[Federal Register Volume 64, Number 145 (Thursday, July 29, 1999)]
[Notices]
[Pages 41089-41092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19444]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-333-401]
Preliminary Results of Full Sunset Review: Cotton Shop Towels
From Peru
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of full Sunset Review: Cotton
shop towels from Peru.
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SUMMARY: On January 4, 1999, the Department of Commerce (``the
Department'') initiated a sunset review of the suspended countervailing
duty investigation on cotton shop towels from Peru (64 FR 364) 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 filed on behalf of
the domestic industry and adequate substantive comments filed on behalf
of both the domestic industry and respondent interested parties, the
Department is conducting a full review. As a result of this review, the
Department preliminarily finds that termination of the suspended
countervailing duty investigation would not likely lead to continuation
or recurrence of a countervailable subsidy.
FOR FURTHER INFORMATION CONTACT: Scott E. Smith or Melissa G. Skinner,
Office of Policy for Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street & Constitution
Avenue NW, Washington, D.C. 20230; telephone: (202) 482-6397 or (202)
482-1560, respectively.
EFFECTIVE DATE: July 29, 1999.
Statute and Regulations
This review is being 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 subject to this suspended countervailing duty
investigation is cotton shop towels from Peru. Shop towels are
absorbent industrial wiping cloths made from a loosely woven fabric.
Shop towels are currently classifiable under item numbers 6307.10.2005
and 6307.10.2015 of the Harmonized Tariff Schedule of the United States
(``HTSUS''). Although the HTSUS subheadings are provided for
convenience and customs purposes, the written description remains
dispositive.
History of the Order
On June 21, 1984, the Department issued an affirmative preliminary
determination in the countervailing duty investigation on cotton shop
towels from Peru (49 FR 26273). The Department preliminarily found a
net bounty or grant of 44 percent ad valorem based on the certificate
of tax rebate (CERTEX) and non-traditional export fund (FENT).
On September 12, 1984, the Department suspended the countervailing
duty investigation on the basis of an agreement between the Department
and Fabrica de Tejidos La Union Limitada, S. A. (``La Union'') and
Santa Cecilia Compania Textil, S.A. (``Santa Cecilia'') to cease
exports of the subject merchandise to the United States (49 FR 35835).
No final determination was issued in this case and the Department has
not conducted an administrative review.
Beginning in 1989, the Department began publishing notices of
intent to terminate the suspended investigation. However, on the basis
of objections by Milliken & Company (``Milliken''), the Department has
not terminated the suspended investigation.\1\
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\1\ See Cotton Shop Towels from Peru; Intent to Terminate
Suspended Investigation, 54 FR 38262 (September 15, 1989); Cotton
Shop Towels from Peru; Determination Not to Terminate Suspended
Investigation, 54 FR 43977 (October 30, 1989); Cotton Shop Towels
from Peru; Intent to Terminate Suspended Investigation, 55 FR 35921
(September 4, 1990); Cotton Shop Towels from Peru; Determination Not
to Terminate Investigation, 55 FR 43994 (October 29, 1990); Cotton
Shop Towels from Peru; Intent to Terminate Suspended Investigation,
57 FR 39391 (August 31, 1992); Cotton Shop Towels from Peru;
Determination Not to Terminate Suspended Investigation, 57 FR 52614
(November 4, 1992); Cotton Shop Towels from Peru; Intent to
Terminate Suspended Investigation, 59 FR 45261 (September 1, 1994);
Cotton Shop Towels from Peru; Intent to Terminate Suspended
Investigation, 61 FR 40408 (August 2, 1996); Cotton Shop Towels from
Peru; Intent to Terminate Suspended Investigation, 61 FR 41128
(August 7, 1996); Cotton Shop Towels from Peru; Determination Not to
Terminate Suspended Investigation, 61 FR 47885 (September 11, 1996).
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Background
On January 4, 1999, the Department initiated a sunset review of the
suspended countervailing duty investigation on cotton shop towels from
Peru (64 FR 364), pursuant to section 751(c) of the Act. The Department
received an Entry of Appearance from Milliken on January 19, 1999,
within the deadline specified in section 351.218(d)(1)(i) of the Sunset
Regulations.
The Department received complete substantive responses from the
Government of Peru, the Comite Textil--Sociedad Nacional de Industrias
(``Comite Textil'') and from Milliken on February 10, 1999, within the
deadline specified in the Sunset Regulations under section
351.218(d)(3)(i).\2\
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\2\ On February 3, 1999, the Department received and granted a
request from the Government of Peru for a five working-day extension
of the deadline for filing substantive responses in this sunset
review. This extension was granted for all participants eligible to
file substantive comments in this review. The deadline for filing
rebuttals to the substantive comments therefore became February 10,
1999.
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In its substantive response, Milliken claimed interested party
status under section 19 U.S.C. 1677(9)(C), as a domestic producer of
shop towels. Further, Milliken stated that it was the sole petitioner
in the original investigation of shop towels from Peru and had
participated as a domestic producer interested party in the proceeding
since 1984.
In its substantive response, the Comite Textil stated that it is a
Peruvian trade association whose members are textile manufacturers,
producers, and exporters. The Comite Textil claimed interested party
status under section 771(9) of the Act. Moreover, two of the Comite
Textil's members, La Union and Santa Cecilia, are the two Peruvian
[[Page 41090]]
companies that signed the suspension agreement. In addition, the
Government of Peru claimed interested party status under section
771(9)(B) of the Act, as a government of the country where subject
merchandise is produced and from which it is exported. The Peruvian
government stated that it has, in the past, submitted responses to the
Department with regard to this suspended countervailing duty
investigation.
Because the responses of the Comite Textil and the Peruvian
government constituted an adequate response to the notice of
initiation, the Department is conducting a full (240 day) review in
accordance with section 351.218(e)(2) of the Sunset Regulations.
On February 19, 1999, the Department received rebuttal comments
from both Milliken and the Comite Textil. \3\
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\3\ On February 11, 1999, the Department received and granted a
request from the Comite Textil for a five working-day extension of
the deadline for filing rebuttal comments in this sunset review.
This extension was granted for all participants eligible to file
rebuttal comments in this review. The deadline for filing rebuttals
to the substantive comments therefore became February 19, 1999.
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The Department determined that the sunset review of the suspended
countervailing duty investigation on cotton shop towels from Peru 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 April 26, 1999, the Department extended the time limit
for completion of the preliminary results of this review until not
later than July 23, 1999, in accordance with section 751(c)(5)(B) of
the Act.\4\
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\4\ See Sugar From the European Community: Extension of Time
Limit for Preliminary Results of Five-Year Review, 64 FR 3683
(January 25, 1999).
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Determination
In accordance with section 751(c)(1) of the Act, the Department is
conducting this review to determine whether termination of the
suspended countervailing duty investigation 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 suspended
investigation is terminated. In addition, consistent with section
752(a)(6), the Department shall provide 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 preliminary determinations concerning continuation
or recurrence of a countervailable subsidy, the net countervailable
subsidy likely to prevail if the suspended investigation is terminated,
and nature of the subsidy are discussed below. In addition, parties'
comments with respect to each of these issues are addressed within the
respective sections.
Continuation or Recurrence of a Countervailable Subsidy
Parties' Comments
In its substantive response, Milliken argued that termination of
the suspended investigation on cotton shop towels from Peru would
likely result in the recurrence of a countervailable subsidy on the
subject merchandise from Peru (see Substantive Response of Milliken,
February 10, 1999, at 3). Milliken maintained that, to the best of its
knowledge, there is no evidence that the programs in question (the
CERTEX and FENT programs) have been suspended or terminated beyond the
partial termination announced by the Peruvian Ambassador in the
original proceedings (see Substantive Response of Milliken, February
10, 1999, at 5).\5\
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\5\ During the original investigation, the Peruvian Ambassador
to the United States informed the Department that on June 17, 1984,
the Peruvian government promulgated Supreme Decree No. 251-84-EFC
eliminating cotton shop towel exports to the U.S. from eligibility
for the CERTEX and FENT programs (see 49 FR 26273 at 26275).
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Additionally, Milliken maintained that the cessation of imports
into the U.S. of cotton shop towels from Peru indicates that the
Peruvian exporters cannot export to the U.S. without the benefit of
countervailable subsidies (see Substantive Response of Milliken,
February 10, 1999, at 5). According to Milliken, the most recent
information reflects the continued non-existence of imports into the
United States of cotton shop towels from Peru.
Milliken argued, therefore, that on the basis of the principles set
out in the Sunset Policy Bulletin and the SAA, there is a clear case
for a determination of likelihood of continuation or recurrence of a
countervailable subsidy.
The Comite Textil argued in its substantive response that the
subsidy programs at issue--indeed all countervailable subsidy
programs--have been eliminated by the Government of Peru and there is
neither need nor justification for the suspension agreement (see
Substantive Response of the Comite Textil, February 10, 1999, at 3).
The Comite Textil stated that support for the statement that all
countervailable subsidies have been eliminated was presented during the
1994 verification conducted in Peru by the Department in the
administrative review of Cotton Yarn from Peru (C-333-002), a
countervailing duty order that was subsequently revoked on August 9,
1995 (see Substantive Response of the Comite Textil, February 10, 1999,
at 2). The Comite Textil stated that Legislative Decree No. 622,
published November 30, 1990, eliminated the CERTEX program. The Comite
Textil further stated that a directive from the Central Reserve Bank of
Peru to all other banks (Circular No. 032-91-EF/90, dated September 13,
1991) eliminated all FENT lines of credit as of January 1, 1992, and
thereby ended the FENT program. The Comite Textil and the Peruvian
government included in their substantive responses a copy of the
decree, with translation of relevant excerpts and circular (see
Substantive Response of the Comite Textil, February 10, 1999, the
Declaration of the Ambassador of Peru, and attachments 1-3).
Furthermore, the Comite Textil stated that independent confirmation
of the elimination of these programs was part of a larger permanent
change in Peruvian Government policy can be found in the 1994 report
prepared by the World Bank. The full report of the World Bank's 1994
independent audit of two Peruvian loans was provided in the substantive
response. Finally, the Comite Textil provided a copy of Peru's
Constitution, adopted December 29, 1993, and stated that the
Constitution establishes the strict policy of commercial openness and
free competition as a critical part of the economic framework of the
country.
Parties' Rebuttal Comments
In its rebuttal comments, Milliken argued that although the
respondents asserted that the CERTEX and FENT programs have been
eliminated, they did not submit specific evidence that all subsidy
programs from which Peruvian exporters of shop towels can potentially
benefit have been eliminated or that Peruvian shop towel manufacturers
are not eligible for such programs. Milliken asserted that this is
important because
[[Page 41091]]
the Department has found that a number of other Peruvian programs
confer countervailable subsidies in other countervailing duty
investigations. Specifically, Milliken referred to the granting of tax
incentives for investments outside the Department of Lima or the
Province of Callao under the 1982 Industrial Law, as well as an
employment benefit for decentralized companies under Article 8 of
Decree 22836.\6\ Additionally, Milliken stated that the Government of
Peru acknowledged the existence of an export insurance program (SECREX)
in its July 28, 1994, response to Supplementary Questionnaire in the
countervailing duty proceeding on cotton yarn from Peru.
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\6\ Milliken cites to Deformed Steel Concrete Reinforcing Bar
from Peru, 50 FR 48819, and Certain Textile Mill Products and
Apparel from Peru, 50 FR 9871.
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In their rebuttal comments, the Comite Textil stated that its
substantive response included clear-cut documentary evidence of the
complete repeal of the countervailable subsidy programs identified in
the suspended investigation of cotton shop towels from Peru. Further,
the Comite Textile asserted that the February 10, 1999, Declaration of
Ambassador Ricardo Luna (also attached to its substantive response)
makes clear that the Peruvian Government's commitment to
nonintervention in its free market economy and rejection of subsidy
programs has continued without interruption for nearly a decade to the
present. Finally, the Comite Textile stated that these principles,
which are embedded in the Constitution, are also integral to Peru's
international undertakings with the International Monetary Fund on
economic and fiscal policy and the domestic adoption of the Agreement
establishing the World Trade Organization and the Multilateral
Agreements contained in the Final Act of the Uruguay Round of the GATT.
Department's Determination
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 termination of a suspended countervailing duty
investigation 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 this review, the Government of Peru and the Comite Textile
asserted that the two programs preliminarily found in the original
investigation to confer subsidies have both been completely eliminated.
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. As noted above, the
respondents submitted copies of the legislative decree and directive
supporting their assertion that these programs have been terminated. We
note that Milliken did not argue that these programs have not been
terminated or that these programs could easily be reinstated. Given the
evidence submitted by the respondents, we preliminarily determine that
both the CERTEX and FENT programs have been eliminated and cannot
easily be reinstated.
Referring to section 752(b)(2) of the Act, the Sunset Policy
Bulletin provides that if the Department determines that good cause is
shown, the Department will consider programs determined to provide
countervailable subsidies in other investigations or reviews, but only
to the extent that such programs (a) can potentially be used by the
exporters or producers subject to the sunset review and (b) did not
exist at the time that the suspension agreement was accepted (see
section III.C.1). Additionally, the Sunset Policy Bulletin provides
that if the Department determines that good cause is shown, the
Department will also consider programs newly alleged to provide
countervailable subsidies, but only to the extent that the Department
makes an affirmative countervailing duty determination with respect to
such programs and with respect to the exporters or producers subject to
the sunset review (see section III.C.2). Both sections specify that the
burden is on interested parties to provide information or evidence that
would warrant consideration of the subsidy program in question. As
noted above, Milliken merely stated that the Department has found in
other countervailing duty investigations that a number of other
Peruvian programs confer countervailable subsidies.
With respect to the tax incentive for investments outside the
Department of Lima or the Province of Callao under the 1982 Industrial
Law, we note that this program existed at the time the suspension
agreement was accepted. Further, we note that both signatories to the
suspension agreement, La Union and Santa Cecilia have Lima, Peru
addresses which would appear to make them ineligible for this
program.\7\
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\7\ See Cotton Shop Towels From Peru; Suspension of
Countervailing Duty Determination, 49 FR 35835 (September 12, 1984).
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With respect to the employment benefit for decentralized companies
under Article 8 of Decree 22836, we note that such program was also in
effect at the time the suspension agreement was accepted.\8\
Additionally, the Lima, Peru addresses of the suspension agreement
signatories appear to make them ineligible for this program.
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\8\ The program was determined to provide an estimated bounty or
grant of 0.008 percent ad valorem during 1983 in Final Affirmative
Countervailing Duty Determinations and Countervailing Duty Orders;
Certain Textile Mill Products and Apparel From Peru; and Rescission
of Initiation of Investigations With Respect to Hand-Made Alpaca
Apparel and Hand-Made Carpets and Tapestries, 50 FR 987, 9876 (March
12, 1985).
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Finally, with respect to the SECREX program, Milliken did not
provide any information other than to state that the Government of Peru
had acknowledged the existence of the program.
On the basis of the above analysis, we preliminarily find that
termination of the suspended investigation is not likely to result in
the continuation or recurrence of a countervailable subsidy.
Net Countervailable Subsidy
Parties' Comments
In its substantive response, Milliken argued that based on an
application of the principles expressed in the Sunset Policy Bulletin,
the Department should provide to the Commission a net countervailable
subsidy rate of 44 percent ad valorem, the country-wide rate of bounty
or grant determined in the original preliminary determination. Milliken
stated that this represents the only calculation of the net
countervailable subsidy and, since the Department has conducted no
administrative reviews since the
[[Page 41092]]
preliminary determination, the Sunset Policy Bulletin dictates that the
Department should not make any adjustments to this rate. Moreover,
Milliken argued that since the Peruvian Government modified the CERTEX
and FENT programs to eliminate exports to the United States from
eligibility, rather than the programs in their entirety, no adjustment
should be made.
In its substantive response, the Comite Textil stated that the net
countervailable subsidy that would prevail if the suspended
investigation were terminated would be zero, bcause, as discussed
above, there are no countervailable programs in place.
Department's Determination
Because we preliminarily determine that a countervailable subsidy
is not likely to continue or recur were the suspended investigation to
be terminated, there is no net countervailable subsidy to report to the
Commission.
Nature of the Subsidy
Parties' Comments
Neither party addressed this issue.
Department's Position
Because we preliminarily determine that a countervailable subsidy
is not likely to continue or recur were the suspended investigation to
be terminated, there is no nature of the subsidy to report to the
Commission.
Preliminary Results of Review
As a result of this review, the Department preliminarily finds that
termination of the suspended countervailing duty investigation would
not be likely to lead to continuation or recurrence of a
countervailable subsidy. As a result of this determination, the
Department, pursuant to section 751(d)(2) of the Act, preliminarily
intends to terminate the suspended countervailing duty investigation on
cotton shop towels from Peru. Pursuant to section 751(c)(6)(A)(iv) of
the Act, this termination would be effective January 1, 2000.
Consistent with section 351.218(f)(2)(i) of the Sunset Regulations
we intend to verify the factual information relied on in making this
determination because we preliminarily determine that termination of
the suspended investigation is not likely to lead to continuation or
recurrence of a countervailable subsidy and our preliminary results are
not based on countervailing duty rates determined in the investigation
or subsequent reviews.
Any interested party may request a hearing within 30 days of
publication of this notice in accordance with 19 CFR 351.310(c). Any
hearing, if requested, will be held on September 20, 1999. Interested
parties may submit case briefs no later than September 13, 1999, in
accordance with 19 CFR 351.309(c)(1)(i). Rebuttal briefs, which must be
limited to issues raised in the case briefs, may be filed not later
than September 16, 1999. The Department will issue a notice of final
results of this Sunset Review, which will include the results of its
analysis of issues raised in any such comments, no later than November
30, 1999.
This five-year (``sunset'') review and notice are in accordance
with sections 751(c), 752, and 777(i)(1) of the Act.
Dated: July 23, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-19444 Filed 7-28-99; 8:45 am]
BILLING CODE 3510-DS-P
