Notice of Preliminary Results of Countervailing Duty Administrative Review: Certain Cut-to-Length Carbon-Quality Steel Plate From the Republic of Korea, 10163-10169 [E7-4070]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 72, Number 44 (Wednesday, March 7, 2007)]
[Notices]
[Pages 10163-10169]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-4070]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-580-837]


Notice of Preliminary Results of Countervailing Duty 
Administrative Review: Certain Cut-to-Length Carbon-Quality Steel Plate 
From the Republic of Korea

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 certain 
cut-to-length carbon-quality steel plate (CTL plate) from the Republic 
of Korea (Korea) for the period January 1, 2005, through December 31, 
2005, the period of review (POR). For information

[[Page 10164]]

on the net subsidy rate for the reviewed company, 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.

EFFECTIVE DATE: March 7, 2007.

FOR FURTHER INFORMATION CONTACT: Jolanta Lawska or Kristen Johnson, AD/
CVD Operations, Office 3, Import Administration, International Trade 
Administration, U.S. Department of Commerce, Room 4014, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
3862 or (202) 482-4793, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On February 10, 2000, the Department published in the Federal 
Register the CVD order on CTL plate from Korea. See Notice of Amended 
Final Determination: Certain Cut-to-Length Carbon-Quality Steel Plate 
From India and the Republic of Korea; and Notice of Countervailing Duty 
Orders: Certain Cut-to-Length Carbon-Quality Steel Plate From France, 
India, Indonesia, Italy, and the Republic of Korea, 65 FR 6587 
(February 10, 2000) (CTL Plate Order). On February 1, 2006, 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, 71 FR 5239 (February 1, 
2006). On February 28, 2006, we received a timely request for review 
from Dongkuk Steel Mill Co., Ltd. (DSM), a Korean producer and exporter 
of subject merchandise. On April 5, 2006, the Department initiated an 
administrative review of the CVD order on CTL plate from Korea, 
covering January 1, 2005, through December 31, 2005. See Initiation of 
Antidumping and Countervailing Duty Administrative Reviews and Deferral 
of Administrative Reviews, 71 FR 17077 (April 5, 2006).
    On July 6, 2006, the Department issued a questionnaire to the 
Government of Korea (GOK) and DSM. We received questionnaire responses 
from DSM and the GOK on September 12, 2006.
    On October 16, 2006, the Department published in the Federal 
Register an extension of the deadline for the preliminary results. See 
Certain Cut-to-Length Carbon Quality Steel Plate from Korea; Notice of 
Extension of Time Limit for Preliminary Results of Countervailing Duty 
Administrative Review, 71 FR 60689 (October 16, 2006).
    On October 31, 2006, the Department issued supplemental 
questionnaires to the GOK and DSM. We received questionnaire responses 
from the GOK and DSM on November 27 and November 28, 2006, 
respectively.
    In accordance with 19 CFR 351.213(b), this review covers only those 
producers or exporters for which a review was specifically requested. 
The only company subject to this review is DSM.

Scope of Order

    The products covered by the CVD order are certain hot-rolled 
carbon-quality steel: (1) Universal mill plates (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 nominal or actual 
thickness of not less than 4 mm, which are cut-to-length (not in coils) 
and without patterns in relief) of iron or non-alloy-quality steel; and 
(2) flat-rolled products, hot-rolled, of a nominal or actual thickness 
of 4.75 mm or more and of a width which exceeds 150 mm and measures at 
least twice the thickness, and which are cut-to-length (not in coils). 
Steel products to be included in the scope of the order are of 
rectangular, square, circular or other shape and of rectangular or non-
rectangular cross-section where such non-rectangular cross-section is 
achieved subsequent to the rolling process (i.e., products which have 
been ``worked after rolling'')--for example, products which have been 
beveled or rounded at the edges. Steel products that meet the noted 
physical characteristics that are painted, varnished or coated with 
plastic or other non-metallic substances are included within this 
scope. Also, specifically included in the scope of the order are high 
strength, low alloy (HSLA) steels. HSLA steels are recognized as steels 
with micro-alloying levels of elements such as chromium, copper, 
niobium, titanium, vanadium, and molybdenum. Steel products to be 
included in this scope, regardless of 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 two percent or less, by weight; and (3) none of 
the elements listed below is equal to or 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 0.10 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 
zirconium. All products that meet the written physical description, and 
in which the chemistry quantities do not equal or exceed any one of the 
levels listed above, are within the scope of this order unless 
otherwise specifically excluded. The following products are 
specifically excluded from the order: (1) Products clad, plated, or 
coated with metal, whether or not painted, varnished or coated with 
plastic or other non-metallic substances; (2) SAE grades (formerly AISI 
grades) of series 2300 and above; (3) products made to ASTM A710 and 
A736 or their proprietary equivalents; (4) abrasion-resistant steels 
(i.e., USS AR 400, USS AR 500); (5) products made to ASTM A202, A225, 
A514 grade S, A517 grade S, or their proprietary equivalents; (6) ball 
bearing steels; (7) tool steels; and (8) silicon manganese steel or 
silicon electric steel.
    The merchandise subject to the order is currently classifiable 
under the HTSUS under subheadings: 7208.40.3030, 7208.40.3060, 
7208.51.0030, 7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000, 
7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 
7211.14.0045, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 
7225.40.3050, 7225.40.7000, 7225.50.6000, 7225.99.0090, 7226.91.5000, 
7226.91.7000, 7226.91.8000, 7226.99.0000.
    Although the HTSUS subheadings are provided for convenience and 
customs purposes, the written description of the merchandise covered by 
the order is dispositive.

Subsidies Valuation Information

Average Useful Life

    Under 19 CFR 351.524(d)(2), we will presume the allocation period 
for non-recurring 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 
country-wide 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 table is significant. According to

[[Page 10165]]

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.

Benchmarks for Long-Term Loans Issued Through 2005

    During the POR, DSM had outstanding long-term won-denominated and 
foreign-currency denominated loans from government-owned 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 respondent's 
countervailable long-term loans obtained in the years 1991 through 
2005:
    (1) For countervailable, foreign-currency denominated loans, 
pursuant to 19 CFR 351.505(a)(2)(ii), and consistent with our past 
practice to date, our preference is to use the company-specific, 
weighted-average foreign currency-denominated interest rates on the 
company's loans from foreign bank branches in Korea, foreign 
securities, and direct foreign loans received after 1991. 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) (Sheet and Strip Investigation); see also 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). Where no such benchmark instruments are 
available, and consistent with 19 CFR 351.505(a)(3)(ii) as well as our 
methodology in a prior administrative review, we rely on the lending 
rates as reported by the IMF's International Financial Statistics 
Yearbook. See 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) (2001 Sheet 
and Strip), and the accompanying Issues and Decision Memorandum (2001 
Sheet and Strip Decision Memorandum), at Section II. B ``Subsidies 
Valuation Information.''
    (2) For countervailable, won-denominated, long-term loans, our 
practice is to use the company-specific corporate bond rate on the 
company's public and private bonds. We note that this benchmark is 
consistent with our decision in Plate in Coils Investigation, 64 FR at 
15531, in which we determined that the GOK did not direct or control 
the Korean domestic bond market after 1991, and that the interest rate 
on domestic bonds may serve as an appropriate benchmark interest rate. 
Where unavailable, we used the national average of the yields on three-
year corporate bonds, as reported by the Bank of Korea (BOK). For 
example, we note that the use of the three-year corporate bond rate 
from the BOK follows the approach taken in the Plate in Coils 
Investigation, in which we determined that, absent company-specific 
interest rate 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 505(a)(3)(ii).
    In accordance with 19 CFR 351.505(a)(2), our benchmarks take into 
consideration the structure of the government-provided loans. For 
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 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 use weighted average interest rates of all variable 
rate loans issued during the POR as our benchmark, 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 in 
similar cases. 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) (2000 
Sheet and Strip), and accompanying Issues and Decision Memorandum 
(Sheet and Strip Decision Memorandum), at Comment 8; see also 19 CFR 
351.505(a)(5)(ii).

Programs Preliminarily Determined To Confer Subsidies

1. The GOK's Direction of Credit
    In the most recently completed administrative review of this CVD 
order, the Department reaffirmed earlier determinations that the GOK 
controlled and directed lending through year 2001. In addition, the 
Department noted that neither DSM nor the GOK provided any new 
information that would warrant a change in the Department's 
determination. Finding that the GOK did not act to the best of its 
ability, the Department employed an adverse inference and determined 
that the GOK continued it direction-of-credit policies from 2002 
through 2004. See, e.g., Preliminary Results of Countervailing Duty 
Administrative Review: Certain Cut-to-Length Carbon-Quality Steel Plate 
from the Republic of Korea, 71 FR 11397, 11399 (March 7, 2006) (2004 
CTL Plate Preliminary Results) (unchanged in final results by Notice of 
Final Results of Countervailing Duty Administrative Review: Certain 
Cut-to-Length Carbon-Quality Steel Plate from the Republic of Korea, 71 
FR 38861 (July 10, 2006)).
    During the POR, DSM had outstanding loans that were received prior 
to the 2002 period. As in the prior administrative review, in this 
review, we asked the GOK for information pertaining to the GOK's 
direction-of-credit policies for the period from 2002 through 2005. The 
GOK did not provide any new or additional information that would 
warrant a departure from these prior findings, stating instead that:

``* * * the Government of Korea continues to believe that the 
evidence demonstrates that there has been no direction of credit to 
the Korean steel industry. Nevertheless, the Department has 
consistently found that long-term loans received by Korean steel 
producers were the result of the Korean Government's direction, 
despite the Government's repeated submission of evidence to the 
contrary * * * . Consequently, in this review, the Government will 
not contest the Department's findings on direction of long-term 
loans.''

    See September 12, 2006, GOK, submission at page 9. Because the GOK 
withheld the requested information on its lending policies, the 
Department does not have the necessary information on the record to 
determine whether the GOK has continued its direction-of-credit 
policies through 2005; therefore, the Department must base its 
determination on facts otherwise available. See section 776(a)(2)(A) of 
the Act.
    Section 776(b) of the Act further provides that the Department may 
use an adverse inference in applying the facts otherwise available when 
a party has failed to cooperate by not acting to the best of its 
ability to comply with a request for information. Section 776(b) of the 
Act also authorizes the Department to use as adverse facts available 
(AFA) information derived from the petition, the final determination, a 
previous administrative review, or other information placed on the 
record.

[[Page 10166]]

    For the reasons discussed below, we determine that, in accordance 
with sections 776(a)(2) and 776(b) of the Act, the use of AFA is 
appropriate for the preliminary results for the determination of 
direction of credit for loans received from 2002 through 2005.
    In this case, the GOK refused to supply requested information that 
was in its possession, even though the GOK had provided similar 
information in prior proceedings. See, e.g., Final Affirmative 
Countervailing Duty Determination: Certain Cut-to-Length Carbon-Quality 
Steel Plate from the Republic of Korea, 64 FR 73176, 73178 (December 
29, 1999) (CTL Plate Investigation). Therefore, consistent with 
sections 776(a)(2)(A) and (C) of the Act, we find that the GOK did not 
act to the best of its ability and, therefore, are employing an adverse 
inference in selecting from among the facts otherwise available. As 
AFA, we preliminarily find that the GOK's direction-of-credit policies 
continued through 2005. As noted above, the GOK's direction-of-credit 
policies provide a financial contribution, confer a benefit, and are 
specific, pursuant to sections 771(5)(D)(i), 771(5)(E)(ii), and 
771(5A)(D)(iii) of the Act, respectively. Therefore, we preliminarily 
find that lending from domestic banks and government-owned banks 
through 2005 are countervailable. Thus, any loans received through 2005 
from domestic banks and government-owned banks that were outstanding 
during the POR are countervailable, to the extent that the interest 
amount paid on the loan is less than what would have been paid on a 
comparable commercial loan. The Department's decision to rely on 
adverse inferences when lacking a response from the GOK regarding the 
direction-of-credit issue is in accordance with its practice. See, 
e.g., 2004 CTL Plate Preliminary Results (unchanged in final results by 
Notice of Final Results of Countervailing Duty Administrative Review: 
Certain Cut-to-Length Carbon-Quality Steel Plate from the Republic of 
Korea, 71 FR 38861 (July 10, 2006)).
    DSM received long-term fixed- and variable-rate loans from GOK-
owned or -controlled institutions that were outstanding during the POR 
and had both won- and foreign currency-denominated loans outstanding 
during the POR. In accordance with 19 CFR 351.505(c)(2) and (4), we 
calculated the benefit for each fixed- and 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 currency-denominated loans, we 
converted the benefits into Korean won using exchange rates obtained 
from the BOK. We then summed the benefits from DMS's long-term fixed-
rate and variable-rate won-denominated loans.
    To calculate the net subsidy rate, we divided DSM's total benefits 
by its respective total f.o.b. sales values during the POR, as this 
program is not tied to exports or a particular product. On this basis, 
we preliminarily determine the net subsidy rate under the direction-of-
credit program to be 0.01 percent ad valorem for DSM.
2. Asset Revaluation Under Tax Programs Under the Tax Reduction and 
Exemption Control Act (TERCL) Article 56(2)
    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. 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. 
See CTL Plate Investigation, 64 FR at 73182-83. 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 countervailable status 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 DSM revalued its assets 
under Article 56(2) of the TERCL in 1988. However, DSM reports that in 
1998 it revalued its assets yet again. DSM states the revaluation in 
1998 was not pursuant to TERCL Article 56(2) and, according to the GOK, 
was consistent with Korean Generally Accepted Accounting Principles 
(GAAP). DSM claims that the asset revaluations that were adopted in 
1988 under Article 56(2) of TERCL were superseded when it revalued its 
assets in 1998. Hence, the 1988 asset revaluation would only affect the 
calculation of depreciation costs for tax years prior to 1998. However, 
there were certain assets that were not revalued in 1998. For those 
assets which were not revalued in 1998, we identified the total amount 
of the change in depreciation expense attributable to the 1988 asset 
revaluation for 2004 (the tax return submitted during the POR). We then 
multiplied this amount by the tax rate for 2004 to determine the 
benefit under this program. This is the same approach the Department 
used in the previous review. See 2004 CTL Plate Preliminary Results 
(unchanged in final results by Notice of Final Results of 
Countervailing Duty Administrative Review: Certain Cut-to-Length 
Carbon-Quality Steel Plate from the Republic of Korea, 71 FR 38861 
(July 10, 2006)). As this program is not tied to exports, we used the 
benefit amount as the numerator and DSM's total sales as the 
denominator. Using this methodology, we preliminarily determine the 
countervailable subsidy from this program to be less than 0.005 percent 
ad valorem, which, according to the Department's practice, is 
considered not measurable and is not included in the calculation of the 
CVD rate. See, e.g., Notice of Preliminary Results of Countervailing 
Duty Administrative Review: Certain Softwood Lumber Products from 
Canada, 70 FR 33088, 33091 (June 7, 2005).
3. GOK Infrastructure Investment at Inchon North Harbor
    Under the Act on Participation of Private Investment in 
Infrastructure (the Harbor Act), signed in 2000, the GOK contracts with 
private companies to construct infrastructure facilities at Inchon 
North Harbor. The program is designed to encourage private investment 
in public infrastructure facilities at Inchon North Harbor. Because the 
ownership of these facilities reverts to the GOK, the government 
compensates private parties for a portion of the construction costs of 
these facilities. In addition, the company is given right to operate 
the facility for a certain period of time.

[[Page 10167]]

    Under the Harbor Act, DSM participated in an agreement with the 
Ministry of Maritime Affairs and Fisheries (``MOMAF''), under which DSM 
is constructing one of 17 piers at Inchon North Harbor. According to 
information submitted by the GOK, the government will retain title of 
the pier. However, upon completion of the project, DSM will receive 
free use of harbor facilities at Inchon Port and the right to collect 
fees it chooses to from other users of the facility for a period of 50 
years. At the end of the 50-year period, operating rights revert to the 
GOK. Further, under the Harbor Act, the GOK compensates DSM for 30 
percent of the construction costs of the facility. DSM reported 
receiving payments from the GOK as reimbursements for construction 
costs it incurred from the fourth quarter of 2003 through the third 
quarter of 2004. As this is the first time DSM has reported receiving 
benefits to the Department, the Department has not previously examined 
this program.\1\
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    \1\ The GOK indicated in its September 12, 2006, response that 
benefits received by DSM in 2003 were inadvertently not reported 
during the last POR, due to an oversight.
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    DSM and the GOK claim that the reimbursements DSM received under 
the program are not countervailable, ``Because this program represents 
a government purchase of construction services, it does not constitute 
a ``financial contribution'' under the terms of the countervailing duty 
statute.'' See GOK's September 12, 2006, questionnaire response at 4; 
see also DSM's September 12, 2006, questionnaire response at 38.
    The record evidence indicates that the actual recipients of the 
grant, whether considered on an enterprise or industry basis are 
limited in number. The GOK has reported that only [six] companies 
representing [four] industries received the grant. See DSM's September 
12, 2006, questionnaire response at Appendix G-6-C. Therefore, we 
preliminarily determine that the program is de facto specific within 
the meaning of section 771(5A)(D)(iii)(I) of the Act. For purposes of 
these preliminary results, we disagree with the claims of the GOK and 
DSM that the GOK's payments to DSM constitute compensation for services 
provided in connection with the construction of the GOK's pier. We find 
that the 50-year duration of DSM's lease of the pier facility is so 
long that it effectively renders DSM the owner of the facility. See the 
``Average Useful Life'' section, above. We note that under the IRS 1997 
Class Life Asset Depreciation Range System, the AUL of land 
improvements, such as wharves and docks, is only 20 years. Therefore, 
the fact that the GOK retains ``ownership'' of the pier for 50 years is 
essentially meaningless. As such, we preliminary find that the GOK's 
payments to DSM constitute grants that aid the construction of a 
facility which, due to the lengthy duration of the lease, is 
effectively owned and operated by DSM. On this basis, we preliminarily 
determine that the reimbursements DSM received under the program 
constitute a direct financial contribution, in the form of grants, and 
confer a benefit within the meaning of sections 771(5)(D)(i) and 
771(5)(E) of the Act, respectively.
    On page 3 of its November 27, 2006, questionnaire response, the GOK 
indicates that the payments to DSM relate to stage one pier 
construction. See also GOK's September 12, 2006, questionnaire response 
at Appendix G-6-C. According to the GOK, the stage one piers are 
intended to handle shipments of steel scrap. See GOK's November 27, 
2006, questionnaire response at page 3. The record evidence indicates 
that one of DSM's main raw materials used in the production of subject 
merchandise during the POR was steel scrap. See DSM's September 12, 
2006, questionnaire response at 9. See also DSM's November 28, 2006, 
questionnaire response at Appendix SD 9. Therefore, in accordance with 
19 CFR 351.525(b)(5), we preliminarily find that the grants received by 
DSM under this program are tied to the production and sales of the 
subject merchandise. Accordingly, we have attributed the grants DSM has 
received under this program to its production and sales of the subject 
merchandise.
    To calculate the benefit under this program, we first summed the 
amount of payments DSM received each year under the program. In 
accordance with 19 CFR 351.524(c), we are treating the grants DSM 
received under the program as non-recurring. Pursuant to 19 CFR 
351.524(b)(2), the Department allocates non-recurring benefits provided 
under a particular subsidy program to the year in which the benefits 
are received if the total amount approved under the subsidy program is 
less that 0.5 percent of the relevant sales of the firm in question, 
during the year in which the subsidy was approved. The GOK provided the 
total approved amount with the date of approval. For the preliminary 
results, the Department performed the 0.5 percent test by dividing 
DSM's portion of the GOK contribution at the time of receipt by DSM's 
total steel sales at the time of receipt. Because the amounts were less 
than 0.5 percent of DSM's total steel sales in the year of receipt, we 
expensed the grants to the year of receipt. On this basis, we 
preliminarily determine that DSM's net subsidy rate under this program 
to be 0.09 percent ad valorem.
4. Research and Development Under Korea Research Association of New 
Iron and Steelmaking Technology (KANIST) (Formerly KNISTRA)
    Under the program, companies make contributions to KANIST, which 
also receives contributions from the GOK. KANIST then contracts with 
universities and other research institutions. Upon completion of the 
projects, KANIST shares the results of the research with the companies 
that participated in the projects.
    The Department examined this program in the underlying 
investigation. In that segment of the proceeding, the Department 
determined that the GOK, through the Ministry of Commerce, Industry and 
Energy (MOCIE) provided research and development grants to support 
numerous projects designed to foster the development of efficient 
technology for industrial development. See CTL Plate Investigation, 64 
FR at 73185. We found this program to be specific as the grants were 
provided directly to respondents and their affiliates that are steel-
related, and that the grants provided a financial contribution. Id. see 
also sections 771(5A)(D)(ii) and 771(5)(D)(i) of the Act. Moreover, 
pursuant to section 771(5)(E) of the Act, the Department determined 
that the benefit was the amount of the GOK's contribution allocated to 
the percentage of the company's contribution and was conferred at the 
time of receipt. No new information, evidence of changed circumstances, 
or comments from interested parties were presented in this review to 
warrant any reconsideration of the countervailable status of this 
program.
    DSM reported that it participated in research and development 
projects coordinated by KANIST. In these projects, DSM and other Korean 
companies made contributions to KANIST, which also received 
contributions from the GOK. Specifically, DSM reported that it 
participated in four projects. The first project deals with the 
``Elimination of Accumulated Impurities and Metal Structural Non-
detrimental Technology Development.'' DSM and the GOK made 
contributions to this project from 2002 through 2006. The remaining 
three projects are dedicated to the development of structural steel. 
See Exhibit D-6-A, Volume II, of DSM's September 12, 2006, 
questionnaire

[[Page 10168]]

response; see also Exhibit G--B-4 of the GOK's September 12, 2006, 
questionnaire response. Based on the information in DSM's response, we 
preliminarily determine that the projects aimed at structural steel 
development are tied to non-subject merchandise. We also preliminarily 
determine that the remaining research and development project is 
relevant to the early stages of the production process and, therefore, 
attributable to DSM's total steel sales.
    In keeping with the Department's practice, we calculated the 
benefits related to the project on the ``Elimination of Accumulated 
Impurities and Metal Structural Non-detrimental Technology 
Development'' by allocating the GOK's payments based on DSM's 
contributions to the project. See 2004 CTL Plate Preliminary Results, 
71 FR at 11400 (unchanged in final results by Notice of Final Results 
of Countervailing Duty Administrative Review: Certain Cut-to-Length 
Carbon-Quality Steel Plate from the Republic of Korea, 71 FR 38861 
(July 10, 2006)). Pursuant to 19 CFR 351.524(b)(2), the Department 
allocates non-recurring benefits provided under a particular subsidy 
program to the year in which the benefits are received if the total 
amount approved under the subsidy program is less that 0.5 percent of 
the relevant sales of the firm in question, during the year in which 
the subsidy was approved. However, neither the GOK nor DSM provided the 
total approved amounts nor the dates of approval. Therefore, we 
performed our analysis under 19 CFR 351.524(b)(2) by dividing DSM's 
portion of the GOK contribution at the time of receipt by DSM's total 
steel sales at the time of receipt. Using this approach, the calculated 
percentages in each year were less than 0.5 percent. Therefore, we 
preliminarily determine that all of the GOK's contributions were 
expensed in the year of receipt. To calculate the net subsidy rate 
under the program, we divided the contributions made by the GOK during 
the POR that were allocated to DSM by DSM's total steel sales during 
the POR. On this basis, we preliminarily calculate a net subsidy rate 
for DSM to be less than 0.005 percent ad valorem, which, according to 
the Department's practice, is considered not measurable and is not 
included in the calculation of the C.V.D. rate.

Programs Preliminarily Found To Be Not Used

    1. Special Cases of Tax for Balanced Development Among Areas (TERCL 
Articles 41, 42, 43, 44, and 45) (Reserve for Investment Program)
    2. Electricity Discounts (VRA, VCA, ELR and DLI Programs)
    3. Price Discount for DSM Land Purchase at Asan Bay
    4. Local Tax Exemption on Land Outside of Metropolitan Area
    5. Exemption of VAT on Anthracite Coal

Programs Preliminarily Found To Be Not Countervailable

1. Special Tax Credit for Boosting Employment
    Under Articles 30-34 of the RSTA, the GOK created ``The Special Tax 
Credit for Boosting Employment'' in July 2004. The program expired in 
December 31, 2005. It was designed to boost employment, and tax credits 
were allowed for any Korean company that met the requirements of 
employing more full-time workers in 2004 and 2005 than it employed the 
previous year. It provided for a credit of one million won for each 
full-time worker employed in 2004 or 2005 in excess of the numbers of 
full-time workers employed the previous year. DSM reported receiving 
credits towards taxes payable under this program for its 2004 tax 
return, the tax return submitted during the POR.
    Information supplied by DSM and the GOK indicate that this tax 
program is available to nearly all companies in Korea except for a 
small category of specialized businesses the GOK deems ``harmful to 
juveniles, affecting public morales, certain private teaching 
institutes, and certain real estate businesses.'' See page 25, Exhibit 
I of DSM's September 12, 2006, questionnaire. Based on information 
supplied by DSM and the GOK, we preliminarily determine that this 
program is not specific within the meaning of Section 771(5A)(D) of the 
Act. Therefore, the Department preliminarily determines that no 
countervailable benefits were conferred under this program during the 
POR.

Preliminary Results of Review

    In accordance with 19 CFR 351.221(b)(4)(i), we calculated a subsidy 
rate for DSM for 2005. We preliminarily determine the total estimated 
net countervailable subsidy rate for DSM is 0.10 percent ad valorem for 
2005, which is de minimis. See 19 CFR 351.106(c)(1).
    If the final results of this review remain the same as these 
preliminary results, the Department will instruct U.S. Customs and 
Border Protection (CBP), 15 days after the date of publication of the 
final results, to liquidate shipments of CTL plate from DSM, entered, 
or withdrawn from warehouse, for consumption from January 1, 2004, 
through December 31, 2004, without regard to countervailing duties. 
Also, the Department will instruct CBP not to collect cash deposits 
rate of estimated countervailing duties on shipments of CTL plate from 
DSM, entered, or withdrawn from warehouse, for consumption on or after 
the publication of the final results of this administrative review.
    We will instruct CBP to continue to collect cash deposits for non-
reviewed companies at the most recent company-specific or country-wide 
rate applicable to the company. Accordingly, the cash deposit rates 
that will be applied to non-reviewed companies covered by this order 
are those established in the most recently completed administrative 
proceeding. See CTL Plate Order, 65 FR 6589. 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(b)(1), 
interested parties may submit written arguments in response to these 
preliminary results. Unless otherwise indicated by the Department, case 
briefs must be submitted within 30 days after the date of publication 
of this notice, and rebuttal briefs, limited to arguments raised in 
case briefs, must be submitted no later than five days after the time 
limit for filing case briefs. See 19 CFR 351.309(c)(1)(ii). Parties who 
submit written arguments in this proceeding are requested to submit 
with the written 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, 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.
    Representatives of parties to the proceeding may request disclosure 
of proprietary information under

[[Page 10169]]

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)(1)(ii), are due. The Department will publish the final 
results of this administrative review, including the results of its 
analysis of arguments made in any case or rebuttal briefs.
    This administrative review is issued and published in accordance 
with sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: February 28, 2007.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E7-4070 Filed 3-6-07; 8:45 am]
BILLING CODE 3510-DS-P