[Federal Register Volume 59, Number 214 (Monday, November 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21549]


[[Page Unknown]]

[Federal Register: November 7, 1994]


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

DEPARTMENT OF COMMERCE
[C-351-029]

 

Certain Castor Oil Products From Brazil: Preliminary Results of 
Countervailing Duty Administrative Review

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

EFFECTIVE DATE: November 7, 1994.

FOR FURTHER INFORMATION CONTACT: Raphiel Hampton or Vincent Kane, 
Office of Countervailing Investigations, U.S. Department of Commerce, 
Room B099, 14th Street and Constitution Avenue, N.W., Washington, DC 
20230; telephone (202) 482-0176 or 482-2815, respectively.

Preliminary Results

    The Department of Commerce is conducting an administrative review 
of the countervailing duty order of certain castor oil products from 
Brazil. We preliminarily determine the net subsidy to be 0.03 percent 
ad valorem, which is de minimis, for the period January 1, 1992, 
through December 31, 1992. We invite interested parties to comment on 
these preliminary results.

Background

    Since the publication of the notice of initiation in the Federal 
Register (58 FR 26960, May 6, 1993), the following events have 
occurred.
    On October 13, 1993, we issued a questionnaire to the Brazilian 
Embassy in Washington, D.C., concerning the subsidy programs under 
review. We received a response from the Government of Brazil (GOB) on 
December 29, 1993, on behalf of itself and the respondent's companies. 
After reviewing the GOB's response, we issued a supplemental 
questionnaire to the GOB on January 28, 1994. We received a 
supplemental response from the GOB on February 23, 1994. From March 7 
to 18, 1994, we verified the government and companies' responses in 
Brazil.

Scope of Review

    The merchandise subject to this review is hydrogenated castor oil 
and 12-hydroxystearic acid. Imports of these products are currently 
classifiable under the following Harmonized Tariff Schedule (``HTS'') 
subheadings: 1516.20.90 and 1519.19.40. Although the HTS subheadings 
are provided for convenience and customs purposes, our written 
description of the scope of this proceeding is dispositive.
    The review covers six companies, the period January 1 through 
December 31, 1992, and 12 programs: (1) Preferential Export Financing 
under Resolution 950/1009; (2) Income Tax Exemption for Export 
Earnings; (3) Preferential Export Financing Under CIC-OPCRE 6-2-6; (4) 
Preferential Financing for Industrial Enterprises by the Bank of 
Brazil; (5) Reduction of Industrial Products Tax (IPI) and Import 
Duties Under Decreto No. 77.065 through BEFIEX; (6) Preferential 
Financing for National Trading Companies under Resolution 883 of the 
Banco Central do Brasil; (7) Accelerated Depreciation for Brazilian-
Made Capital Goods; (8) Preferential Financing under Resolution 68 
through FINEX; (9) Preferential Financing under Resolution 578/83 
through FUNPAR; (10) Preferential Financing under Resolution 579/83 
through PROEX and PROSIM; (11) Preferential Financing for the Storage 
of Merchandise Destined for Export under Resolution 330/Portaria 130 of 
the Banco Central do Brasil; and (12) Green Yellow Drawback (Portaria 
68/83).

Calculation Methodology for Assessment and Cash Deposit Purposes

    In calculating the benefits received during the review period, we 
followed the methodology described in 19 CFR 355.20(d)(1) (53 FR 52325, 
December 27, 1988). Using this methodology we calculated a country-wide 
rate of 0.03 percent which is de minimis.

Analysis of Program

(1) Income Tax Exemption for Export Earnings
    Under this program, exporters of the subject merchandise were 
eligible for an exemption from income tax on the portion of their 
profits attributable to exports. On April 12, 1990, Decree Law 8,034 
eliminated this exemption by establishing a 30 percent income tax rate 
for export profits, which equaled the normal corporate income tax rate. 
Boley, however, was authorized to use the income tax exemption on 
export earnings under the terms of a contract with the Commission for 
the Granting of Fiscal Benefits to Special Export Programs (BEFIEX) 
until its contract expired. Therefore, despite the fact that the income 
tax exemption for export earnings was eliminated, Boley received 
residual benefits from the program during the review period. No other 
company under review used this program.
    To calculate the income tax savings realized by Boley during the 
review period, we multiplied the income tax deduction taken by the firm 
under this program by 30 percent, the corporate income tax rate during 
the review period. We then used the amount of Boley's income tax 
savings to calculate a country-wide rate. We calculated the country-
wide rate by dividing the total income tax savings realized by Boley by 
the total exports of all products by all of the companies under review. 
On this basis, we calculated a subsidy rate of 0.03 percent ad valorem, 
which is de minimis.

Programs Preliminarily Found To Be Terminated

    We examined the following programs and preliminarily determine 
these programs to be terminated. Further, we verified that the 
respondents did not receive any residual benefits under them during the 
period of review.
a. Preferential Export Financing Under Resolution 950/1009 Through 
CACEX (Carteira de Comercio Exterior) of the Bank of Brazil
    We verified that this program was terminated on August 30, 1990, by 
Banco Central Bank do Brasil Resolution No. 1,744. See, also, Final 
Affirmative Countervailing Duty Determination: Silicon Metal from 
Brazil, June 12, 1991 (56 FR 26988).
b. Preferential Export Financing Under CIC-OPCRE 6-2-6
    We verified that on May 10, 1990, the functions of CACEX of the 
Bank of Brazil, which administered these export financing loans, were 
absorbed by the Secretariat of Foreign Trade (SECEX). SECEX was not 
empowered to perform banking operations and the export financing was 
discontinued. See, also, Certain Round-Shaped Agricultural Tillage 
Tools from Brazil; Preliminary Results of Countervailing Duty 
Administrative Review, March 31, 1992 (57 FR 10885) (Tillage Tools).
c. Reduction of Industrial Products Tax (IPI) and Import Duties Under 
Decreto No. 77.065 Through BEFIEX (Comissao par a Concessao de 
Beneficios a Programas Especials de Exportacao) and CIEX (Comissao para 
Incentivos a Exportacao)
    We verified that on April 12, 1990, Decree Law 8,032 limited this 
program exclusively to imports made by the federal, state, and 
municipal governments, territories, and other political entities, and 
scientific institutions, thereby eliminating the benefit to commerical 
enterprises. See, also, Tillage Tools.
d. Preferential Financing for National Trading Companies Under 
Resolution 883 of the Banco Central do Brasil
    We verified that Banco Central do Brasil Resolution 1,744 revoked 
Resolution 883 on August 30, 1990, thereby terminating this program. 
See, also, Tillage Tools.
e. Preferential Financing Under Resolution 68 Through FINEX
    We verified that this program was terminated on April 5, 1988, by 
Article 4 of Brazil's new constitution, which provided that all 
programs requiring funding from the national treasury had to be 
reenacted within a two-year period or cease to exist. Legislation to 
reenact preferential financing through FINEX was not passed and the 
program ceased to exist.
f. Preferential Financing Under Resolution 579/83 Through PROEX and 
PROSIM
    We verified that preferential financing through PROSIM was 
terminated on February 4, 1985, by BNDES Resolution 607, and that 
preferential financing through PROEX was terminated in 1991 by BNDES 
Resolution 762.
g. Preferential Financing for the Storage of Merchandise Destined for 
Export Under Resolution 330/Portaria 130 of the Banco Central do Brasil
    We verified that this program was terminated on August 21, 1984, by 
Central Bank Resolution 950.

Programs Preliminarily Found To Be Not Used

    We also examined the following programs and preliminarily determine 
that the respondents did not use them during the review period:
a. Preferential Financing for Industrial Enterprises by the Bank of 
Brazil
b. Preferential Financing Under Resolution 578/83 Through FUNPAR
c. Accelerated Depreciation for Brazilian Made Capital Goods
d. Green Yellow Drawback (Portaria 68/83)

Preliminary Results of Review

    As a result of our review, we preliminarily determine the net 
subsidy to be 0.03 percent, which is de minimis, for the period January 
1, 1992 through December 31, 1992.
    If the final results of this review remain the same as these 
preliminary results, the Department intends to instruct the Customs 
Service not to assess countervailing duties on shipments of the subject 
merchandise from all companies, exported on or after January 1, 1992 
and on or before December 31, 1992. Further, as provided by section 
751(a)(1) of the Act, the Department will instruct Customs not to 
collect cash deposits on shipments of this merchandise from all 
companies entered or withdrawn from warehouse for consumption on or 
after the date of publication of the final results of this 
administrative review.
    Parties to the proceeding may request disclosure of the calculation 
methodology and interested parties may request a hearing not later than 
ten days after the date of publication of this notice. Interested 
parties may submit written arguments in case briefs on these 
preliminary results within 30 days of the date of publication. Rebuttal 
briefs, limited to agruments raised in case briefs, may be submitted 
seven days after the time limit for filing the case brief. Requests for 
a hearing should be made within ten days of the publication of these 
preliminary results. Any hearing, if requested, will be held within 
seven days after the scheduled date for submission of rebuttal briefs. 
Copies of case briefs and rebuttal briefs must be served on interested 
parties in accordance with 19 CFR 355.38(e) of the Department's 
regulations. The Department will publish the final results of this 
administrative review, including the results of its analysis of issues 
raised in any case or rebuttal brief.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.

    Dated: September 28, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-21549 Filed 11-4-94; 8:45 am]
BILLING CODE 3510-DS-M