[Federal Register Volume 59, Number 142 (Tuesday, July 26, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18171]
[[Page Unknown]]
[Federal Register: July 26, 1994]
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DEPARTMENT OF COMMERCE
[C-433-806, C-475-817]
Notice of Initiation of Countervailing Duty Investigations: Oil
Country Tubular Goods (``OCTG'') From Austria and Italy
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: July 26, 1994.
FOR FURTHER INFORMATION CONTACT: Gary Bettger (Austria) and Kristin
Heim (Italy), Office of Countervailing Investigations, U.S. Department
of Commerce, Room 3099, 14th Street and Constitution Avenue, N.W.,
Washington, DC 20230; telephone (202) 482-2239 and (202) 482-3798,
respectively.
INITIATION:
The Austria Petition
On June 30, 1994, Koppel Steel Corporation; U.S. Steel Group, a
unit of USX Corporation; and USS/Kobe Steel (hereinafter,
``petitioners'') filed with the Department of Commerce (``the
Department'') a countervailing duty petition on behalf of the United
States industry producing OCTG. Co-petitioners in this investigation
are North Star Steel Company; IPSCO Steel, Inc.; and Maverick Tube
Corporation. In accordance with section 702(b) of the Tariff Act of
1930, as amended (``the Act''), petitioners allege that manufacturers,
producers, or exporters of the subject merchandise in Austria receive
countervailable subsidies.
The Italy Petition
On June 30, 1994, Ipsco Steel, Inc. and Maverick Tube Corporation
(herein after, ``petitioners'') filed with the Department of Commerce
(``the Department'') a countervailing duty petition on behalf of the
United States industry producing OCTG. Co-petitioners in this
investigation are North Star Steel Company; Koppel Steel Corporation;
U.S. Steel Group, a unit of USX Corporation; and USS/Kobe Steel
Company. In accordance with section 702(b) of the Act, petitioners
allege that manufacturers, producers, or exporters of the subject
merchandise in Italy receive countervailable subsidies.
Injury Test
Because Austria and Italy are ``countries under the Agreement''
within the meaning of section 701(b) of the Act, Title VII of the Act
applies to these investigations. Accordingly, the U.S. International
Trade Commission (``ITC'') must determine whether imports of the
subject merchandise from Austria and Italy materially injure, or
threaten material injury to, a U.S. industry.
Standing
Petitioners have stated that they have standing to file the
petition because they are interested parties as defined in sections
771(9) (C) and 771(9)(D) of the Act and that they have filed the
petition on behalf of the U.S. industry producing the like product. If
any interested party, as described in sections 771(9)(C), (D), (E) or
(F), wishes to register support for, or opposition to, this petition,
such party should file written notification with the Assistant
Secretary for Import Administration, Room B-099, U.S. Department of
Commerce, 14th Street and Constitution Avenue, N.W., Washington, DC
20230.
Scope of the Investigation
The products covered by these investigations are OCTG, which are
hollow steel products of circular cross-section. These products include
oil well casing, tubing, and drill pipe, of iron (other than cast iron)
or steel (both carbon and alloy), whether or not conforming to American
Petroleum Institute (``API'') or non-API specifications, whether
finished or unfinished (including green tubes). These investigations do
not cover casing, tubing, or drill pipe containing 10.5 percent or more
of chromium. The OCTG subject to these investigations are currently
classified in the Harmonized Tariff Schedule (``HTS'') under item
numbers:
7304.20.10.00, 7304.20.10.10, 7304.20.10.20, 7304.20.30.80,
7304.20.10.30, 7304.20.10.40, 7304.20.10.50, 7304.20.10.60,
7304.20.10.80, 7304.20.20.00, 7304.20.20.10, 7304.20.20.20,
7304.20.20.30, 7304.20.20.40, 7304.20.20.50, 7304.20.20.60,
7304.20.20.80, 7304.20.30.00, 7304.20.30.50, 7304.20.30.60,
7304.20.30.80, 7304.20.40.00, 7304.20.40.10, 7304.20.40.20,
7304.20.40.30, 7304.20.40.40, 7304.20.40.50, 7304.20.40.60,
7304.20.40.80, 7304.20.50.10, 7304.20.50.15, 7304.20.50.30,
7304.20.50.45, 7304.20.50.50, 7304.20.50.60, 7304.20.50.75,
7304.20.60.50, 7304.20.60.60, 7304.20.60.75, 7304.20.70.00,
7304.20.80.00, 7304.20.80.30, 7304.20.80.45, 7304.20.80.60,
7305.20.20.00, 7305.20.40.00, 7305.20.60.00, 7305.20.80.00,
7306.20.10.30, 7306.20.10.90, 7306.20.20.00, 7306.20.30.00,
7306.20.40.00, 7306.20.60.10, 7304.20.30.10, 7304.20.30.20,
7304.20.30.30, 7304.20.30.40, 7304.20.60.10, 7304.20.60.15,
7304.20.60.30, 7304.20.60.45, 7306.20.60.50, 7306.20.80.10,
7306.20.80.50
Although the HTS subheadings are provided for convenience and
customs purposes, our written description of the scope of this
proceeding is dispositive.
Allegation of Subsidies
Section 702(b) of the Act requires the Department to initiate a
countervailing duty proceeding whenever an interested party files a
petition, on behalf of an industry, that (1) alleges the elements
necessary for an imposition of a duty under section 701(a), and (2) is
accompanied by information reasonably available to petitioners
supporting the allegations.
Initiation of Countervailing Duty Investigations
The Department has examined the petitions on OCTG from Austria and
Italy and found that they comply with the requirements of section
702(b) of the Act. Therefore, in accordance with section 702 of the
Act, we are initiating countervailing duty investigations to determine
whether manufacturers, producers, or exporters of OCTG from Austria and
Italy receive subsidies.
A. Austria
We are including in our investigation the following programs which
we believe, based on the petition and the record in the Countervailing
Duty Investigation of Certain Steel Products from Austria (Certain
Steel), to have provided subsidies to producers of the subject
merchandise in Austria:
1 Equity (Capital) Infusions to Voest-Alpine AG (VAAG): 1983, 1984, and
1986
2 Pre-Restructuring Grants to VAAG
3 Assumption of Losses at Restructuring by VAAG
4 Equity Infusions to certain VAAG subsidiaries under Law 298/1987
5 Post-Restructuring Equity Infusions to VAAG
6 Post-Restructuring Grants to VAAG
7 Post-Restructuring Grants to Voest-Alpine Stahl AG (VAS)
Allegation of Upstream Subsidies
Petitioners have alleged that Kindberg, the producer of OCTG,
receives upstream subsidies through its purchase of steel blooms from a
related company, Voest-Alpine Donawitz GmbH (Donawitz). In order to
initiate on an upstream subsidy allegation, the Department's
regulations require that petitioners submit ``factual information
reasonably available'' regarding the following: 1) domestic subsidies
that the government provides to the upstream supplier; 2) the
competitive benefit the subsidies bestow upon the subject merchandise;
and, 3) the significant effect the subsidies have on the cost of
producing the subject merchandise (19 CFR 355.12(b)(8)). Petitioners
have met the three criteria set forth above as described below.
1. Domestic Subsidies
In order to satisfy the first criterion, petitioners have alleged
that Donawitz benefitted from the programs outlined above. We have
analyzed these programs in accordance with section 702(b) of the Act
and found that all programs meet the requirements stated therein.
2. Competitive Benefit
For the purposes of initiation, in determining whether petitioners
have provided sufficient evidence of competitive benefit, the
Department will determine whether a petitioner has provided a
reasonable basis to believe or suspect that:
``(i) The supplier of the input product controls the producer of
the merchandise, the producer controls the supplier, or the supplier
and the producer are both controlled by a third person;
(ii) The price for the input product is lower than the price that
the producer otherwise would pay for the input product in obtaining it
from an unsubsidized seller in an arm's length transaction; or
(iii) The government sets the price of the input product so as to
guarantee that the benefit provided with respect to the input product
is passed through to producers of the merchandise'' (See, Section
355.45(b) of the Department's proposed regulations (54 FR 23366, 23383
(May 31, 1989) (Proposed Regulations)).
It is clear from the petition and the record in Certain Steel that
the condition expressed in (i) has been met. Since 1987, Kindberg and
Donawitz have been separately incorporated and, during this time, they
have been either both controlled by the same third party or Donawitz
controlled Kindberg.
3. Significant Effect
The Department considers that subsidies to the upstream supplier
may have a significant effect if the ad valorem subsidy rate on the
input product multiplied by the proportion of the total production
costs of the merchandise accounted for by the input product is equal
to, or greater than, one percent (see, Proposed Regulations Section
355.45(b)).
Petitioners have provided calculations with respect to subsidies
received by Donawitz for the programs listed above. The alleged
benefits are 10.64 percent. Petitioners additionally provided
information regarding the percentage that steel blooms account for in
the cost of producing OCTG. The alleged benefit to Donawitz multiplied
by the percentage of the cost of production accounted for by the input
exceeds one percent. Therefore, petitioners have provided information
sufficient to support a claim of significant effect.
Therefore, we are initiating an upstream subsidy investigation with
respect to any subsidies received by Donawitz.
We invite interested parties to provide comments with respect to
the methodological approach that the Department plans to follow in its
investigation of subsidies provided on the production of OCTG in
Austria.
B. Italy
We are including in our investigation the following programs
alleged in the petition to have provided subsidies to producers of the
subject merchandise in Italy:
1. 1988/89 Equity Infusion
2. Subsidized Loans under Law 675/77
3. Grants under Law 193/84
4. Retraining Grants
5. Preferential Export Financing under Law 227/77
6. Exchange Rate Guarantee Program under Law 796/76
7. European Coal and Steel Community (``ECSC'') Loans and Interest
Rebates
We are not including the following programs alleged to be
benefitting producers of the subject merchandise in Italy:
1. ``Indirect'' Equity Infusion Into Dalmine
Petitioners have named Dalmine S.p.A. (``Dalmine'') and Acciaierie
Tubificio Arvedi S.p.A. (``Arvedi'') as the producers in Italy of the
subject merchandise. The alleged receipt of an ``indirect'' infusion
concerns only Dalmine; petitioners do not allege that Arvedi received
any such infusion.
Petitioners claim that Dalmine owned 51 percent of a subsidiary,
Tubificio Dalmine Italsider S.p.A. (``Tubificio''), until 1989. The
remaining 49 percent was owned by Dalmine's parent company ILVA S.p.A.
(``ILVA''), which is a government-owned steel producer. In 1989,
Dalmine sold its shares in Tubificio to ILVA. Petitioners allege that
in return, Dalmine received a cash payment from ILVA which should be
treated as an ``indirect'' equity infusion. The reasons cited by
petitioners are that (1) Tubificio was essentially a worthless company
because it made losses in the three years immediately prior to the
sale, and (2) the cash paid by ILVA served as an indirect pass-through
of illegal subsidies received by ILVA.
In previous cases involving the Italian steel industry, we have
treated capital infusions into unequityworthy companies by government-
owned holding companies such as Finsider S.p.A. (``Finsider'') and the
Istituto per la Ricostruzione Industriale (``IRI'') as countervailable
equity infusions. However, in those cases, the recipient companies were
offering their own shares in exchange for cash. (See, e.g., Final
Affirmative Countervailing Duty Determination: Grain-Oriented
Electrical Steel from Italy, (``Electrical Steel''), 59 FR 18357 (April
18, 1994).)
In the instant case, however, Dalmine sold shares in its
subsidiary, Tubificio, to ILVA, Dalmine's parent and the other owner of
Tubificio. ILVA's holding in Dalmine did not increase (absolutely or
relatively) as a result of this transaction. Therefore, we do not view
this as a direct or indirect equity infusion into Dalmine. Moreover,
ILVA is not a holding company like IRI or Finsider, but an operating
company. While the Department found in Electrical Steel and Final
Affirmative Countervailing Duty Determinations: Certain Steel Products
from Italy, (``Certain Steel from Italy''), 58 FR 37327 (July 9, 1993),
that ILVA benefitted from subsidies, those subsidies were allocated to
ILVA S.p.A.'s operations and not to those of its subsidiaries. Beyond
their simple claim that the cash paid by ILVA served as an indirect
pass-through of illegal subsidies received by ILVA, petitioners have
provided no basis for believing that ILVA was channelling government
funds to Dalmine.
On this basis, we are not including the ``indirect'' equity
infusion in the investigation.
2. Secured and Unsecured Loans From Italian Banks to Dalmine
Petitioners maintain that Dalmine was uncreditworthy from 1978
through 1992. According to petitioners, all secured and unsecured loans
obtained by Dalmine from Italian banks during these years are,
therefore, countervailable. Petitioners state that, while they cannot
outline the terms of the financing provided, the loans are
countervailable because they were provided at interest rates lower than
the rates that should have been charged to an uncreditworthy company.
Petitioners have not specified under which laws or programs the
secured and unsecured loans are being provided, nor have petitioners
provided information as to how this funding is specific to the steel
industry (see the petition requirements in section 355.12(b)(7) of the
Department's regulations).
Regarding Arvedi, petitioners have not alleged that the company
received countervailable benefits from secured and unsecured loans, nor
have petitioners alleged that Arvedi was uncreditworthy.
For these reasons, we are not including the secured and unsecured
loans in our investigation.
3. Debt Forgiveness to Dalmine in Connection With the 1981 and 1988
Restructuring Plans
Petitioners claim that in Certain Steel from Italy, the Department
found that Finsider (the government-owned holding company for the steel
industry until 1989) benefitted from government assumption of debt in
connection with the 1981 and 1988 restructurings of the state-owned
steel industry. Because Dalmine was a subsidiary of Finsider in those
years, petitioners allege that Dalmine benefitted from the debt
forgiveness granted to Finsider in connection with these
restructurings. Petitioners have not alleged that Arvedi benefitted
from either instance of debt forgiveness provided to Finsider.
Regarding the 1981 debt forgiveness, the Department established in
Certain Steel from Italy that Finsider assumed the debts of its
subsidiary Italsider which we treated as a countervailable subsidy to
Italsider. In the present case, however, petitioners have not provided
any evidence that Dalmine or Arvedi benefitted from this debt
forgiveness, or that Finsider forgave Dalmine's or Arvedi's debts.
With respect to the 1988 debt forgiveness, we found in Certain
Steel from Italy that a portion of Finsider's liabilities was forgiven
in connection with another restructuring of the state-owned steel
industry undertaken from 1988-1990. We treated this forgiveness as a
countervailable subsidy to ILVA, which was the respondent company in
that investigation. However, in Electrical Steel, we focused our
investigation on subsidies provided directly to the producer of the
subject merchandise, rather than subsidies received by its parent
company. Therefore, we did not treat the debt forgiveness provided to
Finsider as a countervailable benefit in Electrical Steel.
In this case, petitioners have not shown that any debt forgiveness
was provided directly to Dalmine or Arvedi, or that a portion of the
debt forgiven to Finsider in 1988 can be attributed to Dalmine or
Arvedi. On this basis, we are not including the 1981 or 1988 instances
of debt forgiveness provided to Finsider in our investigation.
4. European Investment Bank (``EIB'') Loans to Dalmine
Petitioners maintain that Dalmine received loans from the EIB in
the early 1980s. Petitioners do not claim that Arvedi received EIB
loans. While petitioners do not allege that the EIB loan program itself
represents a countervailable subsidy, they contend that Dalmine
received EIB loans at interest rates below the rates that should have
been applied to an uncreditworthy company.
The Department has previously found EIB loans to be not
countervailable (see, e.g., Certain Steel Products from Belgium, 58 FR
37273 at 37285 (July 9, 1993)). Because petitioners have not provided
any new information that would cause us to change our earlier
determination, we are not including the EIB loans in our investigation.
5. European Regional Development Fund (``ERDF'') Subsidies
Petitioners claim that some loans obtained by Dalmine from the EIB
and ECSC may have been subsidized by the ERDF, but have not presented
any evidence in support of this allegation. Petitioners do not allege
that Arvedi received ERDF subsidies.
At verification of the responses submitted by the European
Community (``EC'') in Certain Steel from Italy, we found that ERDF
grants are provided to regions whose development is lagging behind and
to regions seriously affected by industrial decline. In addition, we
found that rural regions with certain development problems are eligible
for ERDF aid. In the instant case, however, petitioners have not
demonstrated that Dalmine or Arvedi have production facilities in the
regions that are eligible for ERDF assistance. Moreover, there is no
evidence in the petition or in previous investigations that ERDF grants
are used to subsidize ECSC or EIB loans. For these reasons, we are not
including the ERDF grants in our investigation.
6. Early Retirement Benefits for Dalmine Under Law 193/84
Petitioners allege that Dalmine has used the early retirement
provisions under Law 193/84 and that this program provided a
countervailable subsidy to Dalmine. Petitioners request that the
Department treat benefits under Law 193/84 as non-recurring grants.
Petitioners have not provided any details regarding Arvedi's use of
early retirement.
Dalmine's Annual Reports show that the company used early
retirement pursuant to Law 193/84 in 1984 through 1987. In Certain
Steel from Italy, the Department found early retirement, including the
program provided under Law 193/84, to be countervailable. Because early
retirement is a program we typically consider to be recurring (see the
General Issues Appendix to Final Affirmative Countervailing Duty
Determination: Certain Steel Products from Austria, 58 FR 37217 at
37226 (July 9, 1993), we countervailed the program as a recurring grant
in Certain Steel from Italy.
At verification in Electrical Steel, Italian government officials
explained that there were two laws providing for early retirement in
1992: Law 223/91 and Law 406/92. We found early retirement under Law
223/91 to be not countervailable in our final determination. We did not
make a determination with respect to any other early retirement laws,
including Law 193/84, because these laws were not used by the
Electrical Steel respondent in the period of investigation. Petitioners
have requested that, because the Department did not make a
determination with respect to Law 193/84 in Electrical Steel, we should
investigate whether Dalmine used early retirement under Law 193/84.
However, information collected in Electrical Steel suggests that Law
193/84 has been superseded and petitioners have not presented any
evidence to the contrary. There is no evidence in the petition that
Dalmine used early retirement under Law 193/84 after 1987. Rather,
petitioners want us to change our practice and treat early retirement
as a non-recurring benefit.
The last year for which we have been able to establish that Dalmine
used early retirement is 1991. The Annual Report for that year shows
that Dalmine used the early retirement program under Law 223/91, which
we found to be not countervailable in Electrical Steel. Moreover,
petitioners have not presented any information that would cause us to
change our earlier determination that early retirement, if found
countervailable, should be treated as a recurring grant. For these
reasons, we are not including early retirement in our investigation.
7. Grants to Dalmine From the Cassa per il Mezzogiorno
Petitioners allege that Dalmine has received grants from the Cassa
per il Mezzogiorno (``Cazmez'') which are directed to southern Italy.
In Certain Steel, we found such grants to be countervailable because
they were provided on a regional basis. Petitioners are not aware of
any Dalmine plants outside of Bergamo, which is in the North, but point
to Dalmine's Annual Reports which show that the company received Cazmez
grants in the early and mid-1980s. Based on this finding, petitioners
state that Dalmine must have a plant located in the South. Therefore,
petitioners request that the Department, in addition to the Cazmez
grants, investigate a large number of other subsidy programs directed
to the South, should we find that Dalmine maintains production
facilities there.
Regarding Arvedi, petitioners have not alleged that the company
received Cazmez grants or that it benefitted from any other subsidy
programs directed to the South. On the contrary, petitioners maintain
that Arvedi is located in Cremona which is in the north of Italy.
From Dalmine's Annual Reports, we have found that the company
formerly had two production facilities in the South, both of which
produced welded pipe. Apart from these two plants, which were spun off
in 1989, we have not found any other production facilities in the
South. Because both the plants in the South produced welded pipe, which
is not included in the scope of this investigation, we are not
including the Cazmez grants or any other programs directed to the South
in our investigation.
ITC Notification
Pursuant to section 702(d) of the Act, we have notified the ITC of
these initiations.
Preliminary Determination by the ITC
The ITC will determine by August 15, 1994, whether there is a
reasonable indication that an industry in the United States is being
materially injured, or is threatened with material injury, by reason of
imports from Austria and Italy of OCTG. Any ITC determination which is
negative will result in the investigations being terminated; otherwise,
the investigations will proceed according to statutory and regulatory
time limits.
This notice is published pursuant to 702(c)(2) of the Act and 19
CFR 355.13(b).
Dated: July 20, 1994.
Barbara R. Stafford,
Acting Assistant Secretary for Import Administration.
[FR Doc. 94-18171 Filed 7-25-94; 8:45 am]
BILLING CODE 3510-DS-P