[Federal Register Volume 60, Number 38 (Monday, February 27, 1995)]
[Notices]
[Pages 10569-10573]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4718]



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DEPARTMENT OF COMMERCE.
[C-508-808]


Final Affirmative Countervailing Duty Determination: Certain 
Carbon Steel Butt-Weld Pipe Fittings From Israel

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

EFFECTIVE DATE: February 27, 1995.

FOR FURTHER INFORMATION CONTACT:
Gary Bettger or Jennifer Yeske, Office of Countervailing 
Investigations, Import Administration, U.S. Department of Commerce, 
Room B099, 14th Street and Constitution Avenue, NW., Washington, DC 
20230; telephone (202) 482-2239 or 482-0189, respectively.

Final Determination

    The Department of Commerce (``the Department'') determines that 
benefits which constitute subsidies within the meaning of Section 701 
of the Tariff Act of 1930, as amended (``the Act''), are being provided 
to manufacturers, producers, or exporters in Israel of certain carbon 
steel butt-weld pipe fittings (``pipe fittings''). For information on 
the estimated net subsidy, please see the Suspension of Liquidation 
section of this notice.

Case History

    Since the publication of the notice of the preliminary 
determination in the Federal Register (59 FR 28340, June 1, 1994), the 
following events have occurred.
    On June 1, 1994, petitioner requested that the final determination 
in this investigation be postponed and aligned with the date for the 
final determination in the companion antidumping investigation of the 
same subject merchandise from Israel. On June 27, 1994, the Department 
published in the Federal Register a notice postponing and aligning the 
publication of the final determination in this investigation (59 FR 
32955).
    On October 5, 1994, Pipe Fittings Carmiel, Ltd. (``Carmiel''), the 
sole company respondent, requested that the Department postpone the 
final antidumping and countervailing duty determinations. Therefore, on 
November 14, 1994, the Department published in the Federal Register a 
notice postponing the final antidumping and countervailing duty 
determinations until no later than February 16, 1995 (59 FR 56461).
    We conducted verification of the responses submitted by the 
Government of Israel (``GOI'') and Carmiel from November 27 through 
December 4, 1994. Both respondents and petitioner submitted case and 
rebuttal briefs on January 24 and January 31, 1995, respectively.

Scope of Investigation

    The products covered by this investigation are certain carbon steel 
butt-weld pipe fittings having an inside diameter of less than fourteen 
inches (355 millimeters), imported in either finished or unfinished 
condition. Pipe fittings are formed or forged steel products used to 
join pipe sections in piping systems where conditions require permanent 
welded connections, as distinguished from fittings based on other 
methods of fastening (e.g., threaded, grooved, or bolted fittings). 
Butt-weld fittings come in a variety of shapes which include 
``elbows,'' ``tees,''``caps,'' and ``reducers.'' The edges of finished 
pipe fittings are beveled, so that when a fitting is placed against the 
end of a pipe (the ends of which have also been beveled), a shallow 
channel is created to accommodate the ``bead'' of the weld which joins 
the fitting to the pipe. These pipe fittings are currently classifiable 
under subheading 7307.93.3000 of the Harmonized Tariff Schedule of the 
United States (HTSUS). Although the HTSUS subheading is provided for 
convenience and customs purposes, our written description of the scope 
of this proceeding is dispositive.
Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute and to the 
Department's regulations are references to the provisions as they 
existed on December 31, 1994. References to the Countervailing Duties: 
Notice of Proposed Rulemaking and Request for Public Comments, 54 FR 
23366 (May 31, 1989) (Proposed Regulations), are provided solely for 
further explanation of the Department's CVD practice. Although the 
Department has withdrawn the particular rulemaking proceeding pursuant 
to which the Proposed Regulations were issued, the subject matter of 
these regulations is being considered in connection with an ongoing 
rulemaking proceeding which, among other things, is intended to conform 
the Department's regulations to the Uruguay Round Agreements Act. See 
60 FR 80 (January 3, 1995).

Injury Test

    Because Israel is a ``country under the Agreement'' within the 
meaning of section 701(b) of the Act, the U.S. International Trade 
Commission (``ITC'') must determine whether imports of the subject 
merchandise from Israel materially injure, or threaten material injury 
to, a U.S. industry. On April 20, 1994, the ITC published its 
preliminarily determination that there is a reasonable indication that 
industries in the United States are being materially injured or 
threatened with material injury by reasons of imports from Israel of 
the subject merchandise (59 FR 18825).

Period of Investigation

    For purposes of this final determination, the period for which we 
are measuring subsidies (the period of investigation (the ``POI'')) is 
calendar year 1993.

Analysis of Programs

    Based upon our analysis of the petition, responses to our 
questionnaires, verifications and comments made by interested parties, 
we determine the following:

I. Programs Determined To Be Countervailable

A. Grants under the Encouragement of Capital Investments Law of 1959 
(``ECIL'')

    The ECIL program was established to develop the production capacity 
of the Israeli economy by providing investment grants for industrial 
projects. In order to be eligible to receive benefits under the ECIL, 
an applicant first must obtain ``Approved Enterprise'' status, which is 
granted by the Investment Center of the Israeli Ministry of Industry 
and Trade.
    Among the benefits provided under ECIL are investment grants. The 
amount of an investment grant is calculated as a percentage of the 
total approved investment in fixed assets, and this percentage depends 
on the geographic location of the enterprise. For purposes of the ECIL 
program, Israel is divided into three zones--the Central Zone, 
Development Zone A and Development Zone B. The Central Zone comprises 
the geographic center of Israel, including its largest and most 
developed population centers. Companies in the Central Zone could not 
receive grants under this program at all in 1988, and only at a much 
lower rate than companies in Development Zones A and B in 1983, with 
Development Zone A companies receiving a higher level of funding than 
those in Development Zone B. [[Page 10570]] 
    In the Final Affirmative Countervailing Duty Determination: 
Industrial Phosphoric Acid from Israel (``IPA'') (52 FR 25447; July 7, 
1987), the Department found the investment grants program under the 
ECIL to be de jure specific and, therefore, countervailable because the 
grants are limited to enterprises located in specific regions (i.e., 
Development Zones A and B). In the course of this proceeding, the GOI 
provided no new information indicating that the grants are not limited 
to particular regions. Therefore, we are continuing to find ECIL grants 
to be de jure specific.
    Carmiel's production facility is located in Development Zone A. 
According to the responses and verification, the company received 
approval, in 1983 and 1988, for grants for two projects related to the 
production of subject merchandise. These grants were disbursed over the 
period 1983-1993.
    At verification, we noted that for certain of the grant 
disbursements, the Israeli Ministry of Finance subtracted a small 
``computer commission.'' Consistent with section 771(6) of the Act and 
section 355.46 of Countervailing Duties; Notice of Proposed Regulations 
and Request for Public Comments, 54 FR 23366 (May 31, 1989) (``Proposed 
Regulations''), we have determined that this commission constitutes an 
allowable offset. Therefore, we have subtracted the commission in those 
instances in which Carmiel was able to document that a commission was 
subtracted from a grant amount.
    It is our policy to allocate non-recurring grants over a period 
equal to the average useful life of assets in the industry, unless the 
sum of grants provided under a program in a particular year is less 
than 0.50 percent of a firm's total sales in that year. See Section 
355.49(a) of the Department's Proposed Regulations and the General 
Issues Appendix to the Final Affirmative Countervailing Duty 
Determination: Certain Steel Products From Austria, 58 FR 37217, July 
9, 1993. In this instance, Carmiel has not provided sales information 
for years prior to 1989. Therefore, we have no reason to believe that 
grants made before 1989 were less than 0.50 percent of sales in the 
year of receipt for these years and, therefore, have determined that 
the yearly disbursements should be allocated over time. In 1990, the 
sum of grants disbursed under the ECIL program accounted for less than 
0.5 percent of Carmiel's total sales in that year. Therefore, benefits 
for 1990 were allocated to that year and are not included in our 
calculations. For all other years after 1989, the sum of the grants 
disbursed under the ECIL program accounted for more than 0.5 percent of 
Carmiel's total sales each year. Therefore, these benefits were 
allocated over time.
    For ECIL grants allocated over time, we used a twelve year 
allocation period (the average useful life of assets with respect to 
the manufacture of fabricated metal products, as determined by the U.S. 
Internal Revenue Service Asset Depreciation Range System). The formula 
described in Section 355.49(b)(3) of the Proposed Regulations for 
allocating grants relies on a fixed discount rate, which is based on 
the cost of long-term, fixed-rate debt of the firm or generally in the 
country under investigation. However, we confirmed at verification that 
no long-term loans with fixed interest rates (or other long-term fixed-
rate debt) were available in Israel during the years 1983-1993. 
Instead, the only long-term loans (or other long-term debt) available 
to companies in Israel utilized variable interest rates, i.e., a fixed 
real interest rate added to the Consumer Price Index (CPI) or the 
dollar/shekel exchange rate.
    Therefore, we have determined to adapt the grant allocation method 
described in our proposed regulations to use variable rather than fixed 
interest rates as the discount rate, given the absence of long-term 
fixed interest rates in the years these grants were disbursed. This 
methodology reflects the actual long-term options open to Israeli firms 
(i.e., that long-term financing was only available through variable 
rate loans) and also ensures that the net present value of amounts 
countervailed in the year of receipt does not exceed the face value of 
the grant.
    In this determination, we have used as the discount rate the rate 
of return on CPI-indexed commercial bonds (the real rate of return, as 
published in the Bank of Israel Annual Reports, plus the CPI), as no 
actual borrowing rates for Carmiel were available.
    We divided the benefit allocated to 1993 by Carmiel's 1993 total 
sales. On this basis, we determine the estimated net subsidy for this 
program to be 2.31 percent ad valorem for the POI.

B. Long-Term Industrial Development Loans

    Prior to July 1985, companies in Israel were eligible to receive 
long-term industrial development loans funded by the GOI. This program 
was used in conjunction with ECIL; however, a company was not required 
to be an Approved Enterprise in order to receive a development loan.
    We confirmed, as the GOI reported, that loans under this program 
were provided to a number of different industries in Israel. However, 
we also confirmed that the interest rates on these loans varied 
depending on the location of the borrower. The interest rates on loans 
to borrowers in Development Zone A were lowest, while those on loans to 
borrowers in the Central Zone were highest. In previous cases, the 
Department has found long-term industrial development loans in Israel 
to be regional subsidies and countervailable to the extent that the 
applicable interest rates are less than those on loans to companies in 
the Central Zone (see IPA). The GOI has provided no new information to 
warrant reconsideration of this finding.
    Carmiel received loans for a project located in Zone A. These loans 
were received between the year 1983-1989. Under the terms of the 
program, the interest rates on these loans have two components--a fixed 
real interest rate and a variable interest rate, the latter of which is 
based on either the CPI or the dollar/shekel exchange rate. We 
confirmed at verification that Carmiel received some loans that were 
linked to the CPI and others linked to the dollar-shekel exchange rate.
    Because the CPI and dollar-shekel exchange rate vary from year-to-
year, we cannot calculate a priori the payments that will be made over 
the life of these loans and, hence, we cannot calculate the ``grant 
equivalent'' of the loans. Accordingly, we have compared the interest 
that would have been paid by a company in the Central Zone, as a 
benchmark, to the amount actually paid by Carmiel during the POI (see 
Section 355.49(d)(1) of the Proposed Regulations). We divided the 
interest savings by Carmiel's total sales in 1993.
    On this basis, we determine the net subsidy from this program to be 
0.36 percent ad valorem during the POI.

C. Exchange Rate Risk Insurance Scheme

    Introduced in 1981, the Exchange Rate Risk Insurance Scheme (EIS), 
operated by the Israel Foreign Trade Insurance Corporation Inc. 
(IFTRIC), was designed to allow exporters to insure themselves against 
the risk of losses which might occur when the rate of devaluation of 
the Israeli shekel lagged behind the rate of inflation. The EIS was 
optional and open to exporters willing to pay a premium to IFTRIC.
    Under this program, if the rate of inflation was greater than the 
rate of devaluation, the exporter was compensated by an amount equal to 
the difference between these two rates [[Page 10571]] multiplied by the 
value-added of the exports. If the rate of devaluation was higher than 
the change in the domestic price index, however, the exporter was 
required to compensate IFTRIC. Companies using EIS paid a premium, 
calculated for each exporter as a percentage of the insured value of 
exports.
    In determining whether an export insurance program provides a 
countervailable benefit, we examine whether the premiums and other 
charges are adequate to cover the program's long-term operating costs 
and losses. See Section 355.44(d) of the Proposed Regulations and IPA. 
We have reviewed EIS data in this investigation which showed that EIS 
operated at a loss from 1981 through 1991. We believe that this 11 year 
history is more than adequate to establish that the premiums and other 
charges are ``manifestly inadequate'' to cover the long-term operating 
costs and losses of the program. The Department's determination that 
this program is countervailable is consistent with our determination in 
IPA.
    We confirmed at verification that this program was terminated 
during our POI by the GOI. However, we also found at verification that 
the GOI will continue to honor outstanding claims for exports made 
prior to the date of termination, August 31, 1993, as long as the 
claims are made within three years of the date of export. Because of 
the possibility of residual benefits, we have not adjusted the cash 
deposit rate to reflect the termination of this program.
    We have calculated the benefit during the POI as the net amount of 
compensation (compensation received less compensation and fees paid) 
Carmiel received during that period expressly for pipe fittings 
exported to the United States. We confirmed by reviewing company 
records that a certain portion of the total benefit reported by Carmiel 
as having been received during the POI was actually received by the 
company in 1992. Therefore, we have not included this amount in our 
calculations for purposes of this determination.
    We divided the resulting net compensation amount by the value of 
the company's exports of pipe fittings to the United States during the 
POI. On this basis, we determine the estimated net subsidy from this 
program to be 0.19 percent ad valorem during the POI.
D. Exemption From Wharfage Fee

    The Ports and Trains Authority administers all import/export 
operations and the train system in Israel. Wharfage fees represent 45-
50 percent of the revenues of the Authority to cover its infrastructure 
and overhead costs.
    We confirmed at verification that during the POI, importers were 
obligated to pay wharfage fees equal to 1.5 percent ad valorem of 
import value and exporters 0.2 percent ad valorem of export value. 
However, we also found that, during the POI, exporters were exempted by 
a Ports and Trains Authority decision from paying the wharfage fee 
altogether. The exemption of this fee does not relate to the imported 
input (see the Rebate of Wharfage Fees section below), but rather to 
the finished product. Government officials explained that an exemption 
for exporters was made possible by the Authority's sound financial 
position.
    We determine that the exemption from the wharfage fee provides an 
export subsidy insofar as export are allowed an exemption (unlike the 
other users of the port, i.e., importers) solely due to their status as 
exporters. Cf. Final Affirmative Countervailing Duty Determination; 
Certain Fresh Atlantic Groundfish From Canada, 51 FR 10041 (Mar. 24, 
1986).
    In order to calculate the benefit resulting from this program, 
which provides recurring benefits, we multiplied the total value of the 
company's exports during the POI by the 1.5 percent ad valorem 
coefficient and divided this amount by the total value of the company's 
exports.
    On this basis, we determined the estimated net subsidy from this 
program to be 1.50 percent ad valorem during the POI.

E. Rebate of Wharfage Fees

    We confirmed at verification that an additional program allows 
exporters, upon export of the finished product, rebates of the wharfage 
fees paid on imports of physically incorporated inputs. We were 
informed at verification that since the Israeli Customs Service 
administers the drawback system, the GOI asked it to take 
responsibility for rebating wharfage fee under this program. Under the 
rebate program, a company can receive a rebate for up to 80 percent of 
the wharfage fees paid on imported inputs that are physically 
incorporated into exported products.
    This program provides preferential treatment for exporters and does 
not qualify for non-countervailable treatment under section 355.44(i) 
of the Proposed Regulations, as wharfage fees do not constitute 
indirect taxes or import charges. (See DOC Position to Comment 3 
below.)
    To calculate the benefit provided by this program, which provides 
recurring benefits, we divided the total amount of rebate received 
during the POI by the total value of the company's exports during the 
same period.
    On this basis, we determine the estimated net subsidy from this 
program to be 0.34 percent ad valorem.

F. Fund for the Promotion of Marketing Abroad

    During verification we learned that Carmiel received benefits in 
1992 under the Fund for the Promotion of Marketing Abroad. GOI 
officials explained that under the Fund, companies apply for three-year 
financing for overseas market research projects. The company is 
obligated to repay the financing (in part) based on export earnings. We 
also learned that Carmiel has been informed that the funds approved in 
1992 have been cancelled because the company did not timely submit its 
implementation report. Consequently, the Fund Director has asked the 
company to repay the previously received amount. As of the time of 
verification, Carmiel had not yet made any repayments.
    Given the information we have received, we determine that this 
program provides benefits solely to exporters. Consequently, we 
determine that the assistance provided to Carmiel constitutes an export 
subsidy. Moreover, although Carmiel has been asked to repay the funds, 
the company has yet to repay anything. Consequently, we are treating 
the amount as a short-term, interest-free loan still outstanding as of 
the end of our POI.
    In order to calculate the benefit received by Carmiel, we have used 
the 1992 rate for short-term financing as outlined in a Bank of Israel 
Annual Report on the record of this proceeding. We have divided the 
interest savings by Carmiel's total export sales in 1993.
    On this basis, we determine the net subsidy from this program to be 
0.23 percent ad valorem during the POI.

II. Programs Determined Not To Be Countervailable

A. Rebate of Peace of Galilee Levy

    We confirmed that the Peace of Galilee (Shlom-Hagalil) Levy was 
instituted on imports to help the balance of payments problem in Israel 
caused by incessant war with its neighbors. We confirmed that since at 
least 1986 the GOI has allowed rebates on this levy in a manner similar 
to that on the Rebate of Wharfage Fee program. Under the rebate 
program, a company can receive a rebate for 100 percent of the levies 
paid on imported inputs that are physically incorporated into exported 
products. [[Page 10572]] 
    We confirmed that the company is tasked to provide information to 
the GOI regarding which inputs are physically incorporated into its 
exported products, and this information does not give rise to an 
excessive rebate. We also found that the Customs Authority is tasked 
with verifying the claims made by companies such as Carmiel. 
Consequently, we find this program to provide a nonexcessive rebate of 
the levies. See Proposed Regulations at Section 355.44(i). Therefore, 
we have found this program to be not countervailable.

III. Programs Determined Not To Be Used

    We determine that Carmiel did not receive benefits during the POI 
for exports of the subject merchandise to the United States under the 
following programs:

A. Additional Incentives under the ECIL
    1. Preferential Accelerated Depreciation
    2. Tax Benefits
    3. Preferential Loans
    4. Industry Subsidy Payments
B. Labor Training Grants
C. Encouragement of Industrial Research and Development (EIRD) Grants
D. Special Export Financing Loans
E. Provision of Funds for Transportation to Eilat Harbor

Interested Party Comments

    Comment 1: With respect to the Exchange Rate Risk Insurance Scheme, 
petitioner argues that Carmiel originally reported that it received a 
certain amount during the POI based on IFTRIC records. At verification, 
however Carmiel claimed that the original figure incorrectly included a 
payment received in 1992. Petitioner argues that according to IFTRIC 
records verified by the Department, the disputed payment was received 
by Carmiel during the POI. Therefore, the Department should use the 
figure originally reported by Carmiel.
    Carmiel notes that the disputed amount was actually received by the 
company in 1992. According to Carmiel, it is the date of receipt by the 
company that is controlling; hence, the benefit from the EIS should be 
adjusted to reflect only the amount received during the POI.

DOC Position

    We agree with Carmiel. We confirmed at the verification of Carmiel 
that the company actually received the disputed amount in 1992, not 
during the POI. It is unclear why IFTRIC recorded a later date of 
payment. Nevertheless, we have countervailed only the amount received 
by the company under this program during the POI.
    Comment 2: Carmiel argues that since the Department verified that 
the Exchange Rate Risk Insurance Scheme was terminated during the POI, 
the deposit rate should be set at zero.
    Petitioner argues that the Department should reject Carmiel's 
claim. Petitioner notes that the Department found that, although this 
program was terminated during the POI, the GOI will continue to honor 
outstanding claims as long as they are made within three years of the 
date of export. Therefore, residual benefits from the program will 
continue to be available after the POI.

DOC Position

    We agree with petitioner. The Department's practice, as outlined in 
Section 355.50(d)(1)(2) of the Proposed Regulations, is not to adjust 
the cash deposit rate when it determines that residual benefits may 
continue to be bestowed under a terminated program. As we verified that 
residual benefits are possible under this program, we have not made an 
adjustment to the cash deposit rate.
    Comment 3: According to petitioner, the Department verified that 
wharfage fees, assessed in order to finance the Ports and Trains 
Authority, differ for importers and exporters, even though the costs 
associated with both activities do not differ. Moreover, for the last 
ten years, exporters have been exempt from paying a fee altogether. 
Since the Department was unable to verify the value of the wharfage fee 
exemption to Carmiel, it should as best information available (``BIA'') 
establish a 1.5 percent ad valorem countervailing duty for this 
program. Petitioner further argues that the record does not indicate 
that these fees cover costs that have nothing to do with the services 
suggested by the term ``wharfage,'' and, therefore, do not operate as a 
tax.
    Respondent counters that the wharfage fee is, in fact, a general 
levy intended to cover myriad government activities that have nothing 
to do with the services suggested by the term ``wharfage.'' The fee is 
paid to a government agency and is not tied to any specific cost or 
service. It is a tax, and more particularly an indirect tax on exports. 
Therefore, it should not be considered a countervailable subsidy.

DOC Position

    We agree with petitioner that wharfage fees represent fees rather 
than indirect taxes. Consistent with the concept of a fee, the wharfage 
fees here are paid only by users of the port facilities, and the funds 
raised are used to pay for the costs incurred by the Port Authority and 
the maintenance of those facilities.
    We note that we have not used BIA, as petitioner suggests, to 
calculate the countervailable benefit provided by this program. Rather, 
as noted above, for the exemption of the fee, we have determined that 
the correct method by which to calculate the benefit received by 
Carmiel is to multiply the 1.5 percent exemption by total export sales 
during the POI, and divide the resulting amount by the same total 
export sales value.
    Comment 4: Petitioner notes that, with respect to the Rebate of the 
Peace of Galilee Levy Program, the record does not provide enough 
information to determine the extent to which the rebate provided to 
Carmiel is excessive. Although remission of import duties for imports 
consumed as ``normal waste'' may not be excessive, the Israeli Customs 
has made no effort to identify ``normal waste'' in the production of 
butt-weld pipe fittings. Therefore, petitioner submits that, as BIA, 
the entire amount rebated under this program should be treated as a 
countervailable subsidy. Petitioner notes that in Final Affirmative 
Countervailing Duty Determination: Oil Country Tubular Goods from 
Israel (52 FR 1649; January 15, 1987) (``OCTG''), the Department found 
that this program did not provide an excessive rebate of duties paid on 
imported inputs physically incorporated into the exported product. 
However, in this investigation, unlike OCTG, Customs indicated that it 
makes no attempt to determine a value for the carbon steel pipe wasted 
in producing subject merchandise.
    Respondent argues that this program does not provide a 
countervailable subsidy in that it is an indirect tax on items 
physically incorporated into the final exported product. In fact, in 
OCTG, the Department found this program to be not countervailable. 
Respondent also argues that there is absolutely nothing in the record 
of this case to suggest that, while the rebate was ``nonexcessive'' in 
OCTG, the rebate to Carmiel is excessive. Petitioner's attempt to make 
the rebate appear excessive by focusing on the Custom's official's 
statement about wastage is misplaced. Such percentages are not 
determined as they are not relevant to the payments. The rebate is 
based on the proportion of export sales to home market sales. No 
calculation for wastage is necessary; Customs simply compares the 
tonnage of finished product exported to the tonnage sold in the Israeli 
market. [[Page 10573]] 

DOC Position

    We agree with respondent that this program is not countervailable 
because it provides a non-excessive rebate of the levies on imported 
inputs that are used in the production of subsequently exported 
finished products. We confirmed at the Israeli Customs Department that 
its personnel monitor company reports regarding which imports are 
physically incorporated into the end product and the total amount of 
levies paid on such inputs. We also note that a rebate is only given on 
physically incorporated inputs. Consequently, waste is not an issue 
here. For this reason, we do not find anything in the remarks of the 
Customs official at verification that is inconsistent with our finding 
here, or in OCTG.
    Comment 5: With respect to the Fund for the Promotion of Marketing 
Abroad, Carmiel states that the record is clear that it received funds 
for this program in 1992 (which is outside the POI), and that the 
company must refund the money to the government since it did not 
fulfill its obligations under the program. Accordingly, Carmiel 
maintains the money it received does not constitute a countervailable 
subsidy during the POI.

DOC Position

    We confirmed at verification that the company is obligated to repay 
the benefit, has not yet done so. Therefore, during the POI, Carmiel 
had use of money to which it would not have otherwise had access. 
Consequently, we have found that this amount constituted a 
countervailable interest-free loan during the POI.
    Comment 6: Petitioner notes that according to the verification 
report, Carmiel receives ``certain advantages'' if 90 percent of its 
sales represent its own production. The exact nature of these 
advantages is not, unfortunately, further explained in the verification 
report. However, the fact that these otherwise undefined advantages are 
only available to a specific class of sellers in Israel demonstrates 
that the ``advantages'' are not generally available within the country.
    Respondent argues that, as outlined in the verification report, 
producing companies in Israel are eligible for certain benefits while 
trading companies are not. Hence, in order to preserve its status as a 
producing company, Carmiel formed a trading company. There are, 
however, no additional subsidies available to production companies 
other than the ones already investigated in this case.

DOC Position

    We agree with respondent. We found no evidence at verification to 
suggest that Carmiel received any additional benefits than those 
already noted above. The company explained that it formed a trading 
company in order to preserve its ``producing company status.'' 
Consequently, we find no reason to pursue this issue any further.

Verification

    In accordance with section 776(b) of the Act, we verified the 
information used in making our final determination. We followed 
standard verification procedures, including meeting with government and 
company officials, and examination of relevant accounting records and 
original source documents. Our verification results are outlined in 
detail in the public versions of the verification reports, which are on 
file in the Central Records Unit (Room B-099 of the Main Commerce 
Building).

Suspension of Liquidation

    In accordance with our affirmative preliminary determination, we 
instructed the U.S. Customs Service to suspend liquidation of all 
entries of carbon steel butt-weld pipe fittings from Israel, which were 
entered or withdrawn from warehouse for consumption, on or after June 
1, 1994, the date our preliminary determination was published in the 
Federal Register. This final countervailing duty determination was 
aligned with the final antidumping duty determination of certain carbon 
steel butt-weld pipe fittings from Israel, pursuant to section 
705(a)(1) of the Act.
    Under Article 5, paragraph 3 of the GATT Subsidies Code, 
provisional measures cannot be imposed for more than 120 days without 
final affirmative determinations of subsidization and injury. 
Therefore, we instructed the U.S. Customs Service to discontinue 
suspension of liquidation on the subject merchandise beginning 
September 30, 1994, but to continue suspension of liquidation of all 
entries, or withdrawals from warehouse, for consumption of the subject 
merchandise entered from June 1 through September 29, 1994. We will 
reinstate suspension of liquidation under section 703(d) of the Act, if 
the ITC issues a final affirmative injury determination, and will 
require a cash deposit of estimated countervailing duties for such 
entries of merchandise in the amount indicated below.

Certain Carbon Steel Butt-Weld Pipe Fittings

Country-Wide Ad Valorem Rate: 4.93 percent

ITC Notification

    In accordance with section 705(c) of the Act, we will notify the 
ITC of our determination. In addition, we are making available to the 
ITC all nonprivileged and nonproprietary information relating to this 
investigation. We will allow the ITC access to all privileged and 
business proprietary information in our files, provided the ITC 
confirms that it will not disclose such information, either publicly or 
under administrative protective order, without the written consent of 
the Deputy Assistant Secretary for Investigations, Import 
Administration.
    If the ITC determines that material injury, or threat of material 
injury, does not exist, these proceedings will be terminated and all 
estimated duties deposited or securities posted as a result of the 
suspension of liquidation will be refunded or canceled. If, however, 
the ITC determines that such injury does exist, we will issue a 
countervailing duty order directing Customs officers to assess 
countervailing duties on carbon steel butt-weld pipe fittings from 
Israel.

Return or Destruction of Proprietary Information

    This notice serves as the only reminder to parties subject to 
Administrative Protective Order (APO) of their responsibility 
concerning the return or destruction of proprietary information 
disclosed under APO in accordance with 19 CFR 355.34(d). Failure to 
comply is a violation of the APO.

    This determination is published pursuant to section 705(d) of 
the Act and 19 CFR 355.20(a)(4).

    Dated: February 16, 1995.
Barbara R. Stafford,
Acting Assistant Secretary for Import Administration.
[FR Doc. 95-4718 Filed 2-24-95; 8:45 am]
BILLING CODE 3510-DS-M