[Federal Register Volume 60, Number 40 (Wednesday, March 1, 1995)]
[Notices]
[Pages 11072-11075]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5056]
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DEPARTMENT OF COMMERCE
[C-614-503]
Lamb Meat From New Zealand; Preliminary Results of Countervailing
Duty Administrative Review and Intent To Revoke the Countervailing Duty
Order
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of countervailing duty
administrative review and intent to revoke countervailing duty order.
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SUMMARY: The Department of Commerce (the Department) is conducting an
administrative review of the countervailing duty order on lamb meat
from New Zealand for the period April 1, 1992 through March 31, 1993.
We preliminarily determine the total subsidy to be 0.0013 percent ad
valorem for all firms for the review period. In accordance with 19 CFR
355.7, any rate less than 0.50 percent ad valorem is de minimis.
In addition, we preliminarily determine that the Government of New
Zealand (GONZ) has met the requirements for revocation of the
countervailing duty order, including undergoing administrative review
for three consecutive years during which the Department has determined
that there has been no net subsidy on lamb meat and all subsidies on
lamb meat have been abolished. If these preliminary results are
sustained in the final results of this review and the Department is
satisfied that the GONZ is not likely to reinstate or substitute other
subsidy programs on lamb meat, we will revoke the countervailing duty
order pursuant to 19 CFR 355.25(a)(1). We invite interested parties to
comment on these preliminary results.
EFFECTIVE DATE: March 1, 1995.
FOR FURTHER INFORMATION CONTACT: Gayle Longest or Kelly Parkhill,
Office of Countervailing Compliance, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue NW., Washington, DC 20230, telephone:
(202) 482-2786.
SUPPLEMENTARY INFORMATION:
Background
On September 7, 1993, the Department published a notice of
``Opportunity to Request Administrative Review'' (58 FR 47116) for the
countervailing duty order on lamb meat from New Zealand (50 FR 37708;
September 17, 1985). On September 30, 1993, we received a request for
review from the New Zealand Meat Producers Board. The GONZ also
requested revocation of the countervailing duty order on lamb meat from
New Zealand pursuant to 19 CFR 355.25(b) and certified that all
countervailable programs for lamb meat had been eliminated and that it
will not reinstate those countervailable programs or substitute other
countervailable programs. We initiated the review, covering the period
April 1, 1992 through March 31, 1993, on October 18, 1993 (58 FR
53710). The Department is conducting this review in accordance with
section 751 of the Tariff Act of 1930, as amended (the Act). The review
period is April 1, 1992, through March 31, 1993. The review involves
nine companies and five programs.
Revocation of the Order
After carefully examining the September 30, 1993, request for
revocation of the order, including the certification, the Department
determined that certain modifications with respect to the revocation
request were necessary. On May 12, 1994, the GONZ resubmitted its
certification that met the minimum threshold requirements to be
considered for revocation under 19 CFR 355.25(b).
According to 19 CFR 355.25(b), a government meets the minimum
threshold requirement for revocation of an order if, in requesting the
third consecutive administrative review of the order, the government
submits a certification that the government has abolished all subsidy
programs for the subject merchandise for a period of three consecutive
years, and that the government will not reinstate the abolished
programs or substitute other countervailable programs. Under 19 CFR
355.25(a)(1)(i), the Department must have also found that there was no
net subsidy for lamb meat in the two consecutive administrative reviews
prior to the year in which the government requests revocation, and in
the third consecutive administrative review, the Department must also
determine that there is no net subsidy. If the foregoing threshold
requirements are met, and the Department determines in the review
during which revocation has been requested that the GONZ has eliminated
all subsidies on lamb meat for the third consecutive year, and is not
likely to substitute or replace formerly countervailable programs with
new subsidies, then the Department will revoke the order.
With respect to the countervailing duty order on lamb meat, the
GONZ met the minimum threshold requirements for consideration of the
order for revocation. The Department verified [[Page 11073]] that all
programs that were determined to be countervailable in past
administrative reviews of the order have been terminated. The
Department has reviewed these programs in three consecutive
administrative reviews of this order (including this review). In each
of the past two reviews, the Department determined that all
countervailable programs have been eliminated and there was no net
subsidy on lamb meat. In this review, we preliminarily determine that
all countervailable programs on lamb meat have been terminated and have
not been replaced with other countervailable programs. We also
preliminarily determine that it is not likely that in the future the
GONZ will reinstate for lamb meat those programs or substitute other
countervailable programs. In addition, we preliminarily determine that
the net subsidy during the review period was de minimis. Therefore, if
the final results of this review remain unchanged from these
preliminary results, the Department intends to revoke the order
pursuant to 19 CFR 355.25(a)(1).
Scope of Review
Imports covered by this review are shipments of lamb meat, other
than prepared, preserved or processed, from New Zealand. This
merchandise is currently classifiable under item numbers 0204.10.0000,
0204.22.2000, 0204.23.2000, 0204.30.0000, 0204.42.2000, and
0204.43.2000 of the Harmonized Tariff Schedule (HTS). The HTS item
numbers are provided for convenience and Customs purposes. The written
description remains dispositive.
Verification
As required under 19 CFR 355.36(a)(ii) of the Department's
regulations, we verified the elimination of programs that had been
found countervailable in past administrative reviews and examined the
countervailability of other programs that may have replaced these
programs. We also selected several companies for verification to ensure
that there were no net subsidies and that no residual benefits were
being provided to lamb meat producers under the terminated programs.
Analysis of Programs
I. Program Preliminarily Determined to Confer Subsidies
(A) Livestock Incentive Scheme
The Livestock Incentive Scheme (LIS) was introduced in 1976 in
order to encourage farmers to increase permanently their number of
livestock. Under the scheme, a farmer engaged in a stock increase
program, for a minimum of one and a maximum of three years, could opt
for one of two incentives: (1) An interest-free suspensory loan of
NZ$12 for each additional stock unit carried; or (2) a deduction of
NZ$24 from taxable income for each additional stock unit carried. If
the livestock increase was met, farmers who elected to take out loans
wrote the loans off as tax-free grants. For farmers electing the tax
option, the provisional tax deduction could be applied toward tax
liability in any of the three years after completion of the development
program. Applications to participate in the LIS program were accepted
until March 31, 1982. No new loans have been given under this program
since 1983, and no tax credits have been authorized since the 1983/84
government fiscal year. The last loan was forgiven in 1988; these
forgiven loans are treated by the Department as grants. During the
1991/92 government fiscal year (the review period), we verified that
there were no outstanding loans that had not been converted to grants
and no tax credits remaining to be claimed by lamb producers.
The Department has previously found this program to be
countervailable because benefits under this program are available only
to farmers with livestock herds, and, as such, are limited to a
specific enterprise on industry, or group of enterprises or industries
(See Preliminary Affirmative Countervailing Duty Determination; Lamb
Meat From New Zealand (50 FR 28236, June 25, 1985 and Final Affirmative
Countervailing Duty Determination and Countervailing Duty Order; Lamb
Meat From New Zealand (50 FR 37708, September 17, 1985)). No new
information or evidence of changed circumstances has been submitted to
warrant reconsideration of this determination.
To calculate the benefit, we treated the loan amounts forgiven in
prior years as grants and allocated those amounts over five years, the
average useful life of breeding stock. This methodology is described in
Sec. 355.49(g) of Countervailing Duties; Notice of Proposed Rulemaking
and Request for Public Comments (51 FR 23366, 23385; May 31, 1989).
Because the 1988 grant under this program was allocated over five
years, we find that a benefit was conferred during the review period;
however, this is the last year of the five-year benefit stream and no
further benefits will be provided under these forgiven LIS loans. The
discount rate chosen was the average interest rate on overdrafts during
the year in which the loans were forgiven.
The methodology and discount rate are the same used in previous
administrative reviews (see e.g. Lamb Meat from New Zealand;
Preliminary Results of Countervailing Duty Administrative Review (56 FR
27243; June 13, 1991) and Lamb Meat from New Zealand; Final Results of
Countervailing Duty Administrative Review (56 FR 38423; August 13,
1991). We added the value of the benefits from the grants and
multiplied the results by a factor determined to represent the value of
lamb meat as a percentage of the total value of all livestock
production. We then divided that result by the total value of lamb meat
production during the review period. On this basis, we preliminarily
determine the benefit from this program to be 0.0013 percent ad valorem
for all firms.
II. Programs Preliminarily Determined Not To Confer Subsidies
(A) Regional Development Suspensory Loan Scheme (RDSL)
The GONZ established the Regional Development Assistance Program to
encourage utilization of resources in priority regions of New Zealand.
Regions designated by the government as non-priority did not qualify
for regional development assistance. The RDSL program, one of a variety
of regional development programs administered by the Development
Finance Corporation (DFC), provided interest-free loans which were
later converted to grants if development objectives are met.
The Department previously found this program to be countervailable
because it provided government-funded financing to specific regions in
New Zealand on terms inconsistent with commercial considerations (See
Final Affirmative Countervailing Duty Determination and Countervailing
Duty Order; Lamb Meat from New Zealand (50 FR 37708, September 17,
1985)). The RDSL was terminated on April 21, 1986, by the GONZ and the
Regional Development Investigation Grants Scheme (RDIGS) was
established as its replacement (See Verification Report on Lamb Meat
from New Zealand (Public Version) dated April 13, 1988).
In 1988, the Ministry of Commerce (MOC) became the administrator of
the RDIGS, and the name of the program was changed to the Business
Development Investigation Grant Scheme (BDIGS). Unlike its predecessor,
the RDSL, under BDIGS, all New Zealand taxpayers from any region are
[[Page 11074]] eligible to apply for this program. The criteria for
eligible projects under the program are: (1) The project must be a
lawful activity, and (2) the activity must be new to the region in that
its technical feasibility and/or commercial viability has yet to be
established in the region.
The BDIGS assists applicants in assessing the feasibility of a new
activity by providing grants to cover expenses such as accountant fees,
Ministry of Agriculture and Fisheries (MAF) soil studies, pilot plant
costs, marketing consultant fees, and travel costs of visiting a
similar operation in another country. These grants may cover up to 50
percent of the costs related to the project feasibility studies. We
verified that as of June 1989, there are no regional distinctions made
by this program or the government with respect to eligibility for these
grants.
Although the lamb meat industry is not a new or unproven activity
in any region in New Zealand, the introduction of an advanced
technology to the lamb industry could be funded through this scheme. At
verification, we examined the use of BDIGS and found that no producers
or exporters of lamb meat used the program at any time between early
1991 to June 1994. We found that the program was available to all
sectors of the economy and all regions within New Zealand. During the
review period, we verified that this program was used in a wide variety
of different economic sectors for the development of such projects as
tree surgery products, a holiday home exchange program, a plastic bag
holder, Mediterranean bread, and an intelligent radio modem and that
these projects were conducted across all regions in New Zealand (See
Verification of the Countervailing Duty Order on Lamb Meat from New
Zealand (Public Version) dated December 13, 1994). Therefore, because
this program is not limited to a specific enterprise or industry, or
group of enterprises or to companies in specific regions, we find that
it is not countervailable.
(B) Expert Assistance Grant Scheme (EAGS)
The EAGS is a program established in 1992 by the MOC to assist
small businesses, those with 10 employees or less, in their efforts to
become more competitive. Under the EAGS program, grants are provided to
small firms in any industry throughout New Zealand. Grants are provided
to firms that are hiring ``experts'' to help improve quality and
provide expertise that is not available within the firm.
At verification, we examined the EAGS and found that no producers
or exporters of lamb meat used the program at any time between early
1991 to June 1994. We found that the program was available to all
sectors of the economy and all regions within New Zealand. During the
review period, we verified that this program was used in a wide variety
of different economic sectors of the economy including foundries, data
systems, and engineering projects and that companies using EAGS were
located across all regions of New Zealand (See Verification of the
Countervailing Duty Order on Lamb Meat from New Zealand (Public
Version) dated December 13, 1994). Therefore, because this program is
not limited to a specific enterprise or industry, or group of
enterprises or to companies in specific regions, we find that it is not
countervailable.
III. Programs Preliminarily Determined To Be Terminated
(A) The Export Market Development Taxation Incentive (EMDTI)
Under the EMDTI, established in the 1979 Amendment to the Income
Tax Act of 1976, exporters have received tax credits for a certain
percentage of their export market development expenditures. Qualifying
expenditures included those incurred principally for seeking and
developing new markets, retaining existing markets and obtaining market
information. An exporter who took advantage of this tax credit could
not deduct the qualifying expenditures as ordinary business expenses in
calculating taxable income. Because the program was contingent upon
exportation, the Department previously found this program to confer a
countervailable grant or subsidy (See Lamb Meat From New Zealand;
Preliminary Results of Countervailing Duty Administrative Review (56 FR
27243; June 13, 1991) and Lamb Meat From New Zealand; Final Results of
Countervailing Duty Administrative Review (56 FR 38423; August 13,
1991).
Effective with the government fiscal year beginning April 1, 1990,
the GONZ eliminated the EMDTI tax credit, and all formerly eligible
expenditures are subject to the rules for ordinary business expenses in
calculating taxable income. Because certain corporate fiscal years do
not correspond with the GONZ's fiscal year, some residual benefits were
still possible. However, according to the questionnaire response, no
exporters of the subject merchandise claimed benefits under this
program on their tax return during the review period. Moreover, at
verification, we saw no evidence that EMDTI tax credits were given or
that they existed during the review period. Furthermore, we verified
that there can be no residual benefits after our review period.
Accordingly, we preliminarily determine that this program has been
terminated and that there are no residual benefits to lamb meat
producers or exporters.
(B) Export Suspensory Loan Scheme (ESLS)
The ESLS administered by the Department of Trade & Industry and the
DFC, was established in the 1973 budget and modified by Cabinet
decision in 1978. The purpose of the program is to provide loans to
assist exporters in purchasing equipment needed to expand their
production of export goods. The loans covered up to 40 percent of
eligible expenditures and were converted to grants if pre-determined
export targets were met. If the export targets were not met, the loans
could be partially converted to grants or called in full at the DFC's
long-term interest rates. The ESLS terminated on March 31, 1985; we
have verified that no new loans under this program were granted after
that date.
The Department has previously found this program to be
countervailable because benefits under this program are contingent on
export performance and the program provided loans that: (1) Could be at
rates lower than those available from commercial sources, and (2) could
be converted to grants (See Final Affirmative Countervailing Duty
Determination and Countervailing Duty Order; Lamb Meat from New Zealand
(50 FR 37708, September 17, 1985)).
At verification, we examined this program and found that there were
no outstanding ESLS loans during the review period. The final payments
on loans under this program were made during the 1990-91 New Zealand
Government fiscal year. (See Verification of the Countervailing Duty
Order on Lamb Meat from New Zealand (Public Version) dated December 13,
1994.) Furthermore, we saw no evidence that ESLS loans were used by
lamb meat exporters during the review period. Accordingly, we
preliminarily determine that this program has been terminated and that
there are no residual benefits to lamb meat producers or exporters.
(C) Export Programme Grant Scheme (EPGS/Export Programme Suspensory
Loan Scheme (EPSLS)
The EPGS was established in the 1979 Budget to encourage marketing
research in targeted foreign markets. The grants, amounting to 64
percent of budgeted expenditures, were available for up to three years.
In 1982, the grant program was converted to the EPSLS, a
[[Page 11075]] suspensory loan program. Loans covering up to 40 percent
of eligible expenditures were available to established exporters who
increased their net foreign exchanged earnings through the marketing of
specific goods or services in a designated foreign market. If a
predetermined sales forecast was accomplished, the suspensory loan was
converted into a grant; if the forecast was not met, the exporter
repaid the loan with interest.
During our administrative review covering the period April 1, 1986,
through March 31, 1987, the Department verified the EPSLS program and
found that on May 23, 1985, the GONZ terminated the EPSLS. In addition,
the GONZ announced that its commitments made under the program prior to
that date would be met. (See Verification Report Concerning Lamb Meat
From New Zealand (Public Version) dated April 13, 1988, which has been
placed on the public record of this proceeding.) No lamb meat exporters
were using this program at the time it was terminated. (See
Verification Report Concerning Lamb Meat From New Zealand (Public
Version) dated April 13, 1988; Lamb Meat From New Zealand; Preliminary
Results of Countervailing Duty Administrative Review, (54 FR 1402;
January 13, 1989) and Lamb Meat From New Zealand; Final Results of
Countervailing Duty Administrative Review, (54 FR 19590; May 8, 1989).)
Further, during this review period, we found no evidence that this
program was used by lamb meat exporters. Accordingly, we preliminarily
determine that this program has been terminated and that there are no
residual benefits to lamb meat producers or exporters.
Preliminary Results of Review
As a result of our review, we preliminarily determine that total
subsidy to be 0.0013 percent ad valorem for all firms during the period
April 1, 1992, through March 31, 1993. In accordance with 19 CFR 355.7,
any rate less than 0.50 percent is de minimis and will be disregarded.
Therefore, as provided for by section 751(a)(1) of the Act, the
Department intends to instruct the Customs Service to liquidate, upon
publication of the final results of this review in the Federal
Register, without regard to countervailing duties, all shipments of the
subject merchandise from New Zealand exported by all companies on or
after April 1, 1992, and on or before March 31, 1993.
The Department also intends to instruct the Customs Service not to
collect cash deposits of estimated countervailing duties on any
shipments of the subject merchandise from New Zealand 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
10 days after the date of publication of this notice. Pursuant to 19
CFR 355.38(c), 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 arguments raised in case
briefs, may be submitted seven days after the time limit for filing the
case brief. Any hearing, if requested, will be held 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).
Representatives of parties to the proceeding may request disclosure
of proprietary information under administrative protective order no
later than 10 days after the representative's client or employer
becomes a party to the proceeding, but in no event later than the date
the case briefs are due.
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 or at a hearing.
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: February 22, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-5056 Filed 2-28-95; 8:45 am]
BILLING CODE 3510-DS-P