[Federal Register Volume 74, Number 148 (Tuesday, August 4, 2009)]
[Notices]
[Pages 38579-38584]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-18597]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-580-851]
Dynamic Random Access Memory Semiconductors from the Republic of
Korea: Preliminary Results of Countervailing Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce is conducting an administrative
review of the countervailing duty order on dynamic random access memory
semiconductors from the Republic of Korea for the period January 1,
2007, through December 31, 2007. We preliminarily find that Hynix
Semiconductor, Inc. received countervailable subsidies during the
period of review, which result in a de minimis subsidy rate. If these
preliminary results are adopted in our final results of this review, we
will instruct U.S. Customs and Border Protection not to assess
countervailing duties as detailed in 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: August 4, 2009.
FOR FURTHER INFORMATION CONTACT: David Neubacher or Shane Subler,
Office of AD/CVD Operations, Office 1, Import Administration,
International Trade Administration, U.S. Department of Commerce, Room
3069, 14th Street and Constitution Avenue, NW, Washington, DC 20230;
telephone: (202) 482-5823 and (202) 482-0189, respectively.
SUPPLEMENTARY INFORMATION:
Background
On August 11, 2003, the Department of Commerce (``the Department'')
published a countervailing duty order on dynamic random access memory
semiconductors (``DRAMS'') from the Republic of Korea (``ROK''). See
Notice of Countervailing Duty Order: Dynamic Random Access Memory
Semiconductors from the Republic of Korea, 68 FR 47546 (August 11,
2003) (``CVD Order''). On August 1, 2008, the Department published a
notice of ``Opportunity to Request Administrative Review'' for this
countervailing duty order. See Antidumping or Countervailing Duty
Order, Finding, or Suspended Investigation; Opportunity To Request
Administrative Review, 73 FR 44966 (August 1, 2008). On August 28,
2008, we received a request for review from Hynix Semiconductor, Inc.
(``Hynix''). On September 2, 2008, we received a request for review of
Hynix and its affiliates from the petitioner, Micron Technology, Inc.
(``Micron''). In accordance with 19 CFR 351.221(c)(1)(i), we published
a notice of initiation of the review on September 30, 2008. See
Initiation of Antidumping and Countervailing Duty Administrative
Reviews and Requests for Revocation in Part, 73 FR 56795 (September 30,
2008).
On December 12, 2008, we issued countervailing duty questionnaires
to the Government of the Republic of Korea (``GOK'') and Hynix. We
received responses to these questionnaires on January 29, 2009. On
March 17, 2009, we issued supplemental questionnaires to the GOK and
Hynix. We received timely responses to these supplemental
questionnaires on April 14, 2009. We issued additional supplemental
questionnaires to the GOK and Hynix on July 10, 2009 and received
responses on July 23, 2009 and July 17, 2009, respectively.
We received new subsidy allegations from Micron on February 17,
2009.\1\ On July 7, 2009, we decided not to initiate an investigation
of any of the new subsidies that Micron alleged in this administrative
review. In addition, we stated the timing of the benefit of a
previously countervailed debt-to-equity swap (``DES'') is not a new
subsidy, but rather a valuation issue, and we would not reexamine the
issue absent new information that would cast substantial doubt on our
finding. See Memorandum to Susan Kuhbach, Director, Office 1, entitled
``Fifth Countervailing Duty Administrative Review: Dynamic Random
Access Memory Semiconductors from Korea: New Subsidy Allegations
Memorandum'' (July 9, 2009) (``NSA Memo''), available in the Central
Records Unit, Room 1117 of the main Department building.
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\1\ See submission from Micron to the Department, Re: Dynamic
Random Access Memory Semiconductors From Korea: New Subsidy
Allegation (February 17, 2009) (``New Subsidy Allegations'').
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On April 14, 2009, we published a postponement of the preliminary
results in this review until August 3, 2009. See
[[Page 38580]]
Dynamic Random Access Memory Semiconductors from the Republic of Korea:
Extension of Time Limit for Preliminary Results of Countervailing Duty
Administrative Review, 74 FR 17166 (April 14, 2009).
Scope of the Order
The products covered by the order are DRAMS from the ROK, whether
assembled or unassembled. Assembled DRAMS include all package types.
Unassembled DRAMS include processed wafers, uncut die, and cut die.
Processed wafers fabricated in the ROK, but assembled into finished
semiconductors outside the ROK are also included in the scope.
Processed wafers fabricated outside the ROK and assembled into finished
semiconductors in the ROK are not included in the scope.
The scope of the order additionally includes memory modules
containing DRAMS from the ROK. A memory module is a collection of
DRAMS, the sole function of which is memory. Memory modules include
single in-line processing modules, single in-line memory modules, dual
in-line memory modules, small outline dual in-line memory modules,
Rambus in-line memory modules, and memory cards or other collections of
DRAMS, whether unmounted or mounted on a circuit board. Modules that
contain other parts that are needed to support the function of memory
are covered. Only those modules that contain additional items which
alter the function of the module to something other than memory, such
as video graphics adapter boards and cards, are not included in the
scope. The order also covers future DRAMS module types.
The scope of the order additionally includes, but is not limited
to, video random access memory and synchronous graphics random access
memory, as well as various types of DRAMS, including fast page-mode,
extended data-out, burst extended data-out, synchronous dynamic RAM,
Rambus DRAM, and Double Data Rate DRAM. The scope also includes any
future density, packaging, or assembling of DRAMS. Also included in the
scope of the order are removable memory modules placed on motherboards,
with or without a central processing unit, unless the importer of the
motherboards certifies with U.S. Customs and Border Protection
(``CBP'') that neither it, nor a party related to it or under contract
to it, will remove the modules from the motherboards after importation.
The scope of the order does not include DRAMS or memory modules that
are re-imported for repair or replacement.
The DRAMS subject to the order are currently classifiable under
subheadings 8542.21.8005, 8542.21.8020 through 8542.21.8030, and
8542.32.0001 through 8542.32.0023 of the Harmonized Tariff Schedule of
the United States (``HTSUS''). The memory modules containing DRAMS from
the ROK, described above, are currently classifiable under subheadings
8473.30.1040, 8473.30.1080, 8473.30.1140, and 8473.30.1180 of the
HTSUS. Removable memory modules placed on motherboards are classifiable
under subheadings 8443.99.2500, 8443.99.2550, 8471.50.0085,
8471.50.0150, 8517.30.5000, 8517.50.1000, 8517.50.5000, 8517.50.9000,
8517.61.0000, 8517.62.0010, 8517.62.0050, 8517.69.0000, 8517.70.0000,
8517.90.3400, 8517.90.3600, 8517.90.3800, 8517.90.4400, 8542.21.8005,
8542.21.8020, 8542.21.8021, 8542.21.8022, 8542.21.8023, 8542.21.8024,
8542.21.8025, 8542.21.8026, 8542.21.8027, 8542.21.8028, 8542.21.8029,
8542.21.8030, 8542.31.0000, 8542.33.0000, 8542.39.0000, 8543.89.9300,
and 8543.89.9600 of the HTSUS. However, the product description, and
not the HTSUS classification, is dispositive of whether merchandise
imported into the United States falls within the scope.
Scope Rulings
On December 29, 2004, the Department received a request from Cisco
Systems, Inc. (``Cisco''), to determine whether removable memory
modules placed on motherboards that are imported for repair or
refurbishment are within the scope of the order. See CVD Order. The
Department initiated a scope inquiry pursuant to 19 CFR 351.225(e) on
February 4, 2005. On January 12, 2006, the Department issued a final
scope ruling, finding that removable memory modules placed on
motherboards that are imported for repair or refurbishment are not
within the scope of the CVD Order provided that the importer certifies
that it will destroy any memory modules that are removed for repair or
refurbishment. See Memorandum from Stephen J. Claeys to David M.
Spooner, regarding Final Scope Ruling, Countervailing Duty Order on
DRAMs from the Republic of Korea (January 12, 2006).
Period of Review
The period for which we are measuring subsidies, i.e., the period
of review (``POR''), is January 1, 2007, through December 31, 2007.
Changes in Ownership
Effective June 30, 2003, the Department adopted a new methodology
for analyzing privatizations in the countervailing duty context. See
Notice of Final Modification of Agency Practice Under Section 123 of
the Uruguay Round Agreements Act, 68 FR 37125 (June 23, 2003). The
Department's new methodology is based on a rebuttable ``baseline''
presumption that non-recurring, allocable subsidies continue to benefit
the subsidy recipient throughout the allocation period (which normally
corresponds to the average useful life (``AUL'') of the recipient's
assets). However, an interested party may rebut this baseline
presumption by demonstrating that, during the allocation period, a
change in ownership occurred in which the former owner sold all or
substantially all of a company or its assets, retaining no control of
the company or its assets, and that the sale was an arm's-length
transaction for fair market value. Hynix did not challenge this
baseline presumption. See Hynix's January 29, 2009, questionnaire
response at 12.
Subsidies Valuation Information
Allocation Period
Pursuant to 19 CFR 351.524(b), non-recurring subsidies are
allocated over a period corresponding to the AUL of the renewable
physical assets used to produce the subject merchandise. Section
351.524(d)(2) of the Department's regulations creates a rebuttable
presumption that the AUL will be taken from the U.S. Internal Revenue
Service's 1977 Class Life Asset Depreciation Range System (the ``IRS
Tables''). For DRAMS, the IRS Tables prescribe an AUL of five years.
During this review, none of the interested parties disputed this
allocation period. Therefore, we continue to allocate non-recurring
benefits over the five-year AUL.
Discount Rates and Benchmarks for Loans
For loans that we found countervailable in the investigation or in
the prior administrative reviews, and which continued to be outstanding
during the POR, we have used the benchmarks from the prior
administrative reviews.
Long-term Rates
Countervailable Loans from Prior Reviews
For long-term, won-denominated loans originating in 1986 through
1995, we used the average interest rate for three-year corporate bonds
as reported
[[Page 38581]]
by the Bank of Korea (``BOK'') or the International Monetary Fund
(``IMF''). For long-term won-denominated loans originating in 1996
through 1999, we used annual weighted averages of the rates on Hynix's
corporate bonds, which were not specifically related to any
countervailable financing. We did not use the rates on
Hynix's corporate bonds for 2000-2003 for any calculations because
Hynix either did not obtain bonds or obtained bonds through
countervailable debt restructurings during those years.
For U.S. dollar-denominated loans, we relied on the lending rates
as reported in the IMF's International Financial Statistics Yearbook.
For the years in which we previously determined Hynix to be
uncreditworthy (2000 through 2003), we used the formula described in 19
CFR 351.505(a)(3)(iii) to determine the benchmark interest rate. For
the probability of default by an uncreditworthy company, we used the
average cumulative default rates reported for the Caa- to C- rated
category of companies as published in Moody's Investors Service,
``Historical Default Rates of Corporate Bond Issuers, 1920-1997''
(February 1998). For the probability of default by a creditworthy
company, we used the cumulative default rates for investment grade
bonds as published in Moody's Investors Service: ``Statistical Tables
of Default Rates and Recovery Rates'' (February 1998). For the
commercial interest rates charged to creditworthy borrowers, we used
the rates for won-denominated corporate bonds as reported by the BOK
and the U.S. dollar lending rates published by the IMF for each year.
Countervailable Loans during the current POR
For countervailable long-term foreign-currency denominated loans
reported by Hynix, we used, where available, the company-specific,
weighted-average interest rates on the company's comparable commercial
foreign currency loans from foreign bank branches in the ROK, foreign
securities, and direct foreign loans outstanding during the POR. For
countervailable variable-rate loans outstanding during the POR,
pursuant to 19 CFR 351.505(a)(5)(i), we used the interest rates of
variable-rate lending instruments issued during the year in which the
government loans were issued. Where such loans were unavailable, the
Department, consistent with 19 CFR 351.505(a)(3)(ii), followed its
prior practice and relied upon lending rates as reported in the IMF's
International Financial Statistics Yearbook. See Final Affirmative
Countervailing Duty Determination: Dynamic Random Access Memory
Semiconductors from the Republic of Korea, 68 FR 37122 (June 23, 2003)
and accompanying Issues and Decision Memorandum at 5 7.
Analysis of Programs
I. Programs Previously Determined to Confer Subsidies
We examined the following programs determined to confer subsidies
in the investigation
and prior administrative reviews and preliminarily find that Hynix
continued to receive benefits under these programs during the POR.
A. GOK Entrustment or Direction Prior to 2004
In the investigation, the Department determined that the GOK
entrusted or directed creditor banks to participate in financial
restructuring programs, and to provide credit and other funds to Hynix,
in order to assist Hynix through its financial difficulties. The
financial assistance provided to Hynix by its creditors took various
forms, including new loans, convertible and other bonds, extensions of
maturities and interest rate reductions on existing debt (which we
treated as new loans), Documents Against Acceptance (``D/A'')
financing, usance financing, overdraft lines of credit, debt
forgiveness, and DES. The Department determined that these were
financial contributions that constituted countervailable subsidies
during the period of investigation.
In prior administrative reviews, the Department also found that the
GOK continued to entrust or direct Hynix's creditors to provide
financial assistance to Hynix throughout 2002 and 2003. The financial
assistance provided to Hynix during this period included the December
2002 DES and the extensions of maturities and/or interest rate
deductions on existing debt.
In an administrative review, we do not revisit past findings unless
new factual information or evidence of changed circumstances has been
placed on the record of the proceeding that would compel us to
reconsider those findings. See, e.g., Certain Pasta from Italy:
Preliminary Results and Partial Rescission of the Seventh
Countervailing Duty Administrative Review, 69 FR 45676, 45680 (July 30,
2004), unchanged in Certain Pasta from Italy: Final Results of the
Seventh Countervailing Duty Administrative Review, 69 FR 70657
(December 7, 2004). No such new factual information or evidence of
changed circumstances has been placed on the record in this review.
Thus, we preliminarily find that a re-examination of the Department's
findings in the investigation and prior administrative reviews with
respect to the debt forgiveness, loans, and extensions of maturities
and/or interest rate deductions on existing debt is unwarranted.
Micron argues in its New Subsidy Allegations submission that the
Department should reconsider its decision on the timing of the 2002 DES
and find that the DES occurred in 2003. As noted above, we stated that
the issue was not a new subsidy allegation, but rather a subsidy
valuation issue, and we would not consider reexamining the issue absent
new information that casts substantial doubt on this finding. See NSA
Memo at 7.
In its argument, Micron provides new information\2\ with regard to
one aspect of its claims, namely that the contingency requiring
shareholder approval of a 21:1 capital reduction was not pro forma.
Micron's ``new information'' is the list of Hynix board members at the
time of the Micron deal in April 2002, who had unanimously rejected the
deal, and the list of Hynix board members at the time of the Creditors'
Council's restructuring plan in January 2003. See Micron's February 17,
2009, submission at 22. According to Micron, the lists show that three
members of Hynix's board of directors (``BOD''), remained on the board
following its vote on the Micron deal. Thus, Micron asserts, because
the BOD still included members who had previously rejected the Micron
deal, the BOD could still exercise independent judgment and would not
merely ``rubber stamp'' any deal proposed by the Creditors' Council. As
such, Micron concludes, the approval of the DES was not pro forma.
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\2\ The list of Hynix board members at the time of the Micron
vote, cited by Micron in its February 17, 2009, submission, was on
the record of the second administrative review. However, Micron
argues this same information was not on the record of the third
administrative review when the Department last reconsidered this
issue.
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In DRAMS 1st AR, the Department determined that as the Creditors'
Council controlled Hynix and its December 2002 approval was the
singular factor in effectuating the restructuring. See Dynamic Random
Access Memory Semiconductors from the Republic of Korea: Final Results
of Countervailing Duty Administrative Review, 71 FR 14174 (March 21,
2006), and accompanying Issues and Decision Memorandum at Comment 13
(``DRAMS 1st AR''). This decision was upheld by the Court of
International Trade (``CIT'').
[[Page 38582]]
See Micron Technology, Inc. v. United States, 535 F. Supp. 2d 1336,
1344 (CIT 2007). In DRAMS 3rd AR, we reexamined the timing of the 2002
DES based on new information submitted by Micron and concluded,
As stated in the AR1 Decision Memorandum and the Preliminary
Results, the Creditors' Council owned a majority of shares of the
company and effectively controlled the company. {See Dynamic Random
Access Memory Semiconductors from the Republic of Korea: Final Results
of Countervailing Duty Administrative Review, 71 FR 14174 (March 21,
2006), and accompanying Issues and Decision Memorandum at 77 (``AR1
Decision Memorandum'') and Dynamic Random Access Memory Semiconductors
from the Republic of Korea: Preliminary Results of Countervailing Duty
Administrative Review 72 FR 51611 (September 10, 2007) (``Preliminary
Results'').{time} This situation effectively made its December 2002
approval the singular factor in effectuating the restructuring and the
new information does not call into question the Creditors' Council's
dominant role in the process nor raise questions as to whether the
minority shareholders' opposition was significant enough to have an
impact on or to alter the eventual terms and passage of the agreement.
See Dynamic Random Access Memory Semiconductors from the Republic of
Korea: Final Results of Countervailing Duty Administrative Review, 73
FR 14218 (March 17, 2008) (``DRAMS 3rd AR'') and accompanying Issues
and Decision Memorandum at Comment 1. Thus, in our original and
subsequent determinations on the timing of the 2002 DES, one of the
underlying bases for our decisions was the Creditors' Council's
majority stake in Hynix and its effective control over the company.
In submitting the ``new information,'' Micron does not contest this
premise, but highlights the fact that three members of the BOD remained
after its unanimous rejection of the Micron deal in April 2002 and,
Micron argues, therefore, that the BOD vote on the restructuring in
January 2003 was not pro forma. However, based upon the information
submitted by Micron, the simple fact that three members remained on the
BOD from the time of the Micron vote to the restructuring vote does not
cast substantial doubt on our finding that the Creditors' Council's
majority ownership and control of Hynix meant that the Creditors'
Council's approval of the restructuring in 2002 was the single
effectuating event for the DES. Therefore, absent any other new
information that might compel us to reconsider our prior determination,
we will not reexamine it in the context of this administrative review.
See PPG Industries v. United States, 978 F.2d 1232, 1242 (Fed. Cir
1992). See also, Certain Pasta from Italy: Preliminary Results and
Partial Rescission of the Seventh Countervailing Duty Administrative
Review, 69 FR at 45680, unchanged in Certain Pasta from Italy: Final
Results of Seventh Countervailing Administrative Review, 69 FR 70657.
As the benefit from the 2002 DES was fully allocated in the prior
administrative review and we are not reexamining our prior decision, we
are only including in our benefit calculation the following financial
contributions countervailed in the investigation and prior
administrative reviews: bonds, debt forgiveness, and long-term debt
outstanding during the POR. In calculating the benefit, we have
followed the same methodology used in prior administrative reviews.
For loans, we have followed the methodology described at 19 CFR
351.505(c) using the benchmarks described in the ``Discount Rates and
Benchmarks for Loans'' section above.
We divided the total benefits allocated to the POR from the various
financial contributions by Hynix's POR sales. On this basis, we
preliminarily determine the countervailable subsidy from this program
to be less than 0.005 percent ad valorem during the POR. Therefore,
consistent with our past practice, we did not include this program in
our preliminary net countervailing duty rate. See, e.g., Coated Free
Sheet Paper from the People's Republic of China: Final Affirmative
Countervailing Duty Determination, 72 FR 60645 (October 25, 2007), and
accompanying Issues and Decision Memorandum at 16 (``CFS''); and Final
Results of Countervailing Duty Administrative Review: Low Enriched
Uranium from France, 70 FR 39998 (July 12, 2005), and accompanying
Issues and Decision Memorandum at ``Purchases at Prices that Constitute
More than Adequate Remuneration,''' (``Uranium from France'') (citing
Notice of Final Results of Countervailing Duty Administrative Review
and Rescission of Certain Company-Specific Reviews: Certain Softwood
Lumber Products From Canada, 69 FR 75917 (December 20, 2004), and
accompanying Issues and Decision Memorandum at ``Other Programs
Determined to Confer Subsidies'')
B. Operation G-7/HAN Program
Implemented under the Framework on Science and Technology Act, the
Operation G-7/HAN Program (``G-7/HAN Program'') operated from 1992
through 2001. The purpose of this program was to raise the GOK's
technology standards to the level of the G-7 countries. The Department
found that the G7/HAN Program ended in 2001. See Final Affirmative
Countervailing Duty Determination: Dynamic Random Access Memory
Semiconductors from the Republic of Korea, 68 FR 37122 (June 23, 2003),
and accompanying Issues and Decision Memorandum at 25. However, during
the POR, Hynix had outstanding loans that it had previously received
under this program. See Hynix's January 29, 2009, questionnaire
response at 14 and Exhibit 10.
We found that the G-7/HAN Program provided countervailable
subsidies in the investigation. No interested party provided new
evidence that would lead us to reconsider our earlier finding.
Therefore, we continue to find that these loans confer a
countervailable subsidy.
To calculate the benefit of these loans during the POR, we compared
the interest actually paid on the loans during the POR to what Hynix
would have paid under the benchmark described in the ``Subsidy
Valuation Information'' section of this notice. Next, we divided the
total benefit by Hynix's total sales of subject merchandise for the POR
to calculate the countervailable subsidy. On this basis, we
preliminarily determine the countervailable subsidy to be 0.01 percent
ad valorem during the POR.
C. 21st Century Frontier R&D Program
The 21st Century Frontier R&D Program (``21st Century Program'')
was established in 1999 with a structure and governing regulatory
framework similar to those of the G-7/HAN Program, and for a similar
purpose, i.e., to promote greater competitiveness in science and
technology. The 21st Century Program provides long-term interest-free
loans in the form of matching funds. Repayment of program funds is made
in the form of ``technology usance fees'' upon completion of the
project, pursuant to a schedule established under a technology
execution or implementation contract.
Hynix reported that it had loans from the 21st Century Program
outstanding during the POR. See Hynix's January 29, 2009, questionnaire
response at 15 and Exhibit 10.
In the investigation, we determined that this program conferred a
[[Page 38583]]
countervailable benefit on Hynix. No interested party provided new
evidence that would lead us to reconsider our earlier finding.
Therefore, we continue to find that these loans confer a
countervailable subsidy.
To calculate the benefit of these loans during the POR, we compared
the interest actually paid on the loans during the POR to what Hynix
would have paid under the benchmark described in the ``Discount Rates
and Benchmarks for Loans'' section above. We then divided the total
benefit by Hynix's total sales in the POR to calculate the
countervailable subsidy rate. On this basis, we preliminarily find
countervailable benefits of less than 0.005 percent ad valorem during
the POR. Therefore, consistent with our past practice, we did not
include this program in our preliminary net countervailing duty rate.
See CFS and Uranium from France.
D. Import Duty Reduction Program for Certain Factory Automation Items
Article 95(1).4 of the Korean Customs Act provides for import duty
reductions on imports of ``machines, instruments and facilities
(including the constituent machines and tools) and key parts designated
by the Ordinance of the Ministry of Finance and Economy for a factory
automatization applying machines, electronics or data processing
techniques.''
Hynix reported that it had received duty reductions under this
program during the POR. See Hynix's January 29, 2009, questionnaire
response at 16 and Exhibit 13.
In a prior administrative review, the Department found that the
above program provided a financial contribution in the form of revenue
forgone and a benefit in the amount of the duty savings. See DRAMS 3rd
AR Final and the accompanying Issues and Decision Memorandum at 6 - 7
and Comment 6. The Department also found the program to be de facto
specific under section 771(5A)(D)(iii)(III) of the Act. Id. No
interested party provided new evidence that would lead us to reconsider
our earlier finding. Therefore, we continue to find that these duty
reductions confer a countervailable subsidy.
To calculate the benefit, we divided the total duty savings Hynix
received during the POR by Hynix's total sales during the POR. On this
basis, we preliminarily determine the countervailable subsidy to be
0.01 ad valorem percent during the POR.
II. Program Preliminarily Determined To Confer Subsidies
A. Import-Export Bank of Korea Import Financing
In the fourth administrative review the Department did not make a
finding on the countervailability of this program and said it would
examine this program in a subsequent administrative review. See Dynamic
Random Access Memory Semiconductors from the Republic of Korea: Final
Results of Countervailing Duty Administrative Review, 74 FR 7395
(February 17, 2009) and accompanying Issues and Decision Memorandum at
7.
As outlined in Article 18, paragraph 1, subparagraph 4 of the
Import-Export Bank of Korea (``KEXIM'') Act, the ``Import Financing
Program'' is provided to Korean importers to facilitate their purchase
of essential materials, major resources, and operating equipment, the
stable and timely supply of which is essential to the stability of the
general economy. The equipment and materials eligible to be imported
under the program fall under 13 headings listed in Article 14 of the
KEXIM Business Manual. The listed items range from raw materials to
factory automation equipment and include products and materials
described in government notices.
Further, according to the GOK, any Korean company is eligible for
the ``Import Financing Program'' as long as the equipment or material
appears under the 13 headings of eligible items, the company can
satisfy the financial criteria laid out in ``KEXIM's Credit Extension
Regulation,'' and KEXIM's Credit Extension Committee approves the
financing application. Regarding the last item, the GOK stated that all
decisions to offer this financing are based on the application and
financial status of the applicant company.
Hynix received loans from KEXIM under this program in 2006 and
2007. See Hynix's April 14, 2009, supplemental questionnaire response
at 3. See also, GOK's April 14, 2009, supplemental questionnaire
response at 1.
We preliminarily determine that loans under this program constitute
financial contributions, pursuant to sections 771(5)(B)(i) and
771(5)(D)(i) of the Act, and also provide benefits equal to the
difference between what Hynix paid on its loans and the amount it would
have paid on comparable commercials loans within the meaning of section
771(5)(E)(ii) of the Act.
Regarding specificity, information submitted by the GOK shows that
loans provided under the program are available to any enterprise that
meets the criteria as described above. See, e.g., GOK's January 29,
2009, questionnaire response at 12-14 and GOK's April 14, 2009,
supplemental questionnaire response at Exhibit 5. Further, the GOK
reported that eligibility is not limited by law to any enterprise or
group of enterprises, or to any industry or group of industries. Id.
Therefore, we preliminarily determine that there is no basis to find
this program de jure specific under section 771(5A)(D)(i) of the Act.
In determining whether this program is de facto specific, we
examine the four de facto specificity factors under section
771(5A)(D)(iii) of the Act. The GOK provided program usage data for
2003 through 2007 showing the number of industries that received loans
under this program as well as the number of recipients and the total
amount financed for the same period grouped by industry, region, and
eligible item. See GOK's April 14, 2009, supplemental questionnaire
response at 8-12 and 14-16, and GOK's July 23, 2009, supplemental
questionnaire response at 2-7. We preliminarily determine that the
number of enterprises receiving this subsidy is limited within the
meaning of section 771(5A)(D)(iii)(I) of the Act because only 482
companies received this award from 2003 through 2007. See GOK's April
14, 2009, supplemental questionnaire response at 12. Thus, we find the
program to be de facto specific within the meaning of section
771(5A)(D)(iii)(I) of the Act. Therefore, we preliminarily find loans
provided by KEXIM under this program provide countervailable benefits
to Hynix.
To calculate the benefit under this program, we used the benchmarks
described in the ``Discount Rates and Benchmarks for
Loanssection above, as well as the methodology described in
19 CFR 351.505(c). On this basis, we preliminarily determine that Hynix
received a countervailable subsidy of 0.04 percent ad valorem under
this program.
III. Program Preliminarily Found to Have Provided No Benefits
A. Short-Term Export Financing
KEXIM provides short-term export financing to small-, medium- and
large-sized companies (not including companies included in the largest
five conglomerates in the ROK, unless the company's headquarters is
located outside the Seoul Metropolitan area). The loans are not tied to
particular export transactions. However, a company, along with the
financing application, must provide its export performance periodically
for review by KEXIM. Further, any loan agreement
[[Page 38584]]
may only cover an amount ranging from 50 to 90 percent of the company's
export performance up to 30 billion won.
Hynix received a loan under this program during the POR and
provided documentation (e.g. loan application, approval document, and
loan agreement), as well as data regarding the loan amount and interest
paid during the POR. See Hynix's April 14, 2009, supplemental
questionnaire response at 3 and 5. Upon examination of the
documentation as well as the loan amount and interest paid during the
POR, the Department preliminarily determines that there was no
measurable benefit. Accordingly, it is unnecessary in this review for
the Department to make a finding as to the countervailability of this
program for this POR. We will include an examination of this program in
a future administrative review.
IV. Programs Previously Found Not to Have Been Used or Provided No
Benefits
We preliminarily determine that the following programs were not
used during the POR:
A. Reserve for Research and Human Resources Development (formerly
Technological Development Reserve) (Article 9 of RSTA / formerly,
Article 8 of TERCL)
B. Tax Credit for Investment in Facilities for Productivity
Enhancement (Article 24 of RSTA /Article 25 of TERCL)
C. Tax Credit for Investment in Facilities for Special Purposes
(Article 25 of RSTA)
D. Reserve for Overseas Market Development (formerly, Article 17 of
TERCL)
E. Reserve for Export Loss (formerly, Article 16 of TERCL)
F. Tax Exemption for Foreign Technicians (Article 18 of RSTA)
G. Reduction of Tax Regarding the Movement of a Factory That Has
Been Operated for More Than Five Years (Article 71 of RSTA)
H. Tax Reductions or Exemption on Foreign Investments under Article
9 of the Foreign Investment Promotion Act (``FIPA'')/ FIPA (Formerly
Foreign Capital Inducement Law)
I. Duty Drawback on Non-Physically Incorporated Items and Excessive
Loss Rates
J. Export Insurance
K. Electricity Discounts Under the RLA Program
L. Import Duty Reduction for Cutting Edge Products
M. System IC 2010 Project
See Hynix's January 29, 2009, questionnaire response at 20 and the
GOK's January 29, 2009, questionnaire response at 22.
In the first administrative review, the Department found that ``any
benefits provided to Hynix under the System IC 2010 Project are tied to
non-subject merchandise'' and, therefore, that ``Hynix did not receive
any countervailable benefits under this program during the POR,'' in
accordance with 19 CFR 351.525(b)(5). See Dynamic Random Access Memory
Semiconductors from the Republic of Korea: Final Results of
Countervailing Duty Administrative Review, 71 FR 14174 (March 21,
2006), and the accompanying Issues and Decision Memorandum at 15. No
new information has been provided with respect to this program. See
Hynx's April 14, 2009 supplemental questionnaire at 1. Therefore, we
preliminarily find that Hynix did not receive any countervailable
benefits from the System IC 2010 Project during the POR.
Preliminary Results of Review
In accordance with 19 CFR 351.221(b)(4)(i), we calculated an
individual subsidy rate for Hynix, the producer/exporter covered by
this administrative review. We preliminarily determine that the total
estimated net countervailable subsidy rate for Hynix for calendar year
2007 is 0.06 percent ad valorem, which is de minimis in accordance with
19 CFR 351.106(c)(1). Consequently, if these preliminary results are
adopted in the final results of this review, the Department will
instruct U.S. Customs and Border Protection (``CBP'') to liquidate
shipments of DRAMs by Hynix entered or withdrawn from warehouse, for
consumption from January 1, 2007, through December 31, 2007, without
regard to countervailing duties. See 19 CFR 351.106(c)(1). We intend to
issue these instructions 15 days after publication of the final results
of this review.
On October 3, 2008, the Department published a Federal Register
notice that, inter alia, revoked this order, effective August 11, 2008.
See Dynamic Random Access Memory Semiconductors From the Republic of
Korea: Final Results of Sunset Review and Revocation of Order, 73 FR
57594 (October 3, 2008). As a result, CBP is no longer suspending
liquidation for entries of subject merchandise occurring after the
revocation. Therefore, there is no need to issue new cash deposit
instructions in the final results of this administrative review.
Public Comment
Interested parties may submit written arguments in case briefs
within 30 days of the date of publication of this notice. Rebuttal
briefs, limited to issues raised in case briefs, may be filed not later
than five days after the date of filing the case briefs. Parties who
submit briefs in this proceeding should provide a summary of the
arguments not to exceed five pages and a table of statutes,
regulations, and cases cited. Copies of case briefs and rebuttal briefs
must be served on interested parties in accordance with 19 CFR
351.303(f).
Interested parties may request a hearing within 30 days after the
date of publication of this notice. Unless otherwise specified, the
hearing, if requested, will be held two days after the scheduled date
for submission of rebuttal briefs.
The Department will publish a notice of the final results of this
administrative review within 120 days from the publication of these
preliminary results.
We are issuing and publishing these results in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: July 28, 2009.
Ronald K. Lorentzen,
Acting Assistant Secretary for Import Administration.
[FR Doc. E9-18597 Filed 8-3-09; 8:45 am]
BILLING CODE 3510-DS-S