[Federal Register Volume 59, Number 12 (Wednesday, January 19, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-1263]


[[Page Unknown]]

[Federal Register: January 19, 1994]


                                                    VOL. 59, NO. 12

                                        Wednesday, January 19, 1994
=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration
[C-201-003]

 

Ceramic Tile From Mexico; Final Results of Countervailing Duty 
Administrative Review and Revocation in Part of the Countervailing Duty 
Order

AGENCY: International Trade Administration/Import Administration/
Department of Commerce.

ACTION: Notice of Final Results of Countervailing Duty Administrative 
Review and Revocation in Part of the Countervailing Duty Order.

-----------------------------------------------------------------------

SUMMARY: On June 3, 1993, the Department of Commerce published the 
preliminary results of its administrative review of the countervailing 
duty order on ceramic tile from Mexico (58 FR 31505). We have now 
completed this review and determine the total bounty or grant to be 
zero or de minimis for the period January 1, 1991 through December 31, 
1991. In addition, because we have determined that the following 
companies have met the requirements for partial revocation from the 
order, the Department is revoking the countervailing duty order with 
respect to these companies: Azulejos Orion, S.A., Ceramica Santa Julia, 
Eduardo Garcia de la Pena, Jesus Garza Arocha, Ladrillera Monterrey, 
S.A., Pisos Coloniales de Mexico, S.A., Reynol Martinez Chapa, and 
Teofilo Covarrubias.

EFFECTIVE DATE: January 19, 1994.

FOR FURTHER INFORMATION CONTACT: Gayle Longest or Kelly Parkhill, 
Office of Countervailing Compliance, International Trade 
Administration, U.S. Department of Commerce, Washington, DC 20230; 
telephone: (202) 482-2786.

SUPPLEMENTARY INFORMATION:

Background

    On June 3, 1993, the Department of Commerce (the Department) 
published in the Federal Register (58 FR 31505) the preliminary results 
of its administrative review of the countervailing duty order on 
ceramic tile from Mexico (47 FR 20012; May 10, 1982). The Department 
has now completed that administrative review in accordance with section 
751 of the Tariff Act of 1930, as amended (the Act).

Scope of Review

    Imports covered by this review are shipments of Mexican ceramic 
tile, including non-mosaic, glazed, and unglazed ceramic floor and wall 
tile. During the review period, such merchandise was classifiable under 
the Harmonized Tariff Schedule (HTS) item numbers 6907.10.0000, 
6907.90.0000, 6908.10.0000 and 6908.90.0000. The HTS item numbers are 
provided for convenience and Customs purposes. The written description 
remains dispositive.
    The review covers the period January 1, 1991 through December 31, 
1991, sixty-one companies, and the following programs: (1) FOMEX; (2) 
BANCOMEXT Financing for Exporters; (3) PITEX; (4) NAFINSA Long-term 
Loans; (5) Other BANCOMEXT preferential financing; (6) CEPROFI; (7) 
import duty reductions and exemptions; (8) state tax incentives; (9) 
NAFINSA FONEI-type financing; and (10) NAFINSA FOGAIN-type financing.

Calculation Methodology for Assessment and Cash Deposit Purposes

    In calculating the benefits received during the review period, we 
followed the methodology described in the preamble to 19 CFR 355.20(d) 
(53 FR 52306, and 52325; December 27, 1988). We calculated a country-
wide rate, weight-averaging the benefits received by the sixty-one 
companies subject to review to determine the overall subsidy from all 
countervailing programs benefitting exports of the subject merchandise 
to the United States. Because the overall weighted-average country-wide 
rate was de minimis, as defined by 19 CFR 355.7, we did not proceed any 
further in the calculation methodology.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received comments from two respondents, 
Ceramica Regiomontana and Ceramica Santa Julia.
    Comment 1: As in past reviews, Ceramica Regiomontana contends that 
the Department does not have the legal authority to impose 
countervailing duties on ceramic tile from Mexico and must revoke the 
countervailing duty order. Effective April 23, 1985, the date of the 
``Understanding Between the United States and Mexico Regarding 
Subsidies and Countervailing Duties'' (the Understanding), Mexico 
became a ``country under the Agreement''. Therefore, Ceramica 
Regiomontana argues that 19 U.S.C. 1671 requires an affirmative injury 
determination as a prerequisite to the imposition of countervailing 
duties on any Mexican merchandise imported on or after April 23, 1985, 
regardless of whether the countervailing duty order was published 
before or after the date.
    Ceramica Regiomontana further contends that the Department's 
failure to revoke this order is inconsistent with past practice. In two 
previous countervailing duty administrative reviews, Certain Fasteners 
from India; Final Results of Administrative Review and Partial 
Revocation of Countervailing Duty Order (47 FR 44129; October 6, 1982) 
and Carbon Steel Wire Rod from Trinidad and Tobago; Preliminary Results 
of Changed Circumstances Administrative Review and Tentative 
Determination to Revoke Countervailing Duty Order (50 FR 19561; May 9, 
1985), where an outstanding countervailing duty order was issued 
pursuant to 19 U.S.C. 1303(a) without benefit of an ITC injury 
determination, the Department determined that it did not have the 
authority to impose countervailing duties when events subsequent to the 
issuance of the order required an affirmative ITC injury determination 
prior to imposition of countervailing duties. Since the ITC has 
indicated that it does not have the legal authority to conduct an 
injury investigation concerning merchandise already subject to a 
countervailing duty order, the Department has in the past concluded 
that it could not impose countervailing duties and revoked, or 
preliminarily determined to revoke, the order effective the date the 
affirmative injury determination became a requirement. Therefore, the 
Department should revoke the countervailing duty order on ceramic tile 
and refund all deposits of estimated countervailing duties by Ceramica 
Regiomontana during the 1991 review period.
    Department's Position: We fully addressed this issue in a previous 
administrative review of this countervailing duty order. See Ceramic 
Tile from Mexico; Final Results of Countervailing Duty Administrative 
Review (55 FR 50744; December 10, 1990). The U.S. Court of 
International Trade and the U.S. Court of Appeals for the Federal 
Circuit (CAFC) have sustained the Department's legal position that 
Mexican imports subject to an outstanding countervailing duty order 
already in effect when Mexico entered into the Understanding are not 
entitled to an injury test pursuant to section 701 of the Tariff Act 
and paragraph 5 of the Understanding (Cementos Anahuac del Golfo, S.A. 
v. U.S., 879 F.2d 847 (Fed. Cir. 1989), cert. denied, 110 S. CT. 1318 
(1989)). The countervailing duty order on ceramic tile from Mexico was 
published prior to Mexico's entering into the Understanding, therefore, 
imports of ceramic tile are not entitled to an injury test pursuant to 
section 701 of the Tariff Act. Ceramica Regiomontana has provided 
neither new evidence nor new arguments on this issue.
    Comment 2: As in the last administrative review of ceramic tile, 
Ceramica Regiomontana contests the Department's determination that 
BANCOMEXT and FOMEX loans taken out by the company were 
countervailable. The respondent contends that the use of a commercial 
rate as a benchmark in the Department's calculation is inconsistent 
with Item (k) of the Illustrative List of Export Subsidies annexed to 
the Agreement on Interpretation and Application of Articles VI, XVI, 
and XXIII of the General Agreement on Tariffs and Trade (GATT). Item 
(k) of the Illustrative List defines an export subsidy as the granting 
of export credits by governments at interest rates below the cost of 
funds to the government. BANCOMEXT and FOMEX financing meets the cost 
to government standard and therefore do not provide countervailable 
subsidies.
    Department's Position: We disagree. Although FOMEX was examined in 
this administrative review, there were no outstanding loans under this 
program during the review period. Therefore comments on this program 
are moot. With regard to BANCOMEXT, the Department fully addressed this 
issue in the previous administrative review of this countervailing duty 
order. See Ceramic Tile From Mexico; Final Results of Countervailing 
Duty Administrative Review (57 FR 24247; June 8, 1992). The cost to 
government standard which defines an export subsidy in Item (k) of the 
Illustrative List does not limit the United States in applying its own 
national countervailing duty law to determine the countervailability of 
benefits bestowed on merchandise exported from Mexico. See Certain 
Textile Mill Products From Mexico; Final Results of Countervailing Duty 
Order Administrative Review (54 FR 36841, 36843-36844; September 5, 
1989) and Certain Textile Mill Products From Mexico; Final Results of 
Countervailing Duty Administrative Review (56 FR 12175, 12177; March 
22, 1991). BANCOMEXT loans have been determined to be countervailable 
because they are limited to exporters. Ceramic Tile From Mexico; 
Preliminary Results of Countervailing Duty Review (57 FR 5997, February 
19, 1992) and Ceramic Tile From Mexico; Final Results of Countervailing 
Duty Review (57 FR 24247, June 8, 1992). Furthermore, when we compared 
our benchmark with the interest rates reported under the BANCOMEXT 
financing, we found countervailable benefits. Ceramica Regiomontana has 
not provided any new evidence or arguments on this issue.
    Comment 3: As in past administrative review, Ceramica Regiomontana 
contends that the Department incorrectly treated the benefit from the 
PITEX program as a grant and this overstated the company's net 
benefits. Ceramica Regiomontana claims that after five years the 
company will have to pay the import duties and should be treated as an 
interest-free loan instead of an outright grant.
    Department's Position: We fully addressed this issue in the 
previous administrative review of this case. See Ceramic Tile From 
Mexico; Final Results of Countervailing Duty Administrative Review (57 
FR 24247; June 8, 1992). Although exporters anticipate re-export of 
machinery after five years under PITEX, an exporter may choose to keep 
the machinery as a permanent import. It appears that after the five 
year period, any reimbursement made to the Mexican Government of import 
duties previously exempted would not be significant. Therefore, duty 
exemptions under PITEX are properly treated as grants and we expensed 
them in full at the time of importation, when the exporters otherwise 
would have paid duties on the imported machinery. Id.; Final Negative 
Countervailing Duty Determination; Silicon Metal From Brazil (56 FR 
26988; June 12, 1991). Ceramica Regiomontana has presented us with no 
new evidence or arguments on this issue.
    Comment 4: Ceramica Santa Julia contests the Department's 
determination not to revoke the countervailing duty order with respect 
to them. Ceramica Santa Julia contends that they should be revoked 
because: (1) Ceramica Santa Julia met all regulatory requirements for a 
company-specific revocation; (2) the administrative record contains 
sufficient evidence of non-use of export subsidies by Ceramica Santa 
Julia; and (3) the administrative record contains sufficient evidence 
that Ceramica Santa Julia will not apply for or receive countervailable 
benefits in the future.
    Department's Position: Upon further examination of Ceramica Santa 
Julia's record, we agree that the company should be revoked.
    For the purpose of revoking a countervailing duty order in part 
pursuant to 19 CFR 355.25(a)(3), the Department's current policy is 
that administrative reviews must be requested and conducted for each of 
five consecutive years, with the year of request for revocation being 
the fifth consecutive year of review. See Memorandum to Joseph A. 
Spetrini, Acting Assistant Secretary for Import Administration, Basis 
for Revocation of Individual Companies from Countervailing Duty Orders 
under 19 CFR 355.25(a)(3) regarding Ceramica Santa Julia in the 
Countervailing Duty Administrative Review of Ceramic Tile From Mexico, 
dated January 10, 1994. This is consistent with the Department's 
recently established policy for revocation of countervailing duty 
orders in full pursuant to 19 CFR 355.25(a)(1), set forth in Roses and 
Other Cut Flowers from Colombia; Preliminary Results of Countervailing 
Duty Administrative Review and Intent Not to Terminate Suspended 
Investigation (58 FR 52272; October 7, 1993).
    Although Ceramica Santa Julia did not participate in the 
administrative review the year prior to it's request for revocation, 
the Department chose to review whether Ceramica Santa Julia had met the 
minimum requirements for revocation because the above-stated policy had 
not been clearly articulated prior to their revocation request.
    Due to the unique circumstances in this case, the Department 
concludes that Ceramica Santa Julia has met the requirements of 
Sec. 355.25(a)(3) based on the following facts: First, both the 
Government of Mexico and Ceramica Santa Julia have submitted 
certifications stating that the company had not applied for or received 
any net subsidy during the review period and would not apply for or 
receive any net subsidy in the future; second, Ceramica Santa Julia has 
agreed to the immediate suspension of liquidation and reinstatement of 
the order if the Department determines that subsequent to revocation 
the company received a net subsidy; third, in the current review 
period, we verified the company and found no evidence that they had 
applied for or received subsidies, and; fourth, the record shows that 
prior to the year for which there was no review, Ceramica Santa Julia 
was found to have received no net subsidies in seven consecutive 
reviews.
    Based on these unique facts and circumstances, and because there 
was no clearly articulated policy detailing the requirements of 19 CFR 
355.25(a)(3), the Department has decided to revoke Ceramica Santa 
Julia. The Department finds that under the current regulations, 
Ceramica Santa Julia clearly would have met requirements for revocation 
after the seven consecutive reviews in which the Department found no 
receipt of subsidies. Furthermore, the eight years of non-receipt of 
subsidies coupled with the company and government certifications of 
non-receipt are sufficient evidence for a finding of no past subsidy 
receipt or no likelihood of receipt of subsidies in the future.

Final Results of Review

    After reviewing all of the comments received, we determine the 
total bounty or grant to be de minimis for all companies for the period 
January 1, 1991 through December 31, 1991.
    The Department will instruct the Customs Service to liquidate, 
without regard to countervailing duties, shipments of this merchandise 
from all companies exported on or after January 1, 1991 and on or 
before December 31, 1991.
    The Department will instruct the Customs Service to collect cash 
deposits of zero estimated countervailing duties, as provided by 
section 751(a)(1) of the Act, on shipments of this merchandise from all 
companies entered, or withdrawn from warehouse, for consumption on or 
after the date of publication of this notice. This deposit requirement 
shall remain in effect until publication of the final results of the 
next administrative review.
    In addition, we have determined that the following companies have 
met the requirements for revocation from the order: Azulejos Orion, 
S.A., Ceramica Santa Julia, Eduardo Garcia de la Pena, Jesus Garza 
Arocha, Ladrillera Monterrey, S.A., Pisos Coloniales de Mexico, S.A., 
Reynol Martinez Chapa, and Teofilo Covarrubias. We have determined that 
these companies have not applied for or received any net subsidy for 
five consecutive years and they have filed the certifications and 
agreement required by 19 CFR 355.25(b)(3). Based on the foregoing, we 
also determine that there is no likelihood that these companies will 
apply for or receive any net subsidy in the future. Therefore, the 
Department will instruct the Customs Service to terminate suspension of 
liquidation on entries from these companies and to liquidate, without 
regard to countervailing duties, merchandise exported by these 
companies on or after January 1, 1992.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)), 19 CFR 355.22 and 
19 CFR 355.25.

    Dated: January 10, 1994.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 94-1263 Filed 1-18-94; 8:45 am]
BILLING CODE 3510-DS-P