[Federal Register Volume 64, Number 108 (Monday, June 7, 1999)]
[Notices]
[Pages 30313-30316]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-14341]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-351-504]
Final Results of Expedited Sunset Review: Heavy Iron Construction
Castings From Brazil
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Final Results of Expedited Sunset Review: Heavy Iron
Construction Castings from Brazil.
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SUMMARY: On November 2, 1998, the Department of Commerce (``the
Department'') initiated a sunset review of the countervailing duty
order on heavy iron construction castings from Brazil (63 FR 58709)
pursuant to section 751(c) of the Tariff Act of 1930, as amended (``the
Act''). On the basis of a notice of intent to participate and
substantive comments filed on behalf of the domestic industry, as well
as inadequate response (in this case, no response) from respondent
interested parties, the Department determined to conduct an expedited
(120 day) review. As a result of this review, the Department finds that
termination of the countervailing duty order would be likely to lead to
continuation or recurrence of a countervailable subsidy. The net
countervailable subsidy and the nature of the subsidy are identified in
the ``Final Results of Review'' section of this notice.
FOR FURTHER INFORMATION CONTACT: Jason M. Appelbaum or Melissa G.
Skinner, Office of Policy for Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th & Constitution,
Washington, D.C. 20230; telephone: (202) 482-5050 or (202) 482-1560,
respectively.
EFFECTIVE DATE: June 7, 1999.
Statute and Regulations
This review was conducted pursuant to sections 751(c) and 752 of
the Act. The Department's procedures for the conduct of sunset reviews
are set forth in Procedures for Conducting Five-year (``Sunset'')
Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516
(March 20, 1998) (``Sunset Regulations'') and in 19 CFR Part 351 (1998)
in general. Guidance on methodological or analytical issues relevant to
the Department's conduct of sunset reviews is set forth in the
Department's Policy Bulletin 98:3--Policies Regarding the Conduct of
Five-year (``Sunset'') Reviews of Antidumping and Countervailing Duty
Orders; Policy Bulletin, 63 FR 18871 (April 16, 1998) (``Sunset Policy
Bulletin'').
Scope
The merchandise covered by this review are shipments of certain
heavy iron construction castings from Brazil. This merchandise is
defined as manhole covers, rings and frames; catch basin grates and
frames; and cleanout covers and frames. The DGO700 frame and the DG0641
grate from Southland Marketing are outside the scope of the order. This
merchandise is currently classifiable under item number 7325.10.00 of
the Harmonized Tariff Schedule (``HTS'') of the United States. The HTS
item number is provided for convenience and customs purposes only. The
written description remains dispositive.
History of the Order
On March 19, 1986, the Department issued a final affirmative
countervailing duty determination with respect to imports of certain
heavy iron construction castings from Brazil.1 The
countervailing duty order on heavy iron construction castings from
Brazil was published in the Federal Register on May 15, 1986 (51 FR
17786). In the final determination the Department found an estimated
net subsidy of 5.77 percent ad valorem during the review period based
on three programs: 2.85 percent under the preferential working-capital
financing for exports program; 1.86
[[Page 30314]]
percent under the income tax exemption for export earnings program; and
1.06 percent under the FINEX export financing program. However, the
cash deposit rate was adjusted to take into account program-wide
changes in the preferential working capital financing for exports
program, which reduced the program-specific subsidy from 2.85 percent
to 0.48 percent. On May 15, 1986, the Department issued a
countervailing duty order establishing the cash deposit rate at 3.40
percent ad valorem.2
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\1\ See Final Affirmative Countervailing Duty Determination;
Certain Heavy Iron Construction Castings From Brazil, 51 FR 9491
(March 19, 1986).
\2\ See Countervailing Duty Order; Certain Heavy Iron
Construction Castings From Brazil, 51 FR 17786 (May 15, 1986).
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Since the issuance of the order, the Department has conducted one
administrative review covering the period January 1, 1990 through
December 31, 1990, six programs, and the three companies that produced
and exported the subject merchandise to the United States.3
In the final results of administrative review, the Department
determined the benefit from the income tax reduction for export
earnings program was 0.33 percent. However, the Department also found
that Decree Law 8034 of April 12, 1990 eliminated this tax reduction
and, therefore, for purposes of cash deposits of estimated
countervailing duties, the Department determined the benefit from this
program to be zero. The Department also found that the CACEX
preferential working capital financing for exports program has been
terminated effective August 30, 1990, by Central Bank Resolution 1744.
Finally, the Department found that the FINEX export financing program
was not used by respondents during the period of review. The three
other programs reviewed by the Department were either not used or
eliminated.
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\3\ See Certain Heavy Iron Construction Castings From Brazil;
Final Results of Countervailing Duty Administrative Review and
Determination Not To Revoke the Countervailing Duty Order, 57 FR
2252 (January 21, 1992) and Certain Heavy Iron Construction Castings
From Brazil; Preliminary Results of Countervailing Duty
Administrative Review, 56 FR 58879 (November 22, 1991).
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This review covers all producers and exporters of heavy iron
construction castings from Brazil.
Background
On November 2, 1998, the Department initiated a sunset review of
the countervailing duty order on heavy iron construction castings from
Brazil (63 FR 58709), pursuant to section 751(c) of the Act. The
Department received a Notice of Intent to Participate on behalf of the
Municipal Castings Fair Trade Council (``MCFTC'') and its individual
members 4 (collectively ``the domestic parties''), on
November 17, 1998, within the deadline specified in section
351.218(d)(1)(i) of the Sunset Regulations. We received a complete
substantive response on behalf of the domestic parties on December 2,
1998, within the 30-day deadline specified in the Sunset Regulations
under section 351.218(d)(3)(i). The individual members of the MCFTC
claimed interested party status as manufacturers of domestic like
products and MCFTC claimed interested party status as a trade
association representing the domestic industry.
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\4\ The MCFTC is comprised of Allegheny Foundry Company, Bingham
& Taylor, Deeter Foundry Inc., East Jordan Iron Works, Inc., LeBaron
Foundry, Inc., Municipal Castings, Inc., Neenah Foundry Company,
Tyler Pipe, and U.S. Foundry & Manufacturing Co. Bingham & Taylor
and Tyler Pipe are manufacturers only of so-called ``light
castings'' and thus are not interested parties in the review of this
order, which covers only so-called heavy castings.
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The Department did not receive a substantive response from any
respondent interested party, including the Government of Brazil.
Therefore, pursuant to the regulations, the Department determined to
conduct an expedited review.
The Department determined that the sunset review of the
countervailing duty order on heavy iron construction castings from
Brazil is extraordinarily complicated. In accordance with section
751(c)(5)(C)(v) of the Act, the Department may treat a review as
extraordinarily complicated if it is a review of a transition order
(i.e., an order in effect on January 1, 1995). (See section
751(c)(6)(C) of the Act.) Therefore, on March 2, 1999, the Department
extended the time limit for completion of the final results of this
review until not later than June 1, 1999, in accordance with section
751(c)(5)(B) of the Act.5
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\5\ See Heavy Iron Construction Castings From Brazil: Extension
of Time Limit for Final Results of Five-Year Review, 64 FR 10992
(March 8, 1999).
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Determination
In accordance with section 751(c)(1) of the Act, the Department
conducted this review to determine whether termination of the
countervailing duty order would be likely to lead to continuation or
recurrence of a countervailable subsidy. Section 752(b) of the Act
provides that, in making this determination, the Department shall
consider the net countervailable subsidy determined in the
investigation and subsequent reviews, and whether any change in the
program which gave rise to the net countervailable subsidy has occurred
that is likely to affect that net countervailable subsidy. Pursuant to
section 752(b)(3) of the Act, the Department shall provide to the
International Trade Commission (``the Commission'') the net
countervailable subsidy likely to prevail if the order is revoked. In
addition, consistent with section 752(a)(6), the Department shall
provide to the Commission information concerning the nature of the
subsidy and whether the subsidy is a subsidy described in Article 3 or
Article 6.1 of the Subsidies Agreement.
The Department's determinations concerning continuation or
recurrence of a countervailable subsidy, the net countervailable
subsidy likely to prevail if the order is revoked, and nature of the
subsidy are discussed below. In addition, the domestic parties'
comments with respect to each of these issues are addressed within the
respective sections.
Continuation or Recurrence of a Countervailable Subsidy
Drawing on the guidance provided in the legislative history
accompanying the Uruguay Round Agreements Act (``URAA''), specifically
the Statement of Administrative Action (``the SAA''), H.R. Doc. No.
103-316, vol. 1 (1994), the House Report, H.R. Rep. No. 103-826, pt.1
(1994), and the Senate Report, S. Rep. No. 103-412 (1994), the
Department issued its Sunset Policy Bulletin providing guidance on
methodological and analytical issues, including the basis for
likelihood determinations. The Department clarified that determinations
of likelihood will be made on an order-wide basis (see section III.A.2
of the Sunset Policy Bulletin). Additionally, the Department normally
will determine that revocation of a countervailing duty order is likely
to lead to continuation or recurrence of a countervailable subsidy
where (a) a subsidy program continues, (b) a subsidy program has been
only temporarily suspended, or (c) a subsidy program has been only
partially terminated (see section III.A.3.a of the Sunset Policy
Bulletin). Exceptions to this policy are provided where a company has a
long record of not using a program (see section III.A.3.b of the Sunset
Policy Bulletin).
In addition to considering guidance on likelihood provided in the
Sunset Policy Bulletin and legislative history, section 751(c)(4)(B) of
the Act provides that the Department shall determine that revocation of
an order is likely to lead to continuation or recurrence of a
countervailable subsidy where a respondent interested party waives its
participation in the sunset review. Pursuant to the SAA, at 881, in a
review
[[Page 30315]]
of a countervailing duty order where the foreign government has waived
participation, the Department shall conclude that revocation of the
order would be likely to lead to continuation or recurrence of a
countervailable subsidy for all respondent interested
parties.6 In the instant review, the Department did not
receive a substantive response from the foreign government or from any
other respondent interested party. Pursuant to section
351.218(d)(2)(iii) of the Sunset Regulations, this constitutes a waiver
of participation.
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\6\ See also 19 CFR 351.218(d)(2)(iv).
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In their substantive response, the domestic parties argue that it
is likely that a countervailable subsidy would continue to be provided
to manufacturers and exporters of the subject merchandise if the
countervailing duty order were revoked. (See December 2, 1998
Substantive Response of the domestic parties at 42.) The domestic
parties argue that, even though the Department, in the lone
administrative review of this order, found a de minimis net
countervailable subsidy, this alone is not sufficient grounds to
conclude that there is no likelihood of continuation or recurrence of a
countervailable subsidy. Citing to the SAA at 888, the domestic parties
assert that the Department must carefully examine the legal method by
which the Government of Brazil terminated any of its subsidy programs.
(See Substantive Response of the domestic parties at 49-50.)
The domestic parties argue that, with respect to at least one
program (preferential working capital financing for exports),
termination was accomplished through administrative action rather than
a legislative measure. The domestic parties argue that this is
precisely the type of circumstance recognized by the SAA as one in
which a program may more likely be reinstated.
The Sunset Policy Bulletin, at section III.A.3.a, states that,
consistent with the SAA at 888, continuation of a program will be
highly probative of the likelihood of continuation or recurrence of
countervailable subsidies. Temporary suspension or partial termination
of a subsidy program also will be probative of continuation or
recurrence of countervailable subsidies, absent significant evidence to
the contrary. Additionally, the Sunset Policy Bulletin provides that,
where a program has been officially terminated by the foreign
government, this will be probative of the fact that the program will
not continue or recur if the order is revoked. (See Sunset Policy
Bulletin at section III.A.5.)
As noted above, the Department, in its final affirmative
determination, determined that Brazilian producers of castings were
benefitting from three countervailable subsidy programs. In the lone
administrative review of the order, the Department found that two of
the original three programs had since been terminated. Additionally,
the Department also found two other programs that had not previously
been used by producers of castings to be terminated. Finally, the
Department found that the third of the original three programs was not
used during the review period.
As noted in the Sunset Policy Bulletin, where a foreign government
has eliminated a subsidy program, the Department will consider the
legal method by which the government eliminated the program and whether
the government is likely to reinstate the program. With respect to the
income tax exemption for export earnings program, the program was
eliminated by Decree Law 8034. Therefore, since this program was
terminated through legislative action we find that this program was
eliminated and cannot easily be reinstated. With respect to the
preferential working capital financing for exports program, we agree
with the domestic parties that the program was terminated by Central
Bank resolution. Loans made under this program were authorized by
resolution of the Central Bank. Therefore, we determine that
termination of this program by Central Bank resolution is sufficient
for us to consider this program terminated and that it cannot be easily
reinstated. Further, we note that, although the domestic parties
requested that we consider whether the preferential working capital
financing for exports program may be easily reinstated, they offered no
reason to believe that the program has, or will be reinstated.
Therefore, for purposes of this review, we determine that both of these
programs have been eliminated.
On the basis of information submitted during this sunset review,
however, we have no reason to believe that the FINEX export financing
program has been eliminated. The SAA, at 888, states that continuation
of a program will be highly probative of the likelihood of continuation
or recurrence of countervailable subsidies. Additionally, as noted
above, according to the Sunset Regulations, where the foreign
government has waived participation in the review, the Department will
normally determine that revocation of the countervailing duty order
will likely lead to continuation or recurrence of a countervailable
subsidy. Therefore, absent significant evidence to the contrary, and
because the foreign government has waived participation in this review,
we find that revocation of the countervailing duty order would likely
result in the continuation or recurrence of countervailable subsidies.
Net Countervailable Subsidy
In the Sunset Policy Bulletin, the Department stated that,
consistent with the SAA and House Report, ``the Department normally
will select a rate `from the investigation, because that is the only
calculated rate that reflects the behavior of exporters and foreign
governments without the discipline of an order or suspension agreement
in place.' '' The Department went on to clarify that this rate may not
be the most appropriate if, for example, the rate was derived from
subsidy programs which were found in subsequent reviews to be
terminated, there has been a program-wide change, or the rate ignores a
program found to be countervailable in a subsequent review (see section
III.B.3).
Citing to the SAA at 890 and the Sunset Policy Bulletin, the
domestic parties suggested that the Department select the 5.77 percent
subsidy rate from the original investigation because it is the only
calculated rate that reflects the behavior of exporters and foreign
governments without the discipline of the order in place. We disagree
with the domestic parties. Rather, consistent with the Sunset Policy
Bulletin and SAA, we have taken the termination of programs into
account. Because the income tax reduction for export earnings and the
CACEX preferential working capital financing programs were found to be
terminated, we have adjusted the original countervailing duty rate to
reflect these terminations. Further, Brazilian exporters/producers of
castings have not been found to have benefitted from any additional
countervailable programs. Therefore, the Department determines that the
net countervailable subsidy likely to prevail if the order were revoked
is the rate attributed to the FINEX export financing program as
determined in the original investigation. The net countervailable
subsidy that will be reported to the Commission is contained in the
Final Results of Review section of this notice.
Nature of the Subsidy
In the Sunset Policy Bulletin, the Department stated that,
consistent with section 752(a)(6) of the Act, the Department will
provide information to the Commission concerning the nature of the
subsidy and whether the subsidy
[[Page 30316]]
is a subsidy described in Article 3 or Article 6.1 of the Subsidies
Agreement. The domestic parties did not specifically address this
issue.
Because receipt of benefits provided under the FINEX Export
Financing by the Fundo de Financiamento a Exportacao program are
contingent upon exports, this program falls within the definition of an
export subsidy under Article 3.1(A) of the Subsidies Agreement.
Final Results of Review
As a result of this review, the Department finds that revocation of
the countervailing duty order would be likely to lead to continuation
or recurrence of a countervailable subsidy at the rates listed below:
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Margin
Manufacturer/exporters (percent)
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All producers/manufacturers/exporters...................... 1.06
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This notice serves as the only 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 CFR 351.305 of the Department's regulations.
Timely notification of return/destruction of APO materials or
conversion to judicial protective order is hereby requested. Failure to
comply with the regulations and terms of an APO is a sanctionable
violation.
This five-year (``sunset'') review and notice are in accordance
with sections 751(c), 752, and 777(i)(1) of the Act.
Dated: June 1, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-14341 Filed 6-4-99; 8:45 am]
BILLING CODE 3510-DS-P
