[Federal Register Volume 61, Number 177 (Wednesday, September 11, 1996)]
[Notices]
[Pages 47888-47891]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23231]
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DEPARTMENT OF COMMERCE
[C-421-601]
Standard Chrysanthemums From the Netherlands; Final Results of
Countervailing Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Final Results of Countervailing Duty Administrative
Review.
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SUMMARY: On May 6, 1996, the Department of Commerce (the Department)
published in the Federal Register (61 FR 20411) its preliminary results
of administrative review of the countervailing duty order on standard
chrysanthemums from the Netherlands for the period January 1, 1994
through December 31, 1994. We have completed this review and determine
the net subsidies to be de minimis for all exports of the subject
merchandise to the United States. The Department will instruct the U.S.
Customs Service to liquidate, without regard to countervailing duties,
all shipments of the subject merchandise from the Netherlands exported
on or after January 1, 1994, and on or before December 31, 1994.
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 review 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 this administrative review in accordance
[[Page 47889]]
with section 751 of the Tariff Act of 1930, as amended (the Act).
The period covered by the review was January 1, 1994 through
December 31, 1994. This review was conducted on an aggregate basis and
involves 13 programs.
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions of the Tariff Act of 1930, as amended by
the Uruguay Round Agreements Act (URAA) effective January 1, 1995 (the
Act). 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 Review
Imports covered by this review 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.
Country-Wide Rate
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. In the original
investigation of this order, it was determined that there were over
8,000 flower growers in the Netherlands. Therefore, we requested that
the GON provide information on an aggregate basis. See Final
Affirmative Countervailing Duty Determination; Certain Fresh Cut
Flowers From the Netherlands (52 FR 3301; February 3, 1987). Consistent
with the decision made in the investigation, administrative reviews of
this order have been conducted on an aggregate basis. In accordance
with section 777A(e)(2)(B) of the Act, we have also conducted this
administrative review on an aggregate basis because of the large number
of producers and exporters, and on the basis of the aggregate
information submitted by the GON, we have determined a single country-
wide subsidy rate to be applied to all producers and exporters of the
subject merchandise.
Analysis of Programs
Based upon our analysis of the questionnaire responses 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 0.03 percent ad valorem for 1994.
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 0.05 percent ad valorem for 1994.
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 1994.
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 1994.
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 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 0.35 percent ad
valorem for 1994.
II. Programs Found to be 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 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 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
[[Page 47890]]
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: We disagree with the respondent. While
section 771(5B) of the Act does describe subsidies which are non-
actionable if certain conditions are met, the GON has not provided any
timely factual information to support its claim, which was raised for
the first time in its May 28, 1995 case brief.
In our August 28, 1995 questionnaire, the Department provided the
GON with the opportunity to claim ``green light'' status under section
771(5B) for eligible programs, and stated that the GON ``may also claim
that certain subsidies for research activities, disadvantaged regions
and/or the adaptation of existing facilities to new environmental
requirements are not countervailable. If you wish to do so, then please
notifiy the official in charge * * * '' (see, section II-3, page 2 of
the Questionnaire). This request for parties to notify the Department
if they wish to claim ``green light'' status has been a standard
question in the Department's questionnaire since January 1, 1995, the
effective date of the URAA. In its questionnaire response filed on
October 20, 1995, the GON did not request ``green light'' consideration
for any of its programs. Moreover, the GON did not provide any factual
information which the Department could use to determine whether the SES
program meets the criteria outlined in section 771(5B)(D) of the Act.
Since the GON raised this issue for the first time in its case
brief, which is well past the deadline for submitting factual
information in the review, and since no information supporting its
claim otherwise exists on the record, the Department determines that
the SES program does not qualify as a noncountervailable subsidy
pursuant to section 771(5B) of the Act.
Comment 2: 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 are, therefore,
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 insure 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 manufacturers); 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 page 23380.) In the final determination of
this case, the Department found that if a program is available to and
used by virtually all of 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. In
the preliminary results of this review, 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 this
review 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 3: 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
[[Page 47891]]
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 grants over
greenhouse sales. Therefore, the Department has not understated the
benefits under this program attributable to the subject merchandise.
Comment 4: Petitioner argues that the Department should recalculate
the 1994 subsidy flowing from the SES program. Petitioner contends that
the amount calculated for the 1994 review was based on the grant amount
reported in the original questionnaire response, which was smaller than
the total amount reported in the supplemental response.
Department's Position: The Department used the correct amount in
calculating the benefit for the review period, which was the amount
reported in the original response. The amount reported in the
supplemental response was actually the total amount of grants earmarked
for the horticultural industry, while the actual amount of grants
disbursed was what was reported in the original response. The
Department's practice is to countervail the amount of grants actually
provided, not the amount awarded. (See section 355.44(a) of the
Proposed Regulations.)
Final Results of Review
In accordance with section 777A(e)(2)(B) of the Act, we calculated
a country-wide rate to apply to all producers and exporters of the
subject merchandise. For the period January 1, 1994 through December
31, 1994, we determine the net subsidy to be 0.43 percent ad valorem.
As provided for in the Act, any rate less than 0.5 percent ad valorem
is de minimis.
Accordingly, the Department intends to instruct the Customs Service
to liquidate, without regard to countervailing duties, all shipments of
the subject merchandise exported on or after January 1, 1994 and on or
before December 31, 1994. The Department will also instruct Customs to
collect cash deposits of estimated countervailing duties of zero on all
shipments of subject merchandise from the Netherlands entered, or
withdrawn from warehouse, for consumption on or after the date of
publication of the final results of this review.
This notice 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.
This administrative review 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. 96-23231 Filed 9-10-96; 8:45 am]
BILLING CODE 3510-DS-P
