Certain Welded Carbon Steel Standard Pipe from Turkey: Preliminary Results of Countervailing Duty Administrative Review, 19623-19634 [2012-7846]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 77, Number 63 (Monday, April 2, 2012)]
[Notices]
[Pages 19623-19634]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-7846]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-489-502]


Certain Welded Carbon Steel Standard Pipe from Turkey: 
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 certain 
welded carbon steel standard pipe from Turkey for the period January 1, 
2010, through December 31, 2010. We preliminarily find that the net 
subsidy rate for both companies under review is de minimis. See the 
``Preliminary Results of Review'' section below. Interested parties are 
invited to comment on these preliminary results. See the ``Public 
Comment'' section, infra.

DATES: Effective Date: April 2, 2012.

FOR FURTHER INFORMATION CONTACT: Jolanta Lawska at 202-482-8362 (for 
Borusan), Kristen Johnson at 202-482-4793 (for Erbosan), and Gayle 
Longest at 202-482-3338 (for Toscelik), AD/CVD Operations, Office 3, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue NW., 
Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

    On March 7, 1986, the Department published in the Federal Register 
the CVD order on certain welded carbon steel pipe and tube products 
from Turkey.\1\ On March 1, 2011, the Department published a notice of 
opportunity to request an administrative review of this CVD order.\2\ 
On March 30, 2011, we received a letter from Erbosan Erciyas Boru 
Sanayi ve Ticaret A.S. (Erbosan) requesting that the company be 
reviewed by the Department. On March 31, 2011, we received a request 
from Wheatland Tube Company (Wheatland), the petitioner, to review the 
following companies: Borusan Group, Borusan Mannesmann Boru Sanayi ve 
Ticaret A.S. (BMB), and Borusan Istikbal Ticaret T.A.S. (Istikbal), 
(collectively, Borusan) and Tosyali dis Ticaret A.S. (Tosyali) and 
Toscelik Profil ve Sac Endustrisi A.S. (Toscelik Profil), 
(collectively, Toscelik).
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    \1\ See Countervailing Duty Order: Certain Welded Carbon Steel 
Pipe and Tube Products from Turkey, 51 FR 7984 (March 7, 1986).
    \2\ See Antidumping or Countervailing Duty Order, Finding, or 
Suspended Investigation; Opportunity to Request Administrative 
Review, 76 FR 11197 (March 1, 2011).
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    On April 27, 2011, the Department initiated an administrative 
review of the CVD order on certain welded carbon steel standard pipe 
from Turkey for the period January 1, 2010, through December 31, 2010, 
covering Borusan, Erbosan, and Toscelik.\3\
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    \3\ See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews, 76 FR 23545 (April 27, 2011).
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    On April 27, 2011, we issued the initial questionnaire to Borusan, 
Erbosan, Toscelik, and the Government of the Republic of Turkey (GOT). 
On

[[Page 19624]]

June 28, 2011, we received the GOT's initial questionnaire response. On 
July 5, 2011, we received responses to the initial questionnaire from 
Erbosan and Toscelik. On July 14, 2011, we received Borusan's response 
to the initial questionnaire.
    To the GOT, we issued supplemental questionnaires on July 18, 2011, 
October 3, 2011, January 5, 2012, and February 1, 2012, and the GOT 
submitted its responses on September 12, 2011, November 4, 2011, 
December 15, 2012, January 30, 2012, and February 8, 2012, 
respectively. To Erbosan, we issued supplemental questionnaires on July 
19, 2011, and October 3, 2011, and the company submitted its responses 
on September 12, 2011, and November 4, 2011, respectively. To Toscelik, 
we issued a supplemental questionnaire on July 25, 2011, and January 4, 
2012, January 20, 2012, and February 1, 2012. Toscelik provided its 
questionnaire responses on August 29, 2011, January 20, 2012, January 
30, 2012, and February 8, 2012. To Borusan, we issued supplemental 
questionnaires on September 8, 2011 and September 29, 2011, to which it 
responded on September 20, 2011 and October 6, 2011.
    On August 3, 2011, United States Steel Corporation (U.S. Steel), a 
domestic interested party, submitted a letter requesting that the 
Department conduct verification of the questionnaire responses 
submitted by the respondents in this review.
    On August 1, 2011, U.S. Steel requested an extension of time for 
the submission of new subsidy allegations. The original deadline for 
submitting new subsidy allegations was August 3, 2011. On August 4, 
2011, we extended the time period until August 24, 2011.\4\ On August 
11, 2011, Wheatland filed new subsidy allegations and new factual 
information. U.S. Steel submitted new factual information on August 18, 
2011, and new subsidy allegations on August 24, 2011. Wheatland and 
U.S. Steel allege that Borusan, Erbosan, and Toscelik benefitted from a 
variety of countervailable subsidies provided by the GOT, such as the 
provision of land and buildings for less than adequate remuneration, 
grants, preferential lending, reduction in tax rates, and exemptions 
from corporate income tax, customs duties and fees, and value added 
taxes (VAT).
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    \4\ See Memorandum to the File from Kristen Johnson, Trade 
Analyst, AD/CVD Operations, Office 3, regarding ``Extension of Time 
for the Filing of New Subsidy Allegations,'' (August 4, 2011).
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    On October 13, 2011, the Department initiated on the new subsidy 
allegations.\5\ On October 19, 2011, we issued the new subsidies 
questionnaire to the GOT. On October 21, 2011, we issued the new 
subsidies questionnaire to Borusan, Erbosan, and Toscelik. Borusan, 
Toscelik, and Erbosan submitted their responses to the new subsidies 
questionnaire on December 11, 2011, December 12, 2011, and January 23, 
2012, respectively. On January 13, 2012, we issued a supplemental new 
subsidy questionnaire to Borusan, to which it responded on January 26, 
2012. The GOT submitted its response to the new subsidy questionnaire 
on December 15, 2011.
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    \5\ See Memorandum to Melissa G. Skinner, Director, AD/CVD 
Operations, Office 3, from Robert Copyak, Senior Financial Analyst, 
AD/CVD Operations, Office 3, regarding ``Decision Memorandum on New 
Subsidy Allegations,'' (October 13, 2011).
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    On October 20, 2011, the Department postponed the deadline for the 
preliminary results of this administrative review until March 30, 
2012.\6\
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    \6\ See Certain Welded Carbon Steel Standard Pipe from Turkey: 
Extension of Time for Preliminary Results of Countervailing Duty 
Administrative Review, 76 FR 65179 (October 20, 2011).
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    On October 27, 2011, the Department requested U.S. Customs and 
Border Protection (CBP) data on Type 3 entries (i.e., suspended entries 
of subject merchandise) by Erbosan during the period of review 
(POR).\7\ Because the CBP data showed no suspended Type 3 entries by 
Erbosan, on November 3, 2011, the Department requested from Erbosan 
documentation demonstrating a suspended Type 3 entry by the company 
during the CVD POR.\8\
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    \7\ See Memorandum to the File from Kristen Johnson, Trade 
Analyst, AD/CVD Operations, Office 3, regarding ``Request for 
Customs Data in the Countervailing Duty Administrative Review of 
Certain Welded Carbon Steel Standard Pipe from Turkey,'' (October 
27, 2011).
    \8\ See Letter from the Department to Erbosan regarding ``Entry 
Documentation,'' (November 3, 2011).
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    On November 17, 2011, Erbosan reported that because the exports of 
subject merchandise to the United States during the POR were to an 
unrelated importer, the company does not have any entry 
documentation.\9\ On December 2, 2011, officials of Import 
Administration met with Erbosan's counsel to discuss the status of the 
company's entries of subject merchandise during the POR. \10\
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    \9\ See Erbosan's ``Response to Entry Documentation Request,'' 
(November 17, 2011) at 2.
    \10\ See Memorandum to the File from Kristen Johnson, Trade 
Analyst, AD/CVD Operations, Office 3, regarding ``Meeting with 
Counsel for Erbosan,'' (December 5, 2011).
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    On December 20, 2011, the Department published a notice of intent 
to rescind the administrative review of Erbosan and provided interested 
parties with the opportunity to submit comments on the issue.\11\ On 
January 9, 2012, we received and considered the comments from Erbosan 
and Wheatland on the notice of preliminary rescission. Because there 
are no suspended entries of subject merchandise produced by Erbosan 
against which to assess duties, the Department determined to rescind 
the 2010 administrative review for Erbosan.\12\
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    \11\ See Certain Welded Carbon Steel Standard Pipe and Tube from 
Turkey: Intent to Rescind Countervailing Duty Administrative Review, 
in Part, 76 FR 78886 (December 20, 2011).
    \12\ See Certain Welded Carbon Steel Standare PIpie and Tube 
from Turkey: Notice of Rescision of Countervailing Duty 
Administrative Review, In Part, 77 FR 6542 (February 8, 2012), and 
accompanying Issues and Decision Memorandum.\.\
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    In accordance with 19 CFR 351.213(b), this review covers only those 
producers or exporters of the subject merchandise for which a review 
was specifically requested and not rescinded. Therefore, the only 
companies subject to this review are Borusan and Toscelik.

Scope of the Order

    The products covered by this order are certain welded carbon steel 
pipe and tube with an outside diameter of 0.375 inch or more, but not 
over 16 inches, of any wall thickness (pipe and tube) from Turkey. 
These products are currently provided for under the Harmonized Tariff 
Schedule of the United States (HTSUS) as item numbers 7306.30.10, 
7306.30.50, and 7306.90.10. Although the HTSUS subheadings are provided 
for convenience and customs purposes, the written description of the 
merchandise is dispositive.

Period of Review

    The period for which we are measuring subsidies is January 1, 2010, 
through December 31, 2010.

Company History

    BMB and its affiliated foreign trading company, Istikbal, are both 
part of the Borusan Group. BMB produces subject merchandise for both 
the home and export markets. During the POR, all subject merchandise 
exported to the United States was exported from Turkey by BMB. For 
sales of subject merchandise to other destinations, Istikbal was the 
exporter from Turkey. See Borusan's July 14, 2011, questionnaire 
response at page 2. Consistent with 19 CFR 351.525(c), we are 
attributing any subsidies received by Istikbal to BMB.
    Toscelik Profil and its affiliated foreign trading company, 
Tosyali, are

[[Page 19625]]

owned by Tosyali Holding, a Turkish holding company. See Toscelik 
Profil's July 5, 2011, questionnaire response (Toscelik's July QR) at 
5. Toscelik Profil, which produces subject merchandise for both the 
domestic and export markets, was established in 1992. Id. at 6 and 
Exhibit 4. Tosyali, founded in 1996, is the exporter of record with 
respect to Toscelik Profil's export sales and sells subject merchandise 
to unaffiliated customers in the United States. Id. at 6-7 and Exhibit 
7. Consistent with 19 CFR 351.525(c), we are attributing any subsidies 
received by Tosyali to Toscelik Profil.

Subsidies Valuation Information

Allocation Period

    Under 19 CFR 351.524(b), non-recurring subsidies are allocated over 
a period corresponding to the average useful life (AUL) of the 
renewable physical assets used to produce the subject merchandise. 
Pursuant to 19 CFR 351.524(d)(2), there is a rebuttable presumption 
that the AUL will be taken from the U.S. Internal Revenue Service's 
1977 Class Life Asset Depreciation Range System (IRS Tables), as 
updated by the Department of Treasury. For the subject merchandise, the 
IRS Tables prescribe an AUL of 15 years. No interested party has 
claimed that the AUL of 12 years is unreasonable.
    Further, for non-recurring subsidies, we applied the ``0.5 percent 
expense test'' described in 19 CFR 351.524(b)(2). Under this test, we 
compare the amount of subsidies approved under a given program in a 
particular year to sales (total sales or total export sales, as 
appropriate) for the same year. If the amount of subsidies is less than 
0.5 percent of the relevant sales, then the benefits are allocated to 
the year of receipt rather than allocated over the AUL period.

Benchmark Interest Rates

Short-Term Benchmark

    To determine whether government-provided loans under review 
conferred a benefit, the Department uses, where possible, company-
specific interest rates for comparable commercial loans. See 19 CFR 
351.505(a). In the July 14, 2011, questionnaire response at Exhibit 25, 
Borusan submitted comparable company-specific short term interest rates 
for 2010. Thus, we calculated the 2010 benchmark interest rate for 
short term Turkish Lira, Euro and U.S. dollar denominated loans based 
on the data reported by Borusan as provided under 19 CFR 
351.505(a)(2)(ii). To calculate the short term benchmark rates for 
Borusan, we derived an annual average of the interest rates on 
commercial loans that Borusan took out during the years in which the 
government loans were issued, weighted by the principle amount of each 
loan.
    Where no company-specific benchmark interest rates are available, 
as is the case for Borusan for 2009, the Department's regulations 
direct us to use a national average interest rate as the benchmark. See 
19 CFR 351.505(a)(3)(ii). However, according to the GOT, there is no 
official national average short-term interest rate available in 
Turkey.\13\ Therefore, consistent with our past practice in Turkey CVD 
proceedings,\14\ we calculated the 2009 and 2010 benchmark interest 
rate for short-term Turkish Lira denominated loans based on short-term 
interest rate data as reported by The Economist. For U.S. dollar-
denominated interest rates, we used lending rate data from 
International Financial Statistics, a publication of the International 
Monetary Fund (IMF). For Euro-denominated interest rates, we used prime 
lending rate data from Moneyrate, an online statistical database 
operated by the Wall Street Journal.
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    \13\ See GOT's Initial Questionnaire Response at 17 (June 28, 
2011).
    \14\ See Carbon and Certain Alloy Steel Wire Rod from Turkey; 
Final Negative Countervailing Duty Determination, 67 FR 55815 
(August 30, 2002), and accompanying Issues and Decision Memorandum 
(Wire Rod Memorandum) at ``Benchmark Interest Rates;'' see also 
Preliminary Results of Countervailing Duty Administrative Review: 
Certain Welded Carbon Steel Standard Pipe from Turkey, 72 FR 62837, 
62838 (November 7, 2007) (Turkey Pipe 2006 Preliminary Results), 
unchanged in Final Results of Countervailing Duty Administrative 
Review: Certain Welded Carbon Steel Standard Pipe from Turkey, 73 FR 
12080 (March 6, 2008) (Turkey Pipe 2006 Final Results).
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    As discussed below, Borusan paid commissions with regard to loans 
received under several countervailable loan programs (e.g., the Short-
Term Pre-Shipment Rediscount Program, and Pre-Shipment Export Credits 
programs). It is the Department's practice to normally compare 
effective interest rates rather than nominal rates in making the loan 
comparison. See Countervailing Duties; Final Rule, 63 FR 65348, 65362 
(November 25, 1998) (Preamble). ``Effective'' interest rates are 
intended to take account of the actual cost of the loan, including the 
amount of any fees, commissions, compensating balances, government 
charges, or penalties paid in addition to the ``nominal'' interest 
rate.
    The benchmark short-term Turkish Lira interest rates sourced from 
The Economist and the Wall Street Journal, however, do not include 
commissions or fees paid to commercial banks, i.e., they are nominal 
rates. Further, we preliminarily determine that we lack definitive 
evidence to conclude that the company-specific short-term rates 
reported by Borusan include commissions. Therefore, for these 
preliminary results, we compared the benchmark interest rate to the 
interest rate that Borusanwas charged on the countervailable loans, 
exclusive of commissions, to make the comparison on a nominal interest 
rate basis.

Long-Term Benchmark

    As discussed above, to determine whether government-provided loans 
under review conferred a benefit, the Department uses, where possible, 
company-specific interest rates for comparable commercial loans. See 19 
CFR 351.505(a). However, Toscelik, the firm for which a long-term 
interest rate is required, did not report any company-specific long-
term benchmark rates. Where no company-specific benchmark interest 
rates are available, as is the case in this review, the Department's 
regulations direct us to use a national average interest rate as the 
benchmark. See 19 CFR 351.505(a)(3)(ii). We also lack information from 
the GOT concerning long-term interest rates in Turkey. Therefore, in 
accordance with 19 CFR 351.505(a)(3)(ii), we used the national average 
discount rate in Turkey for the relevant years, as reported in 
International Financial Statistics, as the long-term discount rate 
utilized in the grant allocation formula.

Analysis of Programs

I. Programs Preliminarily Determined To Be Countervailable

A. Deduction from Taxable Income for Export Revenue
    Addendum 4108 of Article 40 of the Income Tax Law, effective June 
2, 1995, allows taxpayers engaged in export activities to claim a lump 
sum deduction from gross income, in an amount not to exceed 0.5 percent 
of the taxpayer's foreign-exchange earnings. See Government of Turkey's 
initial questionnaire response (GOT's initial questionnaire) at II-4 
and II-5. The deduction for export earnings may either be taken as a 
lump sum on a company's annual income tax return or be shown within the 
company's marketing, selling and distribution expense account of the 
income statement to record the subtraction of eligible undocumented 
expenses from gross income. Id. Undocumented expenses are expenses that 
are not supported by invoices for lodging, food, and transportation 
costs incurred during overseas business trips. Id. Under this program, 
those expenses are deductible expenditures for tax purposes. Id.

[[Page 19626]]

    Consistent with prior determinations, we preliminarily find that 
this tax deduction is a countervailable subsidy. See, e.g., Certain 
Welded Carbon Steel Standard Pipe from Turkey: Preliminary Results of 
Countervailing Duty Administrative Review, 75 FR 16439, 16440-41 (April 
1, 2010) (Turkey Pipe 2010 Preliminary Results), unchanged in the final 
results, see Certain Welded Carbon Steel Standard Pipe from Turkey: 
Preliminary Results of Countervailing Duty Administrative Review, 75 FR 
44766 (July 29, 2010) (Turkey Pipe 2010 Final Results).
    The income tax deduction provides a financial contribution within 
the meaning of section 771(5)(D)(ii) of the Tariff Act of 1930, as 
amended (the Act), because it represents revenue forgone by the GOT. 
The deduction provides a benefit in the amount of the tax savings to 
the company pursuant to section 771(5)(E) of the Act. It is also 
specific under section 771(5A)(B) of the Act because its receipt is 
contingent upon export earnings. In this review, no new information or 
evidence of changed circumstances has been submitted to warrant 
reconsideration of the Department's prior finding of countervailability 
for this program.
    During 2010, BMB, Istikbal, and Tosyali used the deduction for 
export earnings program with respect to their 2009 income taxes.
    The Department typically treats a tax deduction as a recurring 
benefit in accordance with 19 CFR 351.524(c)(1). To calculate the 
countervailable subsidy rate for this program, we calculated the tax 
savings realized by BMB, Istikbal, and Tosyali in 2010, as a result of 
the deduction for export earnings. For BMB and Istikbal, we divided 
their combined tax savings by Borusan's total export sales for 2010. 
For Tosyali, we divided the tax savings realized by Toscelik's total 
export sales for 2010.
    On this basis, we preliminarily determine the net countervailable 
subsidy for this program to be 0.08 percent ad valorem for Borusan, and 
0.04 percent ad valorem for Toscelik.

B. Foreign Trade Companies Short-Term Export Credits

    The Foreign Trade Company (FTC) loan program was established by the 
Turkish Export Bank to meet the working capital needs of exporters, 
manufacturer-exporters, and manufacturers supplying exporters. See 
GOT's Initial Questionnaire at II-31. This program is specifically 
designed to benefit Foreign Trade Corporate Companies (FTCC) and 
Sectoral Foreign Trade Companies (SFTC).\15\ Id. An FTCC is a company 
whose export performance was at least US$100 million in the previous 
year and has paid-in-capital of Turkish Lira 2 million or more. The 
Undersecretariat for Foreign Trade grants FTCC and SFTC status to 
eligible companies. Id.
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    \15\ To promote exports and diversify export products and 
markets, the GOT encouraged small and medium scale enterprises to 
form SFTC, which comprise a group of companies that operate together 
in a similar sector.
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    To eligible companies, the Export Bank provides short-term export 
loans in Turkish Lira or foreign currency, based on their prior export 
performance and financial criteria, up to 100 percent of the free on 
board (FOB) export commitment. Id. at II-34. The loan interest rates 
are set by the Export Bank and the maximum term for the loans is 360 
days. Id. To qualify for an FTC loan, along with the necessary 
application documents, a company must provide a bank letter of 
guarantee, equivalent to the loan's principal and interest amount, 
because the financing is a direct credit from the Export Bank. Id. at 
II-33. During the POR, Istikbal was the only Borusan company to pay 
interest against FTC credits during the POR. Id. at II-35. See 
Borusan's July 14, 2012, questionnaire response at p. 26.
    Consistent with previous determinations, we preliminarily find that 
these loans confer a countervailable subsidy within the meaning of 
section 771(5) of the Act. See Turkey Pipe 2010 Preliminary Results, 75 
FR at 16439 unchanged in the Turkey Pipe 2010 Final Results; see also 
Turkey Pipe 2006 Preliminary Results, 72 FR at 62839, unchanged in the 
Turkey Pipe 2006 Final Results. The loans constitute a financial 
contribution in the form of a direct transfer of funds from the GOT, 
under section 771(5)(D)(i) of the Act. A benefit exists under section 
771(5)(E)(ii) of the Act in the amount of the difference between the 
payments of interest that Istikbal made on its loans during the POR and 
the payments the company would have made on comparable commercial 
loans. The program is also specific in accordance with section 
771(5A)(B) of the Act because receipt of the loans is contingent upon 
export performance. Further, the FTC loans are not tied to a particular 
export destination. Therefore, we treated this program as an untied 
export loan program, which renders it countervailable regardless of 
whether the loans were used for exports to the United States. Id.
    Pursuant to 19 CFR 351.505(a)(1), we calculated the benefit as the 
difference between the payments of interest that Istikbal made on its 
FTC loans during the POR and the payments the company would have made 
on comparable commercial loans.\16\ In accordance with section 
771(6)(A) of the Act, we subtracted from the benefit amount the fees 
that Istikbal paid to commercial banks for the required letters of 
guarantee. We then divided the resulting benefit by Borusan's total 
export sales for 2010. On this basis, we preliminarily find that the 
net countervailable subsidy for this program is 0.01 percent ad valorem 
for Borusan.
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    \16\ See ``Benchmark Interest Rates,'' supra (discussing the 
benchmark rates used in these preliminary results).
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    Toscelik reported that it did not use this program during the POR.

C. Pre-Export Credits

    The Pre-Export Credit program meets the working capital needs of 
exporters, manufacturers, and manufacturers supplying exporters, except 
for FTC and SFTC classified exporters, which are ineligible to receive 
credits under this program. See GOT's Initial Questionnaire at II-21. 
Eligible applicants are companies that exported more than $200,000 of 
goods in the previous 12 months. Id. Like FTC loans, the Export Bank 
directly extends pre-export loans to eligible companies for the FOB 
value of the export commitment. Id. at II-22. The loans, which have 
interest rates set by the Export Bank, are denominated in either 
Turkish Lira or foreign currency and have a maximum maturity of 540 
days. Id. at II-25. To qualify for a pre-export loan, along with the 
necessary application documents, a company must provide a bank letter 
of guarantee, equivalent to the loan's principal and interest amount. 
Id. at II-22 to II-23. In March, 2008, interest rates applied to 
companies started to be determined according to their outstanding risks 
in Short Term Export Credits. Id. at II-18. During the POR, Borusan 
(specifically, BMB) was the only respondent that paid interest against 
pre-export loans. Id. at II-26. See Borusan's July 14, 2011, 
questionnaire response at p. 27
    Consistent with previous determinations, we preliminarily find that 
these loans confer a countervailable subsidy within the meaning of 
section 771(5) of the Act. See, e.g., Turkey Pipe 2010 Preliminary 
Results, unchanged in the Turkey Pipe 2010 Final Results. The loans 
constitute a financial contribution in the form of a direct transfer of 
funds from the GOT, under section 771(5)(D)(i) of the Act. A benefit 
exists under section 771(5)(E)(ii) of the Act in the amount of the 
difference between

[[Page 19627]]

the payments of interest that BMB made on the loans during the POR and 
the payments the company would have made on comparable commercial 
loans. The program is also specific in accordance with section 
771(5A)(B) of the Act because receipt of the loans is contingent upon 
export performance.
    Further, like the FTC loans, these loans are not tied to a 
particular export destination. Therefore, we treated this program as an 
untied export loan program rendering it countervailable regardless of 
whether the loans were used for exports to the United States. Id. 
Pursuant to 19 CFR 351.505(a)(1), we calculated the benefit as the 
difference between the payments of interest that BMB made on its pre-
export loans during the POR and the payments the company would have 
made on comparable commercial loans. In accordance with section 
771(6)(A) of the Act, we subtracted from the benefit amount the fees 
which BMB paid to commercial banks for the required letters of 
guarantee. We then divided the resulting benefit by Borusan's total 
export value for 2010. On this basis, we preliminarily find that the 
net countervailable subsidy for this program is 0.01 percent ad valorem 
for Borusan.
    Toscelik reported that it did not use this program during the POR.

D. Pre-Shipment Export Credits

    Turkish Export Bank provides short-term pre-shipment export loans 
through intermediary commercial banks to exporters, manufacturer-
exporters, and manufacturers supplying exporters and SFTCs to assist 
them in meeting their export commitments. See GOT's Initial 
Questionnaire Response at II-10. The commercial banks, which assume the 
default risks of the borrowers, are allocated credit lines by the 
Export Bank to make the loans. Id. These loans cover up to 100 percent 
of the FOB export value, are denominated in either Turkish Lira or 
foreign currency, and have a maximum term of 540 days. Id. The interest 
rates charged on these pre-shipment loans are set by the Export Bank. 
Id. However, because these loans are provided through intermediary 
commercial banks, those banks can add a maximum one percent to the 
Turkish Lira loan interest rate and 0.5 percent to the foreign currency 
loan interest rate as their commissions.\17\ Since March 2008 interest 
rates applied to companies are determined according to their 
outstanding risks in Short Term Export Credits. Id. at II-11.
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    \17\ See GOT's Initial Questionnaire Response at 13.
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    In previous determinations, the Department found this program to be 
countervailable because receipt of the loans is contingent upon export 
performance and a benefit was conferred to the extent that the interest 
rates paid on the government loan were less than the amount the 
recipient would pay on comparable commercial loans. See, e.g., Turkey 
Pipe 2010 Preliminary Results, 75 FR 16442, unchanged in the Turkey 
Pipe 2010 Final Results.
    The Department also found that this program is an untied export 
loan program because the loans are not specifically tied to a 
particular destination at the time of approval and the borrower only 
has to demonstrate that the export commitment was satisfied (i.e., 
exports amounting to the FOB value of the credit) to close the loan. 
See Final Results of Countervailing Duty Administrative Review: Certain 
Welded Carbon Steel Standard Pipe from Turkey, 71 FR 43111 (July 31, 
2006) (Turkey Pipe 2004 Final Results), and accompanying Issues and 
Decision Memorandum at ``Pre-Shipment Export Credits.''
    In this review, no new information or evidence of changed 
circumstances has been submitted to warrant reconsideration of the 
Department's prior findings for this program. During the POR, Borusan 
(specifically, BMB) was the only respondent that paid interest against 
pre-shipment export credit loans.
    Consistent with the prior findings, we preliminarily find that 
these loans confer a countervailable subsidy within the meaning of 
section 771(5) of the Act. The loans constitute a financial 
contribution in the form of a direct transfer of funds from the GOT, 
under section 771(5)(D)(i) of the Act. A benefit exists under section 
771(5)(E)(ii) of the Act in the amount of the difference between the 
payments of interest that BMB made on the loans during the POR and the 
payments the company would have made on comparable commercial loans. 
The program is also specific in accordance with section 771(5A)(B) of 
the Act because receipt of the loans is contingent upon export 
performance.
    Pursuant to 19 CFR 351.505(a)(1), we calculated the benefit as the 
difference between the payments of interest that BMB made on its pre-
shipment export loans during the POR and the payments the company would 
have made on comparable commercial loans. It is the Department's 
practice to normally compare effective interest rates rather than 
nominal rates in making the loan comparison. See Countervailing Duties; 
Final Rule, 63 FR 65348, 65362 (November 25, 1998) (Preamble). 
``Effective'' interest rates are intended to take account of the actual 
cost of the loan, including the amount of any fees, commissions, 
compensating balances, government charges, or penalties paid in 
addition to the ``nominal'' interest rate.
    The benchmark short-term Turkish Lira interest rates sourced from 
The Economist, however, do not include commissions or fees paid to 
commercial banks, i.e., they are nominal rates. See ``Benchmark 
Interest Rate,'' section supra. Therefore, for these preliminary 
results, we compared the benchmark Turkish Lira interest rate to the 
interest rate that BMB was charged on the pre-shipment export credit 
loans, exclusive of the intermediary bank commissions, to make the 
comparison on a nominal interest rate basis.
    After computing the benefit amount, we subtracted from the benefit 
amount the fees which BMB paid to commercial banks for the required 
letters of guarantee, as provided under section 771(6)(A) of the Act. 
We then divided that amount by Borusan's total export value for 2010. 
On this basis, we preliminarily find that the net countervailable 
subsidy for this program is less than 0.005 percent ad valorem for 
Borusan. Consistent with the Department's practice, a subsidy rate of 
less than 0.005 percent ad valorem does not confer a measurable benefit 
and, therefore, we have not included it in the calculation of the net 
countervailable rate.\18\
---------------------------------------------------------------------------

    \18\ See Corrosion-Resistant Carbon Steel Flat Products from the 
Republic of Korea: Preliminary Results of Countervailing Duty 
Administrative Review, 74 FR 46100, 46103, 46106 (September 8, 2009) 
at ``Research and Development Grants Under the Industrial 
Development Act'' and ``R&D Grants Under the Act on the Promotion of 
the Development of Alternative Energy,'' unchanged in Corrosion-
Resistant Carbon Steel Flat Products from the Republic of Korea: 
Final Results of Countervailing Duty Administrative Review, 74 FR 
55192 (October 27, 2009).
---------------------------------------------------------------------------

    Toscelik reported that it did not use this program during the POR.

E. Short-Term Pre-Shipment Rediscount Program

    ``Short Term Pre-Shipment Rediscount Program'' (SPRP) was 
established in 1995. It is administered by Turkey's Export Bank. See 
GOT's Initial Questionnaire at II-53. The SPRP program is designed to 
provide financial support to Turkish exporters, manufacturer-exporters 
and manufacturers supplying exporters. Id. This program is contingent 
upon an export commitment. Id. Under SPRP, there is a limit of USD 
200.000, up to USD 20 million per company. Loan payments shall be made 
within the credit period or at maturity to the Export Bank. Companies 
can repay

[[Page 19628]]

either in the foreign currency in which the loan was obtained or in a 
Turkish Lira equivalent of principal and interest set using the 
exchange rate determined by the Export Bank. Id. at II-55 to II-56. In 
March 2008 interest rates applied to companies started to be determined 
according to their outstanding risks in Short Term Export Credits. Id. 
at 54. During the POR, Borusan (specifically, BMB and Istikbal) paid 
interest against pre-shipment rediscount export credit loans. See Id. 
at Exhibit 9.
    We preliminarily find that these loans confer a countervailable 
subsidy within the meaning of section 771(5) of the Act. The loans 
constitute a financial contribution in the form of a direct transfer of 
funds from the GOT, under section 771(5)(D)(i) of the Act. A benefit 
exists under section 771(5)(E)(ii) of the Act in the amount of the 
difference between the payments of interest that BMB and Istikbal made 
on the loans during the POR and the payments the company would have 
made on comparable commercial loans. The program is also specific in 
accordance with section 771(5A)(B) of the Act because receipt of the 
loans is contingent upon export performance.
    Pursuant to 19 CFR 351.505(a)(1), we calculated the benefit as the 
difference between the payments of interest that BMB and Istikbal made 
on its short-term pre-shipment rediscount loans during the POR and the 
payments the companies would have made on comparable commercial loans. 
It is the Department's practice to normally compare effective interest 
rates rather than nominal rates in making the loan comparison. See 
Countervailing Duties; Final Rule, 63 FR 65348, 65362 (November 25, 
1998) (Preamble). ``Effective'' interest rates are intended to take 
account of the actual cost of the loan, including the amount of any 
fees, commissions, compensating balances, government charges, or 
penalties paid in addition to the ``nominal'' interest rate.
    The benchmark short-term Turkish Lira interest rates sourced from 
The Economist, however, do not include commissions or fees paid to 
commercial banks, i.e., they are nominal rates. See ``Benchmark 
Interest Rate,'' section supra. Therefore, for these preliminary 
results, we compared the benchmark Turkish Lira interest rate to the 
interest rate that BMB and Istikbal were charged on the pre-shipment 
export rediscount credits, exclusive of the intermediary bank 
commissions, to make the comparison on a nominal interest rate basis.
    After computing the benefit amount, we subtracted from the benefit 
amount the fees which BMB and Istikbal paid to commercial banks for the 
required letters of guarantee, as provided under section 771(6)(A) of 
the Act. We then divided that amount by Borusan's total export value 
for 2010. On this basis, we preliminarily find that the net 
countervailable subsidy for this program is 0.17 percent ad valorem for 
Borusan and 0XX percent ad valorem for Istikbal.

F. Law 5084: Withholding of Income Tax on Wages and Salaries

    The Ministry of Finance of the GOT administers the withholding of 
income tax on wages and salaries program (withholding of income tax 
program) pursuant to Article 2 and Article 3 of Law 5084. The purpose 
of this program under Law 5084, as set forth in Article 3, is to 
increase investments and employment opportunities in certain provinces 
of Turkey by canceling the income tax calculated on the wages and 
salaries of the workers. See GOT's June 23, 2011, questionnaire 
response (GOT's June QR) at II-47 and Exhibit 23. According to the GOT, 
all enterprises or industries established in the 49 provinces which 
have a GDP per capita equal to or less than 1,550 US dollars (as 
determined by the State Institute of Statistics as of 2001) or which 
have a negative socio-economic development index value (as determined 
by the State Planning Organization as of 2003) can benefit from this 
program. Id. at II-49 and Exhibit 24.
    The GOT states that this program includes two levels of withholding 
based on where the enterprise is established in the 49 eligible 
provinces. See GOT's June QR at II-47. According to the GOT, firms 
whose premises are established in Organized Industrial Zones (OIZ) or 
Industrial Zones located in the 49 provinces can benefit from 100 
percent cancellation of income tax calculated on the wages of all 
workers who have been hired by income or corporate tax payers hiring at 
least ten workers. Id. Companies whose premises are located at other 
areas of the 49 eligible provinces can benefit from 80 percent 
cancellation of income tax calculated on the wages of all workers who 
have been hired by income or corporate tax payers hiring at least ten 
workers. Id. The GOT further states that the total amount to be 
cancelled cannot exceed the sum determined on the basis of the above 
mentioned rates calculated on the value to be obtained by multiplying 
the number of employees and the income tax payable for the minimum 
wage. Id. In addition, Article 7 of Law 5084 states that this program 
shall be applicable for any new investments for five years for the ones 
completed by December 31, 2007, for four years for the ones completed 
by December 31, 2008 and for three years for the ones completed by 
December 31, 2009. See GOT's June QR at II-47. Hence, the last date 
which the investment can benefit from this tax incentive program is 
December 31, 2012. Id.
    During the POR, Toscelik reported that it received a benefit under 
this program with respect to its facility in the Osmaniye OIZ. See 
Toscelik's July 5, 2011, questionnaire response (July QR) at 20. 
Although Toscelik acknowledges receiving this benefit, Toscelik states 
that the relief of payment of withholding does not benefit subject 
merchandise since its Osmaniye plant produces only billet, hot-rolled 
coil, and spiral-weld pipe, none of which are subject merchandise and 
the relief only applies to the workers at the Osmaniye plant. Id. and 
Toscelik's August 29, 2011, questionnaire response (August QR). 
However, in a subsequent submission, Toscelik explains that the hot-
rolled coils produced at the Osmaniye plant with a thickness greater 
than or equal to two millimeters are an input into subject merchandise. 
See Toscelik's August QR. Toscelik further explains that the equipment 
at the Osmaniye plant could not be used to produce subject merchandise 
because this facility does not have pipe-making equipment in Osmaniye 
for subject merchandise. Id.
    With respect to the product tying arguments presented by Toscelik, 
we refer to 19 CFR 351.525(b)(5), which addresses the attribution of 
subsidies to a particular product. Section 351.525(b)(5)(i), states 
that if a subsidy is tied to the production or sale of particular 
products, the Secretary will attribute the subsidy only to those 
products. However, the respondent must demonstrate that the subsidy is, 
in fact, tied to out-of-scope merchandise and could not benefit 
production of in-scope merchandise. Because Toscelik produces hot-
rolled coils at the Osmaniye plant that can be used as an input into 
the subject merchandise, we preliminarily determine that there is 
nothing on the record that demonstrates that this program is precluded 
from benefitting the subject merchandise.
    In these Preliminary Results, we find that during the period of 
review, Toscelik benefitted from the withholding of income tax under 
this OIZ program pursuant to Section 771(5)(E)(i) of the Act in the 
amount of the income taxes on wages and salaries that it did not pay. 
We also find that this program is regionally-specific under 
771(5A)(D)(iv) because it is limited to companies located in the 49 
eligible

[[Page 19629]]

provinces. Moreover, we find that this program constitutes a financial 
contribution in the form of revenue forgone within the meaning of 19 
CFR 351.503(iii) to the extent that it relieves Toscelik of the 
obligation to pay income taxes on wages and salaries that it would have 
had to pay absent this program.
    We attributed the subsidy to Toscelik's total sales pursuant to 19 
CFR 351.525(b)(3).
    To calculate the benefit from the income tax relief that Toscelik 
received under the income tax withholding program, we summed the total 
amount of income tax savings reported by Toscelik during the POR. See 
19 CFR 351.509(a)(1). To calculate the net subsidy rate, we divided the 
benefit by Toscelik's total f.o.b. sales during the POR. On this basis, 
we preliminarily determined Toscelik's net subsidy rate under this 
program to be 0.02 percent ad valorem.

G. Law 5084: Incentive for Employers' Share in Insurance Premiums

    The Social Security Institution of the GOT administers the 
incentive for the Employer's Share in Insurance Premiums Program 
(Insurance Premiums Program) pursuant to Article 2 and Article 4 of Law 
5084. See GOT's September QR at I-7 and GOT's June QR at Exhibit 23. 
The purpose of this program, as set forth in Article 4 of Law 5084, is 
to increase investments and employment opportunities in certain 
provinces of Turkey by providing support for the employer's share of 
insurance premiums through the GOT's limited or full undertaking of 
that share under certain conditions. See GOT's September QR at I-8. 
According to the GOT, all enterprises or industries established in the 
49 provinces which have a GDP per capita equal to or less than 1,550 US 
dollars (as determined by the State Institute of Statistics as of 2001) 
or which have a negative socio-economic development index value (as 
determined by the State Planning Organization as of 2003) can benefit 
from this program. See GOT's September QR at I-8 and GOT's June QR at 
Exhibit 24.
    The GOT states that this program includes two levels of activity 
based on where the enterprise is established in the 49 eligible 
provinces. See GOT's September QR at I-8. According to the GOT, firms 
whose premises are established in Organized Industrial Zones (OIZs) or 
Industrial Zones located in the 49 provinces can benefit from a 100 
percent undertaking for income tax or corporate taxpayers (employers) 
hiring at least ten workers. Id. Companies whose premises are located 
at other areas of the 49 eligible provinces can benefit from 80 percent 
undertaking for income tax or corporate taxpayers (employers) hiring at 
least ten workers. Id. The GOT further states that the support will be 
provided if employers submit monthly premium and service documents to 
the Social Security Institution within the statutory periods in 
conformity with the Social Security Law No. 506 and if they pay the 
amounts corresponding to the employees' share in the insurance premiums 
of all the insured and the employers' share which is unmet by the 
Treasury. Id.
    In addition, Article 7 of Law 5084 states that this program shall 
be applicable for any new investments for five years for the ones 
completed by December 31, 2007, for four years for the ones completed 
by December 31, 2008 and for three years for the ones completed by 
December 31, 2009. See GOT's September QR at I-9. Hence, the last date 
which the investment can benefit from this tax incentive program is 
December 31, 2012. Id.
    Toscelik reported that it received benefits under this program 
during the POR, because its Osmaniye plant is located in the OIZ zone 
in the Osmaniye province which is one of the 49 eligible provinces. See 
Toscelik's August QR at 6. As explained above, because Toscelik 
produces hot-rolled coils at the Osmaniye plant that can be used as an 
input into the subject merchandise, we preliminarily determine that 
there is nothing on the record that demonstrates that this program is 
precluded from benefitting the subject merchandise. See ``Law 5084: 
Withholding of Income Tax on Wages and Salaries'' section above.
    In these Preliminary Results, we also find that during the period 
of review, Toscelik benefitted from the forgiveness on payments for the 
employer's share of social security payments under this OIZ program 
pursuant to Section 771(5)(E)(iii) of the Act in the amount of the 
social security insurance premiums that it did not pay. We also find 
that this program is regionally-specific under 771(5A)(D)(iv) because 
it is limited to companies located in the 49 eligible provinces. 
Moreover, we find that this program constitutes a financial 
contribution in the form of revenue forgone within the meaning of 
section 771(5)(D)(ii) of the Act to the extent that it relieves 
Toscelik of the obligation to pay social security insurance premiums 
that it would have had to pay absent this program.
    To calculate the benefit from the social security insurance premium 
relief that Toscelik received under the insurance premiums program, we 
summed the total amount of insurance premium savings reported by 
Toscelik during the POR. See 19 CFR 351.509(a)(1). To calculate the net 
subsidy rate, we divided the benefit by Toscelk's total f.o.b. sales 
during the POR. On this basis, we preliminarily determined Toscelik's 
net subsidy rate under this program to be 0.15 percent ad valorem.

H. Law 5084: Allocation of Free Land

    The Ministry of Science, Industry and Technology General 
Directorate of Industrial Zones administers the free land allocation 
support program. See GOT's September QR at I-21. According to the GOT, 
all enterprises or industries established in the 49 provinces which 
have a GDP per capita equal to or less than 1,550 US dollars (as 
determined by the State Institute of Statistics as of 2001) or which 
have a negative socio-economic development index value (as determined 
by the State Planning Organization as of 2003) that are also located in 
OIZs can benefit from free land allocation support pursuant to 
Provisional Article 1 of Law 5084. See September QR at I-22 and GOT's 
June QR at Exhibit 24. The GOT further states that although the main 
provisions regarding the land allocation support for OIZs are regulated 
under Provisional Article 1, both Article 5 of Law 5084 and Provisional 
Article 1 govern the land allocation support. Id. The GOT further 
states that pursuant to Article 2, paragraph 1, clause (b) of Law 5084, 
the Allocation of Investment Sites Free of Charge is provided not only 
for aforementioned 49 provinces, but also for other provinces covered 
under the priority regions for development. Id. at I-23 and Exhibit 9. 
According to the GOT, the objective of this program is to reduce inter-
regional disparities and to increase employment in provinces where the 
development is relatively low. Id.
    With respect to companies in the OIZs, the GOT states that pursuant 
to Provisional Article 1, non-allocated parcels in the OIZ, located in 
the provinces subject to clause (b) of Article 2 of Law 5084 can be 
allocated to real or legal entities free of charge provided that the 
competent bodies of the OIZ decide accordingly. See GOT's September QR 
at I-24. According to the GOT, in OIZs under this program, free parcels 
were allocated to companies that employ at least ten employees. Id. The 
GOT states that OIZs are established anywhere in Turkey regardless of 
the geographic location with the aim of gathering the industrial 
facilities in well-coordinated manner with

[[Page 19630]]

necessary infrastructures. Id. The GOT states that the implementation 
of the program initiated on February 6, 2004, and remained in force 
until February 6, 2010, the end of the validity period mentioned in 
paragraph 4, Provisional Article 1. Id.
    According to the GOT, to apply for this program the investor fills 
out the application form and submits it to the OIZ administration. See 
September QR at I-25. The GOT states that the OIZ administration 
decides whether or not to allocate the land to the investor within 30 
days. Id. If the application is approved, then a Free Land Allocation 
Agreement is signed by the investor and the OIZ Administration and sent 
to the Ministry of Science, Industry and Technology. Id. According to 
the GOT, the investors who have benefited from free land allocation 
support are obligated to start production in two years at the latest 
while employing at least 10 people. Id. The GOT states that at the end 
of this period the land allocation of investors who have not started 
production are cancelled. Id. In addition, the land allocations of 
investors who have ceased investment are cancelled. Id.
    Toscelik reported that it received free land in the Osmaniye OIZ 
under Law 5084 Provisional Article 1. See Toscelik's August 29, 2011 QR 
at 8. Toscelik reports that the land transfer was made on December 29, 
2008 in a single installment. Id. at 10. Toscelik further reported that 
the land is the site of the entire Osmaniye facility, including the 
steel mill and the rolling mill that produces the coils that feed the 
spiral pipe mill in Osmaniye. See Toscelik's January 30, 2012, 
questionnaire response (January 30 QR) at 2. In addition, the site 
includes the welded pipe mill in Iskenderun, as well as the billets 
that feed the bar mill at Tosyali Demir in Iskenderun. Id.
    In these Preliminary Results, we find that during the period of 
review, Toscelik benefitted from the provision of free land under this 
OIZ program pursuant to section 771(5)(E)(iv) of the Act in that it was 
able to obtain goods (i.e., land) for less than it would otherwise pay 
in the absence of this subsidy. We also find that this program is 
regionally-specific under 771(5A)(D)(iv) of the Act because it is 
limited to companies located in the 49 eligible provinces. Moreover, we 
find that this program constitutes a financial contribution in the form 
of land provided for less than adequate remuneration (LTAR) within the 
meaning of section 771(5)(D)(iii) of the Act.
    We preliminarily determine to rely on publicly available 
information concerning industrial land prices in Turkey for purposes of 
calculating a comparable commercial benchmark price for land available 
in Turkey. See Memorandum to the File from Eric B. Greynolds, Program 
Manager, Office 3, Operations, ``Placement of Land Price Information on 
Record of Review,'' (March 26, 2012) (Land Price Memorandum), a public 
document available via IA Access in Room 7046 of the Central Records 
Unit in the Commerce Building. We find this land price may serve as a 
comparable commercial benchmark under 19 CFR.351.511(a)(2)(i).
    We considered other potential benchmarks submitted on the record 
but have preliminarily determined not to use them. Toscelik submitted 
transaction information with regard to an adjacent plot of land that it 
purchased from the GOT. See Toscelik's August QR at 9 and Exhibit 11 
and Toscelik's February 8, 2012 QR at 1. However, we preliminarily 
determine that we cannot use this price as a commercial benchmark under 
19 CFR 351.511(a)(2)(i) because it pertains to prices charged by the 
very provider of the good at issue, and we would not normally use these 
prices for comparison purposes under tier one or tier two where other 
more appropriate benchmark data are available. Our approach in this 
regard is consistent with the Department's practice. See Certain Hot-
Rolled Carbon Steel Flat Products from India: Final Results and Partial 
Rescission of Countervailing Duty Administrative Review, 74 FR 20923 
(May 6, 2009), and accompanying Issues and Decision Memorandum at 
Comment 11. In addition, the GOT submitted a land valuation that it 
uses to calculate property taxes in the Osmaniye region. See GOT's 
February 8, 2012 QR at 7. However, information from the GOT indicates 
that this land value represents a ``minimum'' land price. Id. Because 
the land value from the GOT is a ``minimum'' price, we preliminarily 
determine that it cannot serve as a viable commercial benchmark under 
19 CFR 351.511(a)(1).
    To calculate the benefit, we multiplied the area of land Toscelik 
obtained free of charge from the GOT by the unit benchmark land price 
discussed above. Next, we performed the 0.5 percent test by dividing 
the benefit by Toscelik's total sales in 2008. See 19 CFR 
351.524(b)(2). The resulting ratio exceeded 0.5 percent of Toscelik's 
total sales, therefore, we allocated a portion of the benefit to the 
POR using the Department's standard grant allocation formula. See 19 
CFR 351.524(d). We lack company-specific information concerning 
interest rates charged to Toscelik on long-term debt. We also lack 
information from the GOT concerning long-term interest rates in Turkey. 
Therefore, in accordance with 19 CFR 351.505(a)(3)(ii), we used the 
national average discount rate in Turkey for 2008 as the long-term 
discount rate utilized in the grant allocation formula.
    In its questionnaire response, Toscelik argues that the Department 
should use a 55-year AUL that corresponds to a depreciation schedule 
utilized in its financial statement for purposes of performing the 
grant allocation calculation described under 19 CFR 351.524(d). See 
Toscelik's August 29, 2011, questionnaire response at 16. However, for 
purposes of the preliminary results, we used the standard 15-year AUL 
described above in the ``Allocation Period'' section when conducting 
the grant allocation calculation. Our approach in this regard is 
consistent with the Department's approach in other land for less than 
adequate remuneration (LTAR) programs involving the outright sale of 
land. 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 (September 23, 2002), and accompanying 
Issues and Decision Memorandum at Provision of Land at Asan Bay, in 
which the Department used the standard AUL for the steel industry, as 
indicated by the IRS tables, to allocate benefits received under a land 
for LTAR program to the period of investigation.
    To calculate the net subsidy rate, we divided the benefit by 
Toscelk's total f.o.b. sales during the POR. On this basis, we 
preliminarily determined Toscelik's net subsidy rate under this program 
to be 0.11 percent ad valorem.

I. Law 5084: Energy Support

    The Ministry of Economy, General Directorate of Incentives and 
Implementation and Foreign Investments administers the energy support 
program pursuant to Article 2 and Article 6 of Law 5084. See GOT's 
September QR at I-13 and July QR at Exhibit 23. According to the GOT 
the main objective of this program is to reduce inter-regional 
disparities and to increase employment. See GOT's September QR at I-14. 
According to the GOT, all enterprises or industries established in the 
49 provinces which have a GDP per capita equal to or less than 1,550 US 
dollars (as determined by the State Institute of Statistics as of

[[Page 19631]]

2001) or which have a negative socio-economic development index value 
(as determined by the State Planning Organization as of 2003) can 
benefit from this program. See GOT's September QR at I-14 and GOT's 
June QR at Exhibit 24.
    The GOT states that enterprises operating or investing in the 
designated provinces are eligible for the support at rates ranging from 
20 percent to 50 percent of the cost of electricity energy consumption, 
depending on their existing employment levels and the number of new 
hires. See GOT's September QR at I-14. Specifically, eligible 
businesses should operate in animal husbandry (including aquaculture 
and poultry), organic and biotechnological agriculture, mushroom 
cultivation and composting, greenhouse production, certificated seed 
production, cooling warehouse, manufacturing industry, mining, tourism 
accommodation, education or health services. In addition, these 
businesses should have at least 10 employees. See GOT's September QR at 
I-14 and GOT's July QR at Exhibit 23. According to the GOT, the energy 
support rate is applied as 20 percent of energy cost of the 
undertaking. The energy support rate increases 0.5 point for (1) each 
additional employee above 10 employees hired by newly established 
undertakings which started business as of April 1, 2005 or (2) for each 
additional employee above 10 employees who were hired after the date 
set by the Law for operating undertakings which stared business before 
April 1, 2005. Id. According to the GOT, energy support shall not 
exceed 50 percent of the electricity costs of the undertakings 
operating in OIZs or Industry Zones and 40 percent of these costs for 
the undertakings operating in other areas. Id.
    According to the GOT, in order to benefit from energy support, 
eligible firms must apply to the Provincial Offices of the Ministry of 
Science, Industry and Technology. See GOT's September QR at I-16. The 
program is implemented by a provincial Energy Support Commission 
(Commission) which is chaired by the provincial governor or lieutenant 
governor. Id. The Commission is constituted from delegates from 
Provincial Offices of the Ministry of Science, Industry and Technology, 
Ministry of Finance (Tax Office), Ministry of Labor and Social Security 
(Provincial Offices of Social Security Institution), Turkish 
Electricity Distribution Company and OIZ if any. Id. The Commission 
evaluates the applications according to the information provided in the 
application form and other documents submitted with regard to their 
conformity to the conditions set by the related legislation. Id. If a 
firm is found eligible, the Commission also determines the rate of 
energy support to be applied for that firm. Id.
    Toscelik reported that it received energy subsidies during the POR. 
See Toscelik's August 29 QR at 13. According to Toscelik all energy 
subsidies received by the Osmaniye facility relate solely to the 
portion of the Osmaniye facility that produces spiral-welded pipe. See 
Toscelik's January 30 QR at 3. Toscelik points to its August 29 QR and 
asserts that documentation in Exhibit 12 demonstrates that the benefits 
from this program are attributable solely to ``spiral energy support 
deduction,'' i.e., the support for energy expenses relating to the 
spiral-pipe production facility. See Toscelik's January 30 QR at 3. 
Toscelik further maintains that the investment certificate which is 
related to the Osmaniye facility is explicitly only related to the 
spiral pipe production line. Id. Moreover, Toscelik asserts that there 
is no other investment certificate for the other aspects of Toscelik's 
Osmaniye operation. Id.
    When a respondent claims that that a subsidy is tied to non-subject 
merchandise, the respondent must provide evidence to substantiate their 
claim. We preliminarily determine that the document to which Toscelik 
cites in Exhibit 12 of its response does not establish a tie between 
the subsidy and the non-subject merchandise. Furthermore, with respect 
to the investment certificate cited, we preliminarily determine that 
the language on the certificate does not indicate that the subsidy in 
question is linked specifically to spiral pipe. Therefore, as explained 
above, because Toscelik produces hot-rolled coils at the Osmaniye plant 
that can be used as an input into the subject merchandise, we 
preliminarily determine that there is nothing on the record that 
demonstrates that this program is precluded from benefitting the 
subject merchandise. See ``Law 5084: Withholding of Income Tax on Wages 
and Salaries'' section above.
    In these Preliminary Results, we also find that during the period 
of review, Toscelik benefitted from the energy subsidies under this OIZ 
program pursuant to section 771(5)(E)(ii) of the Act in that it was 
able to obtain goods (i.e., electricity) for less than it would 
otherwise pay in the absence of this subsidy. We also find that this 
program is regionally-specific under 771(5A)(D)(iv) because it is 
limited to companies located in the 49 eligible provinces. Moreover, we 
find that this program constitutes a financial contribution in the form 
of electricity provided at LTAR within the meaning of section 
771(5)(D)(iii) of the Act.
    To calculate the benefit from the energy subsidies that Toscelik 
received under the energy support program, we summed the total amount 
of energy subsidies reported by Toscelik during the POR and treated it 
as a non-recurring grant. Next, in accordance with 19 CFR 
351.524(b)(2), we determined whether to allocate the non-recurring 
benefit from the grant over Toscelik's AUL by dividing the approved 
amount by Toscelik's total f.o.b. sales during the POR. The resulting 
ratio was less than 0.5 percent of Toscelik's total f.o.b. sales, 
therefore we allocated the benefit to the POR. On this basis, we 
preliminarily determine Toscelik's net subsidy rate under this program 
to be 0.02 percent ad valorem.

J. OIZ: Exemption from Property Tax

    Toscelik reported that it received an exemption from property tax 
with respect to its Osmanye facilities because of their location in the 
OIZ, during the POR. See Toscelik's August 29, 2011 QR at 14. In these 
Preliminary Results, we find that during the period of review, Toscelik 
benefitted from the exemption from property tax under this OIZ program 
pursuant to Section 771(5)(E)(i) of the Act in the amount of the 
property taxes that it did not pay. We also find that this program is 
regionally-specific under 771(5A)(D)(iv) because it is limited to 
companies located in the OIZ. Moreover, we find that this program 
constitutes a financial contribution in the form of revenue forgone 
within the meaning of 19 CFR 351.503(iii) to the extent that it 
relieves Toscelik of the obligation to pay property taxes that it would 
have had to pay absent this program.
    To calculate the benefit from the tax relief that Toscelik received 
under the property tax exemption program, we took the total amount of 
property tax savings reported by Toscelik during the POR and divided 
the amount of the benefit by Toscelik's total f.o.b. sales during the 
POR. On this basis, we preliminarly determine Toscelik's net subsidy 
rate under this program to be 0.01 percent ad valorem.

[[Page 19632]]

II. Programs Preliminary Determined To Not Confer Countervailable 
Benefits During the POR

A. Inward Processing Certificate Exemption

    Under the Inward Processing Certificate (IPC) \19\ program, 
companies are exempt from paying customs duties and VAT on raw 
materials and intermediate unfinished goods imported to be used in the 
production of exported goods. Companies may choose whether to be exempt 
from the applicable duties and taxes upon importation (i.e., the 
Suspension System) or have the duties and taxes reimbursed after 
exportation of the finished goods (i.e., the Drawback System). Under 
the Suspension System, companies provide a letter of guarantee that is 
returned to them upon fulfillment of the export commitment. See GOT's 
initial QR at II-41 and II-42.
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    \19\ During the POR, the IPC was implemented under Resolution 
No. 2005/8391. A copy of this resolution was submitted by the GOT in 
its June 28, 2011, initial questionnaire response at Exhibit 20.
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    To participate in this program, a company must hold an IPC, which 
lists the amount of raw materials/intermediate unfinished goods to be 
imported and the amount of product to be exported. See GOT's initial QR 
at II-43. The Undersecretariat for Foreign Trade/General Directorate of 
Exports is the authority responsible for administrating the program. 
Id. at II-40. To obtain an IPC, an exporter must submit an application, 
which states the amount of imported raw material required to produce 
the finished products and a ``letter of export commitment,'' which 
specifies that the importer of materials will use the materials to 
produce exported goods. Id. at II-43. Once an IPC is issued, the 
producer must show the certificate to Turkish customs each time it 
imports raw materials on a duty exempt basis. Id. There are two types 
of IPCs: (1) D-1 certificate for imported raw materials or intermediate 
unfinished goods used in the production of exported goods, and (2) D-3 
certificate for imported raw materials or intermediate unfinished goods 
used in the production of goods sold in the domestic market and defined 
as ``domestic sales and deliveries considered as exports.'' \20\ During 
the POR, Borusan and Toscelik used D-1 certificates for the importation 
of raw materials used in the production of exported pipe and tube. No 
respondent used a D-3 certificate during the POR.\21\
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    \20\ See GOT's Initial Questionnaire Response at 41; see also 
pages 42-43 and Exhibit 20 for additional information on D-3 
certificates.
    \21\ See Toscelik's Initial Questionnaire Response at Exhibit 
15. See Borusan's Initial Questionnaire Response at Exhibit 31.
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    Concerning D-1 certificates, pursuant to 19 CFR 351.519(a)(1)(ii), 
a benefit exists to the extent that the exemption extends to inputs 
that are not consumed in the production of the exported product, making 
normal allowances for waste, or if the exemption covers charges other 
than import charges that are imposed on the input. With regard to the 
VAT exemption granted under this program, pursuant to 19 CFR 
351.517(a), in the case of the exemption upon export of indirect taxes, 
a benefit exists to the extent that the Department determines that the 
amount exempted exceeds the amount levied with respect to the 
production and distribution of like products when sold for domestic 
consumption.
    In prior reviews, the Department has found that, in accordance with 
19 CFR 351.519(a)(4)(i), the GOT has a system in place to confirm which 
inputs, and in what amounts are consumed in the production of the 
exported product, and that the system is reasonable for the purposes 
intended. See, e.g., Turkey Pipe 2004 Decision Memorandum at ``Inward 
Processing Certificate Exemption'' under ``Programs Determined to Not 
Confer Countervailable Benefits.'' The Department has also found that 
the exemption granted on certain methods of payments used in purchasing 
imported raw materials under this program does not constitute a subsidy 
pursuant to 19 CFR 351.517(a), because the tax exempted upon export 
does not exceed the amount of tax levied on like products when sold for 
domestic consumption. See Wire Rod Memorandum at ``Inward Processing 
Certificate Exemptions'' and Comment 8. No new information is on the 
record of this review to warrant a reconsideration of the Department's 
earlier findings.
    During the POR, under D-1 certificates, Borusan and Toscelik 
received duty and VAT exemptions on certain imported inputs used in the 
production of steel pipes and tubes. See Toscelik's Initial 
Questionnaire Response at Exhibit 16; see also Borusan's July 14, 2011, 
Questionnaire Response at 14. Consistent with the Department's findings 
in Turkey Pipe 2004 Final and based on our review of the information 
supplied by the respondents regarding this program, we preliminarily 
determine there is no evidence on the record of this review that 
indicates the amount of exempted inputs imported under the program were 
excessive or that the firms used the imported inputs for any other 
product besides those exported.
    Therefore, consistent with past cases,\22\ we preliminarily 
determine that the tax and duty exemptions, which Borusan and Toscelik 
received on imported inputs under D-1 certificates of the IPC program, 
did not confer countervailable benefits as each company consumed the 
imported inputs in the production of the exported product, making 
normal allowance for waste. We further preliminarily find that the VAT 
exemption did not confer countervailable benefits on Borusan or 
Toscelik because the exemption does not exceed the amount levied with 
respect to the production and distribution of like products when sold 
for domestic consumption. Further, because Borusan and Toscelik did not 
import any goods under a D-3 certificate during the POR, we 
preliminarily determine that this aspect of the IPC program was not 
used.
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    \22\ See Turkey Pipe 2004 Decision Memorandum, Turkey Pipe 2005 
Preliminary Results, Turkey Pipe 2006 Preliminary Results, and NSR 
Preliminary Results.
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B. Investment Encouragement Program (IEP): Customs Duty Exemptions

    The GOT provides IEPs that qualified recipients can use to import 
items duty free. In past CVD proceedings, the Department has repeatedly 
found this program to be not countervailable because benefits are not 
specific. See Certain Welded Carbon Steel Standard Pipe from Turkey: 
Preliminary Results of Countervailing Duty Administrative Review, 
(Turkey Pipe 2008 Preliminary Results), 75 FR 16439, 16443 (April 1, 
2010), unchanged in Certain Welded Carbon Steel Standard Pipe from 
Turkey: Final Results of Countervailing Duty Administrative Review, 75 
FR 44766 (July 29, 2010). However, based on allegations from 
petitioners in which they alleged changes to the program starting in 
January 1, 2009, the Department initiated an investigation of this 
program as it pertains to licenses issued after January 1, 2009. 
Toscelik and Borusan reported using this program. See Toscelik's 
December 12 QR at 1-2 and January 30 QR at 7 and Exhibit 5; see also 
Borusan's December 12, 2011, at 5. Concerning Toscelik, its use of the 
program was limited to IEP licenses that it received prior to January 
1, 2009. Thus, we preliminarily determine that Toscelik's use of this 
program did not confer any countervailable benefits during the POR

[[Page 19633]]

because the duty exemptions that Toscelik received relate to IEP 
licenses that the Department has previously determined were distributed 
in a manner that were not specific. See Turkey Pipe 2008 Preliminary 
Results, 75 FR at16439, 16443 (April 1, 2010).
    Concerning Borusan, it reported receiving an IEP license after 
January 1, 2009, that allowed it to import a piece of equipment at a 
reduced duty rate. Borusan argues that the receipt of duty exemptions 
on this license was contingent upon the firm using the equipment to 
produce spiral welded pipe, which is non-subject merchandise. Upon 
review of the IEP license in question, we preliminarily determine that 
the benefit Borusan received on this license was tied to the production 
of spiral welded pipe at the time of bestowal. See Borusan's December 
12, 2011, new subsidies allegations questionnaire response at p. 5-7 
and Exhibits S3-2 and S3-3. Thus, we preliminarily determine that the 
benefits Borusan received under this program are tied to non-subject 
merchandise.

IV. Programs Preliminarily Determined To Not Be Used

    We examined the following programs and preliminarily determine that 
Borusan and Toscelik did not apply for or receive benefits under these 
programs during the POR:

A. Post-Shipment Export Loans
B. Export Credit Bank of Turkey Buyer Credits
C. Subsidized Turkish Lira Credit Facilities
D. Subsidized Credit for Proportion of Fixed Expenditures
E. Subsidized Credit in Foreign Currency
F. Regional Subsidies
G. VAT Support Program (Incentive Premium on Domestically Obtained 
Goods)
H. IEP: VAT Exemptions
I. IEP: Reductions in Corporate Taxes
J. IEP: Interest Support
K. IEP: Social Security Premium Support
L. IEP: Land Allocation
M. National Restructuring Program
N. Regional Incentive Scheme: Reduced Corporate Tax Rates
O. Regional Incentive Scheme: Social Security Premium Contribution 
for Employees
P. Regional Incentive Scheme: Allocation of State Land
Q. Regional Incentive Scheme: Interest Support
R. OIZ: Waste Water Charges
S. OIZ: Exemptions from Customs Duties, VAT, and Payments for Public 
Housing Fund, for Investments for which an Income Certificate is 
Received
T. OIZ: Credits for Research and Development Investments, 
Environmental Investments, Certain Technology Investments, Certain 
``Regional Development'' Investments, and Investments Moved from 
Developed regions to ``Regions of Special Purpose''
U. Provision of Buildings and Land Use Rights for Less than Adequate 
Remuneration under the Free Zones Law
V. Corporate Income Tax Exemption under the Free Zones Law
W. Stamp Duties and Fees Exemptions under the Free Zones Law
X. Customs Duties Exemptions under the Free Zones Law
Y. Value-Added Tax Exemptions under the Free Zones Law
Z. OIZ: Exemption from Building and Construction Charges
AA. OIZ: Exemption from Amalgamation and Allotment Transaction 
Charges

Verification

    The Department's regulations provide that factual information upon 
which the Secretary relies for the final results of an administrative 
review will be verified if a domestic party timely requests 
verification and the Secretary has not conducted verification during 
either of the two immediately preceding administrative reviews. See 19 
CFR 351.307(b)(1)(v). While U.S. Steel timely requested that the 
Department conduct verification in this review, the Department has 
conducted verifications of Toscelik and Borusan during both of the 
immediately preceding administrative reviews. Therefore, in accordance 
with 19 CFR 351.307(b)(1)(iv)(B), we are not verifying Toscelik and 
Borusan in this administrative review.

Preliminary Results of Review

    In accordance with 19 CFR 351.221(b)(4)(i), we calculated an 
individual subsidy rate for each producer/exporter subject to this 
administrative review. For the period January 1, 2010, through December 
31, 2010, we preliminarily determine the following total net 
countervailable subsidy rates: for Borusan is 0.27 percent ad valorem, 
and for Toscelik is 0.35 percent ad valorem; these rates are de 
minimis, pursuant to 19 CFR 351.106(c)(1).
    The Department intends to issue assessment instructions to 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 
countervailing duties all shipments of subject merchandise produced by 
Borusan and Toscelik entered, or withdrawn from warehouse, for 
consumption from January 1, 2010, through December 31, 2010. The 
Department will also instruct CBP not to collect cash deposits of 
estimated countervailing duties on all shipments of the subject 
merchandise produced by Borusan and Toscelik, 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 company-specific 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. Those rates shall 
apply to all non-reviewed companies until a review of a company 
assigned these rates is completed.
    These cash deposit requirements, when imposed, shall remain in 
effect until further notice.

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. Case and rebuttal briefs will be due at the dates specified by 
the Department. The Department will notify interested parties of the 
case and rebuttal due dates once those dates are finalized. Parties who 
submit argument in this proceeding are requested to submit with the 
argument: (1) A statement of the issues, 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.
    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)(1)(ii), are due. The 
Department will publish the final

[[Page 19634]]

results of this administrative review, including the results of its 
analysis of arguments made in any case or rebuttal briefs.
    These preliminary results of review are issued and published in 
accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 
351.221(b)(4).

    Dated: March 26, 2012.
Paul Piquado,
Assistant Secretary for Import Administration.
[FR Doc. 2012-7846 Filed 3-30-12; 8:45 am]
BILLING CODE 3510-DS-P