[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Notices]
[Pages 9426-9429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5439]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
[C-301-003, C-301-601]
Roses and Other Cut Flowers from Colombia; Miniature Carnations
from Colombia: Preliminary Results of Countervailing Duty
Administrative Reviews of Suspended Investigations
AGENCY: Import Administration, International Trade Administration,
Commerce.
ACTION: Notice of Preliminary Results of Countervailing Duty
Administrative Reviews and Intent To Terminate Suspended
Investigations.
-----------------------------------------------------------------------
SUMMARY: The Department of Commerce (the Department) is conducting
administrative reviews of the agreements suspending the countervailing
duty investigation on roses and other cut flowers (roses) from Colombia
and the countervailing duty investigation on miniature carnations
(minis) from Colombia. Termination of these two cases has been
requested by the Government of Colombia (``GOC'') pursuant to 19 CFR
355.25(a)(2) and the procedures specified in 19 CFR 355.25(b)(2), and
by certain producers and exporters of subject merchandise pursuant to
19 CFR 355.25(a)(3) and the procedures specified in 19 CFR 355.25(b)(3)
in the event the Department denies the GOC's request to terminate.
These reviews cover the period of review (``POR'') January 1, 1994,
through December 31, 1994, and eleven programs. We preliminarily
determine that the GOC and the producers/exporters of roses and minis
have complied with the terms of the suspension agreements. We also
preliminarily determine that the producers/exporters of subject
merchandise have not used any program under review for a period of at
least five consecutive years. Additionally, we preliminarily determine
that the GOC and producers/exporters of the subject merchandise
(respondents) have provided sufficient evidence for the Department to
determine that it is likely that producers/exporters of subject
merchandise will not in the future apply for or receive any net subsidy
on the subject merchandise from those programs the Department has found
countervailable in any proceeding involving Colombia or from other
countervailable programs. Therefore, we preliminarily determine that
respondents have met the requirements for termination of the
countervailing duty suspended investigation on roses and other cut
flowers and on miniature carnations as outlined in the Commerce
Regulations.
We invite interested parties to comment on these results. Parties
who submit arguments in this proceeding are requested to submit with
any argument (1) a statement of the issue and (2) a brief summary of
the argument.
EFFECTIVE DATE: March 8, 1996.
FOR FURTHER INFORMATION CONTACT: Rick Johnson or Jean Kemp, Office of
Agreements Compliance, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230, telephone: (202) 482-
3793.
SUPPLEMENTARY INFORMATION:
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute and to the
Department's regulations are in reference to the provisions as they
existed on or after January 1, 1995, the effective date of amendments
made to the Tariff Act in accordance with the Uruguay Round Agreements
Act.
Background
On January 12, 1995, the Department published in the Federal
Register (60 FR 2941) a notice of ``Opportunity to Request an
Administrative Review'' for the 1994 review period. On January 31, 1995
the GOC and the Colombian Association of Flower Exporters
(Asocolflores) requested administrative reviews of the suspended
countervailing duty investigations covering roses and
[[Page 9427]]
minis for the 1994 period. On April 14, 1995, the Department initiated
these reviews (60 FR 19017, 19018). The Department is now conducting
these reviews in accordance with section 751 of the Tariff Act of 1930,
as amended (the Tariff Act), and 19 CFR 355.22.
Scope of Review
The products covered by these administrative reviews constitute two
separate ``classes or kinds'' of merchandise: roses and minis from
Colombia. During the POR, such merchandise covered by these suspension
agreements was classifiable under Harmonized Tariff Schedule (HTS) item
numbers 0603.10.60, 0603.10.70, 0603.10.80, and 0603.90.00 for roses,
and 0603.10.30 for minis. The HTS item numbers are provided for
convenience and Customs purposes only. The written descriptions remain
dispositive.
These reviews of the suspended investigations involve approximately
600 Colombian flower producers/exporters of roses, over 100 Colombian
flower producers/exporters of minis, and the GOC. The suspension
agreement for minis covers ten programs: (1) BANCOLDEX (funds for the
promotion of exports); (2) Plan Vallejo; (3) Instituto de Fomento
Industrial (IFI); (4) Fondo Financiero de Proyectos de Desarrollo
(FONADE); (5) Financiero de Desarrollo Territorial (FINDETER); (6) Tax
Reimbursement Certificate Program (``CERT''); (7) Free Industrial
Zones; (8) Export Credit Insurance; (9) Countertrade; and (10) Research
and Development. The suspension agreement for roses covers the ten
programs listed above, as well as (11) Air Freight Rates.
Verification
As provided in Section 776(b) of the Tariff Act, we verified
information provided by the respondents by using standard verification
procedures, including inspection of programs at the appropriate
administering agencies, onsite inspection of the manufacturers'
facilities, the examination of relevant sales and financial records,
and selection of original documentation containing relevant
information. We verified the responses from four producers/exporters of
both classes or kinds of merchandise under review for the period
January 1, 1994 to December 31, 1994: Flores Condor de Colombia, Ltda,
Flores Las Palmas, S.A., Splendid Flowers, Ltda, and Flores del Rio,
S.A. Our verification results are outlined in the public versions of
the verification reports.
Analysis of Programs
We examined the following programs subject to the terms of the
suspension agreements:
(1) BANCOLDEX
There are six major BANCOLDEX credit lines: Short-term working
capital Colombian peso (peso) loans; medium-term working capital peso
loans; short- and long-term working capital U.S. dollar (dollar) loans;
long-term capitalization peso loans; long-term capitalization dollar
loans; and long-term fixed investment loans. In accordance with
Departmental practice, we will treat medium-term working capital peso
loans as long-term working capital peso loans.
Under the terms of the suspension agreements, Colombian flower
exporters will not apply for, or receive any export financing from
BANCOLDEX other than that offered on non-preferential terms, and at or
above the established Department benchmark interest rates. For the
period of review, the benchmark interest rates in effect for minis were
nominal Depositos a Termino Fijo (DTF)+1 for short-term peso loans, and
nominal DTF+1+.25/year for long-term loans. See Miniature Carnations
from Colombia; Final Results of Countervailing Duty Administrative
Review (1989), 56 FR 14240 (April 8, 1991). For roses for the period of
review, the benchmark interest rates in effect were 22.5% for short-
term peso loans and 21% for long-term peso loans. See Roses and Other
Cut Flowers from Colombia; Final Results of Countervailing Duty
Administrative Review and Revised Suspension Agreement (1983), 51 FR
44930, 44932 (December 15, 1986). There was no applicable benchmark for
U.S. dollar loans for the POR.
Colombian Peso Loans
At verification, we examined GOC documents and confirmed that
BANCOLDEX charged interest rates on its short- and long-term peso loans
above the established Department benchmark interest rates in effect
during the POR. In addition, we found that BANCOLDEX issued the loans
on non-preferential terms. We also examined the four companies'
accounting records which confirmed that the companies received
BANCOLDEX peso loans for the subject merchandise on non-preferential
terms and at interest rates at or above the established Department
benchmark rates for exports of the subject merchandise to the United
States and Puerto Rico in effect during the POR. Therefore, we
preliminarily determine that BANCOLDEX did not confer any
countervailable benefits upon exports of the subject merchandise to the
United States and Puerto Rico during the POR. We also preliminarily
determine that no countervailable loans under the BANCOLDEX loan
program have been used by exporters of the subject merchandise for a
period of five consecutive years.
U.S. Dollar Loans
For the period of review, there were no applicable benchmark
interest rates for U.S. dollar loans. However, for the purposes of
determining whether termination of the suspension agreement is
appropriate, we examined whether BANCOLDEX conferred any
countervailable benefits upon exports of the subject merchandise to the
United States and Puerto Rico during the POR with regard to BANCOLDEX
U.S. dollar-denominated loans. We preliminarily determine that
BANCOLDEX did not confer any countervailable U.S. dollar loans on
subject merchandise during the POR (See Memorandum to the File,
February 28, 1996). We also preliminarily determine that no
countervailable loans under the BANCOLDEX loan program have been used
by exporters of the subject merchandise for a period of five
consecutive years.
(2) Plan Vallejo
Plan Vallejo was established in 1967 under decree 444. Its purpose
is to exempt exporters from certain indirect taxes and customs duties
assessed on imported capital equipment used to produce finished
products for export. The Instituto Colombiano de Comercio Exterior
(INCOMEX) administers the Plan Vallejo program.
Under the terms of the suspension agreements, Colombian flower
exporters will not apply for or receive any benefits from duty and tax
exemptions for capital equipment under Plan Vallejo for exports of the
subject merchandise to the United States and Puerto Rico. At
verification, we examined the GOC's documentation and confirmed that
this program was not used by the exporters of the subject merchandise
for exports to the United States and Puerto Rico during the POR. Also,
GOC officials stated that, during the POR, no flower exporter applied
for Plan Vallejo benefits. Therefore, we preliminarily determine that
this program has not been used for subject merchandise for a period of
five consecutive years.
In addition, we verified that the four companies we examined at
verification did not use the program for capital equipment during the
POR. Therefore,
[[Page 9428]]
we preliminarily determine that this program did not confer any
countervailable benefits upon exports of the subject merchandise to the
United States and Puerto Rico during the POR. In addition, we
preliminarily determine that Plan Vallejo has been abolished for the
subject merchandise in Resolution 2386 because flower exporters are
ineligible to receive benefits for exports to the United States and
Puerto Rico.
(3) Instituto de Fomento Industrial (IFI) Loans
The Instituto de Fomento Industrial, or Institute for the Promotion
of the Industrial Sector, is a branch of the Colombian Ministry of
Economic Development. It provides financing to all sectors of the
Colombian economy and to large and small companies. Companies with
assets above 1.25 billion pesos may borrow directly from IFI, while
smaller companies may borrow funds from IFI which are rediscounted
through financial intermediaries.
Two IFI credit lines are available only to exporters. These include
a credit line for new exporters and relocation of export enterprises,
and the ANDEAN Trade Preference Act (``ATPA'') line of credit. The
other IFI credit lines are available to all enterprises. These include
a commercial sector line of credit, a line of credit for free zones, a
line of credit for working capital, a line of credit for capital
equipment, a capitalization line of credit, ordinary resource loans, a
line of credit for motel and tourist projects, and a line of credit for
market studies. Loans are available in both pesos and dollars.
Loan terms and rates vary by credit line and length of the loan.
Fixed asset dollar loans are available for five-year terms at LIBOR
plus five percentage points. Peso working capital loans are available
for terms of up to three years at the tasa de captacion para
corporaciones (``TCC'') plus five percentage points. Long-term peso
loans are available for terms up to seven years at TCC plus six
percentage points plus a 0.25 percent point for each additional year
after the fifth. ATPA loans are available in pesos for up to four years
at TCC plus five percentage points for working capital loans and for
terms of up to twelve years for fixed asset peso loans at TCC plus five
percentage points plus a 0.25 percent point for each year after the
fifth. In addition, ATPA fixed asset loans are available in dollars at
LIBOR plus five percentage points plus 0.25 for each year after the
fifth.
We verified that the non-export lines of credit provided by IFI
were granted to a broad range of Colombian industry sectors including:
agriculture, mining, textiles, metallic products, financial
establishments, and chemicals, rubber and plastics. Therefore, we
preliminarily determine that IFI's non-export lines of credit are not
provided to a specific enterprise or industry or group thereof and,
therefore, are not countervailable.
Furthermore, we verified that no Colombian flower exporters
received loans under the two export credit lines during the POR. We
preliminarily determine that the GOC and the Colombian flower exporters
of the subject merchandise were in compliance with the suspension
agreements because IFI's export credit lines were not used by Colombian
flower exporters of the subject merchandise during the POR. As we noted
in Roses and Other Cut Flowers From Colombia; Miniature Carnations From
Colombia; Preliminary Results of Countervailing Duty Administrative
Reviews of Suspended Investigations (60 FR 42535, 42538, August 16,
1995) (1993 review), because flower exporters of the subject
merchandise were eligible to apply for and receive IFI's export credit
lines, the same short- and long-term benchmarks as for BANCOLDEX peso
financing applied for the POR (See Section 1 above).
At verification, we determined that Colombian flower exporters did
not apply for or receive any IFI short- and long-term export credits
for the subject merchandise to the United States and Puerto Rico.
Therefore, we preliminarily determine that IFI loans did not confer any
countervailable benefits upon exports of the subject merchandise to the
United States and Puerto Rico during the POR. Although no loans at
preferential rates were received by exporters of the subject
merchandise, the program itself has not been abolished. Rather, the
above scenario constitutes non-use of the program. Therefore, we
preliminarily determine that IFI's export credit line program has not
been used by exporters of the subject merchandise for the period of
review. We also preliminarily determine that exporters of the subject
merchandise have not received countervailable loans under this IFI
program since the Department began examining this program, in the 1993
review.
(4) Fondo Financiero de Proyectos de Desarrollo (FONADE)
FONADE is an industrial and commercial state entity owned by the
National Department of Planning. FONADE finances feasibility studies on
pre-investment projects that are not conditioned on exporting. The main
client is the National Institute for Road Development. At verification,
we found no evidence that Colombian flower producers/exporters of the
subject merchandise applied for or received financing from FONADE
during the POR. Therefore, we preliminarily determine that FONADE's
financing was not used by Colombian flower producers/exporters of the
subject merchandise during the POR. Furthermore, we preliminarily
determine that FONADE financing has not been used by producers/
exporters of the subject merchandise since the Department began
examining this program, in the 1993 review.
(5) Financiera de Desarrollo Territorial (FINDETER)
The Department has previously found Financiera de Desarrollo
Territorial (``FINDETER'') financing to be not countervailable for
exports of the subject merchandise (Roses and Other Cut Flowers from
Colombia; Miniature Carnations From Colombia; Preliminary Results of
Countervailing Duty Administrative Reviews of Suspended Investigations,
60 FR 42535-38, August 16, 1995). For the current review, the
Department has examined this program and preliminarily finds it to be
unchanged and therefore not countervailable for the subject
merchandise.
Other Programs
In past reviews, the Department has found the following programs to
have been abolished for the subject merchandise for a period of at
least three consecutive years (see, infra, Roses and Other Cut Flowers
from Colombia; Preliminary Results of Countervailing Duty
Administrative Review and Intent Not To Terminate Suspended
Investigation, 58 FR 52272-5, October 7, 1993; Miniature Carnations
From Colombia; Preliminary Results of Countervailing Duty
Administrative Review and Intent Not To Terminate Suspended
Investigation, 58 FR 52269-72, October 7, 1993):
(6) Tax Reimbursement Certificate Program (``CERT'');
(7) Free Industrial Zones;
(8) Export Credit Insurance;
(9) Countertrade; and
(10) Research and Development.
For the current review, the Department has examined these programs
and verified that they are unchanged from earlier reviews. Therefore,
they remain abolished for the subject merchandise.
[[Page 9429]]
Program Specific to the Suspension Agreement on Roses and Other Cut
Flowers
(11) Air Freight Rates
The Civil Aeronautics Board (Departmento Administrativo de la
Aeronautica Civil, hereafter referred to as ``DAAC'') is the government
agency that develops, maintains and regulates air transport and air
space activities.
Section D(3) of the suspension agreement states that the Department
may consider rescinding the agreement if the air freight rates paid by
cut flower exporters approach the government-mandated maximum rates set
by the DAAC because such rates might be indicative of government
control rather than the result of competitive forces.
We preliminarily determine that this program did not confer any
countervailable benefits upon exports of the subject merchandise to the
United States and Puerto Rico during the POR. Although no subsidies
were received by exporters of the subject merchandise through this
program, the program establishing minimum and maximum rates itself has
not been abolished. Rather, the above scenario characterizes non-use of
the program. Therefore, we preliminarily determine that this program
has not been used by exporters of the subject merchandise for a period
of five consecutive years.
Preliminary Results of Review
We preliminarily determine that the GOC and the producers/exporters
of the subject merchandise have complied with all the terms of the
suspension agreements during the period January 1, 1994 through
December 31, 1994. We preliminarily determine that no countervailable
benefits have been bestowed on subject merchandise, and furthermore,
that producers/exporters of subject merchandise have not used the above
programs for at least five years (or, in the case of programs only
recently created, for the life of the program). Additionally, we note
that the GOC has stated for the record that it will institute or
maintain appropriate measures to ensure that export loan programs will
be administered to guarantee that loans granted to recipients are
comparable to commercial loans that a flower producer/exporter could
obtain in the market, such as those alternative sources of financing
available to agriculture in Colombia, and will not confer any loan
program countervailable subsidies on flower producers/exporters.
Furthermore, the GOC has certified that, for the subject merchandise,
it shall not reinstate those programs which the Department has found
countervailable, and it shall not substitute other countervailable
programs. Finally, producers/exporters have certified that they will
not apply for or receive any net subsidy on exports to the United
States of subject merchandise from those programs that the Department
has found countervailable in any proceeding involving Colombia or from
other countervailable programs.
Therefore, we preliminarily determine that the GOC and the
producers/exporters covered by this agreement have met the requirements
for termination of the suspended countervailing duty investigations on
roses and other cut flowers and miniature carnations, as required by 19
CFR 355.25.
Interested parties may submit written comments on these preliminary
results within 30 days of the date of publication of this notice and
may request disclosure and/or a hearing within 10 days of the date of
publication. Rebuttal briefs and rebuttals to written comments, limited
to issues in those comments, must be filed not later than 37 days after
the date of publication. Any hearing, if requested, will be held 44
days after the date of publication or the first workday thereafter. The
Department will publish the final results of its analysis of issues
raised in any such written comments or at a hearing.
This administrative review and notice are in accordance with
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR
355.22.
Dated: February 28, 1996.
Paul L. Joffe,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-5439 Filed 3-6-96; 8:45 am]
BILLING CODE 3510-DS-P
