interest Rebates on ECSC Article 54 Loans
3. ECSC Article 56 Loans
4. European Social Fund
5. European Regional Development Fund
6. Resider Program
7. 1993 European Commission Steel Funds

    We are not including in our investigation the following programs 
alleged to be benefitting producers and exporters of the subject 
merchandise in Italy:
    1. Grants to ILVA: The petitioners allege that, in a previous 
investigation of steel products, the Department countervailed various 
programs that provided grants to ILVA; however, the amounts of the 
grants exceeded those authorized by the GOI and the EC. (See Final 
Affirmative Countervailing Duty Determinations: Certain Steel Products 
from Italy, 58 FR 37327 (July 9, 1993) (``Certain Steel''). Because 
there was no verification of ILVA's response in that investigation, we 
countervailed the excess as miscellaneous grants based on best 
information available (BIA).
    However, in a subsequent investigation, it was verified that these 
miscellaneous grants were included in Law 675/77 programs. See Final 
Affirmative Countervailing Duty Determination: Grain-Oriented 
Electrical Steel from Italy, 59 FR 18357 (April 18, 1994) (``Electrical 
Steel''). Since the Department is initiating an investigation on these 
Law 675/77 programs, this alleged subsidy is already captured. As such, 
we are not initiating separately on ``grants to ILVA.''
    2. Interest Subsidies under Law 617/81: The petitioners allege 
that, in 1982, IRI issued two trillion lire worth of bonds. It then re-
lent these funds to its subsidiaries. Of that amount, over 900 billion 
lire was provided to ILVA's predecessor company, Nuovo Italsider. Under 
Law 617/81, the GOI promised to pay 11 percent of the total interest 
costs of the loans. In Certain Steel, this program was countervailed as 
a non-recurring grant based on BIA. In Electrical Steel, this program 
was determined not to be used because none of the loans were 
outstanding during the POI in that investigation. Because, as 
determined in Electrical Steel, the loans on which these interest 
payments had been made were no longer outstanding in 1992, we are not 
initiating on this program.
    3. Law 675: Value Added Tax (VAT) Reductions: The petitioners 
allege that VAT Reductions under law 675 were countervailed in Certain 
Steel; however, in Electrical Steel, this program was found to be 
targeted to southern Italy. Since none of the producers of subject 
merchandise are located in southern Italy, and petitioners have not 
provided any information that demonstrates that firms outside of 
southern Italy are eligible for benefits under this program, we are not 
initiating on this program.
    4. Other Government Loans: Petitioners request that the Department 
investigate financing provided by the GOI to producers of subject 
merchandise. Several of the producers of subject merchandise have 
received loans from the GOI or GOI-owned banks. However, petitioners 
have not presented sufficient information to

[[Page 45232]]

indicate that these loans are at noncommercial rates, or otherwise 
provide a benefit to producers of subject merchandise. Of the loans 
identified by petitioners, one loan appears to have been on 
preferential terms to a producer of subject merchandise. However, that 
loan was provided under law 46, which we have included in this 
investigation. Therefore, we are not initiating on this allegation 
regarding ``other government loans.''
    5. Government Loan Guarantees: Petitioners allege that several 
third party loan guarantees listed in the producers' annual reports are 
likely to have been provided by the government at preferential rates. 
Petitioners claim that these guarantees may be the same, or similar to, 
loan guarantees countervailed by the Department in Certain Steel.
    The Department countervailed government loan guarantees provided by 
IRI and Finsider in Certain Steel based on BIA. However, in Electrical 
Steel, these loan guarantees were found to have been provided only by 
Finsider, not IRI. Since Finsider was in liquidation, and therefore 
could not have paid the loan even if required to, the Department found 
that these loan guarantees provided no benefit.
    Petitioners have not provided any information that indicates that 
the guarantees listed in the company's annual reports are provided by 
the government at preferential rates, nor have they provided any 
information demonstrating that these guarantees, if provided by the 
government, were done so on a specific basis. Therefore, we are not 
initiating on these loan guarantees.
    6. Bolzano/Trentino-Alto Adige Law 9/91: Petitioners allege that 
Law 9/91, which provides easy term loans to stimulate local economic 
activity, provides countervailable benefits to producers of subject 
merchandise. Loans under this law are available to companies in 
tourism, agriculture, crafts and services. Petitioners have not shown 
that producers of subject merchandise would be eligible for benefits 
under this provision. Moreover, they have not provided sufficient 
information to indicate that Law 9/91 would be specific. Therefore, we 
are not initiating on this program.
    7. Trentino-Alto Adige Law 8/95: Petitioners allege that the region 
of Trentino-Alto Adige provides various incentives under Law 8/95 to 
promote local industry, commerce, services, crafts and tourism. 
However, they have not provided sufficient information to indicate that 
the incentives provided under this law are specific. Therefore, we are 
not initiating on Law 8/95 of the region of Trentino-Alto Adige.
    8. Veneto Law 39/87: Petitioners allege that Law 39/87 of the 
Veneto region provides countervailable benefits to producers of subject 
merchandise. This law establishes a registry for financial assistance 
in the province. Based on the information contained in the petition, 
this law seems to be simply an administrative measure that requires 
companies to register with the province before applying for assistance. 
Petitioners have provided no basis to believe that Law 39/87 provide 
any benefits; therefore, we are not initiating on this program.
    9. Veneto Law 16/93: Petitioners allege that Law 16/93 of the 
Veneto region provides countervailable benefits to producers of subject 
merchandise. This law established various initiatives designed to 
promote the economic and social development of Veneto's eastern region. 
However, based on evidence in the petition, Valbruna, the only producer 
of subject merchandise located in the Veneto Region, is not located in 
the eastern portion of the region and there is no indication that other 
parts of the region are eligible for benefits. As no producers of 
subject merchandise appear eligible for benefits under this law, we are 
not initiating on this program.

Distribution of Copies of the Petition

    In accordance with section 702(b)(4)(A)(i) of the Act and section 
351.203(c)(2) of the Department's regulations, copies of the public 
version of the petition have been provided to the representatives of 
the GOI and the EC. We will attempt to provide copies of the public 
version of the petition to all the exporters named in the petition.

ITC Notification

    Pursuant to section 702(d) of the Act and section 351.203(c)(1) of 
the Department's regulations, we have notified the ITC of this 
initiation.

Preliminary Determination by the ITC

    The ITC will determine by September 15, 1997, whether there is a 
reasonable indication that an industry in the United States is being 
materially injured, or is threatened with material injury, by reason of 
imports from Italy of SSWR. Any ITC determination which is negative 
will result in the investigation being terminated; otherwise, the 
investigation will proceed according to statutory and regulatory time 
limits.
    This notice is published pursuant to section 702(c)(2) of the Act 
and section 351.203(c)(1) of the Department's Regulations.

    Dated: August 19, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-22687 Filed 8-25-97; 8:45 am]
BILLING CODE 3510-DS-P