Full opinion text
Table op Contents Introduction ......................................................................... 1261 Standard op Review.................................................................. ' 1263 Section One: Privatization............................................................ 1263 I. Certain Steel Products From Mexico.......................................... 1264 Background................................................................... 1264 Contentions op the Parties.................................................... 1266 A. The Foreign Producers.............................................. 1266 B. The Domestic Producers............................................. 1267 C. The Department of Commerce........................................ 1268 Discussion...............................:.................................... 1270 II. Certain Steel Products from Brazil .......................................... 1277 Background................................................................... 1277 Contentions of the Parties.................................................... 1278 A. The Foreign Producers.............................................. 1278 B. The Domestic Producers............................................. 1278 C. The Department of Commerce........................................ 1279 Discussion.................................................................... 1279 III. Certain Steel Products from the United Kingdom.............................. 1280 Background................................................................... 1280 Contentions of the Parties.................................................... 1280 A. The Foreign Producers.............................................. 1280 B. The Domestic Producers............................................. 1281 C. The Department of Commerce..........'.............................. 1281 Discussion.................................................................... 1282 IV. Certain Steel Products from Germany......................................... 1283 Background................................................................... 1283 Contentions of the Parties.................................................... 1284 A. The Domestic Producers............................................. 1284 B. The Foreign Producers.............................................. 1284 C. The Department of Commerce........................................ 1285 Discussion..............................'...................................... 1285 V. Motion for Summary Judgment Based on Issue Preclusion....................... 1288 Conclusion ................................................................... 1288 Section Two: Allocation Methodology................................................. 1289 Background................................................................... 1289 Issue Presented .............................................................. 1290 Contentions of the Parties.................................................... 1290 A. Plaintiffs........................................................... 1290 B. Defendant.......................................................... 1292 C. Defendantr-Intervenors............................................... 1292 Discussion.................................................................... 1293 Conclusion ................................................................... 1298 Section Three: The Grant Methodology............................................... 1299 Background................................................................... 1300 A. The Rate of Return Shortfall Method................................. 1300 B. The Grant Methodology.............................................. 1300 C. Equity Infusions in Brazil, France, and Korea ....................... 1301 Issues Presented.............................................................. 1302 Contentions of the Parties.................................................... 1302 A. Plaintiffs........................................................... 1302 B. Defendant.......................................................... 1304 C. Defendantr-Intervenors............................................... 1305 Discussion.................................................................... 1306 A. Commerce’s Abandonment of the RORS Methodology .................. 1306 B. Commerce’s Adoption of the Grant Methodology....................... 1307 Conclusion ................................................................... 1309 Section Four: Sales Denominator..................................................... 1310 Background................................................................... 1310 Issue Presented .............................................................. 1311 Contentions of the Parties.................................................... 1311 A. Plaintiffs........................................................... 1311 B. Defendant.......... 1312 C. Defendantr-Intervenors............................................... 1314 Discussion.................................................................... 1315 A. Agency Explanation of the Tying Presumption........................ 1315 B. Adoption of the Tying Presumption.................................. 1316 C. Motion to Strike Portions of Plaintiffs’ Reply Brief................... 1317 D. Motion to Strike Plaintiffs’ Supplemental Memorandum............... 1318 Conclusion ................................................................... 1319 Section Five: Disproportionality....................................................... 1320 Background................................................................... 1320 Contentions of the Parties.................................................... 1322 A. The Korean Respondents............................................. 1322 B. The Department of Commerce........................................ 1323 C. The Domestic Producers............................................. 1324 Discussion.................................................................... 1324 Conclusion ................................................................... 1328 Opinion CARMAN, Judge: The following actions were consolidated by order of the Court of International Trade (CIT) dated February 4, 1994: British Steel pic v. United States, Court No. 93-09-00550-CVD and Geneva Steel, et al. v. United States, Court No. 93-09-00572-CVD consolidated as British Steel pic v. United States, Consol. Court No. 93-09-00550-CVD; Usinas Siderurgicas de Minas Gerais, S.A v. United States, Court No. 93-09-00558-CVD, Gulf States Steel, Inc. of Alabama, et al. v. United States, Court No. 93-09-00574-CVD, and Usinas Siderurgicas de Minas Gerais, S.A. v. United States, Court No. 93-09-00578-CVD consolidated as Usinas Siderurgicas de Minas Gerais, S.A. v. United States, Consol. Court No. 93-09-00558-CVD; Inland Steel Industries, Inc., et al. v. United States, Court No. 93-09-00567-CVD, Usinor Sacilor, et al. v. United States, Court No. 93-09-00588-CVD, Usinor Sacilor, et al. v. United States, Court No. 93-09-00589-CVD, Usinor Sacilor, et al. v. United States, Court No. 93-09-00590-CVD, and Usinor Sacilor, et al. v. United States, Court No. 93-09-00591-CVD consolidated as Inland Steel Industries, Inc., et al. v. United States, Consol.Court No. 93-09-00567-CVD; LTV Steel Co., Inc., et al. v. United States, Court No. 93-09-00568-CVD, Thyssen Stahl AG, et al. v. United States, Court No. 93-09-00585-CVD, AG der Dillinger Hüttenwerke v. United States, Court No. 93-09-00596-CVD, and Fried, Krupp AG Hoesch-Krupp and Krupp Hoesch Stahl AG v. United States, Court No. 93-09-00603-CVD consolidated as LTV Steel Co., Inc., et al. v. United States, Consol.Court No. 93-09-00568-CVD; Laclede Steel Co., et al. v. United States, Court No. 93-09-00569-CVD, Pohang Iron & Steel Co., Ltd. v. United States, Court No. 93-09-00579-CVD, Dongbu Steel Co. Ltd., et al. v. United States, Court No. 93-09-00580-CVD, Dongbu Steel Co. Ltd., et al. v. United States, Court No. 93-09-00581-CVD, and Pohang Iron & Steel Co., Ltd. v. United States, Court No. 93-09-00582-CVD consolidated as Laclede Steel Co., et al. v. United States, Consol.Court No. 93-09-00569-CVD; Lukens Steel Co., et al. v. United States, Court No. 93-09-00570-CVD, Altos Hornos de Mexico, S.A de C.V. v. United States, Court No. 93-09-00618-CVD, and Industrias Monterrey S.A de C.V. v. United States, Court No. 93-09-00632-CVD consolidated as Lukens Steel Co., et al. v. United States, Consol.Court No. 93-09-00570-CVD; and Geneva Steel, et al. v. United States, Court No. 93-09-00566-CVD and Fabrique de Fer de Charleroi v. United States, Court No. 93-09-00599-CVD, consolidated as Geneva Steel, et al. v. United States, Consol.Court No. 93-09-00566-CVD. After several scheduling conferences and upon review and consideration of the minutes of the December 15, 1993, scheduling conference and upon agreement of all parties and pursuant to U.S. CIT R. 42(a), the Court entered the scheduling order governing the joint proceeding in the above-captioned cases. As a convenience to the parties, the Court used British Steel plc v. United States, Consol.Court No. 93-09-00550-CVD to identify this joint proceeding and to establish the guidelines set forth in the February 18, 1994 scheduling order. In accordance with that order, the parties were jointly ordered to brief five general issues which were divided into two groups. General Issues — Group One pertains to: (a) the Department of Commerce’s use of a fifteen-year allocation period to determine the benefit from several nonrecurring eountervailable grants; (b) the Department of Commerce’s use of a grant methodology to countervail equity infusions into an unequityworthy company whose shares are not publicly traded; and (c) the Department of Commerce’s treatment of privatization and restructuring regarding previously received subsidies, including the Department’s use of a repayment methodology. General Issues — Group Two pertains to: (a) the Department of Commerce’s determination of the appropriate sales denominator to be used in subsidy calculations when a respondent’s total sales include not only sales of domestically produced merchandise, but also sales of merchandise produced in one or more foreign countries; and (b) the Department of Commerce’s treatment of disproportionality for the purpose of evaluating the specificity of a potentially eountervailable program. The Scheduling Order directed all questions of law and issues of fact regarding the five general issues to be briefed solely in the context of the briefs on these issues. All parties were prohibited from re-briefing or re-arguing any of these questions or issues in the context of the briefs on the country-specific issues. The Court has jurisdiction over all of these matters pursuant to 28 U.S.C. § 1581(c) (1988). Standard of Review The appropriate standard for the Court’s review of a final determination by Commerce is whether the agency’s determination is “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B) (1988). “Substantial evidence is something more than a ‘mere scintilla,’ and must be enough reasonably to support a conclusion.” Ceramica Regiomontana, S.A v. United States, 10 CIT 399, 405, 636 F.Supp. 961, 966 (1986), aff'd, 5 Fed.Cir. (T) 77, 810 F.2d 1137 (1987) (citations omitted). The Court must accord substantial weight to the agency’s interpretation of the statute it administers. American Lamb Co. v. United States, 4 Fed.Cir. (T) 47, 54, 785 F.2d 994, 1001 (1986) (citations omitted). While Commerce has discretion in choosing one interpretation over another, “[t]he traditional deference courts pay to agency interpretation is not to be applied to alter the clearly expressed intent of Congress.” Board of Governors of the Fed. Reserve Sys. v. Dimension Fin. Corp., 474 U.S. 361, 368, 106 S.Ct. 681, 686, 88 L.Ed.2d 691 (1986), cited in Ceramica Regiomontana, S.A., 10 CIT at 405, 636 F.Supp. at 966 (“[T]his Court will not allow an agency, under the guise of lawful discretion, to contravene or ignore the intent of the legislature or the guiding purpose of the statute.”) (further citation omitted). Section One: Privatization On the general issue of privatization, British Steel pie, Usinas Siderurgicas de Minas Gerais, S.A., and Altos Hornos de Mexico, S.A. de C.V. (collectively “Foreign Producers”) have filed a joint motion for partial judgment on the agency record and supporting memoranda contesting the General Issues Appendix appended to Certain Steel Products from Austria, 58 Fed.Reg. 37,225, 37,259-73 (Dep’t Comm.1993) (final determ.) (General Issues Appendix), as well as the application of the General Issues Appendix in Certain Steel Products from Brazil, 58 Fed.Reg. 37,295 (Dep’t Comm.1993) (final determ.) (Brazilian Final Determination ), Certain Steel Products from Mexico, 58 Fed. Reg. 37,352 (Dep’t Comm.1993) (final determ.) (Mexican Final Determination ), and Certain Steel Products from the United Kingdom, 58 Fed.Reg. 37,393 (Dep’t Comm. 1993) (final determ.) (British Final Determination). The Government of the United Kingdom of Great Britain and Northern Ireland, as plaintiff-intervenor, has filed a brief challenging the administrative determination on the issue of privatization in the British Final Determination, in support of the Foreign Producers’ motion. AK Steel Corporation, Bethlehem Steel Corporation, Geneva Steel, Gulf States Steel Incorporated of Alabama, Inland Steel Industries, Incorporated, Laclede Steel Company, LTV Steel Company, Incorporated, Lukens Steel Company, National Steel Corporation, Sharon Steel Corporation, U.S. Steel Group a Unit of USX Corporation, and WCI Steel, Incorporated (collectively “Domestic Producers”) have filed a joint motion for partial judgment on the agency record and supporting memoranda contesting the General Issues Appendix as well as the application of the General Issues Appendix in the Bra zilian Final Determination, the Mexican Final Determination, the British Final Determination, and Certain Steel Products from Germany, 58 Fed.Reg. 37,315 (Dep’t Comm. 1993) (final determ.) (German Final Determination ). AG der Dillinger Hüttenwerke has moved for summary judgment in LTV Steel Co., Inc. et al. v. United States, Consol.Court No. 93-09-00568-CVD, one of the consolidated eases under the Court’s scheduling order governing this joint proceeding. I. Certain Steel Products From Mexico Background The Department of Commerce’s (Commerce) period of investigation (POI) of Altos Hornos de Mexico, S.A. de C.V. (AHMSA) is calendar year 1991. Mexican Final Determination, 58 Fed.Reg. at 37,354. The product covered by Commerce’s investigation is certain eut-to-length carbon steel plate. Id. at 37,353. In the Mexican Final Determination, Commerce confirmed its preliminary determination and found AHMSA equityworthy in 1977 and unequityworthy from 1979 through 1987. Id. at 37,355. Commerce also found AHMSA unequityworthy for 1990 and 1991 and uncreditworthy from 1983 to 1986. Id. Commerce then concluded that the Government of Mexico was providing subsidies to AHMSA in certain years through various programs including equity infusions, assumption of debt, debt restructuring, short-term pre-export financing, short-term import financing, long-term loans, joint venture research and development, and pre-privatization lay-off financing. Id. at 37,356-61. Commerce also determined that AHMSA, a government-owned company, was privatized: “In November 1991, the [Government of Mexico (GOM) ] sold all of its ownership interest in AHMSA. Prior to privatization, AHMSA was almost entirely owned by the GOM. Since November 1991, the GOM holds no stock in AHMSA.” Id. at 37,355. Accordingly, Commerce applied the privatization and repayment methodologies set forth in General Issues Appendix to the privatization of AHMSA. Commerce explained, In these final determinations, we have decided that a portion of the price paid for a formerly government-owned company represents partial repayment of prior subsidies. We calculated the portion of the purchase price attributable to repayment of prior subsidies. We then reduced the benefit streams for each of the prior subsidies by the ratio of the repayment amount to the net present value of all remaining benefits from those prior subsidies at the time of privatization____ The subsidies allocated to the POI for AHMSA reflect, where appropriate, the application of the privatization methodology. Id. at 37,355. The nature of the General Issues Appendix is as follows. In the July 9, 1993, issue of the Federal Register Commerce published a series of countervailing duty (CVD) final determinations for twelve countries. Several broad methodological issues that were “not case-specific but rather general in nature” were common to many of the investigations involved in the twelve determinations. Certain Steel Products from Austria, 58 Fed. Reg. 37,217, 37,219 (Dep’t Comm.1993) (final determ.). Commerce addressed this situation by creating a General Issues Appendix, appended to the first determination in the series, in which Commerce set forth its positions and analyses and addressed interested party comments on the several general issues consisting of allocation, denominator, equity, prepension program issues, privatization, and restructuring. See generally General Issues Appendix, 58 Fed.Reg. at 37,225-73. Commerce then invoked by reference and applied its methodologies as set forth in the General Issues Appendix in each of the CVD determinations where those issues arose. In the General Issues Appendix discussion of privatization, Commerce set forth its methodology for analyzing the privatization of some or all of a government-owned company. General Issues Appendix, 58 Fed.Reg. at 37,259-73. Commerce began by analyzing the nature of countervailable benefits and concluded that the relevant statutory authority, legislative history, judicial opinions, and Commerce’s regulations “do not permit” Commerce to take into account the use to which subsidies are put or their effect on the recipient’s subsequent performance. Id. at 37,260-61. Instead, CVD law requires Commerce “to countervail an allocated share of the subsidies received by producers, regardless of their effect____ [T]he statute embodies the irrebuttable presumption that subsidies confer a countervailable benefit upon goods produced by their recipients.” Id. at 37,260. “Accepting that the CVD law does not require a subsidy bestowed on a steel producer to confer a demonstrable competitive benefit on that producer in order to be countervailable,” Commerce turned to the specific issue of privatization. Id. at 37,261 (internal quotations omitted). Commerce rejected arguments that privatization automatically extinguishes prior subsidies and concluded that such arguments are contrary to CVD law. Instead, under Commerce’s methodology, “some portion of the prior subsidies received by the seller ‘travel[s] (with the productive unit) to its new home.’ ” Id. at 37,268. Commerce explained, [T]he countervailable subsidy (and the amount of the subsidy to be allocated over time) is fixed at the time the government provides the subsidy. The privatization of a government-owned company, per se, does not and cannot eliminate this countervailability____ [T]he statute does not permit the amount of the subsidy, including the allocated subsidy stream, to be reevaluated based upon subsequent events in the marketplace.” Id. at 37,263. Commerce, however, rejected arguments that after privatization, only a full repayment by the new company can extinguish past subsidies. Instead, Commerce announced a repayment methodology: “[A] private party purchasing all or part of a government-owned company (e.g., a productive unit) can repay prior subsidies on behalf of the company as part or all of the sales price.... [T]o the extent that a portion of the price paid for a privatized company can reasonably be attributed to prior subsidies, that portion of those subsidies will be extinguished.” Id. at 37,262-63. Under Commerce’s repayment methodology, Commerce examines the proportion of the privatized company’s subsidies to the company’s net worth from 1977 to the date of privatization. Id. at 37,263. To calculate this proportion, Commerce takes the simple average of the ratios of subsidies to net worth for each year. Commerce averages those ratios to reach the “historical surrogate for the percent that subsidies constitute of the overall value, i.e., net worth of the company.” Id. Commerce then multiplies the average ratio by the privatization purchase price “to derive the portion of the purchase price attributable to repayment of prior subsidies.” Id. Finally, Commerce reduces “the benefit streams of the prior subsidies by the ratio of the repayment amount to the net present value of all remaining benefits at the time of privatization.” Id. Contentions of the Parties A. The Foreign Producers The Foreign Producers contend that Commerce erred by not finding, as compelled by the evidence, “that the production of a company that has been privatized in an arm’s-length transaction or otherwise at market value is not subsidized by reason of preprivatization grants or other untied capital subsidies that may have been provided to the state-owned enterprise.” (Resp’ts’ J.Br. in Supp. of Mot. for Partial J. on R., Vol. I at 2). The Foreign Producers contend that the true inquiry here is a statutory one. To impose a countervailing duty under 19 U.S.C. § 1671(a)(1), Commerce must find a benefit to the company under investigation. According to the Foreign Producers, the benefit from a subsidy is a financial one, that is, the benefit of operating with funds for which the recipient does not have to pay market price. Because the companies at issue were privatized at arm’s length, the fair market value paid included the payment, at market price, of the value of the subsidies. Thus, the Foreign Producers contend, A privatized company operating with full, market-oriented capital costs does not have an artificial, subsidized cost of capital as did the state-owned enterprise. Its production does not realize any such subsidy benefits and, accordingly, there is no basis under the statute for [Commerce] to determine that such production “is subsidized” because of those past subsidy funds. (Id. at 40). The Foreign Producers further contend that Commerce, contrary to law, erected an “irrebuttable presumption that no subsequent event — including a privatization — can affect a subsidy allocation stream created by the Department under its methodology for allocating subsidies over time.” (Id. at 50). The Foreign Producers argue that no basis to erect such a presumption exists in the statute. Furthermore, they contend, the presumption contradicts the non-punitive nature of countervailing duties intended by Congress and is inconsistent with judicial precedent and Commerce’s own practice. Moreover, the Foreign Producers argue, under the irrebuttable presumption the value of countervailable benefits attributed to the privatized company exceeds the market value of the entire company in some eases. Alternatively, the Foreign Producers contend that if the Court ultimately affirms Commerce’s determination concerning the countervailability of privatized companies for pre-privatization subsidies, the Court should hold Commerce’s repayment methodology arbitrary and capricious. The Foreign Producers claim Commerce adopted this methodology without notice and comment, the preclusion of which is sufficient to justify a remand. Furthermore, they claim, the repayment methodology contains fundamental flaws rendering the methodology arbitrary and capricious. With regard to the privatization of AHM-SA, the Foreign Producers admit that Commerce made no specific finding regarding whether AHMSA was privatized at arm’s length. (AHMSA’s Resp. to Ct.’s Questions at 1). The Foreign Producers contend, however, “the evidence on the record demonstrates that the privatization of AHMSA was accomplished through a fair, open and transparent, competitive auction____ The privatization was ... a non-preferential arm’s-length transaction.” (Id.). Therefore, because the purchaser “paid fair market value for the items it purchased in a fair and competitive auction, it fully paid for the entire value it received.... [T]here is no basis for finding that [the purchaser] or its steel-making operations were in any way subsidized.” (Resp’ts J.Br. in Supp. of Mot. for Partial J. on R., Vol. II Tab B at 13). Furthermore, in their response to this Court’s post-oral, argument questions, the Foreign Producers contend Commerce “found that the post-privatization entity was fundamentally different” from pre-privatization AHMSA. (AHMSA’s Resp. to Ct.’s Questions at 4). The Foreign Producers claim “[a]s [Commerce] recognized, the privatization created a new consolidated ... entity, which had to be treated as a ‘single business enterprise.’ This new consolidated entity was clearly different from the preprivatization state-owned entity — of which [the purchaser] had not been a part.” (Id. (quoting General Issues Appendix, 58 Fed. Reg. at 37,262)). To support these assertions, the Foreign Producers maintain that “facts demonstrate that the new entity created by the privatization process was physically different from the entity that existed before.” (Id.). Furthermore, even if no physical changes occurred, “privatization would still have made a fundamental change in the company____ [T]he payment of the purchase price by [the purchaser] in the privatization imposed new costs and obligations on AHMSA” thus eliminating any continuing benefit from pre-privatization subsidies. (Id. at 5 (footnote omitted)). B. The Domestic Producers The Domestic Producers contend Commerce properly determined in its final determinations that privatization itself does not render non-countervailable subsidies bestowed upon government-owned companies prior to privatization. (Pis.’ J.Br. in Supp. of Mot. for J. on R. at 20). Instead, the Domestic Producers challenge as unsupported by substantial evidence and not in accordance with law Commerce’s determination that privatization could result in a partial repayment of pre-privatization subsidies. (Id. at 20). The Domestic Producers contend that CVD statutes do address repayment of subsidies and issues raised by privatization. According to the Domestic Producers, the CVD statutes require Commerce to countervail subsidies provided and specifically limit the instances in which Commerce may decrease subsidies otherwise countervailable. The specific instances allowing for offsets do not include repayment as a result of privatization. In addition to contending that Commerce did not act in accordance with law, the Domestic Producers argue Commerce’s “interpretation of the statute as requiring the conclusion that subsidies are partially repaid as a result of privatization at fair market value is not reasonable.” (Id. at 31). According to the Domestic Producers, Commerce’s interpretation is inconsistent with both Commerce’s conceptual models of subsidies and its practice of not considering “subsequent events” in calculating the amount of duties imposed. (Id. at 36). Furthermore, Commerce’s repayment methodology ignores the fact' that, in a privatization by sale of stock, “[a]ll that ehange[s] hands [are] literally ‘pieces of paper,’ the certificates evidencing ownership of the company. The company itself [is] not affected by the privatization in and of itself.” (Id. at 42). Because “[e]ach of the transactions at issue here involved the sale by a government of stock in a state-owned company to private investors,” none of the subsidies were repaid. (Id. at 42). The Domestic Producers also contend that the repayment methodology itself is fundamentally flawed on both legal and economic grounds. Finally, while the Domestic Producers agree with Commerce’s determination that in a corporate restructuring a portion of those subsidies allocable to the various productive units “travels” with the units, the Domestic Producers dispute the manner in which those subsidies are allocated across the various corporate entities benefitted. Specifically, the Domestic Producers dispute Commerce’s use of relative asset values as the basis for allocating- the subsidies. Citing the inherent subjectivity of asset valuations and their susceptibility to manipulation, the Domestic Producers argue that Commerce must use sales values in its calculations. With regard to the privatization of AHM-SA, the Domestic Producers contend Commerce’s determination that AHMSA’s privatization could result in a partial repayment of pre-privatization subsidies is not supported by substantial evidence and is not otherwise in accordance with law. See id. at 2, 13-14. As to the privatization transaction itself, the Domestic Producers “make no representations as to whether [any of] the privatization transactions occurred at fair market value, because it is not relevant to the law, which does not concern itself with whether the new shareholders benefit as a result of the change in the subsidized company’s ownership.” (AK Steel Corp., et al., Answers to Ct.’s Questions at 3). The Domestic Producers do contend, however, that AHMSA is “in all material and commercial respects the same” company that received pre-privatization subsidies. (Id. at 4 (stating that all of “the companies under investigation are in all material and commercial respects the same companies that received the subsidies”)). In the case of AHM-SA, “the privatization! ] ... involved a straightforward sale of shares.” (Id. at 17). In fact, “all of the privatizations under review here involved the sale of shares in the company that had received subsidies, so that the company continued in existence and operations were completely uninterrupted or changed under the new ownership.” (Id. at 16-17). C. The Department of Commerce Commerce contends that although neither the statutes nor the legislative history provides specific guidance on the issue of privatization, Congress “has directed Commerce to countervail subsidized imports when it is determined that a domestic industry has been injured by reason of such imports.” (Def.’s Br. in Opp’n to Mots, for J. on R. at 10-11). Accordingly, Commerce reasonably continued to countervail subsidies of public corporations subsequent to the privatizations of those corporations. Commerce maintains it has broad authority both to interpret CVD statutes and to pursue subsidies. Commerce defends its “irrebuttable presumption” as reflective of the basic concept that subsidies confer countervailable benefits. (Id. at 77-100). Furthermore, Commerce contends, Congress intended the agency to countervail subsidies aggressively. Using its broad statutory authority and in accordance with congressional intent, Commerce determined it must measure subsidies on the date those subsidies are bestowed. The statutory scheme does not require Commerce to remeasure the competitive benefits of subsidies due to subsequent events such as privatization. Commerce argues that contrary to this Court’s opinions in Saarstahl, AG v. United States, 18 CIT -, 858 F.Supp. 187 (1994), and Inland Steel Bar Co. v. United States, 18 CIT -, 858 F.Supp. 179 (1994), legislative history clearly shows Congress did not want Commerce to engage in an “effects” analysis. Instead, Commerce reasons: When untied subsidies are bestowed upon a company, they are presumed to benefit the entire company and are allocated across the total sales of the company. This means, in effect, that each of the various productive parts of the subsidized company derive benefits from those subsidies. Therefore when a company is sold, those previously bestowed subsidies continue to be allocable to it. (Def.’s Br. in Opp’n to Mots, for J. on R. at 14). Commerce further argues it reasonably concluded that “because a portion of the value of the company is due to prior subsidies, it was reasonable to consider that some or all of the sale price could constitute repayment for those prior subsidies.” (Id. at 15). Commerce contends its repayment concept does not contradict Commerce’s position that it is not required to take into account subsequent effects. Rather, Commerce argues, the repayment methodology “merely represents an allocation of the remaining unamortized subsidies between the seller ... and the private purchaser.” (Id.). Finally, Commerce defends its use of asset values as the basis for allocating subsidies to a productive unit of a government-owned company when that unit is sold to a private party. (Id. at 71-77). Commerce explains that because its definition of a productive unit does not require a unit to be a profit center, “the value of a productive unit’s sales may not be identifiable.” (Id. at 76 (citing General Issues Appendix, 58 Fed.Reg. at 37,268)). In order to eliminate the necessity of artificially constructing a productive unit’s sales value, Commerce reasonably chose to use book value for assets. (Id.). With regard to AHMSA, Commerce maintains that AHMSA was privatized by a bidding process through which “the Government of Mexico sold all of its ownership interest in AHMSA in November 1991.” (Id. at 8 (citing the Mexican Final Determination, 58 Fed.Reg. at 37,355)). Grupo Acerero del Norte (GAN), the purchaser of AHMSA, “is a holding company formed by a group of private investors for the purpose of purchasing AHMSA.” (Def.’s Resp. to Ct.’s Questions at 13). Commerce maintains “[t]he record reflects that the privatization represent ed a complete transfer of assets from the GOM to [GAN], the ultimate purchaser.” (Id. at 6-7). Commerce, however, makes no specific assertions concerning whether AHMSA’s privatization was effected through an arm’s-length transaction. (Id. at 2, 3). Instead, Commerce maintains that in all of the determinations under review, its “principal concern was whether a legitimate sale had taken place.” (Id. at 2). Commerce explains, Commerce applied its privatization methodology only in instances where there were legitimate sales. Commerce stated that a legitimate sale ‘must involve unrelated parties, one of which must be privately owned.’ Given this focus, Commerce made no specific findings that the privatizations in the Brazil, Germany, Mexico, and United Kingdom certain steel CVD investigations were necessarily of arm’s-length transactions. (Id. at 2 (citations to the General Issues Appendix omitted)). While making no specific assertion concerning whether AHMSA’s privatization was at arm’s length, Commerce does, however, contend that “the record reflects that the GOM sold AHMSA to the lower bidder in terms of cash received.” (Id. at 3). Commerce explains that because the Mexican Government was concerned with production of quality steel for domestic use, the GOM’s bid valuation methodology valued post-privatization committed investment at 50% of the investment. (Id. at 3-4). As a result, “[t]he cash portion of the winning bid was lower than the cash amount offered by the losing bid.” (Id. at 4). Discussion The threshold issue this Court must determine is whether, if AHMSA was privatized, Commerce properly determined subsidies previously bestowed upon AHMSA continued to be eountervailable after AHMSA’s privatization. For the reasons that follow, the Court remands to Commerce to reconsider its determination in light of the Court’s analysis in this opinion. In Saarstahl, AG v. United States, 18 CIT -, 858 F.Supp. 187 (1994), this Court examined the issue of whether pre-privatization subsidies bestowed upon a government-owned corporation could be attributed to a purchaser after privatization through an arm’s-length transaction. This Court pointed to the non-punitive nature of the CVD laws’ legislative intent requiring Commerce to use reasonable methods of allocating the value of subsidies and to relate “the benefit of the commercial advantage to the recipient.” Saarstahl, 18 CIT at -, 858 F.Supp. at 193 (quoting H.R.Rep. No. 317, 96th Cong., 1st Sess. 75 (1979) and citing S.Rep. No. 249, 96th Cong., 1st Sess. 85-86 (1979) U.S. Code Cong. & Admin.News 1979, pp. 381, 471-472 (Methods for allocating the value of non-recurring subsidy grants or loans must be “based on the commercial and competitive benefit to the recipient as a result of the subsidy”) (emphasis added)). Accordingly, this Court concluded that a new owner who pays fair market value for a productive unit cannot be the “recipient” of a subsidy because the buyer has paid for all that it is to receive. Id. at-, 858 F.Supp. at 193. In other words, by paying fair market value for all it has received the new owner has not gained any recognizable commercial or competitive benefit as a result of the transaction. Therefore, if Commerce were permitted to countervail a purchaser who has paid fair market value, Commerce’s actions would directly violate the overriding purpose of the CVD laws “to assess countervailing duties against those goods entering the U.S. on an uneven playing field.” Id. at -, 858 F.Supp. at 194 (emphasis added) (citing British Steel Corp. v. United States, 9 CIT 85, 95, 605 F.Supp. 286, 294 (1985) (further citations omitted)). Further analysis of the CVD statutes supports this Court’s analysis in Saarstahl and gives the Court the opportunity to further articulate its reasoning and holding in Saarstahl. Precedent informs this Court that “if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.” Chevron U.S.A Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 2782, 81 L.Ed.2d 694 (1984) (footnote omitted). In its review of the agency’s answer, “a court may reject an agency interpretation that contravenes clearly discernible legislative intent,” but “its role when that intent is not contravened is to determine whether the agency’s interpretation is ‘sufficiently reasonable.’” Grupo Industrial Camesa v. United States, 18 CIT -, -, 853 F.Supp. 440, 442 (1994) (quoting American Lamb Co. v. United States, 4 Fed.Cir. (T) 47, 54, 785 F.2d 994, 1001 (1986) (citations omitted)). The statutory authority governing countervailing duties does not speak directly to privatization and the imposition of countervailing duties upon privatized corporations. In fact, congressional input is sorely lacking. Commerce has virtually no statutory framework under which to administer the CVD laws with respect to the complex and universally important issue of privatization. However, as this Court discussed in Saarstahl and reiterates above, congressional intent concerning the overriding purpose of the CVD laws as a whole is clearly discernible. Commerce’s interpretation of the CVD statutes to allow the countervailing of pre-privatization subsidies bestowed upon government-owned corporations after any and all types of privatization transactions can result in punitive duties directly violative of that congressional purpose. Additionally, even if Commerce’s interpretation did not contravene clearly discernible legislative intent, for the reasons that follow, Commerce’s interpretation of what little statutory framework is relevant to privatization is unreasonable. In 19 U.S.C. § 1677, Congress defines “subsidy” in part as follows: (A) In general The term “subsidy” has the same meaning as the term “bounty or grant” as that term is used in section 1303 of this title, and includes, but is not limited to, the following: (ii) The following domestic subsidies, if provided or required by government action to a specific enterprise or industry, or group of enterprises or industries, whether publicly or privately owned and whether paid or bestowed directly or indirectly on the manufacture, production, or export of any class or kind of merchandise: (I) The provision of capital, loans, or loan guarantees on terms inconsistent with commercial considerations. (II) The provision of goods or services at preferential rates. (III) The grant of funds or forgiveness of debt to cover operating losses sustained by a specific industry. (IV) The assumption of any costs or expenses of manufacture, production, or distribution. 19 U.S.C. § 1677(5)(A) (1988). In 19 U.S.C. § 1677, Congress sets forth the following rule concerning subsidies: (B) Special rule In applying subparagraph (A), the administering authority, in each investigation, shall determine whether the bounty, grant, or subsidy in law or in fact is provided to a specific enterprise or industry, or group of enterprises or industries---- 19 U.S.C. § 1677(5)(B) (1988); see also 19 U.S.C. § 1671(a)(1)(B) (1988) (discussing the administering authority’s determination of whether a relevant entity “is providing, directly or indirectly, a subsidy”). While these statutory provisions do not speak directly to the privatization issue, Congress has worded § 1677(5)(B) such that the administering authority must determine if a subsidy is provided “to a specific enterprise or industry, or group of enterprises or industries.” This implies that the recipient of a subsidy must be a person or artificial person, such as a corporation carrying on a specific enterprise or industry, capable of holding a property interest such as a subsidy. Indeed, this was conceded by parties including the government at oral argument. See, e.g., Tr. at 496-97, 530. Contrary to the government’s argument, a subsidy cannot be provided to a “productive unit” or “travel” with it unless the “productive unit” is itself an artificial person capable of receiving a subsidy. To reason otherwise leads to absolute absurdity. Who would suggest, for example, that a subsidy could be provided to an inanimate object such as a chair. If a subsidy recipient, then, must be capable of receiving a subsidy, when a foreign government bestows a subsidy upon a corporation, it follows logically that the corporation, and not the corporation’s individual assets, receives the subsidy. In other words, it is with the corporation and not its several parts that the subsidy resides. Accordingly, as discussed in Saarstahl, when a purchaser pays fair market value in an arm’s-length transaction based upon commercial considerations for an asset or several assets of a subsidized corporation, the purchaser receives no gift or subsidy at all because the purchaser paid full monies worth. Furthermore, the subsidy cannot travel with the asset or several assets because the asset or several assets did not receive the subsidy; the corporation received the subsidy. Therefore, the subsidy continues to reside in the subsidized asset-selling corporate entity as holder of the subsidy benefits received. As discussed implicitly in Saarstahl, a different result may arise depending upon what is purchased and the nature of the purchase transaction. For example, where a purchaser buys all or part of a subsidized corporation through a simple stock purchase, the purchaser is buying an interest in the very entity in which the subsidy resides under § 1677(5)(B). The stock purchase merely evidences a change in the identity of the shareholders who hold ownership interests in the subsidized corporation. The stock purchase does not affect the life or nature of the corporate entity purchased. In other words, the entity that received the subsidy continues to survive as does Commerce’s authority to countervail that entity. Contrary to Commerce’s position, Commerce does not have the ability to countervail in such a situation because subsidies “travel.” Rather, Commerce has the ability to countervail because the subsidy continues to reside in the entity in which the subsidy was bestowed and because the subsidy and the entity continue to exist. Commerce has consistently maintained that it does not measure the effects of subsidies once they have been determined by Commerce. In other words, subsequent events are irrelevant. This Court, for the purposes of this proceeding, has no quarrel with that practice. The question confronting the Court is not the measurement of the subsidies, but the question of the location of the subsidies after privatization has taken place. Commerce, after having analyzed the nature of countervailable benefits, relevant statutory authority, legislative history, judicial opinions, and the regulations of Commerce, concluded those authorities do not permit Commerce to take into account the use to which subsidies are put or their effect upon the recipient. General Issues Appen dix, 58 Fed.Reg. at 37,260-61. It is not the effect upon the recipient that is presented by the general issue of privatization, but the identity of the recipient. The CVD laws are remedial in purpose and are designed to correct as much as possible artificial distortions in the marketplace occasioned by the inputs of subsidies, grants, or other types of gifts by governments or others to foreign companies exporting goods to the United States. Under these general principles, where a private investor pays fair market value in an arm’s-length transaction based upon commercial considerations for an asset or assets of a corporation, “there is no benefit conferred to the purchaser and therefore, no countervailable subsidy within the meaning of 19 U.S.C. § 1677(5).” Saarstahl, 18 CIT at -, 858 F.Supp. at 193. Commerce cannot do that which is in direct opposition to congressional intent, that is, countervail where no subsidy has been given in commercial terms. See American Lamb Co. v. United States, 4 Fed.Cir. (T) 47, 54, 785 F.2d 994, 1001 (1986) (“[A] court may reject an agency interpretation that contravenes clearly discernible legislative intent____”) (citation omitted); Ceramica Regiomontana S.A. v. United States, 10 CIT 399, 405, 636 F.Supp. 961, 966 (1986), aff'd, 5 Fed.Cir. (T) 77, 810 F.2d 1137 (1987) (“[T]his Court will not allow an agency ... to contravene or ignore the intent of the legislature or the guiding purpose of the statute.”) (citations omitted). If, however, a purchaser buys into the subsidized corporate entity itself so that the subsidized entity continues in its corporate existence in whole or in part, Commerce may properly continue to countervail that entity in accordance with legislative intent. This analysis is consistent with both the common law of corporations and public policy favoring facilitation of the alienability of property. Turning to the privatization of AHMSA, Commerce reported its conclusion in the Mexican Final Determination that AHMSA was privatized in 1991. See Mexican Final Determination, 58 Fed.Reg. at 37,355 (“In November 1991, the GOM sold all of its ownership interest in AHMSA. Prior to privatization, AHMSA was almost entirely-owned by the GOM. Since November 1991, the GOM holds no stock in AHMSA”). Commerce specifically declined, however, to determine whether the privatization of AHM-SA was an arm’s-length transaction. See General Issues Appendix, 58 Fed.Reg. at 37,264 (“Given the Department’s methodology ... concerns regarding whether or not the sale of AHMSA was at a fair market price are irrelevant.”); Def.’s Resp. to Ct.’s Questions at 2 (“Commerce made no specific findings that the privatizations in the Brazil, Germany, Mexico, and United Kingdom certain steel CVD investigations were necessarily of arm’s-length transactions.”). Instead, Commerce simply “passed through” the government-owned corporation’s pre-privatization subsidies to the privatized corporate entity. Commerce also seems to have stated no finding in the Mexican Final Determination concerning the nature of the privatization transaction involved in that determination. In the General Issues Appendix, Commerce did address party comments involving the manner in which AHMSA was privatized. See General Issues Appendix, 58 Fed.Reg. at 37,264-65. Commerce, however, did not address these comments by making any findings concerning the privatization transaction. As discussed above and in Saarstáhl, privatization as such does not cause subsidies to travel. If privatization is effected through an arm’s-length transaction for fair market value based upon commercial considerations in which the subsidized corporate entity does not continue to survive, Commerce’s ability to countervail that entity, also ceases to exist. Similarly, if privatization takes place by a sale in an arm’s-length transaction for fair market value based upon commercial considerations of the corporation’s several assets, nothing “travels,” and Commerce has no recourse against the purchaser of those assets because it received no subsidy. If, however, privatization is effected through, for example, a simple stock transfer, Commerce may continue to countervail because the entity subsidized continues to exist. However, the mere conclusion that a corporation was privatized is not determinative of whether Commerce’s ability to countervail continues to exist. Therefore, insofar as Commerce’s privatization methodology holds that subsequent to any privatization transaction, Commerce may countervail a privatized company for pre-privatization subsidies regardless of how privatization takes place, that methodology is unlawful. Commerce appears to have made no findings in the Mexican Final Determinar tion as to the nature of the transaction involving AHMSA, other than the finding that AHMSA was privatized in 1991. Accordingly, this Court remands the Mexican Final Determination to Commerce so that Commerce, in its expertise, may make findings in accordance with the above analysis concerning the nature of the transaction which resulted in the privatization of AHMSA. These findings should include: -(1) whether the privatization transaction at issue was effected at arm’s-length, for fair market value, and based upon commercial considerations; (2) whether the transaction at issue involved a privatization or partial privatization; (3) the terms and substance of the transaction at issue, and whether the transaction involved a sale of an asset or several assets, or consisted entirely of a sale of shares; (4) whether, under the Court’s analysis set forth above, if a privatization or partial privatization took place, the privatized entity continues to be, for all intents and purposes, the same entity that received subsidies prior to the transaction; and (5) whether, under the Court’s analysis, Commerce may properly continue to countervail AHMSA. Commerce is further directed to perform and report to the Court the following calculations: (1) Commerce will calculate any countervailing duties due, if any, by any transferor and transferee subsequent to a privatization; (2) if, under the Court’s analysis set forth above, Commerce determines that post-transaction AHMSA continues to be, for all intents and purposes, the same entity that received subsidies prior to the transaction at issue, Commerce will calculate any and all countervailing duties due on that surviving entity; and (3) Commerce will calculate any and all countervailing duties due on account of any other type of privatization transaction. In its calculations Commerce shall, where applicable, make any corrections necessary on account of allocation and/or sales denominator adjustments occasioned by the respective remands on those issues. The Court does not reach the issue of the repayment methodology adopted by Commerce because of the several remands to Commerce on issues pertaining to privatization. Such discussion would be premature. The Court observes, nevertheless, even where a bona fide purchaser in an arm’s-length transaction pays full value to a corporate transferor on an asset by asset basis that the purchase payment would not seem in any way to extinguish the gift .or subsidy previously given to the corporate transferor by its government. It would seem at best the only way to extinguish such a previously given gift or subsidy would be to repay the gift or subsidy to the original donor government. Furthermore, when a bona fide purchaser in an arm’s-length transaction buys only all or some of the stock of a government-owned corporation, none of the subsidy is repaid by that purchase. The corporation still has the subsidy. All that has changed is who owns a beneficial interest in the corporation, evidenced by ownership in the corporation’s common stock. There appears to be nothing in the record that demonstrates any corporate transferor returned anything to its original donor government. It is conceivable that foreign governments, transferors, and transferees could try to structure their privatization transactions to evade potential tariff liability under United States’ CVD laws. Perhaps Congress will provide guidance pertaining to such potential problems. In any event, Commerce, using its considerable expertise and insisting that such transactions be based upon good faith commercial considerations, should be able to ferret out sham transactions. The Court observes, however, it is beyond the scope of this opinion to speculate upon how parties may endeavor to structure future privatization transactions or whether such structuring would be consonant with present CVD statutes. II. Certain Steel Products from Brazil Background The period for which Commerce measured subsidies for purposes of the final determination concerning Usinas Siderúrgicas de Minas Gerais, S.A. (USIMINAS) is calendar year 1991. Brazilian Final Determination, 58 Fed.Reg. at 37,296. The products covered by Commerce’s investigation of USIMINAS are certain hot-rolled carbon steel flat products, certain cold-rolled carbon steel flat products, and certain eut-to-length carbon steel plate. Id. In the Brazilian Final Determination, Commerce set forth its determination that USIMINAS was unequityworthy from 1980 to 1988 and that equity infusions provided by the government of Brazil in those years were inconsistent with commercial considerations. Id. at 37,297. Commerce further determined that USIMINAS was uncreditworthy during the period 1980-1988. Id. Commerce then determined the amount of net subsidies provided under various government programs. Id. at 37,298-300. Without elaboration, Commerce also determined that in 1991, USIMINAS was partially privatized. Id. at 37,297. Accordingly, Commerce applied its privatization and repayment methodology set forth in the General Issues Appendix: In these final determinations, we have decided that a portion of the price paid for a formerly government-owned company represents partial repayment of prior subsidies. We calculated the portion of the purchase price attributable to repayment of prior subsidies. We then reduced the benefit streams for each of the prior subsidies by the ratio of the repayment amount to the net present value of all remaining benefits from those prior subsidies at the time of privatization. A further explanation of the Department’s determination on privatization and these calculations can be found in the Privatization section of the General Issues Appendix. The subsidies allocated to the POI for USIMINAS reflect, where appropriate, the application of the privatization methodology. Id, Contentions of the Parties A. The Foreign Producers The Foreign Producers’ contentions concerning the general issue of privatization as set forth in the General Issues Appendix and applied in the relevant determinations in the CVD series published in the Federal Register on July 9, 1993, are described above in the Court’s discussion of the Mexican Final Determination. Specifically with regard to Commerce’s application of its privatization methodology to USIMINAS, the Foreign Producers contend that USIMINAS was privatized by public auction in October 1991 at an arm’s-length market price for fair market value. (Resp’ts’ J.Br. in Supp. of Mot. for Partial J. on R. (Resp’ts’ J.Br.), Vol. I at 6, Vol. II Tab C at 1-3, 6; Resp’ts’ Answers to Ct.’s Questions (Resp’ts’ Answers) at 15). The Foreign Producers acknowledge that Companhia Vale do Rio Doce- (CVRD), a company majority-owned by the government, purchased 15% of USIMINAS’ common shares at auction. (Resp’ts’ J.Br., Vol. II Tab C at 4). The Foreign Producers maintain, however, that CVRD bought those, shares on terms consistent with other auction purchases. (Id.). The Foreign Producers also acknowledge that the Brazilian government retained an ongoing residual ownership interest in USIMINAS. (Id. at 5; Resp’ts’ Answers at 16 n. 15). They argue, however, that this equity interest is “nominal” and confers no leverage over USIMINAS. (Resp’ts’ Answers at 16 n. 15; Resp’ts’ J.Br., Vol. II Tab C at 5). In sum, the Foreign Producers contend any alleged subsidy benefits received by USIMINAS prior to privatization were extinguished by the sale of the controlling interest in USIMINAS at a bona fide market price. (Resp’ts J.Br., Vol. II Tab C at 1-8). B. The Domestic Producers The Domestic Producers’ contentions concerning the general issue of privatization as set forth in the General Issues Appendix and applied in the applicable determinations in tbe CVD series published in the Federal Register on July 9,1993, are described above in the Court’s discussion of the Mexican Final Determination. Specifically in regard to USIMINAS, while the Domestic Producers dispute Commerce’s determination that privatization results in a partial repayment of pre-privatization subsidies, the Domestic Producers support Commerce’s determination that USIMINAS was only partially privatized. (Def.-Intervenors’ Resp. at 90-92). According to Domestic Producers, the partial privatization of USIMINAS “involved a straightforward sale of shares.” (AK Steel Corp. et al., Answers to Ct.’s Questions at 17). Prior to privatization, the Brazilian Government owned 94.6% and 87.7% of the common and preferred shares of USIMINAS. (Id.). Through an auction of USIMINAS’ shares, various parties purchased “almost all” of the Brazilian Government’s common shares and 32% of its preferred -shares. (Id.). These purchasers, however, included CVRD, a government-owned mining company that bought 15% of USIMINAS’ common shares at auction. (Id. at 5). Additionally, “[s]tate-owned entities ... held 44% of the non-voting preferred shares. SIDERBRAS [Siderurgia Brasileira, S.A.], the state-owned steel holding company, retained ownership of 17% of the preferred shares, while BNDES [Banco Nacional de Desenvolvimento Económico e Social], the state-owned development bank, held another 15%.” (Id. (footnotes omitted)). The Domestic Producers argue “USIMINAS has admitted that government-owned entities continued to own a substantial portion of USIMINAS’ shares after privatization” and thus the Foreign Producers have not shown Commerce’s determination that USIMINAS was only partially privatized to be unsupported by substantial evidence. (Def.-Intervenors’ Resp. at 91-92). C. The Department of Commerce The Department of Commerce’s contentions concerning the general issue of privatization as set forth in the General Issues Appendix and applied in the applicable determinations in the CVD series published in the Federal Register on July 9, 1993, are described above in the Court’s discussion of the Mexican Final Determination. With regard to USIMINAS, Commerce maintains that after benefitting from equity infusions and other subsidies, USIMINAS was partially privatized in 1991. (Def.’s Br. in Opp’n to Mots, for J. on R. at 3-4). This partial privatization was effected through an auction of USIMINAS’ voting stock and a second auction of USIMINAS’ non-voting stock. (Id.). Subsequent to both auctions, SIDERBRAS and BNDES retained a 17% and 15% interest