E6-9007. Certain Pasta from Turkey: Preliminary Results of Countervailing Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce is conducting an administrative review of the countervailing duty order on certain pasta from Turkey for the period January 1, 2004, through December 31, 2004. We have preliminarily determined that Gidasa Sabanci Gida Sanayi ve Ticaret A.S. did not receive countervailable subsidies during the period of review. If the final results remain the same as these preliminary results, we will instruct U.S. Customs and Border Protection to liquidate without regard to countervailing duties, as detailed in the “Preliminary Results of Review” section of this notice. Interested parties are invited to comment on these preliminary results (see the “Public Comment” section of this notice).

EFFECTIVE DATE:

June 9, 2006.

FOR FURTHER INFORMATION CONTACT:

Brandon Farlander or Audrey Twyman, AD/CVD Operations, Office 1, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone [phone] and [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On July 24, 1996, the Department of Commerce (“the Department”) published in the Federal Register the countervailing duty order on certain pasta from Turkey. See Notice of Countervailing Duty Order: Certain Pasta from Turkey, 61 FR 38546 (July 24, 1996). On July 1, 2005, the Department published in the Federal Register, a notice of “Opportunity to Request Administrative Review” of this countervailing duty order. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 70 FR 38099 (July 1, 2005). We received one request for review on July 29, 2005, and initiated the review for calendar year 2004, on August 29, 2005. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 70 FR 51009 (August 29, 2005). In accordance with 19 CFR 351.213(b), this review of the order covers Gidasa Sabanci Gida Sanayi ve Ticaret A.S. (“Gidasa”).

On September 8, 2005, we issued countervailing duty questionnaires to the Government of Turkey and Gidasa. We received responses to our questionnaires on November 14 and 17, 2005, and issued supplemental questionnaires on January 31, 2006. Responses to the supplemental questionnaires were received on February 23, and March 17, 2006.

On March 14, 2006, the Department postponed the preliminary results of review until June 5, 2006. See Certain Pasta from Turkey: Extension of Time Limit for Preliminary Results of the Countervailing Duty Administrative Review, 71 FR 13966 (March 20, 2006).

On April 5, 2006, we provided Gidasa an opportunity to place information on the record concerning the world market price for durum wheat, and international freight rates. We received Gidasa's submission on April 17, 2006.

Scope of Order

Covered by the order 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 order is typically sold in the retail market, in fiberboard or cardboard cartons or polyethylene or polypropylene bags, of varying dimensions.

Excluded from the order 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.

The merchandise under review is currently classifiable under subheading 1902.19.20 of the Harmonized Tariff Schedule of the United States (“HTSUS”). Although the HTSUS subheading is provided for convenience and customs purposes, our written description of the scope of the order is dispositive.

Scope Ruling

To date, the Department has issued the following scope ruling:

On October 26, 1998, the Department self-initiated a scope inquiry to determine whether a package weighing over five pounds as a result of allowable industry tolerances may be within the scope of the countervailing duty order. On May 24, 1999, we issued a final scope ruling finding that, effective October 26, 1998, pasta in packages weighing or labeled up to (and including) five pounds four ounces is within the scope of the countervailing duty order. See Memorandum from John Brinkman to Richard Moreland, dated May 24, 1999, which is on file in the Central Records Unit (“CRU”) in Room B-099 of the main Commerce building.

Period of Review

The period of review (“POR”) for which we are measuring subsidies is from January 1, 2004, through December 31, 2004.

Analysis of Programs

I. Programs Preliminarily Determined To Not Provide a Countervailable Benefit

1. Purchases of Domestic Wheat from the Turkish Grain Board (“TMO”) under Decree 2003/5468

There are three main ways for Turkish pasta producers to obtain wheat for semolina pasta: (1) from the TMO, (2) from local growers and traders, or (3) through imports. Prices for wheat in Turkey are set above world market prices as part of a price support scheme benefitting domestic wheat growers. However, companies holding an Inward Processing License can obtain lower priced wheat (when compared to the equivalent domestic-priced wheat) by purchasing Turkish wheat from the TMO under Decree 2003/5468, and using the wheat to produce products for export. The Government of Turkey and Gidasa have stated that the price of wheat purchased under Decree 2003/5468 is at or above the world market price, as measured by the price from international tender auctions held by the TMO to sell Turkish wheat to foreign buyers. To purchase wheat, companies using Inward Processing Licenses must consume the wheat in the production of pasta for export only.

Under this program, the Government of Turkey provides a financial contribution per section 771(5)(D)(iii) of the Tariff Act of 1930, as amended (“the Act”), by providing a good (durum wheat). This program is specific per section 771(5A)(B) of the Act because it is contingent upon export performance. A benefit exists to the extent that the wheat is being provided on more favorable terms than the terms applicable to the provision of like or directly competitive products for use in the production of goods for domestic consumption, unless such terms or conditions are not more favorable than those commercially available on world markets to exporters. The world market price must be inclusive of delivery charges. 19 CFR 351.516(a)(1) and (2).

In response to our request for information, Gidasa provided arguments concerning world market prices and delivery charges for purposes of determining whether a benefit exists under this program. Concerning delivery charges, Gidasa argues that the Department should use a freight rate that closely resembles the actual freight paid on imports of durum wheat into Turkey. In this regard, the Government of Turkey provided import data showing that imports of durum wheat into Turkey during the POR came only from European Union countries. Therefore, Gidasa argues, the delivery charge should reflect freight from countries in close proximity to Turkey. Gidasa could not find publicly available freight rates from countries near Turkey. Instead, Gidasa provided U.S. import statistics for durum wheat. These statistics show international freight for shipments of durum wheat from Canada to the United States.

Concerning the world market price of durum wheat, the Government of Turkey has reported details on the single auction sale that it made in 2004 to an international purchaser. This sale could also be considered to provide a world market price because we are satisfied that it was an open and fair auction. However, Gidasa has argued that the wheat sold at this auction was durum grade 1, whereas the wheat it purchased under Decree 2003/5468 was durum grades 2 and 3. The quality differences between the grade 1 durum sold internationally and the grades purchased by Gidasa makes a simple unadjusted price comparison inappropriate, according to Gidasa.

Gidasa points instead to U.S. import statistics as providing the most specific world market prices of durum wheat. In particular, only U.S. import statistics distinguish between grades 1 and 2 durum wheat. Therefore, Gidasa argues that the Department should compare the prices Gidasa paid for grades 2 and 3 durum wheat, to the average 2004 import price of durum grade 2 wheat (HTSUS subheading 1001.10.00.96) from the U.S. import statistics.

For these preliminary results, we agree with Gidasa that the delivery charges should reflect the specific characteristics of the Turkish trade in durum wheat. Like Gidasa, we have been unable to find publicly available freight rates for durum wheat shipments to Turkey from nearby countries and, therefore, we preliminarily used the delivery charges from Canada to the United States.

Regarding the selection of a world market price, the Department finds that it does not matter whether we use the U.S. import statistics for durum grade 2 (as suggested by Gidasa), or the international auction price (as we did in the preceding review) as the world market price. (The Department has been unable to find any additional grade specific data.) The result is the same in that the Department finds that the prices that Gidasa paid for wheat purchased under Decree 2004/5468 in the POR were higher than world market prices, inclusive of delivery charges. Therefore, we preliminarily find that this program does not confer a countervailable benefit. See Memorandum to the File, “Calculations for the Preliminary Results for Gidasa Sabanci Gida Sanayi ve Ticaret A.S.” (June 5, 2006).

II. Programs Preliminarily Determined To Be Not Used

1. VAT Support for Domestic Machinery and Equipment Purchases

2. Pre-Shipment Export Loans

3. Resource Utilization Support Fund (“KKDF”) Tax Exemption on Export-Related Loans

4. Banking and Insurance (“BIST”) Tax Exemption on Export-Related Loans

5. Normal Foreign Currency Export Loans

6. GIEP

a. Additional Refunds of VAT

b. Postponement of VAT on Imported Goods

c. Exemption from Certain Taxes, Duties, Fees (Other Tax Exemptions)

d. Exemption from Certain Customs Duties and Fund Levies

e. Payment of Certain Obligations of Firms Undertaking Large Investments

f. Subsidized Turkish Lira Credit Facilities

g. Land Allocation

h. Interest Spread Return Program

i. Energy Support

7. Exemption from Mass Housing Fund Levy (Duty Exemptions)

8. Direct Payments to Exporters of Wheat Products to Compensate for High Domestic Input prices

9. Export Credit Through Foreign Trade Corporate Companies Credit Facility

10. Pasta Export Grants

11. Corporate Tax Deferral

12. Subsidized Credit for Proportion of Fixed Expenditures

13. Subsidized Credit in Foreign Currencies

14. Subsidized Turkish Lira Credit Facilities

15. Exemption from Mass Housing Fund Levy (Duty Exemptions)

16. Performance Foreign Currency Loans

Preliminary Results of Review

For the period January 1, 2004, through December 31, 2004, we preliminarily determine the net subsidy rate for Gidasa to be that specified in the chart shown below. If the final results of this review remain the same as these preliminary results, the Department will instruct U.S. Customs and Border Protection (“CBP”) to liquidate all entries without regard to countervailing duties.

The Department also intends to instruct CBP to collect cash deposits of estimated countervailing duties at the rate below on the FOB value of all shipments of the subject merchandise from Gidasa that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this administrative review.

Company	Ad valorem rate
Gidasa Sabanci Gida Sanayi ve Ticaret A.S.	0.00 percent

The calculations will be disclosed to the interested parties in accordance with 19 CFR 351.224(b).

For companies that were not named in our notice initiating this administrative review, the Department has directed CBP to assess countervailing duties on all entries between January 1, 2004, and December 31, 2004, at the rates in effect at the time of entry.

For all non-reviewed firms, we will instruct CBP to collect cash deposits of estimated countervailing duties 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: Certain Pasta (“Pasta”) From Turkey, 61 FR 38546 (July 24, 1996), or the company-specific rate published in the most recent final results of an administrative review in which a company participated. These rates shall apply to all non-reviewed companies until a review of a company assigned these rates is requested.

Public Comment

Interested parties may submit written arguments in case briefs within 30 days of the date of publication of this notice. Rebuttal briefs, limited to issues raised in case briefs, may be filed not later than five days after the date of filing the case briefs. Parties who submit briefs in this proceeding should provide a summary of the arguments not to exceed five pages and a table of statutes, regulations, and cases cited. Copies of case briefs and rebuttal briefs must be served on interested parties in accordance with 19 CFR 351.303(f).

Interested parties may request a hearing within 30 days after the date of publication of this notice. Any hearing, if requested, will be held two days after the scheduled date for submission of rebuttal briefs.

Representatives of 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 are due. See 19 CFR 351.309(c)(ii).

The Department will publish a notice of the final results of this administrative review within 120 days from the publication of these preliminary results.

This administrative review and notice are in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: June 5, 2006.

David M. Spooner,

Assistant Secretary for Import Administration.