Federal Register / Vol. 62, No. 204 / Wednesday, October 22, 1997 / Notices 55003

individual subsidy rate for each

company investigated. For companies

not investigated, we have determined an

all-others rate by weighting individual

company subsidy rates by each

company’s exports of the subject

merchandise to the United States. The

all-others rate does not include zero or

de minimis rates.

In accordance with section 703(d)(5)

of the Act, we are directing the U.S.

Customs Service to continue to suspend

liquidation of all entries of steel wire

rod from Germany, except those of BES

and WHG, which are entered, or

withdrawn from warehouse for

consumption, on or after the date of

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. This suspension will remain in

effect until further notice.

Company

Ad

valorem

rate

Saarstahl ....................................... 17.67

IHSW ............................................. 5.61

All others ....................................... 11.08

Since the estimated net subsidy rate

for BES and WHG is de minimis, these

companies are not subject to the

suspension of liquidation and will be

excluded from any countervailing duty

order.

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 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 Acting Deputy Assistant

Secretary for AD/CVD Enforcement,

Import Administration.

If the ITC determines that material

injury, or threat of material injury, does

not exist, these proceedings will be

terminated and all estimated duties

deposited or securities posted as a result

of the suspension of liquidation will be

refunded or canceled. If, however, the

ITC determines that such injury does

exist, we will issue a countervailing

duty order directing Customs officers to

assess countervailing duties on steel

wire rod from Germany.

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

examination of 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 (Room B–099

of the Main Commerce Building).

Return or Destruction of Proprietary

Information

This notice serves as the only

reminder to parties subject to

Administrative Protective Order (APO)

of their responsibility concerning the

return or destruction of proprietary

information disclosed under APO in

accordance with 19 CFR 355.34(d).

Failure to comply is a violation of the

APO.

This determination is published

pursuant to section 705(d) of the Act.

Dated: October 14, 1997.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 97–27985 Filed 10–21–97; 8:45 am]

BILLING CODE 350–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[C–274–803]

Final Affirmative Countervailing Duty

Determination: Steel Wire Rod From

Trinidad and Tobago

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: October 22, 1997.

FOR FURTHER INFORMATION CONTACT:

Todd Hansen, Vincent Kane, or Sally

Hastings, Office of Antidumping/

Countervailing Duty Enforcement,

Group I, Office 1, Import

Administration, U.S. Department of

Commerce, Room 1874, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone

(202) 482–1276, 482–2815, or 482–3464,

respectively.

Final Determination

The Department of Commerce (‘‘the

Department’’) determines that

countervailable subsidies are being

provided to Caribbean Ispat Limited

(‘‘CIL’’), a producer and exporter of steel

wire rod from Trinidad and Tobago. For

information on the estimated

countervailing duty rates, please see the

Suspension of Liquidation section of

this notice.

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.

Case History

Since our preliminary determination

on July 28, 1997 (62 FR 41927, August

4, 1997), the following events have

occurred:

We conducted verification in

Trinidad and Tobago of the

questionnaire responses of the

Government of Trinidad and Tobago

(‘‘GOTT’’) and of CIL from August 18

through August 26, 1997. Petitioners

and respondents filed case and rebuttal

briefs on September 12 and September

17, 1997, respectively. A public hearing

was held on September 19, 1997. On

September 16, 1997, the GOTT and the

U.S. Government initialed a proposed

suspension agreement, whereby the

GOTT agreed not to provide any new or

additional export subsidies on the

subject merchandise and to restrict the

volume of direct and indirect exports of

subject merchandise to the United

States. On October 14, 1997, the U.S.

Government and the GOTT signed a

suspension agreement (see, Notice of

Suspension of Countervailing Duty

Investigation: Steel Wire Rod from

Trinidad and Tobago which is being

published concurrently with this

notice). Based on a request from

petitioners on October 14, 1997, the

Department and the International Trade

Commission (‘‘ITC’’) are continuing this

investigation in accordance with section

704(g) of the Act. As such, this final

determination is being issued pursuant

to section 704(g) of the Act.

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
55004 Federal Register / Vol. 62, No. 204 / Wednesday, October 22, 1997 / Notices

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

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 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 effective January 1,

1995 (the ‘‘Act’’). All references to the

Department’s regulations at 19 CFR

355.34 refer to the edition of the

Department’s regulations published

April 1, 1997.

Injury Test

Because Trinidad and Tobago is a

‘‘Subsidies Agreement Country’’ within

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

the ITC is required to determine

whether imports of wire rod from

Trinidad and Tobago 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 Trinidad and

Tobago of the subject merchandise (62

FR 23485).

Subsidies Valuation Information

Period of Investigation: The period for

which we are measuring subsidies (the

‘‘POI’’) is calendar year 1996.

Allocation Period: In the past, the

Department has relied upon information

from the U.S. Internal Revenue Service

(‘‘IRS’’) 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) (‘‘General Issues Appendix’’).

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 this methodology. In accordance

with the Court’s remand order, the

Department calculated a companyspecific 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. 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 purposes of

this determination, the Department has

calculated a company-specific AUL.

Based on information provided by

respondents, the Department has

determined that the appropriate

allocation period for CIL is 15 years.

Equityworthiness: In analyzing

whether a company is equityworthy, the

Department considers whether 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;

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 world markets for the

product under consideration.

In start-up situations and major

expansion programs, where past

experience is of little use in assessing

future performance, we recognize that

the factors considered and the relative

weight placed on such factors may differ

from those used in the analysis of an

established enterprise.

For a more detailed discussion of the

Department’s equityworthiness criteria

see the General Issues Appendix at

37244 and Final Affirmative

Countervailing Duty Determinations:

Certain Steel Products from France, 58

FR 37304 (July 9, 1993) (‘‘Steel from

France’’).

In our preliminary determination, we

determined that the Iron and Steel

Company of Trinidad and Tobago

(‘‘ISCOTT’’) was unequityworthy for the

period 1986–1994. Additional

information and documents gathered at

verification have given us cause to

review our preliminary determination.

As discussed below, we determine that

ISCOTT was unequityworthy from June

13, 1984 to December 31, 1991. For a

discussion of this determination, see the

section of this notice on ‘‘Equity

Infusions.’’

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. A market benchmark

can be obtained, for example, where the

company’s shares are publicly traded.

(See, e.g., Final Affirmative

Countervailing Duty Determinations:

Certain Steel Products from Spain, 58

FR 37374, 37376 (July 9, 1993).)

In this investigation, where a market

benchmark does not exist, the

Department is following the

methodology described in the General

Issues Appendix at 37239. Under 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
Federal Register / Vol. 62, No. 204 / Wednesday, October 22, 1997 / Notices 55005

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 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.

In start-up situations and major

expansion programs, where past

experience is of little use in assessing

future performance, we recognize that

the factors considered and the relative

weight placed on such factors may differ

from those used in the analysis of an

established enterprise. For a more

detailed discussion of the Department’s

creditworthiness criteria, see, e.g., Steel

from France at 37304, and Final

Affirmative Countervailing Duty

Determination; Certain Steel Products

from the United Kingdom, 58 FR 37393,

37395 (July 9, 1993) (‘‘Certain Steel from

the U.K.’’).

In our preliminary determination, we

determined that ISCOTT was

uncreditworthy for the period 1986–

1994. Additional information and

documents gathered at verification have

given us cause to review our

preliminary determination. As

discussed below, we determine that

ISCOTT was uncreditworthy during the

period June 13, 1984 to December 31,

1994. ISCOTT did not show a profit for

any year during this period and

continued to rely upon support from the

GOTT to meet fixed payments. The

company’s gross profit ratio was

consistently negative in each of the

years in which it had sales.

Additionally, the company’s operating

profit (net income before depreciation,

amortization, interest and financing

charges) was consistently negative. The

firm continued to show an operating

loss in each year it was in production,

and was never able to cover its variable

costs.

Regarding the period prior to June 13,

1984, and after December 31, 1994, we

did not examine ISCOTT’s

creditworthiness because ISCOTT did

not receive any countervailable loans,

equity infusions, or nonrecurring grants

during those periods.

Discount Rates: We have calculated

the long-term uncreditworthy discount

rates for the period 1984 through 1994,

to be used in calculating the

countervailable benefit from

nonrecurring grants and equity

infusions, using the same methodology

described in our preliminary

determination. Specifically, consistent

with our practice (described in Final

Affirmative Countervailing Duty

Determination: Grain-Oriented

Electrical Steel from Italy, 59 FR 18357,

18358 (April 18, 1994) (‘‘GOES’’)), we

took the highest prime term loan rate

available in Trinidad and Tobago in

each year as listed in the Central Bank

of Trinidad and Tobago: Handbook of

Key Economic Statistics and added to

this a risk premium of 12% of the

median prime lending rate.

Privatization Methodology: In the

General Issues Appendix at 37259, 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 the period beginning with the

earliest point at which nonrecurring

subsidies would be attributable to the

POI (in this case 1982 for CIL) and

ending one year prior to the

privatization. We then take the simple

average of the ratios. The simple average

of these ratios of subsidies to net worth

serves as a reasonable surrogate for the

percent that subsidies constitute of the

overall value 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 ISCOTT

in 1994.

Based upon our analysis of the

petition and responses to our

questionnaires, we determine the

following:

I. Programs Determined To Be

Countervailable

A. Export Allowance Under Act No. 14

Under the provisions of Act No. 14 of

1976, as codified in Section 8(1) of the

Corporation Tax Act, companies in

Trinidad and Tobago with export sales

may deduct an export allowance in

calculating their corporate income tax.

The allowance is equal to the ratio of

export sales over total sales multiplied

by net income. Export sales to certain

Caricom countries are not eligible for

the export allowance and are excluded

from the amount of export sales for

purposes of calculating the export

allowance.

A countervailable subsidy exists

within the meaning of section 771(5) of

the Act where there is a financial

contribution from the government

which confers a benefit and is specific

within the meaning of section 771(5A)

of the Act.

We have determined that the export

allowance is a countervailable subsidy

within the meaning of section 771(5) of

the Act. The export allowance provides

a financial contribution because in

granting it the GOTT forgoes revenue

that it is otherwise due. The export

allowance is specific, under section

771(5A)(B), because its receipt is

contingent upon export performance.

We verified that CIL made a

deduction for the export allowance on

its 1995 income tax return, which was

filed during the POI. Because the export

allowance is claimed and realized on an

annual basis in the course of filing the

corporate income tax return, we have

determined that the benefit from this

program is recurring. To calculate the

countervailable subsidy from the export

allowance, we divided CIL’s tax savings

during the POI by the total value of its

export sales which were eligible for the

export allowance during the POI. On

this basis, we determine the

countervailable subsidy from this

program to be 3.72 percent ad valorem.

B. Equity Infusions

In 1978, ISCOTT and the GOTT

entered into a Completion and Cash

Deficiency Agreement (‘‘CCDA’’) with

several private commercial banks in

order to obtain a part of the financing

needed for construction of ISCOTT’s

plant. Under the terms of the CCDA, the

GOTT was obligated to provide certain

equity financing toward completion of

construction of ISCOTT’s plant, to cover

loan payments to the extent not paid by

ISCOTT, and to provide cash as

necessary to enable ISCOTT to meet its

current liabilities.
55006 Federal Register / Vol. 62, No. 204 / Wednesday, October 22, 1997 / Notices

In Carbon Steel Wire Rod from

Trinidad and Tobago: Final Affirmative

Countervailing Duty Determination and

Countervailing Duty Order, 49 FR 480

(January 4, 1984) (‘‘Wire Rod I’’), the

Department determined that payments

or advances made by the GOTT to

ISCOTT during its start-up years were

not countervailable. In making this

determination, the Department took into

consideration the fact that it is not

unusual for a large, capital intensive

project to have losses during the startup years, the fact that several

independent studies forecast a favorable

outcome for ISCOTT, and the fact that

ISCOTT enjoyed several important

natural advantages. On these bases,

advances to ISCOTT through April of

1983, the end of the original POI, were

found to be not countervailable.

Given the Department’s decision in

Wire Rod I that the GOTT’s initial

decision to invest in ISCOTT and its

additional investments through the first

quarter of 1983 were consistent with

commercial considerations, the issue

presented in this investigation is

whether and at what point the GOTT

ceased to behave as a reasonable private

investor. During the period from 1983 to

1989, a period of continuing losses,

ISCOTT and the GOTT commissioned

several studies to determine the

financially preferable course of action

for the company. The information

contained in these studies is business

proprietary, and is discussed further in

a memorandum dated October 14, 1997,

from Team to Richard W. Moreland,

Acting Deputy Assistant Secretary for

AD/CVD Enforcement (‘‘Equity

Memorandum’’), a public version of

which is available in the public file for

this investigation located in the Central

Records Unit, Department of Commerce,

HCHB Room B–099 (‘‘Public File’’).

Based on information contained in the

studies and our review of the results of

ISCOTT’s operations over the period

under consideration, we determine that

the GOTT’s investments made after June

13, 1984, were no longer consistent with

the practice of a reasonable private

investor. ISCOTT continued to be

unable to cover its variable costs, yet the

GOTT continued to provide funding to

ISCOTT. Despite ISCOTT’s continued

losses and no reason to believe that

under the conditions in place at that

time there was any hope of

improvement, the GOTT did not make

further investment contingent upon

actions that would have been required

by a reasonable private investor.

In 1988, P.T. Ispat Indo (‘‘Ispat’’), a

company affiliated with CIL, came

forward and expressed an interest in

leasing the plant. On April 8, 1989, the

GOTT and Ispat reached agreement on

a 10-year lease agreement with an

option for Ispat to purchase the assets

after five years. The first few years of the

lease were marked by the GOTT

learning to assume the role of a lessor

and the management of CIL working to

become familiar with the operations of

ISCOTT and to develop relations with

the former ISCOTT employees. Our

review of internal documents, financial

projections and historical financial data

indicate that after December 31, 1991,

the operations of the ISCOTT plant

under CIL and ISCOTT’s financial

condition improved such that we

determine that investments in ISCOTT

after this date were consistent with the

practice of a reasonable private investor.

See, Equity Memorandum for further

discussion of the information used in

making this determination.

We have determined that the GOTT

equity infusions into ISCOTT during the

period from June 13, 1984 through

December 31, 1991 constitute

countervailable subsidies in accordance

with section 771(5) of the Act. We

determine that these equity infusions

confer a benefit under 771(5)(E)(i) of the

Act because these investments were not

consistent with the usual investment

practice of private investors. Also, they

are specific within the meaning of

section 771(5A) because they were

limited to one company, ISCOTT.

To calculate the benefit, we followed

the ‘‘Equity Methodology’’ described

above. The benefit allocated to the POI

was adjusted according to the

‘‘Privatization Methodology’’ described

above. The adjusted amount was

divided by CIL’s total sales of all

products during the POI. On this basis,

we calculated a countervailable subsidy

rate of 11.12 percent ad valorem.

C. Benefits Associated With the 1994

Sale of ISCOTT’s Assets to CIL

In December 1994, CIL, the company

created by Ispat to lease and operate the

plant, exercised the purchase option in

the plant lease and purchased the assets

of ISCOTT. After the sale of its assets,

ISCOTT was nothing but a shell

company with liabilities exceeding its

assets. CIL, on the other hand, had

purchased most of ISCOTT’s assets

without being burdened by ISCOTT’s

liabilities.

The liabilities remaining with

ISCOTT after the sale of productive

assets to CIL had to be repaid, assumed,

or forgiven. In 1995, the National Gas

Company of Trinidad and Tobago

Limited (‘‘NGC’’), which was owned by

the GOTT, and the National Energy

Corporation of Trinidad and Tobago

Limited (‘‘NEC’’), a wholly owned

subsidiary of NGC, wrote off loans owed

to them by ISCOTT totaling TT

$77,225,775. Similarly, Trinidad and

Tobago National Oil Company Limited

(‘‘TRINTOC’’), also owned by the GOTT,

wrote off debts owed by ISCOTT

totaling TT $10,492,830 as bad debt.

While no specific government act

eliminated this debt, CIL (and

consequently the subject merchandise)

received a benefit as a result of this debt

being left behind in ISCOTT.

We have determined that this debt

forgiveness constitutes a countervailable

subsidy in accordance with section

771(5) of the Act because it represents

a direct transfer of funds. Also, it is

specific within the meaning of section

771(5A) because it was limited to one

company.

In this case, to calculate the benefit

during the POI, we used our standard

grant methodology and applied an

uncreditworthy discount rate. The debt

outstanding after the December 1994

sale of assets to CIL (adjusted as

described below) was treated as grants

received at the time of the sale of the

assets.

After the 1994 sale of assets, certain

non-operating assets (e.g., cash and

accounts receivable) remained with

ISCOTT. These assets were used to fund

repayment of ISCOTT’s remaining

accounts payable. In order to account

for the fact that certain assets, including

cash, were left behind in ISCOTT, we

have subtracted this amount from the

liabilities outstanding after the 1994 sale

of assets.

The benefit allocated to the POI was

adjusted according to the ‘‘Privatization

Methodology’’ described above. The

adjusted amount was divided by CIL’s

total sales of all products during the

POI. On this basis, we determine the net

subsidy to be 1.17 percent ad valorem.

D. Provision of Electricity

According to section 771(5)(E) of the

Act, the adequacy of remuneration with

respect to a government’s provision of a

good or service

* * * shall be determined in relation to

prevailing market conditions for the good or

service being provided or the goods being

purchased in the country which is subject to

the investigation or review. Prevailing market

conditions include price, quality,

availability, marketability, transportation,

and other conditions of purchase or sale.

Particular problems can arise in

applying this standard when the

government is the sole supplier of the

good or service in the country or within

the area where the respondent is

located. In this situation, there may be

no alternative market prices available in

the country (e.g., private prices,
Federal Register / Vol. 62, No. 204 / Wednesday, October 22, 1997 / Notices 55007

competitively-bid prices, import prices,

or other types of market reference

prices). Hence, it becomes necessary to

examine other options for determining

whether the good has been provided for

less than adequate remuneration. This

consideration of other options in no way

indicates a departure from our

preference for relying on market

conditions in the relevant country,

specifically market prices, when

determining whether a good or service

is being provided at a price which

reflects adequate remuneration.

With respect to electricity, some of

the options may be to examine whether

the government has followed a

consistent rate making policy, whether

it has covered its costs, whether it has

earned a reasonable rate of return in

setting its rates, and/or whether it

applied market principles in

determining its rates. Such an approach

is warranted where it is only the

government that provides electricity

within a country or where electricity

cannot be sold across service

jurisdictions within a country and there

are divergent consumption and

generation patterns within the service

jurisdictions.

The Trinidad and Tobago Electric

Commission (‘‘TTEC’’), which is

wholly-owned by the GOTT, is the sole

supplier of electric power in Trinidad

and Tobago. For billing purposes, TTEC

classifies electricity consumers into one

of the following categories: residential,

commercial, industrial, and street

lighting. Industrial users are further

classified into one of four categories

depending on the voltage at which they

take power and the size of the load

taken. CIL is the sole user in the very

large load category taking its power at

132 kV for loads over 25,000 KVA.

Other large industrial users take power

at 33 kV, 66 kV or 132 kV at loads from

230 Volts up to 25,000 KVA.

TTEC’s rates and tariffs for the sale of

electricity are set by the Public Utilities

Commission (‘‘PUC’’), an independent

authority. In setting electricity rates, the

PUC takes into account cost of service

studies done by TTEC. These studies are

submitted to the PUC, where they are

reviewed by teams of economists,

statisticians, and auditors. Public

hearings are held and views expressed

orally and in writing. After considering

all of the views and studies submitted,

the PUC issues detailed orders with the

new rates and explanations of how they

were calculated. In establishing these

rates, the PUC is required by section 32

of its regulations to ensure that the new

rates will cover costs and expenses and

allow for a return.

The electricity rates in effect during

the POI were based on cost of service

studies for 1987 and 1991. Based on

these studies and staff audit reports, the

PUC in 1992 issued Order Number 80

with the new electricity rates and a

lengthy explanation of the bases for

these rates. The order allowed for a

specified return to TTEC on its sales of

electricity. In 1993 and 1994, the first

two years following the order, TTEC

was profitable for the first time in years.

However, TTEC had large losses in 1995

and losses in 1996 of about half the

1995 losses.

As noted above, TTEC is the only

supplier in Trinidad and Tobago of

electricity. Consequently, there are no

competitively-set, private benchmark

prices in Trinidad and Tobago to use in

determining whether TTEC is receiving

adequate remuneration within the

meaning of section 771(5)(E) of the Act.

Lacking such benchmarks, the only

bases we have for determining what

constitutes adequate remuneration are

TTEC’s costs and revenues.

Despite PUC’s mandate to set rates

that will cover the costs of providing

electricity plus an adequate return, past

history indicates that this directive has

seldom been met. In addition, evidence

in the cost of service studies, including

the most recent cost of service study

prepared in 1997, indicates that TTEC

did not receive adequate remuneration

on its sales of electricity to CIL. This

evidence is proprietary and is discussed

in the October 14, 1997 proprietary

memorandum entitled Adequate

Remuneration for Electricity.

Consequently, we determine that the

GOTT is bestowing a benefit on CIL

through TTEC’s provision of electricity.

We further determine that this benefit is

specific because CIL is the only user in

its customer category and, hence, the

only company paying fees and tariffs at

that rate.

Adequacy of remuneration is a new

statutory provision which replaced

‘‘preferentiality’’ as the standard for

determining whether the government’s

provision of a good or service

constitutes a countervailable subsidy.

The Department has had no experience

administering section 771(5)(E) and

Congress has provided no guidance as to

how the Department should interpret

this provision. This case and the other

concurrent wire rod cases, mark the first

instances in which we are applying the

new standard. We anticipate that our

policy in this area will continue to be

refined as we address similar issues in

the future.

We calculated the benefit for

electricity by comparing CIL’s actual

electricity rate in 1996 with the rate that

would have yielded an adequate return

to TTEC, as calculated in its 1996 cost

of service study. (We used the cost of

service study to calculate the benefit as

there was no suitable market-based

benchmarks for electricity in Trinidad

and Tobago.) We divided the total

shortfall based on CIL’s POI electricity

consumption by CIL’s total sales of all

products during the POI. On this basis,

we calculated a countervailable subsidy

rate of 1.46 percent ad valorem.

II. Programs Determined to Be Not

Countervailable

A. Import Duty Concessions under

Section 56 of the Customs Act

Section 56 of the Customs Act of 1983

provides for full or partial relief from

import duties on certain machinery,

equipment, and raw materials used in

an approved industry. The approved

industries that may benefit from this

relief are listed in the Third Schedule to

Section 56. In all, 76 industries are

eligible to qualify for relief under

Section 56.

Companies in these industries that are

seeking import duty concessions apply

by letter to the Tourism and Industries

Development Company, which reviews

the application and forwards it with a

recommendation to the Ministry of

Trade and Industry. If the Ministry of

Trade and Industry approves the

application, the applicant receives a

Duty Relief License, which specifies the

particular items for which import duty

concessions have been authorized. CIL

received import duty exemptions under

Section 56 of the Customs Act during

the POI.

In its June 30, 1997, supplemental

response, the GOTT provided a

breakdown by industry of the number of

licenses issued during the first six

months of the POI. During the POI, the

Ministry of Trade and Industry issued a

large number of licenses to a wide crosssection of industries. Some of the

licenses were new issuances and others

were renewals of licenses previously

issued. The breakdown of licenses by

industry indicated that the recipients of

the exemption were not limited to a

specific industry or group of industries.

The breakdown also indicated that the

steel industry was not a predominant

user of the subsidy nor did it receive a

disproportionate share of benefits under

this program. For these reasons, we

determine that import duty concessions

under Section 56 of the Customs Act are

not limited to a specific industry or

group of industries and, hence, are not

countervailable.
55008 Federal Register / Vol. 62, No. 204 / Wednesday, October 22, 1997 / Notices

B. Point Lisas Industrial Estate Lease

As noted above in the Provision of

Electricity section of this notice,

particular problems can arise in

applying the standard for adequate

remuneration when the government is

the sole supplier of the good or service

in the country or within the area where

the respondent is located. With respect

to the leasing of land, some of the

options to consider in determining

whether the good has been provided for

less than adequate remuneration may be

to examine whether the government has

covered its costs, whether it has earned

a reasonable rate of return, and/or

whether it applied market principles in

determining its prices. In the instant

case, we have found no alternative

market reference prices to use in

determining whether the government

has provided (leased) the land for less

than adequate remuneration. As such,

we have examined whether the

government’s price was determined

according to the same market factors

that a private lessor would use in setting

lease rates for a tenant.

The Point Lisas Industrial Port

Development Company (‘‘PLIPDECO’’)

owns and operates Point Lisas Industrial

Estate. Prior to 1994, PLIPDECO was 98

percent government-owned. Since then,

PLIPDECO’s issued share capital has

been held 43 percent by the

government, eight percent by Caroni

Limited, a wholly-owned government

entity, and 49 percent by 2,500

individual and corporate shareholders

whose shares are publicly traded on the

Trinidad and Tobago Stock Exchange.

We were unable to find any privatelyowned industrial estates in Trinidad

and Tobago to provide competitivelyset, private, benchmark rates to

determine the adequacy of PLIPDECO’s

lease rates.

ISCOTT, the predecessor company to

CIL, entered into a 30-year lease

contract for a site at Point Lisas in 1983,

retroactive to 1978. The 1983 lease rate

was revised in 1988. In 1989, the site

was subleased to CIL at the revised

rental fee. In 1994, ISCOTT and

PLIPDECO signed a novation of the

lease whereby ISCOTT’s name was

replaced on the lease by CIL’s. During

the POI, CIL paid the 1988 revised

rental fee for the site.

Under section 771(5) of the Act, in

order for a subsidy to be countervailable

it must, inter alia, confer a benefit. In

the case of goods or services, a benefit

is normally conferred if the goods or

services are provided for less than

adequate remuneration. The adequacy

of remuneration is determined in

relation to prevailing market conditions

for the good or service provided in the

country of exportation.

In establishing lease rates for sites in

the industrial estate, PLIPDECO uses a

standard schedule of lease rates as a

starting point for negotiating with

prospective tenants. The standard lease

rates reflect PLIPDECO’s evaluation of

the market value of land in the estate.

Individual rates are negotiated based on

a variety of factors, such as the size of

the lot, the type of lease, the type of

business, the attractiveness of the

tenant, and the date on which the lease

contract was signed. Because rates are

negotiated individually with each

tenant, the rate paid by CIL (and other

tenants) is specific.

The site leased by ISCOTT in 1983

and now occupied by CIL is the largest

site in the Point Lisas Industrial Estate

with an overall area that is considerably

more than double the size of the next

largest site. After CIL’s site and the next

largest, the size of the remaining sites

drops significantly. At verification, we

examined leases of other sites in the

estate and found only one site with a 30-

year lease that was signed

contemporaneously with CIL’s lease.

The remaining leases examined had

terms of 99 years, or 30-year leases that

were signed much later than CIL’s. The

method of calculating the lease rate on

a 99-year lease is fundamentally

different from the calculation on a 30-

year lease, because tenants with 99-year

leases effectively purchased the land at

the start of the lease, making only token

annual lease payments thereafter.

Tenants with 30-year leases make

substantial annual lease payments

throughout the lease but no large initial

payment. Therefore, we decided not to

compare a 99-year lease rate to CIL’s 30-

year lease rate. Eliminating the 99-year

leases left only one lease with a site that

was somewhat comparable in size to

CIL’s site. CIL’s lease fee per square

meter was in line with the lease fee for

the next most comparable site.

Aside from the lease contract on the

next most comparable site, we have no

other readily available benchmark or

guideline to determine whether the

lease rate paid by CIL provides adequate

remuneration to PLIPDECO. The

standard lease cannot serve as an

appropriate benchmark because it is

used as the starting point for

negotiations. All of the leases examined

at verification had rates below the

standard rate. Aside from the next

largest site, the leases for other sites in

the estate were also found to be

unsuitable. The disparity in both the

sizes of these leases and the years in

which they were signed when compared

with CIL’s site and lease rendered their

use inappropriate. Further, we found no

privately owned industrial estates in

Trinidad and Tobago. Therefore, in

addition to a direct comparison of CIL’s

lease rate with that of the next most

similar site, we also considered other

factors in determining whether

PLIPDECO received adequate

remuneration.

PLIPDECO considered ISCOTT to be

the anchor tenant in the estate because

it was the first company to locate in the

estate, and because of its size and its

role as the first steel producer in

Trinidad and Tobago. Further, ISCOTT’s

annual lease payments provided a

considerable cash flow to PLIPDECO,

especially in the early years of the estate

when PLIPDECO was in need of funds

for continued development. In addition,

ISCOTT was expected to draw other

companies into the estate. As we found

at verification, PLIPDECO’s expectations

that ISCOTT would draw other

companies into the estate were, in fact,

realized. Although a precise dollar value

cannot be placed on these factors,

PLIPDECO took them into consideration

when establishing ISCOTT’s lease rate.

That PLIPDECO took these factors into

consideration is an indication that its

negotiations were intended to assure

adequate remuneration on its lease to

CIL.

During the years for which we have

information, 1992 through 1995,

PLIPDECO has been consistently

profitable. In addition, PLIPDECO’s

successful public stock offering of 49

percent of its shares in 1994

demonstrates that investors viewed the

company as a good investment.

All of these facts support our

determination that PLIPDECO is a

company that has succeeded in

achieving adequate remuneration in its

dealings with CIL and with other

tenants in the estate. Therefore, we

determine that CIL’s lease rates have

provided adequate remuneration for its

site in the Point Lisas Industrial Estate.

C. Provision of Natural Gas

As noted above in the Provision of

Electricity section of this notice,

particular problems can arise in

applying the standard for adequate

remuneration when the government is

the sole supplier of the good or service

in the country or within the area where

the respondent is located. With respect

to the provision of natural gas, some of

the options may be to examine whether

the government has covered its costs,

whether it has earned a reasonable rate

of return, and/or whether it applied

market principles in determining its

prices. In the instant case, we have

found no alternative market reference
Federal Register / Vol. 62, No. 204 / Wednesday, October 22, 1997 / Notices 55009

prices to use in determining whether the

government has provided natural gas for

less than adequate remuneration. As

such, we have examined whether the

government earned a reasonable rate of

return and whether the government

applied market principles in

determining its prices.

NGC is the sole supplier of natural gas

to industrial and commercial users in

Trinidad and Tobago. NGC provides gas

pursuant to individual contracts with

each of its customers. Natural gas prices

to small consumers are fixed prices with

an annual escalator. Prices to large

consumers are negotiated individually

based on annual volume, contract

duration, payment terms, use made of

the gas, any take or pay requirement in

the contract, NGC’s liability for

damages, and whether new pipeline is

required. Prices must be approved by

NGC’s Board of Directors. Although

NGC is 100 percent government-owned,

the GOTT indicates that none of the

current members of the board is a

government official nor do any

government laws or regulations regulate

the pricing of natural gas.

The price paid by CIL for natural gas

during the POI was established in a

January 1, 1989 contract between

ISCOTT and NGC that ISCOTT assigned

to CIL on April 28, 1989. Average price

data submitted by the GOTT for large

industrial users of natural gas indicate

that the price paid by CIL during the

POI was in line with the average price

paid by large industrial users overall.

At verification, NGC officials

explained that the company operates on

a strictly commercial basis, purchasing

natural gas at the lowest prices it can

negotiate and selling and distributing

the gas at prices that assure the

company’s profitability. The years for

which we have information on NGC’s

profitability, 1992 to 1995, demonstrate

that the company has been consistently

profitable.

Clearly, in its contract negotiations

and its overall operations, NGC has

demonstrated that it realizes an

adequate return on its sales and

distribution of natural gas to CIL and its

other customers. For this reason, we

have determined that the prices paid by

CIL, which are in line with those paid

by other large consumers, provide

adequate remuneration to NGC for the

natural gas supplied to CIL. Therefore,

we have determined that NGC’s

provision of natural gas to CIL is not a

countervailable subsidy under section

771(5) of the Act.

IV. Programs Determined To Be Not

Used

A. Export Promotion Allowance

B. Corporate Tax Exemption

V. Program Determined Not To Exist

A. Loan Guarantee From the Trinidad

and Tobago Electricity Commission

By 1988, ISCOTT had accumulated

TT $19,086,000 in unpaid electricity

bills owed to TTEC. To manage this

debt, TTEC obtained a loan from the

Royal Bank of Trinidad and Tobago

which enabled TTEC to more readily

carry the receivable due from ISCOTT.

By 1991, ISCOTT extinguished its debt

to TTEC.

At no time during this period did

TTEC provide a guarantee to ISCOTT

which enabled ISCOTT to secure a loan

to settle the outstanding balance on its

account. The financing obtained by

TTEC from the Royal Bank benefitted

TTEC rather than ISCOTT because it

allowed TTEC to have immediate use of

funds that otherwise would not have

been available to it. On this basis, we

determine that TTEC did not provide a

loan guarantee to ISCOTT for purposes

of securing a loan to settle the

outstanding balance owed to TTEC.

Therefore, we determine that this

program did not exist.

Interested Party Comments

Comment 1: Treatment of shareholder

advances: Petitioners claim that GOTT

advances to ISCOTT should be treated

as grants rather than as equity. In

petitioners’ view, these advances had

none of the characteristics of debt or

equity, such as provisions for

repayment, dividends, or any additional

claim on funds in the event of

liquidation. Petitioners cite to Certain

Hot Rolled Lead and Bismuth Carbon

Steel Products from France, 58 FR 6221

(January 27, 1993) (‘‘Leaded Bar from

France’’), where the Department treated

shareholder advances as grants because

no shares were distributed when the

advances were made, despite the fact

that shares were issued at a later date.

Petitioners point out that the GOTT

received no shares at the time of its

advances to ISCOTT.

Respondents claim that the advances

should be treated as equity.

Respondents note that ISCOTT’s annual

reports consistently state that it was the

practice for advances to be capitalized

as equity, and that in fact, ISCOTT

issued shares for nearly all advances

through 1987. In addition, according to

respondents, the CCDA states that

pending the issuance of any shares, any

payment from the GOTT shall constitute

paid-up share capital. Respondents

further note that Wire Rod I, the

Department characterized GOTT

funding as equity contributions.

Respondents cite to Certain Steel from

the U.K. at 37395, where the Department

stated that despite the fact that the U.K.

government did not receive any

additional ownership, such as stock or

additional rights, in return for the

capital provided to BSC under Section

18(1) since it already owned 100 percent

of the company, such advances to BSC

were treated as equity.

Department’s Position: We agree with

respondents and have continued to treat

advances from the GOTT as equity at

the time of receipt. In Certain Steel from

the U.K., as in this case, requests for

funding from the government were

examined on a case-by-case basis. This

treatment is consistent with our

treatment of advances in Wire Rod I and

our preliminary determination in this

proceeding. Further, similar to Certain

Steel from the U.K., ISCOTT issued

additional shares to the GOTT on

several occasions to reduce the balance

of the shareholder advances, whereas in

Leaded Bar from France there was no

understanding that shareholder

advances were to be converted to equity,

and conversion occurred only as part of

a government-sponsored debt

restructuring.

Comment 2: Equityworthiness:

Petitioners claim that if the Department

treats the stockholder advances as

equity, ISCOTT’s financial statements

and information gathered at verification

demonstrate that ISCOTT was

unequityworthy after March 1983, and

the Department should view the

provision of equity as inconsistent with

the practice of a reasonable private

investor. Petitioners note that ISCOTT

had losses in every year from 1982

through 1994. Petitioners argue that

ISCOTT’s inability to cover its variable

costs while operating the steel plant

demonstrates that the company should

have been shut down. Petitioners urge

the Department to follow its practice of

placing greater reliance on past

indicators rather than on flawed studies

projecting dubious future expectations,

which respondents have pointed to as

evidence of ISCOTT’s equityworthiness.

Petitioners cite to the 1983 Report of the

Committee Appointed by Cabinet to

Consider the Future of ISCOTT

(‘‘Committee Report’’), where under any

of the options considered, ISCOTT was

projected to show a loss, as further

evidence that ISCOTT was

unequityworthy.

Respondents claim that the financial

ratios in this case must be interpreted in

the context of a start-up enterprise.
55010 Federal Register / Vol. 62, No. 204 / Wednesday, October 22, 1997 / Notices

Respondents contend that a venture

capitalist would recognize that a startup enterprise will incur losses for

several years. Second, respondents

point out that while the Committee

Report cited by petitioners predicted an

overall loss over the next five years, the

trend was decidedly positive, with

increasing profits projected for the last

two years included in the study, 1986

and 1987.

Department’s Position: We agree with

petitioners, in part. At some point, a

reasonable private investor would have

come to question ISCOTT’s continued

inability to achieve forecasted operating

results, and would have made future

funding contingent on timely,

fundamental changes in the company’s

operations, shutting down the plant, or

privatizing ISCOTT. As discussed above

in the Equity Infusions section of this

notice, we are including advances from

the GOTT to ISCOTT during the period

June 13, 1984 through December 31,

1991, in our calculation of CIL’s

countervailable subsidy rate.

Comment 3: Loan guarantees under

the CCDA: Respondents claim that the

GOTT’s principal and interest payments

on ISCOTT’s behalf made pursuant to

loan guarantees under the CCDA are not

countervailable. In the 1984 final, the

Department found that the GOTT’s loan

guarantees under the CCDA were on

terms consistent with commercial

considerations. Therefore, payments

which the GOTT made on these loans

pursuant to the guarantees should also

be considered consistent with

commercial considerations. In Carbon

Steel Wire Rod from Saudi Arabia, 51

FR 4206 (February 3, 1986), the

Department determined that funding in

1983 made pursuant to a prior

agreement, which was on terms

consistent with commercial

considerations, was not countervailable,

even though funds provided pursuant to

a new investment decision in 1983 were

countervailable because the company

was no longer equityworthy. Similarly,

in Final Affirmative Countervailing Duty

Determination: Certain Corrosion

resistant Carbon Steel Flat Products

from New Zealand, 58 FR 37366, 37368

(July 9, 1993), the Department

confirmed that a government’s payment

of loans under a guarantee agreement is

not countervailable if the underlying

guarantee was commercially reasonable.

Respondents also seek to clarify that

even if the GOTT had liquidated

ISCOTT, the GOTT could not have

avoided its payment obligations. As of

1983, all funding under the loans

covered by the CCDA had been drawn

down, and were subject to guarantees by

the GOTT.

Petitioners argue that when the

Department determined in 1984 that the

GOTT’s decision to enter into the CCDA

was rational, it was not at that time

determining that any and all future

payments under the CCDA would

necessarily be consistent with the

private investor standard. Petitioners

contend that if the GOTT had acted as

a reasonable private investor, it would

have shut ISCOTT down and stopped

the financial hemorrhaging. Instead,

petitioners argue, both ISCOTT and the

GOTT were too preoccupied with noncommercial considerations to consider

the reasonable course of action.

Department’s Position: We disagree

with respondents that the GOTT was

inexorably committed to make

continued payments on ISCOTT’s behalf

as a result of the loan guarantees

contained in the CCDA. Had the GOTT’s

actions been consistent with those of a

reasonable private investor, as a

controlling shareholder in ISCOTT, the

GOTT would have sought to minimize

losses. Shutting down the plant would

have been less expensive than

continuing to operate the plant in such

a manner that no projection was ever

achieved and variable costs were never

covered by revenues. The GOTT

constructed the ISCOTT plant because it

had studies indicating the plant was a

viable investment. When CIL leased the

ISCOTT plant, it demonstrated that

ISCOTT was viable. The GOTT could

have pursued less costly alternatives

than continued funding of ISCOTT’s

operations with no requirement that

timely and demonstrable actions,

including consideration of shutting

down the plant, be taken to reduce or

eliminate the amount needed to fulfill

all of its obligations under the CCDA.

Comment 4: Countervailability of cash

deficiency payments under the CCDA:

Respondents claim that the CCDA

imposed a further legal obligation on the

GOTT that was distinct from its

commitment to meet ISCOTT’s CCDA

debt service obligations. Specifically,

the CCDA required the GOTT to provide

funds to ISCOTT to cover any other cash

deficiency, such as an operating loss.

Respondents argue that both external

and internal studies demonstrate that

GOTT’s decisions to cover these cash

deficiencies were consistent with those

of a reasonable private investor.

Petitioners reply that the

Department’s prior determination that

the GOTT’s decision to enter into the

CCDA was rational has no bearing on

whether or not subsequent decisions to

fund money-losing operations was

rational. Petitioners contend that the

rationality of guarantee payments must

be evaluated anew each time, and that

the GOTT should have realized that

shutting down the ISCOTT plant would

have been the least cost available

alternative.

Department’s Position: We agree with

petitioners that our 1984 decision

regarding the CCDA did not give the

GOTT license to provide continued

funding to ISCOTT immune from

potential countervailability under U.S.

law. A reasonable private investor

acting on a guarantee would pursue the

least-cost alternative, and would ensure

that the amount of funding under such

a guarantee is truly necessary. We are

not persuaded that the GOTT’s actions

were consistent with those of a

reasonable private investor, as discussed

above in the Equity Infusions section of

this notice.

Comment 5: Post-lease funding of

ISCOTT: Respondents claim that after

ISCOTT’s assets were leased to CIL in

May 1989, any funds provided to

ISCOTT by the GOTT did not provide

a subsidy to CIL’s 1996 production.

Respondents note that CIL has always

been a separate and distinct company,

with no ownership interest in, or other

affiliation with, ISCOTT. Therefore,

according to respondents, there is no

basis for attribution of ISCOTT’s

subsidies to CIL. Respondents note that

as discussed in Final Affirmative

Countervailing Duty Determination;

Certain Hot Rolled Lead and Bismuth

Carbon Steel Products from the United

Kingdom, 58 FR 6237 (January 27, 1993)

(‘‘Leaded Bar from the U.K.’’), the

Department did not attribute any

subsidies received by BSC after it had

spun off its Special Steels Division into

a joint venture, United Engineering

Steels Limited (‘‘UES’’). In that case the

Department did not attribute any

subsidies received by BSC after the spin

off to the joint venture, stating that there

was ‘‘no evidence of any mechanisms

for passing through subsidies from

British Steel plc to UES (e.g., cash

infusions) after the formation of the

joint venture. Therefore we determine

that any benefits received by BSC after

the formation of the joint venture do not

pass through to UES.’’ Respondents

contend that, similarly, in this case

there is no evidence that subsidies

received by ISCOTT after CIL took

control of the steel-making facilities

continued to benefit CIL.

Respondents further contend that any

past subsidies found to have been

received by ISCOTT cannot be found to

have conferred a benefit on CIL’s

production of wire rod in 1996, as

required by section 771(5)(E) of the Act.

Respondent’s argue that CIL never

received any of the advances provided

to ISCOTT, and note that CIL remained
Federal Register / Vol. 62, No. 204 / Wednesday, October 22, 1997 / Notices 55011

a completely separate company from

ISCOTT after purchasing ISCOTT’s

plant in an arm’s length transaction.

Respondents argue that the Department

did not articulate how CIL received a

benefit from financial contributions to

ISCOTT, as required by the Subsidies

and Countervailing Measures

Agreement.

Petitioners claim that the Department

has consistently found that past

subsidies are not extinguished by an

arm’s length sale of a company that had

received the subsidies. Petitioners cite

to Certain Hot-Rolled Lead and Bismuth

Carbon Steel Products From the United

Kingdom; Final Results of

Countervailing Duty Administrative

Review, 61 FR 58377, (November 14,

1996) (‘‘Leaded Bar from the U.K.

Review’’), where the Department found

that a portion of the subsidies traveled

with BSC’s Special Steel Business assets

when, in 1986, the government-owned

BSC exchanged its Special Steels

Business for shares in UES. Petitioners

note that In Final Affirmative

Countervailing Duty Determination:

Certain Pasta from Italy, 61 FR 30288,

(June 14, 1996) (‘‘Pasta from Italy’’), the

Department made a similar finding.

Petitioners contend that in these cases,

the Department views subsidy payments

to a company as a benefit to the entire

company and all of its productive

assets, and, for this reason, the sale of

the company or a part of it does not

extinguish the prior subsidies. Section

771(5)(F) of the Act makes it very clear

that the Department has the discretion

to find prior subsidies countervailable

despite an arm’s length sale of company

or assets.

Department’s Position: We disagree

with respondents, and have allocated a

portion of the nonrecurring subsidies

received by ISCOTT prior to the sale of

the steel plant to CIL. In Leaded Bar

from the U.K., the Department found

that subsidies received by BSC after the

spin-off did not pass through to UES.

We note that in this case the sale of

ISCOTT’s assets to CIL occurred after

the lease period, providing a mechanism

for pass-through of subsidies received

by ISCOTT to CIL. Consistent with the

Department’s past practice in Pasta from

Italy and several pre-URAA cases, we

determine that a portion of the subsidies

received by ISCOTT, including

subsidies received during the lease

period, traveled with the assets sold to

CIL.

Comment 6: Repayment of subsidies

upon sale of assets: Petitioners claim

that the sale of ISCOTT’s assets at a fair

value did not offset the distortion

caused by the GOTT’s original bestowal

of subsidies. Moreover, according to

petitioners, the countervailing duty

statute establishes a presumption that a

change in ownership of the productive

assets of a foreign enterprise does not

render past countervailable subsidies

non-countervailable. Petitioners

contend that once subsidies are

allocated to a productive unit, they

should travel with that unit upon sale

or privatization. Therefore, petitioners

argue that the Department should not

recognize a partial repayment of the

subsidy benefit stream at the time

ISCOTT assets were sold.

Department’s position: We disagree

with petitioners and have continued to

allocate a portion of the sales price of

ISCOTT’s assets to the previously

bestowed subsidies. This is consistent

with the URAA and the Department’s

past practice (see, e.g., Leaded Bar from

the U.K. Review). Section 771(5)(F) of

the Act reads:

Change in Ownership.—A change in

ownership of all or part of a foreign

enterprise or the productive assets of a

foreign enterprise does not by itself require

a determination by the administering

authority that a past countervailable subsidy

received by the enterprise no longer

continues to be countervailable, even if the

change in ownership is accomplished

through an arm’s length transaction.

The language of section 771(5)(F) of

the Act purposely leaves discretion to

the Department with regard to the

impact of a change in ownership on the

countervailability of past subsidies.

Rather than mandating that a subsidy

automatically transfer with a productive

unit that is sold, as petitioners argue,

the language in the statute clearly gives

the Department flexibility in this area.

Specifically, the Department is left with

the discretion to determine, on a caseby-case basis, the impact of a change in

ownership on the countervailability of

past subsidies. Moreover, the SAA states

that ‘‘Commerce retain[s] the discretion

to determine whether, and to what

extent, the privatization of a

government-owned firm eliminates any

previously conferred countervailable

subsidies* * *’’ SAA at 928.

In this case, we have determined that

when ISCOTT’s assets were sold, a

portion of the sales price reflected past

subsidies. To account for that, we

treated a portion of the sales price as

repaying those past subsidies to the

GOTT.

Comment 7: Calculation of amount of

subsidies remaining with the seller of a

productive unit: Respondents argue that

the Department’s methodology for

calculating the amount of subsidies that

pass through in a change of ownership

transaction is inconsistent with the rest

of the Department’s practice with regard

to nonrecurring subsidies because the

Department does not provide for any

amortization when calculating the

percentage of the purchase price that is

attributable to past subsidies.

Respondents claim that if the

Department continues to conclude that

subsidies may survive privatization, it

must revise its methodology for

calculating the percentage of the

purchase price that is attributed to

previously bestowed subsidies to take

into account the fact that subsidies

received prior to privatization must be

amortized from the time of receipt until

the time of privatization. Respondents

propose that the Department determine

the amount of the purchase price

attributable to previously bestowed

subsidies as the ratio of the amount of

subsidies remaining in the company to

the company’s net worth at the time of

privatization.

Petitioners claim the ratio calculated

under the Department’s current

methodology, commonly referred to as

‘‘gamma,’’ is intended to measure the

share of the purchase price attributable

to past subsidies, not the value of past

subsidies at the time of privatization.

Petitioners argue that the methodology

proposed by respondents will yield

anomalous results. Petitioners claim

that the sale of a thinly-capitalized,

heavily-subsidized company would

result in 100 percent of the purchase

price being allocated to previously

bestowed subsidies, while all of the

assets of the company benefitted from

the past subsidies. According to

petitioners, a similarly situated

company with equity financing instead

of debt would have a small amount of

the purchase price allocated to

previously bestowed subsidies using

respondents’ proposed methodology.

Department’s position: In accordance

with our past practice and policy, we

have continued to calculate the portion

of the purchase price attributable to past

subsidies using historical subsidy and

net worth data (see, e.g., General Issues

Appendix at 37263). Because this

methodology relies on several years’

data, as opposed to data from just a

single year, it offers a more reliable

representation of the contribution that

subsidies have made to the net worth of

the productive unit being sold. We take

into account the amortization of

previously bestowed subsidies in our

pass-through calculation as we apply

gamma to the amount of the remaining,

unamortized countervailable subsidy

benefits to calculate the amount that

remains with the seller.

Comment 8: Benefits associated with

the 1994 sale of ISCOTT’s assets to CIL:

Respondents claim that the write-off of
55012 Federal Register / Vol. 62, No. 204 / Wednesday, October 22, 1997 / Notices

ISCOTT’s debts after the sale of the

plant to CIL is not a countervailable

subsidy to CIL. Typically, companies

acquiring the assets of other companies

do not also acquire the debt of these

companies. In contrast, when

companies acquire the stock of other

companies, they would normally be

expected to assume the debt of the

acquired company. Respondents argue

that the Department incorrectly relied

on GOES as precedent, because the

circumstances in that case were very

different from the circumstances in the

case of ISCOTT. Respondents note that

in GOES, the Government of Italy

liquidated Finsider and its main

operating companies in 1988 and

assembled the group’s most productive

assets into a new operating company,

ILVA S.p.A. Respondents argue that the

movement of assets and liabilities

between two government-owned

companies, as was the case in GOES, is

very different from the arm’s length

nature of the sale of ISCOTT’s assets to

CIL. Respondents claim that the

purchase price paid in an arm’s length

transaction, such as the sale of

ISCOTT’s assets to CIL, reflects the fact

that the purchaser is not also assuming

the liabilities of the seller.

Petitioners claim that the Department

has precedent for its decision to

countervail loans to ISCOTT, which

were not transferred to CIL when CIL

purchased ISCOTT’s assets. Petitioners

note that in Final Affirmative

Countervailing Duty Determination;

Certain Steel Products from Austria, 58

FR 37217, 37221 (July 9, 1993), the

Department found that losses incurred

by a government-owned steelmaker,

which were not transferred to new

companies upon their purchase of the

steelmaker’s assets, conferred a subsidy

to the new companies. Department’s

Position: We have continued to treat the

amount of ISCOTT’s remaining

liabilities in excess of the amount of

remaining assets after the sale of

ISCOTT’s assets to CIL as a subsidy to

ISCOTT at the time of the sale. In

Leaded Bar from the U.K., we explained

why we allocate subsidies to productive

units, stating:

In the end, a ‘‘bubble’’ of subsidies would

remain with a virtually empty corporate shell

which would not be affected by any

countervailing duties because it did not

produce or export the countervailed

merchandise to the United States.

Here, the ‘‘empty corporate shell’’ was

ISCOTT, with no productive operations,

no source of future earnings, and debts

exceeding its assets. Under such

circumstances, it was inevitable that

ISCOTT would be unable to pay the

balance owing on the notes payable,

and, in fact, the notes were forgiven by

the lenders in 1995. When a government

funds an entity through loans which are

later forgiven, the Department includes

in its calculation of the countervailing

duty rate for that entity an amount for

debt forgiveness. In this situation, we

determine that the debt forgiveness,

which for all intents and purposes

occurred at the time of the sale of

ISCOTT’s assets, is a countervailable

subsidy.

While the purchase price may have

been lower if CIL had assumed the

responsibility for the notes payable in

the purchase transaction, the result

would be that less of any pre-existing

subsidies would be repaid.

Comment 9: Calculation of net

present value of unamortized subsidies:

Petitioners claim that the Department

appears to have improperly discounted

the 1994 subsidy amount in calculating

the net present value of subsidies to

which the gamma calculation is applied.

Respondents claim that because the

Department begins allocating subsidies

in the year of receipt, the net present

value amount for the 1994 subsidies

should reflect one year of amortization.

Department’s Position: We agree with

petitioners that our preliminary

calculation of the net present value of

previously bestowed subsidies was not

consistent with the Department’s past

practice in this regard, and we have

corrected this error in our final

calculations.

Comment 10: Amortization of

nonrecurring subsidies: Respondents

claim that in amortizing advances to

ISCOTT, the Department began

amortizing in the year after the year of

receipt, without allocating any amount

to the year of receipt.

Department’s Position: We agree with

respondents and have corrected our

calculations.

Comment 11: Adequacy of

remuneration for electricity:

Respondents claim that CIL does not

benefit from the provision of electricity

for less than adequate remuneration

because Section 32 of the PUC’s

regulations requires the Commission to

set rates that will cover costs and earn

a reasonable profit. In 1992, when

setting the electricity rates in effect

during the POI, the PUC set rates for

each customer class based on cost of

service studies for 1987 and 1991. These

rates were calculated to cover costs and

expenses plus yield a reasonable return.

In addition, they were published rates

that applied to all customers within

each of the rate classes.

Further, respondents argue that the

electricity rates set by the PUC in 1992

provided adequate remuneration

because the PUC made upward

adjustments to the rates that had been

proposed by TTEC. For example, the

PUC adopted a flat rate structure rather

than the declining block structure. As

high volume users, CIL and other large

industrial users paid more under the flat

rate structure than they would have

under the declining block structure. The

declining block structure would have

allowed for a rate reduction as usage

increased over the billing period.

Petitioners claim that TTEC did not

receive adequate remuneration during

the POI, nor did it receive an adequate

return in two of the four preceding

years, despite the assertions by PUC and

TTEC officials that the utility is

expected to cover costs and expenses

and show a return. Further, TTEC

intends to file a cost of service study

based on 1996 operating costs and

request a rate increase. Petitioners argue

that this demonstrates that TTEC’s

current revenues are not adequate to

cover costs. Petitioners urge the

Department to calculate CIL’s benefit

from its electricity rates as a recurring

grant valued as the difference between

CIL’s payment at the current rate and

the amount it would pay if it were in the

next largest rate class on which a profit

was realized.

Department’s Position: We agree with

petitioners that CIL’s rate did not

provide adequate remuneration.

Although the PUC’s regulations may

require it to set rates that cover costs

plus a return, history demonstrates that

the PUC has seldom achieved this. The

rates in place in the year preceding the

POI and during the POI resulted in

losses for TTEC. Although a different

rate structure such as declining block

rates might have led to other results,

particularly for CIL, we have no basis to

depart from the structure that was

actually adopted by the PUC.

We disagree, however, with the

calculation methodology proposed by

petitioners. Instead, we have relied

upon the most recent cost of service

study by TTEC which establishes a rate

for CIL that will cover the cost of

supplying electricity to CIL plus a

reasonable return. This provides a better

measure of adequate remuneration for a

very large customer like CIL than

applying the rate for smaller customers,

as proposed by petitioners.

Comment 12: Adequacy of

remuneration for lease: Petitioners

claim that CIL’s lease rate is less than

the standard lease rate. In Wire Rod I (at

482), the Department found this lease

rate to result in a subsidy of 2.246

percent. Further, the record in this

investigation has information on only
Federal Register / Vol. 62, No. 204 / Wednesday, October 22, 1997 / Notices 55013

four other leases. This limited

information does not allow for a

meaningful comparison with the lease

rate paid by CIL. Even these four leases,

however, suggest that CIL’s lease does

not provide adequate remuneration. For

these reasons, CIL’s lease rate should be

found countervailable.

Respondents maintain that the rate

CIL pays for its 105.7 hectares provides

adequate remuneration to PLIPDECO. At

verification, the Department attempted

to find a suitable benchmark for CIL’s

lease and found only two companies

with 30-year leases on sites of 10

hectares or more. Other companies with

sites of 10 hectares or more had 99-year

leases. These 99-year leases are

structured much differently and cannot

be compared to a 30-year lease. Of the

two sites with 30-year leases, the first

was the second largest site in the estate,

and the lease for the property was

signed at about the same time as CIL’s.

The second was a small site with a lease

signed years after CIL’s lease.

Comparing the most comparable lease to

CIL’s reveals that CIL was paying a

higher rate.

Department’s Position: PLIPDECO

officials informed us at verification that

the standard lease rate is used as a

starting point for negotiation and

indicated that only very small sites

would pay this rate. The lease rates of

the four leases examined during

verification were all less than the

standard rate. Therefore, we concluded

that the standard rate was not used as

the lease rate in all cases and was not

an appropriate benchmark for CIL’s

lease rate.

Moreover, neither the GOTT nor

PLIPDECO limited the verification

team’s access to leases during

verification. The team selected the

leases to be reviewed on the basis of

their similarity to CIL’s lease. First, the

team selected leases with sites of 10

hectares or more. Of these, only two had

leases with the same 30-year term as

CIL’s. The others were 99-year leases.

The team then selected two leases with

sites of less than 10 hectares to review

the lease terms on these smaller sites.

Because CIL’s site was 105.7 hectares,

the team did not make further selections

from the leases with sites under 10

hectares.

Although we did find that the 1983

lease conferred a subsidy in Wire Rod I,

we note that CIL’s lease rate increased

significantly in 1988. In addition, the

Department used the standard lease rate

as its benchmark in Wire Rod I.

However, as discussed above, our

review in this proceeding showed that

several leases had rates below the

standard rate. Therefore, we have

concluded that the standard rate is not

an appropriate benchmark.

Comment 13: Export allowance

program: Respondents argue that in

computing the subsidy attributable to

the export allowance program (‘‘EAP’’)

for the POI, the Department should use

CIL’s income tax return for fiscal year

1996 rather than CIL’s 1995 income tax

return. In respondents’ view, this would

be consistent with the Department’s

established cash flow methodology as

described in the Countervailing Duties:

Notice of Proposed Rulemaking and

Request for Public Comments, 54 FR

23366, 23384 (May 31, 1989) (‘‘1989

Proposed Regulations’’) at section

355.48(a). Under that policy, the

Department will ordinarily deem a

countervailable benefit to be received at

the time that there is a cash flow effect

on the firm receiving the benefit.

Respondents assert that CIL experienced

the cash flow effect of the EAP

throughout 1996, when CIL paid its

quarterly installments of the Business

Levy.

Respondents also argue that use of the

1995 tax return distorts the

countervailable subsidy by attributing to

CIL the export allowance benefit earned

in 1995, when both exports and total

sales were greater than in 1996.

Respondents contend that the

Department’s regulations give it the

discretion to use the 1996 tax return and

that the Department should use that

discretion to avoid this distortion.

Petitioners agree with the

Department’s approach used in the

preliminary determination and urge the

Department to continue using the

benefits reported in the 1995 tax return

which was filed during the POI in

calculating the amount of benefit

received by CIL. Petitioners state that

this approach is consistent with the

Department’s prior determinations and

policy as well as section 351.508(2)(b) of

the Proposed Countervailing Duty

Regulations, 62 FR 8818, 8880 (February

26, 1997) (‘‘1997 Proposed

Regulations’’). Petitioners also cite

section 355.48(b)(4) of the 1989

Proposed Regulations, which states that

in the case of a direct tax benefit a firm

can normally calculate the amount of

the benefit when the firm files its tax

return. Petitioners argue that CIL

realized the benefit on October 29, 1996,

the date when it filed its 1995 tax

return, and that CIL did not realize

benefits on its 1996 exports until it filed

its 1996 tax return on August 25, 1997,

after the POI. Petitioners dismiss

respondents’ arguments about cash flow

methodology and estimated tax payment

as meritless. Petitioners assert that CIL

only claimed benefits from the export

allowance when it filed its corporate tax

return. Moreover, petitioners state that

the filing of the formal income tax

return is the earliest date upon which

the Department can determine whether

the EAP had been used.

Department’s Position: We agree with

petitioners that CIL received the benefit

of the tax savings attributable to the EAP

when it filed its corporate tax return.

Consequently, we have continued to

value this benefit based on the tax

return filed during the POI.

In Trinidad and Tobago, a company

pays either the corporation tax or

Business Levy, whichever is higher. The

corporation tax is calculated on the

company’s profits, and the Business

Levy is calculated as a straight

percentage of gross sales or receipts.

The Department’s long-established

practice in treating income tax benefits

has been to recognize the benefit of

income tax programs at the time the

income tax return is actually filed,

usually in the year following the tax

year for which the benefit is claimed

(see, e.g., Final Affirmative

Countervailing Duty Determination: Iron

Ore Pellets from Brazil, 51 FR 21961,

21967 (June 17, 1986)). It is at that time

that the recipient normally realizes a

difference in cash flow between the

income tax paid with the benefit of the

program and the tax that would have

been paid absent the program. Even

when companies make estimated

quarterly income tax payments during

the tax year, the Department has

delayed recognition of the benefit until

the tax return is filed and the amount of

the benefit is definitively established.

In this case, CIL acknowledges that

the 1996 EAP was not claimed until it

filed its 1996 tax return in 1997.

Nevertheless, CIL claims that because of

the export allowance, it does not pay the

corporate income tax. Instead, because it

must pay the higher of the Business

Levy or the corporate income tax, CIL

typically pays the Business Levy.

Moreover, because CIL makes quarterly

deposits of its estimated Business Levy,

the company claims the cash flow effect

of the EAP occurs when these quarterly

deposits are made.

Although we agree that CIL has

typically paid the Business Levy rather

than the corporate income tax as a result

of the EAP, we do not agree that this

should lead us to countervail the

benefits arising from the EAP as if they

were connected with the Business Levy.

First, CIL will only be certain that it

will pay the Business Levy when the

income tax is computed and the export

allowance is claimed. Second, the

amount of the benefit is not calculable

prior to the filing of the corporate tax
55014 Federal Register / Vol. 62, No. 204 / Wednesday, October 22, 1997 / Notices

return. An income tax benefit can

potentially have numerous cash flow

effects. The Department’s practice is to

single out the cash flow effect most

directly associated with the tax benefit;

in this case, the actual savings which

arise when the taxes are due.

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

examination of relevant accounting

records and original source documents.

Our verification results are outlined in

detail in the public versions of the

verification reports, which in the Public

File for this investigation.

Suspension of Liquidation

In accordance with section

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

calculated an ad valorem subsidy rate of

17.47 percent for CIL, the one company

under investigation. We are also

applying CIL’s rate to any companies

not investigated or any new companies

exporting the subject merchandise.

We have concluded a suspension

agreement with the GOTT which

eliminates the injurious effects of

imports from Trinidad and Tobago (see,

Notice of Suspension of Investigation:

Steel Wire Rod from Trinidad and

Tobago being published concurrently

with this notice). As indicated in the

notice announcing the suspension

agreement, pursuant to section 704(h)(3)

of the Act, we are directing the U.S.

Customs Service to continue suspension

of liquidation. This suspension will

terminate 20 days after publication of

the suspension agreement or, if a review

is requested pursuant to section

704(h)(1) of the Act, at the completion

of that review. Pursuant to section

704(f)(2)(B) of the Act, however, we are

not applying the final determination

rate to entries of subject merchandise

from Trinidad and Tobago; rather, we

have adjusted the rate to zero to reflect

the effect of the agreement.

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 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 Acting Deputy Assistant

Secretary for AD/CVD Enforcement,

Import Administration.

If the ITC’s injury determination is

negative, the suspension agreement will

have no force or effect, this investigation

will be terminated, and the Department

will instruct the U.S. Customs Service to

refund or cancel all securities posted

(see, section 704(f)(3)(A) of the Act). If

the ITC’s injury determination is

affirmative, the Department will not

issue a countervailing duty order as long

as the suspension agreement remains in

force, and the Department will instruct

the U.S. Customs Service to refund or

cancel all securities posted (see, section

704(f)(3)(B) of the Act). This notice is

issued pursuant to section 704(g) of the

Act.

Return or Destruction of Proprietary

Information

This notice serves as the only

reminder to parties subject to

Administrative Protective Order (APO)

of their responsibility concerning the

return or destruction of proprietary

information disclosed under APO in

accordance with 19 CFR 355.34(d).

Failure to comply is a violation of the

APO.

This determination is published

pursuant to section 705(d) of the Act.

Dated: October 14, 1997.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 97–27984 Filed 10–21–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[C–307–814]

Final Affirmative Countervailing Duty

Determination: Steel Wire Rod from

Venezuela

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: October 21, 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.

Final Determination

The Department of Commerce (the

Department) determines that

countervailable subsidies are being

provided to CVG-Siderurgica del

Orinoco (SIDOR), the 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.

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.

Case History

Since our preliminary determination

on July 28, 1997 (62 FR 41439, August

4, 1997), the following events have

occurred:

We conducted verification of the

countervailing duty questionnaire

responses from August 27, 1997 through

September 9, 1997. Petitioners and

SIDOR (respondent) filed case briefs on

September 23, 1997, and rebuttal briefs

on September 26, 1997. A public

hearing was held on October 1, 1997.

On September 12, 1997, the GOV and

the U.S. Government initialed a

proposed suspension agreement. On

October 14, 1997, the U.S. Government

and the GOV signed a suspension

agreement (see Notice of Suspension of

Countervailing Duty Investigation: Steel

Wire Rod from Venezuela) which is

being published concurrently with this

notice in the Federal Register. On

October 14, 1997, the petitioners also

requested that the Department and the

International Trade Commission (‘‘ITC’’)

continue this investigation in

accordance with section 704(g) of the

Act. As such, this final determination is

being issued pursuant to section 704(g)

of the Act.

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