[Federal Register Volume 59, Number 28 (Thursday, February 10, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-3062]
[[Page Unknown]]
[Federal Register: February 10, 1994]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-223-601]
Fresh-Cut Flowers From Costa Rica; Preliminary Results of
Countervailing Duty Administrative Review and Intent To Terminate
Suspended Investigation
AGENCY: International Trade Administration/Import Administration,
Department of Commerce.
ACTION: Notice of preliminary results of countervailing duty
administrative review and intent to terminate suspended investigation;
fresh-cut flowers from Costa Rica.
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SUMMARY: The Department of Commerce (the Department) is conducting an
administrative review of the agreement suspending the countervailing
duty investigation on certain fresh-cut flowers from Costa Rica. The
review covers the period January 1, 1991 through December 31, 1991 and
six programs. On January 22, 1992, the Government of Costa Rica (GOCR)
requested an administrative review and termination of the suspended
investigation covering fresh-cut flowers. Section 355.25(a)(2) of the
Department's regulations permits termination of a suspended
investigation if the Department determines that all producers and
exporters covered by the suspension agreement have not applied for or
received any net subsidy on the subject merchandise for a period of at
least five consecutive years, and it is not likely that the producers
or exporters will in the future apply for or receive any net subsidy on
the merchandise from those programs that the Department has found
countervailable. Therefore, we examined the programs to determine if
the producers and exporters had complied with the terms of the
suspension agreement during the review period. The Department has found
that the signatories were in compliance with the terms of the
suspension agreement in each of the four previous review periods (56 FR
66434, December 23, 1991; 56 FR 2163, January 22, 1991; 55 FR 17478,
April 25, 1990; 54 FR 36838, September 5, 1989). We also preliminarily
determine that the GOCR and the signatories of the suspension agreement
on fresh-cut flowers have complied with the terms of the suspension
agreement during the current period of review (POR). On the basis of
our analysis of the information in the record, we preliminarily
determine that it is not likely that the producers or exporters will in
the future apply for or receive a net subsidy from the countervailable
programs. Therefore, we preliminarily determine that the GOCR has met
all requirements for termination of the suspended countervailing duty
investigation on certain cut flowers as outlined in the Department's
regulations. We invite interested parties to comment on these
preliminary results.
EFFECTIVE DATE: February 10, 1994.
FOR FURTHER INFORMATION CONTACT:
Elizabeth Patience or Jean Kemp, Office of Agreements Compliance,
International Trade Administration, U.S. Department of Commerce,
Constitution Avenue and 14th Street NW., Washington, DC 20230;
telephone: (202) 482-3793.
SUPPLEMENTARY INFORMATION:
Background
On December 26, 1991, the Department published a notice of
``Opportunity to Request an Administrative Review'' of the suspended
investigation in this proceeding (56 FR 66846). The producers and
exporters listed in appendix A, accounting for more than eighty-five
(85) percent of total exports of subject merchandise from Costa Rica to
the United States, are signatories to the suspension agreement. Our
information indicates that the 38 signatory companies accounted for
substantially all of the imports into the United States of this
merchandise during the POR. The GOCR and the signatories are the
respondents in this review. The suspension agreement permits ACOFLOR,
the Costa Rican Association of Flower Growers, to act on behalf of the
signatories. See Suspension of Countervailing Duty Investigation;
Certain Fresh-Cut Flowers from Costa Rica, 52 FR 1356, 1360 (1987).
On January 22, 1992, respondents requested the fifth administrative
review of the suspended investigation covering fresh-cut flowers (52 FR
1356, January 13, 1987). At the same time, respondents requested
termination of the suspended investigation, in accordance with 19 CFR
355.25(a)(2) and 355.25(b)(2). On February 24, 1992, the Department
initiated this review, covering the period January 1, 1991 through
December 31, 1991 (57 FR 6314). On March 31, 1992, the Department
published public notification of the GOCR's request for termination of
the suspended investigation (57 FR 10885). The Department is now
conducting this review in accordance with section 751 of the Tariff Act
of 1930, as amended (the Tariff Act), and 19 CFR 355.22 and 355.25. The
final results of the last administrative review in this case where
published in the Federal Register on December 23, 1991 (56 FR 66434).
Scope of Review
Imports covered by this review are shipments of miniature (spray)
carnations, standard carnations, and pompon chrysanthemums from Costa
Rica. This merchandise is currently classifiable under the Harmonized
Tariff Schedule (HTS) items 0603.10.30 and 0603.10.70. 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 and six programs: (1) Tax Credit Certificates; (2) Certificates
for Increasing Exports; (3) Income Tax Exemptions for Export Earnings;
(4) Exporter Credit for Sales Tax and Consumption Tax on Certain
Domestic Purchases; (5) Exporter Exemptions for Taxes and Duties on
Imports; and (6) Accelerated Depreciation. On January 20, 1992, ACOFLOR
certified, on behalf of itself, its individual members, and as
authorized, the signatories to the Agreement, that none of the
signatories (1) applied for or received any net subsidy on the subject
merchandise during the appropriate period under any program that the
Commerce Department previously found countervailable in these
proceedings; and (2) that the signatories shall not apply for or
receive any net subsidy on the subject merchandise under any program
the Department has previously determined to be countervailable in these
proceedings. On January 23, 1992, the Ministry of Foreign Trade
submitted a certification that the GOCR did not provide ACOFLOR, its
members, or any signatory of the Agreement, any net subsidy on the
subject merchandise during the appropriate period, pursuant to any
program that the Department has previously determined to be
countervailable in these proceedings. We selected six producers/
exporters of the subject merchandise which are signatories to the
agreement for the purpose of verifying the accuracy of the respondents'
information and certifications: American Flower Corporation, S.A.,
Flores de Coris, S.A., Fincas Nabori, S.A., Flores Garces, S.A.
(formerly Hermelink y Garces, S.A.), Flor Bella, S.A., and Floricultura
Cartaginesa (collectively, the six companies).
Analysis of Programs
(1) Tax Credit Certificates
Certificados de Abono Tributario (CATs) are bearer instruments
issued by the Central Bank of Costa Rica. Prior to 1991, the value of
the CAT was 15 percent of the amount of the foreign currency converted
from a firm's shipments of non-traditional exports. Effective December
3, 1993, the GOCR ceased granting CATs as part of new ``export
contracts'' which allow exporters to receive GOCR benefits. During the
period of review (POR), if a company with an export contract
voluntarily accepted a reduction in the value of the CAT from 15
percent to 10.5 percent, it could extend its export contract benefits
for three years and be exempt from the 25 percent tax on CAT earnings.
The Central Bank is not granting CATs in new export contracts.
The suspension agreement prohibits Costa Rican producers and
exporters of fresh-cut flowers from applying for or receiving any
benefits under the CAT program for shipments of the subject merchandise
to the United States. Effective the date of the agreement (January 13,
1987), any unused certificates received on prior shipments of the
subject merchandise to the United States were to be returned to the
Central Bank of Costa Rica (Central Bank). During verification, we
examined the GOCR's records and found no exporters of the subject
merchandise received or possessed unused CATs for exports to the United
States during the POR. In addition, we examined the six companies'
accounting records which indicated that the companies did not receive
or possess unused CATs for subject merchandise during the POR.
Therefore, we preliminarily determine that, with respect to this
program, the signatories have complied with the agreement during this
administrative review. We also preliminarily determine that, with
respect to this program, the signatories have complied with the
agreement for a period of five consecutive years based upon the results
in this review and the four previous administrative reviews.
(2) Certificates for Increasing Exports (CIEX)
This program provides grants to agricultural and agro-industrial
producers who increase exports from one year to the next. The
suspension agreement prohibits Costa Rican producers and exporters of
fresh-cut flowers from applying for or receiving any benefits under the
CIEX program. In August 1984, the program was discontinued due to lack
of funds, and the last benefits were paid in 1986. In 1988, the Costa
Rican Congress approved a special commission of bonds for the purpose
of liquidating the outstanding CIEX benefits for 1983/84, 1984/85, and
1985/86. During verification, we examined government and company
records and found that this program was not used by the signatories
during the POR. Therefore, we preliminarily determine that, with
respect to this program, the signatories have complied with the
agreement during this administrative review. We also preliminarily
determine that, with respect to this program, the signatories have
complied with the agreement for a period of five consecutive years
based upon the results in this review and the four previous
administrative reviews.
(3) Income Tax Exemptions for Export Earnings
Firms in Costa Rica are eligible for a tax exemption for export
earnings. The suspension agreement prohibits Costa Rican producers and
exporters of fresh-cut flowers from applying for or receiving any
income tax exemptions for income derived from exports of the subject
merchandise to the United States. During verification, we examined the
six companies' tax returns. We found that any benefits due under this
program had been calculated in accordance with the terms of the
suspension agreement and did not include earnings on exports of the
subject merchandise. Therefore, we preliminarily determine that, with
respect to this program, the signatories have complied with the
agreement during the POR. We also preliminarily determine that, with
respect to this program, the signatories have complied with the
agreement for a period of five consecutive years based upon the results
in this review and the four previous administrative reviews.
(4) Exporter Credit for Sales Tax and Consumption Tax on Certain
Domestic Purchases
Exporting firms in Costa Rica are eligible for a rebate of sales
taxes and selective excise taxes (i.e., indirect taxes) paid on certain
domestically-purchased articles. The suspension agreement prohibits
Costa Rican producers and exporters of fresh-cut flowers from applying
for or receiving any rebates of sales taxes and selective excise taxes
on domestic purchases not physically incorporated into any exports.
During verification, we examined government and company records and
determined that none of the signatory producers and exporters applied
for or received any rebates of these taxes during the review period on
domestic purchases not physically incorporated into exports. Therefore,
we preliminarily determine that, with respect to this program, the
signatories have complied with the agreement during the POR. We also
preliminarily determine that, with respect to this program, the
signatories have complied with the agreement for a period of five
consecutive years based upon the results in this review and the four
previous administrative reviews.
(5) Exporter Exemptions for Taxes and Duties on Imports
Costa Rican firms with export contracts may be exempted from paying
duties and taxes on imported raw materials, intermediate products and
capital goods used to produce exported finished products. The
suspension agreement prohibits Costa Rican producers and exporters of
fresh-cut flowers from applying for or receiving any exemptions from
taxes, surcharges, and duties (i.e., indirect taxes) on non-physically
incorporated imports. Initially, this requirement prevented exporters
or producers from receiving an exemption on any non-physically
incorporated imports, whether used in the production of subject
merchandise or not, because the Department was unable to verify that
the exemption did not benefit the subject merchandise. Subsequently,
the Department found that the agency responsible for granting
exemptions, CENPRO, had instituted a system of controls to ensure that
no exemptions would be granted for imports no physically incorporated
into exports of the subject merchandise. See Certain Cut Flowers from
Costa Rica; Preliminary Results of Countervailing Duty Administrative
Review, 54 FR 27197, 27198 (1989). During the POR, as part of this
system of controls, ACOFLOR received a list from CENPRO of flower
growers that applied for tax and duty exemptions under this program.
Before any applications were processed, a representative of ACOFLOR
visited the flower growers claiming the exemptions, inspected the
imported good in question, and verified its intended use. If the
ACOFLOR representative determined that the imported good would be used
in the production of the subject merchandise, ACOFLOR would require
that the flower grower promptly withdraw its application for exemption.
During verification, we examined the system of controls
administered by ACOFLOR and CENPRO and government and company records,
and determined that no exporter or producer received such exemptions on
any item without verification that the item in question had not been or
will not be physically incorporated in the subject merchandise.
Therefore, because we were able to verify that items receiving duty-
free treatment did not provide benefits to the subject merchandise, we
preliminarily determine that, with respect to this program, the
signatories have complied with the agreement during this administrative
review. We also preliminarily determine that, with respect to this
program, the signatories have complied with the agreement for a period
of five consecutive years based upon the results in this review and the
four previous administrative reviews.
(6) Accelerated Depreciation
Exporting firms in Costa Rica may use accelerated depreciation for
new equipment if they are authorized to do so by the Ministerio de
Hacienda. The suspension agreement prohibits Costa Rican producers and
exporters of fresh-cut flowers from making use of accelerated
depreciation. During verification, we examined the six companies'
depreciation records and determined that no firm used accelerated
depreciation during the POR. Therefore, we preliminarily determine that
the signatories have complied with the terms of the suspension
agreement for the POR. We also preliminarily determine that, with
respect to this program, the signatories have complied with the
agreement for a period of five consecutive years based upon the results
in this review and the four previous administrative reviews.
Preliminary Results of Review
As a result of our review, we preliminarily determine that the GOCR
and signatory companies have complied with all the terms of the
suspension agreement during period January 1, 1991 through December 31,
1991. As described above, we also preliminarily determine that the
signatories have complied with the agreement for a period of five
consecutive years. In addition, the GOCR and ACOFLOR, as authorized by
the signatories, have certified to the Department that the signatories
will not in the future apply for or receive any net subsidy on the
subject merchandise under any program the Department has previously
determined to be countervailable in these proceedings. We also note
that the GOCR and ACOFLOR have stated in the record that they will
maintain procedures to ensure producers and exporters of fresh-cut
flowers from Costa Rica will not receive net subsidies under any
program the Department has previously determined to be countervailable
in these proceedings, in the event that the agreement is terminated.
Moreover, the Department has not been presented with any evidence
indicating the signatories may apply for or receive any such subsidy in
the future. On the basis of the foregoing evidence, in accordance with
19 CFR 355.25(a)(2)(ii), we preliminarily determine that it is not
likely that the producers or exporters will in the future apply for or
receive a net subsidy from the countervailable programs. See Matsushita
Elec. Indus. Co, Ltd. v. United States, 750 F.2d 927, 933 (Fed Cir.
1984); PPG Indus. v. United States, 780 F. Supp. 1389 (CIT 1991); See
also Ceramic Tile from Mexico; Final Results of Countervailing Duty
Administrative Review and Revocation in Part of Countervailing Duty
Order, 59 FR 2823, 2824 (January 19, 1994). Therefore we preliminarily
determine to terminate the suspended countervailing duty investigation
on fresh-cut flowers from Costa Rica.
Interested parties may submit written comments on these preliminary
results within 30 days of the date of publication of this notice and
may request disclosure and/or a hearing within 10 days of the date of
publication. Any hearing, if requested, will be held 44 days after the
date of publication or the first workday thereafter. Rebuttal briefs
and rebuttals to written comments, limited to issues in those comments,
must be filed not later than 37 days after the date of publication. The
Department will publish the final results of its analysis of issues
raised in any such written comments or at a hearing.
This administrative review and notice are in accordance with
sections 751(a)(1)(C) and 751(c) of the Tariff Act (19 U.S.C.
1675(a)(1)(C) and 1675(c)) and 19 CFR 355.22 and 355.25.
Dated: February 3, 1994.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
Appendix A--List of Signatory Producers and Exporters
1. American Flower Corporation, S.A.
2. Flores del Cerro, S.A.
3. Agroflor de Paraiso, S.A.
4. Flores Garces, S.A.
5. Tico Flor, S.A.
6. Coexflo, S.A.
7. Compania Agricola Flex, S.A.
8. Flor Bella, S.A.
9. Exporflor de Cartago, S.A.
10. Lianpa, S.A.
11. Floricultura de Costa Rica, S.A.
12. Vivero El Zamorano, S.A.
13. Floress de Iztaru, S.A.
14. Inversiones Costa Flor, S.A.
15. Coopeflor, S.A.
16. Euroflores, S.A.
17. Flores y Follajes del Tirol, S.A.
18. Flores del Volcan CRP, S.A.
19. Goreza, S.A.
20. Llano Claro, S.A.
21. Ornamentales Cargil, S.A.
22. Floricultura La Colina, S.A.
23. Flores Intercontinentales, S.A.
24. Fincas Nabori, S.A.
25. Flores de Coris, S.A.
26. Florex, S.A.
27. C.R.B. Internacional, S.A.
28. Flores del Caribe, S.A.
29. Zurqui Flor de Costa Rica, S.A.
30. Rio Tapezco, S.A.
31. Jardin Botanico LDL de Costa Rica, S.A.
32. Tropiflor de la Montana, S.A.
33. Floricultura Santa Rosa, S.A.
34. Corporacion Rica Flor, S.A.
35. Intertec, S.A.
36. Accoreo, S.A.
37. Floricultura Cartaginesa, S.A.
38. Brumas Bajas, S.A.
[FR Doc. 94-3062 Filed 2-9-94; 8:45 am]
BILLING CODE 3510-DS-M