[Federal Register Volume 61, Number 177 (Wednesday, September 11, 1996)]
[Notices]
[Pages 47886-47888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23230]
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DEPARTMENT OF COMMERCE
[C-421-601]
Standard Chrysanthemums From the Netherlands; Final Results of
Countervailing Duty Administrative Reviews
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Final Results of Countervailing Duty Administrative
Reviews.
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SUMMARY: On May 6, 1996, the Department of Commerce (the Department)
published in the Federal Register (61 FR 20406) its preliminary results
of administrative reviews of the countervailing duty order on standard
chrysanthemums from the Netherlands for the periods January 1, 1992
through December 31, 1992 and January 1, 1993 through December 31,
1993. We have completed these reviews and determine the net subsidies
to be 0.43 percent ad valorem for the period January 1, 1992 through
December 31, 1992, and 0.80 percent ad valorem for the period January
1, 1993 through December 31, 1993. The Department will instruct the
Customs Service to assess countervailing duties as detailed in the
Final Results of Reviews section of this notice.
EFFECTIVE DATE: September 11, 1996.
FOR FURTHER INFORMATION CONTACT: Lorenza Olivas or Anne D'Alauro,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230; telephone: (202) 482-2786.
SUPPLEMENTARY INFORMATION:
Background
On May 6, 1996, the Department published in the Federal Register
(61 FR 20406) the preliminary results of its administrative reviews of
the countervailing duty order on standard chrysanthemums from the
Netherlands (Preliminary Results). We invited interested parties to
comment on the preliminary results. The Floral Trade Council,
petitioner, and the Government of the Netherlands (GON), respondent,
submitted both case and rebuttal briefs. The Department has now
completed these administrative reviews in accordance with section 751
of the Tariff Act of 1930, as amended (the Act).
The periods covered by the reviews were January 1, 1992 through
December 31, 1992 and January 1, 1993 through December 31, 1993. These
reviews were conducted on an aggregate basis and involve 13 programs.
Applicable Statute and Regulations
The Department is conducting these administrative reviews in
accordance with section 751(a) of the Act. Unless otherwise indicated,
all citations to the statute and to the Department's regulations are in
reference to the provisions as they existed on December 31, 1994.
However, references to the Department's Countervailing Duties; Notice
of Proposed Rulemaking and Request for Public Comments, 54 FR 23366
(May 31, 1989) (Proposed Regulations), are provided solely for further
explanation of the Department's countervailing duty practice. Although
the Department has withdrawn the particular rulemaking proceeding
pursuant to which the Proposed Regulations were issued, the subject
matter of these regulations is being considered in connection with an
ongoing rulemaking proceeding which, among other things, is intended to
conform the Department's regulations to the Uruguay Round Agreements
Act. See 60 FR 80 (Jan. 3, 1995).
Scope of the Reviews
Imports covered by these reviews are shipments of Dutch standard
chrysanthemums. Such merchandise is classifiable under item number
0603.10.70 of the Harmonized Tariff Schedule (HTS). The HTS item number
is provided for convenience and Customs purposes. The written
description remains dispositive.
Analysis of Programs
Based on our analysis of questionnaire responses, verification, and
written comments from the interested parties, we determine the
following:
I. Programs Conferring Subsidies
A. Programs Previously Determined To Confer Subsidies
1. Aids for the Creation of Cooperative Organizations
In the preliminary results, we found that this program conferred
countervailable benefits on the subject merchandise. We received no
comments on our preliminary results, and our findings remain unchanged
in these final results. On this basis, the net subsidy for this program
is 0.07 percent ad valorem for 1992 and 0.04 percent ad valorem for
1993.
2. Glasshouse Enterprises Program
In the preliminary results, we found that this program conferred
countervailable benefits on the subject merchandise. We received no
comments on our preliminary results, and our findings remain unchanged
in these final results. On this basis, the net subsidy for this program
is 0.17 percent ad valorem for 1992 and 0.09 percent ad valorem for
1993.
3. Aids for the Reduction of Glass Surface
In the preliminary results, we found that this program conferred
countervailable benefits on the subject merchandise. We received no
comments on our preliminary results, and our findings remain unchanged
in these final results. On this basis, the net subsidy for this program
is less than 0.005 percent ad valorem for 1992 and less than 0.005
percent ad valorem for 1993.
4. Steam Drainage System
In the preliminary results, we found that this program conferred
countervailable benefits on the subject merchandise. We received no
comments on our preliminary results, and our findings remain unchanged
in these final results. On this basis, the net subsidy for this program
is less than 0.005 percent ad valorem for 1992 and less than 0.005
percent ad valorem for 1993.
B. New Program Found to Confer Subsidies Stimulation for the Innovation
of Electric Energy Program
In the preliminary results, we found that this program conferred
benefits on the subject merchandise. Our analysis of
[[Page 47887]]
the comments submitted by the interested parties, summarized below, has
not led us to modify our findings from the preliminary results for this
program. On this basis, the net subsidy for this program is 0.18
percent ad valorem for 1992 and 0.66 percent ad valorem for 1993.
II. Programs Found Not to Confer Subsidies
In the preliminary results, we found the following programs to be
non-countervailable.
1. Arrangement for Stimulation of Innovation Projects
2. Arrangement for Structural Improvements and the Complementary Scheme
for Investment in Agricultural Holdings
3. Natural Gas Provided at Preferential Rates
4. Income Tax Deduction
5. Value Added Tax (VAT) Reduction of 6 Percent for Natural Gas Users
and Partial Restitution of VAT for Mineral Oils, Fuels, Bulk or Bottled
Gas
6. Guarantee Fund for Agriculture
Our analysis of the comments submitted by interested parties,
summarized below, has not led us to modify our findings from the
preliminary results.
III. Programs Found to be Not Used
We determine that producers and/or exporters of the subject
merchandise did not apply for or receive benefits under the following
programs:
1. Investment Incentive (WIR)--Regional Program
2. Loans at preferential interest rates
Analysis of Comments
Comment 1: Respondent contends that the Department improperly
determined the Stimulation for the Innovation of Electric Energy (SES)
program to be countervailable. Respondent states that the Uruguay Round
Agreement Act (URAA) exempts from countervailability assistance to
promote adaptation of existing facilities to new environmental
requirements.
Petitioner disagrees that there is a general exemption for
subsidies which provide environmental benefits. Instead, the petitioner
notes that Article 8(c) of the Agreement on Subsidies and
Countervailing Measures lists certain non-actionable subsidies
benefitting the environment and that one of the criteria necessary for
the exemption is that the new environmental requirements are imposed by
law or regulation. Petitioner argues that the GON program encouraging
the installation of cogeneration equipment is not pursuant to a new
environmental requirement imposed by law or regulation.
Department's Position: The Department disagrees with respondent.
The URAA amendments to the Act, including amendments pursuant to 8.2(c)
of the Agreement on Subsidies and Countervailing Measures, apply to
reviews initiated pursuant to requests for administrative reviews filed
after January 1, 1995. As such, the provisions of the URAA referenced
by respondent do not apply to these reviews because these reviews were
initiated prior to the enactment of the URAA. Therefore, the Department
properly determined the SES program to be countervailable.
Comment 2: Respondent argues that, if the Department continues to
find the SES program countervailable, the Department should change the
calculation methodology. Respondent alleges that the Department's
decision to allocate the total value of all grants provided under the
SES program in 1993 to that year was entirely arbitrary and contends
that the Department should, instead, allocate those grants over the
average useful life of assets in the industry.
Petitioner, on the other hand, argues that the Department properly
expensed the benefits received in 1993 in the year of receipt in
conformance with its prior practice.
Department's Position: The Department followed its practice, in
accordance with the Proposed Regulations, of expensing non-recurring
grants in the year of receipt when the sum of grants provided under a
particular program is less than 0.50 percent of total sales in the year
in which the grant was received. In this case, the amount of SES grants
provided to greenhouse growers in 1993 was less than 0.50 percent of
total greenhouse sales in that year. Therefore, under long-standing,
established Department practice, these grants were expensed in the year
of receipt, 1993. See, e.g., Final Affirmative Countervailing Duty
Determination; Oil Country Tubular Goods from Austria (60 FR 33534,
33535; June 28, 1995).
Comment 3: Petitioner argues that the Department should reverse its
determination that the reduced VAT rate and VAT rebates, applicable to
purchases of mineral oils, fuels, or gas for greenhouses are not
countervailable. Petitioner argues that the VAT reduction and rebates
provide greenhouse growers with preferential gas prices and that these
benefits are targeted to greenhouse growers and, therefore, are
countervailable. Other reasons noted in support of its argument are
that recipients must produce affidavits attesting that the gas is used
only to heat greenhouses and that inspection programs ensure that the
reduced rate only benefits greenhouse production. Petitioner further
contends that, absent this program, flower growers would pay the higher
VAT. Therefore, according to petitioner, the program is specifically
targeted to greenhouse growers. In support of its arguments, petitioner
cites Bicycle Tires and Tubes from Taiwan, 46 FR 53201 (October 28,
1981) (tax ceiling for bicycle manufactures); Certain Steel Products
from Belgium, 58 FR 32273 (July 9, 1993) (exemptions for companies in
development zone); Certain Steel Products from Brazil (58 FR 37295;
July 9, 1993) (tax rebates to a specific industry); and Certain Steel
Products from Italy, 58 FR 37327; July 9, 1993) (increased VAT
deduction for a firm in a specific region).
Respondent disputes petitioner's argument that the special VAT
regime is countervailable. Respondent argues that the special regime is
available to the entire agricultural sector and that the administrative
procedures that reduce the VAT on oil and natural gas are necessary to
arrive at the reduced VAT level and rebates to which the recipients in
the entire agricultural sector are entitled.
Department's Position: Section 771.5 of the Act and section
355.43(b)(1) of the Proposed Regulations require the Department to
countervail a subsidy that is limited, in law, or in fact, to an
enterprise or industry or group thereof. However, section 355.43(b)(8)
provides that the Department ``will not regard a program as being
specific, within the meaning of paragraph (b)(1) of this section,
solely because the program is limited to the agricultural sector.''
(See Proposed Regulations at 23380.) In the final determination of the
original investigation, the Department found that if a program is
available to virtually all agriculture and is not limited to flower
growers or otherwise limited to a specific enterprise or industry, or
group of enterprises or industries, within agriculture, then the
program is not countervailable. See Final Affirmative Countervailing
Duty Determination; Certain Fresh Cut Flowers From the Netherlands (52
FR 3303; February 3, 1987) (Final Determination). See also, Final
Affirmative Countervailing Duty Determination and Countervailing Duty
Order; Lamb Meat from New Zealand (50 FR 37708; September 17, 1985). In
Lamb Meat, we found that the examined program was not limited to a
specific enterprise or industry, or group thereof, because it was
available to and used by a wide variety of agricultural producers.
[[Page 47888]]
In the preliminary results of these reviews, we found that under the
Dutch National Tax Law, farmers in the Netherlands pay the reduced VAT
rate on purchases of virtually all the goods and services required in
agriculture, including natural gas and oil. The application procedure,
noted by petitioner, for obtaining the reduced VAT rate and rebates is
merely a mechanism which enables farmers to receive the reductions to
which they are entitled under the Dutch National Tax Law.
The cases cited by petitioner in its brief are not relevant to the
issue at hand. The issue in those cases dealt with benefits limited to
specific industries or to specific zones or regions. The issue in these
reviews is whether the reduced VAT rates are applied to virtually all
of the goods and services used within the agricultural sector and
whether there is any limitation within agriculture to provide benefits
to specific commodities under this program. The issue is not whether
the agricultural sector pays lower VAT rates on its purchases than the
other industries in the Netherlands. We found that the reduced VAT rate
is applied to a wide variety of goods in the agricultural sector; such
as, foodstuffs, cereals, seeds, cattle, sheep, goats, pigs, horses,
breeding eggs, veterinary medicines, water, gas and mineral oil,
beetroot, agricultural seeds, fertilizer, feed, round wood, flax, wool,
agricultural tools, bulbs and plants, as well as to services in the
agricultural sector; such as, contracting, repairs, breeding,
inspections, accounting, drying, cooling, cleaning and packaging of
agricultural products. Therefore, since virtually all goods purchased
by and required in the agricultural sector receive the reduced VAT
rate, we determine that this program is not specific. As such, the
reduced VAT rate for agriculture does not provide a countervailable
benefit.
Comment 4: Petitioner argues that the Department understated the
benefits derived from the SES program by allocating the grants received
over estimated greenhouse sales, rather than floricultural sales.
Petitioner claims that because the GON did not provide data regarding
disbursements to flower growers or chrysanthemums growers, the
Department must apply best information available.
Respondent, on the other hand, agrees with the Department's
allocation methodology. Respondent argues that aid from the program is
spread over the entire horticultural sector and is not specific to
flowers or standard chrysanthemums.
Department's Position: Petitioner incorrectly asserts that the
Department understated the benefits from the SES program. We are
conducting this review on an aggregate basis due to the large number of
growers of the subject merchandise. Therefore, we collected information
on program usage from the government rather than from individual
producers. The GON does not maintain records on the grants provided
under this program on a product-specific basis. However, the grants
under this program were provided to greenhouse growers, and we
allocated the value of the grants over the value of greenhouse sales.
Therefore, the Department has not understated the benefits under this
program attributable to the subject merchandise.
Final Results of Reviews
For the period January 1, 1992 through December 31, 1992, we
determine the net subsidy to be 0.43 percent ad valorem. For the period
January 1, 1993 through December 31, 1993, we determine the net subsidy
to be 0.80 percent ad valorem. In accordance with 19 CFR 355.7, any
rate less than 0.5 percent ad valorem is de minimis.
The Department will instruct the U.S. Customs Service to liquidate,
without regard to countervailing duties, all shipments of the subject
merchandise exported on or after January 1, 1992 and on or before
December 31, 1992, and to assess countervailing duties of 0.80 percent
ad valorem of the f.o.b. invoice price on all shipments of the subject
merchandise exported on or after January 1, 1993 and on or before
December 31, 1993.
Because this notice is being published concurrently with the final
results of the 1994 administrative review, the 1994 administrative
review will serve as the basis for setting the cash deposit rate, as
provided for under section 751(c)(1) of the Act.
This notice also serves as a 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 355.43(d). Timely written notification of
return/destruction of APO materials or conversion to judicial
protective order is hereby requested. Failure to comply with the
regulations and the terms of an APO is a sanctionable violation.
These administrative reviews and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.
Dated: August 30, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-23230 Filed 9-10-96; 8:45 am]
BILLING CODE 3510-DS-P
