[Federal Register Volume 59, Number 45 (Tuesday, March 8, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-5307]


[[Page Unknown]]

[Federal Register: March 8, 1994]


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DEPARTMENT OF COMMERCE
[C-301-601]

 

Miniature Carnations From Colombia; Final Results of 
Countervailing Duty Administrative Review and Determination Not To 
Terminate Suspended Investigation

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

ACTION: Notice of final results of countervailing duty administrative 
review.

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SUMMARY: On October 7, 1993, the Department of Commerce (``the 
Department'') published the preliminary results of its administrative 
review and intent not to terminate the suspended countervailing duty 
investigation on miniature carnations from Colombia. The review covers 
the period January 1, 1988 through December 31, 1990 and seven 
programs. On January 31, 1991, the Government of Colombia (``GOC'') 
requested termination of the suspended investigation based on 
abolishment of the programs for a period of at least three years, in 
accordance with 19 CFR 355.25(a)(1) and 355.25(b)(1). Therefore, we 
examined the programs to determine if each program had been abolished 
for a period of at least three consecutive years. We gave interested 
parties an opportunity to comment on the preliminary results. After 
reviewing all the comments received, we determine that the GOC and 
producer/exporters of miniature carnations have complied with the terms 
of the suspension agreement. However, we also determine that the GOC 
has not abolished each program for a period of at least three 
consecutive years. Therefore, we determine that the GOC has not met all 
the requirements for termination of the countervailing duty suspended 
investigation on miniature carnations as outlined in the Commerce 
Regulations.
    For the purpose of revoking a countervailing duty order or 
terminating a suspended countervailing duty investigation based on 
three consecutive years of elimination of all subsidies pursuant to 19 
CFR 355.25(a)(1), it is the Department of Commerce's current policy 
that administrative reviews must be requested and conducted for each of 
the three consecutive years. See Memorandum from Joseph A. Spetrini, 
Deputy Assistant Secretary for Compliance, to Alan M. Dunn, Assistant 
Secretary for Import Administration, of December 14, 1992, which fully 
describes this issue. However, the request for termination in this case 
predates the above policy, and we nevertheless have examined a three-
year period in order to determine whether termination is appropriate. 
We invited interested parties to comment on these results.

EFFECTIVE DATE: March 8, 1994.

FOR FURTHER INFORMATION CONTACT: Stephen Jacques or Jeanene Lairo, 
Office of Agreements Compliance, International Trade Administration, 
U.S. Department of Commerce, Washington, DC 20230; telephone: (202) 
482-3434 or (202) 482-2243, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On October 7, 1993, the Department published in the Federal 
Register the preliminary results of its countervailing duty 
administrative review and intent not to terminate the suspended 
investigation on miniature carnations from Colombia (58 FR 52269). (See 
Suspension of Countervailing Duty Investigation; Miniature Carnations 
from Colombia, 52 FR 1353 (January 13, 1987).) We have now completed 
the administrative review in accordance with section 751 of the Tariff 
Act of 1930, as amended (``the Tariff Act'').

Scope and Review

    Imports covered by this review are shipments of miniature 
carnations from Colombia. During the review period, the merchandise 
covered by this suspension agreement is classified under Harmonized 
Tariff Schedule (``HTS'') item numbers 0603.10.30. The HTS item numbers 
are provided for convenience and Customs purposes. The written 
description remains dispositive.
    The period of review (``POR'') covers January 1, 1988 through 
December 31, 1990, and seven programs: (1) Tax Reimbursement 
(Certificate Program Certificado de Reembolso Tributario (CERT 
program)); (2) The Fund for the Promotion of Export Loans (working and 
fixed-capital) (``PROEXPO''); (3) Plan Vallejo; (4) Free Industrial 
Zones; (5) Export Credit Insurance; (6) Countertrade; and (7) Research 
and Development.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. Also, at the request of the petitioner, the Floral 
Trade Council (``FTC'') and the GOC, we held a public hearing on 
December 3, 1993. Comments 1 through 10 also pertain to the Final 
Results of Countervailing Duty Administrative Review and Intent not to 
Terminate Suspended Investigation; Roses and Other Cut Flowers from 
Colombia which is being published concurrently with this notice.
    Comment 1: The FTC alleges that the GOC has not abolished certain 
programs covered under the suspended investigations for a period of 
three consecutive years as required under 19 CFR 355.25(a)(1)(i). The 
FTC asserts that elimination of Colombian flower exporters' eligibility 
to receive countervailable subsidies on exports of fresh cut flowers to 
the United States is insufficient grounds for termination. The FTC also 
contends that the regulation permits the Department to terminate only 
when the government has abolished all programs benefitting the 
merchandise, not merely the eligibility of exports of a particular 
category of merchandise. Finally, the FTC argues that the Department 
should consider the entire program in deciding whether to terminate the 
suspended investigation.
    The GOC asserts that the Department's preliminary determination was 
erroneous for several reasons. First, the GOC contends that if the 
program remains in existence but has been abolished for the subject 
merchandise, termination is required. In the case of the CERT program, 
the GOC asserts that the Department correctly focused on whether or not 
the subject merchandise remains eligible to receive benefits under the 
subsidy programs found countervailable. Thus, the GOC asserts that the 
Department failed to consistently apply the correct legal standard for 
program abolition in its analysis of PROEXPO, Plan Vallejo, and the air 
freight rates program, since the subsidy programs have been abolished 
with regard to the subject merchandise and there is no likelihood the 
countervailable programs will be reinstated or new programs 
substituted. (See Roses and Other Cut Flowers From Colombia; Final 
Results of Countervailing Duty Administrative Review and Revised 
Suspension Agreement, 51 FR 44930 (December 15, 1986).)
    Department's Position: The Department's regulations at 19 CFR 
355.25(a)(1)(i) state that the Secretary may terminate a suspended 
investigation if the Secretary concludes that ``the Government of the 
affected country has eliminated all subsidies on the merchandise by 
abolishing for the merchandise, for a period of at least three 
consecutive years, all programs that the Secretary has found 
countervailable.'' A program is effectively abolished when the 
government of the affected country has eliminated, by law, the 
eligibility of producer/exporters of the subject merchandise for the 
countervailable program. The regulation does not require that a program 
be abolished for merchandise other than subject merchandise in order 
for the Department to terminate the suspended investigations under this 
provision.
    In the case of CERT, Decree 107, issued by the GOC in January 1987, 
set the level of CERT payments at zero for exports of the subject 
merchandise to the United States. Because, as a matter of law, the GOC 
has made the producer/exporters ineligible for any benefits on the 
subject merchandise by setting their CERT rate to zero, for a period of 
three consecutive years, we determine that the program has been 
abolished for three years.
    In the case of PROEXPO, the program has not been abolished for the 
subject merchandise since flower exporters are eligible to receive 
loans for exports to the United States which may or may not be at 
preferential rates, although they did not receive preferential PROEXPO 
loans during the POR. (See Comment 8, below). For Plan Vallejo, the 
program has not been abolished for the subject merchandise for a period 
of three consecutive years because the GOC did not eliminate 
eligibility for the subject merchandise by law until April 1991. (See 
Comment 9, below.) Because the GOC failed to meet the abolition 
standard in 19 CFR 355.25(a)(1)(i) for Plan Vallejo and PROEXPO, we 
will not terminate the suspended investigations.
    Comment 2: The FTC contends that the Department verified that, 
although, ``in 1988, the Central Bank made no CERT payments for 
shipments of the subject merchandise, * * * there were applications for 
CERT payments in 1988.'' The FTC contends that the verification report 
does not indicate whether signatories to the suspension agreements 
submitted these applications. Consequently, the FTC alleges that this 
is a possible prima facie breach of the suspension agreements and 
should result in a finding of non-compliance.
    The GOC contends that in addition to flowers being ineligible to 
receive any subsidies under the CERT program during the POR, no flower 
grower or exporter received CERT rebates on the subject merchandise.
    Department's Position: We disagree with the petitioner. At 
verification, the Department determined that none of the companies 
examined had used the CERT program during the POR. We have already 
found that for the roses and other cut flowers agreement producer/
exporters were in compliance during the 1988 period and that for the 
miniature carnations agreement producer/exporters were in compliance 
during the 1988 and 1989 periods.
    While applications from a few producer/exporters did occur, the 
companies applying constituted an insignificant portion of the subject 
companies. In 1988, only seven out of approximately 400 flower 
companies applied for CERT payments. The number of companies applying 
for CERT benefits in 1989 and 1990 were two and five respectively. (See 
verification exhibits C-6, C-7, C-13, and C-21.) Moreover, we have 
verified that no countervailable benefits were received under CERT, 
despite any applications made. Although applications for CERT benefits 
are technically inconsistent with the suspension agreements, the 
Department considers these acts inconsequential as specified under 19 
CFR 355.19(d). Consequently, for the purposes of the final results, we 
determine that the signatories were in compliance with the suspension 
agreements during the POR.
    Comment 3: FTC asserts that two signatories may have received CERT 
rebates on U.S. flower exports. FTC contends that the questionnaire 
responses in the 1990-91 administrative review of the antidumping duty 
order indicate that two Colombian signatories to the suspension 
agreements, Flores de la Sabana (``Sabana'') and Las Amalias, S.A. 
(``LASA'') may have received CERT rebates for U.S. exports.
    FTC asserts that in its constructed value questionnaire response, 
Sabana stated that its internal sales taxes are not included in the 
cost of materials because the GOC refunds those taxes because the final 
product is sold outside of the country. Petitioner states that Sabana 
also submitted in a supplemental response a page of its bookkeeping 
records for the month of April 1990 that included the line item 
``CERTs.''
    Petitioner also contends that LASA reported that it was ``entitled 
to a rebate for value added tax * * * paid to suppliers and contractors 
for installations for flowers that are exported. During the period of 
review, LASA received rebates * * *'' FTC claims that according to 
LASA, ``the rebates cover all products exported.'' Finally, FTC states 
that LASA's public version of its consolidated balance sheet dated 
December 31, 1990 includes the line item ``CERTs.''
    The GOC asserts that no CERT rebates were paid with respect to 
exports of subject merchandise. The GOC notes that its questionnaire 
responses and the Department's verification report indicate that no 
subject merchandise received CERT payments.
    The GOC contends that the documents indicate that two producers 
received refund or exemption of value added tax paid on materials used 
in the production for exportation. In addition, the GOC states that 
refund of prior stage value added taxes are entirely permissible and 
non-countervailable. The GOC cites Countervailing Duties; Notice of 
Proposed Rulemaking, 19 CFR 355.44(i)(4)(i), F.R. 23366, 23369, 23380, 
23382 (May 31, 1989) (``Proposed CVD Rules''); General Agreement on 
Tariffs and Trade (``GATT'') Subsidies Code, item (h). Finally, the GOC 
claims that the FTC has failed to demonstrate any link between value 
added tax rebates and the CERT export certificate program.
    The GOC asserts that the bookkeeping records of both companies 
cited by FTC--Sabana and Las Amalias--contain a line item entry for 
CERTs only because they received CERTs for their flower exports to 
third countries.
    Department's Position: We disagree with petitioner and with 
respondent in part. The information described in petitioner's case 
brief pertains to the antidumping administrative review and would 
normally have been considered submitted untimely on the record of these 
reviews. However, because a substantial period of time has passed since 
the petitioner's January 1993 and August 1993 submissions on LASA and 
Sabana, we will consider petitioner's comments on this issue for these 
final results.
    As we stated in our response to Comment 2, the Department verified 
that none of the signatories had used the CERT program for the subject 
merchandise during the POR. Petitioner's remarks concerning line items 
titled ``CERT'' in Sabana's consolidated balance sheet and rebates for 
exports are consistent with the fact that the program is still in 
effect for exports to third countries. However, the Department reviewed 
GOC documentation for all three years of the POR which indicated there 
were no countervailable CERT benefits given on exports of the subject 
merchandise to the United States and corroborated the GOC information 
at verification of three other companies. Consequently, for the 
purposes of the final results, we determine that the signatories were 
in compliance with the suspension agreements during the POR, and that 
we will not conduct any further investigations or verifications with 
regard to Sabana and LASA during this POR. (See also Comment 4, below.)
    As to the GOC's claim that refunds of value-added taxes are 
entirely permissible and non-countervailable, the Department's position 
is that refund of prior stage value added taxes upon export are 
permissible and non-countervailable only to the extent such refund does 
not exceed the amount of prior stage indirect taxes levied on goods 
that are physically incorporated in the export product. (See 
Sec. 355.44(i)(4)(i) of the Proposed CVD Rules.) In the present case, 
because CERT rates were set at zero, no taxes were refunded.
    Comment 4: The FTC contends that the Department's verification of 
the CERT program for three Colombian producer/exporters was 
inconclusive. First, the FTC asserts that the Department failed to 
address how Agropecuria Cuernavaca listed export destinations based on 
the sales ledger if destination was not recorded. Furthermore, 
petitioner contends that the customers' identity are insufficient to 
indicate the final destination, where there are innumerable companies 
trading flowers on consignment.
    Second, the FTC states that since Minispray was incorporated in 
1989 and made its first sale in May 1990, it is hardly representative 
of the Colombian flower producer/exporters.
    Third, the FTC claims that with respect to Floramerica, the 
Department should have investigated whether a CERT payment for the 
merchandise exported to Germany was actually for merchandise exported 
to the United States. The FTC requests that the Department explain how 
it determined that the CERT payment was actually for a shipment to 
Germany, and not the United States. The FTC asserts that the GOC should 
have questioned the CERTs reported by Floramerica on its U.S. sales.
    Finally, the FTC requests that the Department either (1) conduct a 
further investigation and verification or (2) presume that Colombian 
growers received CERT rebates on U.S. flower exports. In support of 
their argument the FTC cites Federal-Mogul Corp. v. United States, 17 
CIT ______. Slip Op. 93-180 (Sept. 14, 1993); and Freeport Minerals 
(Freeport-McMoran Inc.) v. United States, 776 F.2d 1029, 1032-33 (Fed. 
Cir. 1985).
    The GOC contends that the Department fully verified the non-receipt 
of CERT certificates on floral exports for the United States. Also, the 
GOC claims that its records showed no CERT payments being made to 
Floramerica with respect to its exports to the United States. The GOC 
asserts that a Floramerica internal worksheet erroneously listed a U.S. 
CERT payment which the company demonstrated to the Department verifiers 
was actually made for a shipment to Germany.
    The GOC claims that the suspension agreements only obligate 
Colombian growers and exporters to renounce CERT benefits on shipments 
of the subject products exported, directly or indirectly, from Colombia 
to the United States and that the U.S. countervailing duty law 
generally concerns itself only with bounties or grants benefitting 
merchandise exported to the United States.
    Department's Position: We agree with the respondent. The Department 
verified that producer/exporters of the subject merchandise did not 
receive any CERT payments. We were satisfied that the GOC's records and 
procedures meet their obligations under the suspension agreements to 
ensure that no benefits ensue to producer/exporters. At verification, 
from documentation provided by the GOC, we traced all CERT payments 
received by Agropecuria Cuernavaca during the POR to their exports of 
the merchandise to third countries. We verified that all CERT payments 
are recorded in an internal report which tracks CERT payments on a 
yearly basis and that no payments were for shipments of subject 
merchandise. We further verified that the GOC requires documentation 
that the shipment does not go to a country for which CERT payments are 
not available. In the case of Minispray, it was fully operating during 
the POR, thereby making the company a legitimate and representative 
Colombian flower producer and we verified it did not receive CERT 
payments for exports of the subject merchandise. In the case of 
Floramerica, we verified that the company received no CERT payments for 
exports of the subject merchandise during the POR. The Floramerica 
report indicating a CERT payment for a U.S. shipment was the result of 
a clerical error by the company. Based on an official GOC export 
document and other company documents reviewed during the Floramerica 
verification which included the destination and importer, we verified 
the shipment in question went to Germany and not to the United States. 
(See verification exhibit F-6). Finally, the Department will not 
conduct a further investigation or verification of the information the 
FTC submitted on LASA and Sabana. (See Comment 3, above.)
    Comment 5: The FTC contends that the Department's verification 
reports revealed an inability on the part of the GOC to monitor 
compliance with the terms of the suspension agreements and the CERT 
program, in particular.
    In addition, the FTC contends that the verification reports do not 
establish that the Central Bank or Customs collect information on the 
intermediate and ultimate destinations of exports. Therefore, the FTC 
argues that the GOC is unable to certify that CERT payments were made 
for shipments to third countries. In addition, the FTC asserts that 
since the documents are prepared by the exporters, they do not offer 
any objective support that CERT payments were made only for third-
country exports. In support of their position, the petitioner cites 
Asociacion Colombiana de Exportadores v. U.S., 704 F. Supp. 1114, 1117 
(CIT 1989).
    The GOC argues that the Department is not required to investigate 
unsupported allegations and that the GOC is under no obligation to 
disprove these allegations.
    Department's Position: Contrary to petitioner's assertions, we have 
determined that the agreements have been effectively monitored by the 
GOC during the POR. During verification, the Department reviewed 
documentation provided by companies and by the Banco de la Republica, 
including applications and records of official government approval and 
disapproval for CERT payments listed by individual companies for 
exports to various countries during the POR. (See verification exhibits 
C-7, C-13, C-18, and C-21.) The Department also examined export 
manifests and other shipping documents to determine destinations of 
shipments receiving CERT rebates and verified that no shipments of 
subject merchandise received CERT rebates. The export manifests which 
indicated the country of destination for the merchandise matched 
documents verified at the companies. (See verification exhibit AC-3A.) 
Consequently, we determine that the GOC has adequately monitored the 
agreements and has provided the Department the relevant reports in 
accordance with the terms of the agreements.
    Comment 6: The FTC contends that certain shipments received CERT 
rebates which may have been reshipped to the United States from the 
Netherlands Antilles and Panama. The FTC also questions the GOC's 
decision to reduce the CERT rebate rate for exports to the Netherlands 
Antilles and Panama to zero. Finally, the FTC questions whether 
shipments having received CERT payments actually traveled the entire 
distance to Canada and Europe, etc. as indicated on the export 
documentation. The FTC alleges that the Department did not confirm that 
third country exports receiving CERT payments were not actually 
unloaded at Miami port.
    The GOC argues that the Department is not required to investigate 
unsupported allegations and that the GOC is under no obligation to 
disprove these allegations.
    Department's Position: During verification, the Department examined 
export documents to determine destinations of shipments receiving CERT 
rebates and verified that no shipments of subject merchandise received 
CERT rebates. There is no evidence in the questionnaire response, in 
documentation reviewed by the Department at verification, or anywhere 
else on the record to support an allegation of transhipment through 
third countries or of unloading of flowers in the United States.
    Comment 7: The FTC contends that the Department should determine 
that flower exports to the U.S. continue to benefit from CERT rebates 
on third country exports and that the CERT program still exists. Thus, 
the FTC contends that the benefit received benefits the whole company's 
production, including production exported to the United States. In 
support of their position, petitioner cites Certain Carbon Steel 
Products from Brazil; Final Affirmative Countervailing Duty 
Determinations, 49 FR 17988, 17996 (April 26, 1984); Final 
Determination of Sales at Less Than Fair Value: Silicon Metal from 
Brazil, 56 FR 26977, 26987 (June 12, 1991); and British Steel Corp. v. 
United States, 605 F. Supp. 286, 293-95 (CIT 1985).
    The GOC contends that the suspension agreements obligate 
signatories to renounce CERT payments ``on shipments of the subject 
products exported, directly or indirectly, from Colombia to the United 
States.'' The GOC claims that Colombian producer/exporters are under no 
obligation to renounce CERT benefits to third countries.
    The GOC further asserts that U.S. countervailing duty law generally 
concerns itself with only bounties or grants benefitting subject 
merchandise (i.e. merchandise shipped to the United States). In support 
of their claim, the GOC cites Roses and Other Cut Flowers From 
Colombia; Final Results of Countervailing Duty Administrative Review 
and Revised Suspension Agreement, 51 FR 44930 (Dec. 15, 1986); Roses 
and Other Cut Flowers From Colombia; Final Results of Countervailing 
Duty Administrative Review, 52 FR 48846, 48847-8 (Dec. 28, 1987); and 
Final Affirmative Countervailing Duty Determination; Miniature 
Carnations from Colombia, 52 FR 32033, 32036 (Aug. 25, 1987).
    Finally, the GOC contends that by having export subsidies to third 
countries, there is an incentive for Colombian exporters to shift 
exports from the United States to third countries. Consequently, the 
GOC argues that flowers sold in the United States in no way benefit 
from CERT rebates.
    Department's Position: As stated in the final results of the 1983-
1985 administrative review of this case (Roses and Other Cut Flowers 
From Colombia; Final Results of Countervailing Duty Administrative 
Review, 52 FR 48847 and 48848 (Comments 2 and 4)(December 28, 1987)), 
it is the Department's position that rebates tied to exports to third 
countries do not benefit the production or export of the subject 
merchandise. (See Sec. 355.47(b) of the Proposed CVD Rules.) The 
Department has verified that Colombian exporters only received CERT 
payments based on exports to countries other than the United States. 
CERT payments benefit only those shipments to which they are tied, not 
shipments of subject merchandise. It is the Department's policy that we 
will not allocate benefits tied to a product not under investigation 
over a product under investigation unless we have a clear reason to 
believe that such a benefit encourages the production or export to the 
United States of the product under investigation. (See Industrial 
Nitrocellulose From France; Final Results of Countervailing Duty 
Administrative Review, 52 FR 833 (Comment 1)(January 9, 1987), and 
Certain Fresh Cut Flowers From Israel; Final Affirmative Countervailing 
Duty Determination, 52 FR 3316 (Comment 9)(February 3, 1987). We have 
no such evidence in this case. We determine, therefore, that the 
signatories have not violated the suspension agreements.
    We disagree with the FTC that Silicon Metal from Brazil is germane 
to this review. The issue in that antidumping case involved the 
allocation of financing cost for new furnaces that could produce the 
subject merchandise. While it is true that money is fungible, subsidies 
on exports to third countries do not provide benefits to exports to the 
United States if the subsidies are tied to specific non-subject 
merchandise destined for third countries. The FTC's reliance on Certain 
Carbon Steel Products from Brazil is misplaced because in that case, 
although we found the IPI tax rebate was a subsidy benefitting all 
production including exports, we did not find that it was tied to 
specific exports to individual countries. In the case of CERT payments, 
we were able to determine that payments were clearly tied to particular 
countries.
    Comment 8: FTC contends that the Department should compare the 
interest rates received on PROEXPO loans to commercial benchmark 
interest rates available on comparable loans during the POR. FTC also 
argues that the Department applied outdated benchmark interest rates, 
inconsistent with the Department's practice. In support of its 
position, FTC cites the Proposed CVD Rules; Final Affirmative 
Countervailing Duty Determinations: Certain Steel Products From 
Belgium, 58 FR 37273, 37288-89 (July 9, 1993); Final Affirmative 
Countervailing Duty Determinations: Certain Steel Products from 
Germany, 58 FR 37315, 37322-23 (July 9, 1993); Oil Country Tubular 
Goods from Argentina--Preliminary Results of Countervailing Duty; 
Administrative Review, 56 FR 50,855 (October 9, 1991); Preliminary 
Affirmative Countervailing Duty Determination: Bulk Ibuprofen from 
India, 56 FR 66432 (December 23, 1991); Preliminary Affirmative 
Countervailing Duty Determination: Extruded Rubber Thread from 
Malaysia, 56 FR 67276, 67277 (December 30, 1991); Rice from Thailand; 
Preliminary Results of Countervailing Duty Administrative Review, 57 FR 
8437, 8439 (March 10, 1992); and Alhambra Foundry v. United States, 626 
F. Supp. 402 (CIT 1985).
    FTC argues that the Department should instead apply periodically 
reconstructed benchmarks that reflect, for short-term loans, comparable 
commercial financing on a nation-wide and non-sector specific basis 
and, for long-term loans, the firm's other commercial loans taken out 
in the same year or the national average interest rate. FTC asserts 
that if the Department were to apply benchmarks chosen in the 1989 
miniature carnations review it is likely that certain Colombian 
producers/exporters received PROEXPO loans at preferential rates. (See 
Asociacion Colombiana de Exportadores v. United States, 704 F. Supp. 
1114, 1122 (CIT 1989.) Furthermore, the FTC contends that the 
Department should apply effective, rather than nominal benchmark rates. 
Finally, the FTC argues that if ``established benchmarks'' rather than 
reconstructed benchmarks are used in the final results, the Department 
should use its established benchmark methodology to determine 
benchmarks for each of the 1988, 1989, and 1990 periods. FTC contends 
that the Department should confirm the primary source of financing by 
reviewing source documents.
    The GOC contends that the signatories fully complied with the 
suspension agreements because during the POR it rendered flower growers 
ineligible for a countervailable PROEXPO benefit by setting the PROEXPO 
interest rates for flower growers not just at but above the benchmark 
interest rates established by the Department. In addition, the GOC 
asserts that the suspension agreements require their signatories not to 
renounce PROEXPO loans per se, but only to renounce the preferential 
interest rates. The GOC claims that, under the agreements, the 
Department establishes the benchmark interest rates, and that the 
agreements only obligate the renouncing producers and exporters to 
refinance existing loans and obtain new loans on non-preferential terms 
at or above the relevant benchmark interest rate determined by the 
Department. Thus, the GOC argues that continued receipt by flower 
growers of PROEXPO loans at the Department-established rates not only 
is permitted under the suspension agreements but is expressly 
contemplated.
    The GOC also asserts that the Department erred because it defined 
``the program'' at issue as all PROEXPO loans, including PROEXPO loans 
at non-preferential and thus non-countervailable rates.
    The GOC contends the effect was that no flower grower could receive 
a PROEXPO loan at a preferential interest rate, irrespective of the 
destination to which it shipped its flowers, and even if it did not 
export at all. Consequently, GOC asserts that the Department erred in 
its preliminary results of review because it appears to have defined 
``the program'' at issue as all PROEXPO loans, including PROEXPO loans 
at non-preferential and thus non-countervailable rates.
    Department's Position: The Department set the benchmark rates 
applicable to the POR in 1987. Although we determined on April 8, 1991 
that the benchmark for PROEXPO should be changed, we stated that ``any 
changes to short-term and long-term benchmark interest rates for this 
suspension agreement should be set prospectively.'' See Miniature 
Carnations from Colombia; Final Results of Countervailing Duty 
Administrative Review, 56 Fed. Reg. 14240 (April 8, 1991). 
Consequently, the Department cannot reset the benchmarks for these 
suspension agreements in the middle of an administrative review. Had 
the Department changed the benchmark interest rates during the POR it 
would have imposed undue burdens on the signatories to the suspension 
agreements to comply with the changed benchmark rates. Since suspension 
agreements are forward looking, the terms and conditions should not be 
retroactively changed during the POR.
    At verification, the Department examined documentation that 
indicated that PROEXPO charged interest rates on its short- and long-
term loans above the Department's established benchmark rates in effect 
during the POR. The Department also found that the companies received 
PROEXPO loans on terms consistent with the suspension agreements. 
Consequently, we have determined that signatories were in compliance 
with the terms of the suspension agreements for the PROEXPO program. 
Since PROEXPO loans were above the benchmark rates, the Department 
determines that the GOC did not confer any countervailable benefits 
through the PROEXPO program during the POR. The Department finds that 
signatories complied with the suspension agreements' benchmarks and 
avoided countervailable benefits during the POR, resulting in a 
situation analogous to non-use for the PROEXPO program by signatories.
    However, the GOC has not abolished the PROEXPO program for the 
subject merchandise as required by 19 CFR 355.25(a)(1)(i). In the case 
of the CERT program, the GOC has changed the law to eliminate subsidies 
and would have to change the law again in order to confer any future 
countervailable benefits for the subject merchandise through the CERT 
program. In other words, the GOC would have to take a specific action 
in the future (e.g., passing a new law or repealing the old law) in 
order for any possible countervailable benefits to occur in the future. 
As the PROEXPO program is now structured, PROEXPO loans granted at 
interest rates at or above the current benchmarks could constitute 
countervailable subsidies if the commercial interest rate falls below 
the benchmark specified by the suspension agreements. In such a case, 
producer/exporters would be eligible for countervailable benefits under 
PROEXPO without the GOC taking specific action to change the program 
(as would be the case with the CERT program). Thus the GOC has failed 
to eliminate the subsidy by abolishing PROEXPO because loans under the 
program may in future constitute countervailable subsidies without 
further GOC action. Consequently, we determine that PROEXPO has not 
been abolished for the subject merchandise as required by 19 CFR 
355.25(a)(1)(i), and the Department will not terminate the suspended 
investigations.
    Comment 9: The GOC asserts that it rendered flower growers 
ineligible for any countervailable subsidy under the Plan Vallejo 
program for capital equipment. Consequently, the GOC asserts that it 
has satisfied the Department's requirement for abolishing programs 
``for the merchandise'' found to confer countervailable benefits. The 
GOC contends that the Department's preliminary determination is not in 
accordance with law because it appears to require that Plan Vallejo as 
a whole be abolished rather than simply that it be abolished for the 
merchandise.
    Department's Position: We disagree with the GOC. The GOC only 
formalized its policy of not providing subsidies on the subject 
merchandise by abolishing the Plan Vallejo program for the subject 
merchandise in April 1991, after the POR. At verification, the 
Department reviewed documentation that indicated that no flower 
producer/exporters received Plan Vallejo benefits for the subject 
merchandise during the POR. (See verification exhibits PV-4 and PV-5.) 
However, while producer/exporters did not receive any benefits under 
Plan Vallejo, they were eligible for benefits because the GOC had not 
changed its law to abolish the program. Consequently, we determine that 
the program has not been abolished for the subject merchandise for a 
period of three consecutive years as required by 19 CFR 
355.25(a)(1)(i), and the Department will not terminate the suspended 
investigations.
    Comment 10: The GOC argues that because they have not only met 
their obligations under side letters provided in connection with the 
suspension agreements, but have also exceeded them by taking steps to 
reduce, phase out, or eliminate the programs as a whole, there is no 
likelihood that countervailable subsidies will be substituted or 
replaced. To support their arguments petitioner cites the following: 19 
CFR 355.25(a)(1); Manufacturas Industriales de Nogales, S.A. v. United 
States, 666 F. Supp. 1562 (CIT 1987); and Leather Wearing Apparel from 
Mexico; Final Results of Administrative Review of Countervailing Duty 
Order, 50 FR 6024 (February 13, 1985).
    The FTC claims that the existence of potentially countervailable 
subsidies increases the likelihood of the reactivation of the programs 
or their substitution with other countervailable programs after 
termination. In the case of CERT, the GOC may simply issue another 
decree to change the CERT rate on the subject merchandise. As for 
PROEXPO, the FTC asserts that the Department's review cannot establish 
the likelihood of PROEXPO's reinstatement or substitution after 
termination.
    Department's Position: Because we have found that the Plan Vallejo 
and PROEXPO programs have not been abolished during the POR, the 
conditions of 19 CFR 355.25(a)(1)(i) have not been met, and we will not 
terminate the suspension agreements. Therefore, it is unnecessary for 
us to address the question of the likelihood of benefits resuming.

Final Results of Review

    After considering all of the comments received, we determine that 
the signatories have complied with the terms of the suspension 
agreement for the period January 1, 1988 through December 31, 1990. 
However, we will not terminate the suspension agreement. In order for 
us to terminate the suspension agreement the GOC must have abolished 
all programs for a period of three consecutive years which is not the 
case with Plan Vallejo and PROEXPO.
    This administrative review and notice are in accordance with 
sections 751(a)(1)(C) of the Tariff Act (19 U.S.C. 1675(a)(1)(C)) and 
19 CFR 355.22 and 355.25.

    Dated: March 1, 1994.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 94-5307 Filed 3-7-94; 8:45 am]
BILLING CODE 3510-DS-P