Certain Cut-to-Length Carbon-Quality Steel Plate from France: Notice of Court Decision and Suspension of Liquidation

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On September 24, 2002, in GTS Industries S.A. v. United States, Consol. Court No. 00-03-00118, Slip Op. 02-115 (CIT 2002), a lawsuit challenging the Department of Commerce's (“the Department's”) Final Affirmative Countervailing Duty Determination: Certain Cut-to-Length Carbon-Quality Steel Plate from France, 64 FR 73277 (December 29, 1999) (“French Plate”), the Court of International Trade (“CIT”) affirmed the Department's second remand redetermination and entered a judgment order. In this redetermination, the Department reviewed the record evidence regarding the facts and circumstances, including the terms of the sale, of the privatization of Usinor (which owned a majority interest in GTS Industries S.A. (“GTS”) prior to 1996 and a minority interest during the period of investigation (“POI”)), and concluded that no countervailable subsidies were attributable to GTS following the privatization transaction.

As a result of the redetermination, the countervailable subsidy rate for the subject merchandise produced and sold by GTS during the POI was reduced from 6.86 percent to 0.00 percent ad valorem.

This redetermination was not in harmony with the Department's original final determination in French Plate. Consistent with the decision of the U.S. Court of Appeals for the Federal Circuit (“CAFC”) in Timken Co. v. United States, 893 F.2d 337 (Fed. Cir. 1990) (“Timken”), the Department will continue to order the suspension of liquidation of the subject merchandise until there is a “conclusive” decision in this case. If the case is not appealed, or if it is affirmed on appeal, the Department will instruct the U.S. Customs Service to terminate the suspension of liquidation for all entries of certain cut-to-length carbon-quality steel plate from France.

EFFECTIVE DATE:

October 30, 2002.

FOR FURTHER INFORMATION CONTACT:

Jesse Cortes, AD/CVD Enforcement Group I, Office 1, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, DC 20230; telephone: (202) 482-3986.

SUPPLEMENTARY INFORMATION:

Background

In French Plate, using the change-in-ownership methodology in place at that time, the Department determined that countervailable subsidies were being provided to producers and exporters of certain cut-to-length carbon-quality steel plate from France. GTS challenged this determination before the CIT.

On February 2, 2000, the CAFC ruled in Delverde SRL v. United States, 202 F.3d 1360 (Fed. Cir. 2000), reh'g granted in part, (June 20, 2000) (“Delverde III”), that:

the Tariff Act as amended does not allow Commerce to presume conclusively, pursuant to a per se rule, that the subsidies granted to the former owner of Delverde's corporate assets automatically 'passed through' to Delverde following the sale. Rather, the Tariff Act requires that Commerce make such a determination by examining the particular facts and circumstances of the sale and determining whether Delverde directly or indirectly received both a financial contribution and benefit from the government.

202 F.3d at 1364. The methodology analyzing Delverde's change in ownership and struck down by the CAFC in Delverde III was similar to that employed in French Plate. Accordingly, the Department asked the CIT to remand the French Plate proceeding for reconsideration in light of Delverde III. The parties consented to this remand.

On August 9, 2000, the CIT remanded the French Plate proceeding to the Department with instructions to: (1) “determine the applicability, if any, of [Delverde III] to this proceeding, and (2) embark upon further fact finding, if appropriate.” GTS Industries S.A. v. United States, Court No. 00-03-00118, Remand Order August 9, 2000, modified by Order August 24, 2000.

On December 22, 2000, following a comment period, the Department issued the Final Results of Redetermination Pursuant to Court Remand. In that redetermination, in light of Delverde III, the Department analyzed the facts and circumstances of the privatization transaction to determine whether the person to whom countervailable subsides had been given in the past was essentially the same person after privatization. Among the facts and circumstances considered, the Department examined the continuity of general business operations, the continuity of production facilities, continuity of assets and liabilities, and retention of personnel before and after the privatization. Based on these factors, the Department determined that post-privatization Usinor was essentially the same person as pre-privatization Usinor. Consequently, because the Department had attributed a portion of Usinor's pre-privatization subsidies to GTS, these subsidies remained attributable to GTS following Usinor's privatization.

After briefing and a hearing, the CIT, on January 4, 2002¹, again remanded the French Plate proceeding to the Department. GTS Industries S.A. v. United States, 182 F. Supp. 2d 1369 (CIT 2002). The court explained that the central question was whether the Department's remand decision was consistent with the statute, as interpreted by the CAFC in Delverde III. The court found that Delverde III's requirements were as follows:

1.Section 1677(5) prohibits the Department from adopting any per se rule that a subsidy passes through, or is eliminated, as a result of a change in ownership. Id. at 1377.

2.The statute requires that the Department must look at the facts and circumstances of the entire transaction, including the terms of the sale, to determine if the purchaser/new owner received, directly or indirectly, a subsidy for which it did not pay adequate compensation. In other words, the Department must find that the purchaser/new owner indirectly received a subsidy from the government. Id. at 1377-1380.

The Court specifically rejected, as contrary to Delverde III, the Department's argument that, if the pre and post-privatization companies are, in substance, the same legal person, the Department is not required to determine anew whether that same person has received a subsidy.

On June 3, 2002, following a comment period, the Department issued its Results of Redetermination Pursuant to Court Remand. In this second redetermination, the Department re-analyzed certain facts and circumstances of the privatization of Usinor, including the terms of the sale. The Department determined that: 1) some purchasers of Usinor's shares paid full, fair-market value for those shares and, thus, received no subsidy from the privatization transaction; and 2) other purchasers that did not pay full, fair-market value did receive a subsidy from the privatization transaction. However, regarding the purchasers that did not pay full, fair-market value, while they did receive a subsidy, the Department determined that this subsidy was not countervailable because it was conferred on the owners of the company, and not on the company itself. Consequently, the Department concluded that Usinor (and, thus, GTS) received no countervailable subsidies as a result of the privatization transaction. Accordingly, the Department recalculated a subsidy rate of 0.00 percent ad valorem for GTS for the POI.

The CIT affirmed the Results of Redetermination Pursuant to Court Remand on September 24, 2002. See GTS Industries S.A. v. United States, Consol. Court No. 00-03-00118, Slip Op. 02-115 (CIT 2002).

Suspension of Liquidation

The CAFC, in Timken, held that the Department must publish notice of a decision of the CIT or the CAFC which is not “in harmony” with the Department's final determination. Publication of this notice fulfills that obligation. The CAFC also held that the Department must suspend liquidation of the subject merchandise until there is a “conclusive” decision in the case. Therefore, pursuant to Timken, the Department must continue to suspend liquidation pending the expiration of the period to appeal the CIT's September 24, 2002, decision or, if that decision is appealed, pending a final decision by the CAFC. The Department will instruct the Customs Service to liquidate relevant entries covering the subject merchandise effective October 30, 2002, in the event that the CIT's ruling is not appealed, or if appealed and upheld by the CAFC.