[Federal Register Volume 60, Number 96 (Thursday, May 18, 1995)]
[Notices]
[Pages 26717-26719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12199]



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

DEPARTMENT OF COMMERCE
International Trade Administration
[C-201-003]


Ceramic Tile From Mexico; Preliminary Results of Countervailing 
Duty Administrative Review

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

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

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

SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the countervailing duty order on ceramic tile 
from Mexico. We have preliminarily determined the total bounty or grant 
to be 0.48 percent ad valorem for all companies during the period 
January 1, 1993, through December 31, 1993. In accordance with 19 CFR 
355.7, any rate less than 0.5 percent ad valorem is de minimis. If the 
final results remain the same as these preliminary results of 
administrative review, we will instruct the U.S. Customs Service to 
liquidate, without regard to countervailing duties as indicated above.
    Interested parties are invited to comment on these preliminary 
results.

EFFECTIVE DATE: May 18, 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 May 10, 1982, the Department published in the Federal Register 
(47 FR 20012) the countervailing duty order on ceramic tile from 
Mexico. On May 4, 1994, the Department published a notice of 
``Opportunity to Request Administrative Review'' (59 FR 23051) of this 
duty order. We received a timely request for review from the Government 
of Mexico (GOM) and Ceramica Regiomontana, S.A., (Ceramica).
    On June 15, 1994, we initiated the review, covering the period 
January 1, 1993, through December 31, 1993 (59 FR 30770). The review 
covers 40 manufacturers/exporters of the subject merchandise and four 
programs.

Applicable Statute and Regulations

    The Department is conducting this administrative review in 
accordance with section 751(a) of the Tariff Act of 1930, as amended 
(the Act). Unless otherwise indicated, all citations to the statute and 
to the Department's regulations are in reference to the provision as 
they existed on December 31, 1994. However, references to the 
Department's 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 countervailing duty 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 (Jan. 3, 1995).

Partial Revocation

    On May 31, 1994, in its request for administrative review, the GOM 
submitted a request for partial revocation for 14 companies which 
included only the agreements required under 19 CFR 355.25(b)(3)(iii). 
On November 14, 1995, in its submission of the questionnaire response, 
the GOM submitted company and government certifications as required 
under 19 CFR 355.25(b)(3)(i) and (ii) to complete its request for 
partial revocation. After examining the record for each of the 14 
companies identified in the requests for revocation, the Department has 
determined that none of them have met the minimum threshold 
requirements to be considered for revocation under 19 CFR 
355.25(a)(3)(i). These companies did not participate in five 
consecutive administrative reviews in which they were found not to have 
received any net subsidy, including the review in which they are 
requesting revocation, and with no intervening period in which a review 
of the company was not conducted.
    Moreover, under 19 CFR 355.25(b)(3), a company must request 
revocation in writing and, with its request, submit (1) government and 
company certifications that the company neither applied for nor 
received any net subsidy during the period of review and will not apply 
for or receive any net subsidy in the future; and (2) the agreement 
concerning revocation described in 19 CFR 355.25(a)(3)(iii). (According 
to 19 CFR 355.25(a)(3)(iii), producers or exporters must agree in 
writing to their immediate reinstatement in the order, as long as any 
producer or exporter is subject to the order, if the Secretary 
concludes that the producer or exporter, subsequent to the revocation, 
has received any net subsidy on the merchandise.) In this case, 
although the companies filed the agreements required under 19 CFR 
355.25(a)(3)(iii) at the time of the revocation request, they did not 
submit government and company certifications required under 19 CFR 
355.25(b)(3)(i) and (ii) until November 14, 1995, the deadline for 
submission of the questionnaire response.
    All of the requirements for revocation are fully discussed in 
Ceramic Tile From Mexico; Preliminary Results of Countervailing Duty 
Administrative Review and Intent To Revoke in Part Countervailing Duty 
Order (58 FR 31505; June 3, 1993) and Ceramic Tile From Mexico; Final 
Results of Countervailing Duty Administrative [[Page 26718]] Review and 
Revocation in Part of the Countervailing Duty Order (59 FR 2823; 
January 19, 1994). For the reasons stated above, these 14 companies did 
not meet those requirements and are therefore, not eligible for 
revocation in this administrative review.

Scope of Review

    Imports covered by this review are shipments of Mexican ceramic 
tile, including non-mosaic, glazed, and unglazed ceramic floor and wall 
tile. During the review period, such merchandise was classifiable under 
the Harmonized Tariff Schedule (HTS) item numbers 6907.10.0000, 
6907.90.0000, 6908.10.0000, and 6908.90.0000. The HTS item numbers are 
provided for convenience and Customs purposes. The written description 
remains dispositive.
Calculation Methodology for Assessment and Cash Deposit Purposes

    We calculated the bounty or grant on a country-wide basis by first 
calculating the bounty or grant for each company subject to the 
administrative review. We then weight-averaged the rate received by 
each company, even those with de minimis and zero rates, using as the 
weight its share of total Mexican exports to the United States of 
subject merchandise. We then summed the individual companies' weight-
averaged rates to determine the bounty or grant from all programs 
benefitting exports of subject merchandise to the United States. Since 
the country-wide rate calculated using this methodology was de minimis, 
as defined by 19 CFR 355.7, no further calculations were necessary.

Analysis of Programs

I. Programs Conferring Subsidies

A. Programs Previously Found to Confer Subsidies BANCOMEXT Financing 
for Exporters
    Effective January 1, 1990, the Mexican Treasury Department 
eliminated the Fondo para el Fomento de las Exportaciones de Productos 
Manufacturados (FOMEX) loan program and transferred the FOMEX trust to 
the Banco Nacional de Comercio Exterior, S.N.C. (BANCOMEXT). BANCOMEXT 
offers short-term financing to producers or trading companies engaged 
in export activities; any company generating foreign currency through 
exports is eligible for financing under this program. The BANCOMEXT 
program operates much like its predecessor, FOMEX. BANCOMEXT provides 
two types of financing, both in U.S. dollars, to exporters: working 
capital loans (pre-export loans), and loans for export sales (export 
loans). In addition, BANCOMEXT may provide financing to foreign buyers 
of Mexican goods and services.
    The Department has previously found this program to confer an 
export subsidy to the extent that the loans are provided at 
preferential terms (See Ceramic Tile From Mexico; Preliminary Results 
of Countervailing Duty Review (57 FR 5997, February 19, 1992) and 
Ceramic Tile From Mexico; Final Results of Countervailing Duty Review 
(57 FR 24247, June 8, 1992). In this review the GOM provided no new 
information or evidence of changed circumstances that would lead the 
Department to alter that determination.
    We found that the annual interest rates BANCOMEXT charged to 
borrowers for certain loans on which interest payments were due during 
the review period were lower than commercial rates. The BANCOMEXT 
dollar-denominated loans under review were granted at annual interest 
rates ranging from 5.9 percent to 10.0 percent. As discussed in Certain 
Steel Products from Mexico; Final Countervailing Duty Determination (58 
FR 37357, July 9, 1993), because loans are funded by BANCOMEXT through 
commercial banks in dollars and indexed to dollars for repayment, we 
used a dollar benchmark. As the benchmark for BANCOMEXT pre-export and 
export dollar-denominated loans granted in 1993, we used the average of 
the quarterly weighted-average effective interest rates published in 
the Federal Reserve Bulletin, which resulted in an annual benchmark of 
7.03 percent in 1993.
    We consider the benefits from short-term loans to occur at the time 
the interest is paid. Because interest on BANCOMEXT pre-export loans is 
paid at maturity, we calculated benefits based on loans that matured 
during the review period; these were obtained between August 1992 and 
October 1993. Interest on BANCOMEXT export loans is paid in advance; we 
therefore calculated benefits based on BANCOMEXT loans received during 
the review period.
    Three exporters of ceramic tile products used BANCOMEXT pre-export 
financing and one company used BANCOMEXT export financing. Because we 
found that the exporters were able to tie their BANCOMEXT loans to 
specific sales, we measured the benefit only from the BANCOMEXT loans 
tied to sales of the subject merchandise to the United States. To 
determine the benefit for each exporter, we multiplied the difference 
between the interest rate charged to exporters for these loans and the 
benchmark interest rate by the outstanding principal and then 
multiplied this amount by the term of the loan divided by 365. We then 
weight-averaged the benefit received by each company using as the 
weight its share of total Mexican exports to the United States of the 
subject merchandise. On this basis, we preliminarily determine the 
benefit from this program to be 0.0002 percent ad valorem for all 
companies.
PITEX

    The Program for Temporary Importation of Products used in the 
Production of Exports (PITEX) was established by a decree published in 
the Diario Oficial on May 9, 1985, and amended in the Diario Oficial on 
September 19, 1986, and May 3, 1990. The program is jointly 
administered by the Ministry of Commerce and Industrial Development 
(SECOFI) and the Customs Administration. Under PITEX, exporters with a 
proven export record may receive authorization to temporarily import 
products to be used in the production of exports for up to five years 
without having to pay the import duties normally imposed on those 
imports. PITEX allows for the exemption of import duties for the 
following categories of merchandise used in export production: raw 
materials, packing materials, fuels and lubricants, machinery used to 
manufacture products for export, and spare parts and other machinery. 
The importer must post a bond or other security to guarantee the 
reexportation of the temporary imports. Because it is only available to 
exporters, the Department previously found in Certain Textile Mill 
Products From Mexico; Final Results of Countervailing Duty 
Administrative Review (56 FR 50859, October 9, 1991) and Ceramic Tile 
From Mexico; Final Results of Countervailing Duty Administrative Review 
(57 FR 24247, June 8, 1992) that PITEX provides countervailable 
benefits to the extent that it provides duty exemptions on imports of 
merchandise not physically incorporated into exported products. The GOM 
provided no new information or evidence of changed circumstances that 
would lead the Department to alter that determination.
    During the review period, four companies used the PITEX program for 
imports of machinery and spare parts which are not physically 
incorporated into exported products. To determine the benefit for each 
exporter, we calculated the duties that should have been paid on the 
non-physically incorporated items that were imported under the PITEX 
program during the [[Page 26719]] review period. We then divided that 
amount by each company's total exports and weight-averaged the benefit 
received by each company using as the weight its share of total Mexican 
exports to the United States of the subject merchandise. On this basis, 
we preliminarily determine the benefit from this program to be 0.47 
percent ad valorem for all companies.

NAFINSA Long-Term Loans

    Two companies received long-term financing from NAFINSA loans 
(Nacional Finciera Sociedad Anonima). Until December 31, 1988, NAFINSA 
operated as a first-tier bank, which is defined as a commercial bank 
that provides financing directly to the public. Since December 31, 
1988, NAFINSA has operated as ``second-tier'' bank granting financing 
to companies indirectly through the commercial bank, (i.e., first-tier 
banks). NAFINSA long-term loans have been found to be specific in past 
proceedings because availability was limited to specific geographical 
regions of Mexico. See Bars and Shapes from Mexico Final Affirmative 
Countervailing Duty Determinations and Countervailing Duty Orders 49 FR 
161 (August 17, 1984). The GOM has provided no new information or 
evidence of changed circumstances to lead us to conclude that this 
program is not limited to companies in specific regions. Therefore, we 
preliminarily determine that NAFINSA long-term loans are specific.
    Since the GOM did not provide any information on long-term interest 
rates, we are using a short-term CPP based rate as our benchmark rate 
in accordance with our practices as set forth in section 355.49(b)(iii) 
of the Department's regulations. See Countervailing Duties; Notice of 
Proposed Rulemaking and Request for Public Comments, 54 FR 23366, 23384 
(May 31, 1989). In past Mexican cases, we have used the Costo 
Porcentual Promedio (CPP), a short-term interest rate, as the basis for 
our benchmark. We have converted the CPP rate into a benchmark rate 
using a standard formula that has been used consistently in past 
Mexican cases. See Porcelain-on-Steel Cookingware from Mexico; Final 
Results of Countervailing Duty Administrative Review, 57 FR 562 
(January 7, 1982). Using this methodology, we calculated an annual 
average benchmark of 29.79 percent for the peso-denominated loans. A 
comparison between the benchmark rate and the NAFINSA loan rates 
indicates that these loans are inconsistent with commercial 
considerations.
    To calculate the benefit, we multiplied the difference between the 
benchmark rate and the interest rate in effect for the NAFINSA loan by 
the principal outstanding during the review period. We divided the 
benefit by the firm's total sales during the review period and then 
weight-averaged the benefit received by each company using as the 
weight its share of total Mexican exports to the United States of the 
subject merchandise. On this basis, we preliminarily determine the 
benefit from this program to be 0.01 percent ad valorem for all 
companies.
II. Programs Preliminarily Found To Be Not Used

    We also examined the following programs and preliminarily 
determined that exporters of the subject merchandise did not apply for 
or receive benefits under these programs during the review period:
    (A) Other BANCOMEXT preferential financing;
    (B) Other Dollar-Denominated Financing Programs;
    (C) Fiscal Promotion Certificates (CEPROFI);
    (D) Import duty reductions and exemptions;
    (E) State tax incentives;
    (F) Article 15 Loans;
    (G) NAFINSA FONEI-type financing; and
    (H) NAFINSA FOGAIN-type financing.
Preliminary Results of Review
    For the period January 1, 1993, through December 31, 1993, we 
preliminarily determined the total bounty or grant to be 0.48 percent 
ad valorem for all companies. In accordance with 19 CFR 355.7, any rate 
less than 0.5 percent ad valorem is de minimis.
    If the final results remain the same as these preliminary results, 
the Department intends to instruct the U.S. Customs Service to 
liquidate, without regard to countervailing duties, all shipments of 
the subject merchandise from Mexico exported on or after January 1, 
1993, and on or before December 31, 1993.
    The Department also intends to instruct the U.S. Customs Service to 
collect a cash deposit of estimated countervailing duties of zero 
percent of the f.o.b. invoice price on all shipments of the subject 
merchandise from all companies, entered or withdrawn from warehouse, 
for consumption on or after the date of publication of the final date 
of the publication of the final result of this 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, under Sec. 355.38(c), 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: May 10, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-12199 Filed 5-17-95; 8:45 am]
BILLING CODE 3510-DS-P