[Federal Register Volume 60, Number 197 (Thursday, October 12, 1995)]
[Notices]
[Pages 53165-53168]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-25302]
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DEPARTMENT OF COMMERCE
[C-201-505]
Porcelain-on-Steel Cookingware From Mexico; Final Results of
Countervailing Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of Countervailing Duty Administrative
Review.
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SUMMARY: On August 2, 1995, the Department of Commerce (the Department)
published in the Federal Register its preliminary results of
administrative review of the countervailing duty order on porcelain-on-
steel cookingware from Mexico for the period January 1, 1993 through
December 31, 1993. We have completed this review and determine the net
subsidy to be de minimis for all companies. The Department intends to
instruct the Customs Service to liquidate, without regard to
countervailing duties, all shipments of the subject merchandise from
Mexico exported on or after January 1, 1993, and on or before December
31, 1993.
EFFECTIVE DATE: October 12, 1995.
FOR FURTHER INFORMATION CONTACT: Norma Curtis or Kelly Parkhill, Office
of Countervailing Compliance, Import
[[Page 53166]]
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C.
20230; telephone: (202) 482-2786.
SUPPLEMENTARY INFORMATION:
Background
On August 2, 1995, the Department published in the Federal Register
(60 FR 39360) the preliminary results of its administrative review of
the countervailing duty order on porcelain-on-steel cookingware from
Mexico. The Department has now completed this administrative review in
accordance with section 751 of the Tariff Act of 1930, as amended (the
Act).
We invited interested parties to comment on the preliminary
results. On September 1, 1995, case briefs were submitted by Acero
Porcelanizado, S.A. de C.V. (APSA) and Cinsa, S. A. De C.V. (Cinsa),
producers of the subject merchandise which exported porcelain-on-steel
cookingware to the United States during the review period
(respondents), and the Government of Mexico (GOM). The review covers
the period January 1, 1993 through December 31, 1993. The review covers
two companies, which account for virtually all exports of subject
merchandise from Mexico, and ten programs.
Applicable Statute and Regulations
The Department is conducting this administrative review in
accordance with section 751(a) of the Tariff Act of 1930, as amended
(the Act). Unless otherwise indicated, all citations to the statute and
to the Department's regulations are in reference to the provisions as
they existed on December 31, 1994.
Scope of the Review
Imports covered by this review are shipments of porcelain-on-steel
cookingware from Mexico. The products are porcelain-on-steel
cookingware (except teakettles), which do not have self-contained
electric heating elements. All of the foregoing are constructed of
steel, and are enameled or glazed with vitreous glasses. During the
review period, such merchandise was classifiable under item number
7323.94.0020 of the Harmonized Tariff Schedule (HTS). The HTS item
number is provided for convenience and Customs purposes. The written
description remains dispositive.
Calculation Methodology for Assessment and Cash Deposit Purposes
We calculated the net subsidy on a country-wide basis by first
calculating the subsidy rate for each company subject to the
administrative review. We then weight-averaged the rate received by
each company using as the weight its share of total Mexican exports to
the United States of subject merchandise, including all companies, even
those with de minimis and zero rates. We then summed the individual
companies' weight-averaged rates to determine the subsidy rate from all
programs benefitting exports of subject merchandise to the United
States.
Since the country-wide rate calculated using this methodology was
de minimis, as defined by 19 CFR Sec. 355.7 (1994), no further
calculations were necessary.
Analysis of Programs
Based upon our analysis of our questionnaire, verification, and
written comments from the interested parties we determine the
following:
I. Programs Conferring Subsidies
1. Bancomext Financing for Exporters
In the preliminary results, we found that this program conferred
countervailable benefits on the subject merchandise. Our analysis of
the comments submitted by the interested parties, summarized below, has
led us to modify our findings in the preliminary results for this
program. On this basis, the net subsidy for this program was changed
from 0.62 percent ad valorem to 0.48 percent ad valorem.
2. Fonei Long-Term Financing
In the preliminary results, we found that this program conferred
countervailable benefits on the subject merchandise. Our analysis of
the comments submitted by the interested parties, summarized below, has
not led us to reconsider our findings in the preliminary results. On
this basis, the net subsidy for this program remains 0.01 percent ad
valorem.
II. Programs Found Not To Be Used
In the preliminary results, we found that the producers and/or
exporters of the subject merchandise did not apply for or receive
benefits under the following programs during the period of review
(POR):
A. Certificates of Fiscal Promotion (CEPROFI)
B. PITEX
C. Other Bancomext Preferential Financing
D. Import Duty Reductions and Exemptions
E. State Tax Incentives
F. Article 15 Loans
G. NAFINSA FOGAIN-type Financing
H. NAFINSA FONEI-type Financing
Our analysis of the comments submitted by the interested parties,
summarized below, has not led us to reconsider our findings in the
preliminary results.
Analysis of Comments
Comment 1: Respondents contest the Department's determination that
Bancomext export financing constitutes a countervailable subsidy.
Respondents contend that during the 1993 POR Bancomext financing was
provided at interest rates higher than the cost of funds to Bancomext
or the GOM. Under item (k) of the Illustrative List of export
subsidies, only the provision of financing at interest rates below the
government's cost of borrowing is countervailable. Since the GATT
Subsidies Code's Illustrative List of export subsidies does not include
government financing at rates above the government's cost of funds, the
Department should determine that Bancomext was not a countervailable
program, and that the loans obtained through the Bancomext facilities
were not countervailable during the POR. Respondents contend that the
Department confirmed at verification that the audited financial
statements showed no funding from government sources, and that
Bancomext was a profit making operation throughout the POR.
Department's Position: We disagree. With the broad definition of a
subsidy contained in 19 U.S.C. section 1677(5), Congress specifically
included government action which results in the provision of capital
and loans on ``terms inconsistent with commercial considerations,'' the
provision of goods or services at ``preferential rates,'' and the like,
to a specific group of beneficiaries. See 19 U.S.C. section
1677(5)(A)(ii). The cost to government standard which defines an export
subsidy in Item (k) of the Illustrative List does not limit the United
States in applying its own national countervailing duty law to
determine the countervailability of subsidy benefits. The Department
determines the countervailability of subsidies by measuring the benefit
to the recipient rather that the cost to the government. Where, as
here, loans are given below commercial market rates, a benefit is
conferred. Because these benefits were limited to exporters, we
determine that this program is countervailable. See e.g., Final
Affirmative Countervailing Duty Determination: Certain Steel Products
From Austria (58 FR 37217, 37260; July 9, 1993), Certain Textile Mill
Products
[[Page 53167]]
From Mexico; Final Results of Countervailing Duty Order Administrative
Review (54 FR 36841, 36843-36844; September 5, 1989), Certain Textile
Mill Products From Mexico; Final Results of Countervailing Duty
Administrative Review (56 FR 12175, 12177; March 22, 1991) and
Porcelain-on-Steel Cookingware From Mexico; Final Results of
Countervailing Duty Administrative Review (57 FR 562; January 7, 1992).
Comment 2: Both the respondents and the GOM argue that the
Department's preliminary results erroneously state that APSA received a
``FOMEX'' export loan in 1992, with a maturity date in 1993.
Respondents argue that APSA did not receive a FOMEX loan, nor could
have, as the FOMEX program was terminated in 1989. Rather, exporters
commonly referred to export loans as ``FOMEX'' loans regardless of
whether such loans were actually obtained from FOMEX. Respondents argue
that the mere fact that APSA's internal loan ledger erroneously
referred to the loan as ``FOMEX'' cannot contradict previous Department
determinations, based on verified information received from GOM, that
the FOMEX program was terminated in 1989.
Department's Position: We disagree. The Department is not
contradicting its previous determination that the FOMEX program was
terminated on December 31, 1989. Effective January 1, 1990, the Mexican
Treasury Department eliminated the FOMEX loan program and transferred
the FOMEX trust to Bancomext. FOMEX was a program previously found
countervailable by the Department and operates much like the Bancomext
program which the Department has also found countervailable (See
Porcelain-on-Steel Cookingware From Mexico; Preliminary Results of
Countervailing Duty Administrative Review (56 FR 48163; September 24,
1991) and Porcelain-on-Steel Cookingware From Mexico; Final Results of
Countervailing Duty Administrative Review (57 FR 562; January 7,
1992)). As discussed in the preliminary results of this review, during
verification at APSA, we noted that one short-term loan was identified
by APSA as a FOMEX loan. This loan was not reported in APSA's
questionnaire responses. At verification, company officials at APSA
were given the opportunity to provide loan documentation for the loan
in question demonstrating that the loan was not from a countervailable
program; however, they failed to do so. (See Short-Term and Long-Term
Loans Section of APSA's Verification Report (Public Version) dated May
9, 1995 on file in the public file of the Central Records Unit, Room B-
099 of the Department of Commerce). Therefore, the Department treated
this loan as a Bancomext loan. However, as stated in the Department's
preliminary results, because the interest rate provided for this loan
during verification was higher than the commercial benchmark, there was
no benefit to APSA from the loan (See Porcelain-on-Steel Cookingware
From Mexico; Preliminary Results of Countervailing Duty Administrative
Review (60 FR 39360; August 2, 1995)).
Comment 3: Respondents and the GOM argue that the Department
incorrectly treated as Bancomext loans all loans CINSA and APSA had
reported as being financed by Bancomext. Respondents assert that the
loan documents received from commercial banks do not indicate whether
the loans were financed through Bancomext. Further, respondents assert
that the only definitive source of Bancomext financing is Bancomext
itself. The printout (Verification Exhibit BXMT-3) from Bancomext
indicates that APSA had only one loan outstanding in the POR, with the
first interest payment due after the POR. Therefore, the Department
should not have treated other loans as Bancomext loans.
Department's Position: We disagree. As stated in the Department's
regulations, ``the Department will visit with producers, exporter, or
government agencies in order to verify the accuracy and completeness of
submitted factual information. As part of the verification * * * the
Department will request access to all files, records, and personnel of
the producers, exporters, or the government agencies which the
Secretary considers relevant to factual information submitted by those
persons.'' 19 CFR 355.36. It is not possible to completely verify the
Bancomext loan program at Bancomext. Bancomext records do not include
the terms or interest rates established between the companies and the
commercial banks. (See Bancomext Section of the GOM's Verification
Report (Public Version) dated May 9, 1995 on file in the public file of
the Central Records Unit, Room B-099 of the Department of Commerce).
Therefore, verification must be conducted at both the government and
the companies. The loans in question were originally reported by the
companies as Bancomext loans in their questionnaire responses. At
verification, the Department noted discrepancies between the number and
values of the loans reported by Bancomext and those reported by the
companies in their questionnaire responses. Cinsa and APSA were given
the opportunity to identify through their records which loans were in
fact Bancomext loans. (See Bancomext Section of the GOM's Verification
Report (Public Version) dated May 9, 1995, Short-Term Loans Section of
Cinsa's Verification Report (Public Version) dated May 9, 1995 and
Short-Term and Long-Term Loans Section of APSA's Verification Report
(Public Version) dated May 9, 1995 on file in the public file of the
Central Records Unit, Room B-099 of the Department of Commerce). The
companies were unable to demonstrate that the loans they had originally
reported as Bancomext loans were not, in fact, Bancomext loans.
Therefore, the Department has appropriately treated these loans as
Bancomext loans.
Comment 4: Respondents and the GOM contend that the zero percent
interest rate selected by the Department for the unreported Bancomext
loan for Cinsa as best information available (BIA) is inappropriate.
Respondents argue that this rate does not reflect information contained
in the administrative record. Alternatively, respondents suggest that
the Department recalculate the net benefit for the unreported loan
using (1) the lowest rate for Bancomext loans offered during the POR,
(2) an interest rate based on publicly available data (LIBOR) plus the
verified Bancomext spread (the rate charged to commercial banks by
Bancomext to cover operating expenses), or (3) the verified Bancomext
spread that was applicable to Bancomext loans during the POR. The GOM
argues that sufficient information about Bancomext interest rates,
applicable to the specific type of loan provided to Cinsa, was
available on the record. The GOM suggests the Department use one of the
following as the effective interest rate for the unreported loan for
Cinsa: (1) LIBOR + the Bancomext spread, (2) LIBOR, or (3) the
Bancomext spread, respectively.
Department's Position: We disagree. During verification at the GOM,
we discovered one Bancomext loan for Cinsa that had not been reported
in the questionnaire responses. Subsequently, Cinsa did not provide the
interest rate for this loan upon request at verification. (See
Bancomext Section of the GOM's Verification Report (Public Version)
dated May 9, 1995 and Short-Term Loan Section of Cinsa's Verification
Report (Public Version) dated May 9, 1995, on file in the public file
of the Central Records Unit, B-099 of the Department of Commerce).
Section 776 (c) of the Act requires the Department to use BIA whenever
a party refuses or is unable to produce the
[[Page 53168]]
information requested. Furthermore, 19 CFR 355.37 of the Department's
regulations gives the Department broad discretion in the use of BIA to
calculate benefits for non-cooperating companies who do not submit a
complete response. Both the GOM and Cinsa were informed of the need to
provide the interest rate for the previously unreported loan. In light
of the respondent's failure to respond to our request for complete loan
information, we are continuing to use a zero interest rate as BIA.
Comment 5: Respondents contend that the Department incorrectly
calculated the commercial dollar interest rate benchmark to which all
Bancomext loans are compared. The Department's benchmark was calculated
using a weighted average of the commercial interest rates of U.S.
dollar loans reported in the Federal Reserve Bulletins ranging from
$1,000 to $999,000. Respondents argue that, because a significant
portion of the loans obtained during the period of review were in
excess of $999,000, the Department should include in its calculation of
the commercial interest rate benchmark the interest rates for dollar
loans valued between $1 million and $5 million.
Department's Position: We agree. The Department has recalculated
its benchmark for dollar-denominated short-term loans to include the
interest rates reported in the Federal Reserve Bulletin on comparably
sized loans. In addition, the Department inadvertently used the 1993
benchmark for two short-term loans contracted in 1992. It is the
Department's practice to select a benchmark interest rate for loans at
the time the terms of the loan are established, which in this case was
when the loans were received. (See Rice From Thailand; Final Results of
Countervailing Duty Administrative Review (59 FR 8906; February 24,
1994)). Therefore, the Department has recalculated the benefit for the
Bancomext loans received in 1992, but on which interest was paid in
1993, using the 1992 benchmark rate instead of the 1993 benchmark rate.
Because of these changes, we now determine the benefit conferred by the
Bancomext program to be zero for APSA and 0.48 percent ad valorem for
Cinsa.
Final Results of Review
For the period January 1, 1993 through December 31, 1993, we
determine the net subsidy to be 0.42 percent ad valorem for all
companies. In accordance with 19 CFR 255.7, any rate less than 0.5
percent ad valorem is de minimis.
The Department intends to instruct the Customs Service to
liquidate, without regard to countervailing duties, all shipments of
the subject merchandise from Mexico exported on or after January 1,
1993, and on or before December 31, 1993.
The Department will also instruct the U.S. Customs Service to
collect a cash deposit of estimated countervailing duties of zero
percent of the f.o.b. invoice price on all shipments of the subject
merchandise from all companies entered, or withdrawn from warehouse,
for consumption on or after the date of publication of the final
results of this review.
This notice serves as a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 C.F.R. 355.34(d). Timely written notification
of return/destruction of APO materials or conversion to judicial
protective order is hereby requested. Failure to comply with the
regulations and the terms of an APO is a sanctionable violation.
This administrative review and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.
Dated: September 29, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-25302 Filed 10-11-95; 8:45 am]
BILLING CODE 3510-DS-P
