[Federal Register Volume 64, Number 69 (Monday, April 12, 1999)]
[Notices]
[Pages 17618-17624]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-9050]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-475-819]
Certain Pasta from Italy: Preliminary Results of Countervailing
Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Preliminary Results of Countervailing Duty
Administrative Review.
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SUMMARY: The Department of Commerce is conducting an administrative
review of the countervailing duty order on certain pasta from Italy for
the period January 1, 1997, through December 31, 1997. We have
preliminarily determined that certain producers/exporters have received
net subsidies during the period of review. If the final results remain
the same as these preliminary results, we will instruct the Customs
Service to assess countervailing duties as detailed in the preliminary
results of review. Interested parties are invited to comment on these
preliminary results.
EFFECTIVE DATE: April 12, 1999.
FOR FURTHER INFORMATION CONTACT: Vincent Kane, Sally Hastings, or
Suresh Maniam, AD/CVD Enforcement, Group I, Office 1, Import
Administration, U.S. Department of Commerce, Room 3099, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230; telephone (202) 482-
2815, 482-3464 or 482-0176, respectively.
Background
On July 24, 1996, the Department of Commerce (the Department)
published in the Federal Register (61 FR 38544) the countervailing duty
order on pasta from Italy. On July 1, 1998, the Department published a
notice of ``Opportunity to Request Administrative Review'' (63 FR
35909) of this countervailing duty order. We received timely requests
for review and we initiated the review, covering the period January 1,
1997, to December 31, 1997, on August 27, 1998 (63 FR 45796), and
September 9, 1998 (63 FR 48188). In accordance with 19 CFR 351.213(b),
this review of the order covers the following producers or exporters of
the subject merchandise for which a review was specifically requested:
Audisio Industrie Alimentari S.p.A. (``Audisio''); the affiliated
companies Delverde S.r.L., Tamma Industrie Alimentari di Capitanata
S.r.L., Sangralimenti S.r.L., and Pietro Rotunno, S.r.L. (``Delverde/
Tamma''); Pastificio Fabianelli S.p.A. (``Fabianelli''); and Pastificio
Riscossa F.lli Mastromauro S.r.L. (``Riscossa''). This review covers 26
programs.
On September 15, 1998, we issued countervailing duty questionnaires
to the Government of Italy (``GOI''), the Commission of the European
Union (``EU''), and the above-named companies under review. The
following seven companies which had requested to be included in this
review withdrew their request on the noted dates: De Gi Ma S.r.L. and
Pastificio Laporta S.a.s. on September 23, 1998; Industrie Alimentari
Molisane S.r.L. and Pastificio Antonio Pallante S.r.L. on October 6,
1998; Pastificio Maltagliati S.p.A. on October 28, 1998; La Molisana
Industrie Alimentari S.p.A. on November 4, 1998; and Petrini S.p.A. on
November 5, 1998.
We received responses to our questionnaires and issued supplemental
questionnaires throughout the period November 1998 through February
1999. Responses to supplemental questionnaires were received in March
1999.
The Department is conducting this administrative review in
accordance with section 751(a) of the Tariff Act of 1930, as amended by
the Uruguay Round Agreements Act (``URAA''), effective January 1, 1995
(``the Act'').
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions of the Act. In addition, unless otherwise
indicated, all citations to the Department's regulations are to the
regulations codified at 19 CFR Part 351 (1998).
Scope of Review
Imports covered by this review are shipments of certain non-egg dry
pasta in packages of five pounds (2.27 kilograms) or less, whether or
not enriched or fortified or containing milk or other optional
ingredients such as chopped vegetables, vegetable purees, milk, gluten,
diastases, vitamins, coloring and flavorings, and up to two percent egg
white. The pasta covered by this scope is typically sold in the retail
[[Page 17619]]
market, in fiberboard or cardboard cartons or polyethylene or
polypropylene bags, of varying dimensions.
Excluded from the scope of this review are refrigerated, frozen, or
canned pastas, as well as all forms of egg pasta, with the exception of
non-egg dry pasta containing up to two percent egg white. Also excluded
are imports of organic pasta from Italy that are accompanied by the
appropriate certificate issued by the Instituto Mediterraneo Di
Certificazione (``IMC''), by Bioagricoop Scrl, by QC&I International
Services, or by Ecocert Italia.
The merchandise subject to review is currently classifiable under
item 1902.19.20 of the Harmonized Tariff Schedule of the United States
(``HTSUS''). Although the HTSUS subheading is provided for convenience
and customs purposes, the written description of the merchandise
subject to the order is dispositive.
Scope Rulings
(1) On August 25, 1997, the Department issued a scope ruling that
multicolored pasta, imported in kitchen display bottles of decorative
glass that are sealed with cork or paraffin and bound with raffia, is
excluded from the scope of the antidumping and countervailing duty
orders (see Memorandum from Edward Easton to Richard Moreland, dated
August 25, 1997).
(2) On July 30, 1998, the Department issued a scope ruling, finding
that multipacks consisting of six one-pound packages of pasta that are
shrink-wrapped into a single package are within the scope of the
antidumping and countervailing duty orders. (See letter from Susan H.
Kuhbach, Acting Deputy Assistant Secretary for Import Administration,
to Barbara P. Sidari, Vice President, Joseph A. Sidari Company, Inc.,
dated July 30, 1998.)
(3) On October 26, 1998, we initiated a scope inquiry to determine
whether a package weighing over five pounds as a result of industry
packing tolerances may be within the scope of the antidumping and
countervailing duty orders. A preliminary scope ruling was issued (see
Memorandum from John Brinkmann to Richard Moreland, dated March 24,
1999).
Period of Review
The period of review (``POR'') for which we are measuring subsidies
is from January 1, 1997, through December 31, 1997.
Subsidies Valuation Information
Benchmarks for Long-term Loans and Discount Rates: The companies
under review did not takeout any long-term, fixed-rate, lira-
denominated loans or other debt obligations which could be used as
benchmarks in any of the years in which grants were received or
government loans under review were given. Therefore, for years prior to
1995, we used the Bank of Italy reference rate, adjusted upward to
reflect the mark-up an Italian commercial bank would charge a corporate
customer, as the benchmark interest rate for long-term loans and as the
discount rate. For 1995 through 1997, we used the average interest rate
on medium-and long-term loans as reported by the Bank of Italy based on
a survey of 114 Italian banks. We continued to use the same mark-up as
in Certain Pasta From Italy: Final Results of Countervailing Duty
Review, 63 FR 43905, 43906 (August 17, 1998) (``Pasta First Review''),
but we will examine at verification whether that mark-up includes fees,
commissions and other expenses.
Allocation Period: In British Steel plc. v. United States, 879
F.Supp. 1254, 1289 (CIT 1995) (``British Steel I''), the U.S. Court of
International Trade (``CIT'' or ``the Court'') ruled against the
allocation methodology for non-recurring subsidies that the Department
had employed for the past decade, which was articulated in the General
Issues Appendix, appended to Final Countervailing Duty Determination;
Certain Steel Products from Austria, 58 FR 37225 (July 9, 1993)
(``GIA''). In accordance with the Court's remand order, the Department
determined that the most reasonable method of deriving the allocation
period for nonrecurring subsidies is a company-specific average useful
life (``AUL'') of non-renewable physical assets. This remand
determination was affirmed by the Court on June 4, 1996. See British
Steel plc v. United States, 929 F.Supp 426, 439 (CIT 1996) (``British
Steel II''). Accordingly, the Department has applied this method to
those non-recurring subsidies that were not countervailed in the
investigation. However, for non-recurring subsidies received prior to
the POR and which have already been countervailed based on an
allocation period established in earlier segments of this proceeding,
it is neither reasonable nor practicable to reallocate those subsidies
over a different period of time. Therefore, for purposes of these
preliminary results, the Department is using the original allocation
period assigned to each non-recurring subsidy received prior to the
POR. This conforms with our approach in Certain Carbon Steel Products
from Sweden; Final Results of Countervailing Duty Administrative
Review, 62 FR 16549 (April 7, 1997).
For non-recurring subsidies received during the POR, each company
under review submitted an AUL calculation based on depreciation and
asset values of productive assets reported in its financial statements.
Each company's AUL was derived by dividing the sum of average gross
book value of depreciable fixed assets over the past 10 years by the
average depreciation charges over this period. We found this
calculation to be reasonable and consistent with our company-specific
AUL objective. We have used these calculated AULs for the allocation
period for non-recurring subsidies received during the POR.
Benefits to Mills: In cases where semolina (the input product to
pasta) and the subject merchandise were produced within a single
corporate entity, the Department has found that subsidies to the input
product benefit total sales of the corporation, including sales of the
subject merchandise, without conducting an upstream subsidy analysis.
(See, e.g., Final Affirmative Countervailing Duty Determination:
Certain Softwood Lumber Products from Canada, 57 FR 22570 (May 28,
1992); Final Affirmative Countervailing Duty Determination: Industrial
Phosphoric Acid from Israel, 52 FR 25447 (July 7, 1987); Final
Affirmative Countervailing Duty Determination: Certain Pasta from
Italy, 61 FR 30288, at 30292 (June 14, 1996) (``Pasta from Italy'').)
Where appropriate, we have also included sales of semolina in
calculating the ad valorem subsidy rate. However, for those companies
where the mill is separately incorporated from the producer of the
subject merchandise, we have not included subsidies for the milling
operations in our calculations.
Changes in Ownership
One of the companies under review, Delverde/Tamma, purchased an
existing pasta factory from an unaffiliated party. The previous owner
of the purchased factory had received non-recurring countervailable
subsidies prior to the transfer of ownership, which took place in 1991.
Consistent with our practice in Pasta First Review, we have calculated
the amount of the prior subsidies that passed through to Delverde with
the acquisition of the factory, following the spin-off methodology
described in the Restructuring section of the GIA, 58 FR at 37265.
[[Page 17620]]
Affiliated Parties
In Pasta First Review, we found that Delverde S.r.L. (``Delverde'')
and Tamma Industrie Alimentari, S.r.L. (``Tamma'') warrant treatment as
a single company with a combined rate due to the level of affiliation
between the two companies. In this review, the respondents have
provided no new information which would warrant a reconsideration of
this determination. Therefore, we calculated a single countervailing
duty rate for these companies by dividing their combined subsidy
benefits by their combined sales.
Analysis of Programs
I. Programs Preliminarily Determined to Confer Subsidies
A. Industrial Development Grants
1. Law 64/86 Benefits
Law 64/86 provided assistance to promote industrial development in
the Mezzogiorno (south of Italy). Grants were awarded to companies
constructing new plants or expanding or modernizing existing plants.
Pasta companies were eligible for grants to expand existing plants but
not to establish new plants, because the market for pasta was deemed to
be close to saturated. Grants were made only after a private credit
institution chosen by the applicant made a positive assessment of the
project.
In 1992, the Italian Parliament abrogated Law 64/86 and replaced it
with Law 488/92 (see 2, below). This decision became effective in 1993.
Projects approved prior to 1993, however, were authorized to receive
grant amounts after 1993. Delverde/Tamma and Riscossa benefitted from
industrial development grants under Law 64/86 during the POR.
In Pasta from Italy, the Department determined that these grants
provide a countervailable subsidy within the meaning of section 771(5)
of the Act. They provided a direct transfer of funds from the GOI
bestowing a benefit in the amount of the grant. Also, these grants were
found to be regionally specific within the meaning of section 771(5A)
of the Act. In this review, neither the GOI nor the responding
companies provided new information which would warrant reconsideration
of this determination.
In Pasta from Italy, the Department treated independent development
grants as ``non-recurring'' based on the analysis set forth in the
Allocation section of the GIA, 58 FR at 37226. In the current review,
we have found no reason to depart from this treatment. Therefore, we
have allocated those grants which exceeded 0.5 percent of a company's
sales in the year of receipt over time. (See GIA at 58 FR 37226.) To
calculate the countervailable subsidy, we used our standard grant
methodology. We divided the benefit attributable to each company in the
POR by its sales in the POR. Thus, we determine the countervailable
subsidy for these grants to be 2.18 percent ad valorem for Delverde/
Tamma and 0.74 percent ad valorem for Riscossa.
2. Law 488/92 Benefits
In 1986, the EU initiated an investigation of the GOI's regional
subsidy practices. As a result of this investigation, the GOI changed
the regions eligible for regional subsidies to include depressed areas
in central and northern Italy in addition to the Mezzogiorno. After
this change, the areas eligible for regional subsidies are the same as
those classified as Objective 1, Objective 2, and Objective 5(b) areas
by the EU (see III., below). The new policy was given legislative form
in Law 488/92 under which Italian companies in the eligible areas may
apply for industrial development grants. (Loans are not provided under
Law 488/92.) Law 488/92 was previously found countervailable in Final
Affirmative Countervail Duty Determination: Stainless Steel Plate in
Coils from Italy, 64 FR 15508, (March 31, 1999).
In the POR, Delverde/Tamma received grants under Law 488/92 for
modernization of its pasta factory and warehouse and the production of
pasta.
Based on information provided in the responses, we preliminarily
determine that grants under Law 488/92 provide a direct transfer of
funds from the GOI bestowing a benefit in the amount of the grant.
Also, we preliminarily find these grants to be regionally specific
within the meaning of section 771(5A) of the Act. We, therefore,
preliminarily determine that these grants provide a countervailable
subsidy within the meaning of section 771(5) of the Act.
We have determined that Law 488/92 grants are ``non-recurring''
based on the analysis set forth in the Allocation section of the GIA,
58 FR at 37226. In accordance with our practice, we have allocated
these grants, which exceeded 0.5 percent of Delverde/Tamma's sales in
the year of receipt, over time. (See GIA at 58 FR 37226.)
To calculate the countervailable subsidy, we used our standard
grant methodology. We divided Delverde/Tamma's benefit attributable to
the POR by the company's sales in the POR. Thus, we preliminarily
determine the countervailable subsidy for this program to be 0.23
percent ad valorem for Delverde/Tamma.
B. Industrial Development Loans Under Law 64/86
Law 64/86 also provided reduced rate industrial development loans
with interest contributions to companies constructing new plants or
expanding or modernizing existing plants in the Mezzogiorno. The
interest rate on these loans was set at the reference rate, with the
GOI's interest contributions serving to reduce this rate. For the
reasons discussed above, pasta companies were eligible for interest
contributions to expand existing plants but not to establish new
plants.
Delverde/Tamma received industrial development loans with interest
contributions from the GOI. These loans were outstanding during the
POR.
In Pasta from Italy, the Department determined that these loans
were countervailable subsidies within the meaning of section 771(5) of
the Act. They were a direct transfer of funds from the GOI providing a
benefit in the amount of the difference between the benchmark interest
rate and the interest rate paid by the companies after accounting for
the GOI's interest contributions. Also, they were found to be
regionally specific within the meaning of section 771(5A) of the Act.
In this review, neither the GOI nor the responding companies provided
new information which would warrant reconsideration of this
determination.
It is the Department's practice to measure the benefit conferred by
interest rebates using our loan methodology if the company knew in
advance that the government was likely to pay or rebate interest on the
loan at the time the loan was taken out. (See, e.g., Certain Steel from
Italy, 58 FR 37331 (July 9, 1993).) Because, in this case, the
recipients of the interest contributions knew, prior to taking out the
loans, that the GOI would be likely to provide the interest
contributions, we have allocated the benefit over the life of the loan
for which the contribution was received. We divided Delverde/Tamma's
benefit attributable to the POR by the company's sales in the POR. On
this basis, we preliminarily determine the countervailable subsidy for
this program to be 0.65 percent ad valorem for Delverde/Tamma.
C. Export Marketing Grants under Law 304/90
To increase market share in non-EU markets, Law 304/90 provides
grants to encourage enterprises operating in the food and agricultural
sectors to carry out pilot projects aimed at developing links
[[Page 17621]]
between Italian producers and foreign distributors, and improving
services in those markets. Emphasis is placed on assisting small-and
medium-sized producers.
In Pasta from Italy, the Department determined that the export
marketing grants under Law 304 provided countervailable subsidies
within the meaning of section 771(5) of the Act. The grants were a
direct transfer of funds from the GOI providing a benefit in the amount
of the grant. The grants were also found to be specific because their
receipt was contingent upon anticipated exportation. In this review,
neither the GOI nor the responding companies provided new information
which would warrant reconsideration of this determination.
Delverde/Tamma received a grant under this program for an export
sales pilot project in the United States prior to the POR.
Each project funded by Law 304/90 grants requires a separate
application and approval, and the projects represent one-time events in
that they involve an effort to establish warehouses, sales offices, and
a selling network in new overseas markets. Therefore, in Pasta from
Italy, the Department treated the grant received under this program as
``non-recurring'' based on the analysis set forth in the Allocation
section of the GIA, 58 FR at 37226. Further, the Department found that
the grant exceeded 0.5 percent of Delverde/Tamma's exports to the
United States in the year it was received. Therefore, in accordance
with our past practice, we allocated the benefits of this grant over
time. In this review, neither the GOI nor the responding companies
provided new information which would warrant reconsideration of this
determination.
To calculate the countervailable subsidy, we used our standard
grant methodology. We divided the benefit attributable to the POR by
Delverde/Tamma's exports to the United States in the POR. On this
basis, we preliminarily determine the countervailable subsidy to be
0.22 percent ad valorem for Delverde/Tamma.
D. Social Security Reductions and Exemptions
1. Sgravi Benefits
Pursuant to Law 1089 of October 25, 1968, companies located in the
Mezzogiorno were granted a 10 percent reduction in social security
contributions for all employees on the payroll as of September 1, 1968,
as well as those hired thereafter. Subsequent laws (e.g., Law 183/76,
Law 30/97 and Sgravi Unico) authorized companies located in the
Mezzogiorno to take additional reductions in social security
contributions for employees hired during later periods, provided that
the new hires represented a net increase in the employment level of the
company. The additional reductions ranged from 10 to 20 percentage
points. Further, for employees hired during the period July 1, 1976 to
November 30, 1991, companies located in the Mezzogiorno were granted a
full exemption from social security contributions for a period of 10
years, provided that employment levels showed an increase over a base
period.
In Pasta from Italy, the Department determined that the social
security reductions and exemptions were countervailable subsidies
within the meaning of section 771(5) of the Act. They represented
revenue foregone by the GOI and they conferred a benefit in the amount
of the savings received by the companies. Also, they were found to be
specific within the meaning of section 771(5A) of the Act because they
are limited to companies located in the Mezzogiorno. In this review,
neither the GOI nor the responding companies provided new information
which would warrant reconsideration of this determination.
Delverde/Tamma and Riscossa received social security reductions and
exemptions during the POR.
To calculate the countervailable subsidy, we divided each company's
savings in social security contributions during the POR by that
company's sales in the POR. On this basis, we preliminarily determine
the countervailable subsidy from this program to be 0.31 percent ad
valorem for Delverde/Tamma and 0.37 percent ad valorem for Riscossa.
2. Fiscalizzazione Benefits
In addition to the sgravi deductions described above, the GOI
provides social security benefits of another type, called
``fiscalizzazione.'' Fiscalizzazione is a nationwide measure which
provides a reduction of certain social security payments related to
health care or insurance. The program provides an equivalent level of
deductions throughout Italy for contributions related to tuberculosis,
orphans, and pensions. However, the program provides a higher deduction
from contributions to the National Health Insurance system for
manufacturing enterprises located in southern Italy compared to those
located in northern Italy. Until July 31, 1995, the differential was
6.16 percent of base salary after which it was reduced to five percent.
In 1996, the differential was reduced to four percent and it was
further reduced to three percent on January 1, 1997.
In Pasta from Italy, the Department determined that the
fiscalizzazione reductions were countervailable subsidies within the
meaning of section 771(5) of the Act for companies with operations in
southern Italy. They represented revenue foregone by the GOI and
conferred a benefit in the amount of the greater savings accruing to
companies in southern Italy. In addition, they were found to be
regionally specific within the meaning of section 771(5A) of the Act.
In this review, neither the GOI nor the responding companies provided
new information which would warrant reconsideration of this
determination.
Delverde/Tamma and Riscossa received the higher levels of
fiscalizzazione deductions available to companies located in the
Mezzogiorno during the POR.
To calculate the countervailable subsidy, we divided the excess
fiscalizzazione deductions realized by each company in the POR by that
company's sales in the POR. On this basis, we preliminarily determine
the countervailable subsidy from this program to be 0.07 percent ad
valorem for Delverde/Tamma and 0.21 percent ad valorem for Riscossa.
3. Law 407/90 Benefits
Law 407/90 grants a two-year exemption from social security taxes
when a company hires a worker who has been previously unemployed for a
period of two years or more. A 100 percent exemption was allowed for
companies in southern Italy. However, companies located in northern
Italy received only a 50 percent exemption.
In Pasta from Italy, the Department determined that the 100 percent
exemptions provided under Law 407/90 to companies with operations in
southern Italy were countervailable subsidies within the meaning of
section 771(5) of the Act. They represented revenue foregone by the GOI
and conferred a benefit in the amount of the greater savings accruing
to the companies in southern Italy. In addition, the exemptions were
found to be regionally specific within the meaning of section 771(5A)
of the Act. In this review, neither the GOI nor the responding
companies provided new information which would warrant reconsideration
of this determination.
Delverde/Tamma received the higher level of Law 407/90 deductions
available to companies located in the Mezzogiorno during the POR.
To calculate the countervailable subsidy, we divided the amount of
the
[[Page 17622]]
Law 407/90 exemption which exceeds the amount available in northern
Italy realized by Delverde/Tamma in the POR by the company's sales
during the same period. On this basis, we preliminarily determine the
countervailable subsidy from this program to be 0.00 percent ad valorem
for Delverde/Tamma.
4. Law 863 Benefits
Law 863 provides for a reduction of social security payments of 25
percent for companies in northern Italy whose employees are
participating in a training program. Companies in southern Italy
receive a 100 percent reduction in social security payments for such
employees.
In Pasta from Italy, the Department determined that Law 863
reductions were countervailable subsidies within the meaning of section
771(5) of the Act for companies with operations in southern Italy. They
represented revenue foregone by the GOI and confer a benefit in the
amount of the greater savings accruing to the companies in southern
Italy. In addition, they were found to be regionally specific within
the meaning of section 771(5A) of the Act. In this review, neither the
GOI nor the responding companies provided new information which would
warrant reconsideration of this determination.
Delverde/Tamma received the higher level of Law 863 deductions
available to companies located in the Mezzogiorno during the POR.
To calculate the countervailable subsidy, we divided the amount of
the Law 863 reductions which exceeds the amount available in northern
Italy realized by Delverde/Tamma in the POR by the company's sales in
that year. On this basis, we preliminarily determine the
countervailable subsidy from this program to be 0.17 percent ad valorem
for Delverde/Tamma.
E. Remission of Taxes on Export Credit Insurance under Article 33 of
Law 227/77
The Special Section for Export Credit Insurance (``SACE'') was
created under Article 2 of Law 227/77 as the branch of the GOI
responsible for the administration of government export credit
insurance and guarantee programs. Pursuant to Article 3 of Law 227/77,
SACE insures and reinsures political, catastrophic, economic,
commercial and exchange-rate risks which Italian operators are exposed
to in their foreign activities.
During the POR, only two private insurance companies, Societa
Italiana Crediti S.p.A. (``SIAC'') and La Viscontea S.p.A. (``LV''),
had reinsurance agreements with SACE. Under the reinsurance agreements,
the companies passed along a fixed percentage (i.e., 30 percent) of
their export credit insurance premia to SACE. In return, SACE assumed
that same percentage of risk on export credit insurance policies sold
by the companies (i.e., SACE would pay 30 percent of any claim for
which the companies would become liable).
Article 33 of Law 227/77 provides for the remission of insurance
taxes on policies directly insured or reinsured with SACE. For
reinsurance policies, this remission of insurance taxes applied not
only to the portion of the risk covered by SACE, but also the remaining
portion covered by the private insurance company. As a result, export
credit insurance policies sold by SIAC and LV during the POR were
totally exempt from the insurance tax by virtue of its reinsurance
agreement with SACE. Export credit insurance policies sold by other
private insurance companies, however, were not exempt from the
insurance tax. The insurance tax rate was 12.5 percent of premia paid.
In Pasta from Italy, we determined that the exemption from the
insurance tax for policies directly insured or reinsured with SACE was
a countervailable subsidy within the meaning of section 771(5) of the
Act. The exemption represents revenue foregone by the GOI and confers
tax savings on the companies. Also, because export credit insurance was
available only to exporters and was by its nature contingent upon
export performance, we found the remission of taxes on export credit
insurance to be specific within the meaning of section 771(5A) of the
Act. In this review, neither the GOI nor the responding companies
provided new information which would warrant reconsideration of this
determination.
Fabianelli obtained export credit insurance from SIAC for its
exports to the United States and, therefore, was exempted from the
insurance tax. To calculate the benefit, we multiplied the premia paid
by Fabianelli during the POR for exports to the United States by the
insurance tax rate and divided the amount by the company's total
exports to the United States in the POR. On this basis, we
preliminarily determine the countervailable subsidy from this program
to be 0.03 percent ad valorem for Fabianelli.
F. Export Restitution Payments
Since 1962, the EU has operated a subsidy program which provides
restitution payments to EU pasta exporters based on the durum wheat
content of their exported pasta products. Generally, under this
program, a restitution payment is available to any EU exporter of pasta
products, regardless of whether the pasta was made with imported wheat
or wheat grown within the EU. The amount of the restitution payment is
calculated by multiplying the prevailing restitution payment rate on
the date of exportation by the weight of the unmilled durum wheat used
to produce the exported pasta. The weight of the unmilled durum wheat
is calculated by applying a conversion factor to the weight of the
pasta. The EU calculates the restitution payment rate, on a monthly
basis, by first computing the difference between the world market price
of durum wheat and an internal EU price and then adding a monthly
increment (in all months except June and July, which are harvest
months). The EU will not normally allow the restitution payment rate to
be higher than the levy that the EU imposes on imported durum wheat, as
such a situation would lead to circular trade. Because there was no
significant price difference between the EU price and the world market
price on durum wheat in the POR, the restitution payment rate was zero
during the POR. However, export restitution payments were received in
the POR for shipments made prior to the POR. Fabianelli, Audisio, and
Riscossa received export restitution payments during the POR for
shipments to the United States.
In Pasta from Italy, the Department determined that export
restitution payments were countervailable subsidies within the meaning
of section 771(5) of the Act. Each payment represented a direct
transfer of funds from the EU providing a benefit in the amount of the
payment. The restitution payments were found to be specific because
their receipt is contingent upon export performance. In this review,
the GOI, the EU, and the responding companies did not provide new
information which would warrant reconsideration of this determination.
In accordance with our normal practice of recognizing subsidy
benefits when there is a cash-flow effect, we have calculated the
subsidy rate for export restitution benefits based on the amount
actually received during the POR. Export restitution benefits are not
``automatic'' in that their receipt is not certain until an application
has been filed. The amounts received, while generally quite close to
the amounts requested, do not always equal the amount indicated by the
company on its request form. Thus, we have calculated the subsidy rate
for export restitution benefits based on the amount actually received
during the POR.
[[Page 17623]]
To calculate the subsidy, we divided the export restitution
payments received by each company in the POR on shipments to the United
States by that company's pasta exports to the United States in the POR.
On this basis, we preliminarily determine the countervailable subsidy
from this program to be 0.22 percent ad valorem for Delverde/Tamma,
0.42 percent ad valorem for Fabianelli, 1.03 percent ad valorem for
Audisio, and 0.81 percent ad valorem for Riscossa.
III. Program For Which We Need More Information
European Social Fund--Objective 4
The European Social Fund (``ESF''), one of the Structural Funds of
the EU, was created under Article 123 of the Treaty of Rome to improve
employment opportunities for workers and to help raise their living
standards. There are six different objectives identified by the
Structural Funds: Objective 1 covers projects located in underdeveloped
regions: Objective 2 addresses areas in industrial decline; Objective 3
relates to the employment of persons under 25; Objective 4 funds
training for employees in companies undergoing industrial changes;
Objective 5 pertains to agricultural areas; and, Objective 6 pertains
to regions with very low population (i.e., the far north). The ESF
provides vocational training and employment aids.
In Pasta from Italy and Pasta First Review, the Department
determined that ESF grants were regionally specific and constituted
countervailable subsidies within the meaning of section 771(5) of the
Act because such grants were provided to companies located in Objective
1, Objective 2, and Objective 5(b) regions. During the POR of the
current review, Audisio received ESF assistance for training activities
through a provincial body pursuant to EEC Reg. 2081/93 Objective 4.
According to the responses, the training was funded by the ESF, the GOI
through its Rotational Fund, and other participants. In the Final
Affirmative Countervailing Duty Determination: Steel Wire Rod from
Italy, 63 FR 40474 (July 29, 1998) and Final Affirmative Countervailing
Duty Determination: Stainless Steel Plate in Coils from Italy, 64 FR
15508 (March 31, 1999), we altered the manner in which we determine the
specificity of ESF programs. Therein, we examined the specificity of
the funding under each Objective separately. However, we do not have
sufficient information on the record to determine the specificity of
the Objective 4 funding received by Audisio. Therefore, we have decided
to seek more information on this program before our final
determination.
IV. Programs Preliminarily Determined to Be Not Used
We examined the following programs and preliminarily determine that
the producers and/or exporters of the subject merchandise did not apply
for nor receive benefits under these programs during the POR:
A. Local Income Tax (``ILOR'') Exemptions
B. VAT Reductions
C. Lump-Sum Interest Payment Under the Sabatini Law for Companies in
Southern Italy
D. Export Credits Under Law 227/77
E. Capital Grants Under Law 675/77
F. Retraining Grants Under Law 675/77
G. Interest Contributions on Bank Loans Under Law 675/77
H. Interest Grants Financed by IRI Bonds
I. Preferential Financing for Export Promotion Under Law 394/81
J. Corporate Income Tax (``IRPEG'') Exemptions
K. Urban Redevelopment Under Law 181
L. Debt Consolidation Law 341/95
M. Grant Received Pursuant to the Community Initiative Concerning the
Preparation of Enterprises for the Single Market (``PRISMA'')
N. European Agricultural Guidance and Guarantee Fund (``EAGGF'')
O. European Regional Development Fund (``ERDF'')
Preliminary Results of Review
In accordance with 19 CFR 351.221(b)(4)(i), we calculated an
individual subsidy rate for each producer/exporter subject to this
administrative review. For the period January 1, 1997 through December
31, 1997, we preliminarily determine the net subsidy rates for
producers/exporters under review to be those specified in the chart
shown below. If the final results of this review remain the same as
these preliminary results, the Department intends to instruct Customs
to assess countervailing duties at these net subsidy rates.
The Department also intends to instruct Customs to collect cash
deposits of estimated countervailing duties at these rates on the
f.o.b. value of all shipments of the subject merchandise from the
producers/exporters under review entered, or withdrawn from warehouse,
for consumption on or after the date of publication of the final
results of this administrative review.
Because the URAA replaced the general rule in favor of a country-
wide rate with a general rule in favor of individual rates for
investigated and reviewed companies, the procedures for establishing
countervailing duty rates, including those for non-reviewed companies,
are now essentially the same as those in antidumping cases, except as
provided for in section 777A(e)(2)(B) of the Act. The requested reviews
will normally cover only those companies specifically named. See 19 CFR
351.213(b). Pursuant to 19 CFR 351.212(c), for all companies for which
a review was not requested, duties must be assessed at the cash deposit
rate, and cash deposits must continue to be collected, at the rate
previously ordered. As such, the countervailing duty cash deposit rate
applicable to a company can no longer change, except pursuant to a
request for a review of that company. See, Federal-Mogul Corporation
and The Torrington Company v. United States, 822 F.Supp. 782 (CIT 1993)
and Floral Trade Council v. United States, 822 F.Supp. 766 (CIT 1993)
(interpreting 19 CFR 353.22(e), the antidumping regulation on automatic
assessment, which is identical to 19 CFR 355.22(g), the predecessor to
19 CFR 351.212(c)). Therefore, the cash deposit rates for all companies
except those covered by this review will be unchanged by the results of
these review.
We will instruct Customs to continue to collect cash deposits for
non-reviewed companies, except Barilla G. e R. F.lli S.p.A.
(``Barilla'') and Gruppo Agricoltura Sana S.r.L. (``Gruppo'') (which
were excluded from the order during the investigation), at the most
recent company-specific or country-wide rate applicable to the company.
Accordingly, the cash deposit rates that will be applied to non-
reviewed companies covered by this order are those established in the
Notice of Countervailing Duty Order and Amended Final Affirmative
Countervailing Duty Determination: Certain Pasta (``Pasta'') from
Italy, 61 FR 38544 (July 24, 1996), the most recently published
countervailing duty rates for companies not reviewed in this
administrative review.
These rates shall apply to all non-reviewed companies until a
review of a company assigned these rates is requested. In addition, for
the period January 1, 1997 through December 31, 1997, the assessment
rates applicable to all non-reviewed companies covered by these orders
are the cash deposit rates in effect at the time of entry, except for
Barilla and Gruppo (which were excluded from the order during the
original investigation).
[[Page 17624]]
------------------------------------------------------------------------
Ad valorem
Company rate
------------------------------------------------------------------------
Delverde, S.r.L......................................... 4.05
Tamma Industrie Alimentari di Capitanata, S.r.L......... 4.05
Audisio Industrie Alimentari S.p.A...................... 1.03
Pastificio Fabianelli S.p.A............................. 0.45
Pastificio Riscossa F.lli Mastromauro S.r.L............. 2.13
------------------------------------------------------------------------
Public Comment
Interested parties may request a hearing not later than 30 days
after the date of publication of this notice. Interested parties may
submit written arguments in case briefs on these preliminary results
within 30 days of the date of publication. Rebuttal briefs, limited to
arguments raised in case briefs, may be submitted five days after the
time limit for filing the case brief. Parties who submit an argument in
this proceeding are requested to submit with the argument (1) a
statement of the issue, and (2) a brief summary of the argument. Any
hearing, if requested, will be held two days after the scheduled date
for submission of rebuttal briefs. Copies of case briefs and rebuttal
briefs must be served on interested parties in accordance with 19 CFR
351.303(f).
Parties to the proceeding may request disclosure of proprietary
information under administrative protective order no later than 10 days
after the representative's client or employer becomes a party to the
proceeding, but in no event later than the date the case briefs, under
19 CFR 351.309(c)(ii), are due.
The Department will publish the final results of this
administrative review, including the results of its analysis of issues
raised in any case or rebuttal briefs or at a hearing.
This administrative review and notice are in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: April 2, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-9050 Filed 4-9-99; 8:45 am]
BILLING CODE 3510-DS-P
