Federal Register / Vol. 73, No. 175 / Tuesday, September 9, 2008 / Notices 52315 

1 In these preliminary results, unless otherwise 

stated, we use POSCO to collectively refer to 

POSCO, POCOS, and POSTEEL. 

ITC Notification 

In accordance with section 703(f) of 

the Act, we will notify the ITC of our 

determination. In addition, we are 

making available to the ITC all non–

privileged and non–proprietary 

information relating to this 

investigation. We will allow the ITC 

access to all privileged and business 

proprietary information in our files, 

provided the ITC confirms that it will 

not disclose such information, either 

publicly or under an administrative 

protective order, without the written 

consent of the Assistant Secretary for 

Import Administration. 

In accordance with section 705(b) (2) 

of the Act, if our final determination is 

affirmative, the ITC will make its final 

determination within 45 days after the 

Department makes its final 

determination. 

Disclosure and Public Comment 

In accordance with 19 CFR 

351.224(b), the Department will disclose 

to the parties the calculations for this 

preliminary determination within five 

days of its announcement. Case briefs 

for this investigation must be submitted 

no later than one week after the 

issuance of the last verification report. 

See 19 CFR 351.309(c) (for a further 

discussion of case briefs). Rebuttal 

briefs, which must be limited to issues 

raised in the case briefs, must be filed 

within five days after the deadline for 

submission of case briefs. See 19 CFR 

351.309(d). A list of authorities relied 

upon, a table of contents, and an 

executive summary of issues should 

accompany any briefs submitted to the 

Department. Executive summaries 

should be limited to five pages total, 

including footnotes. 

In accordance with 19 CFR 

351.310(c), we will hold a public 

hearing, if requested, to afford interested 

parties an opportunity to comment on 

this preliminary determination. 

Individuals who wish to request a 

hearing must submit a written request 

within 30 days of the publication of this 

notice in the Federal Register to the 

Assistant Secretary for Import 

Administration, U.S. Department of 

Commerce, Room 1870, 14th Street and 

Constitution Avenue, NW, Washington, 

DC 20230. Parties will be notified of the 

schedule for the hearing and parties 

should confirm the time, date, and place 

of the hearing 48 hours before the 

scheduled time. Requests for a public 

hearing should contain: (1) party’s 

name, address, and telephone number; 

(2) the number of participants; and (3) 

to the extent practicable, an 

identification of the arguments to be 

raised at the hearing. 

This determination is issued and 

published pursuant to sections 703(f) 

and 777(i) of the Act and 19 CFR 

351.221(b)(4). 

Dated: September 2, 2008. 

David M. Spooner, 

Assistant Secretary for Import 

Administration. 

[FR Doc. E8–20922 Filed 9–8–08; 8:45 am] 

BILLING CODE 3510–DS–S 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[C–580–818] 

Corrosion-Resistant Carbon Steel Flat 

Products From the Republic of Korea: 

Preliminary Results of Countervailing 

Duty Administrative Review 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

SUMMARY: The Department of Commerce 

(the Department) is conducting an 

administrative review of the 

countervailing duty (CVD) order on 

corrosion-resistant carbon steel flat 

products from the Republic of Korea 

(Korea) for the period of review (POR) 

January 1, 2006, through December 31, 

2006. For information on the net 

subsidy for each of the reviewed 

companies, see the ‘‘Preliminary Results 

of Review’’ section of this notice. 

Interested parties are invited to 

comment on these preliminary results. 

See the ‘‘Public Comment’’ section of 

this notice. 

DATES: Effective Date: September 9, 

2008. 

FOR FURTHER INFORMATION CONTACT: 

Robert Copyak or Gayle Longest, AD/ 

CVD Operations, Office 3, Import 

Administration, International Trade 

Administration, U.S. Department of 

Commerce, Room 4014, 14th Street and 

Constitution Ave., NW., Washington, 

D.C. 20230; telephone: (202) 482–2209 

and (202) 482–3338, respectively. 

SUPPLEMENTARY INFORMATION: 

Background 

On August 17, 1993, the Department 

published in the Federal Register the 

CVD order on corrosion-resistant carbon 

steel flat products (CORE) from Korea. 

See Countervailing Duty Orders and 

Amendments of Final Affirmative 

Countervailing Duty Determinations: 

Certain Steel Products from Korea, 58 

FR 43752 (August 17, 1993). On August 

2, 2007, the Department published a 

notice of opportunity to request an 

administrative review of this CVD order. 

See Antidumping or Countervailing 

Duty Order, Finding, or Suspended 

Investigation; Opportunity to Request 

Administrative Review, 72 FR 42383 

(August 2, 2007). On August 31, 2007, 

we received a timely request for review 

from Pohang Iron and Steel Co. Ltd. 

(POSCO) and Dongbu Steel Co., Ltd. 

(Dongbu). On September 25, 2007, the 

Department published a notice of 

initiation of the administrative review of 

the CVD order on corrosion-resistant 

carbon steel flat products from Korea 

covering the POR January 1, 2006, 

through December 31, 2006. See 

Initiation of Antidumping and 

Countervailing Duty Administrative 

Reviews and Requests for Revocation in 

Part, 72 FR 54428 (September 25, 2007). 

On November 2, 2007, the Department 

sent its initial questionnaire to POSCO, 

Dongbu, and the Government of Korea 

(GOK). On December 20, 2007, the 

Department received questionnaire 

responses from POSCO, Pohang Steel 

Co., Ltd. (POCOS, a production affiliate 

of POSCO), POSCO Steel Service & 

Sales Co., Ltd. (POSTEEL, a trading 

company for POSCO),1 and Dongbu. On 

January 7, 2008, the Department 

received questionnaire responses from 

the GOK. On March 4, 2008 and April 

7, 2008, we issued supplemental 

questionnaires to POSCO and the GOK. 

On March 24, 2008 and April 14, 2008, 

we received responses to these 

supplemental questionnaires. 

On April 28, 2008, the Department 

published in the Federal Register a 

notice of extension of the time period 

for issuing the preliminary results. See 

Corrosion-Resistant Carbon Steel Flat 

Products from the Republic of Korea: 

Extension of Time Limit for Preliminary 

Results of Countervailing Duty 

Administrative Review, 73 FR 22920 

(April 28, 2008). 

In accordance with 19 CFR 

351.213(b), this review covers only 

those producers or exporters for which 

a review was specifically requested. The 

companies subject to this review are 

POSCO (and its affiliates POCOS and 

POSTEEL) and Dongbu. 

Affiliated Companies 

In the present administrative review, 

record evidence indicates that POCOS is 

a majority-owned production affiliate of 

POSCO. Under 19 CFR 

351.525(b)(6)(iii), if the firm that 

received a subsidy is a holding 

company, including a parent company 

with its own operations, the Department 


jlentini on PROD1PC65 with NOTICES
52316 Federal Register / Vol. 73, No. 175 / Tuesday, September 9, 2008 / Notices 

will attribute the subsidy to the 

consolidated sales of the holding 

company and its subsidiaries. Thus, we 

attributed any subsidies received by 

POCOS to POSCO and its subsidiaries, 

net of intra-company sales. Dongbu 

reported that it is the only member of 

the Dongbu group in Korea that was 

involved with the sale of subject 

merchandise to the United States. 

Scope of Order 

Products covered by this order are 

certain corrosion-resistant carbon steel 

flat products from Korea. These 

products include flat-rolled carbon steel 

products, of rectangular shape, either 

clad, plated, or coated with corrosionresistant metals such as zinc, aluminum, 

or zinc-, aluminum-, nickel-or ironbased alloys, whether or not corrugated 

or painted, varnished or coated with 

plastics or other nonmetallic substances 

in addition to the metallic coating, in 

coils (whether or not in successively 

superimposed layers) and of a width of 

0.5 inch or greater, or in straight lengths 

which, if of a thickness less than 4.75 

millimeters, are of a width of 0.5 inch 

or greater and which measures at least 

10 times the thickness or if of a 

thickness of 4.75 millimeters or more 

are of a width which exceeds 150 

millimeters and measures at least twice 

the thickness. The merchandise subject 

to this order is currently classifiable in 

the Harmonized Tariff Schedule of the 

United States (HTSUS) at subheadings: 

7210.30.0000, 7210.31.0000, 

7210.39.0000, 7210.41.0000, 

7210.49.0030, 7210.49.0090, 

7210.60.0000, 7210.61.0000, 

7210.70.6030, 7210.70.6060, 

7210.70.6090, 7210.90.1000, 

7210.90.6000, 7210.90.9000, 

7212.20.0000, 7212.21.0000, 

7212.29.0000, 7212.30.1030, 

7212.30.1090, 7212.30.3000, 

7212.30.5000, 7212.40.1000, 

7212.40.5000, 7212.50.0000, 

7212.60.0000, 7215.90.1000, 7215.9030, 

7215.90.5000, 7217.12.1000, 

7217.13.1000, 7217.19.1000, 

7217.19.5000, 7217.20.1500, 

7217.22.5000, 7217.23.5000, 

7217.29.1000, 7217.29.5000, 

7217.30.15.0000, 7217.32.5000, 

7217.33.5000, 7217.39.1000, 

7217.39.5000, 7217.90.1000 and 

7217.90.5000. Although the HTSUS 

subheadings are provided for 

convenience and customs purposes, the 

Department’s written description of the 

merchandise is dispositive. 

Average Useful Life 

Under 19 CFR 351.524(d)(2), we will 

presume the allocation period for nonrecurring subsidies to be the average 

useful life (AUL) of renewable physical 

assets for the industry concerned as 

listed in the Internal Revenue Service’s 

(IRS) 1997 Class Life Asset Depreciation 

Range System, as updated by the 

Department of the Treasury. The 

presumption will apply unless a party 

claims and establishes that the IRS 

tables do not reasonably reflect the 

company-specific AUL or the countrywide AUL for the industry under 

examination and that the difference 

between the company-specific and/or 

country-wide AUL and the AUL from 

the IRS tables is significant. According 

to the IRS tables, the AUL of the steel 

industry is 15 years. No interested party 

challenged the 15-year AUL derived 

from the IRS tables. Thus, in this 

review, we have allocated, where 

applicable, all of the non-recurring 

subsidies provided to the producers/ 

exporters of subject merchandise over a 

15-year AUL. 

Subsidies Valuation Information 

A. Benchmarks for Short-Term 

Financing 

For those programs requiring the 

application of a won-denominated, 

short-term interest rate benchmark, in 

accordance with 19 CFR 

351.505(a)(2)(iv), we used as our 

benchmark an annual average companyspecific weighted-average interest rate 

for commercial won-denominated loans 

outstanding during the POR. Where no 

such benchmark instruments are 

available, we used national average 

lending rates for the POR, as reported in 

the International Monetary Fund’s (IMF) 

International Financial Statistics 

Yearbook. This approach is in 

accordance with 19 CFR 

351.505(a)(3)(ii) and the Department’s 

practice. See, e.g. , Final Affirmative 

Countervailing Duty Determination: 

Structural Steel Beams From the 

Republic of Korea, 65 FR 41051 (July 3, 

2000) (H Beams Investigation), and the 

accompanying Issues and Decision 

Memorandum (H Beams Decision 

Memorandum) at ‘‘Benchmarks for 

Short-Term Financing.’’

For Dongbu’s document acceptance 

(D/A) loans rediscounted under the 

Korean Export Import Bank’s (KEXIM’s) 

rediscount program, we used, for 

benchmark purposes, Dongbu’s usance 

loans issued by commercial banks. See 

Coated Free Sheet Paper from the 

Republic of Korea: Notice of Final 

Affirmative Countervailing Duty 

Determination, 72 FR 60639 (October 

25, 2007) (CFS Paper Investigation) and 

accompanying Issues and Decision 

Memorandum at Comment 18 (CFS 

Paper Decision Memorandum). 

B. Benchmark for Long-Term Loans 

During the POR, POSCO and Dongbu 

had outstanding long-term wondenominated and foreign-currency 

denominated loans from governmentowned banks and Korean commercial 

banks. Based on our findings on this 

issue in prior investigations and 

administrative reviews, we are using the 

following benchmarks to calculate the 

subsidies attributable to respondents’

countervailable long-term loans 

obtained through 2006: 

(1) For countervailable, foreigncurrency denominated loans, pursuant 

to 19 CFR 351.505(a)(2), and consistent 

with our past practice, our preference is 

to use the company-specific, weightedaverage foreign currency-denominated 

interest rates on the company’s loans 

from foreign bank branches in Korea, 

foreign securities, and direct foreign 

loans outstanding during the POR. See, 

e.g., Final Affirmative Countervailing 

Duty Determination: Stainless Steel 

Sheet and Strip in Coils from the 

Republic of Korea, 64 FR 30636, 30640 

(June 8, 1999) (SSSS Investigation). 

Where no such benchmark instruments 

are available, and consistent with 19 

CFR 351.505(a)(3)(ii), as well as our 

practice, we relied on the national 

average lending rates as reported by the 

IMF’s International Financial Statistics 

Yearbook. See, e.g., Final Results and 

Partial Rescission of Countervailing 

Duty Administrative Review: Stainless 

Steel Sheet and Strip in Coils from the 

Republic of Korea, 69 FR 2113 (January 

14, 2004), and the accompanying Issues 

and Decision Memorandum at 

‘‘Benchmarks for Long-Term Loans and 

Discount Rates.’’

(2) For countervailable, wondenominated, long-term loans, our 

practice is to use the company-specific 

corporate bond rate on the company’s 

public and private bonds, as we 

determined that the GOK did not 

control the Korean domestic bond 

market after 1991 and that domestic 

bonds may serve as an appropriate 

benchmark interest rate. See, e.g., Final 

Negative Countervailing Duty 

Determination: Stainless Steel Plate in 

Coils from the Republic of Korea, 64 FR 

15530, 15531 (March 31, 1999) (Plate in 

Coils Investigation); see also 19 CFR 

351.505(a)(2)(ii). Where no such 

benchmark instruments are available, 

we used the national average of the 

yields on three-year corporate bonds, as 

reported by the Bank of Korea (BOK), 

consistent with 19 CFR 351.505(a)(3)(ii). 

We note that the use of the three-year 

corporate bond rate from the BOK 

follows the approach taken in Plate in 

Coils Investigation, in which we 


jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 73, No. 175 / Tuesday, September 9, 2008 / Notices 52317 

2Borsesztein, Eduardo and Jong-Wha Lee, Credit 

Allocation and Financial Crisis in Korea (an 

International Monetary Fund Working Paper), 

February 1999. See Memorandum to the File from 

Eric B. Greynolds, Program Manager, ‘‘Information 

Regarding Reforms to the Korean Financial 

System,’’ at Attachment 1 (August 11, 2008) 

(Direction of Credit Memorandum), a public 

document on file in the Central Records Unit, room 

1117 of the Main Commerce Building. 

3OECD, Asia and the Global Crisis—The 

Industrial Dimension,1999. See Memorandum from 

Melissa G. Skinner, Director, Office of CVD/AD 

Enforcement VI to Holly A. Kuga, Acting Deputy 

Director for Import Administration, ‘‘Direction of 

Credit in Korea: Structural Steel Beams from the 

Republic of Korea’’ (June 7, 2000), which is on the 

record of this administrative review at GOK’s 

January 7, 2008 Questionnaire Response at Exhibit 

A–2 (Direction of Credit Memorandum for H 

Beams). 

4World Bank, Credit Policies and the 

Industrialization of Korea, 1995 World Bank Study. 

See Direction of Credit Memorandum for H Beams, 

which is on the record of this administrative review 

at GOK’s January 7, 2008 Questionnaire Response 

at Exhibit A–2. 

5See, e.g., December 3, 1997, Letter of Intent of 

the Government of Korea to IMF, and December 5, 

1997, Republic of Korea IMF Stand-By 

Arrangement, which are included as Attachment 2 

of the Direction of Credit Memorandum. 

6The Presidential Commission for Financial 

Reform, Financial Reform in Korea: The Third 

Report, 1997. See Direction of Credit Memorandum 

for H Beams, which is on the record of this 

administrative review at GOK’s January 7, 2008 

Questionnaire Response, at Exhibit A–2. 

determined that, absent companyspecific interest information, the 

corporate bond rate is the best indicator 

of a market rate for won-denominated 

long-term loans in Korea. See Plate in 

Coils Investigation, 64 FR at 15531; see 

also 19 CFR 351.505(a)(3)(ii). 

In accordance with 19 CFR 

351.505(a)(2)(i), our benchmarks take 

into consideration the structure of the 

government-provided loans. For 

countervailable fixed-rate loans, 

pursuant to 19 CFR 351.505(a)(2)(iii), 

we used benchmark rates issued in the 

same year that the government loans 

were issued. For countervailable 

variable-rate loans outstanding during 

the POR, pursuant to 19 CFR 

351.505(a)(5)(i), our preference is to use 

the interest rates of variable-rate lending 

instruments issued during the year in 

which the government loans were 

issued. Where such benchmark 

instruments are unavailable, we used 

interest rates from debt instruments 

issued during the POR as our 

benchmarks, as such rates better reflect 

a variable interest rate that would be in 

effect during the POR. This approach is 

in accordance with the Department’s 

practice. See, e.g., Final Results and 

Partial Rescission of Countervailing 

Duty Administrative Review: Stainless 

Steel Sheet and Strip From the Republic 

of Korea, 68 FR 13267 (March 19, 2003), 

and accompanying Issues and Decision 

Memorandum at Comment 8; see also 

19 CFR 351.505 (a)(5)(ii). 

I. Program Preliminarily Determined 

To Confer Subsidies 

A. The GOK’s Direction of Credit 

In the Plate in Coils Investigation, 64 

FR 15530, 15532–33 (March 31, 1999) 

and in the SSSS Investigation, 64 FR 

30636, 30641–42 (June 8, 1999), the 

Department determined that the GOK 

controlled directly and indirectly the 

lending practices of most sources of 

credit in Korea through 1997. 

Furthermore, the Department 

determined that the GOK’s regulated 

credit from domestic commercial banks 

and government-controlled banks such 

as the Korea Development bank (KDB) 

was specific to the steel industry. In the 

Final Affirmative Countervailing Duty 

Determination: Certain Cut-to-Length 

Carbon-Quality Steel Plate from the 

Republic of Korea, 64 FR 73176, 73179 

(December 29, 1999) (CTL Plate 

Investigation) and in the H Beams 

Investigation and H Beams Decision 

Memorandum at ‘‘GOKs Credit Policies 

from 1992 through 1998,’’ the 

Department determined that the GOK’s 

directed lending practices continued to 

be specific with respect to the steel 

industry through 1998. 

In every subsequent CVD 

investigation or administrative review of 

a Korean steel product covering a period 

of investigation (POI) or POR from 2000 

to 2005, we provided the GOK an 

opportunity to present new factual 

information concerning the 

government’s credit policies, which we 

would consider along with our findings 

in prior investigations. For every POI or 

POR covering the years 2000 to 2005, 

respondents decided not to provide new 

information on the GOK’s lending 

policies for domestic banks. Therefore, 

with respect to each of the years from 

2000 to 2005, consistent with section 

776 of the Act, we found that the GOK’s 

direction of credit policies to the steel 

industry continued through the period 

2000 to 2005. See, e.g., Notice of Final 

Affirmative Countervailing Duty 

Determination: Certain Cold-Rolled 

Carbon Steel Flat Products From the 

Republic of Korea, 67 FR 62102, 

(October 3, 2002) (Cold-Rolled 

Investigation), and accompanying Issues 

and Decision Memorandum at ‘‘GOK 

Directed Credit’’ (Cold-Rolled Decision 

Memorandum); Final Results of 

Countervailing Duty Administrative 

Review: Stainless Steel Sheet and Strip 

in Coils from the Republic of Korea, 69 

FR 2113 (January 14, 2004) (SSSS 2004 

Review), and accompanying Issues and 

Decision Memorandum at ‘‘The GOK’s 

Direction of Credit’’ (SSSS 2004 Review 

Decision Memorandum); and Notice of 

Final Results of Countervailing Duty 

Administrative Review: Certain Cut-toLength Carbon-Quality Steel Plate from 

the Republic of Korea, 72 FR 38565 (July 

13, 2007) (CTL Plate 2007 Review), and 

accompanying Issues and Decision 

Memorandum at ‘‘The GOK’s Direction 

of Credit’’ (CTL Plate 2007 Review 

Decision Memorandum). 

The Department’s last determination 

of the GOK’s directed credit policies not 

based on adverse facts available (AFA) 

was in the H Beams Investigation, 

which covered calendar year 1998. See 

H Beams Decision Memorandum at 

‘‘GOK’s Credit Policies from 1992 

through 1998.’’ In its June 7, 2000, 

memorandum regarding direction of 

credit in the H Beams Investigation, the 

Department noted that: (1) The history 

of GOK intervention in the credit market 

from the 1960s into the 1990s including 

the Heavy and Chemical Industry (HCI) 

promotion program that was introduced 

in the 1980s; (2) an IMF Working Paper 

that concluded that the GOK continued 

to favor priority sectors with credit and 

that financial institutions believed that 

the government would protect them on 

risky lending on unprofitable projects; 2

(3) a 1999 OECD report that stated that 

the GOK exerted immense pressure and 

directed much of the country’s lending 

activities, often on the basis of political 

whim rather than a proper evaluation of 

risk; 3 (4) a World Bank study 

illustrating Korea’s selective allocation 

of credit which also concluded that the 

promotion of the steel industry was one 

of the top priorities of the GOK; 4 (5) an 

Agreement with the IMF in which the 

GOK explicitly stated it would stop 

directing credit; 5 (6) a Korean 

Presidential Commission report on the 

government’s pervasive influence and 

intervention in the country’s financial 

sector; 6 (7) the fact that the Korean steel 

industry was one of the top recipients 

of KDB lending during the time in 

which the KDB was the largest source of 

long-time financing in Korea; and (8) 

industry-specific costs of borrowing as 

reported in the Bank of Korea’s 

Financial Statement Analysis and the 

steel industry’s access to the foreign 

loan market that was controlled by the 

GOK. In the H Beams Investigation, the 

GOK argued that measures were taken 

in 1998 to liberalize the Korean 

financial sector. See H Beams Decision 

Memorandum at ‘‘GOKs Credit Policies 

from 1992 through 1998.’’ However, in 

our analysis of the financial reforms for 

our final determination, the Department 

stated that while the GOK started to 

plan and implement reforms in the 


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7The GOK stated that it chose not to respond to 

direction of credit questions in previous 

administrative reviews of steel products covering 

periods after 2000 because of the considerable 

burden of responding to the Department’s questions 

and the very small impact of the Department’s 

finding of directed credit on respondents 

(especially given that the aggregate companyspecific subsidy rates were de minimis). 

8The FSS was established on January 2, 1999, 

under the Act on the Establishment of Financial 

Supervisory Organizations by bringing together four 

supervisory bodies—Banking Supervisory 

Authority, Securities Supervisory Board, Insurance 

Supervisory Board, and Non-Bank Supervisory 

financial sector during 1998, the record 

evidence indicated that the GOK’s 

previous attempts at removing or 

reducing its controls and influence over 

lending in the country were not 

successful. We noted that, in the ten 

years prior to 1998, the GOK twice 

attempted to reform its financial system. 

In 1988, the GOK attempted to 

deregulate interest rates. However, the 

GOK deemed the 1988 liberalization a 

failure because when interest rates 

began to rise, the GOK cancelled the 

reforms by indirectly pressuring the 

banks to keep interest rates low. In the 

early 1990s, the GOK attempted reforms 

again with a four-stage interest rate 

deregulation plan. Again, the GOK 

deemed this attempt to reform the 

financial system a failure. We also noted 

in the H Beams Investigation that, 

during 1998 and 1999, despite its 

apparent liberalization attempts, the 

GOK threatened to cut off credit to 

Korean companies unless the companies 

followed GOK policies. Id. In addition, 

during this period the GOK took control 

of five large commercial banks due to 

the financial crisis. 

Thus, while the Department 

acknowledged in the H Beams 

Investigation that the GOK was 

attempting to make reforms in the 

financial sector in 1998 and 1999, we 

concluded that the then status of these 

reforms was not enough to change our 

affirmative direction of credit 

determination because: (1) The GOK 

had tried twice before within a ten-year 

period to implement financial reforms 

and failed at each attempt; and (2) the 

GOK was undermining its reform 

attempts by threatening to cut off 

lending to Korean firms and by taking 

control of large commercial banks. Id. 

Subsequent to our determination in the 

H Beams Investigation, the GOK did not 

provide any new information on 

financial reforms implemented after 

1997 in any administrative review of 

any outstanding CVD order covering the 

Korean steel industry; therefore, the 

Department has not revisited our 

direction of credit determination with 

respect to the steel industry. 

During the POR, POSCO and Dongbu 

had outstanding loans that were 

received prior to and/or during the 2006 

POR. As in the prior proceedings, we 

requested that the GOK provide 

information pertaining to the GOK’s 

direction-of-credit policies through 

2006. 

In its January 7, 2008, questionnaire 

response in the instant review, the GOK 

provided new information on the issue 

of directed credit and the status of 

reforms within the financial sector for 

the period 2002 through 2006.7 Based 

on this new information and the reforms 

implemented in the Korean financial 

sector after the 1997 Financial Crisis, 

the GOK concludes that the Department 

should now find that the GOK does not 

direct credit to the steel industry. 

In this administrative review, the 

GOK states that, based on the significant 

and sweeping reforms of the Korean 

financial sector after the 1997 Financial 

Crisis, the Department held in Dynamic 

Random Access Memory 

Semiconductors from the Republic of 

Korea: Final Affirmative Countervailing 

Duty Determination (DRAMS 

Investigation) that the Korean financial 

sector did not direct credit to the 

semiconductor industry after 1998. See 

DRAMS Investigation, 68 FR 37122 

(June 23, 2003), and accompanying 

Issues and Decision Memorandum at 

‘‘Direction of Credit and Other Financial 

Assistance’’ (DRAMS Decision 

Memorandum). The GOK states that 

reforms have continued at a fast pace 

since 1998, more banks have been 

privatized, and numerous reforms have 

been implemented in order to enhance 

the financial strength and independence 

of the banking sector. The GOK notes 

that the Corporate Restructuring 

Promotion Act requires banks to 

undertake ongoing evaluations of their 

customers and their financial health to 

avoid insolvency and to take steps to 

restructure the debtors that become 

credit risks. 

The GOK states that when the 

Department made its initial finding of 

directed credit to the steel industry, the 

Department noted that the availability of 

long-term lending in Korea was 

predominantly controlled by the stateowned KDB. The GOK notes that there 

are now numerous sources of long-term 

funds available in the Korean market 

including loans from commercial banks. 

A comparison of outstanding loans from 

the KDB and loans sourced from 

commercial banks shows that 

commercial banks provide the majority 

of long-term lending in Korea. See 

Government of Korea’s January 7, 2008 

Questionnaire Response at Exhibit A–5 

(GOK’s January QR). Furthermore, there 

are now other means for companies to 

finance long-term debt such as issuing 

bonds and notes in Korea and 

internationally. See GOK’s January QR 

at 8. 

According to the questionnaire 

response submitted by the GOK in this 

administrative review, in the wake of 

the 1997 Financial Crisis, the GOK 

launched a financial sector restructuring 

program aimed at maintaining a 

functioning financial system and, at the 

same time, making it more marketoriented. Nearly a quarter of Korea’s 

financial institutions, including nine of 

26 commercial banks at the time, were 

ultimately closed. To improve the 

supervisory framework, the Financial 

Supervisory Commission (FSC), a 

unified body covering banking, 

insurance, non-banks and the capital 

market, was established. The FSC was 

established under the Act on 

Establishment of Financial Supervisory 

Organizations enacted in December 

1997 and last amended in 2003, with a 

view to contributing to the development 

of the national economy by establishing 

an orderly and sound credit system. The 

FSC supervises financial institutions, 

including commercial banks, and takes 

regulatory actions in accordance with 

the applicable statutes. Other than 

general regulatory functions, the FSC 

does not intervene in the daily 

operations, including credit evaluation 

or extensions decisions, of financial 

institutions. The FSC’s supervisory 

functions in relation to bank’s credit 

services are confined to ensuring 

compliance with credit limits, the 

provision of adequate reserves, and 

other ordinary affairs as necessary to 

determine the soundness of operation of 

the financial institution. Since the 

creation of the FSC in 1998, the 

Ministry of Finance and Economy’s 

authority over the establishment of 

banks and the supervision of banks has 

shifted to the FSC. 

The GOK also states that it does not 

intervene in the decision-making 

process for the direction or regulation of 

credit, or for deposit and lending rates, 

which are entirely reserved for the 

discretion of individual financial 

institutions. As a measure in the course 

of prudential regulation, the Financial 

Supervisory Service (FSS) issued a 

Sample Guideline for Credit Risk 

Assessment and a Notification to 

Financial Institutions Regarding Risk 

Evaluation System for Corporations, for 

the purpose of enhancing the risk 

evaluation system by individual 

financial institutions.8 These documents 


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Authority—into a single supervisory organization. 

The primary function of the FSS is examination and 

supervision of financial institutions but can extend 

to other oversight and enforcement functions as 

charged by the Financial Services Commission (the 

former Financial Supervisory Commission) and the 

Securities and Futures Commission. 

provide simple basic guidelines but do 

not offer specific details for the banks to 

follow in managing their credit 

extensions. The GOK states that all 

bank-specific policies on lending and 

credit evaluation are established by 

individual banks. 

The GOK states that it does not 

provide any guidance with regard to the 

commercial interest rates to be charged 

for loans by Korean commercial banks. 

Specific interest rates to be charged by 

financial institutions are only 

determined by the respective financial 

institution itself. As such, interest rates 

differ from bank to bank depending 

upon the policies taken by individual 

banks, the nature of the loans, the 

current conditions of the financial 

market, and the creditworthiness of the 

borrower. 

The Prime Minister’s Decree 408, 

enacted in November 2000, sets forth 

that the government should not 

intervene in the general management of 

the banks. Furthermore, the Depositors 

Protection Act, revised in January 2000, 

in turn sets forth that the officers and 

employees who are responsible for the 

financial troubles of the financial 

institutions should compensate for the 

damages personally and individually. 

Therefore, the GOK states, not only are 

GOK officials prohibited from 

intervening in the daily business 

operation of the banks, but also any 

GOK official making such an attempt 

would assume civil and criminal 

liability in a personal capacity. 

According to the GOK’s questionnaire 

response, during 2004 through 2006, no 

Korean commercial bank was taken over 

or administered by the GOK due to bank 

restructurings in Korea. Furthermore, 

the GOK has privatized most of the 

commercial banks that it took over as a 

result of the 1997 Financial Crisis. Many 

of these commercials banks, such as SC 

First and the Korean Exchange Bank 

(KEB), have majority ownership by 

foreign interests. For other commercial 

banks such as Kookmin, foreign 

shareholders are the major shareholders 

of the bank. Currently only one 

commercial bank, Woori, has majority 

ownership by the GOK. According to 

the GOK, the Korea Deposit Insurance 

Corporation owns approximately 80 

percent of Woori. 

With respect to other lending sources 

found countervailable in prior directed 

credit determinations, the National 

Investment Fund (NIF) was liquidated 

on January 2, 2003. The NIF supported 

heavy and chemical industries during 

the period from 1974 to 1991 by 

extending loans raised through the 

issuance of national investment bonds 

to financial institutions. The GOK also 

noted that the Department determined 

that access to foreign securities and 

direct foreign loans after April 1999 is 

no longer countervailable. 

Finally, the GOK argues that, in 

Coated Free Sheet Paper from the 

Republic of Korea: Notice of Preliminary 

Affirmative Countervailing Duty 

Determination, 72 FR 17507 (April 9, 

2007) (CFS Paper Preliminary 

Determination), the Department 

reaffirmed its finding in the DRAMS 

Investigation that: (1) Distinguished 

between banks that are government 

authorities and banks with some 

government ownership (as a result of 

the 1997 Financial Crisis) that acted as 

commercial banks and (2) measured the 

specificity of long-term loans to the 

paper sector only with respect to GOKowned banks that were government 

authorities. See CFS Paper Preliminary 

Determination at 72 FR 17511–17512, 

17517. The GOK noted that, in the CFS 

Paper Investigation, 72 FR 60639 

(October 25, 2007), the specificity test 

used by the Department demonstrated 

that long-term loans from GOK-owned 

banks were not specific to the paper 

sector. See CFS Paper Investigation and 

CFS Paper Decision Memorandum at 

‘‘Long-Term Lending Provided by the 

KDB and Other GOK-Owned 

Institutions.’’ The GOK states that a 

comparable analysis demonstrates that 

long-term loans from GOK-owned banks 

are not specific to the steel industry 

during the POR. 

We find that the new information 

submitted by the GOK is sufficient to 

warrant a re-examination of the 

Department’s direction of credit 

determination made with respect to the 

Korean steel industry. As noted above, 

the Department last reviewed new 

information in the H Beams 

Investigation, in which we stated that, 

although the GOK was starting to 

implement reforms of the financial 

sector, these reforms were, in part, 

undermined by the GOK’s taking control 

of commercial banks and the fact that 

previous attempts at reforms were not 

successful. See H Beams Decision 

Memorandum at ‘‘GOK’s Credit Policies 

from 1992 through 1998.’’

Our determination in the H Beams 

Investigation reviewed the attempts of 

the GOK to reform the financial sector 

in 1998 and 1999. Id. The GOK has now 

provided new information on the details 

of the financial sector reforms that were 

implemented in the wake of the 1997 

Financial Crisis, arguing that these 

reforms have removed the controls that 

led to the Department’s determination of 

direction of bank credit. While the 

information submitted by the GOK 

supports its arguments regarding 

reforms of the banking sector, our 

original directed credit determination 

relied on independent sources detailing 

GOK control and direction of bank 

credit. Thus, it is appropriate to also 

review those independent sources to 

determine if these sources substantiate 

the information submitted by the GOK 

in this administrative review. However, 

before this review of independent 

research on GOK financial reforms, it is 

important to review the Department’s 

determinations regarding directed credit 

made in both the DRAMS Investigation 

and the CFS Paper Investigation. 

In its questionnaire response, the 

GOK states that since the directed credit 

determination regarding the Korean 

steel industry, the Department has 

addressed directed credit in 

investigations of two non-steel products, 

the DRAMS Investigation and the CFS 

Paper Investigation, and reached 

different conclusions with respect to 

directed credit from Korean banks. 

In the DRAMS Investigation, the 

Department first examined the GOK’s 

credit policies through 1998. See 

DRAMS Investigation, and DRAMS 

Decision Memorandum at ‘‘The GOK’s 

Credit Policies Through 1998.’’ The 

Department stated that it had found that 

the GOK controlled the lending 

practices of banks in Korea in prior 

cases involving the Korean steel 

industry and had determined in the H 

Beams Investigation that the GOK 

directed credit through 1998. Although 

in the DRAMS Investigation the 

Department provided the GOK with an 

opportunity to present new factual 

information concerning the GOK’s 

direction of long-term lending through 

1998, no new information was 

presented. See DRAMS Decision 

Memorandum at 12. Therefore, in the 

DRAMS Investigation, the Department 

determined that the GOK continued to 

control, directly and indirectly, the 

long-term lending practices of Korean 

domestic banks through 1998. See 

DRAMS Decision Memorandum at ‘‘The 

GOK’s Credit Policies Through 1998.’’

However, the respondents in the 

DRAMS Investigation provided new 

information with respect to whether the 

GOK directed bank credit for the period 

1999 through June 30, 2002. See 

DRAMS Decision Memorandum at ‘‘The 

GOK’s Involvement in the ROK Lending 

Sector from 1999 through June 30, 

2002.’’ Therefore, the Department 


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9 Kyung Tae Lee and Inkoo Lee, ‘‘Crisis, Reforms, 

and Structural Changes in the Korean Economy,’’

October 6, 2007, at 4. See Direction of Credit 

Memorandum, at Attachment 3. 

10Takatoshi Ito and Yuko Hashimoto, ‘‘Banking 

Restructuring in Asia: Crisis Management in the 

Aftermath of the Asian Financial Crisis and 

Prospects for Crisis Prevention—Korea,’’ February 5, 

2007, at 17. See Direction of Credit Memorandum, 

at Attachment 4. 

11 Jahyeong Koo and Sherry L. Kiser, ‘‘Recovery 

from a Financial Crisis: The Case of South Korea,’’

Economic and Financial Review, Fourth Quarter 

2001, Federal Reserve Bank of Dallas, at 25. See 

Direction of Credit Memorandum, at Attachment 5. 

12 Jai S. Mah, ‘‘The Restructuring in the PostCrisis Korean Economy,’’ November 2003. See 

Direction of Credit Memorandum at Attachment 6. 

13 Kyung Tae Lee and Inkoo Lee, ‘‘Crisis, Reforms, 

and Structural Changes in the Korean Economy,’’

October 6, 2007, at 4. See Direction of Credit 

Memorandum, at Attachment 3. 

14Stephan Haggard and Andrew MacIntyre, ‘‘The 

Politics of Moral Hazard: The Origins of Financial 

Crisis in Indonesia, Korea and Thailand,’’ August 

1999. See Direction of Credit Memorandum, at 

Attachment 7. 

15 Dr. Janet Yellen, President and CEO of the 

Federal Reserve Bank of San Francisco, ‘‘The Asian 

Financial Crisis Ten Years Later: Assessing the Past 

and Looking to the Future (Speech),’’ February 6, 

2007. See Direction of Credit Memorandum at 

Attachment 8. 

16Soo-Myung Kim, Ji-Young Kim and Hoon-Tae 

Ryoo, ‘‘Restructuring and Reforms in the Banking 

Industry,’’ BIS Papers No. 28 at 267. See Direction 

of Credit Memorandum, at Attachment 9. 

17 International Monetary Fund (IMF), ‘‘IMF 

Country Report No. 04/44,’’ February 2004, at 6. See 

Direction of Credit Memorandum at Attachment 10. 

18Soo-Myung Kim, Ji-Young Kim and Hoon-Tae 

Ryoo, ‘‘Restructuring and Reforms in the Banking 

Industry,’’ BIS Papers No. 28 at 259. See Direction 

of Credit Memorandum, at Attachment 11. 

19Eui-Gak Hwang, ‘‘Banking Sector Restructuring 

in Korea After the 1997–1998 Crisis,’’ at 13. See 

Direction of Credit Memorandum, at Attachment 

12. 

20 International Monetary Fund (IMF), ‘‘IMF 

Country Report No. 05/49,’’ February 2005, at 5. See 

Direction of Credit Memorandum, at Attachment 

13. 

analyzed this information to determine 

whether the GOK continued to direct 

credit from domestic banks after 1999. 

Based on this analysis, the Department 

determined in the DRAMS Investigation 

that the GOK only directed credit to a 

group of companies that were part of the 

Hyundai group, including DRAMs 

manufacturer, Hynix. Id. 

In the CFS Paper Investigation, the 

Department stated that, although the 

GOK exerted broad control over lending 

through 1998 that resulted in credit 

being directed specifically to strategic 

industries such as steel and 

semiconductors, there was not sufficient 

information to conclude that the paper 

industry was designated as a strategic 

industry by the GOK and, thus, a 

beneficiary of directed credit. See CFS 

Paper Decision Memorandum at 

‘‘Direction of Credit to the Pulp and 

Paper Sector.’’ In CFS Paper 

Investigation, the Department also 

separately examined the provision of 

long-term lending provided by the KDB 

and other GOK-owned institutions, and 

found that KDB lending was not specific 

to the paper industry. See CFS Paper 

Decision Memorandum at ‘‘Long-Term 

Lending Provided by the KDB and Other 

GOK-Owned Institutions.’’

Our review of independent research 

on the post-financial crisis reforms 

within the Korean financial and banking 

sector, as discussed further below, 

support the statements made by the 

GOK in this review. Our review also 

provided no evidence of continued GOK 

systemic control of banking credit 

within Korea, including banking credit 

directed towards the Korean steel 

industry. 

In the period after the 1997 Financial 

Crisis and leading up to 2002, the GOK 

implemented a number of reforms in the 

financial sector. As noted by many 

experts, the Korean financial sector was 

long characterized by government 

intervention and a discretionary 

implementation of rules where the GOK 

played a crucial role in credit resource 

allocation.9 The Korean banking sector 

suffered due to inefficient internal 

management and GOK intervention in 

the financial sector prevented the 

development of market discipline. 

Furthermore, selective credit allocation 

by the government resulted in an 

inefficient and distorted financial 

system.10

The GOK controlled the allocated 

financial resources by managing both 

the commercial banks and the stateowned special banks.11

As discussed in the GOK’s 

questionnaire response, after the 1997 

Financial Crisis, the GOK implemented 

a number of reforms of the financial 

sector, many at the behest of the IMF. 

The GOK actively implemented the 

IMF’s suggested reforms, which 

included structural reforms of the 

financial system.12 For example, the 

GOK introduced a new financial 

supervisory system to prevent moral 

hazard. As discussed above, the FSS 

was created in an attempt to overcome 

inconsistent treatment of different 

institutions and to meet international 

standards of financial supervision.13

The GOK increased the independence of 

the Bank of Korea (BOK) from the 

Ministry of Finance and Economy 

(MOFE), and stripped the regulatory 

powers out of both the BOK and MOFE 

and located them in an independent 

regulatory agency.14

Korea’s progress in strengthening its 

supervision of financial institutions was 

especially significant; Korean 

commercial banks adopted Westernstyle board governance systems, where 

the majority of board members are 

outside directors.15 During the 

restructuring process, the GOK pursued 

a policy of encouraging the entry of 

foreign banks and all the regulatory 

obstacles that stood in the way of 

foreign entry were eased.16 The IMF has 

noted that the Korean banking system 

was transformed after the 1997 

Financial Crisis and noted that Korean 

banks strengthened their commercial 

orientation, allowing them to refocus 

their activities on their most profitable 

lending activities.17 The long-held belief 

that ‘‘banks never fail because the 

government will bail them out’’ faded 

away.18 The reforms that were 

implemented by the GOK after the 1997 

Financial Crisis changed the ways banks 

were operated as well as the patterns of 

the asset allocation behavior of banking 

institutions.19 The IMF concluded that 

since the Financial Crisis, the GOK 

accelerated its shift towards a marketoriented development strategy and that 

direct credit was abolished.20

Based on the Department’s decision 

on Korean directed credit policies in 

both the DRAMS Investigation and the 

CFS Paper Investigation, the 

information submitted by the GOK in 

this review regarding directed credit 

and reforms in the financial sector for 

the period 2002–2006, and our 

substantiation of this submitted 

information through independent 

research, we determine that the GOK no 

longer has a systemic practice of 

directing credit within the Korean 

financial sector and that directed credit 

within the Korean steel industry ended 

as of 2002. 

With regard to the period prior to 

2002, the GOK provided some 

information regarding its lending 

policies, and Dongbu and POSCO 

reported receiving long-term loans prior 

to 2002. However, even assuming that 

the GOK’s actions during this period 

constituted direction of credit, any 

potential benefit to Dongbu and POSCO 

during this POR is less than 0.005 

percent. As explained in Coated Free 

Sheet Paper from the People’s Republic 

of China: Final Determination of 

Countervailing Duty Investigation, 72 FR 

60645 (October 25, 2007) (CFS Paper 

from China Investigation), and 

accompanying Issues and Decision 

Memorandum at ‘‘Purchases at Prices 

that Constitute More than Adequate 

Remuneration’’ (CFS Paper from China 

Decision Memorandum), where the 

countervailable subsidy rate for a 

program is less than 0.005 percent, the 

program is not included in the total 

CVD rate. Hence, we preliminarily find 


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21For POSCO, we also removed intra-company 

sales from the denominators of the net subsidy rate 

calculations of the other programs found 

countervailable in these preliminary results. This 

step was not necessary for Dongbu. 

that any long-term loans provided prior 

to 2002 and outstanding during the POR 

did not confer a measurable benefit to 

Dongbu or POSCO during the POR. 

Accordingly, it is unnecessary to make 

a finding as to the countervailability of 

the GOK’s Direction of Credit program 

prior to 2002 for this administrative 

review. 

Therefore, for purposes of this review, 

we determine that there is no directed 

credit to the Korean steel industry from 

2002. This decision is restricted to the 

post-2001 period that was addressed by 

the GOK in its questionnaire response. 

Furthermore, our determination in this 

review does not change the decision 

that was made by the Department in 

DRAMS Investigation that there may 

still be instances in which the GOK may 

attempt to influence bank decisions on 

an ad hoc basis such as the governmentled financial restructuring of Hynix. 

Accordingly, loans that were issued to 

the respondents from private Korean 

commercial banks and governmentowned banks from January 1, 2002, 

onward are not countervailable. We note 

that, as described below, we are still 

examining loans provided by the KDB, 

as it is a government policy bank. 

We have decided to modify our 

treatment of commercial banks with 

government ownership with respect to 

the finding of a financial contribution 

under section 771(5)(B)(i) of the Act. In 

both the DRAMS Investigation and the 

CFS Paper Investigation, we accorded 

different treatment under this section of 

the Act to government-owned banks that 

were commercial banks and those 

government-owned banks that acted as 

policy or specialized banks. Upon 

further review, we have determined 

that, with respect to determining 

whether a government-owned bank is a 

public entity or authority under the 

CVD law, it is more appropriate to focus 

solely on the issue of government 

ownership and control. This treatment 

of government-owned commercial banks 

is consistent with our treatment of all 

other government-owned entities, such 

as government-owned manufacturers, 

utility companies, and service 

providers. Furthermore, this treatment 

of government-owned commercial banks 

is also more consistent with 19 CFR 

351.505(a)(2)(ii) and 351.505(a)(6)(ii). 

Thus, a government-owned or 

controlled bank, be it a commercial 

bank or a policy bank, is considered a 

public entity or authority under the Act. 

This modification of our treatment of 

government-owned commercial banks 

has no effective impact on our directed 

credit determination, but it provides 

uniformity of treatment for all 

government-owned entities and is more 

consistent with our regulations. 

As discussed above, we are only 

countervailing directed credit provided 

prior to January 1, 2002. In accordance 

with 19 CFR 351.505(c)(2) and (4), we 

calculated the benefit for each fixedand variable-rate loan received from 

GOK-owned or -controlled banks to be 

the difference between the actual 

amount of interest paid on the directed 

loan during the POR and the amount of 

interest that would have been paid 

during the POR at the benchmark 

interest rate. We conducted our benefit 

calculations using the benchmark 

interest rates described in the 

‘‘Subsidies Valuation Information’’

section above. For foreign currencydenominated loans, we converted the 

benefits into Korean won using 

exchange rates obtained from the BOK. 

We then summed the benefits from each 

company’s long-term fixed-rate and 

variable-rate won-denominated loans. 

To calculate the net subsidy rate, we 

divided the companies’ total benefits by 

their respective total f.o.b. sales values 

during the POR, as this program is not 

tied to exports or a particular product. 

In calculating the net subsidy rate for 

POSCO, we removed from the 

denominator sales made between 

affiliated parties.21 On this basis, we 

preliminarily determine the subsidy rate 

under the direction of credit program to 

be less than 0.005 percent ad valorem 

for POSCO and less than 0.0005 percent 

ad valorem for Dongbu. 

B. Asset Revaluation Under Article 56(2) 

of the Tax Reduction and Exemption 

Control Act (TERCL) 

Under Article 56(2) of the TERCL, the 

GOK permitted companies that made an 

initial public offering between January 

1, 1987, and December 31, 1990, to 

revalue their assets at a rate higher than 

the 25 percent required of most other 

companies under the Asset Revaluation 

Act. The Department has previously 

found this program to be 

countervailable. For example, in the 

CTL Plate Investigation, the Department 

determined that this program was de 

facto specific under section 

771(5A)(D)(iii) of the Act because the 

actual recipients of the subsidy were 

limited in number and the basic metal 

industry was a dominant user of this 

program. See CTL Plate Investigation, 64 

FR at 73183. We also determined that a 

financial contribution was provided in 

the form of tax revenue foregone 

pursuant to section 771(5)(D)(ii) of the 

Act. Id. The Department further 

determined that a benefit was conferred 

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

of the Act on those companies that were 

able to revalue their assets under TERCL 

Article 56(2) because the revaluation 

resulted in participants paying fewer 

taxes than they would otherwise pay 

absent the program. Id. No new 

information, evidence of changed 

circumstances, or comments from 

interested parties were presented in this 

review to warrant any reconsideration of 

the countervailability of this program. 

The benefit from this program is the 

difference that the revaluation of 

depreciable assets has on a company’s 

tax liability each year. Evidence on the 

record indicates that, in 1989, POSCO 

made an asset revaluation that increased 

its depreciation expense. Dongbu 

reported that it did not use this program 

during the POR. To calculate the benefit 

to POSCO, we took the additional 

depreciation listed in the tax return 

filed during the POR, which resulted 

from the company’s asset revaluation, 

and multiplied that amount by the tax 

rate applicable to that tax return. We 

then divided the resulting benefit by 

POSCO’s total f.o.b. sales. On this basis, 

we preliminarily determine the net 

countervailable subsidy to be 0.02 

percent ad valorem for POSCO. This 

program was not used by Dongbu. 

C. Research and Development (R&D) 

Grants Under the Industrial 

Development Act (IDA) 

The GOK, through the Ministry of 

Commerce, Industry, and Energy 

(MOCIE), provides R&D grants to 

support numerous projects pursuant to 

the IDA, including technology for core 

materials, components, engineering 

systems, and resource technology. The 

IDA is designed to foster the 

development of efficient technology for 

industrial development. To participate 

in this program a company may: (1) 

Perform its own R&D project, (2) 

participate through the Korea New Iron 

and Steel Technology Research 

Association (KNISTRA), which is an 

association of steel companies 

established for the development of new 

iron and steel technology, and/or (3) 

participate in another company’s R&D 

project and share R&D costs, along with 

funds received from the GOK. To be 

eligible to participate in this program, 

the applicant must meet the 

qualifications set forth in the basic plan 

and must perform R&D as set forth 

under the Notice of Industrial Basic 

Technology Development. If the R&D 

project is not successful, the company 

must repay the full amount. 


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In the H Beams Investigation, the 

Department determined that through 

KNISTRA the Korean steel industry 

receives funding specific to the steel 

industry. Therefore, given the nature of 

KNISTRA, the Department found 

projects under KNISTRA to be specific. 

See Preliminary Negative Countervailing 

Duty Determination with Final 

Antidumping Duty Determination: 

Structural Steel Beams From the 

Republic of Korea, 64 FR 69731, 69740 

(December 14, 1999) (unchanged in the 

final determination and the H Beams 

Decision Memorandum, at ‘‘R&D Grants 

Under the Korea New Iron & Steel 

Technology Research Association 

(KNISTRA)’’). Further, we found that 

the grants constituted a financial 

contribution under section 771(5)(D)(i) 

of the Act in the form of a grant, and 

bestowed a benefit under section 

771(5)(E) of the Act in the amount of the 

grant. Id. No new factual information or 

evidence of changed circumstances has 

been provided to the Department with 

respect to this program. Therefore, we 

preliminarily continue to find that this 

program is de jure specific within the 

meaning of section 771(5A)(D)(i) of the 

Act and constitutes a financial 

contribution and confers a benefit under 

sections 771(5)(D)(i) and 771(5)(E) of the 

Act, respectively. 

Dongbu reported that it did not use 

the program during the POR. POSCO 

reported receiving grants through 

KNISTRA during the POR; however, it 

claims that the research grants it 

received under the program are tied to 

non-subject merchandise. Upon review 

of the information submitted by the 

GOK and POSCO, we preliminarily 

determine that certain grants are tied to 

non-subject merchandise, and thus, we 

did not include these grants in our 

benefit calculations. See the GOK’s 

January 4, 2008, Questionnaire 

Response, at Exhibit G–6; POSCO’s 

April 18, 2008, Supplemental 

Questionnaire Response; and POSCO’s 

May 8, 2008, Supplemental 

Questionnaire Response. 

However, POSCO also reported 

receiving certain other grants related to 

new technologies that can be applicable 

for both inputs of subject merchandise 

as well as subject merchandise. See 

POSCO’s December 20, 2007, 

Questionnaire Response, at Exhibit 6; 

and ‘‘Memorandum to the File through 

Eric Greynolds, ‘‘Factual Information 

Regarding the Steel Production Process’’

(September 2, 2008). Some of these R&D 

grants were examined in previous 

reviews of this case and found to 

provide countervailable benefits to 

POSCO. See Corrosion-Resistant Carbon 

Steel Flat Products from the Republic of 

Korea: Final Results of Countervailing 

Duty Administrative Review, 73 FR 2444 

(January 15, 2008) (2005 CORE from 

Korea), and the accompanying Issues 

and Decision Memorandum at Comment 

2 (2005 CORE from Korea Decision 

Memorandum). In this administrative 

review, as in the previous 

administrative review of this case, there 

is nothing on the record that 

demonstrates that the R&D projects in 

question could not be used in the 

production of subject merchandise or 

that this new technology is limited to 

the development of non-subject 

merchandise. Therefore, we find in 

these preliminary results, as in prior 

reviews, that the R&D grants in question 

provide a countervailable benefit to 

POSCO during the 2006 POR. 

In addition, in the instant review 

POSCO provided information on several 

R&D projects for which 2006 is the first 

year that a grant was received. The 

GOK’s and POSCO’s information with 

respect to the R&D projects initially 

funded in 2006 indicates that some of 

these grants are tied specifically to nonsubject merchandise. See GOK’s January 

4, 2008, Questionnaire Response, at 

Exhibit G–6; POSCO’s April 18, 2008, 

Supplemental Questionnaire Response 

at page 1 and Exhibit G–10; and 

POSCO’s May 8, 2008, Supplemental 

Questionnaire Response, at page 2. 

Therefore, we did not include the grants 

that are tied to non-subject merchandise 

in our calculations in these preliminary 

results. With respect to the other R&D 

grants related to projects initially 

funded in 2006, there is no information 

provided in POSCO’s questionnaire 

responses that demonstrates that the 

new technologies developed in this R&D 

project are limited to non-subject 

merchandise and could not be used to 

develop a hot-rolled technology for the 

subject merchandise. See POSCO’s 

April 18, 2008, Supplemental 

Questionnaire Response at pages 1 and 

2 and Exhibit G–10, and POSCO’s May 

8, 2008, Supplemental Questionnaire at 

pages 1 and 2. Moreover, with respect 

to another project initially funded in 

2006, we find that this project involves 

developing methods that could be 

applicable to inputs to both subject 

merchandise and non-subject 

merchandise. Under 19 CFR 

351.525(b)(5), if a subsidy is tied to the 

production or sale of a particular 

product, the Department will attribute 

the subsidy only to that product. But, 

under sub-paragraph (ii), if a subsidy is 

tied to the production of an input 

product, then the Department will 

attribute the subsidy to both the input 

and downstream products produced by 

a corporation, where the input is 

primarily dedicated to downstream 

products. Accordingly, we have 

attributed the grant related to a 

production process that can be used as 

an input into the production of subject 

merchandise to POSCO’s total sales. 

To determine the benefit from the 

grants that POSCO received through 

KNISTRA, we calculated the GOK’s 

contribution for each R&D project. Next, 

in accordance with 19 CFR 

351.524(b)(2), we determined whether 

to allocate the non-recurring benefit 

from the grants over POSCO’s AUL by 

dividing the approved amount by 

POSCO’s total sales in the year of 

approval. Because the approved 

amounts were less than 0.5 percent of 

POSCO’s total sales in the year of 

receipt, we expensed the grants to the 

year of receipt. Next, to calculate the net 

subsidy rate, we divided the portion of 

the benefit allocated to the POR by 

POSCO’s total f.o.b. sales during the 

POR. On this basis, we preliminarily 

determine POSCO’s net subsidy rate 

under this program to be 0.01 percent 

ad valorem. 

D. Exemption of VAT on Imports of 

Anthracite Coal 

Under Article 106 of Restriction of 

Special Taxation Act (RSTA), imports of 

anthracite coal are exempt from the 

value added tax (VAT). In the ColdRolled Investigation, we determined that 

the program is de jure specific under 

section 771(5A)(D)(i) of the Act. Because 

the GOK allows for only a few items to 

be exempt from VAT, the items allowed 

to be imported without paying VAT are 

limited. See Cold-Rolled Decision 

Memorandum at ‘‘Exemption of VAT on 

Imports of Anthracite Coal.’’ We also 

determined that the VAT exemptions 

under the program constitute a financial 

contribution under section 771(5)(D)(ii) 

of the Act, as the GOK is not collecting 

revenue otherwise due, and that the 

exemptions confer a benefit under 

section 771(5)(E) of the Act equal to the 

amount of the VAT that would have 

otherwise been paid if not for the 

exemption. No new information, 

evidence of changed circumstances, or 

comments from interested parties were 

presented in this review to warrant any 

reconsideration of the countervailability 

of this program. Therefore, we 

preliminarily continue to find that this 

program is de jure specific within the 

meaning of section 771(5A)(D)(i) of the 

Act because it is limited, constitutes a 

financial contribution in the form of 

forgone revenue under section 

771(5)(D)(ii) of the Act, and confers a 

benefit in the amount of the revenue 


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foregone within the meaning of 

771(5)(E) of the Act. 

Dongbu reported that it did not use 

the program during the POR. POSCO 

imported anthracite coal during the POR 

and, therefore, received a benefit in the 

amount of the VAT that it should have 

otherwise paid if not for the exemption. 

To determine POSCO’s benefit from the 

VAT exemption on these imports, we 

calculated the amount of VAT that 

would have been due absent the 

program on the total value of anthracite 

coal POSCO imported during the POR. 

We then divided the amount of this tax 

benefit by POSCO’s total f.o.b. sales. 

Based on this methodology, we 

preliminarily determine the POSCO 

received a countervailable subsidy of 

0.06 percent ad valorem. 

E. Other Subsidies Related to 

Operations at Asan Bay: Provision of 

Land and Exemption of Port Fees Under 

Harbor Act 

1. Provision of Land 

As explained in the Cold-Rolled 

Investigation, the GOK’s overall 

development plan is published every 10 

years and describes the nationwide land 

development goals and plans for the 

balanced development of the country. 

Under these plans, the Ministry of 

Construction and Transportation 

(MOCAT) prepares and updates its Asan 

Bay Area Broad Development Plan. See 

Cold-Rolled Decision Memorandum at 

‘‘Provision of Land at Asan Bay.’’ The 

Korea Land Development Corporation 

(Koland) is a government investment 

corporation that is responsible for 

purchasing, developing, and selling 

land in the industrial sites. Id. 

In the Cold-Rolled Investigation, we 

verified that the GOK, in setting the 

price per square meter for land at the 

Kodai Industrial Estate, removed the 10 

percent profit component from the price 

charged to Dongbu. Id. In the ColdRolled Investigation, we further 

explained that companies purchasing 

land at Asan Bay must make payments 

on the purchase and development of the 

land before the final settlement. 

However, in the case of Dongbu, we 

found that the GOK provided an 

adjustment to Dongbu’s final payment to 

account for ‘‘interest earned’’ by the 

company for the pre-payments. Id. 

POSCO reported that it did not use this 

program. 

In the Cold-Rolled Investigation, we 

determined that the price discount and 

the adjustment of Dongbu’s final 

payment to account for ‘‘interest 

earned’’ by the company on its prepayments were countervailable 

subsidies. Specifically, the Department 

determined that they were specific 

under section 771(5A)(D)(iii)(I) of the 

Act, as they were limited to Dongbu. Id. 

Further, the Department found the price 

discount and the price adjustment for 

‘‘interest earned’’ constituted financial 

contributions in the form of grants 

under section 771(5)(D)(i) of the Act and 

conferred benefits in the amount of 

grants within the meaning of section 

771(5)(E) of the Act. Id. No new 

information, evidence of changed 

circumstances, or comments from 

interested parties were presented in this 

review to warrant any reconsideration of 

the countervailability of this program. 

Therefore, we preliminarily continue to 

find that this program is de facto 

specific within the meaning of section 

771(5A)(D)(iii)(I) of the Act because it is 

limited to Dongbu, constitutes a 

financial contribution in the form of 

grants under sections 771(5)(D)(i), and 

confers a benefit in the amount of the 

price discount and the price adjustment 

within the meaning of 771(5)(E) of the 

Act. 

Consistent with the Cold-Rolled 

Investigation, we have treated the land 

price discount and the interest earned 

refund as non-recurring subsidies. Id. In 

accordance with 19 CFR 351.524(b)(2), 

because the grant amounts were more 

than 0.5 percent of the company’s total 

sales in the year of receipt, we applied 

the Department’s standard grant 

methodology, as described under 19 

CFR 351.524(d)(1), and allocated the 

subsidies over a 15-year allocation 

period. See the ‘‘Average Useful Life’’

section above. To calculate the benefit 

from these grants, we used as our 

discount rate the rates described above 

in the ‘‘Subsidies Valuation 

Information’’ section. We then summed 

the benefits received by Dongbu during 

the POR. We calculated the net subsidy 

rate by dividing the total benefit 

attributable to the POR by Dongbu’s 

total f.o.b. sales for the POR. On this 

basis, we determine a net 

countervailable subsidy rate for Dongbu 

of 0.20 percent ad valorem for the POR. 

2. Exemption of Port Fees Under the 

Harbor Act 

Under the Harbor Act, companies are 

allowed to construct infrastructure 

facilities at Korean ports; however, these 

facilities must be deeded back to the 

government. Because the ownership of 

these facilities reverts to the 

government, the government 

compensates private parties for the 

construction of these infrastructure 

facilities. Because a company must 

transfer to the government its 

infrastructure investment, under the 

Harbor Act, the GOK grants the 

company free usage of the facility and 

the right to collect fees from other users 

of the facility for a limited period of 

time. Once a company has recovered its 

cost of constructing the infrastructure, 

the company must pay the same usage 

fees as other users of the infrastructure. 

In the Cold-Rolled Investigation, the 

Department found that Dongbu received 

free use of harbor facilities at Asan Bay 

based upon both its construction of a 

port facility as well as a road that the 

company built from its plant to its port. 

See Cold-Rolled Decision Memorandum 

at ‘‘Dongbu’s Excessive Exemptions 

under the Harbor Act.’’ The Department 

also determined that Dongbu received 

an exemption of harbor fees for a period 

of almost 70 years under this program. 

See id. 

In the Cold-Rolled Investigation, the 

Department found the exemption from 

the fees to be a countervailable subsidy. 

No new information, evidence of 

changed circumstances, or comments 

from interested parties were presented 

in this review to warrant any 

reconsideration of the countervailability 

of this program. Thus, we preliminarily 

continue to find that the program is 

countervailable and is specific under 

section 771(5A)(D)(iii)(I) of the Act 

because the excessive exemption period 

of 70 years is limited to Dongbu. 

Moreover, we preliminarily determine 

that the GOK is foregoing revenue that 

it would otherwise collect by allowing 

Dongbu to be exempt from port charges 

for up to 70 years and, thus, the program 

constitutes a financial contribution 

within the meaning of section 

771(5)(D)(ii) of the Act. Further, we 

preliminarily determine that the 

exemptions confer a benefit under 

section 771(5)(E) of the Act in the 

amount of the port charges that were not 

collected. 

In the Cold-Rolled Investigation, the 

Department treated the program as a 

recurring subsidy and determined that 

the benefit is equal to the average yearly 

amount of harbor fee exemptions 

provided to Dongbu. Id. For purposes of 

these preliminary results, we have 

employed the same benefit calculation. 

To calculate the net subsidy rate, we 

divided the average yearly amount of 

exemptions by Dongbu’s total f.o.b. sales 

for the POR. On this basis, we 

preliminarily determine that Dongbu’s 

net subsidy rate under this program is 

0.02 percent ad valorem. 

E. Short-Term Export Financing 

KEXIM supplies two types of shortterm loans for exporting companies, 

short-term trade financing and 

comprehensive export financing. 

KEXIM provides short-term loans to 


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Korean exporters who manufacture 

export goods under export contracts. 

The loans are provided up to the 

amount of the bill of exchange or 

contracted amount less any amount 

already received. For comprehensive 

export financing loans, KEXIM supplies 

short-term loans to any small or 

medium-sized company, or any large 

company that is not included in the five 

largest conglomerates based on their 

comprehensive export performance. To 

obtain the loans, companies must report 

their export performance periodically to 

KEXIM for review. Comprehensive 

export financing loans cover from 50 to 

90 percent of the company’s export 

performance; however, the maximum 

loan amount is restricted to 30 billion 

won. In Steel Products from Korea, the 

Department determined that the GOK’s 

short-term export financing program 

was countervailable. See Final 

Affirmative Countervailing Duty 

Determinations and Final Negative 

Critical Circumstances Determinations: 

Certain Steel Products From Korea, 58 

FR 37338, 37350 (July 9, 1993) (Steel 

Products from Korea); see also, ColdRolled Decision Memorandum at 

‘‘Short-Term Export Financing.’’ No 

new information, evidence of changed 

circumstances, or comments from 

interested parties were presented in this 

review to warrant any reconsideration of 

the countervailability of this program. 

Therefore, we continue to find this 

program countervailable. Specifically, 

we preliminarily determine that the 

program is specific, pursuant to section 

771(5A)(B) of the Act, because receipt of 

the financing is contingent upon 

exporting. In addition, we preliminarily 

determine that the export financing 

constitutes a financial contribution in 

the form of a loan within the meaning 

of section 771(D)(i) of the Act and 

confers a benefit within the meaning of 

section 771(E)(ii) of the Act. POCOS, 

POSCO’s affiliate, and Dongbu reported 

using short-term export financing 

during the POR. 

Pursuant to 19 CFR 351.505(a)(1), to 

calculate the benefit under this program, 

we compared the amount of interest 

paid under the program to the amount 

of interest that would have been paid on 

a comparable commercial loan. As our 

benchmark, we used the short-term 

interest rates discussed above in the 

‘‘Subsidies Valuation Information’’

section. To calculate the net subsidy 

rate, we divided the benefit by the f.o.b. 

value of the respective company’s total 

exports. On this basis, we determine the 

net subsidy rate to be less than 0.005 

percent ad valorem for POSCO and less 

than 0.005 percent ad valorem for 

Dongbu. 

II. Program Preliminarily Determined 

Not To Confer a Benefit During the POR 

A. Reserve for Research and Manpower 

Development Fund Under RSTA Article 

9 (Formerly Article 8 of TERCL) 

On December 28, 1998, the TERCL 

was replaced by the Tax Reduction and 

Exemption Control Act (RSTA). 

Pursuant to this change in law, TERCL 

Article 8 is now identified as RSTA 

Article 9. Apart from the name change, 

the operation of RSTA Article 9 is the 

same as the previous TERCL Article 8 

and its Enforcement Decree. 

This program allows a company 

operating in manufacturing or mining, 

or in a business prescribed by the 

Presidential Decree, to appropriate 

reserve funds to cover expenses related 

to the development or innovation of 

technology. These reserve funds are 

included in the company’s losses and 

reduce the amount of taxes paid by the 

company. Under this program, capital 

goods companies and capital intensive 

companies can establish a reserve of five 

percent of total revenue, while 

companies in all other industries are 

only allowed to establish a three-percent 

reserve. 

In a prior segment of this proceeding, 

we determined that this program is 

specific under section 771(5A)(D)(i) of 

the Act because the capital goods 

industry is allowed to claim a larger tax 

reserve under this program than all 

other manufacturers. See Certain 

Corrosion-Resistant Carbon Steel Flat 

Products from the Republic of Korea: 

Preliminary Results of Countervailing 

Duty Administrative Review, 72 FR 

51602, 51607–08 (2005 Preliminary 

Results of CORE from Korea) 

(unchanged in 2005 CORE from Korea. 

We also determined that this program 

provides a financial contribution within 

the meaning of section 771(5)(D)(ii) of 

the Act in the form of revenue forgone 

and that it provides a benefit under 

section 771(5)(E) of the Act to the extent 

that companies in the capital goods 

industry, which includes steel 

manufacturers, pay less in taxes than 

they would absent the program. Id. In 

2005 Preliminary Results of CORE from 

Korea, we continued to find the program 

countervailable, but found that the 

companies under investigation only 

contributed to the reserve at the lower 

three-percent rate. Therefore, we found 

no countervailable benefit because the 

companies contributed at the lower rate, 

which was available to any Korean 

company. Id. No new information, or 

evidence of changed circumstances, was 

presented in this review to warrant 

reconsideration of the approaches 

adopted in the 2005 Preliminary Results 

of CORE from Korea. 

In this administrative review, POSCO 

and POCOS each reported contributing 

to the reserve at the three-percent rate 

during the POR. We continue to find 

this program to be potentially 

countervailable. However, as each 

company contributed to the reserve at 

the lower three-percent rate, and in light 

of the Department’s approach in 2005 

Preliminary Results of CORE from 

Korea, we preliminarily determine that 

no countervailable benefits were 

conferred under this program during the 

POR. Dongbu reported that it did not 

use this program during the POR. 

B. Long-Term Lending Provided by the 

KDB and Other GOK-Owned Institutions 

From 2002 to 2006 

In the CFS Paper Investigation, we 

found that long-term loans issued by 

such GOK institutions as the KDB 

constitute a financial contribution 

within the meaning of section 

771(5)(D)(i) of the Act and a benefit 

under section 771(5)(E) of the Act to the 

extent that interest payments on the 

government loans are lower than what 

would have been paid on comparable 

commercial loans. Regarding specificity, 

we found that long-term loans from the 

KDB are not de jure specific within the 

meaning of sections 771(5A)(D)(i) and 

(ii) of the Act because (1) they are not 

based on exportation, (2) they are not 

contingent on the use of domestic goods 

over imported goods, and (3) the 

legislation and/or regulations do not 

expressly limit access to the subsidy to 

an enterprise or industry, or groups 

thereof, as a matter of law. We then 

examined whether such loans were 

specific as a matter of fact under section 

771(5A)(D)(iii) of the Act, that is, 

whether the program is de facto 

specific. We found that there was no 

evidence indicating that these loans 

were de facto specific. See CFS Paper 

Decision Memorandum at ‘‘Long-Term 

Lending Provided by the KDB and Other 

GOK-Owned Institutions.’’

Dongbu reported receiving long-term 

loans from a GOK-owned bank after 

2001. However, upon calculating the 

benefit to Dongbu during the POR by 

applying the benchmark interest rates 

described above, we preliminarily 

determine that any potential benefit to 

Dongbu during this POR is less than 

0.005 percent As explained in CFS from 

China Investigation and CFS from China 

Decision Memorandum, where the 

countervailable subsidy rate for a 

program is less than 0.005 percent, the 

program is not included in the total 


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CVD rate. Hence, we preliminarily find 

that these loans do not confer a 

measurable benefit to Dongbu. 

Accordingly, it is unnecessary to make 

a finding as to the countervailability of 

this program for this POR. We will 

include an examination of this program 

in a future administrative review. 

POSCO and POSCOS reported that they 

did not receive any such lending after 

2001. 

C. D/A Loans Issued by the KDB and 

Other Government-Owned Banks 

In the CFS Investigation, the 

Department determined that D/A loans 

from the KDB and other governmentowned banks constitute a financial 

contribution in the form of a direct 

transfer of funds within the meaning of 

section 771(5)(D)(i) of the Act. In 

addition, we determined that such loans 

confer a benefit, in accordance with 

section 771(5)(E)(ii) of the Act, to the 

extent the amount exporters pay under 

the program is less than the amount 

they would pay on comparable 

commercial loans they could obtain on 

the market. Because receipt of D/A loans 

is contingent upon export performance, 

we also determined that D/A loans from 

the KDB and other government-owned 

banks are specific within the meaning of 

section 771(5A)(B) of the Act. See CFS 

Paper Decision Memorandum at ‘‘D/A 

Loans Issued by KDB and Other 

Government-Owned Banks.’’

Dongbu reported receiving short-term 

D/A financing from a governmentowned bank during the POR. To 

calculate the benefit, we compared the 

amount of interest paid on the 

government loans to the amount of 

interest that would have been paid on 

comparable commercial short-term 

financing that could have been obtained 

on the market. See 19 CFR 351.505(a). 

We calculated the benefit to Dongbu by 

applying the benchmark interest rates 

described above. Because loans under 

this program are discounted (i.e., 

interest is paid up front at the time the 

loans are received), the effective rate 

paid by respondents on their D/A loans 

is a discounted rate. Therefore, it was 

necessary to derive a discounted 

benchmark interest rate from 

respondents’ respective companyspecific weighted-average interest rates 

for short-term commercial loans. 

Because the benchmark interest rate was 

lower than the interest rates paid by 

Dongbu, we calculated a net subsidy 

rate of 0.00 percent ad valorem for 

Dongbu. Therefore, as explained above, 

it is unnecessary to make a finding as to 

the countervailability of this program 

for this POR. POSCO and POCOS did 

not report any D/A financing from 

government-owned banks during the 

POR. We will include an examination of 

this program in a future administrative 

review. 

D. Document Acceptance (D/A) 

Financing Provided Under KEXIM’s 

Trade Rediscount Program 

Under section 771(5)(B)(iii) of the Act, 

a subsidy can be found whenever the 

government ‘‘makes a payment to a 

funding mechanism to provide a 

financial contribution, or entrusts or 

directs a private entity to make a 

financial contribution* * * to a person 

and a benefit is thereby conferred.’’ In 

the CFS Investigation, we determined 

that KEXIM’s trade bill rediscount 

program constitutes a payment to a 

funding mechanism because the 

rediscount ceiling KEXIM provides to 

banks participating under the program 

is contingent on banks subsequently 

lending the funds to exporters. Section 

771(5)(B)(iii) of the Act also states that 

financial contributions from funding 

mechanisms can be a subsidy only if 

providing the contribution would 

normally be vested in the government 

and the practice does not differ in 

substance from practices normally 

followed by the government. This is the 

‘‘government subsidy function’’ prong of 

an indirect financial contribution. Here, 

the banks are performing a government 

subsidy function and, therefore, their 

loans can qualify as subsidies. 

Therefore, we find that loans from banks 

under the rediscount program constitute 

financial contributions within the 

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

Act and confer a benefit upon exporters, 

in accordance with section 771(5)(E)(ii) 

of the Act, to the extent the amount 

exporters pay under the program is less 

than the amount they would pay on 

comparable commercial loans they 

could obtain on the market. Because 

receipt of the loans is contingent upon 

export performance, we also determine 

that KEXIM’s rediscount program is 

specific within the meaning of section 

771(5A)(B) of the Act. We further found 

that subsidies on the loans under 

KEXIM’s trade bill rediscount program 

are tied to sales of subject merchandise 

to the United States in accordance with 

19 CFR 351.525(b)(4) and (5). 

Accordingly, we limited our benefit 

calculations to D/A loans issued on 

sales of subject merchandise to the 

United States. See CFS Paper Decision 

Memorandum at ‘‘Export Loans by 

Commercial Banks Under KEXIM’s 

Trade Bill Rediscounting Program.’’

Dongbu reported receiving short-term 

D/A financing from commercial banks 

that participated in KEXIM’s Trade 

Rediscount Program during the POR. To 

calculate the benefit to Dongbu under 

this program, we compared the amount 

that Dongbu paid on all of its D/A loans 

from commercial banks outstanding 

during the POI to the amount it would 

pay on comparable commercial shortterm financing that it could obtain on 

the market. See 19 CFR 351.505(a). We 

calculated the benefit to Dongbu by 

applying the benchmark interest rates 

described above. Because loans under 

this program are discounted (i.e., 

interest is paid up front at the time the 

loans are received), the effective rate 

paid by respondents on their D/A loans 

is a discounted rate. Because the 

benchmark interest rate was lower than 

the interest rates paid by Dongbu, we 

calculated a net subsidy rate of 0.00 

percent ad valorem for Dongbu. 

Therefore, as explained above, it is 

unnecessary to make a finding as to the 

countervailability of this program for 

this POR. POSCO and POCOS did not 

report any D/A financing from 

commercial banks during the POR. We 

will include an examination of this 

program in a future administrative 

review. 

III. Programs Preliminarily Determined 

To Be Not Used 

A. Overseas Resources Development 

Program 

The GOK enacted the Overseas 

Resource Development Business Act in 

order to establish the foundation for 

ensuring the long-term secure supply of 

essential energy and major material 

minerals, which are mostly imported 

because of scarce domestic resources. 

Pursuant to Article 11 of this Act, the 

Ministry of Commerce, Industry and 

Energy (MOCIE) annually announces its 

budget and the eligibility criteria to 

obtain an overseas resource 

development (ORD) loan. Any company 

that meets the eligibility criteria may 

apply for an ORD loan to MOCIE. The 

eligibility criteria for receiving an ORD 

loan are that the loan should be used for 

surveying, exploration, development, 

production, engineering services and 

financing for the development of 

overseas natural resources. The 

applicant submits its ORD plans to 

MOCIE in accordance with the Overseas 

Resources Development Business Act. 

MOCIE requests that the Korean 

Resources Corporation (KORES), a 

public corporation that is wholly owned 

by the GOK, conduct an eligibility 

review, feasibility study and credit 

evaluation. KORES was established in 

1967 and has assumed a direct role in 

establishing and implementing the 

GOK’s resources development policy, 

whose purpose is to secure mineral 


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resources for Korea. In the selection 

process, KORES uses a loan evaluation 

committee to select the recipients based 

on the criteria for the project to develop 

strategic minerals (e.g., bituminous coal, 

uranium, iron ore, copper, zinc, nickel, 

etc.), including co-development with 

resource-owning countries, mining right 

of minerals, etc. KORES provides the 

evaluation result and its 

recommendation to MOCIE. If the result 

and recommendation are favorable, 

MOCIE approves the loan application 

and provides funds to KORES. KORES 

then lends the funds to the company for 

foreign resource development. 

During the POR, POSCO reported in 

its December 20, 2007, Questionnaire 

Response that it received ORD loans. 

POSCO’s loans were related to an 

investment in a nickel mine. Nickel is 

not an input used in the production of 

subject merchandise. Therefore, we 

preliminarily determine that POSCO did 

not use this program with respect to the 

subject merchandise during the POR. 

We will continue to examine this 

program in future reviews. 

B. Reserve for Investment (Special Cases of 

Tax for Balanced Development Among 

Areas Under TERCL Articles 41–45) 

C. Electricity Discounts Under the Requested 

Loan Adjustment Program 

D. Electricity Discounts Under the 

Emergency Load Reductions Program 

E. Export Industry Facility Loans and 

Specialty Facility Loans 

F. Reserve for Export Loss Under TERCL 

Article 16 

G. Reserve for Overseas Market Development 

Under TERCL Article 17 

H. Reserve for Export Loss Under TERCL 

Article 22 

I. Exemption of Corporation Tax on Dividend 

Income from Overseas Resources 

Development Investment Under TERCL 

Article 24 

J. Tax Credits for Temporary Investments 

Under TERCL Article 27 

K. Tax Credits for Specific Investments 

Under TERCL Article 71 

L. RSTA Article 94: Equipment Investment to 

Promote Worker’s Welfare Under TERCL 

Article 88 

M. Equipment Investment to Promote 

Worker’s Welfare Under TERCL Article 88 

N. Emergency Load Reduction Program 

O. Local Tax Exemption on Land Outside of 

a Metropolitan Area 

P. Short-Term Trade Financing Under the 

Aggregate Credit Ceiling Loan Program 

Administered by the Bank of Korea 

Q. Industrial Base Fund 

R. Excessive Duty Drawback 

S. Private Capital Inducement Act 

T. Social Indirect Capital Investment Reserve 

Funds Under TERCL Article 28 

U. Energy-Savings Facilities Investment 

Reserve Funds Under TERCL Article 29 

V. Scrap Reserve Fund 

W. Special Depreciation of Assets on Foreign 

Exchange Earnings 

X. Export Insurance Rates Provided by the 

Korean Export Insurance Corporation 

Y. Loans from the National Agricultural 

Cooperation Federation 

Z. Tax Incentives from Highly Advanced 

Technology Businesses Under the Foreign 

Investment and Foreign Capital 

Inducement Act 

Preliminary Results of Review 

In accordance with 19 CFR 

351.221(b)(4)(i), we calculated an 

individual subsidy rate for each of the 

producer/exporters subject to this 

administrative review. For the period 

January 1, 2006, through December 31, 

2006, we preliminarily determine the 

net subsidy rate for POSCO to be 0.09 

percent ad valorem and for Dongbu to 

be 0.22 percent ad valorem, both of 

which are de mimimis. See 19 CFR 

351.106(c)(1). 

The Department intends to issue 

assessment instructions to U.S. Customs 

and Border Protection (CBP) 15 days 

after the date of publication of the final 

results of this review. If the final results 

remain the same as these preliminary 

results, the Department will instruct 

CBP to liquidate without regard to 

countervailable duties all shipments of 

subject merchandise produced by 

POSCO and Dongbu, entered, or 

withdrawn from warehouse, for 

consumption from January 1, 2006 

through December 31, 2006. The 

Department will also instruct CBP not to 

collect cash deposits of estimated 

countervailing duties on shipments of 

the subject merchandise produced by 

POSCO and Dongbu, entered, or 

withdrawn from warehouse, for 

consumption on or after the date of 

publication of the final results of this 

review. 

We will instruct CBP to continue to 

collect cash deposits for non-reviewed 

companies at the most recent companyspecific or country-wide rate applicable 

to the company. Accordingly, the cash 

deposit rates that will be applied to 

companies covered by this order, but 

not examined in this review, are those 

established in the most recently 

completed administrative proceeding 

for each company. These rates shall 

apply to all non-reviewed companies 

until a review of a company assigned 

these rates is requested. 

Public Comment 

Pursuant to 19 CFR 351.224(b), the 

Department will disclose to parties to 

the proceeding any calculations 

performed in connection with these 

preliminary results within five days 

after the date of the public 

announcement of this notice. Pursuant 

to 19 CFR 351.309, interested parties 

may submit written comments in 

response to these preliminary results. 

Unless otherwise indicated by the 

Department, case briefs must be 

submitted within 30 days after the 

publication of these preliminary results. 

See 19 CFR 351.309(c)(1)(ii). Rebuttal 

briefs, which are limited to arguments 

raised in case briefs, must be submitted 

no later than five days after the time 

limit for filing case briefs, unless 

otherwise specified by the Department. 

See 19 CFR 351.309(d)(1). Parties who 

submit argument in this proceeding are 

requested to submit with the argument: 

(1) A statement of the issue; and (2) a 

brief summary of the argument. Parties 

submitting case and/or rebuttal briefs 

are requested to provide the Department 

copies of the public version on disk. 

Case and rebuttal briefs must be served 

on interested parties in accordance with 

19 CFR 351.303(f). Also, pursuant to 19 

CFR 351.310(c), within 30 days of the 

date of publication of this notice, 

interested parties may request a public 

hearing on arguments to be raised in the 

case and rebuttal briefs. Unless the 

secretary specifies otherwise, the 

hearing, if requested, will be held two 

days after the date for submission of 

rebuttal briefs. 

Pursuant to 19 CFR 351.305(b)(4), 

representatives of parties to the 

proceeding may request disclosure of 

proprietary information under 

administrative protective order no later 

than 10 days after the representative’s 

client or employer becomes a party to 

the proceeding, but in no event later 

than the date the case briefs, under 19 

CFR 351.309(c)(i), are due. The 

Department will publish the final 

results of this administrative review, 

including the results of its analysis of 

issues raised in any case or rebuttal brief 

or at a hearing. 

These preliminary results of review 

are issued and published in accordance 

with sections 7519(a)(1) and 777(i)(1) of 

the Act and 19 CFR 351.221(b)(4). 

Dated: September 2, 2008. 

David M. Spooner, 

Assistant Secretary for Import 

Administration. 

[FR Doc. E8–20918 Filed 9–8–08; 8:45 am] 

BILLING CODE 3510–DS–P 


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