Countervailing duties: quality steel products from— Brazil,

 
CONTENT

[Federal Register: October 22, 1998 (Volume 63, Number 204)]

[Notices]

[Page 56623-56627]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr22oc98-46]

DEPARTMENT OF COMMERCE

International Trade Administration

[C-351-829]

Initiation of Countervailing Duty Investigation: Certain Hot- Rolled Flat-Rolled Carbon-Quality Steel Products From Brazil

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

EFFECTIVE DATE: October 22, 1998.

FOR FURTHER INFORMATION CONTACT: Christopher Cassel, at (202) 482-4847, or Kristen Johnson, at (202) 482-4406, Import Administration, U.S. Department of Commerce, Room 1870, 14th Street and Constitution Avenue, NW, Washington, D.C. 20230.

INITIATION OF INVESTIGATION:

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (the Act) by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department's regulations are references to the provisions codified at 19 CFR Part 351 (1998).

The Petition

On September 30, 1998, the Department of Commerce (the

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Department) received a petition filedin proper form on behalf of Bethlehem Steel Corporation, US Steel Group, a unit of USX Corporation, Ispat Inland Steel, LTV Steel Company, Inc., National Steel Corporation, California Steel Industries, Gallatin Steel Company, Geneva Steel, Gulf States Steel Inc., IPSCO Steel Inc., Steel Dynamics, Weirton Steel Corporation, Independent Steelworkers Union, and United Steelworkers of America (the petitioners). The Department received supplemental information to the petition on October 13, 1998.

In accordance with section 702(b)(1) of the Act, petitioners allege that manufacturers, producers, or exporters of hot-rolled flat-rolled carbon-quality steel products (subject merchandise or hot-rolled steel) in Brazil receive countervailable subsidies within the meaning of section 701 of the Act. Petitioners also allege that imports of the subject merchandise are materially injuring, or threaten material injury to, an industry in the United States.

The Department finds that the petitioners are interested parties as defined in sections 771(9)(C) and (D) of the Act. Further, the petitioners have demonstrated industry support for the petition, as required by section 732(c)(4) of the Act. See Determination of Industry Support for the Petition section, below.

Scope of the Investigation

For purposes of this investigation, the products covered are certain hot-rolled flat-rolled carbon-quality steel products of a rectangular shape, of a width of 0.5 inch or greater, neither clad, plated, nor coated with metal and whether or not painted, varnished, or coated with plastics or other non-metallic substances, in coils (whether or not in successively superimposed layers) regardless of thickness, and in straight lengths, of a thickness less than 4.75 mm and of a width measuring at least 10 times the thickness. Universal mill plate (i.e., flat-rolled products rolled on four faces or in a closed box pass, of a width exceeding 150 mm but not exceeding 1250 mm and of a thickness of not less than 4 mm, not in coils and without patterns in relief) of a thickness not less than 4.0 mm is not included within the scope of this investigation.

Specifically included in this scope are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, and the substrate for motor lamination steels. IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium and/or niobium added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum.

Steel products to be included in the scope of this investigation, regardless of the Harmonized Tariff Schedule of the United States (HTSUS) definitions, are products in which: (1) iron predominates, by weight, over each of the other contained elements, (2) the carbon content is 2 percent or less, by weight, and (3) none of the elements listed below exceeds the quantity, by weight, respectively indicated:

1.80 percent of manganese, or

1.50 percent of silicon, or

1.00 percent of copper, or

0.50 percent of aluminum, or

1.25 percent of chromium, or

0.30 percent of cobalt, or

0.40 percent of lead, or

1.25 percent of nickel, or

0.30 percent of tungsten, or

0.012 percent of boron, or

0.10 percent of molybdenum, or

0.10 percent of niobium, or

0.41 percent of titanium, or

0.15 percent of vanadium, or

0.15 percent of zirconium.

All products that meet the written physical description, and in which the chemistry quantities do not exceed any one of the levels listed above, are within the scope of this investigation unless otherwise excluded. The following products, by way of example, are outside and/or specifically excluded from the scope of this investigation:

‹bullet› Alloy hot-rolled steel products in which at least one of the chemical elements exceeds those listed above (including e.g., ASTM specifications A543, A387, A514, A517, and A506).

‹bullet› SAE/AISI grades of series 2300 and higher.

‹bullet› Ball bearing steels, as defined in the HTSUS.

‹bullet› Tool steels, as defined in the HTSUS.

‹bullet› Silico-manganese (as defined in the HTSUS) or silicon electrical steel with a silicon level exceeding 1.50 percent.

‹bullet› ASTM specifications A710 and A736.

‹bullet› USS abrasion-resistant steels (USS AR 400, USS AR 500).

The merchandise subject to this investigation is classified in the HTSUS at subheadings: 7208.10.15.00, 7208.10.30.00, 7208.10.60.00, 7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60, 7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60, 7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30, 7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90, 7208.40.60.30, 7208.40.60.60, 7208.53.00.00, 7208.54.00.00, 7208.90.00.00, 7210.70.30.00, 7210.90.90.00, 7211.14.00.30, 7211.14.00.90, 7211.19.15.00, 7211.19.20.00, 7211.19.30.00, 7211.19.45.00, 7211.19.60.00, 7211.19.75.30, 7211.19.75.60, 7211.19.75.90, 7212.40.10.00, 7212.40.50.00, 7212.50.00.00. Certain hot-rolled flat-rolled carbon-quality steel covered by this investigation, including: vacuum degassed, fully stabilized; high strength low alloy; and the substrate for motor lamination steel may also enter under the following tariff numbers: 7225.11.00.00, 7225.19.00.00, 7225.30.30.50, 7225.30.70.00, 7225.40.70.00, 7225.99.00.90, 7226.11.10.00, 7226.11.90.30, 7226.11.90.60, 7226.19.10.00, 7226.19.90.00, 7226.91.50.00, 7226.91.70.00, 7226.91.80.00, and 7226.99.00.00. Although the HTSUS subheadings are provided for convenience and Customs purposes, the written description of the merchandise under investigation is dispositive.

During our review of the petition, we discussed the scope with the petitioners to ensure that the scope in the petition accurately reflects the product for which the domestic industry is seeking relief. Moreover, as we discussed in the preamble to the Department's regulations (62 FR 27323), we are setting aside a period for parties to raise issues regarding product coverage. In particular, we seek comments on the specific levels of alloying elements set out in the description above, the clarity of grades and specifications excluded by example from the scope, and the physical and chemical description of the product coverage. The Department encourages all parties to submit such comments by November 4, 1998. Comments should be addressed to Import Administration's Central Records Unit at Room 1870, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230. The period of scope consultations is intended to provide the Department with ample opportunity to consider all comments and consult with parties prior to the issuance of the preliminary determination.

Consultations

Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department invited representatives of the Brazilian

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government for consultations with respect to the petition filed. On October 7, 1998, the Department held consultations with a representative of the Government of Brazil. See October 8, 1998, memoranda to the file regarding these consultations (public document on file in the Central Records Unit of the Department of Commerce, Room B- 099).

Determination of Industry Support for the Petition

Section 702(b)(1) of the Act requires that a petition be filedon behalf of the domestic industry. Section 702(c)(4)(A) of the Act provides that a petition meets this requirement if the domestic producers or workers who support the petition account for: (1) at least 25 percent of the total production of the domestic like product; and (2) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition.

Section 771(4)(A) of the Act defines the ``industry'' as the producers of a domestic like product. Thus, to determine whether the petition has the requisite industry support, the statute directs the Department to look to producers and workers who produce the domestic like product. The International Trade Commission (ITC), which is responsible for determining whether ``the domestic industry'' has been injured, must also determine what constitutes a domestic like product in order to define the industry. While both the Department and the ITC must apply the same statutory definition regarding the domestic like product (section 771(10) of the Act), they do so for different purposes and pursuant to separate and distinct authority. In addition, the Department's determination is subject to limitations of time and information. Although this may result in different definitions of the like product, such differences do not render the decision of either agency contrary to the law.‹SUP›1‹/SUP›

\1\ See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp. 639, 642-44 (CIT 1988); High Information Content Flat Panel Displays and Display Glass Therefore from Japan: Final Determination; Rescission of Investigation and Partial Dismissal of Petition, 56 FR 32376, 32380-81 (July 16, 1991).

Section 771(10) of the Act defines the domestic like product as ``a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this title.'' Thus, the reference point from which the domestic like product analysis begins is ``the article subject to an investigation,'' i.e., the class or kind of merchandise to be investigated, which normally will be the scope as defined in the petition. Moreover, petitioners do not offer a definition of domestic like product distinct from the scope of the investigation.

In this case, ``the article subject to investigation'' includes certain products which have not previously been included within the scope of investigations involving hot-rolled carbon steel products. To this end, the Department has reviewed reasonably available information to determine whether the products within the scope of the investigation constitute one or more than one domestic like product(s).

Some steel products classified as alloy steels based on the HTSUS are recognized as carbon steels by the industry and/or the marketplace. For example, The Book of Steel, a 1996 publication by Sollac, a flat- rolled steel division of Usinor, one of the largest steel companies in the world, identifies HSLA, IF, and motor lamination steels as falling within categories of plain carbon sheet steels (see chapters 44, 45, and 52). Also, Carbon and Alloy Steels, published in 1996 by ASM International, a major materials society, indicates that HSLA steels are not considered to be alloy steels, but are in fact similar to as- rolled mild-carbon steel and are generally priced by reference to the base price for carbon steels (see page 29). Carbon and Alloy Steels also distinguishes between carbon-boron and alloy-boron steels; the former may contain boron at levels which would classify it as alloy under the HTSUS, but would not classify it as an alloy steel commercially because, unlike the alloy-boron steels, higher levels of other alloying elements are not specified (see, e.g., pages 159 and 161).

We discussed these issues with representatives of the ITC and ITA's Office of Trade Development. Other than the fact that the AISI technically defines alloy steels based on alloy levels comparable to those in the HTSUS, none of the agency representatives cited reasons why the products in question might be treated as distinct from hot- rolled carbon steels. Regarding the AISI classification, the ITC representatives noted that their initial research indicates that various companies, in reporting shipment data by chemical category (e.g., carbon or alloy) to the AISI, categorized steels such as those in question as carbon steels even if they fit the AISI (and HTSUS) definition of alloy steel. See Attachment to the Initiation Checklist, Re: Industry Support, October 15, 1998 (public document on file in the Central Records Unit of the Department of Commerce, Room B-099).

Thyssen Inc., an importer and interested party in this proceeding, filedcomments with the Department on October 8, 1998, and on October 13, 1998, alleging that deficiencies in petitioners' domestic like product analysis undermine their allegation of industry support. First, Thyssen argues that petitioners have not clearly defined the scope, specifically with regard to the inclusion of certain alloy steel within the product description, and that, as a result, petitioners' claims regarding industry support are called into question. The Department has clarified the language used in the ``Scope of Investigation'' section, above. In addition to the research discussed above, the Department has determined that, with respect to certain steel products, such as high- strength low-alloy steel, industry sources indicate that these steel products are manufactured by similar processes, are priced from similar bases, are marketed in comparable ways, and are used for similar applications. See the Attachment to the Initiation Checklist, Re: Industry Support, October 15, 1998. For these reasons, the Department determines that for purposes of this investigation, the domestic like product definition is the single domestic like product defined in the ``Scope of the Investigation'' section, above.

Thyssen also argues that including cut-to-length sheet and strip products in the scope calls into question petitioners' industry support allegations. Thyssen asserts that petitioners do not produce cut-to- length sheet and strip in any significant quantities, and that, in ongoing investigations of stainless steel sheet and strip, petitioners (including certain of the same petitioning domestic producers as in this carbon hot-rolled investigation) have argued that cut-to-length sheet and strip is a downstream product, and therefore not encompassed within the same domestic like product as sheet and strip in coils. However, in recent cases the Department has not treated cut-to-length carbon sheet and strip as a separate like product from other carbon hot-rolled merchandise (see, e.g., Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Cold Rolled Carbon Steel Flat Products from Argentina, 58 FR 7066 (February 4, 1993) and Notice of Final Determination of Sales at Less Than Fair Value: Certain Cold- Rolled Carbon Steel Flat Products from Argentina, 58 FR 37062, 37063 (July 9, 1993) (collectively, Flat Products from Argentina). Furthermore, the

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classification of cut-to-length sheet and strip as a ``downstream'' product, relative to coiled sheet and strip, is not itself an indication that the latter should be considered a different like product from the former. It has not been established that the additional processing stage (cutting to length) has an effect upon the typical ultimate uses, costs, prices, or marketing associated with these products which is significant enough to result in their classification as a separate like product. The earlier investigations involving Flat Products from Argentina, the Department considered the cut-to-length versus coiled distinction as relatively unimportant in its product matching hierarchy, and there is no evidence suggesting that such treatment would no longer be appropriate.

Thyssen also argues that including pickled and oiled coiled sheet in the scope calls into question petitioners' industry support allegations. Thyssen asserts that petitioners internally consume coils that they have pickled and oiled, and that this should be taken into account in the Department's determination of the level of industry support accounted for by petitioners. However, Thyssen has presented no legal argument for distinguishing, in the context of an industry support determination, between internally and externally consumed products, and we find no basis here for such a distinction. For a further description of this methodology, see Attachment to the Initiation Checklist, Re: Industry Support, October 15, 1998. Furthermore, as in the case of cut-to-length sheet and strip, the Department, in recent cases, has not treated pickled and oiled carbon steel coils as separate like products from other carbon hot-rolled merchandise (see, e.g., Flat Products from Argentina). Thyssen has provided no evidence that the additional processing stage (pickling and oiling) has an effect upon the typical ultimate uses, costs, prices, or marketing associated with these products significant enough to result in their classification as a separate like product. In the earlier investigations involving Flat Products from Argentina, the Department considered the pickled versus not pickled distinction as relatively unimportant in its product matching hierarchy, and there is no evidence suggesting that such treatment would no longer be appropriate.

Thyssen also argues that the inclusion in the scope of hot-rolled sheet and strip in widths less than 600 mm calls into question petitioners' industry support allegations. Thyssen asserts that petitioners do not produce these narrow products domestically. As in the case of cut-to-length sheet and strip, the Department has not in recent cases treated such narrower products as separate like products from other carbon hot-rolled merchandise (see, e.g., Flat Products from Argentina). Furthermore, Thyssen has provided no evidence or information that the variation in processing (whether it is slitting wider coils, or rolling more narrow coils) has an effect upon the typical ultimate uses, costs, prices, or marketing associated with these products significant enough to result in their classification as a separate like product. In the earlier investigations involving Flat Products from Argentina, the Department considered the width of products as unimportant in its product matching hierarchy, and there is no evidence suggesting that such treatment would no longer be appropriate.

Based on our analysis of the information and arguments presented to the Department and the information independently obtained and reviewed by the Department, we have determined that there is a single domestic like product which is defined as stated in the ``Scope of Investigation'' section, above. Moreover, the Department has determined that the petition (and subsequent amendment) and supplemental information obtained through Department research contain adequate evidence of industry support and, therefore, polling is unnecessary (see Attachment to the Initiation Checklist, Re: Industry Support, October 15, 1998). For this investigation, petitioners have established industry support representing over 50 percent of total production of the domestic like product.

Accordingly, the Department determines that the petition was filed on behalf of the domestic industry within the meaning of section 702(b)(1) of the Act.

Injury Test

Because Brazil is a ``Subsidies Agreement Country'' within the meaning of section 701(b) of the Act, section 701(a)(2) applies to this investigation. Accordingly, the ITC must determine whether imports of the subject merchandise from Brazil materially injure, or threaten material injury to, a U.S. industry.

Initiation of Countervailing Duty Investigation

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.

The Department has examined the petition on hot-rolled steel from Brazil and found that it complies with the requirements of section 702(b) of the Act. Therefore, in accordance with section 702(b) of the Act, we are initiating a countervailing duty investigation to determine whether manufacturers, producers, or exporters of hot-rolled steel from Brazil receive subsidies. See Initiation Checklist, October 15, 1998 (public document on file in the Central Records Unit of the Department of Commerce, Room B-099).

We are including in our investigation the following programs alleged in the petition to have provided subsidies to producers and exporters of the subject merchandise in Brazil:

  1. Pre-1992 GOB Equity Infusions to COSIPA, CSN, and USIMINAS 2. GOB Equity Infusion to CSN in 1992 3. GOB Equity Infusions to COSIPA in 1992 and 1993 4. GOB Assumption of Debt owed by COSIPA in 1993.

Allegations and Evidence of Material Injury and Causation

The petition alleges that the U.S. industry producing the domestic like product is being materially injured, and is threatened with material injury, by reason of subsidized imports of the subject merchandise. Petitioners explained that the industry's injured condition is evident in the declining trends in net operating profits, net sales volumes, profit to sales ratios, and capacity utilization. The allegations of injury and causation are supported by relevant evidence including U.S. Customs import data, lost sales, and pricing information. The Department assessed the allegations and supporting evidence regarding material injury and causation, and determined that these allegations are sufficiently supported by accurate and adequate evidence and meet the statutory requirements for initiation. See Attachment to Initiation Checklist, Re: Material Injury, October 15, 1998 (public document on file in the Central Records Unit of the Department of Commerce, Room B-099).

Distribution of Copies of the Petition

In accordance with section 702(b)(4)(A)(i) of the Act, copies of the public version of the petition have been provided to the representatives of the Brazilian government. We will attempt to provide copies of the public version of the petition to all the producers/

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exporters named in the petition, as provided for under Sec. 351.203(c)(2) of the Department's regulations.

ITC Notification

Pursuant to section 702(d) of the Act, we have notified the ITC of this initiation.

Preliminary Determination by the ITC

The ITC will determine by November 16, 1998, whether there is a reasonable indication that an industry in the United States is materially injured, or is threatened with material injury, by reason of imports of hot-rolled steel from Brazil. A negative ITC determination will result in the investigation being terminated; otherwise, the investigation will proceed according to statutory and regulatory time limits.

This notice is published pursuant to section 777(i) of the Act.

Dated: October 15, 1998. Robert S. LaRussa, Assistant Secretary for Import Administration.

[FR Doc. 98-28392Filed10-21-98; 8:45 am]

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