[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