[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