[Federal Register Volume 75, Number 177 (Tuesday, September 14, 2010)]
[Notices]
[Pages 55764-55769]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-22889]
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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,
2008, through August 10, 2008. We preliminarily find that Hynix
Semiconductor, Inc. received countervailable subsidies during the
period of review. If these preliminary results are adopted in our final
results of this review, we will instruct U.S. Customs and Border
Protection to assess
[[Page 55765]]
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.
DATES: Effective Date: September 14, 2010.
FOR FURTHER INFORMATION CONTACT: Shane Subler or Jennifer Meek, 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) 482-0189 and (202) 482-2778, 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 (``Korea''). 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 14, 2009, we 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, 74 FR 41120 (August 14, 2009). On August 18,
2009, we received a request for review from Hynix Semiconductor, Inc.
(``Hynix''). On August 21, 2009, 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 22, 2009. See
Initiation of Antidumping and Countervailing Duty Administrative
Reviews and Request for Revocation in Part, 74 FR 48224 (September 22,
2009).
On December 22, 2009, we issued countervailing duty questionnaires
to the Government of Korea (``GOK'') and Hynix. We received responses
to these questionnaires on February 25, 2010, and February 26, 2010,
from Hynix and the GOK, respectively. On May 27, 2010, we issued
supplemental questionnaires to Hynix and the GOK. We received responses
on June 3, 2010, and June 25, 2010, respectively.
We received new subsidy allegations from Micron on October 5,
2009.\1\ On December 22, 2009, we initiated an investigation of
preferential income tax treatment for Hynix's 2001 and 2002 debt
restructurings. See Memorandum to Susan Kuhbach, Director, Office 1,
``Sixth Countervailing Duty Administrative Review: Dynamic Random
Access Memory Semiconductors From Korea: New Subsidy Allegations
Memorandum'' (December 22, 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
Allegations (October 5, 2009) (``New Subsidy Allegations'').
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On April 20, 2010, we published a postponement of the preliminary
results in this review until September 7, 2010. See Dynamic Random
Access Memory Semiconductors From the Republic of Korea: Extension of
Time Limit for Preliminary Results of Countervailing Duty
Administrative Review, 75 FR 20564 (April 20, 2010).
Scope of the Order
The products covered by the order are DRAMS from Korea, whether
assembled or unassembled. Assembled DRAMS include all package types.
Unassembled DRAMS include processed wafers, uncut die, and cut die.
Processed wafers fabricated in Korea, but assembled into finished
semiconductors outside Korea are also included in the scope. Processed
wafers fabricated outside Korea and assembled into finished
semiconductors in Korea are not included in the scope.
The scope of the order additionally includes memory modules
containing DRAMS from Korea. 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
Korea, 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., 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
[[Page 55766]]
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, 2008, through August 10, 2008.
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's ownership changed during the
AUL period as a result of debt-to-equity conversions in December 2002
and various asset sales. In addition, Hynix reported that its ownership
changed in 2006 because Hynix's Share Management Council decreased its
ownership share in Hynix from 50.6 percent to 36 percent. However, in
this administrative review, Hynix did not challenge this baseline
presumption. See Hynix's February 25, 2010, questionnaire response at
13.
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.
For long-term, won-denominated loans originating in 1986 through
1995, we used the average interest rate for three-year corporate bonds
as reported by the Bank of Korea (``BOK'') or the International
Monetary Fund's (``IMF's'') International Financial Statistics
Yearbook.
For long-term won-denominated loans that originated in 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. 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 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.
For countervailable short-term and long-term foreign currency-
denominated loans, pursuant to 19 CFR 351.505(a)(2)(iv), we would
normally use an annual average of the interest rates on comparable
commercial loans during the year in which the government-provided loans
were taken out. 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 our prior practice and relied upon lending rates 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. Program Preliminarily Determined To Confer Subsidies--Income Tax
Treatment of Hynix's Debt Restructurings
In the NSA Memo, we initiated an investigation into the tax
treatment of Hynix's debt restructurings under which Hynix issued
shares in 2002 and 2003. In their respective February 25, 2010 and
February 26, 2010, questionnaire responses, Hynix and the GOK responded
to the Department's standard questions on this program and provided
additional explanation. On May 27, 2010, we sent a supplemental
questionnaire to the GOK on this program. The GOK responded on June 25,
2010.
Based on information in the GOK's and Hynix's responses, we
preliminarily find the GOK's tax treatment of the debt-for-equity swap
for which Hynix issued shares in 2002 to be countervailable.\2\ A
ruling by the Korean tax authority in 2000 (Bubin 46012-1608, July 20,
2000) established new rules for the tax treatment of debt-for-equity
swaps by companies undergoing voluntary restructuring. The ruling
stated:
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\2\ In the NSA Memo, we initiated an investigation into the
GOK's tax treatment of the debt-for-equity swaps for which Hynix
issued shares in 2002 and 2003. Based on proprietary information in
Hynix's February 25, 2010, questionnaire response, however, we
preliminarily find that only the 2002 issuance applies to this POR.
See Memorandum from Shane Subler to Susan Kuhbach, ``Preliminary
Results Calculations for Hynix Semiconductor, Inc.,'' (September 7,
2010).
In case a domestic corporation carries out debt-equity swap in
accordance with the corporate normalization plan, with respect to
the amount accounted, pursuant to the corporate financial accounting
standards, as debt exemption gains resulting from the amount of
difference between the issuance price of the concerned stock and its
market price, said amount ought to be deemed as the
[[Page 55767]]
amount in excess of the par value of the stock shares issued * * *
and as such, said amount shall not be included into the taxable
income or deductible expense of each (applicable) business year.\3\
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\3\ See Micron's New Subsidy Allegations at 6 and Exhibit 13.
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General Korean tax principles treat decreased liabilities through
the exemption or lapse of debts as a taxable gain for income tax
purposes.\4\ Under the Bubin 46012-1608 ruling, however, the GOK deemed
that any gain from debt forgiveness occurring through a debt-for-equity
swap could be excluded from taxable income.
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\4\ See ``Korean Taxation,'' Ministry of Finance and Economy
(2005), at page 90, Chapter III, 5(a)(7); provided at Attachment 2
of Micron's New Subsidy Allegations. Even though the guide is a 2005
edition, the guide presents established Korean tax principles, not a
set of new principles or rules for 2005.
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On June 7, 2002, in the context of its restructuring under the
GOK's Corporate Restructuring Promotion Act (``CRPA''), Hynix converted
bonds to equity and issued shares to its creditors. Hynix's 2002
financial statements show that the issue price of these shares exceeded
the market value of the shares on June 7, 2002.\5\ Because of the Bubin
46012-1608 ruling, Hynix did not include the difference between the
issue price and the market price of the shares as a gain for its 2002
tax year taxable income. Due to losses and loss carryforwards in 2002
and subsequent years, the exclusion of this amount from Hynix's taxable
income in 2002 did not affect the amount of taxes owed by Hynix until
tax year 2007.
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\5\ Hynix's financial statements show that the issue price of
the shares was 708 won per share; the market price of Hynix's shares
on June 7, 2002, was 390 won per share. See Hynix's 2002 Non-
Consolidated Financial Statements at page 60 (in Micron's New
Subsidy Allegations at Attachment 7); see also Micron's New Subsidy
Allegations at Attachment 9.
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We preliminarily find that the exclusion of the gain from Hynix's
taxable income constitutes a financial contribution within the meaning
of section 771(5)(D)(ii) of the Tariff Act of 1930, as amended (``the
Act''), because the GOK forewent income tax revenue that it otherwise
would have collected in the absence of the exclusion. We also find that
Hynix received a benefit under 19 CFR 351.509(a) because the exemption
reduced the base (i.e., Hynix's taxable income) used to calculate
Hynix's income taxes for the 2007 tax year. Thus, a benefit exists to
the extent that the income taxes paid by Hynix as a result of the
exclusion were less than the taxes Hynix would have paid in the absence
of the exclusion. Regarding timing, under 19 CFR 351.509(b), the
Department will normally consider the date of receipt of a benefit from
a tax exemption or remission as the date on which the firm filed its
tax return. Because Hynix received this benefit when it filed its 2007
tax year tax return, we preliminarily find that Hynix received the
benefit during the POR.
Regarding specificity, in our May 27, 2010, supplemental
questionnaire, we asked the GOK to report the number of companies that
underwent debt-for-equity swaps in the ROK from 2001 through 2003. The
GOK responded that it does not maintain information on which or how
many companies went through debt-to-equity swaps during the period.\6\
Thus, record information does not allow us to determine actual use of
the program.
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\6\ See the GOK's June 25, 2010, supplemental questionnaire
response at 3.
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Section 776(a)(1) of the Act states that the Department may use
``facts available'' if necessary information is not on the record.
Information in Hynix's financial statements and in a press release from
the GOK's Financial Supervisory Service (``FSS'') shows that Hynix
accounted for approximately 36 percent of the debt swapped for equity
under the CRPA.\7\ We preliminarily determine that this percentage
provides the best proxy for measuring Hynix's share of the benefit
provided by the Bubin 46012-1608 ruling. We believe this is a
reasonable measure because a company's share of the benefit provided by
the exclusion is likely to be roughly equal to the company's share of
debt-for-equity swaps under the CRPA. On this basis, we preliminarily
find the exclusion to be specific to Hynix under section
771(5A)(D)(iii)(III) of the Act because Hynix received a
disproportionately large share of the income tax benefits relative to
its size among all companies in Korea.
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\7\ See Attachment 7 of Micron's New Subsidy Allegations
(Hynix's 2002 Non-Consolidated Financial Statements at 60; see also
id. at Attachment 8 (Hynix's 2003 Non-Consolidated Financial
Statements at 45). The financial statements show that Hynix swapped
debts totaling 4.84 trillion won for equity through the 2002 and
2003 stock issuances. The FSS press release (Attachment 26 of
Micron's New Subsidy Allegations) shows that companies swapped a
total of 13.6 trillion won of debt for equity under the CRPA. Thus,
4.84 trillion won / 13.6 trillion won = 36 percent.
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To calculate the benefit under this program, in accordance with 19
CFR 351.509(a), we divided the income taxes Hynix otherwise would have
paid in the absence of the exclusion by Hynix's total sales during the
POR. On this basis, we preliminarily determine that Hynix received a
countervailable subsidy of 2.84 percent ad valorem.
II. Programs Previously Determined To Confer Subsidies
We examined the following programs determined to confer subsidies
in the investigation and prior administrative reviews.
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 financing, usance
financing, overdraft lines of credit, debt forgiveness, and debt-for-
equity swaps. 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 debt-for-equity swap and the extensions of maturities and/or
interest rate deductions on existing debt.
With the exception of loans outstanding during the POR, all forms
of assistance under GOK Entrustment or Direction Prior to 2004 were
either fully allocated prior to the POR or were not outstanding during
the POR. Thus, we have only calculated the benefit from loans
outstanding during the POR. In calculating the benefit, we have
followed the same methodology used in prior administrative reviews. We
followed the methodology described at 19 CFR 351.505, using the
benchmarks described in the ``Discount Rates and Benchmarks for Loans''
section above.
We divided the total benefit from the outstanding loans 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
[[Page 55768]]
Determination, 72 FR 60645 (October 25, 2007), and accompanying Issues
and Decision Memorandum at 15 (``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. 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 February 25, 2010 questionnaire
response at 16-17 and Exhibit 10.
In the investigation, we determined that this program conferred a
countervailable subsidy 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 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.
C. 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 February 25, 2010 questionnaire
response at 17-18 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 Dynamic
Random Access Memory Semiconductors from the Republic of Korea: Final
Results of Countervailing Duty Administrative Review, 73 FR 14218
(March 17, 2008), 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 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-Export Bank of Korea Import Financing
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 carried balances into the POR on loans received from KEXIM
under this program in 2006 and 2007. See Hynix's February 25, 2010
supplemental questionnaire response at 18 and Exhibit 10.
In a prior administrative review, the Department found that the
above program provided a financial contribution pursuant to sections
771(5)(B)(i) and 771(5)(D)(i) of the Act, and also provided 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. See Dynamic Random Access
Memory Semiconductors from the Republic of Korea: Final Results of
Countervailing Duty Administrative Review, 74 FR 60238, 60239 (November
20, 2009). The Department also found the program to be de facto
specific within the meaning of section 771(5A)(D)(iii)(I) of the Act.
Id. No interested party provided new evidence that would lead us to
reconsider our earlier finding. Therefore, we continue to find this
program to be countervailable.
To calculate the benefit under this program, we used the benchmarks
described in the ``Discount Rates and Benchmarks for Loans'' section
above, as well as the methodology described in 19 CFR 351.505. We then
divided the benefit during the POR by Hynix's total sales during the
POR. On this basis, we preliminarily determine that Hynix received a
countervailable subsidy of 0.10 percent ad valorem under this program.
III. Programs Preliminarily Found To Have Provided No Benefits
A. KEXIM 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
[[Page 55769]]
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 may only cover an
amount ranging from 50 to 90 percent of the company's export
performance up to 30 billion won.
Hynix carried a balance on 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 February 25, 2010
questionnaire response at Exhibits 10, 12, and 18. Based on Hynix's
submitted interest payment information for this loan, we preliminarily
determine that the interest Hynix paid was greater than the interest
Hynix would have paid under the benchmark interest rate. Thus, we
preliminarily determine that Hynix received no benefit from these loans
during the POR.
B. Export Insurance
At pages 22-25 of its February 25, 2010, questionnaire response,
Hynix reported that it purchased short-term export insurance from the
Korea Export Insurance Corporation (``KEIC'') during the POR. On page 1
of its supplemental questionnaire response dated June 3, 2010, Hynix
stated that it received no insurance payouts from the KEIC during the
POR and otherwise made no claims on KEIC insurance.
Under 19 CFR 351.520(a)(2), the Department will normally calculate
the benefit from an export insurance program as the difference between
the amount of premiums paid by the firm and the amount received by the
firm under the insurance program. Because Hynix stated that it did not
receive any payouts from the KEIC during the POR, we preliminarily
determine that Hynix received no benefit from this program during the
POR.
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 the Restriction of
Special Taxation Act (``RSTA'')/formerly, Article 8 of Tax Reduction
and Exemption Control Act (``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. Electricity Discounts Under the Requested Load Adjustment
(``RLA'') Program
K. Import Duty Reduction for Cutting Edge Products
L. System IC 2010 Project
M. Operation G-7/HAN Program
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 the POR is
2.94 percent ad valorem.
If these preliminary results are adopted in our final results of
this review, 15 days after publication of the final results of this
review the Department will instruct CBP to liquidate shipments of DRAMS
by Hynix entered or withdrawn from warehouse, for consumption from
January 1, 2008, through August 10, 2008, at 2.94 percent ad valorem of
the entered value.
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: September 7, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-22889 Filed 9-13-10; 8:45 am]
BILLING CODE 3510-DS-P